Brian C. Simcoe v. Thomas Christopher and Catrina Christopher

Opinion

ACCEPTED

04-14-00735-CV

FOURTH COURT OF APPEALS

SAN ANTONIO, TEXAS 2/20/2015 1:49:45 PM

KEITH HOTTLE

CLERK

CAUSE NO. 04-14-00735-CV

__________________________________________________

FILED IN

4th COURT OF APPEALS SAN ANTONIO, TEXAS

IN THE COURT OF APPEALS 2/20/2015 1:49:45 PM FOR THE KEITH E. HOTTLE FOURTH JUDICIAL DISTRICT Clerk SAN ANTONIO, TEXAS

Thomas Christopher and Catrina Christopher v.

Brian C. Simcoe and Adria Simcoe

__________________________________________________

APPEAL FROM THE 45TH JUDICIAL DISTRICT COURT BEXAR COUNTY, TEXAS

HONORABLE JUDGE BARBARA HANSON NELLERMOE, JUDGE PRESIDING

BRIEF OF APPELLANT

Jamie L. Graham, SBOT 24027335 Sarah Anne Lishman, SBOT 24086267 JAMIE GRAHAM & ASSOCIATES, PLLC 310 S. St. Mary’s St, Ste. 845 San Antonio, Texas 78205 Telephone: (210) 308-6448 Telecopier: (210) 308-5669 Email: sarahanne.jgrahamlaw@yahoo.com Attorney for Appellant, Brian C. Simcoe

Oral Argument Not Requested

Contents

IDENTITY OF PARTIES AND COUNSEL ............................................................4 INDEX OF AUTHORITIES......................................................................................5 STATEMENT OF THE CASE ..................................................................................6 STATEMENT OF FACTS ........................................................................................7 ISSUES PRESENTED.............................................................................................11 I. Whether the evidence is legally sufficient to support the trial court’s finding that enforcement of the oral agreement was not barred by the statute of frauds. .11 II. Whether the evidence is legally sufficient to support the trial court’s judgment solely against Appellant. .......................................................................11 SUMMARY OF THE ARGUMENTS ....................................................................12 ARGUMENTS AND AUTHORITIES ...................................................................13 I. Whether the evidence is legally sufficient to support the trial court’s finding that enforcement of the oral agreement was not barred by the statute of frauds. .13 Standard of review .............................................................................................13 The statute of frauds barred enforcement of the alleged oral contract as a matter of law. .................................................................................................................14 In order to enforce the purported oral contract, the burden was on the Christophers to show some exception to the statute of frauds. ..........................15 Calculation of the time for performance depends on the tenor of the agreement and the understanding of the parties at the time the agreement is made, excluding merely fortuitous events. ...................................................................15 The parties disputed what type of performance was required of the Simcoes under the oral contract. .......................................................................................16 The evidence is legally insufficient to show that Payment Performance could have been completed within one year of the making of the oral contract. ........17 The evidence is legally insufficient to support the trial court’s finding that Refinance Performance could conceivably have been completed within one year of the making of the oral agreement...........................................................19 The trial court enforced the oral contract against Appellant, finding that Refinance Performance of the oral contract was to be completed within one year. RR 85:15-21. ............................................................................................19

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II. Whether the evidence is legally sufficient to support the trial court’s judgment solely against Appellant. .......................................................................20 The undisputed evidence showed that both Appellant and Adria Simcoe were liable under the alleged oral contract. ................................................................20 CONCLUSION ........................................................................................................22 PRAYER ..................................................................................................................22 APPENDIX ..............................................................................................................25

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IDENTITY OF PARTIES AND COUNSEL

Appellant: Brian C. Simcoe- Defendant in the underlying case

Appellees: Thomas Christopher- Plaintiff in the underlying case

Catrina Christopher- Plaintiff in the underlying case

Adria Simcoe- Third-party Defendant in the underlying case

Counsel for Appellant: Jamie L. Graham and Sarah Anne Lishman, Jamie Graham

& Associates, PLLC, 310 S. St. Mary’s St., Suite 845, San Antonio, Texas

78205

Counsel for Appellees Thomas Christopher and Catrina Christopher: James A.

Rodriguez, 540 S. St. Mary’s St., San Antonio, Texas 78205

Adria Simcoe: Pro se; 115 Osprey Haven, San Antonio, Texas 78253

5

INDEX OF AUTHORITIES

CASES

Burbage v. Burbage, 447 S.W.3d 249 (Tex. 2014)……….……………………….13

Dynegy, Inc. v. Yates, 422 S.W.3d 638 (Tex. 2013)………………………………13

City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005)……………………….14, 17

Ford Motor Co. v. Ridgway, 135 S.W.3d 598 (Tex. 2004)………………………..13

Young v. Ward, 917 S.W.2d 506 (Tex. App.—Waco, 10th Dist. 1996)…..15, 16, 17

Pitman v. Lightfoot, 937 S.W.2d 496 (Tex. App.—San Antonio 1996)…………...20

SBC Operations, Inc. v. Business Equation, Inc., 75 S.W.3d 462 (Tex. App.—San Antonio [4th Dist.] 2001)……………………………………………….16, 19

Berryman's South Fork, Inc. v. J. Baxter Brinkmann Int'l Corp., 418 S.W.3d 172 (Tex. App.—Dallas [5th Dist.] 2013)………………………………………13

STATUTES

TEX. BUS. & COM. CODE § 26.01……………………………………………...14, 15

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STATEMENT OF THE CASE1

The underlying suit is a breach of oral contract action filed on September 20,

2012 by Appellees Thomas and Catrina Christopher (hereafter “the Christophers”)

against Appellant Brian Simcoe. CR 1-4. Appellant filed his Original Answer on

October 5, 2012. CR 6-7. Appellant filed his First Amended Answer on October

24, 2012. CR 8-9. On June 5, 2013, Appellant filed his Second Amended Answer

and Petition to Joinder Third Party, joining Appellee Adria Simcoe, his ex-wife, as

a third-party defendant. CR 15-17. On August 16, 2013, Appellant filed his Second

Amended Answer and First Amended Petition to Join Third Party Defendant. CR

19-21. On February 11, 2014, Appellant filed his Third Amended Answer and

Second Amended Petition to Join Third Party Defendant. CR 23-25. The

Christophers filed their Second Amended Petition for Breach of Oral Contract and

For Promissory Estoppel on February 20, 2014. CR 26-30.

The final hearing of this matter was held on February 24, 2014, which

included Appellant’s motion to dismiss on the basis of the statute of frauds. CR 31.

The judgment was signed on July 9, 2014. CR 36-37.

Appellant timely filed a Motion for New Trial on August 7, 2014, and a First

Amended Motion for New Trial on September 9, 2014. CR 40-82; CR 83-129. The

1 In this Brief, the Clerk’s Record is cited as “CR,” and the Reporter’s Record from the hearing on February 24, 2014 is cited as “RR.”

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Motion for New Trial was denied after hearing on September 25, 2014. CR 130-

131. Appellant filed his Notice of Appeal on October 21, 2014. CR 132-134.

STATEMENT OF FACTS

In the summer of 2012, the Christophers’ daughter, Adria Simcoe, was

expecting her fourth child with her then-husband, Brian Simcoe. RR 43:13.

Desiring to help the Simcoe family, it is undisputed that the Christophers purchased

a 2010 Chrysler Town and Country (hereafter “the Van”) and a Jeep, intending for

these vehicles to be used by the growing Simcoe family. RR 37:11-15; 43:19-25. It

is undisputed that at the time the Van was purchased by the Christophers, the

Simcoes’ credit score precluded them from acquiring financing for the Van in their

own names. RR 12:23-25; 13:1-4. It is undisputed that the Christophers signed a

five-year note for the Van. RR 21:9-13. It is undisputed while the Van was in the

possession of the Simcoes, the Simcoes made the monthly payments for the Van.

RR 14:24-25; 15:1-5.

On February 21, 2012, Adria Simcoe filed for divorce. RR 51:15-20. Shortly

thereafter, Appellant returned the Van to the Christophers with a kind note

explaining that, in light of the pending divorce, he was no longer able to afford the

monthly payments. RR 16:6-13; 52:4-5. The Christophers had the Van repossessed

about one month later. RR 17:21-24. The Van was sold at auction, leaving a

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deficiency of $18,411.14, for which the Christophers were the named responsible

parties. RR 19:7-15.

The Simcoes’ Final Decree of Divorce was signed on November 5, 2013. RR

40:21-22. Nowhere in the decree is the Van mentioned as an asset or a liability of

the marital estate. CR 113-114; RR 80:21-25; 81:1-5. The Jeep was awarded to

Adria Simcoe. CR 113-114.

On September 20, 2012, the Christophers filed suit against Appellant, alleging

that he breached an oral contract whereby the Christophers were to obtain the Van

in their names and Appellant was to be responsible for all payments thereon. CR 1-

4. The Christophers sought to hold Appellant responsible for the entire amount of

the deficiency. Id. Appellant brought his ex-wife, Adria Simcoe, into the suit as a

third-party defendant, maintaining that if he was liable, she shared joint and several

liability with him as a responsible party to the alleged oral contract. CR 23-25.

At the final hearing on February 24, 2014, the Christophers alleged that the

Simcoes were obligated to make the monthly payments for the Van, regardless of

whether or not the Simcoes had possession of it. Compare RR 11:24-25; 12:1-2; RR

34:25; 35:1-4, with RR 60:18-22; RR 70:6-12. The Christophers further alleged that

they agreed to acquire the Van in their names, but that the Simcoes were obligated

to make all payments under the five year note or to refinance the vehicle into their

names once their credit so permitted. RR 20:17-18; RR 24:13-19; RR 28:10-19.

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Conversely, Appellant maintained that the Simcoes agreed only to make payments

for the Van for so long as they had possession of it. RR 60:18-22; RR 70:6-12. In

other words, according to Appellant, by returning the Van to the Christophers, the

Simcoes’ obligation to make payments ceased. RR 71:16-20. Appellant further

argued that the time for performance, based upon the five-year note signed by the

Christophers, was greater than one year. RR 67:22-25; 68:1-3. As such, the statute

of frauds barred enforcement of the oral agreement because it was not in writing nor

was it signed by the parties to be bound. RR 84:2-8.

At the conclusion of the hearing, the trial court found that the alleged oral

contract was taken outside of the statute of frauds “by virtue of the fact that [the Van]

could have been refinanced as the plan was to refinance as soon as Mr. Simcoe’s

credit improved.” RR at 85:17-21. Judgment was rendered against Appellant for

$18,411.14, and an additional $5,000.00 was awarded to the Christophers for their

attorney’s fees. RR 86:2-4: CR 36-37. No judgment was rendered against Appellee

Adria Simcoe. RR 86:5-15; CR 36-37.

Appellant timely filed a Motion for New Trial, and a hearing on said Motion

was held on September 11, 2014. CR 83-88. Appellant requested a new trial on the

grounds that there was no evidence the alleged oral agreement could be performed

or was intended to be performed within one year, and because Adria Simcoe

10

should’ve been held jointly and severally liable. Id. The trial court denied

Appellant’s Motion for New Trial and this appeal followed. CR 131-134.

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ISSUES PRESENTED

I. Whether the evidence is legally sufficient to support the trial court’s finding

that enforcement of the oral agreement was not barred by the statute of frauds.

II. Whether the evidence is legally sufficient to support the trial court’s judgment

solely against Appellant.

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SUMMARY OF THE ARGUMENTS

To be enforceable, the statute of frauds requires that a contract to answer for

the debt of another, like the one at issue in this case, be in writing and signed by the

party to be bound. It is undisputed that there was not a written and signed contract

between the Simcoes and the Christophers for the debt at issue. The statute of frauds

therefore barred enforceability of the alleged oral contract as a matter of law.

Performance of the alleged oral contract, whether by payment in full or

refinancing of the debt, was not to be completed within one year, according to the

tenor of the agreement and the understanding of the parties at the time the agreement

was allegedly made. Performance within one year could only have been possible

upon the occurrence of some merely fortuitous event. The evidence was legally

insufficient to support the trial court’s finding that the oral contract was enforceable

because of the One-Year Exception to the statute of frauds.

The undisputed evidence shows that both Appellant and Adria Simcoe were

parties to the oral contract at issue as promisors. The terms of the oral contract did

not differentiate or apportion liability between Appellant and Adria Simcoe.

Accordingly, the only theory of liability supported by the undisputed evidence

before the trial court was joint and several liability of both Appellant and Adria

Simcoe. There was legally insufficient evidence to support the trial court’s take-

nothing judgment with respect to Appellee Adria Simcoe.

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ARGUMENTS AND AUTHORITIES I. Whether the evidence is legally sufficient to support the trial court’s

finding that enforcement of the oral agreement was not barred by the

statute of frauds.

Standard of review

Whether a contract comes within the statute of frauds is a question of law,

which is reviewed de novo. Dynegy, Inc. v. Yates, 422 S.W.3d 638, 642 (Tex. 2013).

Whether the circumstances of a particular case fall within an exception to the statute

of frauds is generally a question of fact. Berryman's South Fork, Inc. v. J. Baxter

Brinkmann Int'l Corp., 418 S.W.3d 172, 192 (Tex. App.—Dallas [5th Dist.] 2013).

For an issue where the opposing party bears the burden of proof, a legal-

sufficiency challenge to an adverse finding will be sustained if the evidence

demonstrates a complete absence of a vital fact, or if the evidence offered is no more

than a scintilla. Burbage v. Burbage, 447 S.W.3d 249, 259 (Tex. 2014). More than

a scintilla exists when the evidence would enable reasonable and fair-minded people

to reach different conclusions. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601

(Tex. 2004). Evidence that creates a mere surmise or suspicion of a vital fact is to

be regarded as, in legal effect, no evidence. Id. The reviewing court should consider

the evidence in the light most favorable to the judgment, “crediting favorable

evidence if reasonable jurors could, and disregarding contrary evidence unless

14

reasonable jurors could not.” City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex.

2005). In conducting a legal sufficiency review, the Court cannot disregard

undisputed evidence that allows of only one logical inference. Id. at 814.

The statute of frauds barred enforcement of the alleged oral contract as a matter of

law.

The statute of frauds, as codified in Section 26.01 of the Texas Business and

Commerce Code, applies to “a promise by one person to answer for the debt, default,

or miscarriage of another person.” TEX. BUS. & COM. CODE § 26.01(b)(2).

Enforceability of such promises or agreements is barred as a matter of law unless

they are “(1) in writing; and (2) signed by the person to be charged with the promise

or agreement or by someone lawfully authorized to sign for him.” TEX. BUS. & COM.

CODE § 26.01(a).

The oral contract at issue in the present case falls within the purview of the

statute of frauds because the Simcoes allegedly agreed to answer for the debt of the

Christophers. See RR 12:23-25; 13:1-4. Accordingly, in order to be enforceable,

the statute of frauds required that this contract be in writing and signed by the

Simcoes. It is undisputed that there was not a written and signed contract between

the Simcoes and the Christophers for the debt at issue. RR 21:6-8; 52:6-9. The

statute of frauds therefore barred enforceability of the oral contract as a matter of

law.

15

In order to enforce the purported oral contract, the burden was on the Christophers

to show some exception to the statute of frauds.

At trial, the Christophers argued that an exception to the statute of frauds

applied in this case because performance of the oral contract could have been

completed within one year’s time (the “One-Year Exception”). RR 83:18-24. The

basis for the One-Year Exception is found in Section 26.01(b)(6) of the Texas

Business and Commerce Code, which states that the statute of frauds does not bar

enforcement of “an agreement which is not to be performed within one year from

the date of making the agreement.” The question for the trial court was whether the

alleged oral contract was to be performed within one year from the date the

agreement was made.

Calculation of the time for performance depends on the tenor of the agreement and

the understanding of the parties at the time the agreement is made, excluding merely

fortuitous events.

To determine the time for performance, the court simply compares the date

the oral agreement is made to the date when the performance under the oral

agreement is to be completed, and if there is a year or more in between them, a

writing is required to render the oral agreement enforceable. Young v. Ward, 917

S.W.2d 506, 508 (Tex. App.—Waco, 10th Dist. 1996). In the absence of a known

date when performance will be completed, the statute of frauds does not apply if

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performance could conceivably be completed within one year of the agreement’s

making. Id. at 509. Whether performance could conceivably be completed within

one year depends on the tenor of the agreement and the understanding of the parties

at the time the agreement is made. Id. If performance within one year is dependent

upon some merely fortuitous event, a writing is required to enforce the oral

agreement. Id. at 510–511. If a contract explicitly calls for performance over a

period longer than one year, the mere theoretical possibility of termination of the

contract within one year because of a fortuitous event does not take the contract out

of the statute of frauds. SBC Operations, Inc. v. Business Equation, Inc., 75 S.W.3d

462, 466 (Tex. App.—San Antonio [4th Dist.] 2001).

The parties disputed what type of performance was required of the Simcoes under

the oral contract.

In the instant case, the parties presented conflicting testimony as to what type

of performance was required of the Simcoes under the oral agreement. Appellant

testified that the Simcoes were only required to make payments for so long as they

had possession of the Van. RR 70:6-12; 71:16-20. The Christophers maintained

that performance would be completed when the Simcoes paid all monthly

installment payments for the Van owing under the finance agreement signed by the

Christophers, or, alternatively, when the Simcoes’ credit improved and they

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qualified to refinance the Van into their own names. RR 20:17-18; 24:13-19; 34:25;

35:1-4.

If the parties to an oral contract testify to conflicting terms, a reviewing court

must presume the terms were those asserted by the winner. City of Keller, 168

S.W.3d at 819. Accordingly, the reviewing court must presume that performance

under the oral contract at issue was complete either upon payment of the debt in full

by the Simcoes (“Payment Performance”), or refinance of the debt into the Simcoes’

names (“Refinance Performance”).

At trial the Christophers bore the burden of proving that either Payment

Performance or Refinance Performance could have been completed within one year

in order to enforce the oral contract under the One-Year Exception to the statute of

frauds. The proper analysis for the trial court was whether the Christophers

presented sufficient evidence to show that performance could conceivably be

completed within one year of the agreement’s making, based upon the tenor of the

agreement and the understanding of the parties, and excluding the possibility of

some merely fortuitous event. See Young, 917 S.W.2d at 510–511.

The evidence is legally insufficient to show that Payment Performance could have

been completed within one year of the making of the oral contract.

The only evidence presented to the trial court reflecting the time for

completion of Payment Performance was the note signed by the Christophers. RR

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21:9-13; 36:1-5. By the express term of that note, there was indeed a known date

when Payment Performance was to be completed. Payment Performance would be

completed after five years of monthly installment payments. Id.

In conducting a legal sufficiency review, the Court cannot disregard

undisputed evidence that allows of only one logical inference. City of Keller v.

Wilson, 168 S.W.3d at 814. In the instant case, the only logical inference to be made

from the undisputed evidence presented to the trial court was that Payment

Performance was not to be completed within one year. While there may be some

conceivable possibility that the Simcoes could have paid off the Van within one year,

no evidence was presented at trial showing that was the tenor of the oral agreement

or the understanding of the parties at the time the oral agreement was made. No

evidence was presented to the trial court indicating the Christophers expected the

Simcoes to pay off the Van within one year. To the contrary, the evidence presented

to the trial court indicated that the Christophers knew that the Simcoes were

struggling financially, and could not afford to pay off the Van within one year. RR

67:22-25; 68:1-3. Completion of Payment Performance within one year could only

have been possible upon the occurrence of a merely fortuitous event that transformed

the financial circumstances of the Simcoe family.

The evidence further demonstrated that the Simcoes actually made payments

for the Van for over a year, with no complaint from the Christophers or request that

19

they pay the Van off in full. RR 14:24-25; 15:1-5. The fact that over a year lapsed

without completion of performance demonstrates that the parties never intended for

the Simcoes to pay off the Van in full within a year.

Because the written finance agreement was for a five year term and

completion of Payment Performance within one year was only possible upon the

occurrence of a merely fortuitous event, the One-Year Exception does not apply and

the statute of frauds was a complete bar to enforcement of the oral agreement in this

case. See SBC Operations, Inc., 75 S.W.3d at 466.

The evidence is legally insufficient to support the trial court’s finding that Refinance

Performance could conceivably have been completed within one year of the making

of the oral agreement.

The trial court enforced the oral contract against Appellant, finding that

Refinance Performance of the oral contract was to be completed within one year.

RR 85:15-21. Even considering the evidence in the light most favorable to the

judgment, there is no evidence to support the trial court’s finding “that [the Van]

could have been refinanced” within a year of the agreement’s making. RR at 85:17-

21. No evidence was presented at trial to show whether the Simcoes qualified to

refinance the Van into their names within a year after the alleged oral agreement was

made. Further, there was no evidence that it was the tenor of the agreement or the

understanding of the parties at the time the agreement was made that the Simcoes

20

would refinance the Van within one year. No evidence was presented that the

Christophers asked the Simcoes to refinance within one year. No evidence was

presented that the Simcoes even attempted to refinance within one year.

Absent any evidence that Refinance Performance could have been or was to

be completed within one year, the evidence is legally insufficient to support the trial

court’s finding that the One Year Exception applied to the alleged oral contract at

issue. Enforcement of the oral contract was barred by the statute of frauds as a matter

of law.

II. Whether the evidence is legally sufficient to support the trial court’s judgment

solely against Appellant.

Joint and several liability usually arises when two or more promisors in the

same contract promise the same or different performances to the same promisee.

Pitman v. Lightfoot, 937 S.W.2d 496, 528 (Tex. App.—San Antonio 1996).

Obligations of multiple parties to a contract are usually joint and several. Id.

The undisputed evidence showed that both Appellant and Adria Simcoe were liable

under the alleged oral contract.

The undisputed evidence presented to the trial court showed that, under the

terms of the alleged oral contract sued upon, both Appellant and his then-wife,

Appellee Adria Simcoe, orally promised the Christophers to pay for the Van. RR

34:25; 35:1-4; 35:11-16; 43:19-25; 50:16-21. Evidence was presented that during

21

the divorce of Appellant and Adria Simcoe, the Jeep was awarded to Adria Simcoe

and Appellant was asked to take the Van and assume all payments therefore. RR

45:7-16.35:11-16. The evidence further demonstrated that Appellant could not

afford to assume the Van payments individually, prompting him to return the Van to

the Christophers. RR 63:17-20.

The oral contract that the Christophers sued upon was allegedly made on that

date when the Christophers acquired the Van. RR 14:24-25; 27:22. Regardless of

whatever subsequent negotiation or agreement was allegedly made regarding the

vehicles upon the divorce of Appellant and Adria Simcoe, the terms of the oral

contract as they stood on June 30, 2010 are controlling.

It is undisputed that both Appellant and Adria Simcoe were parties to the oral

contract as promisors. The terms of the oral contract did not differentiate or

apportion liability between Appellant and Adria Simcoe. See RR 50:16-21.

Accordingly, the only theory of liability supported by the undisputed evidence

before the trial court was joint and several liability of both Appellant and Adria

Simcoe. See Pitman, 937 S.W.2d at 528. There was legally insufficient evidence to

support the trial court’s take-nothing judgment with respect to Appellee Adria

Simcoe. RR 86:5-14.

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CONCLUSION

The undisputed evidence before the trial court was that the contract the

Christophers sued on was not in writing or signed by the Christophers. It was

therefore unenforceable under the statute of frauds. There was no evidence

presented to the trial court to show that the Simcoes were to refinance the Van within

one year. The evidence is therefore factually insufficient evidence to support the

trial court’s finding that the oral contract was enforceable under the One Year

Exception to the statute of frauds.

The undisputed evidence shows that both Appellant and Adria Simcoe were

parties to the oral contract at issue as promisors. The terms of the oral contract did

not differentiate or apportion liability between Appellant and Adria Simcoe.

Accordingly, the only theory of liability supported by the undisputed evidence

before the trial court was joint and several liability of both Appellant and Adria

Simcoe. There was legally insufficient evidence to support the trial court’s take-

nothing judgment with respect to Appellee Adria Simcoe.

PRAYER

Appellant Brian Simcoe respectfully prays this Court grant his appeal, and

hold that enforcement of the oral contract is barred by the statue of frauds. Appellant

further prays that this Court reverse the judgment of the trial court, and render

judgment that Appellees, the Christophers, take nothing against him by way of their

23

claims. Appellant prays that, in the alternative, this Court reverse the judgment of

the trial court, and render judgment holding Appellee Adria Simcoe jointly and

severally liable for all damages and attorney’s fees awarded to Appellees, the

Christophers. Appellant further prays for all other and further relief to which he may

be entitled.

Respectfully Submitted,

/s/ Sarah Anne Lishman Sarah Anne Lishman State Bar No. 24086267 Jamie L. Graham State Bar No. 24027335 JAMIE GRAHAM & ASSOCIATES, PLLC 310 S. St. Mary’s St., Suite 845 San Antonio, Texas 78205 Tel. (210) 308-6448 Fax (210) 308-5669

Certificate of Compliance

I certify that the Brief of Appellant is in compliance with the Texas Rules of

Appellate Procedure with respect to its word count, containing approximately 3,345

words.

/s/ Sarah Anne Lishman Sarah Anne Lishman State Bar No. 24086267 Attorney for Appellant, Brian Simcoe

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Certificate of Service

I certify that a true copy of this Brief of Appellant was served in accordance

with rule 9.5 of the Texas Rules of Appellate Procedure on each party or that party's

lead counsel on February 20, 2015 as follows:

Party: Thomas Christopher Lead attorney: James A. Rodriguez Address of service: 540 S. St. Mary’s St.

San Antonio, Texas 78205

Method of service: Via Facsimile: (210) 224-8214 Date of service: February 20, 2015

Party: Catrina Christopher Lead attorney: James A. Rodriguez Address of service: 540 S. St. Mary’s St.

San Antonio, Texas 78205

Method of service: Via Facsimile: (210) 224-8214 Date of service: February 20, 2015

Party: Adria Joy Simcoe Address of service: 115 Osprey Haven, San Antonio, Texas 78253 Method of service: Via First class mail and certified mail Date of service: February 20, 2015

/s/ Sarah Anne Lishman Sarah Anne Lishman State Bar No. 24086267 Attorney for Appellant, Brian C. Simcoe

25

APPENDIX

APPENDIX A: Judgment

APPENDIX B: Statutes

APPENDIX C: Cases

Appendix A: Judgment

Appendix B:

Statutes

Tex. Bus. & Com. Code § 26.01 This document is current through the 2013 3rd Called Session Texas Statutes and Codes > BUSINESS AND COMMERCE CODE > TITLE 3. INSOLVENCY, FRAUDULENT TRANSFERS, AND FRAUD > CHAPTER 26. STATUTE OF FRAUDS

§ 26.01. Promise or Agreement Must Be in Writing (a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is (1) in writing; and (2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him.

(b) Subsection (a) of this section applies to:

(1) a promise by an executor or administrator to answer out of his own estate for any debt or damage due from his testator or intestate;

(2) a promise by one person to answer for the debt, default, or miscarriage of another person;

(3) an agreement made on consideration of marriage or on consideration of nonmarital conjugal cohabitation;

(4) a contract for the sale of real estate; (5) a lease of real estate for a term longer than one year; (6) an agreement which is not to be performed within one year from the date of making the agreement;

(7) a promise or agreement to pay a commission for the sale or purchase of:

(A) an oil or gas mining lease; (B) an oil or gas royalty; (C) minerals; or (D) a mineral interest; and (8) an agreement, promise, contract, or warranty of cure relating to medical care or results thereof made by a physician or health care provider as defined in Section 74.001, Civil Practice and Remedies Code. This section shall not apply to pharmacists.

History

Enacted by Acts 1967, 60th Leg., ch. 785 (H.B. 293), § 1, effective September 1, 1967; am. Acts 1977, 65th Leg., ch. 817 (H.B. 1048), § 21.01, effective August 29, 1977; am.

Jamie Graham

Tex. Bus. & Com. Code § 26.01

Acts 1987, 70th Leg., ch. 551 (S.B. 281), § 1, effective August 31, 1987; am. Acts 2005, 79th Leg., ch. 187 (H.B. 735), § 1, effective September 1, 2005. LexisNexis ® Texas Annotated Statutes Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights reserved.

Appendix C:

Cases | | Positive As of: February 20, 2015 10:27 AM EST

Burbage v. Burbage Supreme Court of Texas

January 9, 2014, Argued; August 29, 2014, Opinion Delivered NO. 12-0563

Reporter 447 S.W.3d 249; 2014 Tex. LEXIS 753; 57 Tex. Sup. J. 1303; 2014 WL 4252274 ALLEN CHADWICK BURBAGE, Case Summary PETITIONER AND CROSS-RESPONDENT, v. W. KIRK Overview BURBAGE AND BURBAGE FUNERAL HOLDINGS: [1]-In a defamation case HOME, RESPONDENTS AND arising from statements defendant made CROSS-PETITIONERS alleging plaintiff committed elder abuse, family abuse, and fraud, defendant failed Prior History: [**1] ON PETITION FOR to preserve error in the jury charge and the REVIEW FROM THE COURT OF reviewing court could not reach the issue APPEALS FOR THE THIRD DISTRICT of qualified privilege; [2]-There was no OF TEXAS. evidence to support the compensatory Burbage v. Burbage, 447 S.W.3d 291, 2011 damage award, and the award of exemplary Tex. App. LEXIS 10034 (Tex. App. Austin, damages could not stand; [3]-Only Dec. 21, 2011) speculative evidence supported the actual impact of the defamatory statements Core Terms plaintiff’s funeral home business; [4]-The trial court’s permanent injunction making damages, funeral home, trial court, a broad prohibition on defendant’s future qualified privilege, defamation, reputation, speech about plaintiff’s actions was an Questions, exemplary damages, court of impermissible prior restraint on free speech appeals, injunction, cemetery, jury award, in violation of U.S. Const. amend. I. defamatory, preservation, broad-form, jury’s, evidence supports, mental anguish, Outcome no evidence, privileged, estimate, funeral, Affirmed in part; and reversed in part. invalid, compensatory damages, LexisNexis® Headnotes

defamatory statement, specific objection, special damage, jury charge, compensate, Governments > Courts > Common Law cancelled Torts > ... > Defenses > Privileges > Qualified Privileges

Jamie Graham

447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1

Governments > Courts > Common Law privileged publication unless the plaintiff’s Torts > ... > Defenses > Privileges > petition affirmatively demonstrates Qualified Privileges privilege. If a defendant establishes the privilege, the burden shifts to the plaintiff HN1 The common law provides a qualified to prove that the defendant made the privilege against defamation liability when statements with actual malice. Actual a communication is made in good faith and malice, in the defamation context, means the author, the recipient or a third person, or one of their family members, has an the making of a statement with knowledge interest that is sufficiently affected by the that it is false, or with reckless disregard of communication. Defamation actions whether it is true. necessarily inhibit free speech and, thus, Torts > ... > Defenses > Privileges > the qualified privilege offers an additional Qualified Privileges

safeguard, even in cases of private, non-political speech. Torts > ... > Defenses > Privileges > Qualified Privileges

Torts > ... > Defenses > Privileges > Qualified Privileges HN3 In a defamation action, qualified privilege presents a question of law when Evidence > Burdens of Proof > Burden the statements at issue employ Shifting unambiguous language and where the facts Civil Procedure > ... > Defenses, Demurrers and circumstances of publication are & Objections > Affirmative Defenses > undisputed. General Overview Civil Procedure > Appeals > Reviewability Torts > ... > Defamation > Public Figures > of Lower Court Decisions > Preservation Actual Malice for Review

Torts > ... > Defenses > Privileges > Civil Procedure > ... > Jury Trials > Jury Qualified Privileges Instructions > Objections Evidence > Burdens of Proof > Burden Civil Procedure > Appeals > Reviewability Shifting of Lower Court Decisions > Preservation Civil Procedure > ... > Defenses, Demurrers for Review & Objections > Affirmative Defenses > Civil Procedure > ... > Jury Trials > Jury General Overview Instructions > Objections Torts > ... > Defamation > Public Figures > Actual Malice HN4 Any complaint to a jury charge is waived unless specifically included in an HN2 In a defamation action, the qualified objection. privilege operates as an affirmative defense in the nature of confession and avoidance; Civil Procedure > ... > Jury Trials > Jury the defendant bears the burden of proving Instructions > General Overview

447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1

Civil Procedure > ... > Jury Trials > Jury the trial court and must point out distinctly Instructions > General Overview the objectionable matter and the grounds HN5 It is fundamental to the system of of the objection. Tex. R. Civ. P. 274; Tex. R. justice that parties have the right to be App. P. 33.1. Under Tex. R. Civ. P. 274, any judged by a jury properly instructed in the complaint as to a question, definition, or law. instruction, on account of any defect, omission, or fault in pleading, is waived Civil Procedure > ... > Jury Trials > Jury unless specifically included in the Instructions > General Overview objections. Tex. R. Civ. P. 274. Civil Procedure > Remedies > Damages > General Overview Civil Procedure > Appeals > Reviewability of Lower Court Decisions > Preservation Civil Procedure > Appeals > Standards of Review > Reversible Errors for Review

Civil Procedure > ... > Jury Trials > Jury Civil Procedure > Appeals > Reviewability Instructions > General Overview of Lower Court Decisions > Preservation for Review

Civil Procedure > Remedies > Damages > General Overview HN8 Preservation requires (1) a timely Civil Procedure > Appeals > Standards of objection stating the grounds for the ruling Review > Reversible Errors that the complaining party sought from the trial court with sufficient specificity to HN6 A broad-form damages submission make the trial court aware of the complaint, mixing valid and invalid elements of unless the specific grounds were apparent damages creates harmful error.

from the context; and (2) a ruling. Tex. R.

Civil Procedure > Appeals > Reviewability App. P. 33.1. The test ultimately asks of Lower Court Decisions > Preservation whether the party made the trial court for Review aware of the complaint, timely and plainly, Civil Procedure > ... > Jury Trials > Jury and obtained a ruling. Instructions > Objections Civil Procedure > ... > Jury Trials > Jury Civil Procedure > Appeals > Reviewability Instructions > Objections of Lower Court Decisions > Preservation for Review Civil Procedure > ... > Jury Trials > Jury Instructions > Objections Civil Procedure > ... > Jury Trials > Jury Instructions > Objections HN9 Only by proper objection does a litigant afford the trial court sufficient HN7 The Texas Rules of Civil Procedure opportunity to correct defects in the charge. establish the preservation requirements to raise a jury-charge complaint on appeal. Civil Procedure > Appeals > General The complaining party must object before Overview

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Governments > Courts > Rule Application fact, or if the evidence offered is no more & Interpretation than a scintilla. More than a scintilla exists Civil Procedure > Appeals > General when the evidence would enable reasonable Overview and fair-minded people to reach different Governments > Courts > Rule Application conclusions. The appellate court regards & Interpretation evidence that creates a mere surmise or suspicion of a vital fact as, in legal effect, HN10 The court construes procedural rules no evidence. The appellate court considers liberally so that the right to appeal is not the evidence in the light most favorable to lost unnecessarily. the judgment, crediting favorable evidence if reasonable jurors could, and disregarding Civil Procedure > Appeals > Reviewability of Lower Court Decisions > Preservation contrary evidence unless reasonable jurors for Review could not. Civil Procedure > Appeals > Reviewability Evidence > Inferences & Presumptions > of Lower Court Decisions > Preservation Presumptions for Review Torts > ... > Defamation > Remedies > HN11 When an objection fails to explain Damages the nature of the error, the appellate court Civil Procedure > Remedies > Damages > cannot make assumptions. General Damages Civil Procedure > ... > Standards of Torts > Intentional Torts > Defamation > Review > Substantial Evidence > Defamation Per Se Sufficiency of Evidence Torts > ... > Damages > Types of Damages > Evidence > Burdens of Proof > Allocation Nominal Damages Evidence > Weight & Sufficiency Evidence > Inferences & Presumptions > Presumptions

Civil Procedure > ... > Standards of Review > Substantial Evidence > Torts > ... > Defamation > Remedies > Sufficiency of Evidence Damages Evidence > Burdens of Proof > Allocation Civil Procedure > Remedies > Damages > General Damages

Evidence > Weight & Sufficiency Torts > Intentional Torts > Defamation > HN12 The legal sufficiency review Defamation Per Se standards are well established. On an issue Torts > ... > Damages > Types of Damages > where the opposing party bears the burden Nominal Damages

of proof, the appellate court sustains a legal sufficiency challenge to an adverse HN13 Texas law presumes that defamatory finding if a review of the evidence per se statements cause reputational harm demonstrates a complete absence of a vital and entitle a plaintiff to general damages

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such as loss of reputation and mental demanding standard than knowledge of anguish. But this presumption yields only falsity or reckless disregard for the truth nominal damages. Beyond nominal may recover only such damages as are damages, the appellate court reviews sufficient to compensate him for actual presumed damages for evidentiary support. injury.

Civil Procedure > Remedies > Damages > Civil Procedure > ... > Standards of General Overview Review > Substantial Evidence > Civil Procedure > Trials > Jury Trials > Sufficiency of Evidence General Overview Civil Procedure > ... > Jury Trials > Jury Civil Procedure > ... > Standards of Instructions > General Overview Review > Substantial Evidence > Civil Procedure > Remedies > Damages > Sufficiency of Evidence General Damages Civil Procedure > Remedies > Damages > Civil Procedure > ... > Standards of General Overview Review > Substantial Evidence > Civil Procedure > Trials > Jury Trials > Sufficiency of Evidence General Overview Civil Procedure > ... > Jury Trials > Jury Civil Procedure > ... > Standards of Instructions > General Overview Review > Substantial Evidence > Civil Procedure > Remedies > Damages > Sufficiency of Evidence General Damages

HN16 The jury charge sets the standard for HN14 In addition to the legal sufficiency of evidence, the Supreme Court of Texas reviewing whether the evidence is legally sufficient to support the damages awarded.

has recognized an imperative that appellate courts determine whether any evidence It is the court’s charge, not some other supports the amount of jury damages. unidentified law, that measures the sufficiency of the evidence when the Torts > ... > Defamation > Remedies > opposing party fails to object to the charge. Damages Torts > ... > Types of Damages > Evidence > Types of Evidence > Compensatory Damages > General Circumstantial Evidence Overview Evidence > Inferences & Presumptions > Torts > ... > Defamation > Remedies > Inferences Damages Civil Procedure > Trials > Jury Trials > Torts > ... > Types of Damages > Province of Court & Jury Compensatory Damages > General Evidence > Types of Evidence > Overview Circumstantial Evidence HN15 The private defamation plaintiff Evidence > Inferences & Presumptions > who establishes liability under a less Inferences

447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1

Civil Procedure > Trials > Jury Trials > For Burbage, Allen Chadwick, Petitioner: Province of Court & Jury James J. Scheske, James J. Scheske, PLLC, Austin, TX; Jason P. Steed, Bell Nunnally HN17 A jury may not reasonably infer an & Martin LLP, Dallas, TX; Peter D. ultimate fact from meager circumstantial Kennedy, William Gerow Christian, Graves evidence which could give rise to any Dougherty Hearon & Moody PC, Austin, number of inferences, none more probable TX. than another.

For Burbage, W. Kirk, Respondent:

Civil Procedure > Remedies > Damages > Gregory Scott Cagle, Savrick, Schumann, Punitive Damages Johnson, McGarr Kaminski & Shirley, LLP, Civil Procedure > Remedies > Damages > Austin, TX. Punitive Damages Judges: JUSTICE GREEN delivered the HN18 A party may not recover exemplary opinion of the Court. damages unless the plaintiff establishes actual damages. Opinion by: Paul W. Green

Civil Procedure > Remedies > Injunctions > Opinion General Overview [*252] In this defamation case, a jury Constitutional Law > ... > Fundamental assessed compensatory and exemplary Freedoms > Judicial & Legislative damages against Allen Chadwick Burbage Restraints > Prior Restraint (Chad) for ten statements defaming his Civil Procedure > Remedies > Injunctions > brother, W. Kirk Burbage (Kirk). The trial General Overview court also permanently enjoined Chad from making similar statements. We are Constitutional Law > ... > Fundamental presented with three issues: (1) whether Freedoms > Judicial & Legislative any defamatory statements fell within a Restraints > Prior Restraint qualified privilege; (2) whether evidence HN19 Prohibitive injunctions of future supports the jury’s damage awards; and (3) speech that is the same or similar to speech whether the trial court abused its discretion that has been adjudicated to be defamatory by issuing the permanent injunction. operate as impermissible prior restraints Because we hold that Chad failed to on free speech. preserve error in the charge, we do not reach the issue of qualified privilege. We Counsel: For Electronic Frontier also hold that the permanent injunction Foundation, Amicus Curiae: David Greene, operates as an impermissible prior restraint Electronic Frontier Foundation, San on freedom of speech. Accordingly, we Francisco, CA; Marc A. Fuller, Vinson & affirm those parts of the court of appeals’ Elkins LLP, Dallas, TX. judgment. But, on damages, we hold that

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no evidence supports the compensatory Chad and Patrice Burbage Lehmann damage award. We reverse that part of the wanted to sell, while Kirk and his brother, court of appeals’ judgment. Keith, demurred. Throughout 2006 and 2007, Chad exchanged heated emails with I. Factual and Procedural Background Kirk’s attorney. In late 2007 and early Kirk owns and operates the Burbage 2008, Chad created a website, Funeral Home, a centuries-old family www.annaburbage.org, to air his grievances business, [**2] in Worcester County, with Kirk. Chad placed several posters Maryland. Chad is Kirk’s older brother. around town to publicize the website. The Chad and Kirk’s grandmother, Anna website contained the following Burbage, managed the funeral home from allegations: her husband’s death in the 1940s until her • ″Anna Burbage (’Miss Anna’) was death in 1985. In her will, Anna left the a victim of Elder Abuse. The Abuser funeral home and all of its assets to Kirk. was her grandson, Kirk Burbage and Anna bequeathed the land for the Burbage others.″ family cemetery to her children, Richard [*253] • ″Virginia Burbage Burbage, Sr., Chad and Kirk’s father, and Markham was the principal of Jean Burbage Prettyman. Although Stephen Decatur High School primarily a family cemetery, Anna and serving northern Worcester County Richard gave permission for burial or Maryland. At the present time, she is entombment of several non-family being abused by her son, Kirk members. Richard died in 1991; in his Burbage, of the Burbage Funeral will, he left his 50% undivided interest in Home. She is currently a victim of the family cemetery property to Chad and ELDER as well as FAMILY Kirk’s mother, Virginia Burbage Markham, ABUSE.″ but the will was never probated. Virginia • ″The methods [of abuse] include:

conveyed this interest to Kirk by quitclaim lies, trespassing, grand larceny, will deed in 2003. Chad felt Kirk obtained the tampering/undue influence, gifts funeral home and the family cemetery with the intent to control his mother, interest through manipulation, first of Anna discrediting fellow siblings, and later of Virginia.

deceptively misrepresenting the Although the origin of the strife between contents of legal documents Chad and Kirk remains unclear, the ″Farm requiring the signature of the Property,″ a 23-acre tract that Virginia ABUSED for personal gain and to inherited from Richard in 1991, aggravated cover up land fraud and involving any existing discord. The potential sale of the ABUSED ELDER in Cemetery the property ultimately aligned Virginia’s Land Fraud implicating several four children against [**3] each other: families including [**4] Shirley and

447 S.W.3d 249, *253; 2014 Tex. LEXIS 753, **4

Brice Phillips of the Phillips Crab • ″Kirk Burbage did commit fraud.″ House.″ Kirk and the Burbage Funeral Home sued • ″Kirk Burbage has also been known Chad for defamation [**5] in Bastrop to abuse the dead, specifically his County.1 Chad appeared pro se. The trial cousin, Anne Prettyman Jones.″ court submitted ten questions—one for each of the statements reproduced Chad also sent letters to Shirley and Brice above—asking the jury whether Chad had Phillips, family friends of the Burbages proven that the statements were who had earlier obtained permission to substantially true. The jury answered ″no″ place a mausoleum in the Burbage to all questions. The court also asked cemetery. The letters espoused a common questions on compensatory and exemplary interest in settling property rights to the damages for Kirk and, separately, for the cemetery but stated, ″You currently have Burbage Funeral Home. The court no title or right to be in the Burbage instructed the jury that all statements were Family Cemetery.″ Chad made the defamatory per se because each statement following statements in the letters: either leveled a criminal charge or tended • ″Kirk Burbage has committed to cause injury to the funeral home’s numerous abuses to family business or to Kirk’s profession. The jury members.″ awarded Kirk $6,552,000: $250,000 for past injury to reputation; $2,500,000 for • ″We are the victims of the selfish, future injury to reputation; $1,000 for past greedy and unlawful actions of Kirk mental anguish; $1,000 for future mental Burbage.″ anguish; and $3,800,000 in exemplary • ″Kirk Burbage of the Burbage damages. The jury awarded the Burbage Funeral Home with the assistance of Funeral Home $3,050,000: $50,000 for his attorney Robert McIntosh have past injury to reputation; $1,000,000 for fraudulently misrepresented rights future injury to reputation; and $2,000,000 which Kirk Burbage does not have . in exemplary damages. The trial court also . . .″ permanently enjoined Chad from future • ″Kirk Burbage fraudulently defamatory speech in a four-page list of obtained a Quit Claim [deed] from prohibited topics (tied to the ten defamatory our mother by what is believed to be statements). elder abuse . . . .″ [*254] Chad appealed. The court of • ″Kirk Burbage and the Burbage appeals reduced the exemplary damages to Funeral Home violated Maryland $750,000 under Texas Civil Practice and law by not having a license to Remedies Code section 41.008(b), upheld operate a cemetery . . . .″ the other damage awards, and vacated the 1 Chad was a resident of Bastrop County, Texas at the time [**6] the lawsuit was filed. See TEX. CIV. PRAC. & REM. CODE § 15.017.

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injunction. 447 S.W.3d 291, 303, 2011 Tex. a defendant establishes the privilege, the App. LEXIS 10034, *25 (Tex. App.—Austin burden shifts to the plaintiff to prove that 2011, pet. granted) (mem. op.). Each party the defendant made the statements with petitioned for review; we granted both actual malice. Dun & Bradstreet, Inc. v. petitions. 57 Tex. Sup. Ct. J. 38 (Nov. 1, O’Neil, 456 S.W.2d 896, 898 (Tex. 1970). 2013). Actual malice, in the defamation context, means ″the making of a statement with II. Qualified Privilege and Charge Error knowledge that it is false, or with reckless We first address Chad’s contention that disregard of whether it is true.″ Hagler v. qualified privilege barred Kirk’s recovery Proctor & Gamble Mfg. Co., 884 S.W.2d based on Chad’s defamatory statements to 771, 772 (Tex. 1994) (per curiam). HN3 the Phillipses. If Chad’s statements were Qualified privilege presents a question of privileged, the jury’s answers on damages law when the statements at issue employ would rest upon invalidly submitted unambiguous language and where the facts theories of liability. We hold that, even if and circumstances of publication are the privilege applied, Chad failed to undisputed. Fitzjarrald v. Panhandle Pub. preserve jury charge error on this point. Co., 149 Tex. 87, 228 S.W.2d 499, 505 (Tex. 1950).

A. Chad’s Qualified Privilege Claim Of the ten statements that the trial court HN1 The common law provides a qualified found defamatory per se, Chad made six of privilege against defamation liability when those statements in letters to the Phillipses, ″communication is made in good faith and while four appeared on the web site or the author, the recipient or a third person, posters. Chad argues that a qualified or one of their family members, has an privilege protects his communication with interest that is sufficiently affected by the the Phillipses because both he and they communication.″ Cain v. Hearst Corp., had an interest ″sufficiently affected by the 878 S.W.2d 577, 582 (Tex. 1994). We have communication.″ The Phillipses obviously recognized that defamation actions had an interest, Chad suggests, in whether necessarily inhibit free speech and, thus, Kirk had the right to sell them a mausoleum the qualified privilege offers an additional and whether any other Burbage family safeguard, even in cases of private, members objected to interring [**8] the non-political speech. See id. HN2 The Phillipses at the family cemetery. Chad privilege operates as an affirmative defense contends that the court of appeals erred [**7] in the nature of confession and when it found the letter unprotected by the avoidance; the defendant bears the burden ″common-interest privilege″; specifically, of proving privileged publication unless Chad objects to the court of appeals’ the plaintiff’s petition affirmatively suggestion that ″antithetical″ interests demonstrates privilege. Denton Pub. Co. v. cannot form the basis for a qualified Boyd, 460 S.W.2d 881, 884 (Tex. 1970). If privilege. 2011 Tex. App. LEXIS 10034,

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2011 WL 6756979, at *9. While the court potentially privileged statements because of appeals seized on the ″common-interest″ he ″did not object in the trial court to the language, which Chad sometimes used in submission of broad-form damages briefing, our case law identifies the questions.″ S.W. 3d at (citing In re affirmative defense at issue here as B.L.D., 113 S.W.3d at 349). In In re B.L.D., qualified privilege.2 we held that the court of appeals erred by reviewing a jury charge complaint when [*255] The trial court submitted the ten the parties did not object at trial to the form statements—four unprivileged and six of submission. 113 S.W.3d at 349, 355. potentially privileged—for the jury to Chad suggests that this case differs because determine if each statement was he raised an objection on qualified substantially true at the time it was made. privilege, which preserved [**10] error in On damages, [**9] the trial court submitted any derivative damages question. Kirk broad-form questions that incorporated the responds that Chad must specifically object jury’s answers for all ten statements. If the to the damages question’s form, not merely qualified privilege applied to any to the underlying liability issue. Kirk statements, then, the broad-form damages further argues that even Chad’s qualified questions incorporated both valid and privilege objection failed to preserve error.

invalid bases for liability. Such commingling may result in harmful error. 1. Charge Error Based on Valid and Cf. Crown Life Ins. Co. v. Casteel, 22 Invalid Liability Theories S.W.3d 378, 388 (Tex. 2000) (reversing for new trial due to erroneous commingling of HN5 ″It is fundamental to our system of valid and invalid liability theories in a justice that parties have the right to be single broad-form liability question). To judged by a jury properly instructed in the obtain reversal due to such a charge error,law.″ Casteel, 22 S.W.3d at 388. Thus, in Chad must have preserved the error at trial.

Casteel, we required a new trial when a In re B.L.D., 113 S.W.3d 340, 349 (Tex. timely and specific objection preserved the 2003) (″HN4 [A]ny complaint to a jury issue of erroneous commingling of valid charge is waived unless specifically and invalid theories of liability in a included in an objection.″). We now turn tobroad-form liability question, such that the this preservation question. appellate court could not determine whether the jury based its verdict on an improperly B. Preservation of Charge Error submitted theory. Id. (citing TEX. R. APP. P.

The court of appeals held that Chad waived 61.1). Extending this principle in Harris any claim of error in the submission of County v. Smith, 96 S.W.3d 230, 234 (Tex. 2 Compare Cain, 878 S.W.2d at 582 (privileging communication when made ″in good faith and the author, the recipient or a third person, or one of their family members, has an interest that is sufficiently affected by the communication″), with RESTATEMENT (SECOND) OF TORTS § 596 (1977) (describing the common-interest privilege, which arises when ″circumstances lead any one of several persons having a common interest in a particular subject matter correctly or reasonably to believe that there is information that another sharing the common interest is entitled to know″).

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2002), we determined that HN6 a bypassing the crucial step of allowing the broad-form damages submission mixing trial judge to correct any errors in the valid and invalid elements of damages charge. created the same type of harmful error.

In Romero, we declined to address whether And in Romero v. KPH Consolidation, the appellant must object both to the lack Inc., 166 S.W.3d 212, 225 (Tex. 2005), of evidence to support submission [**12]

where evidence supported the jury’s of a jury question and the form of the negligence finding but not its malicious submission, because in that case the credentialing finding, we held that the trial appellant did both. 166 S.W.3d at 229 & court committed harmful error by n.55 (acknowledging the difficult question submitting an apportionment question of whether an additional broad-form which allowed the jury to consider objection is required) (citing Pan E. malicious [**11] credentialing. We Exploration Co. v. Hufo Oils, 855 F.2d explained that ″[e]ven if the jury could still 1106, 1124 (5th Cir. 1988)). But whether or have made the same apportionment of not an objection to both is required, some fault [without considering malicious timely and specific objection must raise credentialing], the error in the question is the issue in the trial court. See Thota v. nevertheless reversible because it Young, 366 S.W.3d 678, 691 (Tex. 2012) effectively prevents [the appellant] from (requiring ″some objection to the charge,″ complaining [*256] on appeal that they whether to evidentiary support or to form, would not have done so.″ Id. at 226. to preserve error for appellate review). We continue to adhere to these principles. Here, Chad objected based on qualified Yet in addition to the common animating privilege, but he made no objection to the principle of properly instructing the jury in form of submission. If Chad’s initial the law, these cases share another link: objection on qualified privilege did not some timely and specific objection. preserve error, we need not address whether Romero, 166 S.W.3d at 229; Harris Cnty., a further Casteel-type objection is required. 96 S.W.3d at 232; Casteel, 22 S.W.3d at 2. Specific Objections

387. In other words, in situations where a party does not raise a Casteel-type HN7 Our rules of procedure establish the objection, that party surely cannot raise a preservation requirements to raise a Casteel issue when it failed to preserve a jury-charge complaint on appeal. Id. at claim of an invalid theory of liability that 689. The complaining party must object forms the basis of a Casteel-type error. If before the trial court and ″must point out we allowed litigants to raise a Casteel distinctly the objectionable matter and the issue with no valid objection, either to grounds of the objection.″ TEX. R. CIV. P. liability or submission form, those litigants 274; see also TEX. R. APP. P. 33.1. Under could use a post-trial motion to raise a lack Rule of Civil Procedure 274, ″[a]ny of evidence on the liability question, thus complaint as to a question, definition, or

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instruction, on account of any defect, [*257] Mr. Cagle:3 I’m not sure if omission, or fault in pleading, is waived this is an objection. I apologize, unless specifically included in the Your Honor. But the matter of in the objections.″ TEX. R. CIV. P. 274. As [**13] amended-- defendant’s amended-- a general rule, HN8 preservation requires first amendment to the original (1) a timely objection ″stating the grounds response, defendant has requested for the ruling that the complaining party that there be a qualified privilege sought from the trial court with sufficient relative to the letter, and [**14] the specificity to make the trial court aware of reason for the qualified privilege is the complaint, unless the specific grounds it represents common interests, a were apparent from the context,″ and (2) a continuation of a prior judicial ruling. See TEX. R. APP. P. 33.1. Stated proceeding in Maryland and a differently, the test ultimately asks ″whether continuation of trying to resolve the party made the trial court aware of the matters of mutual concern between complaint, timely and plainly, and obtained the parties of the cemetery. a ruling.″ State Dep’t of Highways & Pub. The Court: All right. Do you have a Transp. v. Payne, 838 S.W.2d 235, 241 requested instruction that you’re (Tex. 1992). asking the Court to consider and to include in the charge?

Importantly, the ″purpose of Rule 274 is to Mr. A. Burbage: I have-- it seems as afford trial courts an opportunity to correct though it would-- it would require errors in the charge by requiring objections the-- a question in the line after-- both to clearly designate the error and to after you find that the statement explain the grounds for complaint.″ Wilgus inflammatory, then there would be a v. Bond, 730 S.W.2d 670, 672 (Tex. 1987); question do you find the statement see Payne, 838 S.W.2d at 243 (Mauzy, J., blah-blah-blah was false at the time dissenting) (″HN9 Only by proper it was made as it related to-- objection does a litigant afford the trial The Court: All right. Anything court sufficient opportunity to correct further on that? On that particular defects in the charge.″). We apply these issue is there anything further? rules to Chad’s objection.

Mr. A. Burbage: No. It was-- it’s 3. Chad’s Objection been mentioned in the testimony.

The Court: All right. The objection The following dialogue occurred at the is overruled. The requested formal charge conference: instruction is denied. 3 The record states that Mr. Cagle, Kirk’s attorney, initially made the objection. The reproduction in Kirk’s brief on the merits instead attributes the objection to Chad. Indeed, it makes more sense in context that Chad made the initial objection. We decline to attach importance to this potential record error [**15] because we find either objection insufficient to preserve error.

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Chad claims that the trial court erred in We note that when Chad wanted to object submitting liability questions on the to a specific question at the charge potentially privileged statements. conference, he did so. Before the objection Therefore, Chad’s objection needed to on qualified privilege at issue here, Chad communicate to the trial court that it was objected [**17] to Question 10 because it improper to submit Questions 5 through 10 duplicated elements of Questions 7 and 8. (on statements in the Phillips letters) to the The trial court initially sustained this jury. The objection does raise the subject objection (although it reversed that ruling of the qualified privilege. But, crucially, at the end of the charge conference). Chad’s the objection must apprise the trial court of objection to qualified privilege, in order to the error alleged such that the court has the preserve error, needed to distinctly raise opportunity to correct the problem. See the issue of withdrawing Questions 5 Wilgus, 730 S.W.2d at 672. When the trial through 10 from the jury. By its language, court asked Chad whether he had a it does not do this. And it would make little requested instruction, Chad responded only sense for Chad to raise an objection to with a request for a question that appears qualified privilege to eliminate Questions to address the falsity of the statements 5 through 10 when, only moments before, themselves. As Chad has argued, a qualified he eliminated Question 10 only because it privilege may still apply even when the was duplicative of Questions 7 and 8, not statements are false. See O’Neil, 456 S.W.2d because the Questions 7 and 8 were at 898. It is unclear what Chad hoped to improper to submit to the jury. With this in accomplish by requesting an additional mind, we cannot conclude that Chad’s question if he wanted the court to withhold intent to remove Questions 5 through 10 Question 5 through 10 from the jury.4 And was ″apparent from the context.″ TEX. R.

it is uncertain even to which questions APP. P. 31.4(a)(1). We hold that Chad’s Chad referred (presumably Questions 5 objection was insufficiently specific and through 10, but the word ″inflammatory,″ did not preserve his claim of error in the which Chad uses to describe the placement submission of Questions 5 through 10.

of his proposed question, [**16] appears nowhere in the charge). Quite simply, Chad Our procedural rules are technical, but not has not provided a specific objection trivial. HN10 We construe such rules indicating the alleged error in the charge liberally so that the right to appeal is not and allowing [*258] the trial court the lost unnecessarily. Arkoma Basin opportunity to correct the error. Exploration Co. v. FMF Assocs. 1990-A, 4 We cannot safely engage in assumptions about what Chad might have meant. Whether the statements were false and Chad knew of their falsity—compared with the jury’s actual finding that the statements were not substantially true—would have relevance to the question of whether Chad acted with actual malice. But the trial court gave the incorrect common law definition of malice, Chad did not object to the incorrect malice definition, and, as Chad argues, the burden on actual malice falls to Kirk, not Chad. Such a confusing objection, raised during the crucial charge conference, could not have apprised the trial judge that Chad objected to the submission of the offending questions. Chad explained his desire more coherently at a hearing on his request for findings of fact and conclusions of law, but at that point it was too late.

447 S.W.3d 249, *258; 2014 Tex. LEXIS 753, **17

Ltd., 249 S.W.3d 380, 388 (Tex. 2008). But III. Damages HN11 when an objection fails to explain the nature of the [**18] error, we cannot We next consider the jury’s compensatory make assumptions. Preservation of error and exemplary damage awards. The [**19] reflects important prudential considerations jury awarded Kirk and the Burbage Funeral recognizing that the judicial process Home $3,802,000 in compensatory benefits greatly when trial courts have the damages and $5,800,000 in exemplary opportunity to first consider and rule on damages, but the court of appeals reduced error. In re B.L.D., 113 S.W.3d at 350 exemplary damages to $750,000.5 After (citing In re C.O.S., 988 S.W.2d 760, 765 reviewing the record, we hold that no (Tex. 1999)). Affording courts this evidence supports the amount of opportunity conserves judicial resources compensatory [*259] damages and, and promotes fairness by ensuring that a consequently, exemplary damages cannot party does not neglect a complaint at trial stand. and raise it for the first time on appeal. Id.

A. Compensatory Damages

(citing Pirtle v. Gregory, 629 S.W.2d 919, 920 (Tex. 1982) (per curiam)). Nor may we Chad argues that the jury’s $3.8 million stray from these rules because Chad award lacks evidentiary support and offends represented himself at trial. See Mansfield the First Amendment. Specifically, Chad State Bank v. Cohn, 573 S.W.2d 181, 184-85 contends that the $3.5 million awarded for (Tex. 1978). future damages punishes Chad for his speech, rather than fairly compensates Kirk 4. Application for his injury. Kirk responds that Texas law Chad argues that the court impermissibly presumes damages for defamatory per se combined valid and invalid theories of statements and ample evidence supports liability when the broad-form damages the jury’s awards. Kirk suggests that question incorporated privileged trust-based businesses like funeral homes statements. Chad did not make a suffer greatly from the mere insinuation of Casteel-type objection to form; thus, to unseemly acts. Further, Kirk argues that preserve error, Chad must have raised non-media defendants like Chad fail to some specific objection to the submission present the same First Amendment concerns of Questions 5 through 10. See In re as media defendants.

B.L.D., 113 S.W.3d at 349-50 (holding that a complaint to a jury charge was waived HN12 Our legal-sufficiency review because it was not specifically included in standards are well established. On an issue an objection). He did not. Thus, we hold where the opposing party bears the burden that Chad’s failure to object waives his [**20] of proof, we sustain a right to complain of the charge on appeal. legal-sufficiency challenge to an adverse 5 Chad does not specifically challenge the $2,000 awarded as mental anguish damages. Therefore, we do not address those damages.

447 S.W.3d 249, *259; 2014 Tex. LEXIS 753, **20

finding if our review of the evidence defamation after a call-in talk show host demonstrates a complete absence of a vital repeatedly made on-air imputations of fact, or if the evidence offered is no more corruption. Id. at 566-67. The jury assessed than a scintilla. See Waste Mgmt. of Tex., $7 million in damages for mental anguish Inc. v. Tex. Disposal Sys. Landfill, Ltd., and $150,000 in reputation and character 434 S.W.3d 142, 156 (Tex. 2014). More damages. Id. at 605. We recognized that than a scintilla exists when the evidence the inherent difficulty in quantifying such would enable reasonable and fair-minded noneconomic damages necessarily allows people to reach different conclusions. Ford the jury latitude. Id. Yet this latitude has Motor Co. v. Ridgway, 135 S.W.3d 598, limits; latitude does not ″give [the jury] 601 (Tex. 2004). We regard evidence that carte blanche to do whatever it will, and creates a mere surmise or suspicion of a this is especially true in defamation actions vital fact as, in legal effect, no evidence. brought by public officials.″ Id. Even in a Id. We consider the evidence in the light case outside the realm of media defendants most favorable to the judgment, ″crediting and public officials, judicial review of jury favorable evidence if reasonable jurors discretion remains important to protect could, and disregarding contrary evidence free speech. See id. We must ensure that unless reasonable jurors could not.″ City of noneconomic damages compensate for Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. actual injuries and are not simply ″a 2005). disguised disapproval of the defendant.″ HN13 Texas law presumes that defamatory Id.; see also Gertz v. Robert Welch, Inc., per se statements cause reputational harm 418 U.S. 323, 350, 94 S. Ct. 2997, 41 L. and entitle a plaintiff to general damages Ed. 2d 789 (1974) (″HN15 [T]he private such as loss of reputation and mental defamation plaintiff who establishes anguish. Bentley v. Bunton, 94 S.W.3d 561, liability under a less demanding standard 604 (Tex. 2002) (plurality opinion). But than [knowledge of falsity or reckless this presumption yields only nominal disregard for the truth] may recover only damages. See Salinas v. Salinas, 365 S.W.3d such damages as are sufficient to 318, 320 (Tex. 2012) (per curiam). Beyond compensate him for actual injury.″). nominal damages, we review presumed [*260] Before turning to the evidence, we damages for evidentiary support. See must delimit our review. HN16 The jury Hancock v. Variyam, 400 S.W.3d 59, 66 charge sets the standard. See Osterberg v.

(Tex. 2013).

Peca, 12 S.W.3d 31, 55 (Tex. 2000) (″[I]t is HN14 In addition to the legal sufficiency the court’s charge, not [**22] some other of evidence, we have recognized an unidentified law, that measures the imperative that appellate courts determine sufficiency of the evidence when the whether any evidence supports the amount opposing party fails to object to the of jury damages. See Bentley, 94 S.W.3d at charge.″). Questions 11 and 12 asked what 606. In Bentley, a judge sued [**21] for sum of money ″would fairly and reasonably

447 S.W.3d 249, *260; 2014 Tex. LEXIS 753, **22

compensate″ for injuries sustained. The Q. If you sold the funeral home trial court instructed the jury that ″[y]ou today, what would the value of that must make a finding of at least nominal funeral home be-- of the business, as damages for injury to reputation in the an ongoing business? past.″ In response, the jury awarded A. I never had any intention nor do $300,000 to Kirk and the Burbage Funeral I have any interest in selling the Home. But on future reputation damages, funeral home, so I never really-- if I the court instructed the jury to determine had to throw something out there the appropriate compensation for injury and just-- this is just from experience ″that, in reasonable probability, [Kirk] will with hearing about other firms, but I sustain in the future″ (and did not require don’t-- I don’t really know. I’d say a the jury to find at least nominal damages).

few million dollars.

The jury awarded a combined $3.5 million in response. We must conduct a meaningful This estimate is practically and appellate review of the jury’s determination linguistically troubling. Practically of an amount that ″would fairly and speaking, Kirk admits in the previous reasonably compensate″ for the loss. sentence that he does not know the value, With these principles in mind, we turn to and the phrase ″if I had to throw something the evidence. Chad and Kirk vigorously out there″ qualifies his response. We require disagree about the defamation’s effect on some concrete basis [**24] for an estimate. the Burbage Funeral Home’s business. The Cf. Nat. Gas Pipeline Co. of Am. v. Justiss, court of appeals upheld the large 397 S.W.3d 150, 159-61 (Tex. 2012) compensatory damage award in part (concluding that speculative and conclusory because the funeral home ″had a market testimony, lacking in demonstrable factual value of at least $3 million [**23] and . . explanation, could not support an award of . this value would likely be lost because of damages based on diminished market value Chad’s statements.″ S.W.3d at . The of a home in a permanent nuisance claim). court stated that Kirk was not required to And Kirk’s language adds ambiguity. How substantiate the value with documentary many is a few? The court of appeals evidence. Id. interprets this as at least $3 million, but Although we agree that the jury generally this is not clear: definitions of ″few″ vary. has broad latitude in determining damages, See, e.g., AMERICAN HERITAGE COLLEGE we find no evidence of actual injury in the DICTIONARY 505 (3d. ed. 2000) (″[b]eing record. To begin, we cannot credit the more than one but indefinitely small in purported value of the funeral home number″); RANDOM HOUSE DICTIONARY OF business (leaving aside that this does not THE ENGLISH LANGUAGE 712 (2d. ed. 1987) reflect actual damage to reputation). Kirk (″not many but more than one″); WEBSTER’S reluctantly offered a questionable estimate THIRD NEW INTERNATIONAL DICTIONARY 843 of the funeral home’s value: (1961) (″not many persons or things″).

447 S.W.3d 249, *260; 2014 Tex. LEXIS 753, **24

We recently addressed an analogous evidence of actual damages for injury to situation in Waste Management of Texas, the business’s reputation.6 Inc. v. Texas Disposal Systems Landfill, The record contains only speculative Ltd., 434 S.W.3d 142 (Tex. 2014). In that evidence that the value, if established, case, the key evidence of injury to Texas ″would likely be lost,″ as the court of [*261] Disposal Systems’ reputation was appeals found. [**27] See S.W.3d at . its CEO’s testimony estimating the value Questioned whether the defamation could of its reputation at $10 million, and three destroy the funeral home’s reputation, Kirk exhibits purportedly supported that said: ″[P]otentially. In my opinion.″ Kirk testimony. Id. at 160. The exhibits said the value would be ″zero″ only when estimated lost profits and evidenced a questioned on what would happen if the decrease in ″base business.″ Id. First, we funeral home was ″run out of business.″ held that damages such as lost profits ″are Keith, Kirk’s brother, testified that, in a not the sort of general damages that small community, such allegations ″can necessarily flow from such a defamatory ruin that entire business.″ A theoretical publication.″ [**25] Id. Then, we stated possibility, however, is a far cry from a that the ″evidence must support the amount likely event. awarded by the jury; it must not be an Similarly speculative evidence supports ’indicator’ that supports the estimates the actual impact on the funeral home. offered by the corporate executive.″ Id. Kirk testified that some customers, Turning to this case, Kirk provided even including customers with previous business less evidence than the ″indicators″ we at the funeral home, cancelled pre-paid found insufficient in Waste Management. contracts: Kirk’s ballpark estimate of the Burbage Q. Since these allegations have been Funeral Home’s value does not equate to made, have you had people who have cancelled those?

6 Furthermore, the purported evidence on the value of the business blurs the lines between the torts of business disparagement and business defamation. In Waste Management, we noted ″the similarity between the two claims, but that one difference is that one claim seeks to protect reputation interests and the other seeks to protect economic interests against pecuniary loss.″ 434 S.W.3d at 155 (citing Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003)). The publication at issue in that case was defamatory of the owner of the business, and not the landfill-services business itself. Id. at 150-51 n.35. In other words, defamation injures the reputation of the owner, not the owner’s business. Id. In a defamation per se claim, general damages are presumed, while special damages are not; special damages, on the other hand, are an essential [**26] element of a business disparagement claim. Id. at 155. We distinguish between ″general damages (which are non-economic damages such as for loss of reputation or mental anguish) and special damages (which are economic damages such as for lost income).″ Hancock v. Variyam, 400 S.W.3d 59, 65 (Tex. 2013). Turning back to this case, Kirk seems to seek damages to the business, rather than damages for loss of the business’s reputation. This fine distinction matters. If Kirk desired damages to protect the economic interests of the Burbage Funeral Home, a business disparagement claim provides the correct vehicle. See Forbes, 124 S.W.3d at 170. And, whether under defamation or business disparagement, we require a plaintiff requesting special damages to prove those damages. See Hancock, 400 S.W.3d at 66. Here, the type of damages Kirk seeks, economic damages, are distinct from the noneconomic damages that are presumed in a defamation per se case. Kirk did not plead these special damages and certainly has not proven them. Kirk could have brought business disparagement or defamation claims (or both), but in any case his proof will not suffice for recovery of special damages.

447 S.W.3d 249, *261; 2014 Tex. LEXIS 753, **27

A. Yes, I have. damage award compensates—Kirk offered Q. Even as recently as last week? only vague testimony:

A. Yes, sir. Q. How would you say that these Q. Have you ever asked them why accusations have affected your they’re cancelling it? reputation in the community? Do you still have one?

[*262] A. Couldn’t bring myself to.

A. I’d like to think that I do. I’d like Q. Are you afraid its because of to think that there’s those people these accusations? that know me and-- that truly know A. Yes. me and that they’re going to give it credence. Sure, they’re going to In Hancock v. Variyam, a doctor claimed listen up, because they’d be stupid that the submission of a defamatory letter not to, but I’d like to believe that-- to an accrediting body, which later denied you know, that it-- that it doesn’t the doctor accreditation, provided evidence affect everybody. I’d like to believe of reputation damages. 400 S.W.3d at 70. that. This Court held that HN17 ″a jury may not Q. But you don’t know.

reasonably infer an ultimate fact from ’meager circumstantial [**28] evidence A. No, I don’t [**29] know. which could give rise to any number of inferences, none more probable than Kirk’s mother, Virginia, when asked about another.’″ Id. at 70-71 (quoting Hammerly the impact on the Burbage family name, Oaks, Inc. v. Edwards, 958 S.W.2d 387, said ″I’m sure it could hurt some, but I 392 (Tex. 1997)). Similarly, the jury cannot think most people would not believe it.″ reasonably infer that defamation caused Further, Kirk’s testimony undermines the the cancellations when the cancellations scope of the impact on him, personally: could have occurred for any number of Q. You don’t advertise with your reasons. Indeed, Kirk admitted that he did photo anywhere or your name not ask why the customers cancelled, only anywhere? that he was ″afraid″ it was because of accusations. A. No, sir.

Q. Have there been any newspaper Some evidence does suggest community articles about you in conjunction awareness of and discussion of Chad’s with the funeral home or community statements. And Chad, in earlier menacing service? letters, suggested that the statements would have ″significant repercussions.″ But in A. Not that I can recall anyway. terms of actual impact of the Q. Are you the only funeral director defamation—the basis for which the there at the Burbage Funeral Home?

447 S.W.3d 249, *262; 2014 Tex. LEXIS 753, **29

A. No. There are three others. 71. Because we hold that no evidence Q. Are you-- are you-- Anna Burbage supports the jury’s award of actual was the face of the Burbage Funeral damages, exemplary damages are not Home; is that right? available. See id.

A. In her lifetime. IV. Prohibitive Injunction Q. Are you considered the face of As part of its final judgment, the trial court the Burbage Funeral Home?

permanently enjoined Chad from A. I don’t know if I would be ″publishing, disseminating or causing to considered the face because I don’t be published or disseminated, . . . to meet with a lot of the families any third-parties by any means, . . . any more unless it’s a family that I statement or representation that states, know. That’s what I have the other implies or suggests in whole or part″ any directors to do. I’m a lot more behind of four pages of forbidden topics. The the scenes. injunction tracks the language of the ten The court of appeals distinguished Bentley defamatory statements, and for many as a public-official case. S.W.3d at . statements the injunction lists numerous ways Chad may run afoul of the court’s While the concern for baseless jury awards order. For instance, Chad may not assert has stronger resonance in public-official that he or any third party suffered from any cases, such concerns are not absent here.

of Kirk’s selfish, greedy, or unlawful The evidence does not show actual loss of actions. This extraordinarily broad [**31]

[**30] reputation, that anyone believed the defamation, that the Burbage Funeral prohibition on future speech need not detain Home suffered an actual loss, or even the us long. HN19 Prohibitive injunctions of funeral home’s actual value. On the record future speech that is the same or similar to here, we hold [*263] that no evidence speech that has been adjudicated to be supports the jury’s award of $3.8 million defamatory operate as impermissible prior in actual damages. We reverse the judgment restraints on free speech.7 Kinney v. Barnes, of the court of appeals in part. 443 S.W.3d 87, 92-93, 2014 Tex. LEXIS 764, *4 (Tex. 2014). Under Kinney, the B. Exemplary Damages trial court’s prohibitive injunction cannot stand. Therefore, we affirm that part of the HN18 A party may not recover exemplary court of appeals’ judgment. damages unless the plaintiff establishes actual damages. Hancock, 400 S.W.3d at V. Conclusion 7 A mandatory injunction requiring the removal or deletion of posted speech that has been adjudicated defamatory is not a prior restraint on speech. Kinney v. Barnes, 443 S.W.3d 87, 89, 2014 Tex. LEXIS 764 , *4 (Tex. 2014). But here the injunction did not require Chad to remove or delete any previously-made defamatory statements. Although Chad published several defamatory statements to his website and on posters, the website was only operative for approximately four months and the posters had been removed by trial.

447 S.W.3d 249, *263; 2014 Tex. LEXIS 753, **31

Chad failed to preserve for appeal his as a matter of law that the plaintiff is complaint of the jury charge; thus, we do entitled only to nominal damages, the not reach whether a qualified privilege appellate court will not reverse merely to protected any of Chad’s statements. We enable him to recover such damages″ and therefore affirm in part the court of appeals’ instead rendering a take-nothing judgment). judgment. We do, however, hold that no However, we do not reach mental anguish evidence supports the jury’s award of damages because Chad made no challenge compensatory damages, and that exemplary in this Court. Finally, we hold that the damages cannot stand. We reverse that part prohibitive injunction impermissibly of the [**32] court of appeals’ judgment restrains speech; therefore, we affirm that and render judgment that Kirk and the part of the court of appeals’ judgment. Burbage Funeral Home take nothing as compensatory and exemplary damages on Paul W. Green their defamation claims. See MBM Fin. Justice Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660, 666 (Tex. 2009) OPINION DELIVERED: August 29, 2014 (recognizing that ″where the record shows | | Neutral As of: December 3, 2014 5:24 PM EST

Dynegy, Inc. v. Yates Supreme Court of Texas

August 30, 2013, Opinion Delivered NO. 11-0541

Reporter 422 S.W.3d 638; 2013 Tex. LEXIS 679; 56 Tex. Sup. J. 1092; 2013 WL 4608711

DYNEGY, INC., PETITIONER, v. TERRY W. YATES, INDIVIDUALLY, AND TERRY W. YATES, P.C., RESPONDENTS

Subsequent History: Released for Publication March 21, 2014. Rehearing denied by Dynegy Inc. v. Yates, 2014 Tex. LEXIS 224 (Tex., Mar. 21, 2014)

Prior History: [**1] ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS. Dynegy, Inc. v. Yates, 345 S.W.3d 516, 2011 Tex. App. LEXIS 1272 (Tex. App. San Antonio, 2011)

Core Terms

statute of frauds, suretyship, main purpose doctrine, promise to pay, court of appeals, guarantor, surety, initial burden, fee agreement, third person, legal fees, applies, attorney’s fees, oral promise, inducement, another’s, billed

Case Summary

Overview HOLDINGS: [1]-The company pleaded the statute of frauds under Tex. Bus. & Com. Code Ann. § 26.01(a), (b)(2) as an affirmative defense and had the burden to establish that the alleged promise fell within the statute of frauds; [2]-The company’s former officer hired the attorney to represent him in criminal proceedings, and the company orally promised to pay the fees associated with the defense that under the fee agreement were the officer’s obligation, and thus the company established the statute of frauds’ suretyship provision initially applied to bar the claims against the company; [3]-The burden was on the attorney to secure favorable findings on the main purpose doctrine, and his failure to do so constituted a waiver of the issue under Tex. R. Civ. P. 279;

Jamie Graham

422 S.W.3d 638, *638; 2013 Tex. LEXIS 679, **1

[4]-Because the statute of frauds rendered the oral agreement unenforceable, the attorney could not recover on his claims.

Outcome Appellate court’s judgment reversed and a take-nothing judgment rendered in favor of the company.

LexisNexis® Headnotes

Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN1 The statute of frauds’ suretyship provision provides that an oral promise by one person to answer for the debt, default, or miscarriage of another person is generally unenforceable. Tex. Bus. & Com. Code Ann. § 26.01(a), (b)(2).

Civil Procedure > ... > Defenses, Demurrers & Objections > Affirmative Defenses > Burdens of Proof Civil Procedure > ... > Defenses, Demurrers & Objections > Affirmative Defenses > Statute of Frauds Contracts Law > ... > Statute of Frauds > Exceptions > General Overview

HN2 The statute of frauds generally renders a contract that falls within its purview unenforceable. Tex. Bus. & Com. Code Ann. § 26.01(a). The party pleading the statute of frauds bears the initial burden of establishing its applicability. Tex. R. Civ. P. 94. Once that party meets its initial burden, the burden shifts to the opposing party to establish an exception that would take the verbal contract out of the statute of frauds. One recognized exception to the statute of frauds’ suretyship provision is the main purpose doctrine. The party seeking to avoid the statute of frauds must plead, prove, and secure findings as to an exception or risk waiver under Tex. R. Civ. P. 279. A party who contends that an agreement falls within an exception to the statute of frauds must request and obtain a jury finding on the exception. Case law places the burden on the plaintiff to plead and prove an exception to the statute of frauds.

Civil Procedure > Appeals > Standards of Review > Abuse of Discretion Civil Procedure > Appeals > Standards of Review > Questions of Fact & Law Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN3 Whether a contract comes within the statute of frauds is a question of law, which the appellate court reviews de novo. The statute of frauds’ suretyship provision applies to a promise by one person to answer for the debt, default, or miscarriage of another

422 S.W.3d 638, *638; 2013 Tex. LEXIS 679, **1

person. Tex. Bus. & Com. Code Ann. § 26.01(b)(2). The suretyship provision applies regardless of whether the debt was already incurred or to be incurred in the future.

Civil Procedure > ... > Pleadings > Complaints > Requirements for Complaint Contracts Law > ... > Statute of Frauds > Exceptions > General Overview

HN4 A plaintiff relying on a primary obligor theory under the main purpose doctrine must plead and establish facts to take a verbal contract out of the statute of frauds. Tex. Bus. & Com. Code Ann. § 26.01(b)(2) provides that a promise by one person to answer for the debt of another person falls within the statute of frauds.

Contracts Law > ... > Measurement of Damages > Foreseeable Damages > Benefit of the Bargain Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN5 The statute of frauds bars a fraud claim to the extent the plaintiff seeks to recover as damages the benefit of a bargain that cannot otherwise be enforced because it fails to comply with the statute of frauds.

Counsel: For Dynegy, Inc., Petitioner: Bruce D. Oakley, Christopher Mohr Odell, Hogan Lovells L.L.P., Houston, TX; David J. Beck, David M. Gunn, Russell S. Post, Beck Redden LLP, Houston, TX.

For Terry W. Yates, Respondent: Elizabeth Holman Rivers, Kathleen S. Rose, Thomas C. Wright, Wanda McKee Fowler, Wright & Close LLP, Houston, TX; Lloyd E. Kelley, The Kelley Law Firm, Houston, TX.

Judges: JUSTICE GREEN delivered the opinion of the Court, in which CHIEF JUSTICE JEFFERSON, JUSTICE HECHT, JUSTICE JOHNSON, JUSTICE WILLETT, JUSTICE LEHRMANN, and JUSTICE BOYD joined. JUSTICE DEVINE filed a dissenting opinion. JUSTICE GUZMAN did not participate in the decision. JUSTICE DEVINE, dissenting.

Opinion by: Paul W. Green

Opinion

[*639] HN1 The statute of frauds’ suretyship provision provides that an oral promise ″by one [*640] person to answer for the debt, default, or miscarriage of another person″ is generally unenforceable. See TEX. BUS. & COM. CODE § 26.01(a), (b)(2). Dynegy, Inc. contends that this provision bars the current suit because both the fraudulent inducement and breach of contract claims against it are based on an oral promise to an attorney to

422 S.W.3d 638, *640; 2013 Tex. LEXIS 679, **1

pay the attorney’s fees incurred by one of Dynegy’s former officers. We agree. Accordingly, we reverse the court of appeals’ judgment and render a take-nothing judgment in favor of Dynegy.

I. Background A grand jury indicted James Olis, a former officer of Dynegy, on multiple counts of securities fraud, mail and wire fraud, and conspiracy arising out of work he performed while at Dynegy. [**2] Dynegy’s board of directors passed a resolution authorizing the advancement of attorney’s fees for Olis’s defense provided that Olis acted in good faith, in Dynegy’s best interests, and in compliance with applicable law. The resolution provided that it ″may be modified or revoked by this Board at any time as a result of changes in circumstances or further analysis.″ Olis hired Terry Yates, a criminal defense attorney, to defend him in the federal criminal investigation and an ongoing civil investigation conducted by the Securities and Exchange Commission. Olis told Yates and Mark Clark, Yates’s associate, that Dynegy would be paying his legal fees. Clark called Cristin Cracraft, an attorney in Dynegy’s legal department, who orally confirmed that Dynegy would pay Olis’s legal fees. Clark testified that Cracraft stated, ″The Board has passed a resolution, so, yes, we are paying Jamie Olis’s fees,″ and instructed Clark that the bills should be submitted to her. Cracraft’s trial testimony was similar to Clark’s version of the conversation. Olis signed a written fee agreement with Yates under which Olis agreed that he was responsible for payment of his legal fees. The contract stated that [**3] ″all fees are due when billed unless other specific arrangements have been made.″ Yates testified that, despite the written fee agreement, he had an oral agreement with Olis under which Yates would never look to Olis for payment of fees, but instead would look to Dynegy for payment. Yates testified that he spoke to Cracraft after faxing his fee agreement and hourly rate to Dynegy and that Cracraft told him Dynegy would pay Olis’s legal fees through trial. Cracraft contradicted Yates’s testimony about the phone call, however, stating that she had spoken only to Clark and never to Yates as of the date of the trial. Dynegy then hand-delivered a letter notifying Yates that it would pay him directly for Olis’s legal fees through August 17, 2003, but the remaining fees incurred were to be paid into escrow pursuant to a board resolution. Dynegy paid Yates’s initial invoice for $15,000. Yates submitted his $105,176 July bill in August, but Dynegy did not pay it until after trial in November. Olis was ultimately convicted of securities fraud, mail and wire fraud, and conspiracy. United States v. Olis, 429 F.3d 540, 549 (5th Cir. 2005) (affirming the conviction but remanding to the trial court [**4] to reconsider the proper sentencing guidelines). Yates submitted a third and final invoice for $448,556, representing all work performed from August 2003 through April 2004, including the

422 S.W.3d 638, *640; 2013 Tex. LEXIS 679, **4

November 2003 trial. Dynegy initially escrowed that amount pursuant to the board resolution, but later refused to release the escrowed funds after concluding that Olis did not meet the ″good faith″ standard for indemnification as required by the board’s resolution. Yates filed suit against Dynegy to recover the unpaid attorney’s fees, alleging that Dynegy orally promised that it would pay Yates’s fees through Olis’s trial. Yates asserted claims for breach of contract and [*641] fraudulent inducement and sought benefit-of-the-bargain damages for both claims. After a three-week trial, the jury found for Yates on both claims. Yates ultimately elected to recover under his fraudulent inducement claim, and the trial court rendered judgment on that claim in favor of Yates. Dynegy filed a motion for judgment notwithstanding the verdict on its affirmative defense of statute of frauds, which the trial court denied. Dynegy appealed. The court of appeals initially reversed and rendered judgment for Dynegy based on its [**5] affirmative defense of statute of frauds. No. 04-10-00041-CV, 2010 Tex. App. LEXIS 3556, at *1 (Tex. App.—San Antonio May 12, 2010). Thereafter, the court of appeals denied Yates’s motion for rehearing while also issuing a revised opinion. No. 04-10-00041-CV, 2010 Tex. App. LEXIS 6915, at *1 (Tex. App.—San Antonio Aug. 25, 2010). Then the same panel, on its own motion, reconsidered and granted Yates’s motion for rehearing. 345 S.W.3d 516, 519 (Tex. App.—San Antonio 2011). In its third opinion, the court of appeals reversed itself based on the main purpose doctrine, holding that Dynegy intended to bind itself to a primary obligation rather than a promise to pay the debt of another, and the statute of frauds was therefore inapplicable. Id. at 520, 523-25. The court of appeals also reversed the trial court’s judgment based on the jury’s fraud finding, holding that the evidence was legally insufficient. Id. at 534. The court of appeals then rendered judgment for Yates on his breach of contract claim. Id. at 536. Dynegy petitions this Court for review, arguing that the court of appeals erred by considering an element of the main purpose doctrine, which is an exception to the statute of [**6] frauds, as a part of Dynegy’s initial burden on its statute of frauds affirmative defense. We agree.

II. Analysis HN2 The statute of frauds generally renders a contract that falls within its purview unenforceable. TEX. BUS. & COM. CODE § 26.01(a). The party pleading the statute of frauds bears the initial burden of establishing its applicability. TEX. R. CIV. P. 94; cf. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988) (holding that the party pleading statute of limitations has the initial burden of proof). Once that party meets its initial burden, the burden shifts to the opposing party to establish an exception that would take the verbal contract out of the statute of frauds. See Cobb v. Johnson, 101

422 S.W.3d 638, *641; 2013 Tex. LEXIS 679, **6

Tex. 440, 108 S.W. 811, 812 (Tex. 1908). One recognized exception to the statute of frauds’ suretyship provision is the main purpose doctrine. See Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817, 827-28 (Tex. 2012). The party seeking to avoid the statute of frauds must plead, prove, and secure findings as to an exception or risk waiver under Rule 279 of the Texas Rules of Civil Procedure. See, e.g., Crown Ranch Dev., Ltd. v. Cromwell, No. 09-10-00458-CV, 2012 Tex. App. LEXIS 1345, at *14-15 (Tex. App.—Beaumont Feb. 23, 2012, pet. denied) [**7] (mem. op.) (″A party who contends that an agreement falls within an exception to the statute of frauds must request and obtain a jury finding on the exception.″); W.H. McCrory & Co. v. Contractors Equip. & Supply Co., 691 S.W.2d 717, 720-21 (Tex. App.—Austin 1985, writ ref’d n.r.e.) (placing the burden on the plaintiff to plead and prove an exception to the statute of frauds); cf. Woods, 769 S.W.2d at 517-18 (holding that the discovery rule, as a defense to the statute of limitations, is a plea in confession and avoidance that is waived if not pled).

A. Dynegy Met its Initial Burden to Establish Applicability of the Statute of Frauds [*642] Here, Dynegy pled the statute of frauds as an affirmative defense and thus had the initial burden to establish that the alleged promise fell within the statute of frauds. See TEX. BUS. & COM. CODE § 26.01(a), (b)(2); TEX. R. CIV. P. 94. HN3 Whether a contract comes within the statute of frauds is a question of law, which we review de novo. See Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796 (Tex. 1961). The statute of frauds’ suretyship provision applies to ″a promise by one person to answer for the debt, default, or miscarriage [**8] of another person.″ TEX. BUS. & COM. CODE § 26.01(b)(2). Yates argues that the suretyship provision does not apply to the oral agreement in this case because there is not a preexisting debt. On the contrary, the suretyship provision applies regardless of ″whether [the debt was] already incurred or to be incurred in the future.″ See RESTATEMENT (SECOND) OF CONTRACTS § 112 cmt. b (1981). The record indicates that Olis hired Yates to represent him in the criminal proceedings. Olis signed a fee agreement with Yates, in which Dynegy was not mentioned. Yates agreed to defend Olis, and Olis agreed in exchange that fees were due when billed unless other arrangements were made. Both Clark and Yates testified that Cracraft orally promised that Dynegy would be paying Olis’s fees through trial, and it is undisputed that this agreement was never reduced to writing. These facts establish one conclusion: Dynegy orally promised to pay attorney’s fees associated with Olis’s defense that, under the fee agreement, were Olis’s obligation (i.e., Olis’s debt). The dissent, like the court of appeals, believes that Dynegy’s promise to pay Olis’s legal fees was a primary obligation and not a promise to pay [**9] another’s debts, and therefore the statute of frauds does not bar Yates’s recovery on his breach of contract claim. But, as we have explained, HN4 a plaintiff relying on a primary obligor theory under the main purpose doctrine must plead and establish facts to take a verbal contract out of the statute of

422 S.W.3d 638, *642; 2013 Tex. LEXIS 679, **9

frauds. See Cruz, 364 S.W.3d at 828; Gulf Liquid Fertilizer Co. v. Titus, 163 Tex. 260, 354 S.W.2d 378, 382-83 (Tex. 1962); Cobb, 108 S.W. at 812. We hold that Dynegy established as a matter of law that the statute of frauds’ suretyship provision initially applied to bar the claims against it. See TEX. BUS. & COM. CODE § 26.01(b)(2) (providing that ″a promise by one person to answer for the debt . . . of another person″ falls within the statute of frauds). The court of appeals erred when it held otherwise.

B. The Burden Shifted to Yates At this point, the burden shifted to Yates to establish an exception that would take the verbal contract out of the statute of frauds—namely, the main purpose doctrine. See Cobb, 108 S.W. at 812. The main purpose doctrine required Yates to prove: (1) Dynegy intended to create primary responsibility in itself to pay the debt; (2) there was consideration for the promise; [**10] and (3) the consideration given for the promise was primarily for Dynegy’s own use and benefit—that is, the benefit it received was Dynegy’s main purpose for making the promise. See Cruz, 364 S.W.3d at 828. We have noted that the question of intent to be primarily responsible for the debt is a question for the finder of fact, taking into account all the facts and circumstances of the case. See Haas Drilling Co. v. First Nat’l Bank, 456 S.W.2d 886, 889 (Tex. 1970) (citing Gulf Liquid Fertilizer Co., 354 S.W.2d at 384). Thus, the burden was on Yates to secure favorable findings on the main purpose doctrine.1 Yates’s failure to do so constituted a waiver of the issue under Rule 279 of the Texas Rules of Civil Procedure. [*643] See TEX. R. CIV. P. 279; W.H. McCrory & Co., 691 S.W.2d at 720-21; cf. Woods, 769 S.W.2d at 518 (holding the discovery rule waived when a party neither pled nor obtained findings on the issue in response to the opposing party’s limitations defense). Therefore, the court of appeals erred by considering the intent element of the main purpose doctrine in conjunction with determining whether Dynegy met its initial burden to show applicability of the statute of frauds.2

III. Conclusion Based on the preceding analysis, we hold that the statute of frauds renders the oral agreement between Dynegy and Yates unenforceable. Consequently, Yates cannot recover under his breach of contract claim. In addition, Yates’s claim for benefit-of-the-bargain damages pursuant to his alternative fraudulent inducement action is barred. See Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001) HN5 (″[T]he Statute 1 Dynegy [**11] even pointed out to the trial court and Yates the omission of any jury questions related to an exception to the statute of frauds in its written charge objections. 2 The dissent also argues that the main purpose doctrine takes Dynegy’s promise out of the statute of frauds based on Dynegy’s self-serving reasons for promising to pay Olis’s legal fees. But, as with the intent element, Yates failed to plead and prove the consideration elements of the main purpose exception.

422 S.W.3d 638, *643; 2013 Tex. LEXIS 679, **11

of Frauds bars a fraud claim to the extent the plaintiff seeks to recover as damages the benefit of a bargain that cannot otherwise be enforced because it fails to comply with the Statute of Frauds.″). Accordingly, we grant Dynegy’s petition for review and, without hearing oral argument, TEX. R. APP. P. 59.1, [**12] we reverse the court of appeals’ judgment and render judgment that Yates take nothing on his claims.

Paul W. Green

Justice

OPINION DELIVERED: August 30, 2013

Dissent by: John P. Devine

Dissent

JUSTICE DEVINE, dissenting.

The Statute of Frauds ″is a two-edged sword. It . . . may be used to perpetrate frauds as well as to prevent them. Under it a person may obtain an oral promise to pay the debt of a third person and then resist payment on the ground that this promise is oral and therefore unenforceable under the Statute of Frauds. Because of this and other dangers, the courts of England and this country have sought to keep the Statute within its intended purpose.″1

In this case, the Court applies the Statute of Frauds’ suretyship provision to, what the jury found to be, an unconditional promise by a company to pay an attorney to defend one of its employees from a work-related prosecution. Because I do not believe the Statute was intended to apply to such promises, I respectfully dissent.

The Statute of Frauds’ suretyship provision applies when a creditor seeks to recover from a guarantor because of a third person’s failure to perform.2 The provision [**13] discourages false allegations that a person promised to pay if the primary debtor could not.3 The provision also protects [*644] those closely associated with the principal debtor from making rash or emotionally-driven oral promises before having ″any real opportunity for awareness of the nature and magnitude of the risks 1 Gulf Liquid Fertilizer Co. v. Titus, 163 Tex. 260, 354 S.W.2d 378, 382 (Tex. 1962).

2 The essential elements of a surety relationship are (1) the third person and the surety are each bound to the same performance; and, (2) the third person, rather than the surety, should be the one to perform. RESTATEMENT (SECOND) OF CONTRACTS § 112 cmt. c.; see also 4 CAROLINE N. BROWN, CORBIN ON CONTRACTS § 15.14, at 290 (Joseph M. Perillo ed., rev. ed. 1997) (″To be within the suretyship clause of the statute, the defendant’s (S’s) duty to pay must be conditional on nonpayment by the third person (P) . . . .″) (emphasis added). 3 Cooper Petroleum Co. v. LaGloria Oil & Gas Co., 436 S.W.2d 889, 895 (Tex. 1969).

422 S.W.3d 638, *644; 2013 Tex. LEXIS 679, **15

undertaken.″4 The suretyship provision, however, is not intended to provide more certainty to the terms of an oral contract for the benefit of a third person.5 Nor is it intended to discourage oral promises to assume the debt of a third person.6

The Court states that the facts here ″establish one conclusion: Dynegy orally promised to pay attorney’s fees associated with Olis’ defense [that would have otherwise been Olis’ obligation.]″ S.W.3d at . I agree, but the inference I draw from that conclusion is that Dynegy assumed the role of primary obligor, not surety. As we explained in Bank of Garvin v. Freeman, the Statute of Frauds’ suretyship provision does not bar an oral promise to assume primary responsibility for the debt of another:

The meaning of that statute is to require a promise as surety for another’s debt, or guarantor of another’s debt, to be in writing. It never was intended to prohibit one person from assuming the payment of another’s debt, as his own debt, where there is a valid consideration moving between the parties to such contract. In other words, one person for a valuable consideration may assume as his own debt the debt of another, and it need not be in writing, but he cannot [**15] contract with one person to become surety or guarantor for the debt of another person except it be in writing.7

Here, Dynegy does not claim that a surety relationship existed between Olis and itself. Dynegy argues instead that the suretyship provision applies merely because Olis and Yates entered into a written fee agreement, creating a debt. But if the creation of a debt was all that was necessary to invoke the Statute of Frauds, it would not be possible to assume another’s debt by oral agreement, and the Court was wrong to say otherwise in Bank of Garvin.8

For its part, Dynegy does not claim to be the guarantor of Olis’ debt. Dynegy instead concedes that it agreed to pay Yates for Olis’ defense, but argues that a condition in the board resolution allowed it to stop paying Yates if Dynegy’s board determined that Olis did not act in good faith. At that point, according to Dynegy, Olis became responsible for Yates’ fee. But the board resolution did not make Dynegy the guarantor of Olis’ debt, nor did it give the company the right to stop or suspend payment to the attorney [**16] for services already rendered. The board resolution merely stated that the 4 4 BROWN, supra, § 16.1, [**14] at 317.

5 See id. § 15.7, at 268 (″[I]t is enough to take the defendant’s promise out of the statute that the third person was not bound at all to the promisee.″). 6 See Bank of Garvin v. Freeman, 107 Tex. 523, 181 S.W. 187, 190-91 (Tex. 1915).

7 Titus, 354 S.W.2d at 383-84 (quoting Bank of Garvin, 181 S.W. at 191 (emphasis added)).

8 Bank of Garvin, 181 S.W. at 191.

422 S.W.3d 638, *644; 2013 Tex. LEXIS 679, **16

employee was to repay the company if his actions were determined not to have been in good faith. The dispute in this case is therefore not about whether Dynegy agreed to pay Yates; it clearly did. The dispute instead is about the extent of Dynegy’s promise. Dynegy contends that its promise to Yates was conditioned by the terms of the board resolution. Yates contends that Dynegy’s promise to pay for Olis’ defense through trial was unconditional and, as to Yates, primarily the company’s responsibility. The dispute was submitted to a jury, which was asked to determine the extent of Dynegy’s agreement with Yates. The [*645] charge instructed the jury that an essential term of the asserted agreement was whether Dynegy agreed to pay Yates for his legal services to Olis through trial.9 In closing argument, Dynegy argued that the jury should not find it in breach of the agreement unless it believed Dynegy made an unconditional promise to pay Yates through trial. The jury found Dynegy in breach of its agreement to pay Yates and awarded damages, apparently reasoning that the conditional payment terms of the board resolution did [**17] not apply to the oral contract between Dynegy and Yates. The Court concludes, however, that the written fee agreement between Yates and Olis conclusively establishes Olis as the primary obligor, making Dynegy merely the surety of that obligation. Because Dynegy never intended to act as a guarantor of Olis’ debt, however, the Statute of Frauds’ suretyship provision should not apply as a matter of law. I therefore disagree with the Court’s conclusion, but even if I agreed with it, I would nevertheless hold that the main purpose exception takes Dynegy’s promise to Yates out of the Statute. The main purpose doctrine, or leading object rule, takes a promise out of the Statute where ″the consideration given for the promise is primarily for the promisor’s own use and benefit.″10 The test focuses on the purpose of the promise, rather than on who receives the benefit of the promise.11 This test was devised by the courts to determine whether ″the promise was manifestly induced by other than [**18] gratuitous or sentimental purposes.″12 The circumstances surrounding the promise in this case began with an SEC investigation into Project Alpha. Dynegy originally billed Project Alpha as a complex transaction that 9 The charge instructions also stated that the terms of an agreement may be oral or written, or both, and that the parties must have the same understanding of the subject matter at the time of the agreement. 10 Titus, 354 S.W.2d at 383.

11 Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817, 828 (Tex. 2012).

12 4 BROWN, supra, § 16.1, at 317; see also Cooper, 436 S.W.2d at 895 (″[T]he basic reason for requiring that a promise to answer for the default of another be in writing is that the promisor has received no direct benefit from the transaction.″).

422 S.W.3d 638, *645; 2013 Tex. LEXIS 679, **18

would provide the company a significant long-term supply of physical natural gas, cash funding, and a permanent tax benefit. The SEC investigation resulted in a civil fine related to the company’s tax classification of the assets involved. However, the Department of Justice’s investigation was just beginning. As media publicity and threats of indictment by the Department of Justice increased, Dynegy’s board passed a resolution promising to advance attorney’s fees to officers and employees of the company who were involved with Project Alpha. Dynegy’s bylaws required the company to indemnify its directors and officers for any civil or criminal [**19] proceedings arising out of their role as a Dynegy director or officer. Dynegy paid Olis’ first attorney directly and, when Olis desired to hire Yates, the company told Yates to send the bills to the company and that it would pay him directly. The urgency in securing the services of Yates, a more experienced trial attorney, was heightened by Olis’ recent indictment. Therefore, Dynegy had at least two self-serving reasons to promise to pay Yates to represent Olis: (1) to protect the company’s interests; and (2) to comply with its bylaws. Yates should therefore be able to enforce Dynegy’s oral contract to [*646] pay him through trial because Dynegy was acting for its own purposes and not merely as a guarantor of its employee’s obligation.13 In conclusion, Dynegy has not asserted or argued that it intended to act as a guarantor of Olis’ debt. Moreover, the jury agreed that [**20] Dynegy’s promise to pay Yates through trial was not conditional, and thus its promise does not fall within the Statute of Frauds’ suretyship provision. However, even were I to agree that the suretyship provision otherwise applies to this transaction, I would conclude that the main purpose exception takes Dynegy’s promise out of the Statute. Because the Court holds the Statute of Frauds applies to bar Dynegy’s oral contract with Yates, I respectfully dissent. John P. Devine Justice Opinion Delivered: August 30, 2013

13 See Haas Drilling Co. v. First Nat’l Bank, 456 S.W.2d 886, 890-91 (Tex. 1970) (holding that main purpose doctrine was satisfied ″as a matter of law″ where prospect of maintaining value of oil-producing property was sufficient benefit to enforce bank’s promise to pay jetting gas company the past-due debt of the former owner).

| | Warning As of: December 4, 2014 12:08 PM EST

City of Keller v. Wilson Supreme Court of Texas

October 19, 2004, Argued ; June 10, 2005, Delivered NO. 02-1012

Reporter 168 S.W.3d 802; 2005 Tex. LEXIS 436; 48 Tex. Sup. J. 848

THE CITY OF KELLER, PETITIONER v. JOHN W. WILSON, GRACE S. WILSON, JOHNNY L. WILSON AND NANCY A. WILSON, RESPONDENTS

Subsequent History: [**1] Rehearing denied by City of Keller v. Wilson, 2005 Tex. LEXIS 688 (Tex., Sept. 2, 2005) On remand at City of Keller v. Wilson, 2006 Tex. App. LEXIS 5361 (Tex. App. Fort Worth, June 22, 2006)

Prior History: ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE SECOND DISTRICT OF TEXAS. City of Keller v. Wilson, 86 S.W.3d 693, 2002 Tex. App. LEXIS 7837 (Tex. App. Fort Worth, 2002)

Disposition: The court reversed the judgment of the court of appeals and remanded.

Core Terms

jurors, reviewing court, City’s, flooding, contrary evidence, no evidence, cases, conclusively, disregarded, inferences, per curiam, insurer, no-evidence, legal sufficiency, parties, scope of review, damages, courts, reasonable juror, jury’s, drainage, plans, evidence supports, court of appeals, appellate court, inclusive, vital fact, credibility, undisputed, engineers

Case Summary

Procedural Posture Appellant city petitioned for review of a decision of the Court of Appeals for the Second District of Texas, which upheld the trial court’s ruling that there was an intentional taking by the city under Tex. Const. art. I, § 17 of appellee property owners’ property that they claimed by flooded due to a drainage ditch.

Jamie Graham

168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1

Overview The owners contended that the city approved revised plans that it knew were certain to have the effect of flooding their land. The question was whether the court of appeals applied the correct standard in its legal sufficiency review by considering only the evidence and inferences that supported the finding. The court held that both the inclusive and exclusive standards for the scope of legal-sufficiency review, properly applied, must arrive at the same result, disregarding evidence contrary to the verdict unless reasonable jurors could not. The court reversed the judgment, holding that the court of appeals did not properly apply the scope of review in that the critical question was the city’s state of mind because the owners had to prove the city knew that flooding was substantially certain, and the court of appeals disregarded the evidence regarding why the city approved the plan. It was uncontroverted that three sets of engineers certified that the revised plans met the city’s codes and regulations, and thus would not increase downstream flooding. Further, the court of appeals declined to address the jury’s alternate verdict on a claim under the Texas Water Code.

Outcome The court reversed the judgment of the court of appeals and remanded.

LexisNexis® Headnotes

Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN1 ″No evidence″ points must, and may only, be sustained when the record discloses one of the following situations: (a) a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; (d) the evidence establishes conclusively the opposite of the vital fact. It is in deciding ″no evidence″ points in situation (c) that the courts follow the further rule of viewing the evidence in its most favorable light in support of the finding of the vital fact, considering only the evidence and the inferences which support the finding and rejecting the evidence and the inferences which are contrary to the finding.

Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN2 The traditional rule in Texas has never been that appellate courts must reject contrary evidence in every no-evidence review. Instead, the traditional scope of review does not disregard contrary evidence if there is no favorable evidence, or if contrary evidence renders supporting evidence incompetent or conclusively establishes the opposite.

168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1

Admiralty & Maritime Law > Maritime Contracts > General Overview Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN3 In a legal sufficiency review, evidence can be disregarded whenever reasonable jurors could do so, an inquiry that is necessarily fact-specific. But it is important that when courts use the exclusive standard and disregard contrary evidence, they must recognize certain exceptions to it.

Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN4 If evidence may be legally sufficient in one context but insufficient in another, the context cannot be disregarded even if that means rendering judgment contrary to the jury’s verdict. Either ″evidence contrary to the verdict″ must be defined to exclude material contextual evidence, or it must be an exception to the general rule.

Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview Evidence > ... > Procedural Matters > Objections & Offers of Proof > Objections

HN5 Incompetent evidence is legally insufficient to support a judgment, even if admitted without objection. Thus, evidence showing it to be incompetent cannot be disregarded, even if the result is contrary to the verdict. If the rule were otherwise, incompetent evidence would always be legally sufficient, because the evidence showing it to be incompetent could never be considered.

Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN6 Evidence that might be ″some evidence″ when considered in isolation is nevertheless rendered ″no evidence″ when contrary evidence shows it to be incompetent. Such evidence cannot be disregarded; it must be an exception either to the exclusive standard of review or to the definition of contrary evidence.

Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview Evidence > Types of Evidence > Circumstantial Evidence Evidence > Admissibility > Circumstantial & Direct Evidence

HN7 When circumstantial evidence of a vital fact is meager, a reviewing court must consider not just favorable but all the circumstantial evidence, and competing inferences as well.

Civil Procedure > ... > Jury Trials > Jurors > General Overview Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1

HN8 There are several types of conclusive evidence. First, an appellate court conducting a legal sufficiency review cannot disregard undisputed evidence that allows of only one logical inference. By definition, such evidence can be viewed in only one light, and reasonable jurors can reach only one conclusion from it. Jurors are not free to reach a verdict contrary to such evidence; indeed, uncontroverted issues need not be submitted to a jury at all.

Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN9 Reviewing legal sufficiency in such cases encompasses a general no-evidence review, because if some evidence supports the verdict then the contrary evidence was not ″undisputed.″ But the review does not stop there; the evidence must also have only one logical inference. Undisputed evidence that reasonable jurors could disbelieve has two: (1) it is true, or (2) it is not. Most often, undisputed contrary evidence becomes conclusive (and thus cannot be disregarded) when it concerns physical facts that cannot be denied. Undisputed contrary evidence may also become conclusive when a party admits it is true.

Evidence > Inferences & Presumptions > General Overview

HN10 Undisputed evidence and conclusive evidence are not the same -- undisputed evidence may or may not be conclusive, and conclusive evidence may or may not be undisputed.

Civil Procedure > ... > Jury Trials > Jurors > General Overview Civil Procedure > Trials > Jury Trials > Province of Court & Jury Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN11 Proper legal-sufficiency review prevents reviewing courts from substituting their opinions on credibility for those of the jurors, but proper review also prevents jurors from substituting their opinions for undisputed truth. When evidence contrary to a verdict is conclusive, it cannot be disregarded.

Civil Procedure > Trials > Jury Trials > Province of Court & Jury Evidence > ... > Testimony > Credibility of Witnesses > General Overview

HN12 Jurors are the sole judges of the credibility of the witnesses and the weight to give their testimony. They may choose to believe one witness and disbelieve another. Reviewing courts cannot impose their own opinions to the contrary.

Civil Procedure > ... > Jury Trials > Jurors > General Overview Civil Procedure > Appeals > Standards of Review > General Overview

168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1

Evidence > ... > Testimony > Credibility of Witnesses > General Overview

HN13 Most credibility questions are implicit rather than explicit in a jury’s verdict. Thus, reviewing courts must assume jurors decided all of them in favor of the verdict if reasonable human beings could do so. Courts reviewing all the evidence in a light favorable to the verdict thus assume that jurors credited testimony favorable to the verdict and disbelieved testimony contrary to it.

Civil Procedure > ... > Jury Trials > Jurors > General Overview Civil Procedure > Trials > Jury Trials > Province of Court & Jury Evidence > ... > Testimony > Expert Witnesses > General Overview

HN14 Jurors may disregard even uncontradicted and unimpeached testimony from disinterested witnesses. Even uncontroverted expert testimony does not bind jurors unless the subject matter is one for experts alone.

Civil Procedure > ... > Jury Trials > Jurors > General Overview Civil Procedure > Trials > Jury Trials > Province of Court & Jury Evidence > ... > Testimony > Credibility of Witnesses > General Overview

HN15 The jury’s decisions regarding credibility must be reasonable. Jurors cannot ignore undisputed testimony that is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted. They are not free to believe testimony that is conclusively negated by undisputed facts. But whenever reasonable jurors could decide what testimony to discard, a reviewing court must assume they did so in favor of their verdict, and disregard it in the course of legal sufficiency review.

Civil Procedure > Trials > Jury Trials > Province of Court & Jury Civil Procedure > Appeals > Standards of Review > General Overview

HN16 It is the province of the jury to resolve conflicts in the evidence. Accordingly, courts reviewing all the evidence in a light favorable to the verdict must assume that jurors resolved all conflicts in accordance with that verdict.

Civil Procedure > Trials > Jury Trials > Province of Court & Jury Civil Procedure > Appeals > Standards of Review > General Overview Torts > Malpractice & Professional Liability > Healthcare Providers

HN17 Evidence is not conflicting just because the parties cannot agree to it. But in every circumstance in which reasonable jurors could resolve conflicting evidence either

168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1

way, reviewing courts must presume they did so in favor of the prevailing party, and disregard the conflicting evidence in their legal sufficiency review.

Civil Procedure > ... > Jury Trials > Jurors > General Overview Civil Procedure > Trials > Jury Trials > Province of Court & Jury Civil Procedure > Appeals > Standards of Review > General Overview Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview Transportation Law > Private Vehicles > Traffic Regulation > One Way Streets

HN18 Even if evidence is undisputed, it is the province of the jury to draw from it whatever inferences they wish, so long as more than one is possible and the jury must not simply guess. Accordingly, courts reviewing all the evidence in a light favorable to the verdict must assume jurors made all inferences in favor of their verdict if reasonable minds could, and disregard all other inferences in their legal sufficiency review.

Civil Procedure > Trials > Jury Trials > Province of Court & Jury Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN19 Whether a court begins by reviewing all the evidence or disregarding part in a legal-sufficiency review, there can be no disagreement about where that review should end. If the evidence at trial would enable reasonable and fair-minded people to differ in their conclusions, then jurors must be allowed to do so. A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement.

Civil Procedure > Appeals > Record on Appeal Civil Procedure > Appeals > Standards of Review > General Overview Evidence > Inferences & Presumptions > Inferences

HN20 Whether a reviewing court starts with all or only part of the record, the court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it. But if the evidence allows of only one inference, neither jurors nor the reviewing court may disregard it.

Civil Procedure > Appeals > Appellate Jurisdiction > State Court Review Civil Procedure > Appeals > Record on Appeal Civil Procedure > Appeals > Standards of Review > Questions of Fact & Law Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1

HN21 The exclusive and inclusive standards of review must coincide if the Texas Supreme Court is to perform its constitutional duties. Although factual sufficiency has been the sole domain of the intermediate appellate courts in Texas since 1891, The supreme court ’s jurisdiction has always included legal sufficiency, as that is a question of law, not of fact. Construing either standard to require it to do less would be just as unconstitutional as construing either to allow the court to do more.

Civil Procedure > ... > Jury Trials > Jurors > General Overview Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview Civil Procedure > ... > Standards of Review > Substantial Evidence > Sufficiency of Evidence

HN22 The final test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review. Whether a reviewing court begins by considering all the evidence or only the evidence supporting the verdict, legal-sufficiency review in the proper light must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not.

Civil Procedure > Trials > Jury Trials > Province of Court & Jury Evidence > ... > Testimony > Expert Witnesses > General Overview

HN23 When a case involves scientific or technical issues requiring expert advice, jurors cannot disregard a party’s reliance on experts hired for that very purpose without some evidence supplying a reasonable basis for doing so.

Judges: JUSTICE BRISTER delivered the opinion of the Court, in which CHIEF JUSTICE JEFFERSON, JUSTICE HECHT, JUSTICE WAINWRIGHT, and JUSTICE GREEN joined, and in which JUSTICE O’NEILL and JUSTICE MEDINA joined as to Parts I through IV. JUSTICE O’NEILL filed a concurring opinion in which JUSTICE MEDINA joined. JUSTICE JOHNSON did not participate in the decision.

Opinion by: Scott Brister

Opinion

[*807] Must an appellate court reviewing a verdict for legal sufficiency start by considering all the evidence or only part? Over the years, we have stated both as the proper scope of review. While some see the standards as opposing, we disagree; like a glass that is half-full or half-empty, both arrive at the same point regardless of where they start.

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But both standards must be properly applied. Rules and reason sometimes compel that evidence must be credited or discarded whether it supports a verdict or contradicts it. Under either scope of review, appellate courts must view the evidence in the light favorable to the verdict, crediting favorable [**2] evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. As we find the evidence here meets neither standard, we reverse.

I. Factual and Procedural History The City of Keller is one of several fast-growing communities on the outskirts of [*808] Fort Worth. 1 As part of that growth, the City approved plans for two new subdivisions, Estates of Oak Run and Rancho Serena, including plans for storm water drainage.

The Wilsons own property southeast of the new subdivisions, with a tract owned by Z.T. Sebastian lying between. Before development, surface water flowed generally north to south from the land where the subdivisions were built, across the Sebastian and Wilson properties, and into the Little Bear Creek Watershed. In 1991, the [**3] City adopted a Master Drainage Plan providing for drainage easements across both the Sebastian and Wilson properties, and thence into Little Bear Creek. The City’s codes require developers to comply with the Master Plan, to provide drainage for a 100-year rain event, and to avoid increasing the volume or velocity of water discharged upon downhill properties.

The developers of Oak Run and Rancho Serena submitted plans to the City indicating they would buy a drainage easement and build a ditch forty-five feet wide and more than two hundred yards long across the Sebastian property, and deed both to the City upon completion. 2 The plans also included detention basins on the subdivision properties, but omitted any drainage easement or ditch across the Wilsons’ property. The City’s director of public works approved the developers’ plans, and the City accepted the works on completion.

[**4] In accordance with the Master Plan, the City built a box culvert south of the Wilsons’ property. But as the developers’ drainage ditch ended at the Wilsons’ north property line, there was no link between the two. The Wilsons alleged and the jury found this omission increased flooding on the Wilsons’ property, ruining eight acres of farmland the jury valued at almost $ 300,000. 1 The City of Fort Worth asserts in an amicus brief that in 2001 alone it approved 325 subdivision plats creating 5,857 residential lots within its extraterritorial jurisdiction, which of course excludes surrounding communities. 2 Evidence at trial and briefs by amici indicate that cities normally acquire title to these easements to ensure they are properly mowed and maintained after the developers’ departure.

168 S.W.3d 802, *808; 2005 Tex. LEXIS 436, **4

To recover damages for inverse condemnation, the Wilsons had to prove the City intentionally took or damaged their property for public use, or was substantially certain that would be the result. 3 They do not allege the City intentionally flooded their land, but do allege it approved revised plans that it knew were substantially certain to have that effect. The City contends no evidence supports the jury’s finding of an intentional taking. It presented evidence that engineers for the developers, for the City, and for an outside [**5] firm the City retained all certified that the revised drainage plan complied with the City’s codes and regulations -- including the ban against increasing downstream runoff. Thus, the City asserts it had no reason to be substantially certain the opposite would occur, until it did. A divided court of appeals rejected this contention. 4 In its legal sufficiency review, the court refused to consider the various engineers’ certifications because ″we are to consider only the evidence and inferences that tend to support the finding and disregard all evidence and inferences to the contrary.″ 5 The City challenges [*809] this omission as applying the wrong scope of review. We have on many occasions stated the scope of review precisely as the court of appeals says (the ″exclusive″ standard). 6 [**7] But we have also stated that a reviewing court must consider ″all of the evidence″ in the light favorable to the verdict (the ″inclusive″ standard). [**6] 7 Sometimes we have mentioned neither reviewing all evidence nor

3 TEX. CONST. art. I, § 17; City of Dallas v. Jennings, 142 S.W.3d 310, 313-14, 47 Tex. Sup. Ct. J. 715 (Tex. 2004).

4 86 S.W.3d 693, 715, 717.

5 Id. at 700.

6 See, e.g., Wal-Mart Stores, Inc. v. Canchola, 121 S.W.3d 735, 739, 46 Tex. Sup. Ct. J. 1116 (Tex. 2003) (per curiam); Bradford v.

Vento, 48 S.W.3d 749, 754, 44 Tex. Sup. Ct. J. 655 (Tex. 2001); City of Fort Worth v. Zimlich, 29 S.W.3d 62, 69, 43 Tex. Sup. Ct. J. 972 (Tex. 2000); Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936, 41 Tex. Sup. Ct. J. 811 (Tex. 1998); Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450, 40 Tex. Sup. Ct. J. 172 (Tex. 1996); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499, 38 Tex. Sup. Ct. J. 848 (Tex. 1995); Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928, 37 Tex. Sup. Ct. J. 118 (Tex. 1993); Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84, 35 Tex. Sup. Ct. J. 881 (Tex. 1992); Weirich v. Weirich, 833 S.W.2d 942, 945, 35 Tex. Sup. Ct. J. 952 (Tex. 1992); Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 458, 35 Tex. Sup. Ct. J. 523 (Tex. 1992); Lewelling v. Lewelling, 796 S.W.2d 164, 166, 33 Tex. Sup. Ct. J. 742 (Tex. 1990); Burkard v. ASCO Co., 779 S.W.2d 805, 806, 33 Tex. Sup. Ct. J. 80 (Tex. 1989) (per curiam); Brown v. Edwards Transfer Co., 764 S.W.2d 220, 223, 32 Tex. Sup. Ct. J. 108 (Tex. 1988); City of Gladewater v. Pike, 727 S.W.2d 514, 518, 30 Tex. Sup. Ct. J. 322 (Tex. 1987); King v. Bauer, 688 S.W.2d 845, 846, 28 Tex. Sup. Ct. J. 406 (Tex. 1985); Tomlinson v. Jones, 677 S.W.2d 490, 492, 27 Tex. Sup. Ct. J. 445 (Tex. 1984); Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401, 24 Tex. Sup. Ct. J. 482 (Tex. 1981) (per curiam); Holley v. Adams, 544 S.W.2d 367, 370, 20 Tex. Sup. Ct. J. 76 (Tex. 1976); Garza v. Alviar, 395 S.W.2d 821, 823, 9 Tex. Sup. Ct. J. 76 (Tex. 1965); Wininger v. Ft. Worth & D.C. Ry. Co., 105 Tex. 56, 143 S.W. 1150, 1152 (Tex. 1912). 7 See, e.g., St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 519, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.); Associated Indem. Corp.

v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86, 41 Tex. Sup. Ct. J. 389 (Tex. 1998); State Farm Lloyds Ins. Co. v. Maldonado, 963 S.W.2d 38, 40, 41 Tex. Sup. Ct. J. 443 (Tex. 1998); Formosa Plastics Corp. v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48, 41 Tex. Sup. Ct. J. 289 (Tex. 1998); Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711, 40 Tex. Sup. Ct. J. 846 (Tex. 1997);

168 S.W.3d 802, *809; 2005 Tex. LEXIS 436, **6

8

disregarding some part of it. [**8] Finally, we have sometimes expressly mentioned both. 9 [**9] Although this Court has used both the exclusive and the inclusive standards interchangeably over the years, commentators say the two are different. 10 Because this [*810] important issue is dispositive here, we address it in some detail, and reserve for another day the City’s arguments that a governmental entity cannot be liable for approving a developer’s plans, or accepting rather than constructing the works at issue.

[**10] II. Contrary Evidence That Cannot Be Disregarded The question presented here is not a new one. More than 40 years ago, then Justice Calvert 11 addressed the standards for reviewing legal and factual sufficiency in the most-cited law review article in Texas legal history. 12 Frustrated that despite this Court’s efforts to explain those standards ″a growing number of recent decisions indicate a continuing misunderstanding,″ 13 the author summarized and attempted to clarify Texas law up to 1960. 14 The article’s impact remains substantial today, having been cited more than 100 times by Texas courts in the last five years. White v. Southwestern Bell Tel. Co., 651 S.W.2d 260, 262, 26 Tex. Sup. Ct. J. 441 (Tex. 1983); Burk Royalty v. Walls, 616 S.W.2d 911, 922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981); Harbin v. Seale, 461 S.W.2d 591, 592, 14 Tex. Sup. Ct. J. 128 (Tex. 1970); De Winne v. Allen, 154 Tex. 316, 277 S.W.2d 95, 97 (Tex. 1955); Hall v. Med. Bldg. of Houston, Tex., 151 Tex. 425, 251 S.W.2d 497, 498 (Tex. 1952). 8 Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 552, 47 Tex. Sup. Ct. J. 707 (Tex. 2004); Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, 684, 47 Tex. Sup. Ct. J. 649 (Tex. 2004); Lozano v. Lozano, 52 S.W.3d 141, 144, 44 Tex. Sup. Ct. J. 499 (Tex. 2001) (per curiam); La.-Pac. Corp. v. Andrade, 19 S.W.3d 245, 247, 43 Tex. Sup. Ct. J. 56 (Tex. 1999); Latham v. Castillo, 972 S.W.2d 66, 68, 41 Tex. Sup. Ct. J. 994 (Tex. 1998); Brown v. Bank of Galveston, Nat’l Ass’n, 963 S.W.2d 511, 513, 41 Tex. Sup. Ct. J. 437 (Tex. 1998). 9 See, e.g., Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 234, 47 Tex. Sup. Ct. J. 559 (Tex. 2004); Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649, 37 Tex. Sup. Ct. J. 860 (Tex. 1994) (per curiam); compare Biggers v. Cont’l Bus Sys., Inc., 157 Tex. 351, 303 S.W.2d 359, 363 (Tex. 1957) (″We may consider only that evidence, if any, which, viewed in its most favorable light, supports the jury findings, and we must disregard all evidence which would lead to a contrary result.″) (emphasis added), with Biggers v. Cont’l Bus Sys., Inc., 157 Tex. 367, 298 S.W.2d 79, 81 (Tex. 1956) (″The duty of this Court [is] to examine and consider all of the evidence bearing on the controlling issues, and having done so to decide whether there is evidence of probative value to support the answers made by the jury to the issues.″) (quotation omitted) (emphasis added), and Cartwright v. Canode, 106 Tex. 502, 171 S.W. 696, 698 (Tex. 1914) (″We must reject all evidence favorable to the plaintiffs in error, and consider only the facts and circumstances which tend to sustain the verdict. . . . In considering this question, we must take into account all of the facts and circumstances attending the transaction.″). 10 See, e.g., W. Wendell Hall, Standards of Review in Texas, 34 ST. MARY’S L.J. 1, 159-62 (2002); William V. Dorsaneo, III, Judges, Juries, & Reviewing Courts, 53 SMU L.R. 1497, 1498, 1507-11 (2000); Phil Hardberger, Juries Under Siege, 30 ST. MARY’S L.J. 1, 40-41 (1998). But see William Powers, Jr., Judge & Jury in the Texas Supreme Court, 75 TEX. L. REV. 1699, 1699-1700, 1704-19 (1997) (concluding the Court is not changing the no-evidence standard of review but is moving away from broad definitions of duty and toward particularized definitions of duty). 11 Robert W. Calvert was an associate justice of this Court from 1950 to 1960, and Chief Justice from 1961 to 1972.

12 Robert W. Calvert, ″No Evidence″ & ″Insufficient Evidence″ Points of Error, 38 TEX. L. REV. 361 (1960).

13 Id. at 361.

14 ″Most of what has been said here is repetitious of what has been said before in the cited cases and articles. The purpose of the writer here has been to try to bring former writings on the subject into compact form and under somewhat closer analysis.″ Id. at 371.

168 S.W.3d 802, *810; 2005 Tex. LEXIS 436, **11

[**11] According to the article:

HN1 ″No evidence″ points must, and may only, be sustained when the record discloses one of the following situations: (a) a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; (d) the evidence establishes conclusively the opposite of the vital fact. 15

16

We have quoted a similar formulation on many occasions. [**12] Notably, Justice Calvert then proceeded to put the question before us in the proper context:

It is in deciding ″no evidence″ points in situation (c) that the courts follow the further rule of viewing the evidence in its most favorable light in support of the finding of the vital fact, considering only the evidence and the inferences which support the finding and rejecting the evidence and the inferences which are contrary to the finding. 17 Clearly, HN2 the traditional rule in Texas has never been that appellate courts must reject contrary evidence in every no-evidence review. Instead, the traditional scope of review does not disregard contrary evidence if there is no favorable evidence [*811] (situation (a) above), or if contrary evidence renders supporting evidence incompetent (situation (b) above) or conclusively establishes the opposite (situation (d) above). As the following examples show, this has remained the rule since. We do not presume to categorize all [**13] circumstances in which contrary evidence must be considered in a legal sufficiency review. HN3 Evidence can be disregarded whenever reasonable jurors could do so, 18 an inquiry that is necessarily fact-specific. But it is important that when courts use the exclusive standard and disregard contrary evidence, they must recognize certain exceptions to it.

A. Contextual Evidence 15 Id. at 362-63.

16 See, e.g., King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751, 46 Tex. Sup. Ct. J. 1093 (Tex. 2003); Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727, 46 Tex. Sup. Ct. J. 689 (Tex. 2003) (per curiam); Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334, 42 Tex. Sup. Ct. J. 43 (Tex. 1998); Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 409, 41 Tex. Sup. Ct. J. 683 (Tex. 1998); Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997); Anderson v. City of Seven Points, 806 S.W.2d 791, 795 n.3, 34 Tex. Sup. Ct. J. 356 (Tex. 1991); Cecil v. Smith, 804 S.W.2d 509, 510 n.2, 34 Tex. Sup. Ct. J. 383 (Tex. 1991); Juliette Fowler Homes, Inc. v. Welch Assoc., Inc., 793 S.W.2d 660, 666 n.9, 33 Tex. Sup. Ct. J. 530 (Tex. 1990). 17 Calvert, supra note 12, at 364.

18 See In re J.F.C., 96 S.W.3d 256, 266, 46 Tex. Sup. Ct. J. 328 (Tex. 2002); Uniroyal, 977 S.W.2d at 340; Triton Oil & Gas Corp.

v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446, 26 Tex. Sup. Ct. J. 73 (Tex. 1982).

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In Justice Calvert’s first situation -- a complete absence of evidence of a vital fact -- it is generally irrelevant whether a reviewing court considers contrary evidence. 19 If supporting evidence is absent, opposing evidence cannot change that result. But in a number of cases, the lack of supporting evidence may not appear until all the evidence is reviewed in context. [**14] For example, publications alleged to be defamatory must be viewed as a whole -- including accompanying statements, headlines, pictures, and the general tenor and reputation of the source itself. 20 A court reviewing legal sufficiency cannot disregard parts of a publication, considering only false statements to support a plaintiff’s verdict or only true ones to support a defense verdict. 21

Similarly, reviewing courts must construe contracts as a whole; we do not consider only the parts favoring one party [**15] and disregard the remainder, as that would render the latter meaningless. 22 Even writings executed at different times must be considered together if they pertain to the same transaction. 23

It is not just writings that reviewing courts must consider in context. For example, in reviewing intentional infliction of emotional distress claims for legal sufficiency, ″we consider the context and the relationship between the parties.″ 24 [**16] Acts that might constitute outrageous conduct when dealing with a hearing-impaired consumer 25 may be legally insufficient between [*812] business parties. 26 In our no-evidence reviews of successful claims, we have invariably reviewed not just evidence showing the conduct was outrageous, but also evidence showing that, in context, it was not. 27 19 Calvert, supra note 12, at 364 (″If there is an absolute absence of evidence of a vital fact . . . an appellate court has no occasion to concern itself with an abstract rule such as how minds of reasonable men might view the situation.″). 20 New Times, Inc. v. Isaacks, 146 S.W.3d 144, 158-59, 47 Tex. Sup. Ct. J. 1140 (Tex. 2004); Turner v. KTRK Television, Inc., 38 S.W.3d 103, 114, 44 Tex. Sup. Ct. J. 244 (Tex. 2000); Guisti v. Galveston Tribune Co., 105 Tex. 497, 150 S.W. 874, 877-78 (1912). 21 Bentley v. Bunton, 94 S.W.3d 561, 581, 45 Tex. Sup. Ct. J. 1172 (Tex. 2002) (considering remarks in context of series of talk-show programs); Turner, 38 S.W.3d at 115 (holding defamation includes story in which details are right but gist is wrong). 22 Shell Oil Co. v. Khan, 138 S.W.3d 288, 292, 47 Tex. Sup. Ct. J. 640 (Tex. 2004).

23 DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 102, 42 Tex. Sup. Ct. J. 979 (Tex. 1999).

24 Tiller v. McLure, 121 S.W.3d 709, 714, 46 Tex. Sup. Ct. J. 632 (Tex. 2003) (per curiam); see also Tex. Farm Bureau Mut. Ins. Cos.

v. Sears, 84 S.W.3d 604, 610-11, 45 Tex. Sup. Ct. J. 1245 (Tex. 2002); GTE Southwest, Inc. v. Bruce, 998 S.W.2d 605, 612, 42 Tex. Sup. Ct. J. 907 (Tex. 1999). 25 See George Grubbs Enters., Inc. v. Bien, 881 S.W.2d 843, 852-53 (Tex. App.--Fort Worth 1994) (holding that efforts to pressure deaf-mute consumer to buy car were legally sufficient evidence of intentional infliction), rev’d on other grounds, 900 S.W.2d 337, 338, 38 Tex. Sup. Ct. J. 869 (Tex. 1995). 26 See Tiller, 121 S.W.3d at 714 (holding efforts to pressure widow of contracting party to complete project were legally insufficient evidence of intentional infliction). 27 See, e.g., id. at 713-14 (discussing contrary evidence showing defendant’s reasonable concerns about timeliness of plaintiff’s work);

Sears, 84 S.W.3d at 612 (discussing contrary evidence that defendant believed claimant was involved in suspicious dealings).

168 S.W.3d 802, *812; 2005 Tex. LEXIS 436, **16

More generally, evidence cannot be taken out of context in a way that makes it seem to support a verdict when in fact it never did. 28 If a witness’s statement ″I did not do that″ is contrary to the jury’s verdict, a reviewing court may need to disregard the whole statement, but cannot rewrite [**17] it by disregarding the middle word alone. Thus, HN4 if evidence may be legally sufficient in one context but insufficient in another, the context cannot be disregarded even if that means rendering judgment contrary to the jury’s verdict. Either ″evidence contrary to the verdict″ must be defined to exclude material contextual evidence, or it must be an exception to the general rule.

B. Competency Evidence It has long been the rule in Texas thatHN5 incompetent evidence is legally insufficient to support a judgment, even if admitted without objection. 29 Thus, evidence showing it to be incompetent cannot be disregarded, even if the result is contrary to the verdict. If the rule were otherwise, incompetent evidence would always be legally sufficient, because the evidence showing it to be incompetent could never be [**18] considered.

Thus, for example, if an eyewitness’s location renders a clear view of an accident ″physically impossible,″ it is no evidence of what occurred, even if the eyewitness thinks otherwise. 30 Similarly, an employee’s testimony that he was in the course and scope of his employment is legally insufficient to support a verdict against his employer if the evidence shows that legal conclusion to be incompetent. 31 [**19] This exception frequently applies to expert testimony. When expert testimony is required, lay evidence supporting liability is legally insufficient. 32 In [*813] such cases, a no-evidence review cannot disregard contrary evidence showing the witness was unqualified to give an opinion. 33 And if an expert’s opinion is based on certain

28 Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, 684, 685, 47 Tex. Sup. Ct. J. 649 (Tex. 2004) (holding no evidence supported defect as comments from deposition ″were read out of context″). 29 Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 n.1, 47 Tex. Sup. Ct. J. 559 (Tex. 2004) (citing Henry v. Phillips, 105 Tex. 459, 151 S.W. 533, 538 (Tex. 1912)). This rule was changed for hearsay evidence in 1983. See TEX. R. EVID. 802 (″Inadmissible hearsay admitted without objection shall not be denied probative value merely because it is hearsay.″). 30 Tex. & P. Ry. Co. v. Ball, 96 Tex. 622, 75 S.W. 4, 6 (Tex. 1903).

31 Minyard Food Stores, Inc. v. Goodman, 80 S.W.3d 573, 579, 45 Tex. Sup. Ct. J. 828 (Tex. 2002) (holding defamation was not in course and scope of employment as duties required employee to cooperate in investigation but not to lie); Robertson Tank Lines, Inc. v. Van Cleave, 468 S.W.2d 354, 360, 14 Tex. Sup. Ct. J. 391 (Tex. 1971) (holding truck driver was not in course of employment during social visit to his father). 32 Bowles v. Bourdon, 148 Tex. 1, 219 S.W.2d 779, 782-83 (Tex. 1949) (affirming directed verdict against malpractice claim as inadequate expert testimony from doctor of same school or practice as defendant rendered proof legally insufficient). 33 See Leitch v. Hornsby, 935 S.W.2d 114, 119, 40 Tex. Sup. Ct. J. 159 (Tex. 1996).

168 S.W.3d 802, *813; 2005 Tex. LEXIS 436, **19

assumptions about the facts, we cannot disregard evidence showing those assumptions were unfounded. 34

35

[**20] After we adopted gate-keeping standards for expert testimony, evidence that failed to meet reliability standards was rendered not only inadmissible but incompetent as well. 36 Thus, an appellate court conducting a no-evidence review cannot consider only an expert’s bare opinion, but must also consider contrary evidence showing it has no scientific basis. 37 Similarly, review of an expert’s damage estimates cannot disregard the expert’s admission on cross-examination that none can be verified. 38 Thus, HN6 evidence that might be ″some evidence″ when considered [**21] in isolation is nevertheless rendered ″no evidence″ when contrary evidence shows it to be incompetent. Again, such evidence cannot be disregarded; it must be an exception either to the exclusive standard of review or to the definition of contrary evidence.

C. Circumstantial Equal Evidence

As noted above, Justice Calvert believed the exclusive standard applied only when a no-evidence challenge asserted the evidence was no more than a scintilla. 39 But he went on to note a ″variation″ that required contrary inferences to be considered when the equal-inference rule applied. 40

In claims or defenses supported only by meager circumstantial evidence, the evidence does not rise above a scintilla (and thus is legally insufficient) if jurors would have to guess whether a vital fact exists. 41 ″When the circumstances are equally consistent with 34 See Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499-500, 38 Tex. Sup. Ct. J. 848 (Tex. 1995) (holding opinion that spray caused frostbite was legally insufficient as it assumed absence of redness when plaintiff admitted the contrary); Roark v. Allen, 633 S.W.2d 804, 809, 25 Tex. Sup. Ct. J. 348 (Tex. 1982) (holding opinion that physician should have warned of possible skull fracture was legally insufficient as it assumed physician was aware of fracture when there was no proof he was). 35 See E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 556, 38 Tex. Sup. Ct. J. 852 (Tex. 1995) (adopting reasoning of Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 125 L. Ed. 2d 469, 113 S. Ct. 2786 (1993)). 36 Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 714, 720 (Tex. 1997).

37 Id. at 711, 724-30.

38 Kerr-McGee Corp. v. Helton, 133 S.W.3d 245, 254-57, 47 Tex. Sup. Ct. J. 248 (Tex. 2004).

39 Calvert, supra note 12, at 364.

40 38 Tex. L. Rev. at 364-65.

41 Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601, 47 Tex. Sup. Ct. J. 266 (Tex. 2004) (holding evidence that truck caught fire unaccompanied by proof identifying any defect did not exceed a scintilla, as jurors would have to guess cause); Marathon Corp. v. Pitzner, 106 S.W.3d 724, 729, 46 Tex. Sup. Ct. J. 689 (Tex. 2003) (per curiam); Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387, 392, 41 Tex. Sup. Ct. J. 187 (Tex. 1997); W. Tel. Corp. v. McCann, 128 Tex. 582, 99 S.W.2d 895, 900 (Tex. 1937); Calvert, supra note 12, at 365.

168 S.W.3d 802, *813; 2005 Tex. LEXIS 436, **21

either of two facts, neither fact may be inferred.″ 42 In such cases, we must ″view each piece of [**22] circumstantial [*814] evidence, not in isolation, but in light of all the known circumstances.″ 43 Justice Calvert argued there was ″no necessity for [**23] the variation″ because drawing an inference based on meager evidence was unreasonable whether or not the reviewing court considered the opposing inferences. 44 Nevertheless, he recognized that ″the opposing inference is present and it does no harm to note its presence.″ 45

In subsequent cases this Court has continued to note rather than disregard the presence of equal but opposite inferences, often because lower courts have overlooked them. Thus, for example, one might infer from cart tracks in spilled macaroni salad that it had been on the floor a long time, but one might also infer the opposite-- that a sloppy shopper recently did both. 46 [**24] Similarly, when injury or death occurs without eyewitnesses and only meager circumstantial evidence suggests what happened, we cannot disregard other meager evidence of equally likely causes. 47 Thus, HN7 when the circumstantial evidence of a vital fact is meager, a reviewing court must consider not just favorable but all the circumstantial evidence, and competing inferences as well.

D. Conclusive Evidence

Next, Justice Calvert noted that Texas courts conducting a no-evidence review traditionally do not disregard contrary evidence that conclusively establishes the opposite of a vital fact. 48 [**25] He argued that this is to some extent not a ″true″ 42 Tubelite, a Div. of Indal, Inc. v. Risica & Sons, Inc., 819 S.W.2d 801, 805, 35 Tex. Sup. Ct. J. 225 (Tex. 1991); see also Litton Indus.

Prods., Inc. v. Gammage, 668 S.W.2d 319, 324, 27 Tex. Sup. Ct. J. 166 (Tex. 1984) (citing Tex. Sling Co. v. Emanuel, 431 S.W.2d 538, 541, 11 Tex. Sup. Ct. J. 582 (Tex. 1968)). 43 Lozano, 52 S.W.3d at 167.

44 Calvert, supra note 12, at 365.

45 Id.

46 Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 938, 41 Tex. Sup. Ct. J. 811 (Tex. 1998).

47 See Marathon Corp. v. Pitzner, 106 S.W.3d 724, 729, 46 Tex. Sup. Ct. J. 689 (Tex. 2003) (per curiam); McCann, 99 S.W.2d at 900.

48 Calvert, supra note 12, at 363-64. But other commentators disagree. See Powers, supra note 10, at 1703-10. We have held that a ″conclusively and as a matter of law″ point may be asserted under a ″no evidence″ point. O’Neil v. Mack Trucks, Inc., 542 S.W.2d 112, 113, 19 Tex. Sup. Ct. J. 462 (Tex. 1976). And the cases in this section note that conclusive proof is often asserted by parties that do not carry the burden of proof. See also Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241, 44 Tex. Sup. Ct. J. 664 (Tex. 2001) (per curiam) (court must first examine record for evidence supporting verdict, ignoring all evidence to the contrary; if there is no such evidence, the court then examines the entire record to see if the contrary finding is established as a matter of law).

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no-evidence claim, as proponents may have to show not only that no evidence supports the verdict but that the opposite was proved as a matter of law. 49 HN8 There are several types of conclusive evidence. First, an appellate court conducting a legal sufficiency review cannot ″disregard undisputed evidence that allows of only one logical inference.″ 50 [**26] By definition, such evidence can be viewed in only one light, and reasonable jurors can reach only one conclusion from it. Jurors are not free to reach a verdict contrary to such evidence; 51 indeed, uncontroverted issues [*815] need not be submitted to a jury at all. 52

HN9 Reviewing legal sufficiency in such cases encompasses a general no-evidence review, because if some evidence supports the verdict then the contrary evidence was not ″undisputed.″ But the review does not stop there; [**27] the evidence must also have only one logical inference. Undisputed evidence that reasonable jurors could disbelieve has two: (1) it is true, or (2) it is not. Most often, undisputed contrary evidence becomes conclusive (and thus cannot be disregarded) when it concerns physical facts that cannot be denied. Thus, no evidence supports an impaired-access claim if it is undisputed that access remains along 90 percent of a tract’s frontage. 53 Evidence that a buyer believed a product had been repaired is conclusively negated by an accompanying letter to the contrary. 54 And an insured’s liability has not been determined by an ″actual trial″ if the insured did not appear, present evidence, or challenge anything presented by his opponent. 55 [**28] Undisputed contrary evidence may also become conclusive when a party admits it is true. Thus, a claimant’s admission that he was aware of a dangerous premises

49 Calvert, supra note 12, at 363-64. But see, e.g., Cecil v. Smith, 804 S.W.2d 509, 510 n.2, 34 Tex. Sup. Ct. J. 383 (Tex. 1991) (″Cecil’s points that (1) there was no evidence to support the findings and (2) the contrary of each finding was established as a matter of law will hereinafter collectively be referred to as her ″no evidence″ points.″). 50 St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 519-20, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.) (quoting Universe Life Ins. Co.

v. Giles, 950 S.W.2d 48, 51 n.1, 40 Tex. Sup. Ct. J. 810 (Tex. 1997)). 51 Tex. & N.O.R Co. v. Burden, 146 Tex. 109, 203 S.W.2d 522, 528, 530 (Tex. 1947); see also Prudential Ins. Co. of Am. v. Krayer, 366 S.W.2d 779, 783, 6 Tex. Sup. Ct. J. 381 (Tex. 1963) (finding evidence of suicide undisputed after disregarding disputed portion of facts). 52 Sullivan v. Barnett, 471 S.W.2d 39, 44, 14 Tex. Sup. Ct. J. 416 (Tex. 1971); Wright v. Vernon Compress Co., 156 Tex. 474, 296 S.W.2d 517, 523 (Tex. 1956) (″The trial court is required to submit only controverted issues. No jury finding is necessary to establish undisputed facts.″); Clark v. Nat’l Life & Accident Ins. Co., 145 Tex. 575, 200 S.W.2d 820, 822 (Tex. 1947) (″Uncontroverted questions of fact need not be and should not be submitted to the jury for its determination.″); S. Underwriters v. Wheeler, 132 Tex. 350, 123 S.W.2d 340, 341 (Tex. 1939). 53 County of Bexar v. Santikos, 144 S.W.3d 455, 460-61, 47 Tex. Sup. Ct. J. 1010 (Tex. 2004).

54 PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 97-98, 47 Tex. Sup. Ct. J. 822 (Tex. 2004).

55 State Farm Lloyds Ins. Co. v. Maldonado, 963 S.W.2d 38, 40, 41 Tex. Sup. Ct. J. 443 (Tex. 1998).

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condition is conclusive evidence he needed no warning about it. 56 Similarly, an ex-employee’s admission that she obtained other employment may prove conclusively that she did not detrimentally rely on a defendant’s promise to re-hire her. 57 And jurors may not find that an indictment was based on a defendant’s misleading report when the district attorney admits it was his own mistake. 58 164 S.W.3d 607, 48 Tex. Sup. Ct. J. 226 [**29]It is impossible to define precisely when undisputed evidence becomes conclusive. For example, an injured employee’s return to work may prove conclusively that an injury was not total, 59 or it may not. 60 Circumstances in which a body is found may conclusively establish suicide, 61 or allow [*816] jurors to infer otherwise. 62 [**30] Evidence is conclusive only if reasonable people could not differ in their conclusions, 63 a matter that depends on the facts of each case. There is another category of conclusive evidence, in which the evidence is disputed. HN10 Undisputed evidence and conclusive evidence are not the same -- undisputed evidence may or may not be conclusive, and conclusive evidence may or may not be undisputed. Thus, for example, in Murdock v. Murdock, we found no evidence to support a verdict establishing the defendant’s paternity when blood tests conclusively proved he was not the child’s father. 64 The evidence was directly disputed -- the child’s mother testified she had conjugal relations with no one else during the relevant time. 65 [**31]

56 Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709-10, 46 Tex. Sup. Ct. J. 530 (Tex. 2003) (per curiam).

57 See Johnson & Johnson Med., Inc. v. Sanchez, 924 S.W.2d 925, 930, 39 Tex. Sup. Ct. J. 790 (Tex. 1996).

58 King v. Graham, 126 S.W.3d 75, 78-79, 47 Tex. Sup. Ct. J. 85 (Tex. 2003) (per curiam) (holding no evidence supported malicious prosecution claim as district attorney admitted prosecution was due to item he overlooked rather than any false statements by defendants).

59 Travelers Ins. Co. v. Seabolt, 361 S.W.2d 204, 206, 6 Tex. Sup. Ct. J. 44 (Tex. 1962) (return to regular job in which use of hand was required conclusively established claimant did not suffer total loss of use). 60 Navarette v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 309-10, 29 Tex. Sup. Ct. J. 282 (Tex. 1986) (return to work did not conclusively establish injury was not total as claimant could not do regular work and employer voluntarily accommodated her with lesser duties). 61 See, e.g., Prudential Ins. Co. of Am. v. Krayer, 366 S.W.2d 779, 783, 6 Tex. Sup. Ct. J. 381 (Tex. 1963).

62 See Republic Nat’l Life Ins. Co. v. Heyward, 536 S.W.2d 549, 552, 19 Tex. Sup. Ct. J. 280 (Tex. 1976).

63 Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 340, 42 Tex. Sup. Ct. J. 43 (Tex. 1998); Triton Oil & Gas Corp. v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446, 26 Tex. Sup. Ct. J. 73 (Tex. 1982). 64 811 S.W.2d 557, 560, 34 Tex. Sup. Ct. J. 733 (Tex. 1991).

65 Id. at 558.

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Nevertheless, we held there was no evidence to support the paternity verdict because of conclusive evidence to the contrary. 66 Similarly, in Texas & New Orleans Railroad Co. v. Compton, we found no evidence that a railroad’s negligence caused an automobile to slam into the sixtieth car of a slow-moving train. 67 Again, the evidence was hotly disputed -- while railroad witnesses testified that warning signs were in place at the crossing, the car’s driver and a passenger testified they saw nothing, and would have been able to stop if they had. 68 Nevertheless, we held there was no evidence to support the claim because, if the driver could not see the side of a train before he hit it, he could not have seen a crossing sign either. 69

Of course, there are few instances in which disputed evidence is conclusive, and many instances in which [**32] undisputed evidence is not. As our sister court has noted, testimony by a paid informant is legally sufficient to support a conviction, even if ″twenty nuns testify that the defendant was with them at the time, far from the scene of the crime … [and] twenty more nuns testify that they saw the informant commit the crime.″ 70 But a more famous clerical hypothetical by Judge Learned Hand shows the opposite limit:

If, however, it were proved by twenty bishops that either party, when he used the words [in a contract], intended something else than the usual meaning which the law imposes upon them, he would still be held . . . . 71

While jurors may generally believe either sinners or saints, their discretion is limited when it is proved beyond question that an ″eyewitness″ was actually far away in prison or totally blind on the day of the crime.

[**33]HN11 Proper legal-sufficiency review prevents reviewing courts from substituting [*817] their opinions on credibility for those of the jurors, but proper review also prevents jurors from substituting their opinions for undisputed truth. When evidence contrary to a verdict is conclusive, it cannot be disregarded.

E. Clear-and-Convincing Evidence 66 Id. at 560. In defense of jurors, it should be noted that the trier-of-fact in Murdock was a judge.

67 135 Tex. 7, 136 S.W.2d 1113, 1115 (Tex. 1940).

68 Id.

69 Id.

70 Clewis v. State, 922 S.W.2d 126, 133 n.12 (Tex. Crim. App. 1996) (en banc) (citation omitted).

71 Hotchkiss v. Nat’l City Bank, 200 F. 287, 293 (S.D.N.Y. 1911).

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Since the time of Justice Calvert’s article, new claims and burdens of proof have arisen that require additions to the four types of no-evidence review Justice Calvert considered exhaustive. Beginning with the United States Supreme Court’s opinion in Jackson v. Virginia, appellate courts have recognized that, while ″one slender bit of evidence″ may be all a reviewing court needs to affirm a verdict based on the preponderance of the evidence, a higher burden of proof requires a higher standard of review. 72 As we recently stated, the standard for legal sufficiency works in tandem with the standard of review -- ″whenever the standard of proof at trial is elevated, the standard of appellate review must likewise be elevated.″ 73 If the rule were otherwise, legally sufficient evidence to support a preponderance-of-the-evidence verdict would satisfy [**34] the higher burdens as well, thus rendering their differences meaningless. 74 Accordingly, we have held that a legal sufficiency review must consider all the evidence (not just that favoring the verdict) in reviewing cases of parental termination, 75 [**35] defamation, 76 and punitive damages. 77 In such cases, again, evidence contrary to a verdict cannot be disregarded.

F. Consciousness Evidence Further, we have had to particularize legal-sufficiency review in cases involving what a party knew or why it took a certain course, as they are not amenable to review under the exclusive standard.

Long before gross negligence had to meet a clear-and-convincing burden, we recognized in Burk Royalty Co. v. Walls that no-evidence review of such findings had to include ″all of the surrounding facts, circumstances, and conditions, not just individual elements or facts.″ 78 [**36] As then Chief Justice Greenhill noted in concurring, speeding and running a red light may not be legally sufficient evidence of gross negligence if one’s 72 443 U.S. 307, 320 n.14, 61 L. Ed. 2d 560, 99 S. Ct. 2781 (1979).

73 Southwestern Bell Tel. Co. v. Garza, ___ S.W.3d ___, ___, 48 Tex. Sup. J. 226 (Tex. 2004).

74 Our sister court reviews the legal sufficiency of criminal convictions by considering ″all evidence which the jury was permitted, whether rightly or wrongly, to consider″ in the light most favorable to the prosecution. Moff v. State, 131 S.W.3d 485, 488 (Tex. Crim. App. 2004); see also Vodochodsky v. State, 158 S.W.3d 502, 509 (Tex. Crim. App. 2004). 75 In re J.F.C., 96 S.W.3d 256, 266 (Tex. 2002).

76 Bentley v. Bunton, 94 S.W.3d 561, 596, 45 Tex. Sup. Ct. J. 1172 (Tex. 2002); Turner v. KTRK Television, Inc., 38 S.W.3d 103, 120, 44 Tex. Sup. Ct. J. 244 (Tex. 2000). 77 Garza, ___ S.W.3d at ___, 48 Tex. Sup. J. 226.

78 616 S.W.2d 911, 922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981).

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wife and daughter are bleeding to death in the back seat. 79 Reviewing courts assessing evidence of conscious indifference cannot disregard part of what a party was conscious of. 80

For the same reasons, the exclusive standard of review has proven problematic in insurance bad-faith cases. Liability in [*818] such cases requires proof that the insurer denied coverage after it became reasonably clear. 81 But that standard will always be met if reviewing courts must disregard any evidence that coverage was unclear. 82 Subsequent cases show that reviewing courts are in fact looking at all the evidence to determine whether coverage was reasonably clear. 83 [**37]This problem arises in other contexts as well. In discrimination cases, discharged employees will never have to prove that the reason given for termination was a pretext if no-evidence review must disregard that reason. 84 Government officials will never be entitled to immunity if we consider only evidence suggesting they should have acted differently. 85 And limitations will never run under the discovery rule if reviewing courts must disregard all evidence that claimants knew of their claims. 86 [**38] This is not to say a reviewing court may credit a losing party’s explanations or excuses if jurors could disregard them. For example, while an insurer’s reliance on an 79 Id. at 926 (Greenhill, C.J., concurring).

80 See Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 234-35, 47 Tex. Sup. Ct. J. 559 (Tex. 2004).

81 Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 55-56, 40 Tex. Sup. Ct. J. 810 (Tex. 1997).

82 See id. at 51 (noting same problem with previous test whether insurer had reasonable basis for denying claim).

83 See Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d 253, 262-63, 45 Tex. Sup. Ct. J. 659 (Tex. 2002) (finding no evidence of bad faith based in part on defendant’s correspondence showing misunderstanding regarding settlement terms); State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 45, 41 Tex. Sup. Ct. J. 371 (Tex. 1998)(affirming bad-faith verdict after noting that insurer gave contradictory reasons for not interviewing potential arsonists); Minn. Life Ins. Co. v. Vasquez, 133 S.W.3d 320, 330 (Tex. App.--Corpus Christi 2004, pet. filed) (finding some evidence of bad faith because, though insurer showed hospital stymied its efforts to obtain records, insurer failed to seek same information from other sources); Allstate Tex. Lloyds v. Mason, 123 S.W.3d 690, 704-06 (Tex. App.--Fort Worth 2003, no pet.) (reversing bad-faith verdict for legal insufficiency because insurer reasonably relied on expert report); Allison v. Fire Ins. Exch., 98 S.W.3d 227, 249-50 (Tex. App.--Austin 2002, pet. granted, judgm’t vacated w.r.m.) (affirming bad-faith verdict after reviewing insurer’s reasons for delay and insured’s responsive evidence); Oram v. State Farm Lloyds, 977 S.W.2d 163, 167 (Tex. App.--Austin 1998, no pet.) (reversing bad-faith verdict for legal insufficiency because insurer’s interpretation of exclusion was reasonable though incorrect). 84 Wal-Mart Stores, Inc. v. Canchola, 121 S.W.3d 735, 740, 46 Tex. Sup. Ct. J. 1116 (Tex. 2003) (per curiam) (noting liability may be established by proof of discrimination plus proof employer’s reason was pretext); Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 452, 40 Tex. Sup. Ct. J. 172 (Tex. 1996) (same). 85 See, e.g., Univ. of Houston v. Clark, 38 S.W.3d 578, 583 (Tex. 2000) (noting good-faith test considers all circumstances on which official acted). 86 See, e.g., PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 94, 47 Tex. Sup. Ct. J. 822 (Tex. 2004)

(holding no evidence supported jury verdict applying discovery rule based on contrary evidence that claimant’s predecessor knew 3,000 windows had failed).

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expert report may foreclose bad faith recovery, 87 it will not do so if the insurer had some reason to doubt the report. 88 But a reviewing court cannot review whether jurors could reasonably disregard a losing party’s explanations or excuses without considering what they were.

III. Contrary Evidence That Must Be Disregarded As trials normally focus on issues that jurors could decide either way, reviewing [*819] courts must disregard [**39] evidence contrary to the verdict far more often than they must consider it. Just as no-evidence review that starts by disregarding contrary evidence often must end up considering considerably more, no-evidence review that begins by considering all the evidence must usually end up considering considerably less.

Again, we do not presume to categorize all circumstances in which contrary evidence must be disregarded; a few examples serve to demonstrate that even under the inclusive standard, viewing all the evidence in a light favorable to the verdict often requires that much of it be disregarded.

A. Credibility Evidence HN12 Jurors are the sole judges of the credibility of the witnesses and the weight to give their testimony. 89 [**40] They may choose to believe one witness and disbelieve another. 90 Reviewing courts cannot impose their own opinions to the contrary. 91 HN13 Most credibility questions are implicit rather than explicit in a jury’s verdict. Thus, reviewing courts must assume jurors decided all of them in favor of the verdict if reasonable human beings could do so. Courts reviewing all the evidence in a light

87 See, e.g., Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 194-95, 42 Tex. Sup. Ct. J. 215, 42 Tex. Sup. Ct. J. 610 (Tex. 1998)

(finding no evidence insurer denied claim in bad faith due to conflicting medical evidence). 88 See, e.g., State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448, 40 Tex. Sup. Ct. J. 794 (Tex. 1997) (holding some evidence showed expert report was pretext and thus denial of claim had no reasonable basis). 89 Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761, 46 Tex. Sup. Ct. J. 1133 (Tex. 2003); Jaffe Aircraft Corp. v. Carr, 867 S.W.2d 27, 28, 37 Tex. Sup. Ct. J. 268 (Tex. 1993); McGalliard v. Kuhlmann, 722 S.W.2d 694, 697, 30 Tex. Sup. Ct. J. 96 (Tex. 1986); Edrington v. Kiger, 4 Tex. 89, 93 (1849). 90 McGalliard, 722 S.W.2d at 697; Silcott v. Oglesby, 721 S.W.2d 290, 293, 30 Tex. Sup. Ct. J. 114 (Tex. 1986); Ford v. Panhandle & Santa Fe Ry. Co., 151 Tex. 538, 252 S.W.2d 561, 563 (Tex. 1952) (holding it was up to jurors ″to resolve conflicts and inconsistencies in the testimony of any one witness as well as in the testimony of different witnesses″); Houston, E. & W.T. Ry. Co. v. Runnels, 92 Tex. 305, 47 S.W. 971, 972 (Tex. 1898). 91 Turner v. KTRK Television, Inc., 38 S.W.3d 103, 120, 44 Tex. Sup. Ct. J. 244 (Tex. 2000).

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favorable to the verdict thus assume that jurors credited testimony favorable to the verdict and disbelieved testimony contrary to it. 92 [**41] For example, viewing the evidence in the light favorable to the verdict means that if both parties in a traffic accident testify they had the green light, an appellate court must presume the prevailing party did and the losing party did not. If the parties to an oral contract testify to conflicting terms, a reviewing court must presume the terms were those asserted by the winner. When all the evidence is viewed in the light most favorable to the jury verdict, some of it must be completely discounted. Though not disregarded at the outset, the end result is the same.

This has always been our practice in cases using the inclusive scope of review. Thus, we have concluded that a bailee sold cotton without the bailor’s consent, despite the former’s denials, because the jury verdict favored the latter. 93 [**42] And we have affirmed a gross negligence verdict based on testimony that the defendant’s speed was 80 miles per hour, without mentioning his own testimony to a speed half that. 94 Nor is it necessary to have testimony from both parties before jurors [*820] may disbelieve either. HN14 Jurors may disregard even uncontradicted and unimpeached testimony from disinterested witnesses. 95 Thus, an architect’s uncontradicted testimony that he relied on a 20-year warranty was not binding on jurors when the bid specifications he prepared included only much shorter warranties. [**43] 96 Nor was an insured’s uncontradicted testimony about lost furnishings binding on jurors when the fire scene contained several indications of arson but few of burnt furniture. 97 Even uncontroverted expert testimony does not bind jurors unless the subject matter is one for experts alone. 98

92 Runnels, 47 S.W. at 972.

93 Cochran v. Wool Growers Cent. Storage Co., 140 Tex. 184, 166 S.W.2d 904, 907 (Tex. 1942) (noting the Court ″read the entire statement of facts″). 94 Harbin v. Seale, 461 S.W.2d 591, 594, 14 Tex. Sup. Ct. J. 128 (Tex. 1970); compare Harbin v. Seale, 454 S.W.2d 271, 272 (Tex.

Civ. App.--Dallas 1970) (reporting defendant’s testimony that he was traveling only 40 miles per hour), rev’d, 461 S.W.2d 591, 14 Tex. Sup. Ct. J. 128 (Tex. 1970). 95 MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 653-54, 42 Tex. Sup. Ct. J. 656 (Tex. 1999) (holding evidence allowed jurors to disbelieve defendant’s experts’ testimony even though plaintiff’s expert’s testimony was shown to be in error); Runnels, 47 S.W. at 972; Cheatham v. Riddle, 12 Tex. 112, 118 (1845). 96 PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 100, 47 Tex. Sup. Ct. J. 822 (Tex. 2004).

97 Anchor Cas. Co. v. Bowers, 393 S.W.2d 168, 169-70, 8 Tex. Sup. Ct. J. 544 (Tex. 1965).

98 Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 338, 42 Tex. Sup. Ct. J. 43 (Tex. 1998); McGalliard v. Kuhlmann, 722 S.W.2d 694, 697, 30 Tex. Sup. Ct. J. 96 (Tex. 1986).

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Of course, HN15 ″the jury’s decisions regarding credibility must be reasonable.″ 99 [**44] Jurors cannot ignore undisputed testimony that is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted. 100 And as noted above, they are not free to believe testimony that is conclusively negated by undisputed facts. But whenever reasonable jurors could decide what testimony to discard, a reviewing court must assume they did so in favor of their verdict, and disregard it in the course of legal sufficiency review.

B. Conflicting Evidence HN16 It is the province of the jury to resolve conflicts in the evidence. 101 [**45] Accordingly, courts reviewing all the evidence in a light favorable to the verdict must assume that jurors resolved all conflicts in accordance with that verdict. 102 Again, this has always been the case even in those cases using the inclusive scope of review. For example, in such cases we have sometimes detailed only the evidence that supported a jury’s fraud finding. 103 We have affirmed a bad-faith verdict for legal sufficiency despite ″significant evidence″ that the insurer acted in [*821] good faith. 104 We have found some evidence of lost profits, even though income tax returns showed the contrary. [**46] 105 And we have affirmed a jury’s negligence finding despite a defendant’s evidence asserting it could not have prevented the accident. 106 In none of these cases did we state that the scope of review required us to disregard evidence contrary to the verdict; instead, we started by considering the entire record in each. But in each case we either discounted or never mentioned conflicting evidence contrary to the verdict because viewing the evidence in the light favorable to the verdict required us to do so. 99 Bentley v. Bunton, 94 S.W.3d 561, 599, 45 Tex. Sup. Ct. J. 1172 (Tex. 2002).

100 See TEX. R. CIV. P. 166a(c); Wal-Mart Stores, Inc. v. Reece, 81 S.W.3d 812, 817, 45 Tex. Sup. Ct. J. 863 (Tex. 2002) (finding no evidence that store knew of puddle based in part on uncontradicted testimony by only employee in the area); In re Doe 4, 19 S.W.3d 322, 325, 43 Tex. Sup. Ct. J. 537 (Tex. 2000); WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 574, 41 Tex. Sup. Ct. J. 1394 (Tex. 1998) (holding reporter’s detailed explanation of foundation of report established lack of malice as matter of law). 101 See, e.g., Dresser Indus., Inc. v. Lee, 880 S.W.2d 750, 754, 37 Tex. Sup. Ct. J. 67 (Tex. 1993); Lyons v. Millers Cas. Ins. Co., 866 S.W.2d 597, 601, 37 Tex. Sup. Ct. J. 241 (Tex. 1993); Biggers v. Cont’l Bus Sys., Inc., 157 Tex. 351, 303 S.W.2d 359, 365 (Tex. 1957); Howard Oil Co. v. Davis, 76 Tex. 630, 13 S.W. 665, 667 (Tex. 1890) (holding reviewing court must uphold jury verdict despite strong evidence to the contrary if evidence is conflicting). 102 See, e.g., Gen. Motors Corp. v. Sanchez, 997 S.W.2d 584, 592, 42 Tex. Sup. Ct. J. 969 (Tex. 1999); Caller-Times Publ’g Co. v. Triad Communications, Inc., 826 S.W.2d 576, 580, 35 Tex. Sup. Ct. J. 509 (Tex. 1992); Bendalin v. Delgado, 406 S.W.2d 897, 899, 10 Tex. Sup. Ct. J. 18 (Tex. 1966). 103 Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48-49, 41 Tex. Sup. Ct. J. 289 (Tex. 1998).

104 Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 286, 41 Tex. Sup. Ct. J. 389 (Tex. 1998).

105 White v. Southwestern Bell Tel. Co., 651 S.W.2d 260, 262-63, 26 Tex. Sup. Ct. J. 441 (Tex. 1983).

106 Hall v. Med. Bldg. of Houston, 151 Tex. 425, 251 S.W.2d 497, 502 (Tex. 1952).

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Of course, it is not always clear whether evidence is conflicting. HN17 Evidence is not conflicting just because the parties cannot agree to it. For example, evidence that a hospital controlled a doctor’s rotation and patient assignments raises no material conflict with evidence that a different entity controlled the details of medical treatment, as only the latter is material in a malpractice case. 107 Similarly, evidence showing the terms of one loan does not conflict with undisputed evidence that the parties never reached an agreement [**47] regarding the terms of another. 108

But in every circumstance in which reasonable jurors could resolve conflicting evidence either way, reviewing courts must presume they did so in favor of the prevailing party, and disregard the conflicting evidence in their legal sufficiency review.

C. Conflicting Inferences HN18 Even if evidence is undisputed, it is the province of the jury to draw from it whatever inferences they wish, so long as more than one is possible and the jury must not simply guess. Thus, in product liability cases jurors may find evidence of a defect from subsequent modifications, even if there were plenty of other reasons for the changes. 109 Even if a defendant admits approaching an intersection from the wrong way on a one-way street, jurors may infer the plaintiff failed to keep a proper lookout, [**48] as that is one possible inference from the accident itself. 110 Similarly, jurors may infer that relatives tore down posters of a missing child to assist the child’s father, even though another inference was that the signs simply embarrassed them. 111

Accordingly, courts reviewing all the evidence in a light favorable to the verdict must assume jurors made all inferences in favor of their verdict if reasonable minds could, and disregard all other inferences in their legal sufficiency review.

IV. Reconciling the Standards

Having noted the dual lines of authority stating the scope of no-evidence review, and the proper application and exceptions to each, [**49] we turn to the question of which one is correct. For the reasons [*822] discussed below, we believe the answer is both.

A. Goals: The Standards Must Be The Same 107 St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 542-43, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.).

108 T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221, 36 Tex. Sup. Ct. J. 259 (Tex. 1992).

109 Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 341-42, 42 Tex. Sup. Ct. J. 43 (Tex. 1998).

110 De Winne v. Allen, 154 Tex. 316, 277 S.W.2d 95, 98-99 (Tex. 1955).

111 Lozano v. Lozano, 52 S.W.3d 141, 144, 44 Tex. Sup. Ct. J. 499 (Tex. 2001) (per curiam); id. at 162-63 (Hecht, J., concurring and dissenting).

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HN19 Whether a court begins by reviewing all the evidence or disregarding part in a legal-sufficiency review, there can be no disagreement about where that review should end. If the evidence at trial would enable reasonable and fair-minded people to differ in their conclusions, then jurors must be allowed to do so. 112 [**50] A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement. 113

Similarly, there is no disagreement about how a reviewing court should view evidence in the process of that review. HN20 Whether a reviewing court starts with all or only part of the record, the court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it. 114 [**51] But if the evidence allows of only one inference, neither jurors nor the reviewing court may disregard it. 115

Given these premises, it is no coincidence that the two standards should reach the same result -- indeed they must. Any scope of appellate review smaller than what reasonable jurors could believe will reverse some verdicts that are perfectly reasonable; any scope of review larger than what reasonable jurors could believe will affirm some verdicts that are not. Further, HN21 the two must coincide if this Court is to perform its constitutional duties. Although factual sufficiency has been the sole domain of the intermediate appellate courts in Texas since 1891, our jurisdiction has always included legal sufficiency, as

112 See Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 552, 47 Tex. Sup. Ct. J. 707 (Tex. 2004); Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 234, 47 Tex. Sup. Ct. J. 559 (Tex. 2004); Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601, 47 Tex. Sup. Ct. J. 266 (Tex. 2004); Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 922, 41 Tex. Sup. Ct. J. 763 (Tex. 1998); Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499, 38 Tex. Sup. Ct. J. 848 (Tex. 1995); Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25, 37 Tex. Sup. Ct. J. 883 (Tex. 1994); Orozco v. Sander, 824 S.W.2d 555, 556, 35 Tex. Sup. Ct. J. 338 (Tex. 1992); Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63, 26 Tex. Sup. Ct. J. 383 (Tex. 1983); Corbin v. Safeway Stores, Inc., 648 S.W.2d 292, 297, 26 Tex. Sup. Ct. J. 321 (Tex. 1983) (per curiam). 113 See William Powers, Jr. & Jack Ratliff, Another Look at ″No Evidence″ & ″Insufficient Evidence,″ 69 TEX. L.R. 515, 517-20 (1991). 114 Gragg, 151 S.W.3d at 552; St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 519, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.);

Southwestern Bell Mobile Sys., Inc. v. Franco, 971 S.W.2d 52, 54, 41 Tex. Sup. Ct. J. 930 (Tex. 1998) (per curiam); Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48, 41 Tex. Sup. Ct. J. 289 (Tex. 1998); Havner, 953 S.W.2d at 711; Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 75, 40 Tex. Sup. Ct. J. 810 (Tex. 1997) (Hecht, J., concurring); Preferred Heating & Air Conditioning Co. v. Shelby, 778 S.W.2d 67, 68, 33 Tex. Sup. Ct. J. 18 (Tex. 1989) (per curiam); Burk Royalty Co. v. Walls, 616 S.W.2d 911, 922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981); Harbin v. Seale, 461 S.W.2d 591, 592, 14 Tex. Sup. Ct. J. 128 (Tex. 1970); W. Tel. Corp. v. McCann, 128 Tex. 582, 99 S.W.2d 895, 898 (Tex. 1937). 115 See St. Joseph Hosp., 94 S.W.3d at 519-20 (Tex. 2002) (plurality op.); Giles, 950 S.W.2d at 51 n. 1 (citing Wininger v. Ft. Worth & D.C. Ry. Co., 105 Tex. 56, 143 S.W. 1150, 1152 (Tex. 1912) and Tex. & N.O. Ry. Co. v. Rooks, 293 S.W. 554, 556-57 (Tex. Comm’n. App. 1927)).

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that is a question of law, not of fact. 116 Construing either standard to require us to do less would be just as unconstitutional as construing [**52] either to allow us to do more.

This is not to say judges and lawyers will always agree whether evidence is legally [*823] sufficient. As discussed more fully below, reasonable people may disagree about what reasonable jurors could or must believe. But once those boundaries are settled, any standard of review must coincide with those boundaries -- affirming jury verdicts based on evidence within them and reversing jury verdicts based on evidence that is not. Any standard that does otherwise is improperly applied.

B. Other Motions: The Standards Must Be The Same

Just as the scope of no-evidence review must coincide with its goals, the scope of review should not depend upon the motion in which it is asserted. Judgment without or against a jury verdict is proper [**53] at any course of the proceedings only when the law does not allow reasonable jurors to decide otherwise. Accordingly, the test for legal sufficiency should be the same for summary judgments, directed verdicts, judgments notwithstanding the verdict, and appellate no-evidence review.

Our statements of the standard for reviewing a directed verdict present the same mixed bag found with general no-evidence review. We have most often used the exclusive standard, stating that courts reviewing directed verdicts must consider only evidence supporting the nonmovant’s case and disregard all contrary evidence. 117 But we have also stated that reviewing courts should use the inclusive standard, considering all the evidence in a light contrary to the directed verdict. [**54] 118 And we have sometimes

116 Southwestern Bell Tel. Co. v. Garza, ___ S.W.3d ___, ___, 48 Tex. Sup. J. 226 (Tex. 2004) (citing Choate v. San Antonio & A.P.

Ry., 91 Tex. 406, 44 S.W. 69, 69 (Tex. 1898); Muhle v. N.Y., T. & M. Ry., 86 Tex. 459, 25 S.W. 607, 608 (Tex. 1894)). 117 Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 234, 47 Tex. Sup. Ct. J. 559 (Tex. 2004); Qantel Bus. Sys., Inc. v. Custom Controls Co., 761 S.W.2d 302, 303, 32 Tex. Sup. Ct. J. 115 (Tex. 1988); Hart v. Van Zandt, 399 S.W.2d 791, 793, 9 Tex. Sup. Ct. J. 66 (Tex. 1965); Triangle Motors v. Richmond, 152 Tex. 354, 258 S.W.2d 60, 61 (Tex. 1953); Ford v. Panhandle & Santa Fe Ry. Co., 151 Tex. 538, 252 S.W.2d 561, 562 (Tex. 1952); Anglin v. Cisco Mortgage Loan Co., 135 Tex. 188, 141 S.W.2d 935, 938 (Tex. 1940). 118 Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, 684, 47 Tex. Sup. Ct. J. 649 (Tex. 2004); S.V. v. R.V., 933 S.W.2d 1, 8, 39 Tex. Sup. Ct. J. 386 (Tex. 1996); Colvin v. Red Steel Co., 682 S.W.2d 243, 245, 28 Tex. Sup. Ct. J. 153 (Tex. 1984); White v. Southwestern Bell Tel. Co., 651 S.W.2d 260, 262, 26 Tex. Sup. Ct. J. 441 (Tex. 1983); Seideneck v. Cal Bayreuther Assocs., 451 S.W.2d 752, 753, 13 Tex. Sup. Ct. J. 227 (Tex. 1970); Dunagan v. Bushey, 152 Tex. 630, 263 S.W.2d 148, 153 (Tex. 1953); Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 258 (Tex. 1951); Kelly v. McKay, 149 Tex. 343, 233 S.W.2d 121, 122 (Tex. 1950); White v. White, 141 Tex. 328, 172 S.W.2d 295, 296 (Tex. 1943); McAfee v. Travis Gas Corp., 137 Tex. 314, 153 S.W.2d 442, 445 (Tex. 1941); Wellington Oil Co. v. Maffi, 136 Tex. 201, 150 S.W.2d 60, 61 (Tex. 1941); Chicago, R.I. & G. Ry. Co. v. Carter, 261 S.W. 135, 135 (Tex. Com. App. 1924, judgm’t adopted); Charles v. El Paso Elec. Ry. Co., 254 S.W. 1094, 1094-95 (Tex. Com. App. 1923, holding approved, judgm’t adopted).

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stated both, requiring reviewing courts to consider all the evidence in a light contrary to the directed verdict and then to disregard all conflicting evidence that supports it. 119 [**55] By contrast, cases concerning judgments non obstante verdicto most often utilize the inclusive scope of review. Beginning with the 1931 amendment authorizing trial judges to grant them, 120 we have generally reviewed such orders by considering all the evidence in a light favorable to the [*824] verdict that was set aside. 121 [**56] In later years we have sometimes adopted the exclusive standard, 122 but our opinions doing so usually cite to general no-evidence cases in which no judgment n.o.v. was involved. 123

119 Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649, 37 Tex. Sup. Ct. J. 860 (Tex. 1994) (per curiam); Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480, 483, 27 Tex. Sup. Ct. J. 388 (Tex. 1984); Corbin v. Safeway Stores, Inc., 648 S.W.2d 292, 295, 26 Tex. Sup. Ct. J. 321 (Tex. 1983); Jones v. Tarrant Util. Co., 638 S.W.2d 862, 865, 25 Tex. Sup. Ct. J. 416 (Tex. 1982); Collora v. Navarro, 574 S.W.2d 65, 68, 22 Tex. Sup. Ct. J. 120 (Tex. 1978); Henderson v. Travelers Ins. Co., 544 S.W.2d 649, 650, 20 Tex. Sup. Ct. J. 84 (Tex. 1976); Jones v. Nafco Oil & Gas, Inc., 380 S.W.2d 570, 574, 7 Tex. Sup. Ct. J. 480 (Tex. 1964). 120 Act of April 25, 1931, 42d Leg., R.S., ch. 77, § 1, 1931 Tex. Gen. Laws 119; Myers v. Crenshaw, 134 Tex. 500, 137 S.W.2d 7, 13 (Tex. 1940); Hines v. Parks, 128 Tex. 289, 96 S.W.2d 970, 971 (Tex. 1936). Cf. Deal v. Craven, 277 S.W. 1046, 1047 (Tex. Com. App. 1925, judgm’t adopted) (″It has long been settled in this state that the judgment must follow the verdict, and that the courts are without power to enter a judgment notwithstanding a verdict upon a material issue.″). 121 Brown v. Bank of Galveston, Nat’l Ass’n, 963 S.W.2d 511, 513, 41 Tex. Sup. Ct. J. 437 (Tex. 1998) (″We consider the evidence in the light most favorable to the verdict and reasonable inferences that tend to support it.″); Trenholm v. Ratcliff, 646 S.W.2d 927, 931, 26 Tex. Sup. Ct. J. 239 (Tex. 1983) (″In acting on the motion [for judgment notwithstanding the verdict], all testimony must be viewed in a light most favorable to the party against whom the motion is sought, and every reasonable intendment deducible from the evidence is to be indulged in that party’s favor.″) (emphasis added); Dowling v. NADW Mktg., Inc., 631 S.W.2d 726, 728, 25 Tex. Sup. Ct. J. 266 (Tex. 1982) (same); Douglass v. Panama, Inc., 504 S.W.2d 776, 777, 17 Tex. Sup. Ct. J. 142 (Tex. 1974) (same); Leyva v. Pacheco, 163 Tex. 638, 358 S.W.2d 547, 550, 5 Tex. Sup. Ct. J. 475 (Tex. 1962) (same); Houston Fire & Cas. Ins. Co. v. Walker, 152 Tex. 503, 260 S.W.2d 600, 603-04 (Tex. 1953) (affirming trial court’s implied disregard of one jury answer based on ″consideration of the transcript as a whole″); Burt v. Lochausen, 151 Tex. 289, 249 S.W.2d 194, 199 (Tex. 1952) (″We must consider all the testimony in the record from the standpoint most favorable to the plaintiff.″) (emphasis added); Neyland v. Brown, 141 Tex. 253, 170 S.W.2d 207, 211 (Tex. 1943) (considering judgment non obstante veredicto ″in the light of the record as a whole″); Le Master v. Fort Worth Transit Co., 138 Tex. 512, 160 S.W.2d 224, 225 (Tex. 1942) (″We must view LeMaster’s testimony, as well as all other testimony in the record, from a standpoint most favorable to him.″) (emphasis added); McAfee v. Travis Gas Corp., 137 Tex. 314, 153 S.W.2d 442, 445 (Tex. 1941) (″We must regard the evidence contained in this record in its most favorable light for McAfee . . . because of the instructed verdict and judgment non obstante veredicto.″); see also Ballantyne v. Champion Builders, Inc., 144 S.W.3d 417, 424-29, 47 Tex. Sup. Ct. J. 852 (Tex. 2004) (upholding judgment non obstante veredicto based on conclusive evidence contrary to verdict). 122 See Tiller v. McLure, 121 S.W.3d 709, 713, 46 Tex. Sup. Ct. J. 632 (Tex. 2003) (per curiam); Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709, 46 Tex. Sup. Ct. J. 530 (Tex. 2003) (per curiam); Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227, 34 Tex. Sup. Ct. J. 157 (Tex. 1990); Best v. Ryan Auto Group, Inc., 786 S.W.2d 670, 671, 33 Tex. Sup. Ct. J. 314 (Tex. 1990) (per curiam); Navarette v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 309, 29 Tex. Sup. Ct. J. 282 (Tex. 1986); Tomlinson v. Jones, 677 S.W.2d 490, 492, 27 Tex. Sup. Ct. J. 445 (Tex. 1984); Williams v. Bennett, 610 S.W.2d 144, 145, 24 Tex. Sup. Ct. J. 110 (Tex. 1980); Freeman v. Tex. Comp. Ins. Co., 603 S.W.2d 186, 191, 23 Tex. Sup. Ct. J. 438 (Tex. 1980); Dodd v. Tex. Farm Prods. Co., 576 S.W.2d 812, 814-15, 22 Tex. Sup. Ct. J. 210 (Tex. 1979); Campbell v. Northwestern Nat’l Life Ins. Co., 573 S.W.2d 496, 497, 22 Tex. Sup. Ct. J. 11 (Tex. 1978); Miller v. Bock Laundry Mach. Co., 568 S.W.2d 648, 650, 21 Tex. Sup. Ct. J. 141 (Tex. 1977); Sobel v. Jenkins, 477 S.W.2d 863, 865, 15 Tex. Sup. Ct. J. 241 (Tex. 1972); C. & R. Transp., Inc. v. Campbell, 406 S.W.2d 191, 193, 9 Tex. Sup. Ct. J. 532 (Tex. 1966). 123 See Tiller, 121 S.W.3d at 713 (citing Bradford v. Vento, 48 S.W.3d 749, 754, 44 Tex. Sup. Ct. J. 655 (Tex. 2001)); Miller, 102 S.W.3d at 709 (same); Best, 786 S.W.2d at 671 (citing King v. Bauer, 688 S.W.2d 845, 846, 28 Tex. Sup. Ct. J. 406 (Tex. 1985)); Tomlinson, 677 S.W.2d at 492 (citing Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401, 24 Tex. Sup. Ct. J. 482 (Tex. 1981)); Campbell, 573

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[**57] The one exception in which both standards do not expressly appear is in the scope of review for summary judgments. Here, there is only one standard -- a reviewing court must examine the entire record in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the motion. 124 Reviewing courts do not disregard the evidence supporting the motion; [*825] if they did, all summary judgments would be reversed.

In practice, however, a different scope of review applies when a summary judgment motion is filed without [**58] supporting evidence. 125 In such cases, evidence supporting the motion is effectively disregarded because there is none; under the rule, it is not allowed. Thus, although a reviewing court must consider all the summary judgment evidence on file, in some cases that review will effectively be restricted to the evidence contrary to the motion.

The standards for taking any case from the jury should be the same, no matter what motion is used. If only one standard were proper, we would not expect both to appear in cases reviewing directed verdicts, judgments notwithstanding the verdict, and summary judgments. But both do.

C. Federal Courts: The Standards Are The Same

The federal courts have had a similar split of authority between the inclusive and exclusive standards for scope of review. But no longer -- the United States Supreme Court recently concluded in Reeves v. Sanderson Plumbing Products, Inc. that the two tests are the same. 126 [**59] Under Rule 50 of the federal rules of procedure, a court should render judgment as a matter of law when ″there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.″ 127 In deciding whether all or only part of the evidence should be considered, the Supreme Court stated:

The Courts of Appeals have articulated differing formulations as to what evidence a court is to consider in ruling on a Rule 50 motion. Some decisions have stated S.W.2d at 497 (citing Martinez v. Delta Brands, Inc., 515 S.W.2d 263, 265, 18 Tex. Sup. Ct. J. 51 (Tex. 1974)); Campbell, 406 S.W.2d at 193 (citing Cartwright v. Canode, 106 Tex. 502, 171 S.W. 696, 697-98 (Tex. 1914)). 124 IHS Cedars Treatment Ctr. of Desoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798, 47 Tex. Sup. Ct. J. 666 (Tex. 2004); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16, 47 Tex. Sup. Ct. J. 174 (Tex. 2003); Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506, 46 Tex. Sup. Ct. J. 21 (Tex. 2002); Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734, 736, 33 Tex. Sup. Ct. J. 697 (Tex. 1990); Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868, 27 Tex. Sup. Ct. J. 369 (Tex. 1984). 125 See TEX. R. CIV. P. 166a(i).

126 530 U.S. 133, 150, 147 L. Ed. 2d 105, 120 S. Ct. 2097 (2000).

127 FED. R. CIV. P. 50(a)(1).

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that review is limited to that evidence favorable to the nonmoving party, while most have held that review extends to the entire record, drawing all reasonable inferences in favor of the nonmovant. On closer examination, this conflict seems more semantic than real. Those decisions holding that review under Rule 50 should be limited to evidence favorable to the nonmovant appear to have their genesis in Wilkerson v. McCarthy 128 . In Wilkerson, we stated that ″in passing upon [**60] whether there is sufficient evidence to submit an issue to the jury we need look only to the evidence and reasonable inferences which tend to support the case of″ the nonmoving party. 129 But subsequent decisions have clarified that this passage was referring to the evidence to which the trial court should give credence, not the evidence that the court should review. In the analogous context of summary judgment under Rule 56, we have stated that the court must review the record ″taken as a whole.″ And the standard for granting summary judgment ″mirrors″ the standard for judgment as a matter of law, such that ″the inquiry under each is the same.″ It therefore follows that, in entertaining a motion for judgment as a [*826] matter of law, the court should review all of the evidence in the record. 130

[**61] We address the Supreme Court’s conclusion as to the most appropriate standard below; the relevant point here is its conclusion that differences between the inclusive and exclusive standards are more semantic than real.

D. Objections: The Standards Are Not The Same

While we have used the two standards for the scope of review interchangeably for many years in many different contexts, several arguments suggest they are not the same.

First, the courts of appeals often use the two standards in illustrations of the difference between legal and factual sufficiency, with the exclusive standard tied to the former and the inclusive standard to the latter:

When [reviewing] legal sufficiency, we consider only the evidence and inferences that tend to support the award of damages and disregard all evidence and inferences to the contrary. . . . When we review factual sufficiency, we consider and weigh all of the evidence and will set aside the verdict only if it is so against 128 336 U.S. 53, 93 L. Ed. 497, 69 S. Ct. 413 (1949).

129 Id. at 57.

130 Reeves, 530 U.S. at 149-50 (citations omitted).

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the great weight and preponderance of the evidence that it is clearly wrong and unjust. 131 132

[**62] But there have always been exceptions to this distinction. As demonstrated in Parts II and III above, it is generally true that the result of legal-sufficiency review is to disregard contrary evidence, but there are exceptions when a reviewing court cannot. It is not surprising that in drawing the general distinction between legal and factual sufficiency, courts have not complicated that distinction by listing the several exceptions in which the scope of review -- though not the standard of review -- may overlap. Second, it has been argued that the exclusive standard ″is an important prophylactic″ against invasion of the jury’s province, as appellate judges are less likely to consider contrary evidence when they should not if the exclusive standard is used. 133 But if that [**63] is true, the opposite should also be the case -- appellate courts are less likely to consider contrary evidence when they must (as shown in Part II) if the exclusive standard is used. No matter which standard is used, appellate courts must take care not to consider or disregard too little or too much. [*827] Conversely, several factors appear to favor application of the inclusive standard. First, when we have said ″we must look only at that evidence which tends to support the judgment,″ 134 we could not have been speaking literally; no glasses filter evidence, and judges cannot abandon such judgments to law clerks or litigants. It is often hard to say whether evidence does or does not support a verdict -- the same facts may support different conclusions, 135 or may support one part of a verdict but not another. 136 Nor can evidence [**64] supporting a verdict be identified by which party offered it -- 131 Carter v. Steverson & Co., 106 S.W.3d 161, 166 (Tex. App.--Houston [1st Dist.] 2003, pet. denied) (emphasis added) (citation omitted); accord Long v. Long, 144 S.W.3d 64, 67 (Tex. App.--El Paso 2004, no pet.); Gore v. Scotland Golf, Inc., 136 S.W.3d 26, 29 (Tex. App.--San Antonio 2003, pet. denied); Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 438 (Tex. App.--Dallas 2002, pet. denied); N. Am. Van Lines, Inc. v. Emmons, 50 S.W.3d 103, 113 n.3 (Tex. App.--Beaumont 2001, pet. denied); Molina v. Moore, 33 S.W.3d 323, 329 (Tex. App.--Amarillo 2000, no pet.); Wal-Mart Stores, Inc. v. Itz, 21 S.W.3d 456, 470 n.3 (Tex. App.--Austin 2000, pet. denied); see also In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (Tex. 1951) (per curiam) (holding court of appeals erred in failing to distinguish between legal and factual sufficiency review by not weighing all the evidence when conducting the latter). 132 Burk Royalty Co. v. Walls, 616 S.W.2d 911, 922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981) (noting that review of gross negligence finding by considering all the evidence appeared to but did not conflict with traditional no-evidence test). 133 Dorsaneo, supra note 10, at 1503; see also Hardberger, supra note 10, at 17 (arguing exclusive standard is ″designed to afford high deference to jury verdicts″). 134 State v. Biggar, 873 S.W.2d 11, 13, 37 Tex. Sup. Ct. J. 612 (Tex. 1994).

135 See, e.g., CMH Homes, Inc. v. Daenen, 15 S.W.3d 97, 102, 43 Tex. Sup. Ct. J. 420 (Tex. 2000) (noting plaintiff argued defendant’s frequent inspections of stairs showed knowledge of inherent danger, while court held it showed the opposite as inspections found nothing); State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 45, 41 Tex. Sup. Ct. J. 371 (Tex. 1998) (affirming bad-faith verdict after noting insurer’s reasons for denial were contradictory). 136 See, e.g., Wal-Mart Stores, Inc. v. Alexander, 868 S.W.2d 322, 327, 37 Tex. Sup. Ct. J. 252 (Tex. 1993) (noting evidence of single previous minor stumble supported negligence finding but not gross negligence).

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parties depend on admissions and cross-examination during their opponent’s case, and minimize damaging evidence by presenting it during their own. As a practical matter, a court cannot begin to say what evidence supports a verdict without reviewing it all. [**65] Second, an appellate court that begins by disregarding one party’s evidence may strike many citizens as extending something less than justice for all. Concerns about open government and open courts suggest an appellate process that considers all the evidence, though deferring to the jury’s verdict. While there is some dispute whether Lady Justice should wear a blindfold, 137 the metaphor was surely never intended to suggest that justice disregards the facts. In sum, the exclusive standard is helpful in recognizing the distinctive roles of judge and jury, intermediate and supreme court. By contrast, the inclusive standard is helpful in recognizing what courts actually do, and must be seen to do. Both are important; we should avoid choosing between them if we can.

E. Conclusion: The Standards Are The Same As both [**66] the inclusive and exclusive standards for the scope of legal-sufficiency review have a long history in Texas, as both have been used in other contexts to review matter-of-law motions, as the federal courts have decided the differences between the two are more semantic than real, and as both -- properly applied -- must arrive at the same result, we see no compelling reason to choose among them. The key qualifier, of course, is ″properly applied.″ HN22 The final test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review. Whether a reviewing court begins by considering all the evidence or only the evidence supporting the verdict, legal-sufficiency review in the proper light must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. While judges and lawyers often disagree about legal sufficiency in particular cases, [*828] the disagreements are almost always about what evidence jurors can or must credit and what inferences they can or must make. It is inevitable in human affairs that reasonable people sometimes disagree; thus, it is also [**67] inevitable that they will sometimes disagree about what reasonable people can disagree about. This is not a new problem; Justice Calvert noted it almost fifty years ago:

The rule as generally stated is that if reasonable minds cannot differ from the conclusion that the evidence lacks probative force it will be held to be the legal 137 See Judith Resnik, Managerial Judges, 96 HARV. L.R. 374, 382-83 (1982) (noting that images of justice appeared blindfolded only within the last four hundred years).

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equivalent of no evidence. The application of the rule can lead to strange results. It is theoretically possible, and sometimes not far from actual fact, that five members of the Supreme Court will conclude that the evidence supporting a finding of a vital fact has no probative force, and in reaching the conclusion through application of the rule will thus hold, in effect, that the trial judge who overruled a motion for instructed verdict, the twelve jurors who found the existence of the vital fact, the three justices of the Court of Civil Appeals who overruled a ″no evidence″ point of error and four dissenting justices of the Supreme Court are not men 138 [**68] of ″reasonable minds.″ 139 It is not hubris that occasionally requires an appellate court to find a jury verdict has no reasonable evidentiary basis. As Justice Frankfurter stated long ago:

Only an incompetent or a wilful judge would take a case from the jury when the issue should be left to the jury. But since questions of negligence are questions of degree, often very nice differences of degree, judges of competence and conscience have in the past, and will in the future, disagree whether proof in a case is sufficient to demand submission to the jury. The fact that [one] thinks there was enough to leave the case to the jury does not indicate that the other [is] unmindful of the jury’s function. The easy but timid way out for a trial judge is to leave all cases tried to a jury for jury determination, but in so doing he fails in his duty to take a case from the jury when the evidence would not warrant a verdict by it. A timid judge, like a biased judge, is intrinsically a lawless judge. 140

[**69] V. Application to the Facts It remains to apply the scope of review to the facts presented. A majority of the court of appeals affirmed the verdict for the Wilsons, finding legally sufficient evidence that the City knew increased flooding on the Wilsons’ property was substantially certain to occur. 141 The majority pointed to the following proof. First, the

138 Justice Calvert’s use of the masculine in 1960 may perhaps be forgiven, for although Hattie Hennenberg, Hortense Ward, and Ruth Brazzil served temporarily on this Court in 1925, and Sarah T. Hughes was appointed as a state district judge ten years later, it was not until 1954 that the Texas Constitution was amended to allow women to serve as jurors, and not until 1973 that Mary Lou Robinson became the first women to serve as a state appellate judge. See James T. ″Jim″ Worthen, The Organizational & Structural Development of Intermediate Appellate Courts in Texas, 46 S.TEX. L. REV. 33, 75 (2004); Robert L. Dabney, Jr. We Were There, HOUSTON B.J. Nov.-Dec. 1999, at 42, 44. 139 Calvert, supra note 12, at 364.

140 Wilkerson v. McCarthy, 336 U.S. 53, 65, 93 L. Ed. 497, 69 S. Ct. 413 (1949) (Frankfurter, J., concurring).

141 86 S.W.3d 693, 709.

168 S.W.3d 802, *828; 2005 Tex. LEXIS 436, **69

Wilsons’ expert testified that the revised plan was certain to [*829] create flooding. 142 Second, as the City admittedly knew that development would increase runoff and the Sebastian ditch would channel it toward the Wilsons, so it knew ″with absolute certainty″ that flooding would be the result. 143 Third, the City ″did not explain″ why the Master Plan required a drainage ditch across the Wilsons’ property but the revised plan did not, thus allowing jurors to infer that the City knew this omission would cause flooding. 144 [**70] Of course, the City did explain why it approved the new plan -- because three sets of engineers said the omitted ditch was unnecessary -- but the court felt compelled by the scope of review to disregard that evidence. For several of the reasons stated earlier, we believe the court of appeals did not properly apply the scope of review. The critical question in this case was the City’s state of mind -- the Wilsons had to prove the City knew (not should have known) that flooding was substantially certain. A reviewing court cannot evaluate what the City knew by disregarding most of what it was told. Moreover,HN23 when a case involves scientific or technical issues requiring expert advice (as this one does), jurors cannot disregard a party’s reliance on experts hired for that very purpose without some evidence supplying a reasonable basis for doing so. 145 Here, it was uncontroverted that three sets of engineers certified that the revised plans met the City’s codes and regulations -- and thus would not increase downstream flooding. The same firm that drew up the original Master Plan certified the revised one; unless the City had some reason to know the first certification was true [**71] and the second one was false (of which there was no evidence), there was only one logical inference jurors could draw. None of the evidence cited by the court of appeals showed the City knew more than it was told by the engineers. The Wilsons’ expert testified that flooding was (in his opinion) inevitable, but not that the City knew it was inevitable. The Wilsons’ expert gave no opinion on the latter point. Second, ending a ditch at a neighbor’s property line may be evidence that a defendant was substantially [**72] certain of the result in some cases, but not in the context of this 142 86 S.W.3d at 703, 705.

143 86 S.W.3d at 705.

144 86 S.W.3d at 704-05.

145 Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 194-95, 42 Tex. Sup. Ct. J. 215, 42 Tex. Sup. Ct. J. 610 (Tex. 1998); see also State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448, 40 Tex. Sup. Ct. J. 794 (Tex. 1997) (holding reliance on expert report did not foreclose bad-faith claim because claimant ″presented evidence from which a fact-finder could logically infer that Haag’s reports were not objectively prepared, that State Farm was aware of Haag’s lack of objectivity, and that State Farm’s reliance on the reports was merely pretextual.″).

168 S.W.3d 802, *829; 2005 Tex. LEXIS 436, **72

one. City witnesses admitted knowing development would increase runoff at the head of this drainage system, but not flooding at its foot. Calculating the effect of detention ponds and absorption in a grassy drainage ditch forty-five feet wide and over two hundred yards long required hydrological formulas, computer models, and mathematical calculations. The omission of the ditch across the Wilsons’ property obviously raised concerns that the City investigated, but was no evidence that the City knew the advice it received in response was wrong.

The Wilsons also point to a letter Sebastian’s attorney wrote the City demanding indemnity in case the new ditch flooded the Wilsons. But attorneys must protect a client from potential liability whether it is real [*830] or imagined -- and justly so. In the letter, the attorney never purports to be an expert in hydrology, or cite the opinions of anyone who was. This letter may have required the City to investigate, but again is no evidence it knew the advice it received was wrong. 146 [**73] Our concurring colleagues believe reasonable jurors could nevertheless disregard what all the engineers certified because the City had a financial incentive to believe them rather than pay the Wilsons. Of course, defendants have a financial incentive to avoid paying damages in every case; if that incentive alone is some evidence of liability, then plaintiffs create enough evidence to go to the jury every time they file suit. But more important, this ignores what the Wilsons had to prove -- not that the City might have disbelieved the engineers’ reports, but that it did. This requires evidence of ″objective indicia of intent″ showing the City knew identifiable harm was occurring or substantially certain to result. 147 Jurors’ doubts about the engineers’ reports or the City’s motives could not supply them with objective indicia that the City knew flooding would occur. Constitutional concerns about the roles of judge and jury do not allow either to make such evidence up. [**74] We agree with the court of appeals that the Wilsons presented some evidence that the City damaged their property, and that in drawing up and approving drainage plans it was acting for a public purpose. The missing piece in the evidence here is proof that the City knew the plans it approved were substantially certain to increase flooding on the Wilsons’ properties. While the City certainly knew that fact after the flooding started, the Wilsons never pleaded or submitted to the jury any takings theory other than the City’s initial approval. 146 Cf. Nissan Motor Co. Ltd. v. Armstrong, 145 S.W.3d 131, 140, 47 Tex. Sup. Ct. J. 955 (Tex. 2004) (holding complaint letters may require manufacturer to investigate, but are not evidence complaints are true). 147 Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 555, 47 Tex. Sup. Ct. J. 707 (Tex. 2004) (emphasis added).

168 S.W.3d 802, *830; 2005 Tex. LEXIS 436, **74

Crediting all favorable evidence that reasonable jurors could believe and disregarding all contrary evidence except that which they could not ignore, we hold there was no evidence the City’s approval of the revised drainage plan was an intentional taking. Accordingly, we reverse the court of appeals’ judgment against the City under article I, section 17 of the Texas Constitution. Because the court of appeals declined to address the jury’s alternate verdict for the Wilsons on a claim under the Texas Water Code, we remand the case to that court to determine that issue. Scott Brister Justice

Concur by: Harriet O’Neill

Concur

JUSTICE O’NEILL, joined by [**75] JUSTICE MEDINA, concurring. The Court does an excellent job of explaining the appropriate scope of no-evidence review: the reviewing court ″must view the evidence in the light favorable to the verdict, crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not.″ ___ S.W.3d at ___. I agree with this standard and join Parts I through IV of the Court’s opinion. But I cannot join Part V, because the Court misapplies the standard that it so carefully [*831] articulates by crediting evidence the jury could reasonably disregard. The City of Keller’s Master Drainage Plan required it in part to condemn a 2.8-acre drainage easement on the Wilson property for construction of an earthen channel forty-five feet wide and five feet deep that would funnel water from the adjoining Sebastian property over the Wilson property into the Little Bear Creek Watershed. The City chose not to proceed with this portion of the plan, though, claiming reliance on engineers’ assurances that the developers’ installation of retention ponds on neighboring land could prevent flooding. The drainage channel that was actually built ended at the edge of the Sebastian [**76] property and funneled water directly onto the Wilsons’ land, destroying eight acres of farmland worth almost $ 300,000. The Court holds that the jury was required to believe the City’s testimony that it relied on the engineers’ assurances and thus did not know flooding was substantially certain to occur, stating that when a case requires expert testimony ″jurors cannot disregard a party’s reliance on experts hired for that very purpose without some evidence supplying a reasonable basis for doing so.″ ___ S.W.3d at ___. Even if this were an appropriate review standard--which it hasn’t been until today--I believe the jury had a reasonable basis upon which to

168 S.W.3d 802, *831; 2005 Tex. LEXIS 436, **76

disregard the City’s professed reliance; the City had a financial incentive to disclaim knowledge of the flooding, and the Wilsons presented some evidence that the City had independent knowledge flooding was substantially certain to occur. In my view, the jury was the proper body to weigh the witnesses’ credibility and resolve these disputed fact issues. I nevertheless agree that the City cannot be liable for a taking in this case because I believe that a city’s mere act of approving a private development plan cannot constitute a [**77] taking for public use. Accordingly, I concur in the Court’s judgment but not its reasoning. I Questions of intent are generally proved only by circumstantial evidence; as the court of appeals in this case aptly noted, ″defendants will rarely admit knowing to a substantial certainty that given results would follow from their actions,″ and therefore the jury must be ″free to discredit defendants’ protestations that no harm was intended and to draw inferences necessary to establish intent.″ 86 S.W.3d 693, 704. I agree with the Court that the jury’s ability to disbelieve the City’s protestations is not itself ″evidence of liability.″ ___ S.W.3d at ___. Instead, the jury’s ability to weigh the witnesses’ credibility means that the City’s testimony did not conclusively establish its lack of liability. Because liability is not conclusively negated, we must examine the record to see if there is legally sufficient evidence from which the jury could infer that the City knew flooding was substantially certain to occur. I would hold that the evidence of intent that was presented in this case allowed the jury to draw such an inference. At trial, the Wilsons presented evidence [**78] that the City had independent sources of knowledge that flooding was substantially certain to occur. First, they demonstrated that the developers’ plan itself was flawed. Rather than incorporate a drainage ditch running across the Wilson property, as the City’s Master Plan required, the developers’ plan ended the drainage ditch abruptly at the edge of the Wilson property. The Wilsons’ expert testified that the plan’s implementation would necessarily ″increase the volume and flow of water across the Wilson property from the rate of fifty-five cubic feet per second to ninety-three cubic feet per second.″ 86 S.W.3d at [*832] 703. Second, the City was aware that water flowed across the Wilson property before the development commenced, and, as the court of appeals pointed out, the City’s Director of Public Works admitted that the City knew the development would increase the water’s flow and velocity; specifically, he testified that ″the City knew the upstream water would be absorbed less and would flow faster due to the removal of trees and vegetation from the developments and from the forty-five-foot-wide earthen channel″ that ended at the Wilson property’s edge. Id. at 705. [**79] Finally, there was evidence that the City received a letter warning that the developers’ plan would subject the Wilson property to flooding.

168 S.W.3d 802, *832; 2005 Tex. LEXIS 436, **79

While I believe there is some evidence that the City knew flooding was substantially certain to occur, there is also some evidence that it did not. City officials testified that they relied on the representations of engineers who assured them retention ponds could substitute for a drainage easement and the Wilson property would not be damaged. If the jury accepted this evidence as true, I agree that the intent element would be negated, which would preclude the City’s takings liability. But I do not agree that the jury was bound to accept the City’s testimony as true. The Court itself notes that jurors ″may choose to believe one witness and disbelieve another,″ and that ″courts reviewing all the evidence in a light favorable to the verdict thus assume that jurors credited testimony favorable to the verdict and disbelieved testimony contrary to it.″ ___ S.W.3d at ___. This statement mirrors our prior jurisprudence, which has long provided that a jury ″has several alternatives available when presented with conflicting evidence″ because it ″may believe [**80] one witness and disbelieve others,″ ″may resolve inconsistencies in the testimony of any witness,″ and ″may accept lay testimony over that of experts.″ McGalliard v. Kuhlmann, 722 S.W.2d 694, 697, 30 Tex. Sup. Ct. J. 96 (Tex. 1986) (citations omitted). As the Court itself states, jurors are required to credit undisputed testimony only when it is ″clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted.″ ___ S.W.3d at ___. The City’s testimony does not meet this standard. The City Manager did testify that the City ″would not have approved the developments unless [it was] assured that the developments did not increase the velocity of water or the flow of water″ onto the neighboring property. 86 S.W.3d at 706. But the Wilsons disputed whether the City’s protestations were credible, pointing out that the City had a powerful incentive to profess a lack of knowledge through reliance on the engineers’ assurances because it would then avoid the considerable expense of compensating the Wilsons for the property that would otherwise have been condemned under the Master Drainage Plan. See id. at 705. [**81] Moreover, the Court’s conclusion that juries cannot disregard a party’s reliance on expert opinions is not consistent with our jurisprudence. The Court cites two cases for this proposition, but neither supports the Court’s analysis; instead, both cases support the conclusion that the jury, as the finder of fact, should appropriately resolve factual disputes regarding a party’s reliance on hired experts. Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 194-95, 42 Tex. Sup. Ct. J. 215, 42 Tex. Sup. Ct. J. 610 (Tex. 1998); State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448-50, 40 Tex. Sup. Ct. J. 794 (Tex. 1997). In Castaneda, a bad-faith insurance case, there was no question that the insurer had relied on an expert’s assurances and thus no dispute about whether the [*833] jury could have disregarded that evidence. Castaneda, 988 S.W.2d at 194-95. In that case, we

168 S.W.3d 802, *833; 2005 Tex. LEXIS 436, **81

performed a traditional legal sufficiency analysis and concluded there was no evidence that the defendant acted in bad faith. Id. at 194. We did state that reliance on an expert’s opinion will not preclude a finding of bad faith if the expert’s opinion was ″unreliable and the insurer knew or should have known that to be the case. [**82] ″ Id. However, we did not hold that the jury must credit a party’s testimony that it relied on an expert. We reiterated this point in Nicolau, another bad-faith insurance case. There, the Court noted ″we have never held that the mere fact that an insurer relies upon an expert’s report to deny a claim automatically forecloses bad faith recovery as a matter of law,″ and again concluded that purported ″reliance upon an expert’s report, standing alone, will not necessarily shield″ the defendant from liability. Nicolau, 951 S.W.2d at 448. The Court conceded that ″were we the trier of fact in this case, we may well have concluded that [the insurer] did not act in bad faith,″ but concluded that the ″determination is not ours to make″ because ″the Constitution allocates that task to the jury and prohibits us from reweighing the evidence.″ Id. at 450 (citing TEX. CONST. art. I, § 15, art. V, §§ 6, 10). The same is true in this case. The jury was not required to believe that the City did not know flooding was substantially certain to occur because it relied on assurances to the contrary; as a reviewing Court, we should ″assume that jurors credited [**83] testimony favorable to the verdict and disbelieved testimony contrary to it.″ ___ S.W.3d at ___. Such credibility determinations are uniquely suited and constitutionally committed to the fact finder. See TEX. CONST. art. I, § 15, art. V, § 6; see also Nicolau, 951 S.W.2d at 450.

II Although I disagree with the Court’s conclusion that the jury was required to credit the City’s testimony, I agree with its judgment in the City’s favor because, in my view, the City’s mere approval of the private development plans did not result in a taking for public use, as the constitutional standard requires for a compensable taking. TEX. CONST. art. I, § 17. The City did not appropriate or even regulate the use of the Wilsons’ land, nor did it design the drainage plan for the proposed subdivisions. Instead, the City merely approved subdivision plans designed by private developers, and that design included inadequate drainage capabilities. The City argues, and I agree, that its mere approval of private plans did not transfer responsibility for the content of those plans from the developers to the City. Municipalities review subdivision plats ″to ensure that subdivisions [**84] are safely constructed and to promote the orderly development of the community.″ City of Round Rock v. Smith, 687 S.W.2d 300, 302, 28 Tex. Sup. Ct. J. 321 (Tex. 1985); see TEX. LOC. GOV’T CODE § 212.002. Such a review is intended to protect the city’s residents; it is not intended to transfer responsibility for a flawed

168 S.W.3d 802, *833; 2005 Tex. LEXIS 436, **84

subdivision design from the developers to the municipality. See, e.g., City of Round Rock, 687 S.W.2d at 302; see also Cootey v. Sun Inv., Inc., 68 Haw. 480, 718 P.2d 1086, 1091 (Haw. 1986) (holding that ″the permit process by which the County approves or disapproves the development of a proposed subdivision reflects an effort by government to require the developer to meet his responsibilities under the subdivision rules, regulations, and laws,″ and that ″the primary responsibility of providing an adequate and safe development rests with . . . the developer, and not with the County″). Because the primary responsibility for a development’s design rests with the developer, [*834] and because the plat-approval process does not transfer such responsibility to the municipality, mere plat approval cannot be a basis [**85] upon which to predicate takings liability. We have held that, to be liable for a taking, a governmental entity must ″perform certain acts in the exercise of its lawful authority . . . which resulted in the taking or damaging of plaintiffs’ property, and which acts were the proximate cause of the taking or damaging of such property.″ State v. Hale, 136 Tex. 29, 146 S.W.2d 731, 736 (Tex. 1941) (emphasis added). In this case, flooding resulted from the developers’ defective drainage design, not from the City’s approval of the plat; thus, the City’s approval was not the proximate cause of the damage to the Wilson property. Other courts, faced with similar facts, have also concluded that a governmental entity cannot be liable for a taking when its only action is to approve a private development plan. See Phillips v. King County, 136 Wn.2d 946, 968 P.2d 871, 879 (Wash. 1998); see also Pepper v. J.J. Welcome Constr. Co., 73 Wn. App. 523, 871 P.2d 601, 606 (Wash. Ct. App. 1994). In Phillips, the Washington Supreme Court observed that there is no public aspect to a private development and concluded that ″if the county or city were [**86] liable for the negligence of a private developer, based on approval under existing regulations, then the municipalities, and ultimately the taxpayers, would become the guarantors or insurers for the actions of private developers whose development damages neighboring properties.″ Phillips, 968 P.2d at 878. The court in Pepper similarly examined an inverse condemnation claim based upon a county’s approval of private developments with defective drainage plans; it, too, concluded that the county’s approval did not cause the resultant flooding and did not result in an unconstitutional taking. Pepper, 871 P.2d at 606. The court noted that the flooding was ″not the result of the County appropriating or regulating their use of the land,″ and held that ″the fact that a county regulates development and requires compliance with road and drainage restrictions does not transform a private development into a public project.″ Id. The court concluded that because ″land use regulation of [the plaintiffs’] property did not cause the damages, no inverse condemnation was involved.″ Id. I am persuaded by the reasoning of the courts in Phillips and [**87] Pepper, and would similarly conclude that the City’s plat approval in this case did not amount to an unconstitutional taking as a matter of law.

168 S.W.3d 802, *834; 2005 Tex. LEXIS 436, **87

The court of appeals in this case advanced an alternative reason for affirming the trial court’s judgment, suggesting that even if the City could not be liable for merely approving a subdivision plat, it could nevertheless be held liable for failing to condemn a drainage easement across the Wilson property. 86 S.W.3d at 707. The court of appeals stated that ″the City chose not to condemn any of the Wilson property,″ but instead ″allowed the water flowing from the Sebastian easement to discharge, uncontrolled, across the Wilson property.″ Id. As noted above, however, it was the developers’ plan--not the City’s actions--that allowed the water to flood the Wilson property. Because the City’s action did not cause the flooding, I disagree that the City’s failure to condemn an easement is relevant to takings liability. If the City were responsible for the flooding but chose not to condemn the property, it might be subject to inverse-condemnation liability. See Tarrant County Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 554, 47 Tex. Sup. Ct. J. 707 (Tex. 2004) [**88] (″When the government takes private property without first paying for it, the owner may recover damages for inverse condemnation.″). However, if a governmental entity’s actions are not the [*835] ″proximate cause of the taking or damaging″ of the property, then the entity cannot be liable for a taking. Hale, 146 S.W.2d at 736. Accordingly, the entity need not condemn property merely because a private entity is causing damage. This rule does not leave owners of flooded property without a remedy; when a private development floods neighboring land, the owner of the damaged property will ordinarily have recourse against the private parties causing the damage. See TEX. WATER CODE § 11.086(a), (b) (providing that ″no person may divert or impound the natural flow of surface waters in this state . . . in a manner that damages the property of another by the overflow of the water diverted or impounded″ and that ″[a] person whose property is injured by an overflow of water caused by an unlawful diversion or impounding has remedies at law and in equity and may recover damages occasioned by the overflow″). Because the developers’ design of the plat--not [**89] the City’s approval--caused the flooding damage in this case, I would hold that the City cannot be held liable for an unconstitutional taking under Article I, Section 17 of the Texas Constitution.

III

Because I believe the Court fails to give due regard to the jury’s right to make credibility determinations, I cannot join Part V of the Court’s opinion. But because I conclude that the City’s mere act of approving a private development plan did not cause the Wilson property to be ″taken, damaged or destroyed for or applied to public use,″ TEX. CONST. art. I, § 17, I agree that the City cannot be held liable for a taking in this case. Accordingly, I concur in the Court’s judgment.

Harriet O’Neill

168 S.W.3d 802, *835; 2005 Tex. LEXIS 436, **89

Justice | | Caution As of: December 4, 2014 12:15 PM EST

Ford Motor Co. v. Ridgway Supreme Court of Texas

September 10, 2003, Argued ; February 6, 2004, Delivered NO. 02-0552

Reporter 135 S.W.3d 598; 2004 Tex. LEXIS 74; 47 Tex. Sup. J. 266; CCH Prod. Liab. Rep. P16,878

FORD MOTOR COMPANY, PETITIONER, v. JACK RIDGWAY AND LINDA RIDGWAY, RESPONDENTS

Subsequent History: [**1] Rehearing denied by Ford Motor Co. v. Ridgway, 2004 Tex. LEXIS 560 (Tex., June 25, 2004)

Prior History: ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS. Ridgway v. Ford Motor Co., 82 S.W.3d 26, 2002 Tex. App. LEXIS 625 (Tex. App. San Antonio, 2002)

Disposition: Reversed the judgment of the court of appeals and rendered judgment that the plaintiffs take nothing..

Core Terms

defective product, truck, product liability, inferred, Restatement, summary judgment, repairs, manufacturing defect, circumstantial evidence, scintilla of evidence, genuine issue of material fact, res ipsa loquitur, time of sale, causes, pickup

Case Summary

Procedural Posture Plaintiffs, husband and wife, sued defendant automobile manufacturer for injuries the husband sustained when his truck caught on fire. The trial court granted the manufacturer’s summary judgment motion, and the Court of Appeals for the Fourth District of Texas affirmed the motion on plaintiffs’ negligence claim, but reversed as to the product liability claim. The manufacturer sought review.

Overview Jamie Graham

135 S.W.3d 598, *598; 2004 Tex. LEXIS 74, **1

The husband was injured when the truck that he was driving caught on fire. Plaintiffs did not provide any direct evidence of the cause of the fire, and their circumstantial evidence that a manufacturing defect existed in the truck when it left the manufacturer did not exceed a ″scintilla of evidence.″ The best that plaintiffs’ expert could state was that he suspected the electrical system caused the fire. However, because there was no proof that identified a defect in the truck when it left the manufacturer, the expert’s affidavit was not sufficient to raise a fact issue. Thus, the state supreme court reversed the judgment of the court of appeals and rendered judgment that the plaintiffs take nothing.

Outcome The decision of the court of appeals was reversed, and the matter was remanded to render judgment that plaintiffs take nothing.

LexisNexis® Headnotes

Civil Procedure > Judgments > Summary Judgment > General Overview Civil Procedure > Appeals > Summary Judgment Review > General Overview Civil Procedure > ... > Summary Judgment > Burdens of Proof > General Overview Civil Procedure > ... > Summary Judgment > Opposing Materials > General Overview Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General Overview

HN1 An appellate court reviews the trial court’s summary judgment under the standards of Tex. R. Civ. P. 166a(i). The non-movants must produce summary judgment evidence raising a genuine issue of material fact to defeat the summary judgment under that provision. Tex. R. Civ. P. 166a(i). A genuine issue of material fact exists if more than a scintilla of evidence establishing the existence of the challenged element is produced. If the plaintiffs fail to produce more than a scintilla of evidence under that burden, then there is no need to analyze whether the moving party’s proof satisfied the Rule 166a(c) burden.

Real Property Law > Torts > Construction Defects Torts > Products Liability > Types of Defects > Manufacturing Defects Torts > Products Liability > Theories of Liability > Strict Liability

HN2 A manufacturing defect exists when a product deviates, in its construction or quality, from the specifications or planned output in a manner that renders it unreasonably dangerous. A plaintiff must prove that the product was defective when it

135 S.W.3d 598, *598; 2004 Tex. LEXIS 74, **1

left the hands of the manufacturer and that the defect was a producing cause of the plaintiff’s injuries.

Civil Procedure > ... > Summary Judgment > Evidentiary Considerations > Scintilla Rule Civil Procedure > Judgments > Summary Judgment > Evidentiary Considerations Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General Overview

HN3 When determining if more than a scintilla of evidence has been produced in response to a Tex. R. Civ. P. 166a(i) motion for summary judgment, the evidence must be viewed in the light most favorable to the non-movant. The Supreme Court of Texas has repeatedly held that more than a scintilla of evidence exists if the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. On the other hand, when the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence.

Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General Overview Evidence > Types of Evidence > Circumstantial Evidence Evidence > Admissibility > Circumstantial & Direct Evidence

HN4 Both direct and circumstantial evidence may be used to establish any material fact. To raise a genuine issue of material fact, however, the evidence must transcend mere suspicion. Evidence that is so slight as to make any inference a guess is in legal effect no evidence.

Judges: CHIEF JUSTICE PHILLIPS delivered the opinion of the Court. JUSTICE HECHT filed a concurring opinion, in which JUSTICE OWEN joined.

Opinion by: Thomas R. Phillips

Opinion

[*599] We must decide whether the evidence offered by plaintiffs in response to the defendant’s Rule 166a(i) summary judgment motion created a genuine issue of material fact that a manufacturing defect in the defendant’s product caused the plaintiff’s injuries. Because we hold that the court of appeals erred in holding that the evidence was sufficient, we reverse the judgment of the court of appeals, 82 S.W.3d 26, and render judgment that the plaintiffs take nothing.

135 S.W.3d 598, *599; 2004 Tex. LEXIS 74, **1

I Jack Ridgway sustained serious injuries when his two-year-old Ford F-150 pick-up truck caught fire while he was driving. Ridgway was the truck’s third owner. The first owner drove the truck approximately 7,000 miles and installed a spotlight on the front left ″A″ pillar, which is the front part of the door frame. The second owner drove the truck approximately 47,000 more miles [**2] and had the truck repaired four times at the Red McCombs Ford dealership in San Antonio (″Red McCombs″). Each repair attempted to fix a clunking noise that occurred during hard turns. Three of the four repairs also involved the fuel system and attempted to improve the truck’s poor gas mileage. The Ridgways drove the truck for only one month before the fire, making no repairs or modifications.

The fire occurred when Ridgway was driving home from work on a paved county road in Bandera County. Driving at or below the speed limit, he looked into the [*600] rear-view mirror and noticed flames curling up around the cab of the truck. Before he could jump out of the truck, Ridgway sustained second-degree burns to 20 percent of his body. Ridgway and his wife Linda sued Red McCombs and Ford, alleging products liability, breach of express and implied warranties, violations of the Texas Deceptive Trade Practices Act, and negligence. After both defendants moved for summary judgment, the Ridgways nonsuited Red McCombs, leaving only their negligence and strict products liability claims against Ford. After adequate time for discovery, Ford moved for summary judgment under Rule 166a(i) and alternatively [**3] under Rule 166a(c). The trial court granted summary judgment without specifying on which provision it relied. On appeal, a divided court of appeals affirmed the trial court’s judgment on plaintiffs’ negligence claim but reversed on products liability. We granted Ford’s petition for review to determine whether the Ridgways presented more than a scintilla of evidence in support of their claim.

II HN1 We first review the trial court’s summary judgment under the standards of Rule 166a(i). The non-movants, here the plaintiffs, must produce summary judgment evidence raising a genuine issue of material fact to defeat the summary judgment under that provision. TEX. R. CIV. P. 166a(i). A genuine issue of material fact exists if more than a scintilla of evidence establishing the existence of the challenged element is produced. Morgan v. Anthony, 27 S.W.3d 928, 929, 43 Tex. Sup. Ct. J. 1172 (Tex. 2000). If the plaintiffs fail to produce more than a scintilla of evidence under that burden, then there is no need to analyze whether Ford’s proof satisfied the Rule 166a(c) burden.

135 S.W.3d 598, *600; 2004 Tex. LEXIS 74, **3

HN2 A manufacturing defect exists when a product deviates, in its construction or quality, from the specifications or planned [**4] output in a manner that renders it unreasonably dangerous. Torrington Co. v. Stutzman, 46 S.W.3d 829, 844, 44 Tex. Sup. Ct. J. 225 (Tex. 2000); Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 434, 40 Tex. Sup. Ct. J. 658 (Tex. 1997). A plaintiff must prove that the product was defective when it left the hands of the manufacturer and that the defect was a producing cause of the plaintiff’s injuries. Torrington Co., 46 S.W.3d at 844. In an attempt to defeat Ford’s motion, the Ridgways presented affidavits from all three of the truck’s owners and from Bill Greenlees, an expert who inspected the truck after the accident. The owners explained when and where they purchased the truck, how many miles they drove it, and any modifications or repairs they made. In addition, Ridgway described when he first noticed the fire, how he reacted, and the injuries he sustained. Greenlees explained that his expert opinion was based on his visual inspection of the truck after the accident, a visual comparison of a similar but undamaged truck, a review of Ford service manuals, and a review of the National Highway Traffic Safety Administration’s database. Based on the areas of greatest damage to the truck [**5] and an indication of a ″hot spot in the left center area of the engine compartment,″ Greenlees concluded that the fire originated within the engine compartment and opined that ″a malfunction of the electrical system in the engine compartment is suspected of having caused this accident.″ Greenlees, however, declined to eliminate all portions of the fuel system as a possible cause of the accident and conceded that ″the actual cause of the fire has not been determine [sic] yet.″ Although Greenlees suggested that further investigation might yield a more definitive conclusion, particularly [*601] if the vehicle were disassembled, the Ridgways made no motion for further testing and did not complain that the trial court failed to allow adequate time for or sufficient scope of discovery. 1 HN3 When determining if more than a scintilla of evidence has been produced in response to [**6] a Rule 166a(i) motion for summary judgment, the evidence must be viewed in the light most favorable to the non-movant. Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 208, 45 Tex. Sup. Ct. J. 470 (Tex. 2002). We have repeatedly held that more than a scintilla of evidence exists if the evidence ″rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.″ Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499, 38 Tex. Sup. Ct. J. 848 (Tex. 1995); Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25, 37 Tex. Sup. Ct. J. 883 (Tex. 1994). On the other hand, ″when the evidence offered to prove a vital fact is so weak as to do no more than create a mere 1 Greenlees’ affidavit stated: ″The inspection of the subject Ford was a visual inspection only. No disassembly nor alterations have been performed as of this time.″ In oral argument, the Ridgways’ attorney suggested that Greenlees could not perform destructive testing on the vehicle because it was severely damaged.

135 S.W.3d 598, *601; 2004 Tex. LEXIS 74, **6

surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence.″ Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63, 26 Tex. Sup. Ct. J. 383 (Tex. 1983). HN4 Both direct and circumstantial evidence may be used to establish any material fact. Lozano v. Lozano, 52 S.W.3d 141, 149, 44 Tex. Sup. Ct. J. 499 (Tex. 2001); Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928, 37 Tex. Sup. Ct. J. 118 (Tex. 1993). To raise a genuine [**7] issue of material fact, however, the evidence must transcend mere suspicion. Evidence that is so slight as to make any inference a guess is in legal effect no evidence. Lozano, 52 S.W.3d at 148; Browning-Ferris, Inc., 865 S.W.2d at 928.

The Ridgways produced no direct evidence of the fire’s cause, and their circumstantial evidence that a manufacturing defect existed in the Ford F-150 when it left the manufacturer does not exceed a scintilla. Ridgway’s affidavit establishes only that a fire occurred, and Greenlees could say no more than that he ″suspects″ the electrical system caused the fire. Because Greenlees could not rule out part of the fuel system as a possible cause and because there is no proof that identified a defect in the truck at the time it left the manufacturer, Greenlees’ affidavit is not sufficient to raise a fact issue. The Ridgways argue that this proof is nevertheless sufficient under section 3 of the Third Restatement of Torts, which provides:

It may be inferred that the harm sustained by the plaintiff was caused by a product defect existing at the time of sale or distribution, without proof of a specific defect, when the [**8] incident that harmed the plaintiff: (a) was of the kind that ordinarily occurs as a result of a product defect; and (b) was not, in the particular case, solely the result of causes other than the product defect existing at the time of sale or distribution.

RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 3 (1998). No Texas court has ever cited this section, and we do not decide today whether it reflects the law of this state. Even if section 3 were the law in Texas, it would generally apply only to new or almost new products. Such products typically have not been modified or repaired, therefore making a product defect the likely cause of an accident. The [*602] drafters of the Restatement realized this limitation and noted: ″The inference of defect may not be drawn . . . from the mere fact of a product-related accident. . . . Evidence that the product may have been used improperly or was altered by repair people weakens the inference [that there was a product defect].″ Id. at reporters’ notes to cmt. d (citations omitted). The reporters’ notes also provide several examples to illustrate when a product defect cannot be inferred without [**9] proof of a specific defect

135 S.W.3d 598, *602; 2004 Tex. LEXIS 74, **9

because of the product’s age or the presence of modifications or repairs. Compare Woodin v. J.C. Penney Co., 427 Pa. Super. 488, 629 A.2d 974, 976-77 (Pa. Super. Ct. 1993) (recognizing that a product defect cannot be inferred in a freezer cord when it functioned flawlessly for eight years before catching fire), and Walker v. Gen. Elec. Co., 968 F.2d 116, 120 (1st Cir. 1992) (holding that the mere fact that a six-year-old toaster oven caught fire does not support an inference that a manufacturing defect exists), with Dietz v. Waller, 141 Ariz. 107, 685 P.2d 744, 748 (Ariz. 1984) (stating that a boat that broke in half after only ten hours of use gives rise to an inference of a manufacturing defect). When courts have cited section 3, they have also noted this limitation on the Restatement’s operation. See Jarvis v. Ford Motor Co., 283 F.3d 33, 44 (2nd Cir. 2002) (applying a New York law similar to section 3 to excuse a plaintiff from proving a specific defect, instead inferring a defect from proof that a six-day-old vehicle did not perform as intended); Myrlak v. Port Auth., 157 N.J. 84, 723 A.2d 45, 56 (N.J. 1999) (adopting [**10] section 3 in a case involving a collapsed five-week-old chair). Therefore, we reiterate that because section 3 is not applicable to the facts of this case, we need not decide if it is an accurate statement of Texas law.

III Under the circumstances of this case, the Ridgways’ summary judgment proof is no more than a scintilla of evidence that a manufacturing defect was present when the truck left the manufacturer. Therefore, the Ridgways have not met their burden of showing that a genuine issue of material fact exists regarding a manufacturing defect. We accordingly reverse the judgment of the court of appeals and render judgment that the plaintiffs take nothing. Thomas R. Phillips Chief Justice

Concur by: Nathan L. Hecht

Concur

JUSTICE HECHT, joined by JUSTICE OWEN, concurring.

I join in the Court’s opinion and write only to explain that while Texas law would allow proof of products liability by circumstantial evidence in certain cases, 1 the black-letter 1 See, e.g., General Motors Corp. v. Hopkins, 548 S.W.2d 344, 20 Tex. Sup. Ct. J. 191 (Tex. 1977), overruled on other grounds by Turner v. Gen. Motors Corp., 584 S.W.2d 844, 22 Tex. Sup. Ct. J. 409 (Tex. 1979) and Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 27 Tex. Sup. Ct. J. 213 (1984); Darryl v. Ford Motor Co., 440 S.W.2d 630, 12 Tex. Sup. Ct. J. 358 (Tex. 1969); see also Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63, 26 Tex. Sup. Ct. J. 383 (Tex. 1983) (citing Hopkins, 548 S.W.2d 344, 20 Tex. Sup. Ct. J. 191).

135 S.W.3d 598, *602; 2004 Tex. LEXIS 74, **10

rule of section 3 of the Restatement (Third) of Torts: Products Liability does not accurately restate Texas law.

[**11] Section 3 states:

Circumstantial Evidence Supporting Inference of Product Defect It may be inferred that the harm sustained by the plaintiff was caused by a product defect existing at the time of sale or distribution, without proof of a specific defect, when the incident that harmed the plaintiff: (a) was of a kind that ordinarily occurs as a result of product defect; and (b) was not, in the particular case, solely the result of causes other than [*603] product defect existing at the time of sale or distribution. 2

″It may be inferred″ cannot mean ″it is always proper to infer″, as the present case demonstrates. Section 3(a) requires only that an injury-causing incident be the kind of thing that ordinarily results from a product defect, not that the incident is the kind of thing that ordinarily does not result unless there is a defect. A pickup suddenly bursting into flame for no discernible reason is the kind of thing that ordinarily occurs as a result of product defect in the sense that product defects do cause such things. Thus Ridgway has satisfied section 3(a), even though it is also true that fires in vehicles ordinarily occur for many reasons other than [**12] product defect. 3 As for section 3(b), although Ridgway cannot conclusively negate that the fire was caused solely by something other than a defect, Ford cannot point to anything as the sole cause of the fire. Therefore, Ridgway argues, section 3 entitles him to an inference that his pickup was defective and the further inference that the defect existed when Ford sold the pickup. The Court rejects Ridgway’s argument, not because of the text of the rule, but because comment d to section 3, the reporter’s notes, and cases allowing proof of products liability by circumstantial evidence limit the stated rule. In other words, the section 3 rule means much less than it appears to say.

[**13] ″It may be inferred″ really means ″it is sometimes proper to infer″, but while this reading makes the rule stated in section 3 accurate, it also makes the rule not very helpful. Few would question the use of circumstantial evidence to prove products liability in appropriate cases. The hard issue is not whether it can be done, but when and how. The comments to section 3 and the cases cited in support of it illustrate the kinds 2 RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 3 (1998).

3 See U.S. FIRE ADMINISTRATION, HIGHWAY VEHICLE FIRES, 2 TOPICAL FIRE RESEARCH SERIES No. 4 (July 2001, revised Mar. 2002) (reporting that highway vehicle fires are due 66% to mechanical or design problems 18% to incendiary or suspicious origins, 8% to misuse, 4% to operational deficiency, and 3% to other design, construction, and installation deficiencies), available at http://www.usfa.fema.gov/downloads/pdf/tfrs/v2i4.pdf (last visited Feb. 5, 2004).

135 S.W.3d 598, *603; 2004 Tex. LEXIS 74, **13

of considerations courts have taken into account in deciding whether to allow an inference of pre-sale defect in a product, but these considerations are not reflected the in the black-letter rule itself. One looks to comments to explain the rule; one does not look to comments to find the rule.

4

Section 3 is modeled on section 328D of the Restatement (Second) of Torts, [**15] which states:

Res Ipsa Loquitur (1) It may be inferred that harm suffered by the plaintiff is caused by negligence of the defendant when (a) the event is of a kind which ordinarily does not occur in the absence of negligence; (b) other responsible causes, including the conduct of the plaintiff and third persons, are sufficiently eliminated [**14] by evidence; and (c) the indicated negligence is within the scope of the defendant’s duty to the plaintiff. 5

[*604] But the differences in the two provisions are such that section 3 is not an analogue of section 328D but rather a kind of res ipsa -- lite! Sections 3(a) and (b) are less strict than the parallel provisions in sections 328D(1)(a) and (b), at least in a case like the present one. It cannot be said that fires in pickups do not ordinarily occur absent a product defect; they ordinarily occur for all sorts of reasons. 6 Nor has Ridgway ″eliminated by evidence″ the existence of other responsible causes of the fire. The most he can say is that Ford has offered no evidence of another cause. He has not shown that, given the circumstances, another cause was impossible or even improbable. If section 3 were as strictly worded as section 328D, Ridgway’s claim would clearly fail. Texas law of res ipsa loquitur is at least as strict as section 328D. We require the first condition stated in section 328D(1)(a), and instead of the second condition stated in section 328D(1)(b), we require that the instrumentality causing harm have been under the defendant’s management and control. 7 We have explained that 4 Proceedings at 72nd Annual Meeting: American Law Institute, 72 A.L.I. PROC. 179, 231 (1996) (remarks of James A. Henderson, Reporter, introducing RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 3 (Tentative Draft No. 2, 1995)) (″Section 3 is derived quite faithfully from § 328D of the Restatement, Second, of Torts.″). 5 RESTATEMENT (SECOND) OF TORTS § 328D (1965).

6 See infra note 3.

7 Haddock v. Arnspiger, 793 S.W.2d 948, 950, 33 Tex. Sup. Ct. J. 591 (Tex. 1990) (″Res ipsa loquitur is applicable only when two factors are present: (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence; and (2) the

135 S.W.3d 598, *604; 2004 Tex. LEXIS 74, **14

the ″control″ requirement is not a rigid rule that the instrumentality must have always been in the defendant’s possession or even that it must have been in the defendant’s control at the time of the injury. It is sufficient if the defendant was in control at the time that the negligence inferable from the first factor probably occurred, so that the reasonable probabilities point to the defendant and support a reasonable inference that he was the negligent party. The possibility of other causes does not have to be completely eliminated, but their likelihood must be so reduced that the jury can reasonably find by a preponderance of the evidence that the negligence, if any, lies at the defendant’s door. 8

The rule of res [**16] ipsa loquitur allows an inference of negligence, absent direct proof, only when injury would ordinarily not have occurred but for negligence, and defendant’s negligence is probable. There is no reason to allow an inference of products liability any more freely than an inference of negligence. An inference of products liability is really two inferences: that the product was defective, and that the defect existed at the time of sale. Applying the principle underlying res ipsa loquitur, neither inference can be drawn without evidence that the injury would not ordinarily [**17] have occurred absent a product defect and that that defect probably existed when the product was sold. This is not what section 3 says. Nathan L. Hecht Justice

instrumentality causing the injury is shown to have been under the management and control of the defendant.″) (citing Mobil Chem. Co. v. Bell, 517 S.W.2d 245, 251, 18 Tex. Sup. Ct. J. 113 (Tex. 1974) and Marathon Oil Co. v. Sterner, 632 S.W.2d 571, 573, 25 Tex. Sup. Ct. J. 274 (Tex. 1982)). 8 Mobil Chem. Co., 517 S.W.2d at 251 (citations omitted).

| | Caution As of: December 4, 2014 12:19 PM EST

Young v. Ward

Court of Appeals of Texas, Tenth District, Waco March 6, 1996, delivered ; March 6, 1996, filed No. 10-95-001-CV

Reporter 917 S.W.2d 506; 1996 Tex. App. LEXIS 900

GEOFFREY YOUNG, Appellant v. TRAVIS WARD, Appellee

Prior History: [**1] From the 13th District Court. Navarro County, Texas. Trial Court # 94-00-03917-CV.

Disposition: Reversed and remanded

Core Terms

one year, employment contract, parties, statute of frauds, retirement, indefinite duration, no writ, terminate, fully performed, oral agreement, ten years, ref’d, summary judgment, conceivably, duration, lifetime

Case Summary

Procedural Posture

Appellant sought review of the judgment from the 13 District Court, Navarro County (Texas), which granted appellee’s motion for summary judgment in appellant’s suit against appellee for enforcement of an oral contract.

Overview

Appellant sued appellee to enforce an oral contract under which appellee was to pay appellant a monthly pension for the rest of appellant’s life. Summary judgment in appellee’s favor was entered on the grounds that the oral contract was unenforceable under Tex. Bus. & Comm. Code Ann. § 26.01(b)(6), because it could not be performed within one year from the date of the agreement. Appellant sought the court’s review. The court held that § 26.01(b)(6) referred to agreements which could not be performed within one year of their making. But if the occurrence of some other contingent event would terminate the agreement before it had been fully performed, then the possibility Jamie Graham

917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1

of that terminating event occurring within one year of the agreement’s making was sufficient to make § 26.01(b)(6) inapplicable. Here, the contract required appellant to work for a month and a half before becoming entitled to payments. That time period then necessarily expired within one year of the agreement’s making. Further, the length of time the payments were to occur could also have been fully performed within one year. Accordingly, § 26.01(b)(6) was not applicable. Judgment reversed and remanded.

Outcome

Summary judgment in appellee’s favor reversed and remanded where the oral contract between appellant and appellee was not required to be in writing to be enforceable where performance of the contract was contingent upon an event which necessarily had to occur within a year of the contract’s making, and where the time for performance could have been fully performed within one year.

LexisNexis® Headnotes

Civil Procedure > Appeals > Summary Judgment Review > General Overview Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General Overview Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > Genuine Disputes Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > Materiality of Facts

HN1 On appeal from the granting of summary judgment, the court must determine whether the evidence establishes as a matter of law that there is no genuine issue of material fact. In deciding whether a genuine issue of material fact exists, the evidence must be viewed in favor of the nonmovant, resolving all doubts and indulging all inferences in his favor. A defendant as a movant must either: 1) disprove at least one element of each of the plaintiff’s theories of recovery; or 2) plead and conclusively establish each essential element of an affirmative defense.

Contracts Law > Procedural Matters > Statute of Frauds > General Overview Contracts Law > ... > Statute of Frauds > Requirements > General Overview Contracts Law > ... > Statute of Frauds > Requirements > Performance Labor & Employment Law > ... > Conditions & Terms > Duration of Employment > Fixed Term

917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1

HN2 Tex. Bus. & Comm. Code Ann. § 26.01(b)(6) provides that, to be enforceable, promises or agreements which are not to be performed within one year from the date of making the agreement must be in writing. Agreements which demand performance at or for a specified amount of time are easily determined by the court to fall or not fall under the strictures of §26.01(b)(6). The court simply compares the date of the agreement to the date when the performance under the agreement is to be completed and if there is a year or more in between them then a writing is required to render the agreement enforceable. Agreements where the time at or for performance is not specifically provided but can be readily ascertained from the context of the agreement can also be easily determined to be within or outside § 26.01(b)(6).

Contracts Law > Procedural Matters > Statute of Frauds > General Overview Contracts Law > ... > Statute of Frauds > Requirements > General Overview Contracts Law > ... > Statute of Frauds > Requirements > Performance Labor & Employment Law > Employment Relationships > Employment Contracts > Statute of Frauds

HN3 Without knowing definitely when performance is to be completed, courts are unable to determine with certainty whether the agreement is to be performed within one year from the date of making the agreement. Tex. Bus. & Comm. Code Ann. § 26.01(b)(6). Courts, however, apparently in an effort to avoid the harsh consequences § 26.01(b)(6) can produce, generally hold that, in the absence of a known date when performance will be completed, the statute of frauds as contained in § 26.01(b)(6) does not apply if performance could conceivably be completed within one year of the agreement’s making.

Contracts Law > Procedural Matters > Statute of Frauds > General Overview Contracts Law > ... > Statute of Frauds > Requirements > General Overview Contracts Law > ... > Statute of Frauds > Requirements > Performance Labor & Employment Law > ... > Conditions & Terms > Duration of Employment > General Overview Labor & Employment Law > Employment Relationships > Employment Contracts > Statute of Frauds

HN4 Agreements requiring performance for an indefinite duration and which do not depend upon any conditions for their perpetuation are generally held not to require a writing under the statute of frauds, Tex. Bus. & Comm. Code Ann. § 26.01(b)(6), because there is nothing in the agreement itself to show that the agreement could not be performed within a year according to its tenor and the understanding of the parties.

917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1

Contracts Law > Procedural Matters > Statute of Frauds > General Overview Contracts Law > ... > Statute of Frauds > Requirements > General Overview Contracts Law > ... > Statute of Frauds > Requirements > Performance

HN5 Agreements which are to last during the life of one of the parties do not require a writing because the party upon whose life the duration of the contract is measured could die within a year of the agreement’s making.

Contracts Law > Procedural Matters > Statute of Frauds > General Overview Labor & Employment Law > ... > Employment Contracts > Conditions & Terms > General Overview Labor & Employment Law > Wrongful Termination > Breach of Contract > General Overview Labor & Employment Law > Wrongful Termination > Breach of Contract > Express Contracts

HN6 The mere possibility of an agreement terminating within one year of its making does not, in and of itself, ensure that a writing is not required. If this conceivable possibility of performance is dependent upon some merely fortuitous event, a writing will still be required to enforce the agreement.

Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN7 If an agreement can be fully performed within one year of its making, Tex. Bus. & Comm. Code Ann. § 26.01(b)(6) does not apply. But if the occurrence of some other contingent event, even if expressly contemplated in the agreement, would simply terminate the agreement before the agreement had been fully performed, then the possibility of that terminating event occurring within one year of the agreement’s making is insufficient to take the agreement outside of § 26.01(b)(6). The event that could conceivably occur within one year of the agreement must be one intended by the parties to result in the full performance of the agreement.

Counsel: William B. Short, Jr. & Mark Frels, SHORT, HOW, LOZANO, FRELS & TREDOUX, L.L.P., Dallas, TX.

Frederick M. Loeber, Jr., Dallas. TX.

Judges: BOBBY L. CUMMINGS, Justice, BILL VANCE, Justice - concurring

Opinion by: BOBBY L. CUMMINGS

917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1

Opinion

[*506] OPINION This is a breach of contract case. At trial, appellant Geoffrey Young sought to enforce an oral contract between him and appellee Travis Ward whereby Ward, Young’s former employer, had allegedly agreed to pay Young a pension of $ 2000 per month for the rest of [*507] Young’s life. Ward moved for summary judgment on the grounds that the alleged oral contract was unenforceable under the statute of frauds. TEX. BUS. & COMM. CODE ANN. § 26.01 (Vernon 1987). The trial court granted the motion, prompting Young to bring this appeal. We reverse and remand. The two parties differ widely in their versions of the events which led to this lawsuit. According to Young, beginning in 1956 and continuing until the end of October 1985, Young worked for Ward as an office manager and bookkeeper. Starting [**2] in or about 1969, he began to feel concerned that Ward had not yet established some provision for his retirement income. He, therefore, brought the subject up to Ward, who assured Young that he had no need to be concerned about a lack of a retirement income and that Ward would provide one for Young when the time came. Nevertheless, despite repeated protests from Young, Ward never attempted to finalize a formal agreement with Young until either late September or early October of 1985 when Young was only a few weeks from his last day of employment. At that time, again according to Young, Ward offered to pay Young $ 2000 per month for the rest of Young’s life. Young argues that the consideration for the agreement was that Young would continue to work for Ward until the end of October. The negotiations were oral and the agreement was never reduced to writing. Ward agrees that Young worked for him from 1956 until the end of October 1985 as an office manager and bookkeeper, but this essentially is where the similarity between his story and Young’s ends. According to Ward, his decision to offer Young a pension arose from an effort to keep Young in his employment when Ward was relocating [**3] his offices from Corsicana to Dallas sometime between 1971 and 1973, not from concerns expressed by Young about a lack of a retirement plan. Young did not want to move to Dallas and was reluctant to commute; accordingly, in an effort to persuade him to continue in his employment, Ward offered to provide Young a company car and gas so that Young could make the commute from Corsicana without any financial expense. Furthermore, as an added incentive, Ward decided to offer Young a retirement plan. Ward consulted an insurance agent, Gara Stark, who analyzed certain figures and offered certain suggestions to Ward on what might be feasible Options for him and Young. Ward decided not to accept any of the suggestions from Stark; instead, he orally offered to pay Young $ 2000 per month for eight years once Young retired. According to Ward, Young orally accepted this offer in 1973, but it was never reduced to writing.

917 S.W.2d 506, *507; 1996 Tex. App. LEXIS 900, **3

The parties agree that Young retired at the end of October 1985 and that Ward paid Young $ 2000 per month for eight years following Young’s retirement. Young brought his lawsuit when Ward informed him in or about October 1993 that he would cease making payments to Young the following [**4] month. In his motion for summary judgment, Ward contended the oral agreement between him and Young was unenforceable because it was not to be performed within one year from the date of the making of the agreement, as provided in our state’s statute of frauds. TEX. BUS. & COMM. CODE ANN. § 26.01(b)(6). Ward raised two arguments in support of his theory: first, he contended that any contract for lifetime is, per se, barred by the statute of frauds; second, he argued that, since the date of the contract’s making was in 1973, more than one year would necessarily have had to elapse before the contract could be performed because Young was not due to retire until twelve years later in 1985. The trial court granted summary judgment solely on the former argument; consequently, we can only consider it and not the latter. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (1993); McDuff v. Chambers, 895 S.W.2d 492, 497 (Tex. App.--Waco 1995, writ denied). HN1 On appeal from the granting of summary judgment, we must determine whether the evidence establishes as a matter of law that there is no genuine issue of material fact. Rodriguez v. Naylor, 763 S.W.2d 411, 413 (Tex. [**5] 1989); Hamlin v. Gutermuth, 909 S.W.2d 114, 116 (Tex. App.--Houston [14th Dist.] 1995, writ denied). In deciding whether a genuine issue of material fact exists, the evidence must be viewed in [*508] favor of the nonmovant, resolving all doubts and indulging all inferences in his favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). A defendant as a movant must either: 1) disprove at least one element of each of the plaintiff’s theories of recovery; or 2) plead and conclusively establish each essential element of an affirmative defense. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 (Tex. 1979). Ward in his summary judgment motion raised the affirmative defense of the statute of frauds. The question before us, then, is whether oral lifetime contracts are unenforceable under the statute of frauds. We conclude that they are not. Construing the facts in the light most favorable to Young, we find that in late September or early October 1985 Ward offered to pay Young $ 2000 per month for the rest of Young’s life if Young would continue to work for Ward until the end of October 1985. Young accepted the offer, but the agreement [**6] was never reduced to writing. HN2 Section 26.01(b)(6) of the Business and Commerce Code provides that, to be enforceable, promises or agreements ″which [are] not to be performed within one year from the date of making the agreement″ must be in writing. TEX. BUS. & COMM. CODE ANN. § 26.01(b)(6). Agreements which demand performance at or for a specified

917 S.W.2d 506, *508; 1996 Tex. App. LEXIS 900, **6

amount of time are easily determined by the court to fall or not fall under the strictures of section 26.01(b)(6). Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796 (1961) (question of whether an agreement falls within the statute of frauds is one of law). The court simply compares the date of the agreement to the date when the performance under the agreement is to be completed and if there is a year or more in between them then a writing is required to render the agreement enforceable. Gilliam v. Kouchoucos, 161 Tex. 299, 340 S.W.2d 27, 28-29 (1960) (employment contract for ten years within statute); Chevalier v. Lane’s, Inc., 147 Tex. 106, 213 S.W.2d 530, 533 (Tex. 1948) (employment contract for term of one year and several weeks within statute); Paschall v. Anderson, 127 Tex. 251, 91 S.W.2d 1050, 1051 (1936) [**7] (same); Shaheen v. Motion Indus., Inc., 880 S.W.2d 88, 91 (Tex. App.--Corpus Christi 1994, writ denied) (employment contract for nine months not within statute); International Piping Sys., Ltd. v. M.M. White & Assoc., Inc., 831 S.W.2d 444, 451 (Tex. App.--Houston [14th Dist.] 1992, writ denied) (employment contract for one year performable within one year and therefore not within statute); Wiley v. Bertelsen, 770 S.W.2d 878, 881-82 (Tex. App.--Texarkana 1989, no writ) (employment agreement for approximately ten years within statute); M.R.S. Datascope Inc. v. Exchange Data Corp., Inc., 745 S.W.2d 542, 544 (Tex. App.--Houston [1st Dist.] 1988, no writ) (covenant not to compete for three years within statute); Levine v. Loma Corp., 661 S.W.2d 779, 781-82 (Tex. App.--Fort Worth 1983, no writ) (agreement to employ employee for over one year and then pay him $ 1000 per month for life thereafter within statute). Agreements where the time at or for performance is not specifically provided but can be readily ascertained from the context of the agreement can also be easily determined to be within or outside section 26.01(b)(6). Schroeder v. Texas Iron Works, [**8] Inc., 813 S.W.2d 483 (Tex. 1991) (employment contract until retirement, which was eight to ten years from date of agreement’s making, was within statute); Niday v. Niday, 643 S.W.2d 919, 920 (Tex. 1982) (agreement fell within statute where performance under agreement would take at least two years); Hall v. Hall, 158 Tex. 95, 308 S.W.2d 12, 15 (1957) (employment contract with no specified duration was within statute where the parties intended it to last for a reasonable time and where the jury determined the parties at the time the agreement was made intended it to be about three years); Leon Ltd. v. Albuquerque Commons Partnership, 862 S.W.2d 693, 702 (Tex. App.--El Paso 1993, no writ) (writing was required where performance under agency agreement, although for an unspecified term, could not possibly be completed within three years from date of agreement); Winograd v. Willis, 789 S.W.2d 307, 310-11 (Tex. App.--Houston [14th Dist. 1990, writ denied) (employment contract of unspecified duration determined to be for one year and therefore not within statute where the terms of the agreement indicated that employee [*509] was to receive an annual salary); [**9] Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 406-07 (Tex. App.--Beaumont 1987, writ ref’d n.r.e.) (employment

917 S.W.2d 506, *509; 1996 Tex. App. LEXIS 900, **9

contract until retirement for employee several years younger than retirement age within statute); Gano v. Jamail, 678 S.W.2d 152, 154 (Tex. App.--Houston [14th Dist.] 1984, no writ) (indefinite duration agreement between plaintiff lawyers to share profits from personal injury cases required a writing because the work on the cases could not reasonably be completed within one year from the date the cases were taken); Molder v. Southwestern Bell Tel. Co., 665 S.W.2d 175, 177 (Tex. App.--Houston [1st Dist.] 1983, writ ref’d n.r.e.) (employment contract until retirement for eighteen year-old employee within statute). Agreements which fail to specify a definite time when performance is to be completed and agreements from which the time at or for performance cannot be readily ascertained present a different and more difficult problem. HN3 Without knowing definitely when performance is to be completed, courts are unable to determine with certainty whether the agreement was ″to be performed within one year from the date of making the agreement.″ TEX. BUS. & COMM. [**10] CODE ANN. § 26.01(b)(6). Texas courts, however, apparently in an effort to avoid the harsh consequences section 26.01(b)(6) can produce, have generally held that, in the absence of a known date when performance will be completed, the statute of frauds does not apply if performance could conceivably be completed within one year of the agreement’s making. Miller v. Riata Cadillac Co., 517 S.W.2d 773, 776 (Tex. 1974) (where contract to pay employee a bonus after approximately one year could theoretically be performed before the year expired, statute of frauds did not apply); Young v. Fontenot, 888 S.W.2d 238, 241 (Tex. App.--El Paso 1994, writ denied) (agreement to transfer stocks at an unspecified date in the future was performable within one year and therefore not within statute); Gerstacker v. Blum Consulting Engineers, Inc., 884 S.W.2d 845, 851 (Tex. App--Dallas 1994, writ denied) (employment contract for no specified duration but for as long as the employee’s performance was satisfactory could be performed within one year because performance could conceivably become unsatisfactory within one year); Prowse v. Schellhase, 838 S.W.2d 787, 790 (Tex. App.--Corpus [**11] Christi 1992, no writ) (agreement to find a buyer for mineral leases was performable within one year and therefore not within statute); Goodyear Tire & Rubber Co. v. Portilla, 836 S.W.2d 664, 670-71 (Tex. App.--Corpus Christi 1992) (employment contract for as long as employee performed work satisfactorily not within statute), aff’d, 879 S.W.2d 47 (Tex. 1994); Day & Zimmermann, Inc. v. Hatridge, 831 S.W.2d 65, 68-69 (Tex. App.--Texarkana 1992, writ denied) (same); Kennedy v. Hyde, 666 S.W.2d 325, 328 (Tex. App.--Fort Worth) (oral agreement to repay a note for a ten-year period not within statute because parties intended for alternative performance by possible early payment within one year of the agreement), rev’d on other grounds, 682 S.W.2d 525 (Tex. 1984); JOHN D. CALAMARI AND JOSEPH M. PERILLO, CONTRACTS, § 19-18 (2nd ed. 1977); contra Wal-Mart Stores, Inc. v. Coward, 829 S.W.2d 340, 342-43 (Tex. App.--Beaumont 1992, writ

917 S.W.2d 506, *509; 1996 Tex. App. LEXIS 900, **11

denied) (employment contract for as long as employee wanted it and made a ″good hand″ required a writing). Furthermore, under similar reasoning, HN4 agreements requiring performance for an indefinite duration and which do not depend upon [**12] any conditions for their perpetuation are generally held not to require a writing under the statute of frauds because ″there is nothing in the agreement itself to show that [the agreement could not] be performed within a year according to its tenor and the understanding of the parties[.]″ Bratcher, 346 S.W.2d at 796 (quoting 49 AM. JUR. Statute of Frauds § 27 (1943)). Again, the agreements could conceivably be performed within a year of their making; therefore, a writing is not required to enforce them. Id. (statute of frauds did not apply to employment contract of indefinite duration); Beckstrom v. Gilmore, 886 S.W.2d 845, 846-47 (Tex. App.--Eastland 1994, writ denied) (agreement of indefinite duration by attorney to send demand letters for medical doctor performable within one year and therefore not within statute); Morgan v. Jack Brown Cleaners, Inc., 764 S.W.2d 825, 827 (Tex. [*510] App.--Austin 1989, writ denied) (on rehearing) (employment contract of indefinite duration not within statute); Kelley v. Apache Products, Inc., 709 S.W.2d 772, 774 (Tex. App.--Beaumont 1986, writ ref’d n.r.e.) (same); Robertson v. Pohorelsky, 583 S.W.2d 956, [**13] 958 (Tex. Civ. App.--Waco 1979, writ ref’d n.r.e.) (employment contract of indefinite duration did not require writing because nothing in agreement indicated parties intended employee to work more than one year); RESTATEMENT (SECOND) OF CONTRACTS § 130 cmt. a (1981). Accordingly, HN5 agreements to last during the life of one of the parties would also not require a writing because the party upon whose life the duration of the contract is measured could die within a year of the agreement’s making. In Wright v. Donaubauer, 137 Tex. 473, 154 S.W.2d 637 (1941), the Supreme Court considered whether an oral agreement providing for an alternative means of performing on a ten-year note was within the statute of frauds. The parties orally agreed that the debtor could pay off his $ 2100 debt, payable on the note by $ 100 every six months for ten years, by performing yard work either for the life of the creditor or for the duration of the note, whichever should occur first. 154 S.W.2d at 638. The parties intended that the note, under either scenario, would be paid in full. See id. It is important to distinguish the two agreements at issue in the Wright case. The first is the written [**14] agreement represented in the ten-year note. The second is the oral agreement between the parties providing for an alternative means of paying off the note other than the tendering of $ 100 every six months for ten years. Under the oral agreement, the parties intended for two alternative means of performance. The first required ten years of yard work by the debtor; the second required the performance of yard work by the debtor until the death of the creditor. The Supreme Court held that, because the second means of performance could have occurred within one year of the agreement’s making, the statute of frauds did not

917 S.W.2d 506, *510; 1996 Tex. App. LEXIS 900, **14

apply and a writing was not required to enforce it. 154 S.W.2d at 639; see Gilliam, 340 S.W.2d at 28. This rule of law has since been followed in Texas and in virtually every other jurisdiction in the United States. Lieber v. Mercantile Nat’l Bank at Dallas, 331 S.W.2d 463, 474 (Tex. Civ. App.--Dallas 1960, writ ref’d n.r.e.) (oral prenuptial agreement that husband would will certain monies to his wife not within statute because husband could have died within one year of the agreement’s making); Central Nat’l Bank of San Angelo v. Cox, 96 S.W.2d 746, 748 [**15] (Tex. Civ. App.--Austin 1936, writ dism’d) (employment contract until employee should die or become incapacitated performable within one year and therefore not within statute); accord Doherty v. Doherty Ins. Agency, Inc., 878 F.2d 546, 551-52 (1st Cir. 1989) (applying Massachusetts law); Rath v. Selection Research, Inc., 246 Neb. 340, 519 N.W.2d 503, 506 (Neb. 1994); Boothby v. Texon, Inc., 414 Mass. 468, 608 N.E.2d 1028, 1035-36 (Mass. 1993); Falls v. Virginia State Bar, 240 Va. 416, 397 S.E.2d 671, 672 (Va. 1990); Kestenbaum v. Pennzoil Co., 108 N.M. 20, 766 P.2d 280, 283-84 (N.M. 1988), cert. denied, 490 U.S. 1109, 109 S. Ct. 3163, 104 L. Ed. 2d 1026 (1989); Bergquist-Walker Real Estate, Inc. v. William Clairmont, Inc., 333 N.W.2d 414, 418 (N.D. 1983); Kitsos v. Mobile Gas Serv. Corp., 404 So. 2d 40, 42 (Ala. 1981); Kiyose v. Trustees of Indiana Univ., 166 Ind. App. 34, 333 N.E.2d 886, 889 (Ind. 1975); Price v. Mercury Supply Co., Inc., 682 S.W.2d 924, 933 (Tenn. App. 1984); contra Massey v. Houston Baptist Univ., 902 S.W.2d 81, 84 (Tex. App.--Houston [1st Dist.] 1995, writ denied) (promise of lifetime employment, without [**16] reference to retirement, required a writing); Benoit, 728 S.W.2d at 407 (employment contracts for ″lifetime employment″ require a writing); Zimmerman v. H.E. Butt Grocery Co., 932 F.2d 469, 472-73 (5th Cir.) (under Texas law agreements for ″lifetime employment″ require a writing), cert. denied, 502 U.S. 984, 112 S. Ct. 591, 116 L. Ed. 2d 615 (1991); Quinn v. Workforce 2000, Inc., 887 F. Supp. 131, 136 (E.D. Tex. 1995) (same); Rayburn v. Equitable Life Assurance Soc. of the United States, 805 F. Supp. 1401, 1405-06 (S.D. Tex. 1992) (same). However, HN6 the mere possibility of the agreement terminating within one year of its making does not, in and of itself, ensure that a writing is not required. If this conceivable possibility of performance is dependent upon [*511] some merely fortuitous event, a writing will still be required to enforce the agreement. Gilliam, 340 S.W.2d at 28 (ten-year employment contract required writing notwithstanding express provision in the oral agreement that such would terminate upon employee’s death); Chevalier, 213 S.W.2d at 533 (mere possibility of death did not eliminate requirement of a writing to enforce an [**17] employment contract of one year and several weeks); Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 934 (Tex. App.--Houston [14th Dist.] 1994, no writ) (employment contract for three years within statute even though under agreement employee could be terminated at any time for cause); Mann v. NCNB Texas Nat’l Bank, 854 S.W.2d 664, 668 (Tex. App.--Dallas 1992, no writ) (loan agreement with

917 S.W.2d 506, *511; 1996 Tex. App. LEXIS 900, **17

a three-year repayment term was within Statute notwithstanding remote possibility that debtor would repay the loan within a year from its making); Webber v. M. W. Kellogg Co., 720 S.W.2d 124, 128 (Tex. App.--Houston [14th Dist.] 1986, writ ref’d n.r.e.) (employment contract until retirement required a writing notwithstanding employer’s contractual right to discharge employee at will within first three months of employment). This seemingly technical distinction is one between termination of the contract and performance under the contract. Gilliam, 340 S.W.2d at 28-9; Chevalier, 213 S.W.2d at 532. Section 26.01(b)(6) refers to agreements which cannot be ″performed″ within one year of their making. TEX. BUS. & COMM. CODE ANN. § 26.01(b)(6). Accordingly, HN7 if an [**18] agreement could be fully ″performed″ within one year of its making, section 26.01(b)(6) does not apply. Bratcher, 346 S.W.2d at 796; Gilliam, 340 S.W.2d at 28-9; Chevalier, 213 S.W.2d at 532; Gerstacker, 884 S.W.2d at 851 (employment contract for as long as the employee’s performance was satisfactory would be fully completed when employee’s performance became unsatisfactory); Portilla, 836 S.W.2d at 670-71 (same). But if the occurrence of some other contingent event, even if expressly contemplated in the agreement, would simply terminate the agreement before the agreement had been fully performed, then the possibility of that terminating event occurring within one year of the agreement’s making is insufficient to take the agreement outside of section 26.01(b)(6). The event that could conceivably occur within one year of the agreement must be one intended by the parties to result in the full performance of the agreement. In the words of the Fifth Circuit, ″If an oral . . . agreement can cease upon some contingency, other than by some fortuitous event or the death of one of the parties, the agreement may be performed within one year, and the statute of frauds does [**19] not apply.″ Pruitt v. Levi Strauss & Co., 932 F.2d 458, 463-64 (5th Cir. 1991); see Gilliam, 340 S.W.2d at 29-30; Chevalier, 213 S.W.2d at 532; Collins, 871 S.W.2d at 934; M.R.S. Datascope, 745 S.W.2d at 544. We will now apply the facts to the above-stated principles of law. Here, the summary judgment evidence indicates that the parties agreed in late September or early October 1985 that Ward would pay Young $ 2000 per month for the rest of Young’s life if Young would work for Ward until the end of October 1985. We note that there are two stages of performance under this agreement. The first is the month and a half of work Young would have to complete in order to be entitled to payment from Ward. The parties identified a specific and definite period of time by which performance under this first stage would be completed; i.e., no more than a month and a half. This month and a half would necessarily expire within one year of the agreement’s making; therefore, the writing requirement of section 26.01(b)(6) is not invoked by this stage. The second stage of performance is the period of time Ward was required to make payments to Young. This period was one of an [**20] indefinite duration; i.e., until

917 S.W.2d 506, *511; 1996 Tex. App. LEXIS 900, **20

Young dies. As an agreement of indefinite duration, we must ask whether it could have been fully performed within one year of its making. Obviously, it could have been. Young could have died at any time after he ceased working for Ward. We must also ask, however, whether Young’s death would have resulted in the agreement being fully performed or fortuitously terminated. The language of the [*512] agreement reveals the parties’ intention that the contract would be fully performed once Young died, assuming he successfully performed under the first stage of the agreement, which we note was less than one year. Young’s death within a year of the agreement’s making would not have simply resulted in the fortuitous termination of the agreement: Young’s death was intended by the parties to be the defining event which would determine when the agreement was fully performed. Therefore, because both stages of the agreement, taken together, could have been fully performed within one year of the agreement’s making, we conclude that section 26.01(b)(6) is not applicable. We, accordingly, sustain Young’s first point of error. Due to our disposition of his first [**21] point of error, we need not consider his remaining points. The cause is reversed and remanded for a trial on the merits. BOBBY L. CUMMINGS Justice Before Justice Cummings, and Justice Vance Reversed and remanded Opinion delivered and filed March 6, 1996 | | Caution As of: February 20, 2015 11:43 AM EST

Pitman v. Lightfoot

Court of Appeals of Texas, Fourth District, San Antonio August 7, 1996, Delivered ; August 7, 1996, Filed Appeal No. 04-93-00480-CV

Reporter 937 S.W.2d 496; 1996 Tex. App. LEXIS 3531 B.F. PITMAN III; Kim I. MANNING; J. limitations, notice, contractual damages, Brian O’CONNOR; Michael H. BERTINO, limitations period, no writ M.D.; Fred L. BAKER; Lawrence F. HAASS; Rodolfo DAVILA, Trustee of Case Summary The Rodolfo L. Davila Estate Trust; and Frank DAVILA II, Appellants, v. O. Procedural Posture Waymond LIGHTFOOT, Jr.; William R.

Appellant investors of bank holding FIELDS, Jr. and His Estate in Bankruptcy company stock challenged a judgment from through Intervenor John Patrick LOWE, the 285th District Court of Bexar County Trustee, Appellees.

(Texas), in favor of appellee sellers of the Subsequent History: [**1] Released for stock, in appellees’ action for breach of Publication December 6, 1996. contract, related tort theories, and violations of the Texas Securities Act, Tex.

Prior History: Appeal from the 285th Rev. Civ. Stat. Ann. art. 581-33, concerning District Court of Bexar County. Trial Court a purported agreement with appellants to No. 91-CI-16926. Honorable Michael P. purchase stock from appellees for which Peden, Judge Presiding. payment was not made.

Disposition: AFFIRMED IN PART; Overview REVERSED AND RENDERED IN PART.

The parties had entered into a stock Core Terms repurchase agreement, an agreement for funding repurchases of shares, and appellees’, control group, stock, trial court, repurchase agreement for the a bank’s damages, questions, shares, appellants’, capital stock. Payment was not made. The Savings, parties, issues, ratification, trial court granted judgment in favor of financing, ambiguous, loans, Securities, appellee sellers in an action against attorneys’, breach of contract, pleadings, appellant investors for breach of contract, ratified, securities fraud, discovery rule, breach of trustees’ and directors’ fiduciary conditioned, individually, voting trust, duties, and violations of the Texas Jamie Graham

937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1

Securities Act, Tex. Rev. Civ. Stat. Ann. art. the evidence supporting the jury’s finding, 581-33. On appeal, the court affirmed the ignoring all evidence to the contrary. If part of the judgment based upon breach of there is no evidence to support the finding, contract because the ″discovery rule″ tolled then the entire record must be examined to the four-year statute of limitations. The see if the contrary proposition is established evidence was both legally and factually as a matter of law. Only when the contrary sufficient to support a finding that proposition is conclusively established by appellants promised, though their agent, to the evidence does the court sustain the buy appellees’ stock. The court, however, point. reversed the judgment regarding the breach of duty and art. 581-33 claims. As to one Civil Procedure > ... > Defenses, Demurrers appellant, no evidence showed that any & Objections > Affirmative Defenses > General Overview

untrue statements or omissions were made regarding the stock itself. Regarding the Civil Procedure > ... > Statute of other appellant, article 581-33(H) clearly Limitations > Tolling of Statute of provided an optimum limitations period of Limitations > Discovery Rule five years, which was not observed. The Civil Procedure > Discovery & Disclosure > breach of duty claim thus failed as well. General Overview Governments > Legislation > Statute of Outcome Limitations > General Overview The court affirmed only that portion of the Governments > Legislation > Statute of trial court’s judgment that awarded liability Limitations > Time Limitations and damages for breach of contract to appellee sellers of bank holding company Torts > Procedural Matters > Statute of stock against appellant investors. The court Limitations > General Overview reversed those parts of the trial court’s HN2 The discovery rule is a plea in judgment that awarded liability and confession and avoidance. A plea in damages for breach of trustees’ and confession and avoidance is one which directors’ fiduciary duties, and for avows and confesses the truth in the violations of the Texas Securities Act, and averments of fact in the petition, either rendered that appellees take nothing. expressly or by implication, but then proceeds to allege new matter which tends LexisNexis® Headnotes to deprive the facts admitted of their ordinary legal effect, or to obviate, Civil Procedure > Appeals > Standards of neutralize, or avoid them. This most closely Review describes the function of the discovery HN1 When reviewing ″matter of law″ rule, which asserts that while the statute of points, an appellate court employs a limitation may appear to have run, giving two-prong test. The court will first examine rise to that appearance should not control.

937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1

Civil Procedure > ... > Defenses, Demurrers Torts > Procedural Matters > Statute of & Objections > Affirmative Defenses > Limitations > General Overview General Overview HN4 The discovery rule does not excuse a Civil Procedure > ... > Affirmative party from exercising reasonable diligence Defenses > Statute of Limitations > Waiver in protecting its own interests. The rule Civil Procedure > ... > Statute of expressly mandates the exercise of Limitations > Tolling of Statute of reasonable diligence to discover facts of Limitations > Discovery Rule negligence or omission. Moreover, the Governments > Legislation > Statute of burden is on the party seeking the benefit Limitations > General Overview of the discovery rule to establish its Governments > Legislation > Statute of applicability. Whether reasonable diligence Limitations > Pleadings & Proof was used is generally a question of fact unless the evidence is such that reasonable Torts > Procedural Matters > Statute of minds could not differ as to its effect; only Limitations > General Overview then does it become a question of law.

HN3 A party seeking to avail itself of the discovery rule must plead the rule, either Civil Procedure > ... > Defenses, Demurrers & Objections > Affirmative Defenses > in its original petition or in an amended or General Overview

supplemental petition in response to defendant’s assertion of the defense as a Civil Procedure > ... > Statute of matter of avoidance. A defendant who has Limitations > Tolling of Statute of established that the suit is barred cannot be Limitations > Discovery Rule expected to anticipate the plaintiff’s Civil Procedure > Discovery & Disclosure > defenses to that bar. A matter in avoidance General Overview of the statute of limitations that is not Contracts Law > Breach > Breach of raised affirmatively by the pleadings will, Contract Actions > General Overview therefore, be waived. The party seeking to Contracts Law > Breach > General benefit from the discovery rule must also Overview

bear the burden of proving and securing favorable findings thereon. The party Contracts Law > Defenses > Affirmative asserting the discovery rule should bear Defenses > Statute of Limitations this burden, as it will generally have greater Governments > Legislation > Statute of access to the facts necessary to establish Limitations > General Overview that it falls within the rule. Governments > Legislation > Statute of Limitations > Time Limitations Civil Procedure > ... > Defenses, Demurrers & Objections > Affirmative Defenses > HN5 A breach of contract action is General Overview governed by a four-year statute of Civil Procedure > Discovery & Disclosure > limitations. Tex. Civ. Prac. & Rem. Code General Overview Ann. § 16.004 (1986). In applying this

937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1

four-year limitations period, a cause of to the pleader. The court will look to the action is generally said to accrue when the pleader’s intendment and the pleading will wrongful act effects an injury, regardless be upheld even if some element of a cause of when the plaintiff learned of such injury. of action has not been specifically alleged. An exception to the general rule is known Every fact will be supplied that can as the discovery rule and this rule is used reasonably be inferred from what is to determine when the cause of action specifically stated. accrued. The discovery rule tolls the running of the limitations period until the Civil Procedure > ... > Defenses, Demurrers time the injured party discovers or through & Objections > Affirmative Defenses > the use of reasonable care and diligence General Overview should have discovered the injury. In a Civil Procedure > ... > Jury Trials > Jury breach of contract action, limitations begin Instructions > General Overview to run from the time of the breach, or from the time the plaintiff knew or should have Civil Procedure > ... > Standards of known of the breach, whichever is the Review > Substantial Evidence > later. Sufficiency of Evidence Torts > Procedural Matters > Statute of Civil Procedure > ... > Defenses, Demurrers Limitations > General Overview & Objections > Affirmative Defenses > General Overview HN8 Reasonably diligent discovery is Civil Procedure > ... > Statute of generally a matter for the jury. This is Limitations > Tolling of Statute of especially true in a case where the material Limitations > Discovery Rule facts are far from undisputed. Civil Procedure > Discovery & Disclosure > Civil Procedure > ... > Defenses, Demurrers General Overview & Objections > Affirmative Defenses > Governments > Legislation > Statute of General Overview Limitations > General Overview Civil Procedure > ... > Statute of Torts > Procedural Matters > Statute of Limitations > Tolling of Statute of Limitations > General Overview Limitations > Discovery Rule HN6 For a court to apply the discovery Contracts Law > Breach > Breach of rule, the party asserting it must also Contract Actions > General Overview affirmatively plead the rule. Contracts Law > Breach > General Civil Procedure > Pleading & Practice > Overview Pleadings > Rule Application & Torts > Procedural Matters > Statute of Interpretation Limitations > General Overview

HN7 The general rule is that pleadings HN9 Without application of the discovery will be construed as favorably as possible rule, a contract cause of action normally

937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1

accrues when the contract is breached, not matter of right from the date of the injury when it was made. or loss.

Evidence > ... > Exemptions > Statements Civil Procedure > Judgments > Preclusion by Party Opponents > General Overview of Judgments > General Overview Evidence > Types of Evidence > Judicial Civil Procedure > Judgments > Preclusion Admissions > General Overview of Judgments > Law of the Case Evidence > Types of Evidence > Judicial HN13 The ″law of the case″ doctrine has Admissions > Pleadings been defined by the Texas Supreme Court HN10 A party’s testimonial declarations as that principle under which questions of which are contrary to his position are law decided on appeal to a court of last quasi-admissions. They are merely some resort will govern the case throughout its evidence, and they are not conclusive upon subsequent stages. By narrowing the issues the admitter. These are to be distinguished in successive stages of the litigation, the from the true judicial admission which is a law of the case doctrine attempts to achieve formal waiver of proof usually found in uniformity of decision as well as judicial pleadings or the stipulations of the parties. economy and efficiency. A judicial admission is conclusive upon the party making it, and it relieves the Civil Procedure > Appeals > Summary opposing party’s burden of proving the Judgment Review > General Overview admitted fact, and bars the admitting party Civil Procedure > Judgments > Preclusion from disputing it. The requirements for of Judgments > Law of the Case treating a party’s testimonial quasi-admission as a conclusive judicial HN14 The doctrine of the law of the case admission include that the statement be only applies to questions of law and not to deliberate, clear, and unequivocal and that questions of fact. Furthermore, the doctrine the hypothesis of mere mistake or slip of does not necessarily apply when either the the tongue must be eliminated. issues or the facts presented at successive appeals are not substantially the same as Torts > ... > Types of Damages > Judgment those involved in the first trial. Interest > General Overview Civil Procedure > Judgments > Summary HN11 See Tex. Rev. Civ. Stat. Ann. art. Judgment > General Overview 5069-1.03 (1987).

Civil Procedure > Appeals > Summary Torts > ... > Types of Damages > Judgment Judgment Review > General Overview Interest > General Overview Civil Procedure > ... > Summary HN12 Where damages are definitely Judgment > Motions for Summary determinable, interest is recoverable as a Judgment > General Overview

937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1

Civil Procedure > ... > Summary Criminal Law & Procedure > ... > Jury Judgment > Opposing Materials > General Instructions > Particular Instructions > Overview Elements of Offense Civil Procedure > ... > Summary HN17 A proper broad form jury question Judgment > Entitlement as Matter of Law > asks an ultimate issue and instructs the General Overview jury about the elements of the ground of recovery or defense that the jury must find HN15 On review of summary judgments, before giving a ″yes″ answer to the issue.

the appellate courts are limited in their considerations of issues and facts. In such Contracts Law > Contract Interpretation > a proceeding, the movant is not required to Parol Evidence > General Overview assert every theory upon which he may Contracts Law > Defenses > Ambiguities & recover or defend. Thus, when a case Mistakes > General Overview comes up for a trial on the merits, the Evidence > Types of Evidence > parties may be different, the pleadings may Documentary Evidence > Parol Evidence be different, and other causes of action may have been consolidated. Other HN18 The parol evidence rule is a rule of distinctions may be drawn; for instance, in substantive law which provides that in the reviewing the evidence to determine absence of fraud, accident, or mistake, whether there are any fact issues in dispute, extrinsic evidence is not admissible to the appellate court must review the vary, add to, or contradict the terms of a evidence in the light most favorable to the written instrument that is facially complete party opposing the motion for summary and unambiguous. judgment. Thus, the context of a summary Contracts Law > Contract Interpretation > judgment proceeding is distinguishable Parol Evidence > General Overview from a full trial on the merits.

Evidence > Types of Evidence > Civil Procedure > Appeals > Reviewability Documentary Evidence > Parol Evidence of Lower Court Decisions > Preservation HN19 A party may not introduce parol for Review evidence to vary the terms of an HN16 Proposed questions must be unambiguous contract. When a writing is submitted to the jury in ″substantially intended as a completed legal transaction, correct wording.″ Tex. R. Civ. P. 278. If thethe parol evidence rule excludes other request is not in substantially correct evidence of any prior or contemporaneous wording, it does not preserve error. Tex. R. expressions of the parties relating to the Civ. P. 279. transaction. Only if the intention of the parties as expressed on the face of the Civil Procedure > ... > Jury Trials > Jury document is doubtful may the court resort Instructions > General Overview to parol evidence to resolve the doubt.

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Contracts Law > Contract Interpretation > during trial that at least one of the parties is Parol Evidence > General Overview claiming ambiguity, supported by adequate Contracts Law > Defenses > Ambiguities & pleadings, to examine the provisions in Mistakes > General Overview question and determine at that time whether or not the contract is or is not ambiguous.

Evidence > Types of Evidence > Documentary Evidence > Parol Evidence This is necessary, among other reasons, so that the court can properly rule on Evidence > Admissibility > Statements as evidentiary objections and submit a Evidence > Parol Evidence substantially correct charge. HN20 When there is no ambiguity, parol Contracts Law > Contract Interpretation > evidence is not admissible to create one.

Ambiguities & Contra Proferentem > When a contract, on its face, can be given General Overview a definite, legal meaning, parol evidence is not admissible to render it ambiguous. Contracts Law > Defenses > Ambiguities & Only after the trial judge determines that Mistakes > General Overview the contract is ambiguous does parol HN22 If neither party alleges a contract is evidence become admissible, and then only ambiguous, or if the issue is raised for the to assist the fact finder in determining the first time on appeal, construction of the subjective intent of the parties at the time agreement is a question of law for the they entered into the agreement. appellate court.

Civil Procedure > Judicial Officers > Contracts Law > Contract Interpretation > Judges > General Overview Ambiguities & Contra Proferentem > Contracts Law > Contract Interpretation > General Overview Ambiguities & Contra Proferentem > Contracts Law > Defenses > Ambiguities & General Overview Mistakes > General Overview Contracts Law > Defenses > Ambiguities & Mistakes > General Overview HN23 Only when a contract contains an ambiguity does its interpretation become a Contracts Law > Formation of Contracts > question of fact for the jury. Mistake > General Overview Contracts Law > Contract Interpretation > HN21 Even in the absence of appropriate Ambiguities & Contra Proferentem > pleading by either party, a trial judge may General Overview conclude a contract is ambiguous. Indeed, Contracts Law > Defenses > Ambiguities & he must do so before the issue can be Mistakes > General Overview submitted to the jury: If the trial court has not made a determination on the question HN24 In construing a contract, the court of whether a contract is ambiguous before must give effect to the objective intent of a jury trial commences, it is incumbent on the parties as expressed or apparent in the the judge when it first becomes apparent writing, in light of the surrounding

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circumstances. A contract is not ambiguous evidence unless the appellant can if, after applying the rules of construction, demonstrate that the whole case turns on the provision in question can be given a the particular evidence that was admitted certain or definite legal meaning or or excluded. The exclusion of evidence is interpretation. On the other hand, the harmless if it is cumulative of other contract is ambiguous when its meaning is evidence that was admitted on the same uncertain and doubtful or it is reasonably issue. susceptible to more than one meaning. The court recognizes that an instrument is not Civil Procedure > ... > Jury Trials > Jury ambiguous simply because the parties Instructions > General Overview disagree over its interpretation. Civil Procedure > ... > Jury Trials > Jury Instructions > Requests for Instructions Contracts Law > Contract Interpretation > Parol Evidence > General Overview Civil Procedure > Appeals > Reviewability of Lower Court Decisions > Preservation Contracts Law > Defenses > Ambiguities & for Review Mistakes > General Overview Evidence > Types of Evidence > HN27 All parties are entitled to have Documentary Evidence > Parol Evidence controlling issues, raised by the pleadings and evidence, submitted to the jury. A HN25 Parol evidence is admissible controlling issue is one which requires a regarding the intentions of the parties when factual determination to render judgment the writing contained in the document is in the case. The issue must also be disputed. ambiguous. Moreover, it is admissible to Appellants must also show they preserved show the agreement was not to become error to prevail on these points. Several effective save upon certain conditions or procedural steps are required to preserve contingencies. error. First, the complaining party must Civil Procedure > Appeals > Reviewability request a question on the issue. The request of Lower Court Decisions > Preservation must be in writing, separated from other for Review requested jury charges, and must be tendered in ″substantially correct″ form.

Civil Procedure > Appeals > Standards of Review > Reversible Errors Tex. R. Civ. P. 278, 279. The requested question must also be presented and filed HN26 The admission or exclusion of before the charge is read to the jury. evidence rests within the sound discretion Finally, the complaining party must obtain of the trial court. In other words, the trial a ruling on the request. court commits error only when it acts in an unreasonable and arbitrary manner, or acts Civil Procedure > ... > Jury Trials > Jury without reference to any guiding principles. Instructions > General Overview Reversible error does not usually occur in Civil Procedure > Appeals > Standards of connection with rulings on questions of Review > Abuse of Discretion

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HN28 The court reviews a trial court’s Civil Procedure > ... > Jury Trials > Jury submission of a theory of recovery or Instructions > General Overview defense by questions or instructions under Civil Procedure > Appeals > Reviewability an abuse of discretion standard, recognizing of Lower Court Decisions > Preservation there is a presumption in favor of the for Review broad-form submission of questions. Tex. HN30 Any complaint concerning the R. Civ. P. 277. Rule 277 mandates broad submission of an instruction is waived form submission whenever feasible, that unless specifically included in the is, in any and every instance in which it is objections. Tex. R. Civ. P. 274. capable of being accomplished. The test for an abuse of discretion is whether the Civil Procedure > ... > Standards of trial court’s action in refusing to submit Review > Substantial Evidence > General Overview

the requested definition and instruction was arbitrary or unreasonable. This means HN31 When both legal and factual the trial court has wide discretion in sufficiency points are raised, the court submitting explanatory instructions and must first examine the legal sufficiency of definitions, or in determining what the evidence. In considering a ″no constitutes necessary and proper issues. evidence″ or legal sufficiency point, the court considers only the evidence or Civil Procedure > Trials > Jury Trials > Jury inferences from the evidence favorable to Deliberations the decision of the trier of fact and Civil Procedure > ... > Jury Trials > Jury disregards all evidence and inferences to Instructions > General Overview the contrary. If there is any evidence, more than a scintilla, to support the finding, the Criminal Law & Procedure > Appeals > no evidence challenge will fail.

Reversible Error > Juries & Jurors Civil Procedure > ... > Standards of HN29 Instructions and definitions are Review > Substantial Evidence > General proper when they are raised by the written Overview

pleadings, supported by the evidence, and aid the jury in answering the questions in HN32 In considering a factual sufficiency the charge. Tex. R. Civ. P. 277, 278. But, a point, the court may not substitute our judgment should not be reversed because judgment for that of the trier of fact, but of a failure to submit other and various must assess all the evidence and reverse phases or different shades of the same for a new trial only if the challenged question. Moreover, a trial court errs if it finding shocks the conscience, clearly refuses to submit a properly formed demonstrates bias, or is so against the great question with appropriate instructions, and weight and preponderance of the evidence instead submits separate, granulated issues as to be manifestly unjust. Under this to the jury. analysis, the members of the court are not

937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1

the fact finders and do not pass upon the binding, he thereby affirms the contract credibility of witnesses or substitute their and waives his right to a rescission. An judgment for that of the trier of fact, even express ratification is not necessary; any if there is conflicting evidence upon which act based upon a recognition of the contract a different conclusion could be supported. as existing or any conduct inconsistent In other words, the court is not free to with an intention of avoiding it has the substitute its judgment for the jury’s simply effect of waiving the right of rescission. because the court may disagree with the verdict. Business & Corporate Law > Agency Relationships > General Overview Business & Corporate Law > ... > Duties & Business & Corporate Law > ... > Duties & Liabilities > Unlawful Acts of Agents > Liabilities > Causes of Action & Remedies > Fraud & Misrepresentation Burdens of Proof Business & Corporate Law > Agency Business & Corporate Law > ... > Duties & Relationships > Ratification > General Liabilities > Unlawful Acts of Agents > Overview Fraud & Misrepresentation Business & Corporate Law > Agency Business & Corporate Law > Agency Relationships > Ratification > Avoidance Relationships > Ratification > General Business & Corporate Law > Agency Overview Relationships > Ratification > Express & Business & Corporate Law > Agency Implied Ratification Relationships > Ratification > Illegal Acts Business & Corporate Law > Agency Business & Corporate Law > Agency Relationships > Ratification > Illegal Acts Relationships > Ratification > Proof Contracts Law > ... > Affirmative Contracts Law > Remedies > Ratification Defenses > Fraud & Misrepresentation > General Overview HN34 The critical factor in determining whether a principal has ratified an Contracts Law > Remedies > Ratification unauthorized act by his agent is the HN33 Ratification occurs when a principal, principal’s knowledge of the facts of the though he had no knowledge originally of prior transaction and his actions in light of an unauthorized act of his agent, retains such knowledge. Ratification can occur if the benefits of the transaction after the party, at the time of his allegedly acquiring full knowledge. Stated simply, if ratifying acts, has knowledge of all material a person who has fraudulently been made a facts pertaining to the prior fraudulent party to a contract continues to receive the transaction. The question of ratification of benefits of the contract after he becomes a contract is usually a mixed question of aware of the fraud, or if he otherwise law and fact. Although ratification may be conducts himself in such a manner as to determined as a matter of law if the recognize the contract as existing and evidence is uncontroverted or

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uncontrovertible, when the act or acts of actual damages. This is not a departure ratification are controverted, the question from the general rule of contract damages, of ratification must be left to the trier of but only recognition of an element of fact. damages if proven. Actual damages for loss of credit or injury to credit reputation Business & Corporate Law > Agency Relationships > Ratification > General in an action for breach of contract may be Overview recovered when there is evidence that loss of credit was a natural, probable, and HN35 It is fundamental that the critical foreseeable consequence of the defendant’s factors in determining ratification are 1) breach. the principal’s subsequent knowledge of the transaction and 2) his actions thereafter, Business & Corporate Law > General and implied ratification may be proven by Partnerships > Formation > General silence in the face of knowledge. Overview

Contracts Law > Remedies > General Business & Corporate Law > Overview Unincorporated Associations

HN36 The only way that a defendant can HN38 An unincorporated association is a successfully attack a multi-element voluntary group of persons, without a damages award on appeal is to address character, formed by mutual consent for each and every element and show that not the purpose of promoting a common a single element is supported by sufficient enterprise or prosecuting a common evidence. If there is just one element that is objective. supported by the evidence, the damages award will be affirmed if it is supported by Business & Corporate Law > Agency the evidence. Relationships > Establishment > General Overview

Contracts Law > Breach > General Contracts Law > Remedies > Ratification Overview Contracts Law > Remedies > General HN39 Any collective group of individuals Overview may act through a common agent. Contracts Law > ... > Types of Damages > Business & Corporate Law > Agency Compensatory Damages > General Relationships > General Overview Overview Business & Corporate Law > General HN37 To recover for loss of credit, as with Partnerships > Formation > General any element of contract damage, it must be Overview proved that the injury was the natural, Business & Corporate Law > General probable, and foreseeable consequence of Partnerships > Management Duties & the breach of contract or there are no Liabilities > General Overview

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Business & Corporate Law > Contracts Law > Third Parties > Joint & Unincorporated Associations Several Contracts Contracts Law > ... > Affirmative HN42 In the law of contracts, joint and Defenses > Fraud & Misrepresentation > General Overview several liability usually arises when two or more promisors in the same contract HN40 It may be supposed that an promise the same or different performances arrangement is entirely inoperative if it to the same promisee. Texas law is no purports to be made by a partnership or different, obligations of multiple parties to other unincorporated association with a a contract are usually ″joint and several.″ member of such association. There is no reason why such an agreement should not Civil Procedure > Discovery & Disclosure > operate as a valid and enforceable contract General Overview between the individual member and the Governments > Legislation > Statute of other members of the association that Limitations > Time Limitations purports to make the agreement. For the purpose of giving a judicial remedy and Securities Law > ... > Civil Liability > Blue for other practical purposes, there is nothing Sky Fraud > General Overview to prevent a court from treating the Securities Law > Blue Sky Laws > Civil association of individuals as if it were an Liability > General Overview independent unit. It may well be that an Securities Law > Blue Sky Laws > Offers & agreement made in this way should be Sales

subjected to severe scrutiny in the search for fraud and illegality. Yet the mere fact Torts > Procedural Matters > Statute of that the agreement purports to be made Limitations > General Overview between the unincorporated association and HN43 The limitations period for claims one of its members does not in itself prove fraud or illegality. under the Texas Securities Act is found in Tex. Rev. Civ. Stat. Ann. art. 581-33(H)

Business & Corporate Law > Agency (1996), which provides that suit cannot be Relationships > General Overview brought: (1) more than three years after Business & Corporate Law > ... > Authority discovery of the untruth or omission, or to Act > Contracts & Conveyances > after discovery should have been made by General Overview the exercise of reasonable diligence; or (2) Business & Corporate Law > Agency more than five years after the purchase; or Relationships > Duties & Liabilities > (3) more than one year after rejecting a General Overview rescission offer. However, a claim under the Texas Securities Act may ″in no event″ HN41 An agent’s promise necessarily be made more than five years after the binds his principals to the promised undertaking. sale.

937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1

Contracts Law > Contract Interpretation > the time of the initial pleading, at least for Parol Evidence > General Overview limitations purposes. Contracts Law > Defenses > Ambiguities & Mistakes > General Overview Securities Law > Blue Sky Laws > Civil Liability > General Overview Evidence > Types of Evidence > Documentary Evidence > Parol Evidence HN46 See Tex. Rev. Civ. Stat. Ann. art.

581-33(B) (1986).

HN44 The ″merger doctrine″ is a corollary to the parol evidence rule in contract cases. Securities Law > Blue Sky Laws > Civil Merger refers to the extinguishment of one Liability > General Overview contract by its absorption into another HN47 Tex. Rev. Civ. Stat. Ann. art. 581-33 subsequent contract and is largely a matter (1986) provides remedies of both rescission of intention of the parties. Merger occurs and damages. Article 581-33(D) provides when the same parties to a prior agreement that on rescission, a plaintiff who was a subsequently enter into a written integrated defrauded seller is to recover the security, agreement covering the same subject or a security of the same class and series, matter. The question of whether a merger upon tender of the consideration the seller has occurred, or whether an agreement is received for the security plus interest merely additional to and not contradictory thereon at the legal rate from the date the of a written contract, is determined from seller received the consideration, less the the intent of the parties. Absent pleading amount of any income the buyer received and proof of ambiguity, fraud, or accident, on the security. A plaintiff who was a a written instrument presumes that all prior defrauded seller may recover the value of agreements of the parties relating to the the security at the time of the sale plus the transaction have been merged into the amount of any income the buyer received written instrument.

on the security, less the consideration paid Civil Procedure > ... > Pleadings > the seller for the security, plus interest on Amendment of Pleadings > Relation Back these sums at the legal rate from the date of payment of the seller. Article 581-33(D)(4).

HN45 Although an amended pleading normally supersedes and supplants the Securities Law > Blue Sky Laws > Civil original, an original pleading tolls the Liability > General Overview limitations period for claims asserted in Securities Law > Blue Sky Laws > Offers & subsequent, amended pleadings as long as Sales

the amended pleading does not allege a wholly new, distinct, or different HN48 Tex. Rev. Civ. Stat. Ann. art. transaction or occurrence. See Tex. Civ. 581-33(B) cmt. (Supp. 1996) states that Prac. & Rem. Code Ann. § 16.068 (1986). art. 581-33(B) is to be construed similarly The subsequent pleading ″relates back″ to, to art. 33(A), which provides remedies for and is considered as having been filed at defrauded buyers of securities. Turning to

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the statutory definitions, they define ″sale,″ introduce evidence that the untrue ″offer for sale″ or ″sell″ to ″include every statements relate to the security purchased disposition, or attempt to dispose of a and induced the purchase thereof. Thus security for value.″ Tex. Rev. Civ. Stat. untrue statements made about a security by Ann. art. 581-4(E). Moreover, one who a seller to the buyer thereof at a time when ″offers or sells″ a security is not limited to the buyer has already purchased the those who pass title. Article 581-4(E) security are not the ″means″ by which the further defines ″sell″ as any act by which a security was sold. It follows, then, that if a sale is made, including a solicitation to buyer was not induced to purchase a sell, an offer to sell, or an attempt to sell, security by an untrue statement made after either directly or by an agent or salesman. the purchase, he could not have been By analogy, the terms ″offer to buy″ or misled thereby, and no further statements ″buy″ should therefore include every respecting such security are required to acquisition of, or attempt to acquire, a explain the original statement so made security for value. under the provisions of the above statute.

Securities Law > Blue Sky Laws > Civil Civil Procedure > Judgments > Entry of Liability > General Overview Judgments > Multiple Claims & Parties

Securities Law > Blue Sky Laws > Offers & HN51 The single recovery, or one Sales satisfaction rule, is a rule of general acceptance that an injured party is entitled HN49 Like Tex. Rev. Civ. Stat. Ann. art. to one satisfaction for sustained injuries. A 581-33(B) (1986), art. 581-33(A)(2) party who seeks redress under two or more renders a seller liable only if he sells or theories of recovery for a single wrong offers to sell a security by means of an must elect, before the judgment is rendered, untrue statement or omission. under which remedy he wishes the court to enter a judgment. An election is not Energy & Utilities Law > Oil, Gas & necessary until after the verdict. But where Mineral Interests > Conveyances > General the prevailing party fails to make that Overview election, the trial court should use the Securities Law > ... > Civil Liability > Blue findings affording the greater recovery and Sky Fraud > General Overview render judgment accordingly. If the trial Securities Law > Blue Sky Laws > Civil court fails to do so, the appellate court will Liability > General Overview reform the trial court’s judgment to effect Securities Law > Blue Sky Laws > Offers & such an election. Sales Civil Procedure > Remedies > Damages > HN50 Under Tex. Rev. Civ. Stat. Ann. art. Punitive Damages 581-33(A)(2) (1986), in order for the Contracts Law > Breach > General plaintiff or buyer to prevail, he must Overview

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Contracts Law > Contract Interpretation > did cause rendition of an improper Fiduciary Responsibilities judgment in the case. Tex. R. App. P. Contracts Law > Remedies > General 81(b)(1). Overview Civil Procedure > ... > Standards of Contracts Law > ... > Damages > Types of Review > Plain Error > General Overview Damages > Punitive Damages Estate, Gift & Trust Law > ... > Private HN55 While some errors are not Trusts Characteristics > Trustees > General considered reversible, all errors considered Overview together could present cumulative error Governments > Fiduciaries requiring reversal. To determine if a Torts > Remedies > Damages > General cumulation of errors denied the appellants Overview their right to a fair trial and due process of law, all errors in the case will be considered HN52 Punitive damages are not along with the record as a whole to recoverable for a breach of contract absent determine if the errors collectively were an independent tort with accompanying calculated to cause and probably did cause actual damages. the rendition of an improper judgment.

Civil Procedure > Appeals > Reviewability Tex. R. App. P. 81(b)(1). Before the court of Lower Court Decisions > Preservation may reverse a judgment and order a new for Review trial based on cumulative error, however, it must determine whether the error HN53 It is well-settled that to preserve committed by the trial court was reasonably error in a charge, a party must make calculated to cause and probably did cause objections to the court’s charge or submit the rendition of an improper judgment. requests for additional questions, Tex. R. App. P. 81(b)(1). Appellants must instructions, or definitions. The test is therefore show that, based on the record as whether the party made the trial court a whole, but for the alleged errors, the jury aware of the complaint, timely and plainly, would have rendered a verdict favorable to and obtained a ruling.

them.

Civil Procedure > Appeals > Standards of Counsel: FOR APPELLANT: Bruce Review > Abuse of Discretion Robertson, Jr., LAW OFFICES OF BRUCE HN54 Generally, the granting or denying ROBERTSON, JR., San Antonio, TX. of a motion for mistrial is reviewed under Walter C. Wolff, Jr., Ruth Lown, WOLFF an abuse of discretion standard. In addition & WOLFF, San Antonio, TX. Kim I. to showing an abuse of discretion, Manning, San Antonio, TX. Paul M. Green, appellants must also show that the trial LANG, LADON, GREEN, COGHLAN & court’s error, if indeed there was error, was FISHER, P.C., San Antonio, TX. Jerry N. reasonably calculated to cause and probably Dennard, San Antonio, TX.

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FOR APPELLEE: Stewart J. Alexander, points of error. We affirm the trial court’s San Antonio, TX. Robert D. Reed, LAW judgment in part, and reverse and render in OFFICES OF ROBERT D. REED, P.C., part. San Antonio, TX. Robert W. Wachsmuth, THE KLEBERG LAW FIRM, San BACKGROUND Antonio, TX. Thomas H. Crofts, Jr., Appellants, appellees, and other individuals CROFTS, CALLAWAY & JEFFERSON, were investors in Crown Bancshares, Inc., P.C., San Antonio, TX. Ron A. Sprague, a bank holding company (Crown GENDRY & SPRAGUE, P.C., San Bancshares). Incorporated in June of 1985, Antonio, TX.

Crown Bancshares owned all the stock of Judges: Opinion by: Alma L. Lopez, Crown Bank, N.A. (Crown Bank). The Justice. Sitting: Alma L. Lopez, Justice, incorporating officers and directors [**3] Catherine Stone, Justice, Shirley W. Butts, were Bernard Austin and appellants, Frank Justice. 1 Davila II, Lawrence F. Haass, and Brian O’Connor. The Federal Reserve approved Opinion by: ALMA [**2] L. LOPEZ Crown Bank’s application in August of 1985, and capital stock in Crown Opinion Bancshares was privately offered beginning in October of 1985.

[*500] Appellees, William R. Fields, Jr. and O. Waymond Lightfoot, Jr., filed suit [*501] Beginning in February of 1986, the against appellants, Fred L. Baker, Frank bank was capitalized through a series of Davila II, Rodolfo Davila, Trustee of the loans to 28 purchasers of Crown Rodolfo Davila Estate Trust (together, the Bancshares stock, including appellants and Davilas), Lawrence F. Haass, J. Brian appellees, in the aggregate amount of $ O’Connor, Kim I. Manning, J. Pat 5,066,310.00, from First State Savings O’Connell, Brian O’Connor, B.F. Pitman Association (First State). Fields purchased III, and others, for breach of contract and 10,000 shares of Crown Bancshares stock other related tort theories. Fields’ trustee in (at $ 10 per share), with $ 5,000.00 in cash bankruptcy, John Patrick Lowe, intervened and $ 95,000.00 borrowed from First State. in the case. Appellees’ theories of recovery With a two percent origination fee, Fields’ concern a purported agreement with the loan was in the amount of $ 96,900.00. appellants to purchase bank holding Lightfoot purchased 30,000 shares of company stock from the appellees for Crown Bancshares stock (at $ 10 per which payment was not made. After a jury share), with $ 15,000.00 in cash and $ verdict, the trial court granted a judgment 285,000.00 borrowed from First State. With in favor of the appellees, from which the two percent origination fee, Lightfoot’s appellants now bring an appeal raising 104 note to First State was for $ 290,700.00. 1 Justice Shirley W. Butts not participating.

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The purchasers pledged their Crown elect the directors of Crown Bancshares Bancshares stock to First State as security which, in turn, owned and controlled for the loans. These agreements also Crown Bank. The stated purpose of the contained cross-default provisions -- a voting trust agreement was to ″secure default by one borrower equaled a default continuity and stability of policy in by all [**4] borrowers. 2 In the event of a management, and to establish constructive default, First State could ″declare the entire administration of the business of the unpaid balance of principal and all earned Company . . . .″ The voting trust agreement interest on the Indebtedness immediately signed by the parties referred to them as due and payable.″ Each of the borrowers, ″subscribers,″ but the parties often used except Lightfoot and Dr. Richard Rouse, the term ″Control Group″ to describe also signed personal guaranty agreements. themselves. All of the appellants (except Rodolfo Davila, individually) and appellees A series of agreements were concluded: a were members of the Control Group.

voting trust agreement, a stock repurchase Although it was originally intended that agreement, an agreement for funding the trustee under the voting trust agreement repurchases of Crown Bancshares, a was to have all the stock of Crown repurchase agreement concerning the Bancshares issued in his name as trustee, capital stock of Crown Bancshares, and an with the trustee [**6] then issuing voting amendment to the voting trust agreement.

trust certificates to the various shareholders Although these agreements were prepared to evidence their stock ownership, the in 1985 -- 1985 is typed on various pages stock of the holding company was not -- they were all apparently signed in issued that way. No stock was tendered February of 1986. These agreements were into the voting trust. Instead it was issued signed by both the appellants and appellees.

separately in the name of each subscriber.

The purpose [**5] of the voting trust First State required that all such stock, agreement was to maintain Crown upon the closing of the loan to purchase, Bancshares as a closely-held corporation. be physically pledged to First State and The organizers of the bank had determined that each subscriber sign an ″irrevocable that a voting trust agreement should be stock power″ as to the stock and deliver it signed so that a majority of the subscribers to First State at the time they signed the of Crown Bancshares stock could maintain other loan documents. The voting trust control over the direction and operation of agreement was signed only by members of the bank. Through the voting trust the Control Group; neither Crown agreement, a majority of the shareholders Bancshares nor First State were parties to subscribing to the agreement would control the agreement. The subscribers to the the vote at the shareholders’ meeting and voting trust agreement appointed Dwight 2 Defendants’ Exhibit 13, Fred L. Baker’s Pledge and Security Agreement, defines ″default″ as ″the failure of DEBTOR or any individual Shareholder of CROWN BANCSHARES, INC. to pay the Indebtedness of any part thereof as it becomes due . . . .″

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L. Lieb -- the largest Crown Bancshares agents, and in such connection, to stockholder -- as the voting trustee. execute and deliver Powers of Attorney designating any person or The voting trust agreement defined the group of persons to act in his full powers and duties of the voting trustee.

place and stead, to have and perform The agreement contained a ″Grant of any and all powers, duties, acts and Irrevocable Proxy and Power of Attorney,″ discretions as set forth in such which reads as follows:

written Power of Attorney to the In addition to all other rights and fullest extent permitted by applicable powers granted under this law. Any person dealing with said Agreement, during the term hereof Trustee shall be entitled to rely upon each Subscriber by execution of this such Power of Attorney as fully Agreement irrevocably names, authorizing the exercise of such constitutes [**7] [*502] and [**8] powers, acts and discretions appoints Trustee (or successor as therein set forth. Trustee) his true and lawful attorney and agent with full power of (Emphasis added). substitution, to vote all shares of The Control Group comprised nearly 75 stock deposited with Trustee by such percent ownership of Crown Bancshares. Subscriber, subject to the The voting trust subscribers selected the requirements of Section 4 hereof, at board of directors of Crown Bancshares. any and all regular and special The directors of the holding company then meetings of the Company’s elected the directors of Crown Bank who, shareholders whenever and wherever in turn, selected a slate of officers for the held during the term of this bank. Most, if not all, of these individuals Agreement, or at any adjournment were members of the Control Group. thereof, and hereby ratifies and Sometime after agreeing to participate in confirms all that the said Attorney the bank’s formation, appellees decided to might do. DURING THE TERM withdraw from the enterprise. During the HEREOF, THE PARTIES HERETO trial of this case, Lightfoot testified that he AGREE THAT THE PROXY first decided to sell his Crown Bancshares HEREBY GRANTED IS stock in the latter part of 1985 or early COUPLED WITH AN INTEREST 1986. According to Lightfoot’s testimony, AND IS IRREVOCABLE. he approached the president of Crown Bancshares, Brian O’Connor, and told him An amendment to the agreement further that, due to personal and business provided:

difficulties, he could no longer bear the Any Trustee then serving shall have financial cost of purchasing and paying for the power and authority to designate 30,000 shares of stock. O’Connor asked

937 S.W.2d 496, *502; 1996 Tex. App. LEXIS 3531, **8

Lightfoot to wait because a sale by an [**10] of 1987, Fields indicated to incorporating bank director might impede Lieb that he was prepared to sell his final regulatory approval of the bank. stock in Crown Bancshares for $ 10 When Lightfoot again raised the question a share. The first written indication of a stock repurchase, Lieb, the voting of an agreement to purchase Fields’ agreement [**9] trustee, said he would call shares is found in a April 27, 1987 a meeting of the board of directors of letter from Fields to Lieb. Fields’ Crown Bancshares and convey Lightfoot’s letter reads in part as follows: need to sell the shares. The first indication This letter confirms our of an agreement to repurchase Lightfoot’s agreement whereby you, or stock is found in the minutes of a June 9, your assignee, purchased 1986 Crown Bancshares Board of Directors 9,000 Crown Bancshares from meeting, which read in part as follows: me on Monday, April 27, 1987, at $ 10.00 per share. As Mr. [J. Brian] O’Connor informed mentioned to you, $ 87,210 the Board that Director O. Waymond principal is outstanding

Lightfoot has offered 25,000 shares [*503] on the shares

of Crown Bancshares stock for sale purchased by you; interest has to the holding company as prescribed been paid through March 31, by the repurchase agreement. The 1987.

Board waived the corporation’s right to purchase the stock and determined Lieb apparently apprised First State that it was in the best interest of the of the Control Group’s purchase of holding company to offer the stock Lightfoot’s stock on January 15, to outside investors. A 1987. Handwritten notes from a recommendation was made to the meeting with Randy Cadwallader, a signatories of the Crown Bancshares, First State loan officer, show that Inc. stock repurchase plan to waive ″Lightfoot’s Crown Bank stock [is] their right to purchase the stock and to be transferred over to the Control make it available to new investors. Group.″ On June 27th the Board met again. On May 19, 1987, Lieb wrote to the The minutes of the board meeting Control Group about the agreement state that ″O’Connor updated the to purchase Fields’ and Lightfoot’s board on the status of the proposed shares. According to Lieb’s letter, in stock sale of O. Waymond Lightfoot. June of 1986 the Control Group had He indicated the shares would soon agreed to purchase 83.3 percent of be ready to be offered for sale.″ Lightfoot’s shares and in April 1987, Fields also decided that he wanted to purchase 90 percent of Field’s to sell his stock. During March shares:

937 S.W.2d 496, *503; 1996 Tex. App. LEXIS 3531, **10

Dear Control [**11] Group me at Crown Bank.″ Lightfoot said Member: this letter accurately represented the The Control Group has agreement [**12] he thought he had purchased certain shares from with the Control Group. Waymond Lightfoot and Ray Lightfoot recalled that he was to be Fields, 25,000 shares and 9,000 shares, respectively. The paid by the Control Group, but that agreement with Mr. Lightfoot it made no difference to him whether was made in September, 1986, appellants performed the agreement and with Mr. Fields in April, either by paying cash or by assuming 1987. An explanation of each the indebtedness to First State. He transaction is enclosed assumed, however, that appellants herewith, together with an had chosen to pursue payment by analysis of the amount owed assuming his indebtedness with First by each Control Group State. Lightfoot continued to serve member. as a director of Crown Bancshares Lieb’s accompanying explanation and Crown Bank, and continued to stated that ″the principal balance attend board meetings. He said he outstanding on Mr. Lightfoot’s stock was aware of the purchase of Fields’ on 10/01/86 amounted to $ stock when he received Lieb’s May 290,700.00. On that date, the Control 19 letter. 3 Appellants recalled these Group repurchased 25,000 shares of events differently. Baker, for stock from Mr. Lightfoot at $ 10/sh.″ example, denied -- and continues to As for Fields, the explanation further deny -- that he ever gave Lieb stated: ″The principal balance authority to buy Fields’ or outstanding on Mr. Field’s note on Lightfoot’s stock under the terms of 4/20/87 amounted to $ 96,900.00. the agreement described in Lieb’s On that date, the Control Group May 19, 1987 letter. Baker, like all repurchased 9,000 shares of stock of the other appellants, testified that from Mr. Fields at $ 10 per share.″ in order to buy Fields’ or Lightfoot’s Both Lightfoot and Fields testified stock, it would have been necessary that these statements accurately to have the stock purchase financed described their agreements with the by First State Savings, using the Control Group. The letter concluded: stock as security. But, First State ″Please make your check payable to never agreed to refinance Fields’ Dwight L. Lieb, Trustee for the and Lightfoot’s stock. Nor did Baker Control Group, and forward same to recall ever giving Lieb authority to 3 The jury found the May 19, 1987 document ″constituted an agreement whereby the Control Group bought 25,000 of Lightfoot’s shares of Crown Bancshares Stock″ and 9,000 shares of Fields’ Crown Bancshares stock.

937 S.W.2d 496, *503; 1996 Tex. App. LEXIS 3531, **12

purchase Fields’ or Lightfoot’s Group in regards to the purchasing [**13] stock. of approximately 83% of your crown On April 27, 1987, Fields wrote to banc stock. The fact remains, Lieb confirming what he called, however, that your loan is delinquent and you are responsible for this ″our agreement whereby you, obligation.″ Lightfoot recalled or your assignee, purchased asking the Control Group on several 9,000 Crown Bancshares from occasions why he was receiving me on Monday, April 20, these notices and, more specifically, 1987, at $ 10.00 per share. As about the progress of the transaction;

mentioned to you, $ 87,210 he testified that he was assured each principal is outstanding on the time that it was just a matter of shares purchased by you;

″paperwork,″ that it was being interest has been paid through ″handled,″ and that they were in March 31, 1987.

control of the situation.

A check for $ 2,790.00, less the interest owed to April 20, Like Fields, Lightfoot testified that 1987, should be forwarded to he paid only the interest attributable me . . .″ to his retained shares after the alleged purchase. A handwritten On August 6, 1987, the Control letter received by Lieb in March of Group issued a check to Fields for $ 1987 states that ″these are the 2,700. Fields claimed this figure payments I have made against the represented his equity in the 9,000 stock. The sale was originally shares he had sold to the Control proposed for June of 1986. The Group. Each Control Group member transfer was for $ 250,000 but I am sent Lieb his prorata contribution willing to transfer all [**15] of it.

for 90 percent of the principal and My financial commitments have interest due on Fields’ note to First increased dramatically due to other State.

insurance related activities.″ [*504] [**14] Meanwhile, The letter is signed ″Waymond″ and Lightfoot continued to receive is written on Waymond Lightfoot’s past-due notices from First State. On personal stationary. Accompanying June 10, 1987, he received a letter the letter are four checks from the from Pam Pilgrim, a loan processor Harris and Lightfoot Insurance with First State, which informed Agency.

him that his loan had been in default since December 20, 1986. The letter Lightfoot and Fields both testified added: ″I have been informed that that they were repeatedly assured you are working with the Control payments were being made on their

937 S.W.2d 496, *504; 1996 Tex. App. LEXIS 3531, **15

loans. The record contains check by return mail, payable photocopies of several checks from to Dwight L. Lieb, Trustee for Lieb, the voting trustee, to First Control Group, sent to the State for principal and interest due bank will be appreciated. on their loans to First State. On At an October 1987 meeting, the September 28, 1987, the Control Control Group 4 discussed the status Group issued a check to First State of this matter as well as delinquent for $ 6,923.18. This figure loans of minority (non-Control represented 90 percent of the Group) stockholders. The minutes principal and interest due on Fields’ also indicate that ″First State had note as of September, 1987. Fields never prepared documents necessary testified that he paid -- and continued to refinance the shares of Waymond to pay -- the remaining 10 percent, Lightfoot and Ray Fields which the having retained 1,000 of his original members of the Control Group 10,000 shares. Although the Control agreed to purchase in 1986.″ The Group never paid Lightfoot’s equity, Control Group directed that a $ it issued -- through Lieb as Trustee 50,000.00 letter of credit be obtained -- a check to First State for $ and provided to First State to cover 7,267.21. This amount represented delinquent principal and interest on 83 percent of the principal and all notes held by First State and to interest due on Lightfoot’s note in bring cash contributions of all September of 1987. Lightfoot stated Control Group members current. that he was never informed the [**17] Control Group [**16] had stopped making payments to First State. On October 27, 1987, the Control On October 20, 1987, Lieb again Group’s attorney, Neil Boldrick, Jr., wrote to the Control Group: wrote to First State that several Enclosed please find a ″adjustments″ to the original $ 5.2 statement for your prorata million notes were necessary, e.g., share of the interest payable ″restructuring of the Lightfoot and to First State for the shares Fields Notes and complete financing purchased by the Control for new investors of the Gamboa, Group from Waymond Flume, Japhet and O’Connor Notes.″ Lightfoot and Ray Fields. First In December of 1987, Dennis Jones, State is very anxious to an assistant vice president with First receive payment by Friday, State, advised Neil Boldrick that ″as October 23, 1987, and your all parties are well aware, certain of 4 According to the minutes of the meeting, the following shareholders were present: Dwight Lieb, Frank Davila II, B.F. Pitman III, Kim Manning, Michael Bertino, Richard Rouse, J. Brian O’Connor.

937 S.W.2d 496, *504; 1996 Tex. App. LEXIS 3531, **17

the loans are presently in default, On February 22, 1988, the Control and have been in default for a [*505] Group met at the home of Frank period of time beyond thirty (30) Davila II. The apparent subject of days . . . .″ Jones also advised the meeting was a memorandum Boldrick that ″First State Savings is written by Frank Davila II and willing to accommodate your addressed to the ″File″ which clients.″ Jones’ letter added that ″if, questioned whether the Control after reasonable efforts on the part Group had ever agreed to purchase of your clients, they are unable to Fields’ and Lightfoot’s stock. Davila bring the loan current, then, upon observed that ″an effective transfer of the stock or a letter transaction concerning the sale or instructing us to transfer the stock to transfer of the stock would involve, Dwight Lieb, Trustee, and payment among other things, the approval of of all past-due interest, we will First State Savings to finance the reinstate the applicable loan.″ The purchase of the said stock″; and that letter further advised Boldrick that ″Dennis Jones of First State Savings First State held a letter of credit and told Fred Baker and myself that at certificates of deposit that could be no time had there been [**19] an used to pay past due interest if the agreement by First State Savings to Control Group so desired. Jones later finance such a purchase.″ Davila [**18] testified that First State concluded by noting that: never provided financing for loans The ultimate disposition of to purchase Fields’ or Lightfoot’s said shares of stock will stock and that his letter to Boldrick probably result in any case in never specifically addressed the the fact that the Control Group question. Rather, it addressed the and its members are going to problem of the Control Groups’ be saddled with obligations delinquent loans and what was which were not fully foreseen necessary to reinstate them. at the time that the written On February 12, 1988, Lightfoot documents were executed. I received another letter from First feel very strongly, however, State informing him that the note for that there should not be $ 290,700.00 ″executed by O. ratification of a transaction Waymond Lightfoot and payable to which has not in fact occurred, First State Savings″ was now in and that the legal owners of default. The letter demanded the shares of stock in question payment for $ 28,534.28 in past due should be the persons interest on or before February 25, involved in the foreclosure 1988. and/or other proceedings

937 S.W.2d 496, *505; 1996 Tex. App. LEXIS 3531, **19

which have or might be as ten percent of the current interest initiated by First State payment due. The letters further Savings. noted that the interest on the balance of the note ″should be paid by the This is my opinion, and Control Group pursuant to their perhaps I am the only person purchase of my stock in April, 1987.″ holding to this opinion, but I Baker testified that he did not recall believe that each member Lightfoot ever writing letters about present should take a yes or either his stock or his down payment.

no position as to whether the As before, Fields asked for a copy of transaction took place, and the minutes of the March, 1988 whether the Control Group Control Group meeting and and its non-delinquent reminded Baker the account with members should be involved First State was past-due:

in any of the steps preceding the actual takeover of the I am again requesting a copy stock by First State Savings. of the minutes of this years [sic] meeting wherein [**21]

Fields testified that Lieb interrupted it was again confirmed that a heated discussion between Frank the Control [*506] Group Davila II and Fields by reassuring purchased, in April 1987, Fields that the Control Group had 9,000 of my 10,000 shares of indeed [**20] purchased Fields’ stock in Crown Bank. stock. Although Fields said he took Please note on the enclosed that as a reassurance he was going to statement of account from get paid, he continued to get notices First State Savings that the from First State Savings reflecting Control Group still owes the 100 percent liability on the loan, as amount shown as delinquent though he still owned 10,000 and on the statement of account. I not 1,000 shares. As before, however, have been current on my share Fields continued to pay 10 percent of the account since my of the outstanding loan balance. purchase of the stock. Fields recalled writing two separate It is again requested that the checks for 10 percent of the interest records at First State Savings due -- one in June and another in be brought up to date September. He sent them directly to accordingly and that I be Fred Baker. Both payments were notified that this action has accompanied by a letter to Baker. been taken. Both letters specified the amount Fields said he never received a copy tendered and identified that amount of those minutes, taken by Pitman,

937 S.W.2d 496, *506; 1996 Tex. App. LEXIS 3531, **21

until he saw them in discovery prior with Don Krause in the to the trial of this case. attempt to restructure the During February of 1988, Don indebtedness at First State Krause, an attorney for the Control Savings. The motion passed Group, began negotiations with First unanimously. State to refinance the $ 5.2 million The check for $ 24,266.44, along capitalization loan. Refinancing was with additional cash contributions discussed during a March 7, 1988 from other Control Group members, meeting of the Control Group, which was supposed to bring the delinquent also confirmed Lieb’s resignation as or defaulted loans current, thereby trustee. He was replaced by Fred L. inducing First State to restructure Baker and Frank Davila II as the loans on better terms. First State co-trustees. 5 The Control Group had made clear it would not do also voted to renegotiate the entire anything [**23] until the delinquent First State $ 5.2 million loan on loans were made current -- hence, better terms. The minutes state that: the contributions. Baker continued [**22] to hold this money until February of Dwight Lieb delivered to Fred 1990, at which point he said it Baker a check in the amount became clear a restructuring of the of $ 24,266.44, such check loans could not be accomplished. representing the interest due The Control Group never succeeded on his loan to First State in restructuring their loans with First Savings, such interest State. Don Krause testified that he calculated through 2-29-88. tried his best to induce First State to This payment is to be used restructure the loans but they never only if the other members of agreed to do so. Baker testified that the Control Group pay their in addition to Krause’s efforts, he pro-rata share of the amounts repeatedly talked to representatives that are delinquent at First of First State to try not only to get State Savings, and a them to restructure all the loans on restructuring of the debt at better terms, but also to make loans First State Savings is to finance the purchase of Fields’ accomplished. and Lightfoot’s stock. Again, Upon a motion made by B.F. however, First State never did so. Pitman and seconded by Ray Baker, like Lieb, and Dennis Jones, Fields, Frank Davila and Fred a vice president in charge of Baker were appointed to work regulatory compliance with First 5 Lieb filed for bankruptcy in April of 1989.

937 S.W.2d 496, *506; 1996 Tex. App. LEXIS 3531, **23

State Savings, considered On March 16, 1988, the Control refinancing the loans and financing Group met again and with Fields, the purchase of appellees’ stock as Lightfoot, Frank Davila II and separate issues. O’Connell abstaining, voted to [*507] confirm and ratify the Whether First State representatives purchase of Fields’ and Lightfoot’s ever intended to finance a stock stock. The handwritten minutes from purchase, the evidence certainly the March 16, 1988 meeting -- taken shows that Control Group members, by Pitman -- record that a ″motion to including Baker, believed that First confirm that the stock purchase is a State was going to finance the valued transaction″ was made, purchase of appellees’ stock. This seconded and passed. 6 There is no belief [**24] was apparently based, mention of any financing conditions. at least in part, on statements made [**25] by representatives of First State who On March 25, 1988, Crown were in management when the Bancshares filed its ″Annual Report original purchase money loans were of Bank Holding Companies″ for made, but who were no longer with the 1987 fiscal year -- the ″FR Y-6″ First State when discussions were form -- with the Federal Reserve. later held to renegotiate the total The FR Y-6 contained a list of the indebtedness and finance the members of the Control Group and appellees’ purchase. their individual percentages of There is also evidence that First ownership in Crown Bancshares. State Savings was having financial The report stated that Fields owned problems long before the Federal 1,000 shares and Lightfoot owned Deposit Insurance Corporation 5,250 shares. The report mentions (FDIC) took control of it in March no stock sale or financing conditions. of 1989. Beginning in April of 1987, The FDIC [**26] took control of First State was under on-site First State Savings on March 2, supervision of state, and later federal, 1989. On June 26, 1989, Fields banking regulators; there is received his first official delinquency testimony to the effect that their notice from the now approval would have been required federally-controlled First State for any restructuring of loans or Savings. In July, the FDIC again stock purchase financing. demanded payment from Fields for 6 Although Control Group meetings were, in theory, closely structured, with set, ordered agendas, Fred Baker recalled that Control Group meetings often involved free-wheeling discussions and ″were very difficult to chair and manage.″ Baker said he did not recall whether there was an affirmative vote to confirm the purchase of Fields’ and Lightfoot’s shares; however, he also admitted that he never asked to amend the minutes. Baker denied ever voting for a resolution confirming the purchase of Fields’ and Lightfoot’s stock in accordance with the terms of Lieb’s letter.

937 S.W.2d 496, *507; 1996 Tex. App. LEXIS 3531, **26

his full share of the initial Control Group members to turn all capitalization loan, which of the money over to either Fields or represented 10,000 shares of Crown Lightfoot to pay for the stock Bancshares stock. purchase. In August of that year, Baker met After receiving the letter and check, with Donald Backer of the FDIC, in Fields, on February 10, 1990, wrote a final attempt to either restructure to Baker expressing his concern ″that the notes with First State or refinance nothing has been accomplished to Fields’ and Lightfoot’s notes. date regarding the transfer of the Backer, however, maintained that he 9,000 shares of Crown Bancshares intended to deal with the Control common stock purchased from me Group borrowers on an individual by Control Group members in April, basis. Baker reminded him that ″if 1987.″ he was going to do that, then the transaction between the members of In October of 1990, Crown the Control Group and Mr. Fields Bancshares’ board of directors voted and Mr. Lightfoot needed to be taken to liquidate and dissolve the bank. into consideration as he dealt with The resolution appointed Bernard each individual.″ No agreement to Austin as the Liquidating Director refinance was reached. and Trustee and provided that Crown Bancshares would distribute the On February 6, 1990, Co-Trustees remainder of its bank account to its Baker and Frank Davila II wrote to shareholders on a prorata basis.

the Control Group that ″it has Fields recalled receiving a become obvious that each of us will liquidation distribution based on only end up dealing with First State on an 1,000 shares of stock.

individual basis.″ With this letter, Baker and Frank Davila II returned In November of 1990, Austin sent money the Control Group had the shareholders [**28] of Crown contributed to the [**27] Trust in Bancshares, Inc. their purported March of 1988 for renegotiation of prorata shares of the liquidation their delinquent loans with First distribution -- approximately $ State. Fields received $ 451.97; 0.1254013 for each share held. On Lightfoot received $ 2,410.28. Both November 25, 1990, Austin wrote to Fields and Lightfoot recalled Neil Boldrick that in connection with accepting and cashing their checks. the liquidation, he was enclosing Baker later testified that he returned two cashier’s checks for the firm’s ″dollar-for-dollar″ what had been escrow account. One of the checks, contributed. He said he did not think registered in Fields’ name, was for $ he had the authority from the other 1,128.61 and represented 9,000

937 S.W.2d 496, *507; 1996 Tex. App. LEXIS 3531, **28

shares of stock. The other check, against Crown Bancshares, Inc., F. registered in Lightfoot’s name, was Bernard Austin, Fred L. Baker, in the amount of $ 3,135.03 and Michael H. Bertino, M.D., Frank represented 25,000 shares. The letter Cross, Frank Davila II, Rodolfo added that ″the [*508] 9,000 shares Davila, Israel Fogiel, Lawrence F. and 25,000 shares listed above Haass, Roger Maley, Kim I. represent shares apparently Manning, J. Pat O’Connell, J. Brian purchased from Mr. Fields and Mr. O’Connor, B.F. Pitman III, and Lightfoot by the Crown Bancshares, Richard G. Rouse, M.D. The Inc. Voting Trust (’Control Group’) plaintiffs originally asserted causes but which shares have never been of action for breach of contract, presented to the corporation for misrepresentation, fraud, breach of registration.″ fiduciary duty (both as to the directors and trustees of Crown On June 26, 1991, Fields filed a Bancshares), negligence, tortious voluntary petition under Chapter interference with contract, and Seven of the U.S. Bankruptcy Code.

violations of article 581-33(B) of Both Fields and Lightfoot were the Texas Securities Act. The subsequently sued by the RTC for appellees’ second amended petition the full amounts of their First State (filed on December 14, 1992)

notes.

dropped claims against F. Bernard Lightfoot testified that he realized Austin but added the Rodolfo L. for the first time that he would not Davila Estate Trust 7 as a defendant. be paid for his stock on October 10, The amended petition also dropped 1991. On that day he attended a claims for tortious interference meeting with Fields, his lawyers, [**30] with contract, but added [**29] and various members of the negligent misrepresentation and Control Group. Lightfoot recalled several additional theories of liability there were ″some extremely heated against the trustees and directors of discussions and denials as to any Crown Bancshares. The appellees responsibility for the debt and/or the claimed that the directors, liquidating purchase of Ray Fields’ stock.″ director, trustee, and co-trustees of Fields said that until February 6, Crown Bancshares failed to establish 1990, he believed the appellants a ″trust fund″ for the benefit of were in the process of performing Fields, Lightfoot and other creditors. the agreement. They argued that the corporate entity Fields and Lightfoot filed this of Crown Bancshares should be lawsuit on November 25, 1991 disregarded because it was the ″alter 7 Rodolfo Davila testified that the Rodolfo Davila Estate Trust was set up by his father to oversee the estate after his death.

937 S.W.2d 496, *508; 1996 Tex. App. LEXIS 3531, **30

ego″ of the Control Group and the problem is the fact that appellants because it was used as a ″sham to have brought 104 points of error perpetrate a fraud.″ The appellees scattered among four separate briefs. further argued that the defendants’ Fred Baker, for example, raises 35 breach of contract resulted in a points of error. B. F. Pitman, J. Brian ″loss of credit and/or injury to credit O’Connor, Michael H. Bertino, and reputation of Fields and Lightfoot.″ Kim I. Manning (hereafter Pitman) At the conclusion of the evidence, raise 29 points of error. Rodolfo the trial court submitted four of the Davila, Trustee of the Rodolfo L. appellees’ causes of action to the Davila Estate [**32] Trust, and jury: (1) breach of contract; (2) Frank Davila II, his brother (together, breach of trustees’ (Fred L. Baker the Davilas), raise 23 points of error. and Frank Davila II) fiduciary duties; Lawrence F. Haass raises 17 points (3) breach of directors’ (Fred L. of error. Each appellant’s brief, in Baker, Michael H. Bertino, Frank turn, [*509] adopts the points of error and arguments contained in the Davila II, Lawrence F. Haass, Kim I.

other three. In addressing these Manning, J. Pat O’Connell, J. Pat arguments we have tried, whenever O’Connor, B.F. Pitman) fiduciary possible, to combine the relevant duties; and (4) violations of the points of error and address them Texas Securities Act. After the jury collectively. Whenever possible, we found for the appellees on these have also avoided addressing the issues, [**31] the trial court appellants’ points by their individual rendered judgment against the number, discussing them instead appellants on April 12, 1993. A according to the issues they raise. default judgment was entered against Crown Bancshares. Defendant, DISCUSSION Richard G. Rouse, received a Statute of Limitations summary judgment prior to trial. All of the appellants raise ″matter of The case against him was severed, law″ points attacking the trial court’s resulting in a separate appeal. In decision to submit the discovery Fields and Lightfoot v. Rouse, No. rule in questions 20 and 21 of the 04-93-00067-CV (Tex. App.--San jury charge. In answering questions Antonio, December 15, 1993, writ 20 and 21, the jury found that Fields denied) (unpublished), we affirmed and Lightfoot either discovered or, the summary judgment in Dr. in the exercise of reasonable Rouse’s favor. diligence, should have discovered The trial of this case lasted nearly on February 6, 1990 that appellants three weeks and leaves a substantial would not perform the agreement. record in its wake. Compounding Appellants argue that the trial court

937 S.W.2d 496, *509; 1996 Tex. App. LEXIS 3531, **32

erred in awarding judgment for -it is barred by limitations. Fields Fields and Lightfoot under a breach and Lightfoot therefore offer [**34] of contract theory because, as a three arguments designed to avoid matter of law, the cause of action is the limitations period: (1) their barred by the four-year statute [**33] claims against the appellants did not of limitations. We disagree. accrue until the appellants had a This lawsuit was filed on November ″reasonable time″ to pay the money 25, 1991. The original petition they owed; (2) the appellants named as defendants all of the acknowledged the debt; and (3) the appellants except the Rodolfo L. ″discovery rule″ tolled the Davila Estate Trust, which was limitations period. This last argument joined as a defendant when the will be the focus of our discussion. appellees filed their second amended HN1 When reviewing ″matter of petition on December 14, 1992. As law″ points, an appellate court we have already noted, however, employs a two-prong test. The court Lieb’s letter to the Control Group will first examine the evidence regarding the Control Group’s supporting the jury’s finding, repurchase of the appellees’ stock is ignoring all evidence to the contrary.

dated May 19, 1987. Lieb’s letter also references two earlier dates: Sterner v. Marathon Oil Co., 767 September of 1986 for Lightfoot S.W.2d 686, 690 (Tex. 1989); see and April, 1987 for Fields. The also W. Wendell Hall, Revisiting appellees’ second amended petition Standards of Review in Civil claims that under the alleged stock Appeals, 24 ST. MARY’S L.J. 1135 purchase agreement, the effective (1993). If there is no evidence to date of the transfer, for purposes of support the finding, then the entire calculating principal, interest, and record must be examined to see if equity, was October 1, 1986 for the contrary proposition is Lightfoot and April 20, 1987, for established as a matter of law. Fields. However, all of these dates Sterner, 767 S.W.2d at 690. Only are well beyond the four-year when the contrary proposition is limitations period for breach of conclusively established by the contract claims. See TEX. CIV. evidence do we sustain the point. PRAC. & REM. CODE ANN. § Meyerland Community Improvement 16.004 (Vernon 1986). Unless the Ass’n v. Temple, 700 S.W.2d 263, appellees’ breach of contract claim 267 (Tex. App.--Houston [1st Dist.] somehow accrued or was tolled 1985, writ ref’d n.r.e.). beyond November 25, 1987 -- four In Woods v. William Mercer, Inc., years before this lawsuit was filed 769 S.W.2d [**35] 515 (Tex. 1988),

937 S.W.2d 496, *509; 1996 Tex. App. LEXIS 3531, **35

the court explained the nature and affirmatively by the pleadings origin of the discovery rule: will, therefore, be waived.

HN2 We hold that the The party seeking [**36] to discovery rule is a plea in benefit from the discovery rule confession and avoidance. A must also bear the burden of plea in confession and proving and securing avoidance is one which avows favorable findings thereon. and confesses the truth in the The party asserting the averments of fact in the discovery rule should bear this petition, either expressly or burden, as it will generally by implication, but then proceeds to allege new matter have greater access to the facts which tends to deprive the necessary to establish that it facts admitted of their falls within the rule. ordinary legal effect, or to Id. at 517-18 (citations omitted). obviate, neutralize, or avoid HN4 The discovery rule does not them. This most closely excuse a party from exercising describes the function of the reasonable diligence in protecting discovery rule, which asserts its own interests. Johnson v. Abbey, that while the statute of 737 S.W.2d 68, 70 (Tex. limitation may appear to have App.--Houston [14th Dist.] 1987, no run, giving rise to that writ). The rule expressly mandates appearance should not control. the exercise of reasonable diligence HN3 A party seeking to avail to discover facts of negligence or itself of the discovery rule omission. Black v. Wills, 758 S.W.2d must therefore plead the rule, 809, 815 (Tex. App.--Dallas 1988, either in its original petition no writ). Moreover, the burden is on or in an amended or the party seeking the benefit of the supplemental petition in discovery rule to establish its response to defendant’s applicability. Woods, 769 S.W.2d at assertion of the defense 518. Whether reasonable diligence [*510] as a matter of was used is generally a question of avoidance. A defendant who fact unless the evidence is such that has established that the suit is reasonable minds could not differ as barred cannot be expected to to its effect; only then does it become anticipate the plaintiff’s a question of law. Enterprise-Laredo defenses to that bar. A matter Associates v. Hachar’s, Inc., 839 in avoidance of the statute of S.W.2d 822, 837 (Tex. App.--San limitations that is not raised Antonio 1992), writ denied per

937 S.W.2d 496, *510; 1996 Tex. App. LEXIS 3531, **36

curiam, 843 [**37] S.W.2d 476 Thurman & Co., 786 S.W.2d at 20 (Tex. 1992). (cause of action for breach [**38] of HN5 A breach of contract action is contact ″commences to run from the governed by a four-year statute of time of the breach of contract, or limitations. TEX. CIV. PRAC. & from the time when the plaintiff had REM. CODE ANN. § 16.004 (Vernon knowledge of the breach, whichever 1986). In applying this four-year is the later, unless his lack of limitations period, knowledge resulted from his lack of diligence or from negligence″).

a cause of action is generally said to accrue ″when the HN6 For a court to apply the wrongful act effects an injury, discovery rule, the party asserting it regardless of when the must also affirmatively plead the plaintiff learned of such rule. Woods, 769 S.W.2d at 517-18. injury.″ Moreno v. Sterling Appellants argue that the discovery Drug, Inc., 787 S.W.2d 348, rule does not toll the statute of 351 (Tex. 1990). An exception limitations in this case because to the general rule is known Fields and Lightfoot failed to plead as the discovery rule and this the discovery rule. After reviewing rule is used to determine when the appellees’ amended and original the cause of action accrued. pleadings, however, we believe The discovery rule tolls the Fields and Lightfoot pled sufficient running of the limitations facts to make the discovery rule an period until the time the issue in this case. injured party discovers or Although appellees’ original and through the use of reasonable amended pleadings do not care and diligence should have specifically mention discovery or discovered the injury. In a concealment, their second amended breach of contract action, petition alleges that Lightfoot made limitations begin to run from no earlier demand for payment for the time of the breach, or from the purchase of his shares because the time the plaintiff knew or ″he did not know and could not have should have known of the known that the Control Group would breach, whichever is the later. not perform the agreement.″ As for El Paso Associates, Ltd. v. Fields, the clear import of the J.R. Thurman & Co., 786 appellees’ pleadings is that he did S.W.2d 17, 20 (Tex. App.--El not know and could not have known Paso 1990, no writ). the Control Group’s intent until Id. at 837 (emphasis added); see Baker [**39] and Frank Davila II also El Paso Associates, Ltd. v. J.R. returned the third-call contributions

937 S.W.2d 496, *510; 1996 Tex. App. LEXIS 3531, **39

and wrote that ″it has become Having determined that the obvious that each of us will end up discovery rule applies in this case, dealing with FIRST STATE on an the issue then becomes whether there individual basis.″ Also, the appellees is sufficient evidence to support the specifically pled that they ″justifiably jury’s finding. As we have already relied″ on the Control Group’s noted, both Fields and Lightfoot representation that the appellants testified that appellants could ″would consummate the purchase of perform the agreement by paying their respective shares of stock.″ cash or by assuming their indebtedness with First State HN7 The general rule is that Savings. Thereafter, Lightfoot paid pleadings will be construed as the interest attributable to his favorably as possible to the pleader. retained shares; appellants paid the Gonzalez v. City of Harlingen, 814 interest attributable to the sold S.W.2d 109, 112 [*511] (Tex. shares. The trustees assured App.--Corpus Christi 1991, writ Lightfoot on several occasions that denied). ″The court will look to the completion of the assumption was pleader’s intendment and the merely a matter of paperwork. pleading will be upheld even if some Lightfoot said he believed that the element of a cause of action has not appellants were attempting in good been specifically alleged. Every fact faith to work out the assumption, but will be supplied that can reasonably that nobody at First State apprised be inferred from what is specifically him of any problem. Against this stated.″ Gulf, Colorado & Santa Fe background, Lightfoot testified that Ry. Co. v. Bliss, 368 S.W.2d 594, 599 he realized appellants were not going (Tex. 1963). Having reviewed the to perform the agreement after a appellees’ pleadings and the record, meeting with Fields and his counsel we believe Fields and Lightfoot pled on October 10, 1991. sufficient facts to make the discovery Fields likewise testified that First rule an issue in this case. We also State accepted his interest payments note that appellants failed to file any attributed [**41] to the retained special exceptions to the appellees’ shares and that appellants’ ongoing original or amended pleadings; assumption effort ″was exactly what hence, they [**40] waived any they said they would do.″ Until pleading defects. See J.K. & Susie L. February 6, 1990, Fields said he Wadley Research Inst. v. Beeson, believed, by virtue of the parties’ 835 S.W.2d 689, 695 (Tex. reallocated contributions toward the App.--Dallas 1992, writ denied); see First State loan and appellants’ also TEX. R. APP. P. 90. ongoing assumption efforts, that

937 S.W.2d 496, *511; 1996 Tex. App. LEXIS 3531, **41

appellants were in the process of they would have been barred by performing the agreement. limitations. Appellants are correct in The jury found that appellees, in the noting that Fields and Lightfoot exercise of reasonable diligence, repeatedly testified they were should have discovered on February entitled to payment beginning in 6, 1990 that appellants would not April of 1987 with respect to Fields, perform the agreement. 8 The jury and in September or October of charged Lightfoot with notice on 1986 as to Lightfoot. But, while that date despite his testimony as to Fields and Lightfoot both testified a later date. HN8 Even so, they were entitled to payment at the reasonably diligent discovery is time of the contract, they also generally a matter for the jury. pinpointed the date when they Enterprise-Laredo, 839 S.W.2d at realized the appellants were not 838. This is especially true in a case going to perform the agreement. like this one, where the material Lightfoot testified that he realized facts are far from undisputed. Giving this for the first time [**43] on due deference to the jury’s role in October 10, 1991; Fields testified determining the weight and that he reached this conclusion on credibility of the witnesses’ February 6, 1990. We have already testimony, we believe there is noted that the limitations period on a sufficient evidence to support the claim for breach of contract begins jury’s finding that February 6, 1990 to run ″from the time of the breach, was the date Fields and Lightfoot or from the time the plaintiff knew either discovered or should have or should have known [*512] of the discovered that the Control Group breach, whichever is the later.″ would not perform the agreement. Enterprise-Laredo, 839 S.W.2d at Since there is sufficient evidence 837. HN9 Without application of [**42] supporting the jury’s finding, the discovery rule, a contract cause we need not consider the second of action normally accrues when the element of Sterner. 767 S.W.2d at contract is breached, not when it 690. was made. Tel-Phonic Services, Inc.

v. TBS Int’l, Inc., 975 F.2d 1134, Judicial Admission 1143 (5th Cir. 1992). We reach this conclusion despite the The most that can be said of Fields’ appellants’ argument that both Fields and Lightfoot’s testimony regarding and Lightfoot judicially admitted their entitlement to payment is that their actions accrued at a time when it raises a question as to when they 8 February 6, 1990 was the day co-trustees Baker and Frank Davila II served notice to the other members of the Control Group that ″each of us will end up dealing with First State on an individual basis.″

937 S.W.2d 496, *512; 1996 Tex. App. LEXIS 3531, **43

really knew matters had gone awry. Hennigan v. I.P. Petroleum Co., Inc., One could argue that if the appellees 858 S.W.2d 371, 372 (Tex. 1993) knew they were entitled to their (quoting Mendoza v. Fidelity & money beginning in late 1986 or Guar. Ins. Underwriters, Inc., 606 early 1987, they must have known S.W.2d 692, 694 (Tex. 1980)). ″The long before February of 1990 that requirements for treating a party’s the appellants were not going to testimonial quasi-admission as a honor the agreement. This is, conclusive judicial admission include that the statement be however, an evidentiary issue for ’deliberate, clear, and unequivocal’

the trier of fact, not a question of and that ’the hypothesis of mere law for an appellate court; it was for mistake or slip of the tongue must the jury to determine the date be eliminated.’″ Id. at 372 (quoting appellees knew or should have Griffin v. Superior [**45] Ins. Co., known that the [**44] appellants 161 Tex. 195, 338 S.W.2d 415, 419 were not going to honor their (1960)). Given the record in this agreement. Moreover, the appellees’ case, we cannot say either Fields or testimonial declarations more closely Lightfoot judicially admitted that resemble ″quasi-admissions,″ not their claims for breach of contract conclusive judicial admissions: were barred by limitations.

HN10 A party’s testimonial Nor do we attribute any significance declarations which are to the fact that the plaintiffs’ second contrary to his position are amended petition pleads for a quasi-admissions. They are recovery of prejudgment interest merely some evidence, and beginning on October 1, 1986 for Lightfoot and April 20, 1987 for they are not conclusive upon Fields. Article 5069-1.03 provides the admitter . . . . These are to in part:

be distinguished from the true judicial admission which is a HN11 When no specific rate formal waiver of proof usually of interest is agreed upon by found in pleadings or the the parties, interest at the stipulations of the parties. A rate of six percent per annum judicial admission is shall be allowed on all conclusive upon the party accounts and contracts making it, and it relieves the ascertaining the sum payable, opposing party’s burden of commencing on the thirtieth proving the admitted fact, and (30th) day from and after the bars the admitting party from time when the sum is due and disputing it . . . . payable.

937 S.W.2d 496, *512; 1996 Tex. App. LEXIS 3531, **45

TEX. REV. CIV. STAT. ANN. art. HN13 The ″law of the case″ doctrine 5069-1.03 (Vernon 1987). HN12 The has been defined by the Texas Texas Supreme Court has stated that Supreme Court as ″that principle ″where damages are definitely under which questions of law determinable, interest is recoverable decided on appeal to a court of last as a matter of right from the date of resort will govern the case the injury or loss.″ Imperial Sugar throughout its subsequent [*513] Co., Inc. v. Torrans, 604 S.W.2d 73, stages.″ Hudson v. Wakefield, 711 74 (Tex. 1980) (per curiam). We S.W.2d 628, 630 (Tex. 1986). By therefore agree with appellees that narrowing the issues in successive there is nothing inconsistent about stages of the litigation, [**47] the pleading for the commencement of law of the case doctrine attempts to achieve uniformity of decision as interest, [**46] on the one hand, well as judicial economy and and a reasonable post-contract period efficiency. Dessommes v.

of time in which appellants could Dessommes, 543 S.W.2d 165, 169 timely perform the agreement, on (Tex. Civ. App.--Texarkana 1976, the other.

writ ref’d n.r.e.). The doctrine is Law of the Case based on public policy and is aimed Nor are we persuaded by the at putting an end to litigation. See appellants’ argument that our prior Barrows v. Ezer, 624 S.W.2d 613, opinion in Fields and Lightfoot v. 617 (Tex. App.--Houston [14th Dist.] Rouse, No. 04-93-00067-CV (Tex. 1981, no writ); Elliott v. Moffett, 165 App.--San Antonio, December 15, S.W.2d 911 (Tex. Civ. 1993, writ denied) (unpublished), App.--Texarkana 1942, writ ref’d controls the outcome of this appeal. w.o.m.). In our prior decision, which affirmed HN14 The doctrine of the law of the a summary judgment in favor of Dr. case only applies to questions of law Richard G. Rouse, we held that all and not to questions of fact. Hudson, of the appellees’ claims against Dr. 711 S.W.2d at 630. Furthermore, the Rouse were barred by the four-year doctrine does not necessarily apply statute of limitations for breach of when either the issues or the facts contract claims. Appellants argue presented at successive appeals are that our prior decision in Fields and not substantially the same as those Lightfoot v. Rouse controls the involved in the first trial. Barrows, outcome of this case insofar as 624 S.W.2d at 617. In Hudson, the appellees’ breach of contract claim court also drew a distinction between is concerned. Again, however, we a summary judgment and an appeal disagree. following a full trial on the merits:

937 S.W.2d 496, *513; 1996 Tex. App. LEXIS 3531, **47

A critical factor in our 283 (Tex. App.--Austin 1993, writ determination of this case is denied). The court in Pannill also that in the first appeal we recognized that an ″appeal after a reviewed a summary full and lengthy trial on the merits judgment. HN15 On review with a jury acting as the finder of of summary judgments, the facts, differs in a very material sense appellate courts are limited in from a prior limited appeal″ their considerations of issues following a summary judgment. and facts. [**48] In such a Pannill, [**49] 659 S.W.2d at 681. proceeding, the movant is not The distinction recognized in required to assert every theory Hudson and Pannill also applies upon which he may recover here, since our prior opinion was or defend. Thus, when a case issued on review of a summary comes up for a trial on the judgment in favor of Dr. Rouse. The merits, the parties may be present appeal followed a jury trial different, the pleadings may which lasted nearly three weeks and be different, and other causes leaves behind a voluminous record. of action may have been As a result, the facts were developed consolidated. See Governing to a point far beyond the summary Bd. v. Pannill, 659 S.W.2d judgment record that we reviewed in 670, 680-81 Rouse. And as we have already (Tex.App.--Beaumont 1983, noted, the jury found that Fields and writ ref’d n.r.e.). Other Lightfoot either discovered or should distinctions may be drawn; for instance, in reviewing the have discovered on February 6, 1990 evidence to determine whether that the appellants would not perform there are any fact issues in the agreement. Were we sitting as dispute, the appellate court the jurors in this case we might well must review the evidence in have resolved the issue differently. the light most favorable to the However, it was for the jury, not this party opposing the motion for court, to weigh the evidence and summary judgment. Gaines v. determine the weight and credibility Hamman, 163 Tex. 618, 358 of the witnesses’ testimony. There is S.W.2d 557, 562 (1962). Thus, certainly sufficient evidence to the context of a summary support the jury’s answer. Given the judgment proceeding is present circumstances, we simply distinguishable from a full cannot agree that our opinion in trial on the merits. Rouse should control the legal issues Id. at 630-31. See also Med Center in this appeal. Bank v. Fleetwood, 854 S.W.2d 278, Requested Limitations Issues

937 S.W.2d 496, *513; 1996 Tex. App. LEXIS 3531, **49

Appellants also argue that the trial known, that [**51] the Control court erred when it refused to submit Group would not perform the their requested limitations issues. agreement is ″irrelevant.″ Again, we [**50] They claim the jury should disagree. have been asked when payment was HN16 Proposed questions must be due, not when Fields and Lightfoot submitted to the jury in ″substantially ″knew or should have known″ that correct wording.″ TEX. R. CIV. P. the appellants would not perform 278. If the request is not in the agreement. Once again, we substantially correct wording, it does disagree. not preserve error. TEX. R. CIV. P. There were four proposed limitations 279; Keetch v. Kroger Co., 845 issues which were refused by the S.W.2d 262, 266 (Tex. 1992). In this trial court. Two of these issues were case, the appellants’ proposed submitted by the Davilas; the other limitations questions were not two by Baker. As to Fields and tendered in ″substantially correct″ Lightfoot, however, they were wording. For example, their tendered identical: (1) ″On what date was the questions assumed that the contract indebtedness claimed by O. specified when payment would be Waymond Lightfoot, Jr. due to him due -- it did not. Appellants under the terms of the agreement, if apparently presume that the any?″; and (2) ″On what date was limitations period for breach of [*514] the indebtedness claimed by contract claims is measured only William R. Fields, Jr. due to him from the time payment is due -- it is under the terms of the agreement, if not. Nor can appellees’ testimony any?″ regarding when they were entitled to Appellants also argue that the trial their money be transformed into court erred in submitting questions conclusive judicial admissions, given 20 and 21 because they are not the strict standards which govern ″ultimate issues.″ Building on their judicial admissions. To be within the previous argument, appellants again realm of substantial correctness, the claim the appellees’ causes of action appellants’ tendered limitations began to run at the time when they questions should have included a were entitled to their money. Given reasonable time inquiry -- once the appellees’ testimony, this would again, they did not. Since the have been on October 1, 1986 for appellants failed to comply with Rule Lightfoot and April 20, 1987 for 279, their limitations points Fields. According to appellants, it concerning the charge [**52] are follows that a question regarding the not subject to appellate review. There date appellees knew, or should have was no abuse of discretion.

937 S.W.2d 496, *514; 1996 Tex. App. LEXIS 3531, **52

As to whether questions 20 and 21 consider what the parties said raised ″ultimate issues,″ we note and did in light of the that the trial court has broad surrounding circumstances, discretion when constructing the jury including any earlier course charge. HN17 ″A proper broad form of dealing. You may not jury question asks an ultimate issue consider the parties’ and instructs the jury about the unexpressed thoughts or elements of the ground of recovery intentions. or defense that the jury must find In addition to arguing that the before giving a ’yes’ answer to the appellees’ contract claim is barred issue.″ Rampel v. Wascher, 845 by limitations, appellants assail the S.W.2d 918, 924 (Tex. App.--San breach of contract theory on a Antonio 1992, writ denied). We hold number of other grounds: (1) the that the charge in this case aided the trial court should have admitted jury and did not misstate the law. evidence that the agreement was Appellants’ points are overruled. conditioned on First State ″actually Breach of Contract funding″ the stock purchase; (2) the Fields and Lightfoot pleaded that trial court should have asked the Lieb’s May 19, 1987 letter evidenced jury whether the agreement was a contract binding on the appellants ″conditioned″ on financing; (3) the for the purchase of the appellees’ jury’s finding that the Control Group stock. This claim was submitted to ratified its purchase of the appellees’ the jury in questions one and two of stock is not supported by legally or the court’s charge. In answering factually sufficient evidence; (4) the these questions, the jury agreed that trial court should have asked the Lieb’s May 19, 1987 ″writings″ jury whether each of the appellants ″constituted an agreement whereby individually ratified the agreement;

(5) the appellees’ contractual the Control Group″ purchased damages are not supported by legally Fields’ and Lightfoot’s stock. The or factually sufficient evidence; (6)

questions were preceded by an the trial court should have submitted ″Instruction on Agreement,″ which questions asking the jury [**54]

charged the jury as follows:

whether each member of the Control In deciding whether [**53] Group individually agreed to the parties agreed that purchase the appellees’ stock and Lightfoot and Fields would whether the agreement [*515] was not be paid unless First State based upon prorata liability; and (7) Savings actually funded and the trial court should not have held restructured the Control them jointly and severally liable for Group’s loans, you may the appellees’ contractual damages.

937 S.W.2d 496, *515; 1996 Tex. App. LEXIS 3531, **54

Exclusion of Evidence memoranda, letters and records of Crown and the

Prominent among appellants’

Control Group, because such complaints is their contention the writings constitute the written trial court erred in not submitting to agreements between the

the jury their theory concerning the parties; and Appellants cannot non-occurrence of an alleged vary the terms by parol

condition precedent, i.e., the evidence and have no

agreement was conditioned on First pleadings to support State ″actually funding″ the stock introduction of such purchase. This argument takes two testimony.

forms: (1) that the trial court erred in failing to admit evidence that the Appellants introduced evidence agreement was conditioned on First through a bill of exception pertaining State actually funding or to the alleged condition precedent. restructuring the Control Group’s Baker and Frank Davila II testified loans; and (2) that the trial court by bill of exception that the should have submitted a separate agreement made by the members of question regarding conditional the Control Group was subject to the purchase in the court’s charge. We condition that First State Savings will begin with the first argument, would provide refinancing. The which concerns the parol evidence appellants’ bill included excerpts rule and the trial court’s ruling on from the depositions of Frank Cross the appellees’ motion in limine. and Dwight Lieb, both of whom similarly testified that refinancing On February 22, 1993, shortly before by First State Savings was part of trial, the appellees filed a motion in the agreement. limine. Although there is no written The bill also included testimony order, the record [**55] indicates from Frank Davila II regarding that the trial court sustained plaintiffs’ exhibits 16 [**56] and 59.

paragraph eight of the motion, which Exhibit 16 was the notice from Frank asked the court to prohibit the Davila II to members of the Control appellants or their counsel from Group informing them of a meeting suggesting to the jury, to be held on June 16, 1986 to that there were conditions, consider repurchase of the appellees’ conditions precedent or terms stock. Exhibit 59 was Frank Davila of their agreement to purchase II’s February 22, 1988 memorandum Appellees’ shares of Crown which questioned the validity of the Bancshares stock which are sale and reiterated that any purchase not expressed in the written was based on financing from First

937 S.W.2d 496, *515; 1996 Tex. App. LEXIS 3531, **56

State. Both documents had been included a copy of Lightfoot’s admitted at the beginning of trial original petition, which the trial court without limitation, but during Frank had excluded from evidence. Davila II’s direct examination, the HN18 The parol evidence rule is a trial judge would not permit him to rule of substantive law which read aloud the first paragraph of provides that in the absence of fraud, exhibit 59, which stated that ″an accident, or mistake, extrinsic effective transaction concerning the evidence is not admissible to vary, sale or transfer of the stock would add to, or contradict the terms of a involve, among other things, the written instrument [*516] that is approval of First State Savings to facially complete and unambiguous. finance the purchase of said stock.″ Martin v. Ford, 853 S.W.2d 680, 681 This was presumably in keeping (Tex. App.--Texarkana 1993, writ with the court’s ruling on the motion denied); see also JOHN D. in limine. During the bill of CALAMARI AND JOSEPH M. exception, Frank Davila II read from PERILLO, CONTRACTS § 3-2, at both the excluded portion of exhibit 135-36 (3rd ed. 1987) (″The parol 59 and the first paragraph of exhibit evidence rule has been stated in 16, which stated ″the control group many ways but the basic notion is purchase would be conditioned on that a writing intended by the parties the approval of First State Savings to be a final [**58] embodiment of to finance the purchase.″ their agreement may not be Lightfoot testified under direct contradicted by certain kinds of examination during the appellants’ evidence.″). bill [**57] of exception that the HN19 A party may not introduce original proposal presented to the parol evidence to vary the terms of Control Group was that he would be an unambiguous contract. Murphy v. paid $ 10 per share for 25,000 shares; Dilworth, 137 Tex. 32, 151 S.W.2d that the Control Group agreed to 1004, 1005 (1941); Markert v. purchase his shares at that price Williams, 874 S.W.2d 353, 355 (Tex. based upon the ″approval″ or App.--Houston [1st Dist.] 1994, writ ″permission″ of First State Savings denied). When a writing is intended to refinance the debt. Lightfoot also as a completed legal transaction, the admitted that his original petition parol evidence rule excludes other contained the statement that ″the evidence of any prior or purchase [of Lightfoot’s shares] was contemporaneous expressions of the conditioned on the Control Group’s parties relating to the transaction. acquisition of financing from FIRST Markert, 874 S.W.2d at 355; Massey STATE.″ The appellants’ record v. Massey, 807 S.W.2d 391, 405

937 S.W.2d 496, *516; 1996 Tex. App. LEXIS 3531, **58

(Tex. App.--Houston [1st Dist.] question of whether a contract 1991), writ denied, 867 S.W.2d 766 is ambiguous before a jury (Tex. 1993). Only if the intention of trial commences, it is the parties as expressed on the face incumbent on the judge when of the document is doubtful may the it first becomes apparent court resort to parol evidence to during trial that at least one of resolve the doubt. Markert, 874 the parties is claiming S.W.2d at 355. ambiguity, supported by HN20 When there is no ambiguity, adequate pleadings, to parol evidence is not admissible to examine the provisions in create one. Markert, 874 S.W.2d at question and determine at that 355; Entzminger v. Provident Life & time whether or not the Accident Ins. Co., 652 S.W.2d 533, contract is or is not 537 (Tex. App.--Houston [1st Dist.] ambiguous. This is necessary, 1983, no writ); see also Sun Oil Co.

among other reasons, so that (Delaware) v. Madeley, 626 S.W.2d the court can properly rule on 726, 731 (Tex. [**59] 1981) (When a contract, on its face, can be given evidentiary [**60] objections a definite, legal meaning, parol and submit a substantially evidence is not admissible to render correct charge. it ambiguous). Only after the trial West Texas Gathering Co. v. Exxon judge determines that the contract is Corp., 837 S.W.2d 764, 770 (Tex. ambiguous does parol evidence App.--El Paso 1992), rev’d on other become admissible, and then only to grounds, 868 S.W.2d 299 (Tex. 1993). assist the fact finder in determining HN22 If neither party alleges a the subjective intent of the parties at contract is ambiguous, or if the issue the time they entered into the is raised for the first time on appeal, agreement. Coker v. Coker, 650 construction of the agreement is a S.W.2d 391, 394 (Tex. 1983).

question of law for the appellate HN21 Even in the absence of court. See Praeger v. Wilson, 721 appropriate pleading by either party, S.W.2d 597, 600 (Tex. App.--Fort a trial judge may conclude a contract Worth 1986, writ ref’d n.r.e.); see is ambiguous. Sage Street Associates also Community Dev. Serv. v. v. Northdale Const. Co., 863 S.W.2d Replacement Parts Mfg., Inc., 679 438, 445 (Tex. 1993). Indeed, he S.W.2d 721, 724 (Tex. App.--Houston must do so before the issue can be [1st Dist.] 1984, no writ); Sale v. submitted to the jury: Contran Corp., 486 S.W.2d 161, 165 If the trial court has not made (Tex. Civ. App.--Dallas 1972, writ a determination on the ref’d n.r.e.).

937 S.W.2d 496, *516; 1996 Tex. App. LEXIS 3531, **60

Although never using the word appellants’ condition evidence. In ″ambiguity″ in their pleadings, the constructing the jury charge, appellants and appellees obviously however, the trial judge asked the disagreed over whether there was a jury questions designed to ascertain contract, and if so, whether it was whether there was an agreement, subject to certain conditions. Baker i.e., whether Lieb’s May 19, 1987 and the Davilas alleged in their ″writings″ ″constituted an agreement amended answers that ″there was no whereby the Control Group″ valid agreement between Appellants purchased Fields’ and Lightfoot’s and/or the Control Group and stock. If the document was indeed Appellees because there was no [**62] unambiguous, the court meeting of the minds of the parties should never have submitted such as to such agreement.″ Pitman, issues to the jury. HN23 Only when Bertino, O’Connor, and Manning all a contract contains an ambiguity does its interpretation become a [**61] denied that Lieb, Baker or question of fact for the jury. Reilly v.

Frank Davila II -- the voting trustees Rangers Management, Inc., 727 -- ever had the authority to negotiate S.W.2d 527, 529 (Tex. 1987). While an agreement with the appellees, or the trial judge never expressly found that they ratified such an agreement, the agreement was ambiguous, such but added that if there were an a determination was necessary before agreement, it was subject to certain it could submit questions one and conditions precedent, e.g., First State two. See Exxon Corp. v. West Texas Savings agreeing to the proposed Gathering Co., 868 S.W.2d 299, 302 transfer of stock, allowing a prorata (Tex. 1993) (″If the court had not assumption of the appellees’ debts, considered the contract ambiguous, and, in turn, releasing the appellees the court could only have interpreted from their indebtedness. Haass it as a matter of law.″); see also adopted the amended answers filed Neece v. A.A.A. Realty Co., 159 Tex. by Fred Baker [*517] and the 403, 322 S.W.2d 597, 599 (1959) Davilas, which contained these same (By submitting issues to the jury allegations. designed to ascertain the parties’ There is no indication in the record agreement, ″the trial judge evidently that the trial court ever expressly considered that the written found the contract was ambiguous, instrument was ambiguous.″). As a and apparently, none of the parties result, the issue is whether the trial ever asked him to do so. The trial court erred in concluding the judge must have concluded, at least document was ambiguous, and if initially, that Lieb’s letter was not, whether the appellants’ parol unambiguous, since it excluded the evidence should have been admitted.

937 S.W.2d 496, *517; 1996 Tex. App. LEXIS 3531, **62

HN24 In construing a contract, the upon certain conditions [**64] or court must give effect to the contingencies. Baker v. Baker, 143 objective intent of the parties as Tex. 191, 183 S.W.2d 724, 728 (Tex. expressed or apparent in the writing, 1944); Litton v. Hanley, 823 S.W.2d in light of the surrounding [**63] 428, 430 (Tex. App.--Texarkana circumstances. Praeger, 721 S.W.2d 1992, no writ). Since the trial court at 600-01. A contract is not concluded the agreement was ambiguous if, after applying the rules ambiguous, and since our review of of construction, the provision in the record and the law requires no question can be given a certain or contrary determination, the definite legal meaning or appellants’ parol evidence should interpretation. Coker, 650 S.W.2d at have been admitted to aid the jury in 393; Universal C.I.T. Credit Corp. v. determining the intentions of the Daniel, 150 Tex. 513, 243 S.W.2d parties. 154, 158 (1951). On the other hand, Our analysis, however, does not end the contract is ambiguous when its there. We must also conduct a harm meaning is uncertain and doubtful analysis to determine if this error or it is reasonably susceptible to requires reversal. See TEX. R. APP. more than one meaning. Coker, 650 P. 81(b)(1). In addition to showing S.W.2d at 393. We recognize that an that the trial court committed error, instrument is not ambiguous simply appellants must also show that the because the parties disagree over its error was reasonably calculated to interpretation. Markert, 874 S.W.2d cause and probably did cause the at 355; Praeger, 721 S.W.2d at 600. rendition of an improper verdict. After carefully reviewing the record, Gee v. Liberty Mut. Fire Ins. Co., we do not believe the trial judge 765 S.W.2d 394, 396 (Tex. 1989); erred in concluding the agreement Bridges v. City of Richardson, 163 was ambiguous or in submitting the Tex. 292, 354 S.W.2d 366, 368 (Tex. issue to the jury. 1962); New Braunfels Factory Outlet Turning to the second issue, we note Center, Inc. v. IHOP Realty Corp., that HN25 parol evidence is 872 S.W.2d 303, 310 (Tex. admissible regarding the intentions App.--Austin 1994, no writ); see also of the parties when the writing TEX. R. APP. P. 81(b). HN26 The contained in the document is admission or exclusion of evidence ambiguous. Trinity Univ. Ins. Co. v. rests within the sound discretion of Ponsford Bros., 423 S.W.2d 571, the trial [**65] court. Center, Inc., 574-75 (Tex. 1968). Moreover, it is 872 S.W.2d at 310; Tracy v. Annie’s admissible to show the agreement Attic, Inc., 840 S.W.2d 527, 531 was not to become effective save (Tex. App.--Tyler 1992, writ denied);

937 S.W.2d 496, *517; 1996 Tex. App. LEXIS 3531, **65

Luvual v. Henke & Pillot, 366 documentary evidence, or argue to S.W.2d 831, 838 (Tex. Civ. the jury what the terms of the App.--Houston [1st Dist.] 1963, writ agreement were, and consequently, ref’d n.r.e.). In other words, the trial explain why they did not follow court [*518] commits error only through with the deal, appellants when it acts in an unreasonable and claim their case was hopelessly arbitrary manner, or acts without prejudiced by the trial court’s reference to any guiding principles. decision to exclude their condition Downer v. Aquamarine Operators, precedent testimony. We disagree. Inc., 701 S.W.2d 238, 241-42 (Tex. Our review of the record shows that 1985), cert. denied, 476 U.S. 1159, various Control Group members 90 L. Ed. 2d 721, 106 S. Ct. 2279 testified without objection that it (1986). Reversible error does not was their intention to purchase the usually occur in connection with appellees’ stock only if First State rulings on questions of evidence would finance the purchase. unless the appellant can demonstrate Although never using the word that the whole case turns on the ″condition,″ Baker, Lieb, Pitman, particular evidence that was admitted O’Connor, Bertino, Manning, and or excluded. Litton v. Hanley, 823 Haass all testified before the jury S.W.2d 428, 430 (Tex. App.--Houston that they were prepared to buy their [1st Dist.] 1992, no writ). The prorata shares of Fields’ and exclusion of evidence is harmless if Lightfoot’s stock if First State agreed it is cumulative of other evidence to refinance the purchase. Moreover, that was admitted on the same issue. the issue of financing conditions See Gee, 765 S.W.2d at 396 (″The was raised during closing arguments. erroneous admission of testimony Counsel for Baker and the Davilas that is merely cumulative of properly urged the jury to answer ″no″ [**67] admitted testimony is harmless to questions one and two because error.″); see also TEX. R. CIV. the financing condition had not been EVID. 403. satisfied. Thus, not only did the jury Appellants [**66] argue that hear a wealth of evidence on the exclusion of their condition evidence appellants’ condition theory, but the was harmful error, because it was issue was included in the court’s material not only to the issue of preliminary ″Instruction on whether there was an agreement, but Agreement″ and argued to the jury. to all of the appellees’ tort claims as Appellants never objected to this well as their actual and exemplary instruction. As for plaintiffs’ exhibits damages. Unable to elicit testimony 16 and 59, the Frank Davila II from witnesses, produce memoranda, although appellants

937 S.W.2d 496, *518; 1996 Tex. App. LEXIS 3531, **67

claim they were never offered to the 744 S.W.2d 940, 944 (Tex. 1988) jury ″in their entirety,″ the record (op. on reh’g). The issue must also shows both documents were be disputed. Id. admitted without reservation at the Appellants must also show they beginning of trial, and were in the preserved error to prevail on these jury room during deliberations. The points. Several procedural steps are fact Frank Davila II was not required to preserve error. First, the permitted to read from or testify complaining party must request a regarding specific paragraphs is not question on the issue. Lyles v. Texas cause for concern, when one Employers’ Ins. Ass’n, 405 S.W.2d considers the other condition 725, 727 (Tex. Civ. App.--Waco 1966, evidence that was before the jury.

writ ref’d n.r.e.). The request must Because other evidence admitted be in writing, separated from other throughout the trial and emphasized requested jury charges, and must be during closing arguments conveyed tendered in ″substantially correct″ substantially the same information to the jury that was found in form. TEX. R. CIV. P. 278, 279; appellants’ bill of exception, even if Woods v. Crane Carrier Co., Inc., the trial court erred in excluding this 693 S.W.2d 377, 379 [*519] (Tex. testimony, the error was harmless. 1985). The requested question must The appellants’ points are overruled. [**69] also be presented and filed before the charge is read to the jury.

Conditional Purchase M.L.C. Loan Corp. v. P.K. Foods, Appellants also argue that [**68] Inc., 541 S.W.2d 902, 905 (Tex. Civ. the trial court erred in refusing to App.--Beaumont 1976, no writ). ask the jury whether the agreement Finally, the complaining party must was conditioned on financing by obtain a ruling on the request. TEX. First State. To prevail on these R. CIV. P. 276; Greenstein, Logan & points, however, appellants must Co. v. Burgess Mktg., 744 S.W.2d show they were entitled to a jury 170, 181 (Tex. App.--Waco 1987, question on the issue. HN27 All writ denied). parties are entitled to have Counsel for Baker, Haass, Bertino, controlling issues, raised by the Pitman, O’Connor and the Davilas pleadings and evidence, submitted all objected to questions one and to the jury. Brown v. Goldstein, 685 two, but only the Davilas tendered S.W.2d 640, 641 (Tex. 1985). A ″condition″ questions. The Davilas’ controlling issue is one which first question asked whether there requires a factual determination to ″was any authority given to Lieb by render judgment in the case. the Davila Defendants to purchase Employers Casualty Co. v. Block, Fields’ stock limited to purchasing

937 S.W.2d 496, *519; 1996 Tex. App. LEXIS 3531, **69

such stock on condition of First mandates broad form submission State actually accomplishing the ’whenever feasible,’ that is, in any financing?″ The second question and every instance in which it is asked: ″Did the Davila Defendants capable of being accomplished.″ agree to by [sic] Fields’ stock E.B., 802 S.W.2d at 649. The test for without a condition of First State an abuse of discretion is whether the actually accomplishing the trial court’s action in refusing to financing?″ The third asked: ″Did submit the requested definition and the Davilas agree to buy Crown instruction was arbitrary or Bancshares, Inc. from Lightfoot unreasonable. Downer, 701 S.W.2d without a condition of First State at 241-42. This means the trial court actually accomplishing the has wide discretion [**71] in financing?″ All three questions were submitting explanatory instructions refused by the trial court. The record and definitions, Wisenbarger v. shows that appellants filed written Gonzales Warm Springs requests for a special [**70] charge Rehabilitational Hosp., Inc., 789 on the issue of condition, separated S.W.2d 688, 692 (Tex. App.--Corpus from their other requested questions, Christi 1990, writ denied), or in definitions, and instructions, before determining what constitutes the charge was submitted to the jury. necessary and proper issues. Scott v. Therefore, they complied with the Ingle Bros. Pacific, Inc., 489 S.W.2d first procedural step in error 554, 557 (Tex. 1972). preservation. Because the trial judge HN29 Instructions and definitions endorsed these requests ″refused″ are proper when they are raised by and signed his name officially, the written pleadings, supported by appellants fulfilled this final error the evidence, and aid the jury in preservation requirement. answering the questions in the HN28 We review a trial court’s charge. See TEX. R. CIV. P. 277, submission of a theory of recovery 278; see also Elbaor v. Smith, 845 or defense by questions or S.W.2d 240, 243 (Tex. 1992); Texas instructions under an abuse of Dep’t of Transp. v. Ramming, 861 discretion standard, recognizing S.W.2d 460, 463 (Tex. App.--Houston there is a presumption in favor of [14th Dist.] 1993, writ denied) (trial the broad-form submission of court’s discretion ″is subject to the questions. TEX. R. CIV. P. 277; Texas requirement that the questions Dept. of Human Services v. E.B., submitted must control the 802 S.W.2d 647, 649 (Tex. 1990); disposition of the case, be raised by Mobil Chem. Co. v. Bell, 517 S.W.2d the pleadings and evidence, and 245, 256 (Tex. 1974). ″Rule 277 properly submit the disputed issues

937 S.W.2d 496, *519; 1996 Tex. App. LEXIS 3531, **71

for the jury’s deliberation.″). But, Court further held, and Rule 277 ″[a] judgment should not be reversed specifically provides, that the trial because of a failure to submit other court should [**73] submit and various phases or different appropriate accompanying shades of the same question.″ instructions to enable the jury to Sheldon L. Pollack Corp. v. Falcon render a verdict. Id. See also Industries, Inc., 794 S.W.2d 380, Glendon Investments, Inc. v. Brooks, 383 (Tex. App.--Corpus [**72] 748 S.W.2d 465, 469 (Tex. Christi 1990, writ denied). Moreover, App.--Houston [1st Dist.] 1988, writ a trial court errs if it refuses to denied); American Cyanamid Co. v. submit a properly formed question Frankson, 732 S.W.2d 648, 658 (Tex. with appropriate instructions, and App.--Corpus Christi 1987, writ ref’d instead submits separate, granulated n.r.e.). issues to the jury. H.E. Butt Grocery In the present case, as in Island, Co. v. Warner, 845 S.W.2d 258, 260 Fields’ and Lightfoot’s contractual (Tex. 1992). claim was submitted to the jury in In Island Recreational Development broad form. Although appellants Corp. v. Republic of Texas Savings claim the trial court should have Association, 710 S.W.2d 551 (Tex. submitted several additional 1986), the developer and owner of a questions inquiring about specific condominium brought a lawsuit aspects of the contract -- whether against a bank alleging breach of the agreement was conditioned; contract for failure to permanently whether the appellants individually fund first mortgages of condominium ratified it -- the controlling issue in units under the terms of a the case, and the one which commitment letter. Id. at 553. The authorized recovery for the trial court submitted a broad-form appellees, was whether Lieb’s May issue to the jury asking whether they 19, 1987 letter constituted an found the ″plaintiffs performed their agreement whereby the Control obligations under the commitment Group bought certain shares of letter in question.″ Id. at 554. There Fields’ and Lightfoot’s stock. This were no instructions accompanying was the issue the trial court this issue, nor did the parties ask for submitted to the jury; the remaining them. [*520] Id. The Texas Supreme issues, e.g., condition and Court held that trial courts are ratification, were addressed in the permitted, and even urged, to submit court’s accompanying instructions the controlling issues of a case in and, therefore, were encompassed broad terms so as to simplify the within the broad-form question. We jury’s chore. Id. at 555. The Island therefore hold that the trial court did

937 S.W.2d 496, *520; 1996 Tex. App. LEXIS 3531, **74

[**74] not abuse its discretion in the party sought to be charged refusing appellants’ tendered with responsibility for the questions and in choosing to submit conduct [**75] of another the contractual claims in broad form. may be considered in Accordingly, appellants’ points of determining whether apparent error are overruled. authority exists. Agency During closing arguments, appellants In connection with the liability urged the jury to absolve them of issues, the court gave the jury an liability because they gave Lieb no ″Instruction on Authority″ which authority to purchase the appellees’ preceded all of the liability stock. In resolving the liability issues questions: against the appellants, however, the jury impliedly found the requisite A party’s conduct includes the agency connection.

conduct of another who acts with the party’s authority or Appellants raised no trial objection apparent authority. to the court’s agency instruction, Authority for another to act and their briefs scarcely even for a party must arise from the mention the issue. In a reply brief, party’s agreement that the Baker argues the trial court should other act on behalf and for the not have rendered judgment based benefit of the party. If a party upon a theory of agency because the so authorizes another person trial court’s rulings construing Lieb’s to perform an act, that other May 19, 1987 letter as the written party is also authorized to do memorial of the agreement between whatever else is proper, usual the parties and its prohibition of the and necessary to perform the appellants’ condition evidence act expressly authorized. harmed appellants. Moreover, Baker again claims the trial court erred in Apparent authority exists if a refusing the appellants’ condition party (1) knowingly permits evidence because this evidence another to hold himself out as would have explained ″Lieb’s having authority or, (2)

restricted authority.″

through lack of ordinary care, bestows on another such Conspicuously absent from the indications of authority that appellants’ argument is any lead a reasonably prudent indication of whether, or how, they person to rely on the apparent preserved error on this point. HN30 existence of such authority to Any complaint concerning the his detriment. Only the acts of submission of an instruction is

937 S.W.2d 496, *520; 1996 Tex. App. LEXIS 3531, **75

waived unless specifically included Civ. App.--Dallas 1969, writ ref’d). [**76] in the objections. See TEX. An agency relationship becomes a R. CIV. P. 274. This appellants failed question of law only when the facts to do. Although they tendered several are agreed or undisputed. Ross v. proposed instructions on agency, Texas One Partnership, 796 S.W.2d appellants never once challenged the 206, 209 (Tex. App.--Dallas 1990), court’s agency instruction, [*521] writ denied per curiam, 806 S.W.2d nor do they raise the issue now. 9 By 222 (Tex. 1991). This is certainly not failing to even raise the issue in their such a case. appellate briefs, appellants waived The Voting Trust Agreement any complaint on appeal regarding an implied finding of agency. [**77] Perhaps the most compelling evidence of an agency relationship But even if error was preserved, we between Lieb and [**78] the believe there is sufficient evidence members of the Control Group is the for the jury to have reasonably voting trust agreement. In entering inferred the existence of an actual or this agreement, the appellants agreed apparent agency relationship among themselves, in the interest of between Trustee Lieb and the other ″continuity and stability of policy,″ members of the Control Group to unite their vote in Trustee Lieb regarding the purchase of Fields’ and to be bound by their own vote and Lightfoot’s stock. Whether an regarding matters entrusted to him. agency relationship exists is usually This agreement constitutes evidence, a question of fact, and circumstantial albeit circumstantial, from which the evidence may be used to establish jury could have found a broader the agency and the extent of the agency relationship between Lieb agent’s authority. St. Paul Surplus and the other members of the Control Lines Ins. Co., Inc. v. Dal-Worth Group. Tank Co., Inc., 917 S.W.2d 29, 48 (Tex. App.--Amarillo 1995, n.w.h.); Other Circumstantial Evidence Bhalli v. Methodist Hosp., 896 There is also evidence of an actual S.W.2d 207, 210 (Tex. App.--Houston or apparent agency relationship [1st Dist.] 1995, writ denied); through the Control Group’s official Foundation Reserve Ins. Co. v. vote and the appellants’ subsequent Wesson, 447 S.W.2d 436, 438 (Tex. conduct. Among the relevant 9 Counsel for the Davilas alluded to the issue of agency when he was objecting to questions one and two of the court’s charge. After reminding the trial judge that questions one and two asked the jury to determine whether Lieb was an agent for the Control Group, counsel added: ″We have submitted requested instructions on the -- on agency, and this is a necessary element of whether Mr. Lieb was an agent and could enter into the agreement. And we have submitted an instruction on that agency theory which we’ve raised by the pleadings and has been shown by the evidence or raised by the evidence, and the court has denied that.″ On appeal, however, appellants do not challenge the trial court’s denial of their agency instructions.

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circumstances the jury could have Appellants [*522] raise two related considered is the fact that, after arguments regarding the court’s receipt of Lieb’s May 19, 1987 letter, ratification instruction and the jury’s each appellant appears to have findings: (1) they claim the court’s conducted himself in accordance submission of the issue was with the described transaction. There erroneous because appellants were is evidence in this record from which entitled to separate questions as to the jury could have found that each whether each of them, individually, appellant had knowledge of the ratified the Lieb agreement; and (2) transaction, recognized its existence, they argue that even if the ratification and retained the beneficial right to issue was properly submitted, the increase his holdings commensurate evidence is both legally and factually with the purchase. Not only did the [**80] insufficient to support the Control Group vote its explicit jury’s response. After reviewing the ratification, [**79] but each record, however, we disagree. appellant contributed several times Do you find the Control Group to the Control Group’s fund for ratified their purchase of Fields’ paying the First State debt that stock? corresponded to the stock purchase. Given these circumstances, we [Answer ″Yes″ or ″No″] believe there is sufficient evidence ANSWER: Yes to support the jury’s implied finding Question four provided:

that Lieb was the agent of the Control Group. See City of San Do you find the Control Group Antonio v. Aguilar, 670 S.W.2d 681, ratified their purchase of Lightfoot’s 683 (Tex. App.--San Antonio 1984, stock? writ dism’d) (implied authority exists [Answer ″Yes″ or ″No″] when appearances indicate that ″in some manner the agent was ANSWER: Yes authorized to do what he did″). These questions were preceded by Ratification an instruction on ratification:

In addition to the agency instruction, A party’s conduct includes conduct the court also charged the jury on of others that the party has ratified. ratification. In answering this Ratification may be express or question, the jury found that the implied. Control Group ratified their purchase Implied ratification occurs when a of Fields’ and Lightfoot’s stock. 10 party, though he may have been 10 Question three reads as follows:

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unaware of unauthorized conduct demonstrates bias, or is so against taken on his behalf at the time it the great weight and preponderance occurred, retains the benefits of the of the evidence as to be manifestly transaction involving the unjust. Pool v. Ford Motor Co., 715 unauthorized conduct after he S.W.2d 629, 635 (Tex. 1986); [**82] acquired full knowledge of the Cain v. Bain, 709 S.W.2d 175, 176 unauthorized conduct. Implied (Tex. 1986). Under this analysis, we ratification results in the ratification are not the fact finders and we do of the entire transaction. not pass upon the credibility of HN31 When, as in [**81] this case, witnesses or substitute our judgment both legal and factual sufficiency for that of the trier of fact, even if points are raised, we must first there is conflicting evidence upon examine the legal sufficiency of the which a different conclusion could evidence. Glover v. Texas Gen. be supported. Clancy v. Zale Corp., Indem. Co., 619 S.W.2d 400, 401 705 S.W.2d 820, 826 (Tex. (Tex. 1981). In considering a ″no App.--Dallas 1986, writ ref’d n.r.e.). evidence″ or legal sufficiency point, In other words, we are not free to we consider only the evidence or substitute our judgment for the jury’s inferences from the evidence simply because we may disagree favorable to the decision of the trier with the verdict. Herbert v. Herbert, of fact and disregard all evidence 754 S.W.2d 141, 142 (Tex. 1988). and inferences to the contrary. HN33 Ratification occurs when a Sherman v. First Nat’l. Bank, 760 principal, though he had no S.W.2d 240, 242 (Tex. 1988); Garza knowledge originally of an v. Alviar, 395 S.W.2d 821, 823 (Tex. unauthorized act of his agent, retains 1965). If there is any evidence -- the benefits of the transaction after more than a scintilla -- to support acquiring full knowledge. Land Title the finding, the no evidence Co. of Dallas v. F. M. Stigler, Inc., challenge will fail. Stafford v. 609 S.W.2d 754, 757 (Tex. 1980). Stafford, 726 S.W.2d 14, 16 (Tex. Stated simply, if a person who has 1987); In re King’s Estate, 150 Tex. fraudulently been made a party to a 662, 224 S.W.2d 660, 661 (1951). contract continues to receive the HN32 In considering a factual benefits of the contract after he sufficiency point, we may not becomes aware of the fraud, or if he substitute our judgment for that of otherwise conducts himself in such the trier of fact, but must assess all a manner as to recognize the contract the evidence and reverse for a new as existing and binding, he thereby trial only if the challenged finding affirms the contract and waives his shocks the conscience, clearly right to a rescission. Daniel [**83]

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v. Goesl, 161 Tex. 490, 341 S.W.2d the question of ratification must be 892, 895 (1960); Rosenbaum v. Texas left to the trier of fact. Id. Bldg. & Mortgage Co., 140 Tex. Appellants argue that Plaintiff’s 325, 167 S.W.2d 506, 508 (1943); Exhibit 66 -- the handwritten minutes Spangler v. Jones, 797 S.W.2d 125, of the Control Group’s March 16, 131 (Tex. App.--Dallas 1990, writ 1988 meeting -- do not show who denied). An express ratification is voted for the resolution to confirm not necessary; any act based upon a the purchase of Fields’ and recognition of the contract as Lightfoot’s stock. Rather, these existing or any conduct inconsistent minutes, which were kept by Pitman, with an intention of avoiding it has merely indicate that the ″motion to the effect of waiving the right of confirm that the stock purchase is a rescission. Rosenbaum, 167 S.W.2d valid transaction made 2nded & [sic]

at 508. HN34 The critical factor in passed.″ Baker, like the other determining whether a principal has appellants, testified that if the ratified an unauthorized act by his agent is the principal’s knowledge minutes meant the agreement was of the facts of the prior transaction being ratified without any condition, and his actions in light of such he did not vote for it. And Baker, knowledge. Land Title Co. v. F. M. like the other appellants, testified by Stigler, Inc., 609 S.W.2d 754, 756 bill of exception that the agreement (Tex. 1975). Ratification can occur if was always conditioned on First the party, at the time of his allegedly State accomplishing financing. ratifying acts, has knowledge of all Be that as it may, however, the material facts pertaining to the prior record is replete with evidence from fraudulent transaction. Rourke v. which the jury could have concluded Garza, 530 S.W.2d 794, 805 (Tex. the Control Group ratified the 1975); Vessels v. Anschutz Corp., purchase of Fields’ and Lightfoot’s 823 S.W.2d 762, 764 [*523] (Tex. shares. HN35 ″It [**85] is App.--Texarkana 1992, writ denied). fundamental that the critical factors The question of ratification of a in determining ratification are 1) the contract is usually a mixed question principal’s subsequent knowledge of of law and fact. Sawyer v. Pierce the transaction and 2) his actions [**84] , 580 S.W.2d 117, 123 (Tex. thereafter, and implied ratification Civ. App.--Corpus Christi 1979, writ may be proven by silence in the face ref’d n.r.e.). Although ratification of knowledge.″ See Banc Texas Allen may be determined as a matter of Parkway v. Allied American Bank, law if the evidence is uncontroverted 694 S.W.2d 179, 182 (Tex. or uncontrovertible, when the act or App.--Houston [14th Dist.] 1985, acts of ratification are controverted, writ ref’d n.r.e.) (emphasis added);

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see also Spangler, 797 S.W.2d at could not have answered as it did 131 (conduct recognizing agreement without a finding applicable to every as binding is sufficient). There is member of the Control Group. Thus, evidence that each appellant had even if Lieb did not have the knowledge of the transaction, authority to negotiate a stock conducted himself in recognition of purchase agreement with the its existence, and retained the appellees, the jury’s finding that the beneficial right to increase his Control Group ratified the purchase holdings commensurate with a stock of the appellees’ shares supports the purchase. Indeed, not only did the trial court’s judgment. We therefore Control Group vote its explicit hold that the trial court did not err in ratification of the stock purchase, refusing to submit separate but each appellant contributed ratification questions, and the jury’s several times to the Control Group’s finding that the Control Group fund to pay the First State debt that ratified the purchase of the appellees’ corresponded to the purchase. Given shares is supported by legally and this record, there is simply no merit factually sufficient evidence. to the appellants’ contentions that Damages for Breach of Contract the trial court erred when it refused to submit separate authority and Appellants also attack the legal and ratification questions for each factual sufficiency of [**87] the defendant. In entering the voting evidence supporting the appellees’ trust agreement, the appellants contractual damages -- questions five agreed [**86] among themselves, in and six of the court’s charge. 11 the interest of ″continuity and Urging [*524] an evidentiary stability of policy,″ to unite their sufficiency challenge as to various vote in Trustee Lieb and to be bound elements of Fields’ and Lightfoot’s by their own vote in matters contractual damages, appellants entrusted to him. Moreover, each argue the entire answer should be appellant’s contribution to partial disregarded. The Davilas, for performance is additional evidence example, claim two elements of from which the jury could have Fields’ contractual damages lack any concluded they acknowledged Lieb’s support in the evidence: (b) authority and ratified the stock reasonable and necessary costs purchase agreement with Fields and incurred by Fields, and (e) the value Lightfoot. Finally, the trial court’s of any property, income or business Control Group questions are interests lost as a natural, probable all-or-nothing propositions; the jury and foreseeable consequence of the 11 The questions and the jury’s answers are as follows:

937 S.W.2d 496, *524; 1996 Tex. App. LEXIS 3531, **87

Control Group’s failure to comply. Answer in dollars and cents for Baker argues that ″there is no damages, if any, that -- evidence that as a natural, probable Were sustained in the past: and foreseeable consequence of group’s [sic] purported failure to ANSWER: $ 253,000 comply with the agreement that In reasonable probability will be Fields lost the value of any property, sustained in the future: income or business interests,″ an ANSWER: $ 0

apparent reference to element (e) of question number six. As for A similar question was posed with Lightfoot, appellants claim there is respect to Fields: no evidence of damage to Lightfoot’s What sum of money, if any, if paid credit reputation and the ″reasonable in cash, would fairly and reasonably and necessary costs incurred.″ compensate Fields for his damages, What sum of money, if any, if paid if any, that resulted from the Control in cash, would fairly and reasonably Group’s failure to comply with their compensate Lightfoot for his agreement to purchase 9,000 of his damages, if any, that resulted from shares? the Control Group’s failure to Consider the following elements of comply with their agreement to damages, if any, and none other: purchase 25,000 of his shares?

a. The agreed purchase price;

Consider the following elements of b. The reasonable and necessary damages, if any, and none other:

costs incurred by Lightfoot;

a. The agreed purchase price; c. Reasonable and necessary b. The reasonable and necessary expenses incurred in defense of the costs incurred by Lightfoot; suit brought on Lightfoot’s loan at First State Savings;

c. Reasonable and necessary expenses incurred in defense of the d. Damage to credit reputation that suit brought on Lightfoot’s loan at was a natural, probable and First State Savings; foreseeable consequence of the Control Group’s failure to comply.

d. Damage to credit reputation that was a natural, probable and Do not include any amount for foreseeable consequence of the interest on past damages, if any. Control Group’s failure to comply. Answer in dollars and cents for Do not include any amount for damages, if any, that -- interest on past damages, if any. Were sustained in the past:

937 S.W.2d 496, *524; 1996 Tex. App. LEXIS 3531, **87

ANSWER: $ 290,000 damages award on appeal is In reasonable probability will be to address each and every sustained in the future: element and show that not a single element is supported ANSWER: $ 0 by sufficient evidence. If there These questions were preceded by is just one element that is the following instruction: supported by the evidence, the You are instructed that if you answer damages award will be questions about damages, answer affirmed if it is supported by each question separately. Do not the evidence. increase or reduce the amount in one Id. Appellants have clearly failed to answer because of your answer to meet this burden. any other question about damages. Do not speculate about what any Appellants cannot defeat a damages party’s ultimate recovery may or question that is submitted in may not be. Any recovery will be broad-form by attacking only determined by the Court when it individual elements. We note, for applies the law to your answers at example, that the Davilas fail to the time of judgment. challenge three elements of Fields’

damages: (a) the agreed purchase [**88] Our review of the appellees’ price; (c) reasonable and necessary contractual damages is complicated costs incurred in defense [**89] of by the fact that the issues were the suit brought on Fields’ loan at submitted to the jury in broad form, First State Savings; and, more i.e., called for a one-sum answer importantly, (d) damage to credit after consideration of several reputation that was a natural and different elements. ″When a damages probable and foreseeable issue is submitted in broad-form, an consequence of the Control Group’s appellate court cannot ascertain what failure to comply. Baker fails to amount of the damages award is challenge the evidence in support of attributable to each element.″ element (d) -- damage to Fields’ Greater Houston Transp. Co., Inc. v. credit reputation. 12 [*525] Zrubeck, 850 S.W.2d 579, 589, n. 11 Appellants also overlook several (Tex. App.--Corpus Christi 1993, elements of Lightfoot’s damages: writ denied). agreed purchase price, reasonable HN36 The only way that a and necessary costs, reasonable and defendant can successfully necessary legal expenses. By attack a multi-element challenging some elements of Fields’

12 The brief filed by Pitman adopts the arguments contained in Baker’s brief, and Haass does not raise the issue.

937 S.W.2d 496, *525; 1996 Tex. App. LEXIS 3531, **89

and Lightfoot’s contractual damages transactions. Although the corporate but not others, appellants run the structure changed several times, at risk of losing their sufficiency the core of these transactions were challenge if there is at least one two companies called Rehabtex, Inc. element of Fields’ and Lightfoot’s and Rehabtex Services, Inc., which contractual damages that is were formed to develop a series of supported by legally and factually outpatient physical rehabilitation sufficient evidence. See Zrubeck, 850 centers in Texas. Rehabtex and S.W.2d at 589. Rehabtex Services [**91] sold a series of limited partnerships Fields’ Damages concerning outpatient physical In addition to testimony concerning therapy rehabilitation to individuals the unpaid [**90] balance on the in the medical field. Rehabtex was agreement with Lieb to sell his supposed to be the general partner; shares of stock in Crown Bank, the limited partners would be Fields also testified that he has been referring physicians. Rehabtex sued by the RTC for the full amount Services would provide the billing, of the unpaid principal on his collection, budgeting, accounting, promissory note to First State, or $ and administrative support. Rehabtex 93,993.00, with $ 42,551.59 in and Rehabtex Services were, in turn, accrued interest as of April 3, 1992, owned by several other corporate together with interest accrued since entities, among them Orion Medical Group (OMG) and Rehabco, Inc., a that date, for a total amount due Pennsylvania corporation owned by under the guarantee agreement of $ an investor named Rick Actman.

193,800.00. The RTC’s petition also Like Dr. Bertino, Fields owned a included a demand for $ 2,500.00 in percentage of the Orion Medical attorneys’ fees, and an additional $ Group, Rehabtex, and several other 5,000.00 for each appellate level to closely related corporate entities.

which an appeal is taken.

Fields, however, said he was forced Much of Fields’ damages testimony to sell his interest in all of these concerned ″lost investment″ or ″lost outside ventures by August of 1989, income″ opportunities, and damage because he could not come up with to his credit reputation. He testified his share of a $ 15,000.00 tax debt -- that, beginning in 1985, he became $ 6,400.00 -- that Orion Medical involved with several other investors Group owed the IRS. Fields stated including another member of the that he had tried to borrow $ Control Group, Dr. Bertino, in a 2,500.00 from a San Antonio bank series of highly complex to meet his share of the obligation, medically-related business but was unable to do so. In any

937 S.W.2d 496, *525; 1996 Tex. App. LEXIS 3531, **91

event, the minutes of the August 9, [**93] over $ 400,000.00 in 1989 meeting of the board of revenues by April of 1988 as a result directors of the Orion Medical Group of physician referrals. Fields, a stock (O.M.G.) -- Michael H. Bertino, broker by training, estimated these [**92] William R. Fields, and outside business interests would have Charles V. Heath -- show that Dr. been worth approximately $ Bertino agreed to pay the tax 590,800.00 by the time of the trial obligation. In return, Fields sold his had he not been forced to sell them. OMG stock to Dr. Bertino, receiving More specifically, he claimed his net $ 17,000.00 for his equity in the interest in Rehabtex would have been company. Fields resigned from OMG worth approximately $ 200,000.00 and all affiliated companies and by the time of trial, had he not been corporations; he remained on the forced to sell it. To arrive at the board of directors of Rehabtex, Inc., larger figure, however, Fields but retained no voting rights. Fields essentially claimed that if this sum claimed he had no ownership interest had been invested in a series of in any of these ventures after the other ventures, for example, a August, 1989 board meeting. company called Sunport Medical, it Fields blamed his financial losses on would have run the $ 200,000.00 a poor credit rating, claiming his into $ 590,000.00. continuing indebtedness with First Dr. Carl Hubbard, the appellees’ State, which was listed on his credit expert witness on damages, report, hampered his ability to estimated that if Fields had still borrow money. Fields introduced a owned these outside business copy of his credit report, dated July interests at the time of trial -- three of 1989, which showed that he owed years after their sale -they would First State Savings $ 94,000.00 with have been worth $ 204,481.70. a delinquency of $ 14,000.00. Hubbard testified at length regarding Fields also testified regarding the these highly complex business future profitability of his outside transactions. However, Hubbard’s interests. He testified that Orion testimony concerned only Fields’ Medical Group was the general resulting or consequential damages; partner in a limited partnership the damages that resulted from the which had an interest in the San sale of Fields’ stock and the failure Antonio Imaging Center -- including of the appellants to pay the alleged the right to 50 percent of the net purchase price. He [**94] said he profits and 20 percent of the was not asked to make such radiology fees. According to Fields, calculations regarding the sale of this center was [*526] generating Lightfoot’s stock.

937 S.W.2d 496, *526; 1996 Tex. App. LEXIS 3531, **95

In Mead v. Johnson Group, Inc., 615 [**95] of the defendant’s S.W.2d 685 (Tex. 1981), the Texas breach. Supreme Court explained: Id. at 368 (emphasis added). Given The 1980 Supplement to the broad form submission of Fields’ Corbin on Contracts states contractual damages and the ″there is no good reason why uncontested evidence regarding lost damage to credit rating should income and damage to his credit not be compensable in reputation, we hold that the evidence contract.″ 2 Corbin, Contracts is legally and factually sufficient to § 1007 (Kaufman Supp. support Fields’ damages award. 1980). Recognition that loss Lightfoot’s Damages

of credit may be a foreseeable Although there is no testimony result of breach of contract is regarding damage to Lightfoot’s in line with the realities of credit reputation, he claimed he had today’s economy. HN37 To been sued by the RTC for over $ recover for loss of credit, as 436,000.00, and that he had paid an with any element of contract attorney $ 3,000.00 to defend him in damage, it must be proved that lawsuit. In addition, there was that the injury was the natural, testimony concerning the agreement probable, and foreseeable with Lieb to sell his shares of stock consequence of the breach of in Crown Bank. This is only $ contract or there are no actual 3,000.00 less than the amount which damages. See Hadley v.

the jury awarded Lightfoot -- $ Baxendale, supra, at 354;

253,000.00. Lightfoot’s testimony as Restatement (Second) of to the $ 3,000.00 in attorneys’ fees Contracts § 365 (Tent. Draft supports the remainder of the jury’s 1979). This is not a departure award. We therefore hold there is from the general rule of both legally and factually sufficient contract damages, but only evidence in this record to support recognition of an element of the jury’s award of $ 253,000.00 in damages if proven. We hold contractual damages for Lightfoot.

that actual damages for loss Appellants’ points are overruled.

of credit or injury to credit reputation in an action for Individual Purchase breach of contract may be Appellants argue the trial court recovered when there is should have submitted a question to evidence that loss of credit the [**96] jury asking whether each was a natural, probable, and member of the Control Group foreseeable consequence individually agreed to purchase the

937 S.W.2d 496, *526; 1996 Tex. App. LEXIS 3531, **96

appellees’ stock. The questions become liable on a contract made in tendered by Baker and the Davilas their name if they assent to or ratify would have asked the jury whether it. Id. ″Dwight Lieb, as agent for each of As we have already noted, the the following named control group appellees’ case against the Control members and with each member’s Group was based on a theory of authority to do so, agreed to purchase agency and ratification -- even if O. Waymond Lightfoot Jr.’s 25,000 Lieb did not have the authority to shares of Crown Bancshares stock?″ negotiate a stock repurchase The jury would have been asked to agreement with Fields and Lightfoot, answer yes or no for each member the Control Group ratified the of the Control Group, including agreement. Since appellants waived Fields. The trial court refused these any complaint regarding the jury’s questions as well as identical agency findings, and the agency and questions pertaining to Fields. ratification findings are supported [*527] Appellants base their by legally and factually sufficient argument on the contention that the evidence, whether the Control Group Control Group is an unincorporated is a legal entity is immaterial. HN39 association. They cite the general Any collective [**98] group of rule that unincorporated associations individuals may act through a 13 are not liable on their contracts, common agent. See RESTATEMENT which are regarded as the liability of (SECOND) OF AGENCY § 20 the individuals who sign them. Comment f. (″A number of persons . Hutchins v. Grace Tabernacle United . . may act jointly in the authorization Pentecostal Church, 804 S.W.2d 598, of an agent. In such case, the agent 599 (Tex. App.--Houston [1st Dist.] may have power to subject them to 1991, no writ); see also Cox v. Thee joint liability to third persons . . .″). Evergreen Church, 836 S.W.2d 167, The fact that Fields and Lightfoot 169 (Tex. 1992). In Hutchins, the were both members of the Control only case cited by appellants on this Group makes the resulting issue, the court noted that the contractual arrangement somewhat members of an unincorporated unusual, but it does not invalidate [**97] association were not bound the agreement. by unauthorized acts or unratified HN40 It may be supposed, representations of an individual for example, that an member. Id. However, the court also arrangement is entirely noted that members of an association inoperative if it purports to be 13 HN38 ″An unincorporated association is a voluntary group of persons, without a character, formed by mutual consent for the purpose of promoting a common enterprise or prosecuting a common objective.″ BLACK’S LAW DICTIONARY, 1531-32 (6th ed. 1990).

937 S.W.2d 496, *527; 1996 Tex. App. LEXIS 3531, **98

made by a partnership or other agent’s promise necessarily binds unincorporated association his principals to the promised with a member of such undertaking. See Ames v. Great association. There is no reason Southern Bank, 672 S.W.2d 447, 450 why such an agreement should (Tex. 1984). Through their agent, not operate as a valid and Lieb, all of the appellants made the enforceable contract between same promise to the appellees. See the individual member and the RESTATEMENT (SECOND) OF other members of the CONTRACTS § 288 Comment c (″It association that purports to has been said that when two or more make the agreement. For the persons undertake a contractual purpose of giving a judicial obligation they are presumed to remedy and for other practical undertake it jointly and that ’words purposes, there is nothing to of severance’ are necessary to prevent a court from treating overcome the presumption.″). We the association of individuals therefore hold the trial court did not as if it were an independent err in refusing to ask the jury whether unit. . . . It may well be that an appellants individually agreed to agreement made in this way purchase the appellees’ stock. should be subjected to severe Appellants’ points are overruled. scrutiny in the search for fraud Prorata [**100] Liability and illegality. Yet the [**99] mere fact that the agreement Appellants also claim the trial court purports to be made between should have asked the jury whether the unincorporated association the agreement, and, consequently, and one of its members does the Control Group’s purchase, was not in itself prove fraud or based on prorata liability. Baker and illegality. the Davilas submitted proposed questions, which were refused by 1 CORBIN ON CONTRACTS § 3.1 the trial court, asking whether the (Rev. ed. 1993). In fact, since agreement to buy Fields’ and appellants jointly appointed Lieb, Lightfoot’s shares was ″limited his only real authority was to act for [*528] to buying such control group their joint account. See member’s pro rata portion of such RESTATEMENT (SECOND) OF stock.″

AGENCY § 41(1) (″Unless otherwise indicated, authority given Citing no authority or discussing by two or more principals jointly any law to support their contentions, includes only authority to act for appellants claim that Lieb’s letter their joint account.″). HN41 An and its attachments ″unequivocally″

937 S.W.2d 496, *528; 1996 Tex. App. LEXIS 3531, **100

show that the responsibility of the the jury found the Control Group Control Group members was based agreed to purchase the appellees’ on their individual stock ownership stock. Appellants do not challenge in Crown Bancshares. They also the legal or factual sufficiency of the refer us to evidence, including evidence supporting these findings. testimony from the appellees, which They raised the issue of limitations, indicates the stock purchases were which we have already overruled. based on the appellants’ Since there is legally and factually proportionate ownership in the bank. sufficient evidence that the Control Appellants argue that if this evidence Group promised, though their agent, did not establish their prorata Lieb, to buy the appellees’ stock, it liability as a matter of law, it required makes no difference whether their the trial court to submit the issue to duty was ″joint and several.″ the jury. Again, however, we Consequently, the trial court did not disagree. err in refusing to ask the jury [**102]

whether the agreement was based on HN42 In the law of contracts, joint prorata liability. The appellants’ and several liability usually arises points are overruled. when two or more promisors in the Joint and Several Liability same contract promise [**101] the same or different performances to Appellants also claim the trial court the same promisee. See erred in awarding contractual RESTATEMENT (SECOND) OF damages jointly and severally. CONTRACTS §§ 288, 289 (1981); Building on their previous argument, see also CORBIN ON appellants claim the trial judge erred CONTRACTS § 928 (West Pub. in awarding appellees the full Co. 1951) (″Each Joint Promisor is amount of the contractual damages Bound For the Whole Performance found by the jury because, as a Promised.″). Texas law is no matter of law, appellants were liable different -- obligations of multiple for only their prorata share. Once parties to a contract are usually ″joint again, however, appellants cite no and several.″ See Marynick v. authority or discuss any law to Bockelmann, 773 S.W.2d 665, 668 support their contentions. We have (Tex. App.--Dallas 1989), rev’d on already explained that the trial court other grounds, 788 S.W.2d 569 (Tex. did not err in refusing to ask the jury 1990); Guynn v. Corpus Christi Bank whether the agreement was based on & Trust, 620 S.W.2d 188, 190 (Tex. prorata liability, and we need not Civ. App.--Corpus Christi 1981, writ discuss the issue again. Appellants’ ref’d n.r.e.). In answering questions points are overruled. one and two of the court’s charge, Texas Securities Act

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As for the appellees’ claims under The question then becomes whether, TEX. REV. CIV. STAT. ANN. art. for purposes of limitations, we 581-33 (Vernon Supp. 1996), the consider the sale [*529] of Fields’ Texas Securities Act, appellants raise and Lightfoot’s stock to have two arguments: (1) they argue the occurred on May 19, 1987, the date claim itself is barred under the of Lieb’s letter to the Control Group, limitations period contained in article or the earlier dates referenced in 581-33(H)(2); and (2) they claim the Lieb’s letter and accompanying evidence is both legally and factually writing -October [**104] 1, 1986 insufficient to support the jury’s for Lightfoot; April 20, 1987 for answers [**103] to questions 15 and Fields. Given that the appellees’ 16 of the court’s charge, which original petition was filed on concerned liability and damages for November 25, 1991, if we calculate securities fraud. Both of these the five-year limitations period from arguments have merit. September or October of 1986, Lightfoot’s securities fraud claims Statute of Limitations are barred. Fields’ claim, however, HN43 The limitations period for would not be barred if we used the claims under the Texas Securities April, 1987 date referenced in Lieb’s Act is found in article 581-33(H), letter to the Control Group. which provides that suit cannot be Furthermore, if we consider the sale brought: (1) ″more than three years to have occurred on May 19, 1987, after discovery of the untruth or the date of Lieb’s letter, neither omission,″ or after discovery should claim is barred by limitations. Not have been made by the exercise of surprisingly, appellees therefore reasonable diligence; or (2) ″more argue that under the law of merger, than five years after the purchase;″ May 19, 1987 becomes the effective or (3) more than one year after date of the sale, rather than the rejecting a rescission offer. TEX. earlier oral agreements referenced in REV. CIV. STAT. ANN. art. Lieb’s letter. 581-33(H)(2) (Vernon Supp. 1996). HN44 The ″merger doctrine″ is a However, a claim under the Texas corollary to the parol evidence rule Securities Act may ″in no event″ be in contract cases. Merger refers to made more than five years after the the extinguishment of one contract sale. Williams v. Khalaf, 802 S.W.2d by its absorption into another 651, 655 n. 3 (Tex. 1990); see also subsequent contract and is largely a TEX. REV. CIV. STAT. ANN. art. matter of intention of the parties. 581-33(H) cmt. (Vernon Supp. Leon, Ltd. v. Albuquerque Commons 1996). Partnership, 862 S.W.2d 693, 701

937 S.W.2d 496, *529; 1996 Tex. App. LEXIS 3531, **104

(Tex. App.--El Paso 1993, no writ); to the jury. Insofar as the parol Smith v. Smith, 794 S.W.2d 823, 827 evidence rule and the doctrine of (Tex. App.--Dallas 1990, no writ). merger are concerned, this means Merger occurs when the same parties [**106] we cannot disregard the to a prior agreement [**105] earlier dates referenced in Lieb’s subsequently enter into a written letter. Second, and more importantly, integrated agreement covering the article 581-33(H) clearly provides same subject matter. Leon, Ltd., 862 an optimum limitations period of S.W.2d at 700; Boy Scouts of five years for securities fraud claims, America v. Responsive Terminal and this limitations period is Systems, Inc., 790 S.W.2d 738, 744 measured from the date of the (Tex. App.--Dallas 1990, writ ″purchase or sale,″ not the date of denied). The question of whether a the agreement. See Williams v. merger has occurred, or whether an Khalaf, 802 S.W.2d at 655 n. 3; see agreement is merely additional to also TEX. REV. CIV. STAT. ANN.

art. 581-33(H) cmt. (Vernon Supp.

and not contradictory of a written 1996). In this case, Lieb’s letter and contract, is determined from the the accompanying documents intent of the parties. See Smith, 794 pinpoint the dates of the sale:

S.W.2d at 827-28; Smith v. U.S.

October 1, 1986 for Lightfoot, and Nat’l Bank of Galveston, 767 S.W.2d April 20, 1987 for Fields.

820, 823 (Tex. App.--Texarkana Furthermore, this is consistent with 1989, writ denied). Absent pleading the appellees’ own testimony: Fields and proof of ambiguity, fraud, or and Lightfoot repeatedly testified accident, a written instrument they were entitled to payment for presumes that all prior agreements their stock beginning in April of of the parties relating to the 1987 with respect to Fields, and in transaction have been merged into September or October of 1986 as to the written instrument. Boy Scouts Lightfoot. Since the appellees’ of America, 790 S.W.2d at 745. original petition was not filed until Appellants’ argument overlooks two November of 1991, Lightfoot’s important points. First, we have claims under the Texas Securities already held that the issue of Act are barred by the five-year ambiguity was raised in the limitations period. 14 We therefore appellants’ pleadings, and the trial sustain the appellants’ applicable judge did not err in concluding the points of error insofar as they pertain May 19, 1987 document was to Lightfoot’s securities fraud claim; ambiguous or in submitting the issue we overrule them as to Fields’

14 There is a discrepancy between Lieb’s letter and the accompanying documents regarding the date when Lightfoot’s stock was sold.

The letter states that the sale occurred in September of 1986, while the accompanying documents indicate that the stock sale occurred

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15

[**107] claim. We will address subsequent pleading ″relates back″ appellants’ remaining arguments to, and is considered as having been only as they apply to Fields. filed at the time of the initial One final question concerns the pleading, at least for limitations purposes. See Stevenson v.

status of appellant, Rodolfo Davila, Koutzarov, 795 S.W.2d 313, 319 as trustee of [*530] his deceased (Tex. App.--Houston [1st Dist.] 1990, father’s estate. The appellees’

writ denied); Meisler v. Republic of original petition named only Frank Texas Savings Ass’n, 758 S.W.2d Davila II and Rodolfo Davila, 878, 881-882 (Tex. App.--Houston individually, as appellants. The [1st Dist.] 1988, no writ). This rule ″Rodolfo L. Davila Estate Trust″ applies to claims under the Texas was not joined as a defendant until Securities Act. See Nicholas v. December 14, 1992, when the Crocker, 687 S.W.2d 365, 368 (Tex. appellees [**108] filed their second [**109] App.--Tyler 1984, writ amended petition. The Davilas ref’d n.r.e.) (Appellees’ first therefore argue that the trustee and amended petition under Texas the trust cannot be liable to either Securities Act was not subject to appellee under the five-year plea of limitations, where original limitations period contained in the petition, based on fraud, was not securities statute, because they were subject to plea of limitations and joined as appellants more than five amended petition was not based on years after Lieb’s letter to the new, distinct or different transaction Control Group. Again, however, we or occurrence). A review of the disagree. appellees’ original petition and their HN45 Although an amended subsequent amended petitions, pleading normally supersedes and leaves no doubt that the same supplants the original, an original evidence supports all of their causes pleading tolls the limitations period of action, the measure of damages is for claims asserted in subsequent, the same, and that the allegations are amended pleadings as long as the subject to the same defenses. We amended pleading does not allege a therefore conclude that Fields’ wholly ″new, distinct, or different securities fraud claims against the transaction or occurrence.″ See TEX. ″Rodolfo L. Davila Estate Trust″ are CIV. PRAC. & REM. CODE ANN. § not barred by limitations. 16.068 (Vernon 1986). The Liability and Damages for on October 1, 1986. In either event, however, Lightfoot’s claims are barred by the five-year limitations period contained in article 581-33(H). 15 These points include Baker’s twenty-eighth, twenty ninth, and thirtieth points of error; the Davilas’ eighth point; Pitman’s twenty-third point; and Haass’ third point.

937 S.W.2d 496, *530; 1996 Tex. App. LEXIS 3531, **109

Securities Fraud or for damages if the buyer no longer owns the security.

Appellants raise three arguments regarding appellees’ securities fraud However, a person is not liable claims: (1) the appellees cannot if he sustains the burden of recover damages under the Texas proof that either (a) the seller Securities Act, but may only obtain knew of the untruth or rescission since they still own the omission, or (b) he (the offeror securities; (2) there is neither legally or buyer) did not know, and in nor factually sufficient evidence that the exercise of reasonable care any member of the Control Group could not have known, of the made untrue statements or omissions untruth or omission. regarding the securities purchased;

(Emphasis added).

and (3) the trial court should have submitted [**110] each individual’s HN47 The statute provides remedies liability separately. The second issue of both rescission and damages. Part is what concerns us here. D of article [**111] 581-33 provides that on rescission, a plaintiff who Fields and Lightfoot sought damages was a defrauded seller is to recover for misrepresentations pursuant to the security (or a security of the the Texas Securities Act. TEX. REV. CIV. STAT. ANN. art. 581-1, et seq. same class and series) upon tender (Vernon 1964 & Supp. 1996). Article of the consideration the seller 581-33(B) of the Act provides: received for the security plus interest thereon at the legal rate from the HN46 A person who offers to date the seller received the buy or buys a security consideration, less the amount of (whether or not the security or any income the buyer received on transaction is exempt under the security. Id. at 581-33(D)(2). A Section 5 or 6 of this Act) by plaintiff who was a defrauded seller means of an untrue statement may recover the value of the security of a material fact or an at the time of the sale [*531] plus omission to state a material the amount of any income the buyer fact necessary in order to make the statements made, in received on the security, less the the light of the circumstances consideration paid the seller for the under which they were made, security, plus interest on these sums not misleading, is liable to the at the legal rate from the date of person selling the security to him, who may sue either at law or in equity for rescission

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payment of the seller. Id. at value. This would include the 581-33(D)(4). 16 [**112] [**113] transaction in the present The act does not define ″offers to case. buy or buys.″ HN48 However, the HN49 Like article 33(B), article commentary to article 33(B) states 33(A)(2) renders a seller liable only that the provision is to be construed if he sells or offers to sell a security similarly to article 33(A), which by means of an untrue statement or provides remedies for defrauded omission. One court of appeals has buyers of securities. See TEX. REV. held that the wording of subsection CIV. STAT. ANN. art. 581-33(B) cmt. (A)(2) requires the defrauded buyer (Vernon Supp. 1996) (″The phrase to prove that the untrue statements ’offers to buy or buys’ is to be related to the security and induced construed like the corresponding the purchase. In other words, the phrase for sales in §§ 33(A)(1) and plaintiff must show the untrue 33(A)(2).″). Turning to the statutory statements were made before the definitions, we note that they define sale occurred. See Nicholas, 687 ″sale,″ ″offer for sale″ or ″sell″ to S.W.2d at 368. In Nicholas, the court ″include every disposition, or held that a buyer of an interest in oil attempt to dispose of a security for and gas wells failed to establish a value.″ Id. at 581-4(E). Moreover, violation of article 581-33(A)(2) one who ″offers or sells″ a security because he did not show the seller’s is not limited to those who pass title. representations were made before See Pinter v. Dahl, 486 U.S. 622, the sale. HN50 The court construed 108 S. Ct. 2063, 100 L. Ed. 2d 658 the article 581-33(A)(2), (1988). The act further defines ″sell″ to mean that in order for the as any act by which a sale is made, plaintiff/buyer to prevail, he including a solicitation to sell, an must introduce evidence that offer to sell, or an attempt to sell, the untrue statements relate to either directly or by an agent or the security purchased and salesman. TEX. REV. CIV. STAT. induced the purchase thereof. ANN. art. 581-4(E) (Vernon Supp. Thus untrue statements made 1996). By analogy, the terms ″offer about a security by a seller to to buy″ or ″buy″ should therefore the buyer thereof at a time include every acquisition of, or when the buyer has already attempt to acquire, a security for purchased the security are not 16 Two other provisions are worth noting. Part F imposes joint and several liability on anyone who ″directly or indirectly controls a seller, buyer, or issuer of a security″ and on anyone who ″directly or indirectly with intent to deceive or defraud or with reckless disregard for the truth or the law materially aids a seller, buyer, or issuer of a security.″ Id. at 531-33(F)(1)(2). Part M provides that ″the rights and remedies provided by this Act are in addition to any other rights (including exemplary or punitive damages) or remedies that may exist at law or in equity.″ Id. at 581-33(M).

937 S.W.2d 496, *531; 1996 Tex. App. LEXIS 3531, **113

the ″means″ by which the paragraph ten of the appellees’ security was sold. It follows, amended petition: [**115] then, that if a buyer was not [*532] The Control Group induced [**114] to purchase a agreed (and if not, security by an untrue fraudulently offered and statement made after the misrepresented to FIELDS purchase, he could not have and LIGHTFOOT) to been misled thereby, and no purchase Fields’ and further statements respecting Lightfoot’s shares of CROWN such security are required to stock for Ten Dollars ($ 10.00) explain the original statement per share. FIELDS and so made under the provisions LIGHTFOOT relied on that of the above statute. agreement and representation.

Each member of the Control Id. at 368. See also Calpetco 1981 v. Group, CROWN, and each Marshall Exploration, Inc., 989 F.2d Trustee, directly or indirectly, 1408, 1418 (5th Cir. 1993) (Citing with intent to deceive or Nicholas v. Crocker, and noting that disregard or reckless disregard ″Article 581-33A(2) has been for the truth, aided in the construed to mean that the alleged misrepresentations regarding misrepresentation must relate to the the purchase. Further, security and ’induce the purchase CROWN and each Trustee thereof.’″). Given the statutory who directly or indirectly directive that article 33(B) and 33(A) controlled the Control Group, ″are intended to be construed were aware of the agreements similarly,″ see TEX. REV. CIV. STAT. to purchase, and failed to ANN. art. 33(B) cmt. (Vernon Supp. ensure that the purchase price 1996), these rules apply equally well be paid. Because the purchase to our analysis of Fields’ and was not consummated as Lightfoot’s claims. We therefore represented, the acts and conclude, like the Nicholas court, failures to act by CROWN, that under article 33(B) of the Texas the Control Group, and the Securities Act, the alleged untruth or Trustees directly and material omission must have related proximately caused damages to the security and ″induced the to FIELDS and LIGHTFOOT. purchase thereof.″ Appellees claim there is more than In the present case, the only enough evidence to support the allegations regarding statutory jury’s findings. They argue, for securities fraud are found in example, there is evidence from

937 S.W.2d 496, *532; 1996 Tex. App. LEXIS 3531, **115

which the jury could have concluded, not evidence of an untrue statement or at least inferred, that the Control or material omission relating to the Group failed to disclose their intent stock itself at the time of purchase. not to pay Fields and Lightfoot Simply offering to purchase [**117] unless they could secure an overall stock and then failing to pay for it restructuring [**116] of the entire $ does amount to an untruth or material 5.2 million loan for their own omission, nor can omissions which benefit. Unfortunately, however, they occur only after the sale be the provide no citations to the record in ″means″ by which a purchaser support of these assertions. ″offers to buy or buys″ the security. In this case, there is simply no To hold otherwise would transform evidence there were any untrue every breach of contract involving statements or omissions regarding a sale of securities into a statutory the stock itself. We recognize that a violation, a result certainly not person who offers to buy or buys a intended by the Texas Legislature security by means of any untrue when it drafted article 33(B). We statement of a material fact may be therefore hold, as a matter of law, liable to the person selling the that Fields has not established a security who does not know of the violation of article 33(B) of the untruth. Similarly, liability may be Texas Securities Act. Accordingly, imposed on a buyer who fails to we sustain the appellants’ relevant state a material fact that is necessary points of error insofar as they attack to prevent other statements from the legal sufficiency of the jury’s being misleading in light of the answers to questions fifteen and circumstances under which they sixteen of the court’s charge -- were made. See WILLIAM V. liability and damages for statutory DORSANEO III, TEXAS securities fraud. 17 We reverse that LITIGATION GUIDE § portion of the court’s judgment and 171.03[1][d] (1995). In the present render judgment that Fields take case, however, the evidence does nothing. [**118] not show a violation of the Texas Rescission

Securities Act, but simply a breach of contract. The evidence alluded to Since we have already determined by the appellees concerns how they that Lightfoot’s securities fraud were to be paid for the stock and the claims are barred by limitations, and fact they were continually told after that Fields’ cause of action fails as a the sale that it would go through -- matter of law, we need not address 17 These include Baker’s twenty-third through twenty-sixth points; the Davilas’ seventeenth point; Pitman’s seventeenth point; and Haass’ fifteenth point.

937 S.W.2d 496, *532; 1996 Tex. App. LEXIS 3531, **119

the rescission argument raised by thirteen, sixteen and then awarding the appellants. the total sum to the appellees. Damages The trial court rendered judgment Appellants raise several arguments against appellants on April 12, 1993. regarding the damages awarded by Unless otherwise indicated, the the trial court. Prominent among following awards were against all of these complaints is their contention the appellants, jointly and severally, that the trial court erred in except Rodolfo Davila individually: cumulating the jury’s actual damages findings in questions five, six, ten, [*533]

LIGHTFOOT FIELDS

Breach of Contract $ 253,000.00 $290,000.00

18

Prejudgment interest (10%) $ 131,698.63 $150,958.90

[**119]

Attorneys’ fees $ 153,879.45 $176,383.56

19

Trustees’ Breach of Fiduciary Duties -0- $200,000.00 Prejudgment interest (10%) -0- $104,109.58 Attorneys’ fees -0- $121,643.00

20

Directors’ Breach of Fiduciary Duties $ 3,000.00 $ 42,551.59 Prejudgment interest (10%) -0- $ 22,150.15 Attorneys’ fees $1,200.00 $ 22,880.70 Exemplary Damages for Directors Breach of Fiduciary Duties

Fred L. Baker -0- $ 1,750.00 Michael H. Bertino -0- $ 1,500.00 Frank Davila II -0- $ 5.00 Lawrence F. Haass -0- $ 250.00 Kim I. Manning -0- $ 250.00 J. Pat O’Connell -0- $ 1,000.00 J. Brain O’Connor -0- $ 500.00 B.F. Pitman III -0- $ 1,750.00

Texas Securities Act $253,000.00 $ 332,551.59 Prejudgment interest (10%) $131,698.63 $ 173,109.04 Attorneys’ fees 153,879.45 $ 202,264.25

[**120] Appellants raised the issue of motions for new trial and for judgment double recovery of damages in their notwithstanding the verdict. Both then and

18 The awards of prejudgment simple interest were calculated from January 20, 1988 until the date of judgment.

19 This award is against defendants Fred L. Baker and Frank Davila II, jointly and severally.

20 This award is against defendants, Fred L. Baker, Michael H. Bertino, Frank Davila II, Lawrence F. Haass, Kim I. Manning, J. Pat O’Connell, J. Brian O’Connor, and B.F. Pitman III, jointly and severally.

937 S.W.2d 496, *533; 1996 Tex. App. LEXIS 3531, **120

now, they base their arguments on two prevailing party fails to make that election, closely related principles of law: (1) that the trial court should use the findings an injured party is entitled to only one affording the [*534] greater recovery and satisfaction for his loss, Stewart Title Guar. render judgment accordingly. Birchfield v. Co. v. Sterling, 822 S.W.2d 1 (Tex. 1991); Texarkana Memorial Hosp., 747 S.W.2d and (2) when an injury consists only of 361, 367 (Tex. 1987); see also Southern economic loss to the subject of a contract, County Mutual Ins. Co. v. First Bank & the action sounds in contract alone. Jim Trust of Groves, 750 S.W.2d 170, 173-74 Walter Homes, Inc. v. Reed, 711 S.W.2d (Tex. 1988) (noting that bank’s pleadings 617, 618 (Tex. 1986). It is the first rule set forth alternative grounds of recovery, which we address here. and that appeals court reversibly erred in rendering a judgment based on both Cumulation of Damages; Double grounds of recovery pled). If the trial court Recovery fails to do so, the appellate court will HN51 The single recovery, or one reform the trial court’s judgment to effect satisfaction rule, is a rule of general such an election. Star Houston, 886 S.W.2d acceptance that an injured party is entitled at 422; Koutzarov, 795 S.W.2d at 322; to one satisfaction for sustained injuries. American Baler Co., 748 S.W.2d at [**122] Stewart Title, 822 S.W.2d at 7. A party who 246, 250. seeks redress under two or more theories In support of their argument that they of recovery for a single wrong must elect, before the judgment is rendered, under should recover for all theories under which which remedy he wishes the court to enter the jury awarded damages, appellees cite a judgment. Star Houston, Inc. v. Shevack, Birchfield v. Texarkana Memorial Hospital, 886 S.W.2d 414, 422 (Tex. App.--Houston 747 S.W.2d 361 (Tex. 1987). In Birchfield, [1st Dist.] 1994), writ denied per curiam, the plaintiffs sued a hospital alleging gross 907 S.W.2d 452 (1995); [**121] American negligence and DTPA 21 violations. Baler Co. v. SRS Systems, Inc., 748 S.W.2d Although the jury was asked only a single 243, 246 (Tex. App.--Houston [1st Dist.] question on actual damages, it awarded 1988, writ denied); Thate v. Texas & Pacific both exemplary damages under the gross Ry. Co., 595 S.W.2d 591, 595 (Tex. Civ. negligence claim and treble damages under App.--Dallas 1980, writ dism’d). An the DTPA claim. Id. at 367. The court held election is not necessary until after the that ″in the absence of separate and distinct verdict. International Piping Systems, Ltd. findings of actual damages on both the acts v. M.M. White & Assoc., Inc., 831 S.W.2d of negligence and the deceptive acts or 444, 452 (Tex. App.--Houston [14th Dist.] practices, an award of exemplary damages 1992, writ denied). But where the and statutory damages would be necessarily 21 Damages under the DTPA are cumulative, and simultaneous recovery with another legal theory is generally allowed. Murphy v.

Seabarge, Ltd., 868 S.W.2d 929, 937 (Tex. App.--Houston [14th Dist.] 1994, writ denied). But, to obtain such a cumulative recovery, separate findings of actual damages for each act complained of are required. Birchfield, 747 S.W.2d at 361, 367.

937 S.W.2d 496, *534; 1996 Tex. App. LEXIS 3531, **122

predicated upon the same finding of actual The damages for the trustees’ and directors’ damages and would amount to a double breach of fiduciary duties are strikingly recovery of punitive damages.″ Id. Fields similar to the contractual damages. The and Lightfoot argue that because they trustees’ breach of fiduciary damages were obtained separate jury findings of actual zero for Lightfoot and $ 200,000.00 for damages on each cause of action, they Fields. Coincidentally, however, this $ were entitled to recover on each cause of 200,000.00 figure is exactly what Fields action. Birchfield, however, simply does testified to as the damages for loss of his not support this conclusion. The case outside business interests. The damages addresses only the issue of when statutory for the directors’ breach of fiduciary duties and exemplary damages are both available were $ 3,000.00 for Lightfoot and $ in DTPA cases. [**123] It does not hold 42,551.59 for Fields. As we have already that jury findings on multiple theories of noted, however, Lightfoot testified that he recovery automatically support duplicate paid $ 3,000.00 in attorneys’ fees to defend awards of actual damages. As we have the lawsuit brought by the RTC. Similarly, already noted, although a party may assert Fields testified that the interest calculated any and all causes of action it may have by the RTC in the original purchase of his against another, it is limited to only one stock was $ 42,551.59. recovery of damages. See Jones v. Rainey, 168 S.W.2d 507, 509-10 (Tex. Civ. [**125] The jury’s answers to the App.--Texarkana 1942, writ ref’d n.r.e.). securities fraud questions are even more intriguing. Lightfoot’s damages, $ A review of the jury’s findings leaves no 253,000.00, correspond precisely to the doubt that the damages awarded by the contractual damages that he received in the trial court were cumulative. Beginning with jury’s answer to question number five. If the contractual damages awarded to Fields one adds Fields’ contractual damages, $ in question six, $ 290,000.00, we note 290,000.00, and his damages for the again that the only evidence which could directors’ breach of fiduciary duties, $ support [**124] this finding is the unpaid 42,551.49, the total is $ 332,551.59. This is balance on his First State note, $ 90,000.00, precisely what the jury awarded him in its plus $ 200,000.00 for the loss of outside answer [*535] to question number six for business interests, as calculated by his statutory securities fraud. expert witness, Dr. Hubbard. As for Lightfoot, the only support in the record A review of the appellees’ pleadings only for the $ 253,000.00 which the jury reinforces our conclusion that their awarded him in question number five is damages are based on the same acts or the unpaid balance on his First State note, omissions. The appellees’ second amended $ 250,000.00, plus $ 3,000.00 which he petition prefaces Fields’ and Lightfoot’s paid as attorneys’ fees to defend the lawsuit actual damages with the statement they are brought by the RTC. based on ″the acts of breach of contract,

937 S.W.2d 496, *535; 1996 Tex. App. LEXIS 3531, **125

misrepresentation, entitled to recover only the damages for negligent

misrepresentation, fraud, breach of breach of contract. Thus, we reverse that fiduciary duty, negligence, portion of the trial court’s judgment which gross

negligence, and securities fraud.″ What awarded Fields and Lightfoot actual and follows, however, is a discussion that looksexemplary damages for breach of fiduciary suspiciously contractual in nature -- duty, and render judgment that [**127] purchase price of the stock; principal and Fields and Lightfoot take nothing for this claim. Our application of the double interest due; and, in the case of Fields, loss of business interests because of the recovery rule also eliminates the exemplary appellants’ failure to discharge his note atdamages which the jury awarded Fields in First State. [**126] Except for the punitiveits answer to the second part of question damages, which the jury awarded only in fourteen. HN52 Punitive damages are not small amounts, there are no damages recoverable for a breach of contract absent peculiar to tort claims of any kind. Indeed,an independent tort with accompanying actual damages. Texas Nat’l Bank v.

each element mentioned is of a type one Karnes, 717 S.W.2d 901, 903 (Tex. 1986)

would normally expect to see in a lawsuit (per curiam). Because of our holding, we for breach of contract. The essence of all do not address the appellants’ points these claims is the failure of the appellants regarding either breach of trustees’ or to pay for Fields’ and Lightfoot’s stock directors’ fiduciary duties -- questions under the contract.

seven through fourteen of the court’s

23

Our review of the pleadings and the record charge. These points are denied as moot. leaves no doubt that the appellees’ claims [**128] Attorneys’ Fees

for breach of contract, breach of trustees’ and directors’ fiduciary duties, and Appellants also argue that the trial court statutory securities fraud are all based on erred in awarding judgment to the appellees the same acts or omissions. We therefore for attorneys fees because, as a matter of sustain the appellants’ points of error law, attorneys’ fees are not recoverable for regarding cumulation of actual damages. any of the appellees’ causes of action 22 Because we have already concluded that except breach of contract. We have already the appellees’ securities fraud claims fail concluded that the appellees’ claims for as a matter of law, and as between the breach of fiduciary duty and securities remaining claims, the damages awarded by fraud cannot stand close scrutiny. This the jury for the breach of contract are leaves only the attorneys’ fees for breach clearly greater, we hold that appellees are of contract, which the appellants argue 22 This includes Baker’s thirty-second and thirty-third points; the Davilas’ ninth point of error, Pitman’s twenty-sixth point; and Haass’

sixth point. 23 This includes points ten through twenty-two, twenty-eight through thirty, in Baker’s brief; points five through seven, fourteen through sixteen, in the brief filed by the Davilas; points ten and eleven, thirteen through sixteen, and twenty-four, in the brief filed by Pitman; and point fourteen in Haass’ brief.

937 S.W.2d 496, *535; 1996 Tex. App. LEXIS 3531, **128

should have been awarded on a prorata Appellant, Lawrence Haass, claims the basis rather than imposed jointly and trial court erred in awarding prejudgment severally. Appellants, however, failed to interest to appellees ″on any of the theories object to questions eighteen and nineteen of recovery advanced.″ Our resolution of of the court’s charge, which asked the jury the appellees’ breach of fiduciary duty and to assess a ″reasonable fee for the necessary securities fraud claims leaves prejudgment services″ of the appellees’ attorneys, stated interest for breach of contract as the only as a percentage of recovery.″ The jury’s remaining issue. answer, forty percent, therefore stands In his appellate brief, Haass’ point is unless there is some indication in the grouped with three other points of error record that appellants preserved the issue which attack attorneys’ fees, exemplary by objection. [**130] damages, and the trial court’s decision to cumulate damages -- issues we Our review of the record finds they made have already discussed. There is no no such objection. The only objection to argument or authority regarding attorneys’ questions eighteen and nineteen was as fees, save for the cryptic statement that follows: ″On the attorney’s fees, there is ″appellees were awarded pre-judgment no evidence that the fee charged for the interest and attorneys’ fees on each necessary services was reasonable. [**129] respective theory,″ an apparent reference Counsel did not give any testimony on to cumulation of damages. Haass’ brief whether that was a [*536] reasonable fee purports to adopt pages 21 - 28 of the brief or not . . .″ There was no mention of filed by the Davilas, and pages 47 and 48 prorating attorneys’ fees, nor did appellants of Baker’s brief. However, the Davilas do submit a question or instruction in that not discuss prejudgment interest for breach regard. HN53 It is well-settled that to of contract, except to remind us the breach preserve error in the charge, a party must of contract claim is barred by limitations make objections to the court’s charge or -- an issue we have already resolved. submit requests for additional questions, Baker says only that prejudgment interest, instructions, or definitions. The test is like attorneys’ fees, should have been whether the party made the trial court prorated. Once again, however, he fails to ″aware of the complaint, timely and tell us how or why it should have been plainly,″ and obtained a ruling. State Dept. prorated, and his brief offers no argument of Highways & Public Transp. v. Payne, or authority on the subject. If in fact, the 838 S.W.2d 235, 241 (Tex. 1992). Because trial court erred in awarding prejudgment appellants failed to do this, we overrule interest for breach of contract, appellees’ their points of error. We now address their only remaining claim, appellants have not remaining arguments. even told us how the trial court erred, much less whether the error ″was Prejudgment Interest reasonably calculated to cause and probably

937 S.W.2d 496, *536; 1996 Tex. App. LEXIS 3531, **130

did cause rendition of an improper The list also contained handwritten judgment in the case.″ [**131] TEX. R. comments in the margins which indicated APP. P. 81(b)(1). Their points, therefore, whether the exhibits had been admitted or are overruled. denied, and a series of initials which seem to indicate during whose testimony they Default Judgment Against Crown were admitted, e.g., ″LF,″ ″RF,″ or ″FB.″ Bancshares Appellants also argue that the trial court The trial judge granted the jury’s request. erred in awarding a default judgment The appellees prepared a revised exhibit against Crown Bancshares, the holding list which contained only the exhibits which company. After the close of the evidence, had been admitted at trial, along with a the appellees’ counsel moved for a brief description of each item. The judgment by default or, in the alternative, appellees submitted their list to the bailiff an instructed verdict against Crown the following morning. The appellants had Bancshares. Crown Bancshares had filed apparently [*537] been given an an answer in the case but made no opportunity to submit their own exhibit appearance in the trial. The court reserved list, but were late in doing so. ruling until after the verdict, at which time it granted the default. We note, however, The bailiff provided the appellees’ exhibit that Crown Bancshares, Inc. has not list to the jury upon receipt. The appellants perfected an appeal from the trial court’s telephoned the court clerk and advised the judgment, only individual members of the court they would be late in submitting their Control Group have done so. Therefore, exhibit list. At that time, they were their points are overruled. informed that the appellees’ list had already been given to the jury. The trial judge, who Jury Deliberations; Motion for Mistrial was not in chambers, was contacted and Appellants also argue that the trial court instructed the bailiff [**133] to withdraw erred in overruling their motions for the appellees’ exhibit list. mistrial based on improper jury communication. Shortly after the jury The appellants moved for mistrial. The received the court’s exhibits, the charge, bailiff testified that he thought he had and retired to deliberate, it asked the trial complied with the court’s instruction and court whether there was an exhibit list that that the appellees’ exhibit list was in the could be used as a reference to locate jury room for approximately fifteen certain exhibits. The only [**132] exhibit minutes before it was removed. The list in existence was appellees’ exhibit appellants argued that the appellees’ number 128, a list which contained all of descriptions of the exhibits contained the appellees’ exhibits that were offered at editorial comments about the exhibits and trial, along with a description of each item. their evidentiary significance which harmed

937 S.W.2d 496, *537; 1996 Tex. App. LEXIS 3531, **133

the appellants’ case. 24 They noted that the cause and probably did cause rendition of appellees’ list omitted exhibit sixteen, the an improper judgment in the case.″ [**135] letter where Frank Davila II had given See TEX. R. APP. P. 81(b)(1). In this case, notice of the June, 1986 Control Group however, neither showing has been made. meeting, a document which was admitted The points are overruled. into evidence. The trial court denied the motion for mistrial. Cumulative Error In one of their final points, appellants [**134] Appellants argue that the exhibit argue that the combined or cumulative list harmed their case because it ″contained effect of the trial court’s alleged errors editorial comments concerning appellees’

deprived them of a fair trial and due opinions as to the effect of the exhibits,″ process of law. HN55 While some errors and because the appellants were never are not considered reversible, all errors given an opportunity to inspect the list considered together could present before it was given the jury. Appellees cumulative error requiring reversal.

maintain the trial court did not abuse its Fibreboard Corp. v. Pool, 813 S.W.2d at discretion in denying the appellants’ motion 695; Klein v. Sporting Goods, Inc., 772 for mistrial because there is no evidence of S.W.2d 173, 179 (Tex. App.--Houston [14th an improper jury communication, or that the brief presence of the exhibit list in the Dist.] 1989, no writ). ″To determine if a cumulation of errors denied the appellants jury room was ″reasonably calculated to their right to a fair trial and due process of cause and probably did cause rendition of law, all errors in the case will be considered an improper″ verdict. We agree.

along with the record as a whole to HN54 Generally, the granting or denying determine if the errors collectively were of a motion for mistrial is reviewed under calculated to cause and probably did cause an abuse of discretion standard. See Ussery the rendition of an improper judgment.″ v. Gray, 804 S.W.2d 232, 237 (Tex. Fibreboard, 813 S.W.2d at 696; TEX. R. App.--Fort Worth 1991, no writ) APP. P. 81(b)(1). Before we may reverse a (disqualification of attorney); Mendoza v. judgment and order a new trial based on Ranger Ins. Co., 753 S.W.2d 779, 781 (Tex. cumulative error, however, we must App.--Fort Worth 1988, writ denied) (jury determine whether the error committed by selection). In addition to showing an abuse the trial court was reasonably calculated to of discretion, appellants must also show cause and probably did cause [**136] the that the trial court’s error, if indeed there rendition of an improper judgment. was error, ″was reasonably calculated to Fibreboard, 813 S.W.2d at 695-96; TEX. 24 For example, they took issue with the title: ″Fields and Lightfoot v. Crown Bank Control Group.″ They also complained of the appellees’ descriptions of exhibits 17 (″O’Connor correspondence to Crown Board of Directors re: Lightfoot shares will soon be ready for sale″), 27 (″Lieb informs Control Group of purchase of Lightfoot and Fields shares″), 45 (″First State Savings (Dennis Jones) letter to Boldrick offers to restructure loans upon: 1) transfer of the stock or a letter instructing First State Savings to transfer stock to Lieb; and 2) payment of all past due interest″), and 84 (″Bertino takes over Fields’ stock in Orion Medical Group″).

937 S.W.2d 496, *537; 1996 Tex. App. LEXIS 3531, **136

R. APP. P. 81(b)(1). Appellants must The purpose of § 115.015 is to assure trust therefore show that, based on the record as beneficiaries that ″their interest will be a whole, but for the alleged errors, the jury protected, [and] that a potential conflict of would have rendered a verdict favorable to interest will not threaten the adequacy of them. [*538] See Fibreboard, 813 S.W.2d their interests’ representation.″ Nacol v. at 695. This they cannot do. McNutt, 797 S.W.2d 153, 154 (Tex.

App.--Houston [14th Dist.] 1990, writ Although appellants attack specific rulings denied). ″The trustee is required to provide of the trial court, e.g., the motion in limine, a list of beneficiaries within eleven days of they do not assert that, but for the the request for such list. A plaintiff satisfies cumulative effect of these errors, the jury the notice requirements of this section would probably have rendered a verdict in when he notifies those persons on the list their favor. Nor do we believe appellants provided by the trustee within the time have met their burden in this regard. We prescribed by the statute.″ Corum have considered all their allegations of Management Co., Inc. v. Aguayo error and we specifically find that the Enterprises, Inc., 755 S.W.2d 895, 900-901 errors committed by the trial court do not (Tex. App.--San Antonio 1988, writ denied). constitute cumulative error. As another court noted, albeit under different The appellees’ original petition and first circumstances: ″there are few errorless amended [**138] petition named only trials, especially those of the length of this ″Rudy″ Davila and Frank Davila II, proceeding.″ Id. at 696. We have carefully individually, as appellants, but the second reviewed the record and each of appellants’ amended original petition, filed on 104 points of error, and we do not find December 14, 1992, added the Rodolfo L. cumulative error that would have probably Davila Estate Trust as a defendant. This caused the jury to render a verdict in favor amended petition announced that, of the appellants. Because we do not find notice is hereby given that the any cumulative error [**137] that probably Trustee, Rodolfo Davila, provide caused the jury to render an improper Appellees a list of all beneficiaries verdict, appellants’ points are overruled.

and their addresses within (10) days Notice Under the Texas Trust Code of the receipt of this AMENDED PETITION. However, to the extent The Davilas also argue that the trial court that the Trustee’s production of a list erred in rendering judgment against the of beneficiaries is not forthcoming Rodolfo L. Davila Estate Trust because or is not timely provided to there is neither factually nor legally Appellees; Appellees request that sufficient evidence that appellees gave the Court enter an order setting a notice to the beneficiaries of the trust deadline, which is more than (30) under § 115.015 of the Texas Trust Code. days prior to the date of judgment,

937 S.W.2d 496, *538; 1996 Tex. App. LEXIS 3531, **138

by which notice must be given to the Cross Claims and Counterclaims for beneficiaries. Contribution and Indemnity There is no indication in the record whether The Davilas also argue that [**140] the the trial court ever entered such an order. trial court erred because it failed to grant The Davilas’ answer informed the trial judgment for them based on their court that ″the appellees have failed to give cross-claims and counterclaims for proper notice to the beneficiaries of the indemnity and contribution. Again, we Rodolfo L. Davila Estate Trust as is disagree. required under the Texas Trust Code.″ In an amended motion for new trial and/or to The Davilas, like the other appellants, filed ″modify, correct and reform the judgment″ cross-claims against their fellow appellants the Davilas again claimed ″there was no and counterclaims against the appellees. evidence that the [**139] appellees and/or The basis for the Davilas’ cross-claim was intervenor [trustee of Fields’ bankruptcy that if any defendant was adjudged liable estate] gave notice to the beneficiaries of to the appellees on the contract claim the Rodolfo L. Davila Estate Trust that is and/or the tort claims, they would be required by the Texas Trust Code.″ entitled to contribution from those co-defendants who were also held Apart from these tantalizing bits of responsible.

information, however, we have no further indication from the parties whether notice The basis for the counterclaims filed by to the trust beneficiaries was required, the Davilas and the other appellants ordered, or even given. There is no mention apparently concerns the appellees’ status of the evidence, arguments, or authorities as members of the Control Group. As that were presented to the trial court Control Group members, the appellees regarding the judgment that was rendered. were responsible, albeit at reduced We also note that although appellees claim ownership, for the purchase of each other’s they ″provided notice to the beneficiaries stock. Since they have not paid their identified by the trustee by certified mail, respective shares of the purchase price for which was received by all identified each other’s stock, they are, according to beneficiaries,″ their brief provides no appellants, liable along with them. citations to the record that would support this assertion. Even so, the burden is on As a practical matter, however, the appellants, not the appellees, to show error appellees did not sell the stock to that ″was reasonably calculated to cause themselves and should not, therefore, be and probably did cause rendition of an liable to themselves for any part of the improper judgment in the case.″ See TEX. appellants’ liability. More to the point, no R. APP. P. 81(b)(1). The Davilas have appellant introduced [**141] evidence or failed to [*539] meet this burden. Their requested jury questions on contribution or point, therefore, is overruled. indemnity issues. No appellant argued at

937 S.W.2d 496, *539; 1996 Tex. App. LEXIS 3531, **141

trial that the appellees’ damages should be the double recovery rule, we deny these reduced or in some way impacted by points of error as moot. indemnity or contribution. It was the appellants’ burden to request jury issues in Conclusion substantially correct wording and to secure In summary, we affirm only that portion of a ruling on them by the trial court. TEX. R.

the trial court’s judgment which awards CIV. P. 278, 279; General Resources liability and damages for breach of Organization, Inc. v. Deadman, 907 S.W.2d contract. Lightfoot is therefore entitled to 22, 33 (Tex. App.--San Antonio 1995), writ $ 253,000.00 damages for breach of denied, No. 95-973- CV, 1996 WL 242513 contract, $ 131,698.63 for prejudgment (1996). They failed to do either. As a result, any counterclaims or cross-claims interest, and $ 153,879.45 in attorneys’ for contribution and indemnity, whatever fees, together with 10 percent postjudgment their basis, were waived. The points are interest. Fields will receive $ 290,000.00 overruled. damages for breach of contract, $ 150,958.90 for prejudgment interest, and $ Haass’ Motion for Directed Verdict & 176,383.56 for attorneys’ fees, plus ten Judgment NOV percent postjudgment interest. These sums are recoverable against all of the appellants, Haass also argues that the trial court erred jointly and severally, except Rodolfo Davila in denying his motion for directed verdict individually. However, we reverse those and for a judgment notwithstanding the parts of the trial court’s judgment which verdict. His appellate brief attacks the award liability and damages for breach of legal and factual basis for three of the trustees’ and directors’ fiduciary duties, appellees’ claims -- breach of fiduciary and for violations of the Texas Securities duty, breach of contract, and statutory Act. We render judgment that Fields and securities fraud. However, since we have Lightfoot take nothing for these claims.

already examined the appellees’ claims for breach of contract and securities fraud, Alma L. Lopez, and since a discussion of the [**142] breach of fiduciary duty claim is Justice unnecessary in view of our application of | | Positive As of: February 19, 2015 10:58 AM EST

SBC Operations, Inc. v. Business Equation, Inc. Court of Appeals of Texas, Fourth District, San Antonio December 19, 2001, Delivered ; December 19, 2001, Filed No. 04-00-00698-CV

Reporter 75 S.W.3d 462; 2001 Tex. App. LEXIS 8358 SBC OPERATIONS, INC. f/k/a rates, awarding damages, one year, Southwestern Bell Communications, Inc. admissibility, econometric and Southwestern Bell Telephone Company, Appellants v. THE BUSINESS Case Summary EQUATION, INC., A California Corporation, Appellee Procedural Posture

Plaintiff advertising company sued Subsequent History: [**1] Petition for defendants, telephone companies, for fraud Review Granted June 13, 2002. Petition and breach of contract. Following a jury for Review Denied November 21, 2002. trial in the 131st Judicial District Court, Petition for review denied by, 08/29/2002 Bexar County, Texas, judgment was entered Motion for rehearing on petition for review in favor of the advertising company. The denied by, 11/21/2002 telephone companies appealed. Prior History: From the 131st Judicial Overview District Court, Bexar County, Texas. Trial Court No. 98-CI-13442. Honorable John The jury found that the telephone D. Gabriel, Judge Presiding. companies breached an oral agreement with the advertiser, and awarded damages.

Disposition: Reversed and rendered. On appeal, the telephone companies argued that the statute of frauds barred such a Core Terms recovery, and the court of appeals agreed.

The advertiser agreed to take over the launch, lost profits, customers, certain functions for the full launch of a telemarketing, calculations, assumptions, discount program. In the November 1997 marketing, projections, mailing, terminal, business strategy presentation, the full reliable, services, estimates, royalties, launch of the program would begin in vendors, unreliable, trial court, damages, April of 1998 and continue through the expenses, statute of frauds, business plan, end of 1999, a period in excess of one year. no evidence, three year, enrollment, costs, Consequently, the contract fell with the Jamie Graham

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statute of frauds and, absent a sufficient its making must be in writing to be writing was unenforceable. The telephone enforceable. Id. If a contract explicitly companies contended there was legally calls for performance over a period longer and factually insufficient evidence to than one year, the mere theoretical support the jury’s award of lost profits and possibility of termination of the contract terminal value. The court of appeals agreed within one year because of death or another and concluded that the no-evidence fortuitous event does not take the contract challenge was dispositive of all remaining out of the statute of frauds. issues on appeal. The expert evidence offered was not sufficient to show lost Civil Procedure > ... > Standards of profits either because of flaws in the Review > Substantial Evidence > General experts’ assumptions, misuse of actual data Overview from a test program or lack of facts, figures, and data from historical HN3 In reviewing a no-evidence challenge, profitability. the appellate court considers only the evidence in the light most favorable to the Outcome finding, and disregards all evidence and The court of appeals reversed the decision inferences to the contrary. If there is a of the trial court and rendered judgment scintilla of evidence to support the finding, for the telephone companies. the finding will be upheld.

LexisNexis® Headnotes Contracts Law > ... > Types of Damages > Compensatory Damages > General Contracts Law > Procedural Matters > Overview Statute of Frauds > General Overview HN4 Loss of profits damages need only be HN1 The statute of frauds provides that proven with reasonable certainty, and the certain promises and agreements are not rule regarding such proof is intended to be enforceable unless they are in writing. Tex. flexible so as to accommodate the various Bus. & Com. Code Ann. § 26.01(a) (Vernon circumstances in which claims for lost 1987). profits arise. What constitutes reasonably certain evidence of lost profits is a fact Contracts Law > Procedural Matters > intensive determination. At a minimum, Statute of Frauds > General Overview opinions or estimates of lost profits must Contracts Law > ... > Statute of Frauds > be based on objective facts, figures, or data Requirements > General Overview from which the amount of lost profits may Contracts Law > ... > Statute of Frauds > be ascertained. Requirements > Performance Contracts Law > ... > Measurement of HN2 An agreement that is not to be Damages > Foreseeable Damages > General performed within one year from the date of Overview

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HN5 The ″reasonable certainty″ test to Judges: Opinion by: Tom Rickhoff, Justice. determine lost profits has clear parameters. Dissenting opinion by: Phil Hardberger, Profits that are largely speculative, as from Chief Justice. Sitting: Phil Hardberger, an activity dependent on uncertain or Chief Justice, Tom Rickhoff, Justice, Sarah changing market conditions, or on chancy B. Duncan, Justice. business opportunities, or on promotion of untested products or entry into unknown or Opinion by: Tom Rickhoff unviable markets, or on the success of a new and unproven enterprise, cannot be Opinion recovered. Factors like these and others that make a business venture risky in [*464] SBC Operations, Inc. (″SBC″) and prospect preclude recovery of lost profits Southwestern Bell Telephone Company in retrospect. (″SBTC″) appeal a judgment rendered on a jury verdict. The jury found SBC liable to Contracts Law > ... > Measurement of The Business Equation, Inc. (″BEI″) for Damages > Foreseeable Damages > General fraud and breach of contract. SBC and Overview SBTC present twelve issues challenging HN6 Where estimates are based on the jury’s liability and damage findings. objective facts or data and there are firm We conclude the evidence is legally reasons to expect a business to yield a insufficient to support the award of lost profit, recovery is not prohibited simply profits and terminal value, and the oral because the enterprise is new. It is the contract between the parties is barred by activity that is the enterprise, and if the the statute of frauds. Therefore, we reverse activity is well-established, the fact that a the judgment and render a take-nothing newly formed entity is engaging in the judgment in favor of SBC and SBTC. activity will not preclude recovery. BACKGROUND Counsel: FOR APPELLANT: Daniel W. In January 1997, John Allshouse presented Lanfear, Hubert W. Green, The Kleberg the idea of a member services program to Law Firm, P.C. San Antonio, TX. SBC. Allshouse and his partner Clark Jacqueline N. Strch, Sharon E. Callaway, ″Dub″ Doyal ultimately formed A&D Crofts & Callaway, P.C. San Antonio, TX. Alliance Resources, Inc. (″ADAR″). The member services program was [**2]

FOR APPELLEE: Renee Fortnach designed to offer discounts on various McElhaney, Rosemarie Kanusky, W. goods and services from participating Wendell Hall, Fulbright & Jaworski, L.L.P., vendors to SBC small and medium size San Antonio, TX. Paul Bartlett, Jr., Law business customers. The program was later Office of Paul N. Bartlett, Jr., San Antonio, given the name BizLink. TX. Richard J. Karam, Law Offices of As ADAR worked to locate vendors to join Richard J. Karam, San Antonio, TX. the program, ADAR discovered that BEI

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was engaged in a similar program on a ADAR - 20%; and BEI - 20%. The goal of much smaller scale. Judy Wallace and the BizLink program was customer Joyce Axtell were the primary officers of retention; however, the financial projections BEI. BEI had contracts in place with showed that BizLink would break-even in vendors that ADAR thought would be 1999 based on an early 1997 beginning good vendors to include in BizLink. On date. April 10, 1997, ADAR and BEI entered A formal Member Services Agreement into a [*465] letter agreement ″to authorize (″MSA″) was entered into between SBC [ADAR] to use agreed upon contracts with and ADAR on August 28, 1997. Although vendors/partners to provide these services BEI had wanted to be a party to the MSA, for a member services program for [a]

it was not made a party to the final client of [ADAR].″ On April 15, 1997, BEI agreement. An appendix of the MSA entered into a non-disclosure agreement describes the services ADAR agreed to with SBC. At that time, BEI first learned provide. ADAR is defined as the Seller in that the program was to be offered to the MSA. The appendix states that BEI SBC’s customers. The non-disclosure did was approved as a subcontractor. On not commit either party to a specific September 15, 1997, ADAR and BEI arrangement but was intended to facilitate entered into a separate contract, [**4]

the free-flow of information during the setting forth their agreement with respect planning and negotiating phases.

to the services each was to provide with As the parties were working on business respect to the BizLink program. The MSA plans for BizLink, SBC was undertaking to was incorporated by reference into the acquire Pacific Bell (″PacBell″). In July agreement between ADAR and BEI. 1997, SBC discussed BizLink [**3] with In November 1997, a meeting was held to PacBell’s marketing team to determine if alleviate the vendors’ concerns regarding BizLink should be offered to PacBell the delay in beginning the program. A business customers. On July 10, 1997, the revised business plan was discussed with a parties met with several of the participating test launch followed by a full launch of vendors to discuss BizLink. BizLink to all SBC/PacBell customers.

The plans included a goal of a 10% The planning documents envisioned that a enrollment rate; i.e., if the direct mailing direct mailing advertising BizLink would was sent to 100,000, the goal was that be sent to all the small and medium size 1,000 customers would enroll. In 1998, the business customers of SBC and PacBell.

goals of BizLink were changed, and SBC The customers would not be charged to management wanted the program to breakjoin BizLink. The vendors would pay even in 1998.

royalties based on the amount of sales to SBC and PacBell customers. The royalties The launch of BizLink involved a three-city would be divided as follows: SBC - 60%; mailing in February 1998: 40,000 mailings

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in Houston, Texas; 14,934 mailings in [**6] LIABILITY FOR BREACH OF Wichita, Kansas; and 25,481 mailings in THE ORAL CALL CENTER Austin, Texas. As the responses were being CONTRACT measured, it appeared that the 10% goal would not be met. As a result, additional In April of 1998, SBC and BEI were marketing efforts were undertaken, modifying the BizLink business plans to find ways to cut expenses and to break-even including a reminder post-card to the same quicker. At a meeting, BEI orally agreed to 80,415 customers, another 8,900 mailings take over the inbound call center for $ to new business customers in a five-state 10,000, plus an additional $ 10,500 per area, inbound telemarketing by SBC month. BEI operated the call center from (offering BizLink [**5] to customers April 1998 through August 1999.

calling for different reasons), outbound telemarketing by SBC (calling and offering The jury found that SBC breached its oral BizLink to customers), an advertisement in agreement with BEI, and awarded $ 94,000 a magazine SBC provided to customers, in damages. On appeal, SBC and SBTC and bill inserts. On March 20, 1998, the argue that the statute of frauds bars such a company SBC paid to perform the direct recovery, and we agree. mailing, RMG, stopped measuring the HN1 The statute of frauds provides that response level. Based on the responses certain promises and agreements are not they measured, only 2.12% of the enforceable unless they are in writing.

customers receiving the direct mail enrolled TEX. BUS. & COM. CODE ANN. § in BizLink.

26.01(a) (Vernon 1987). HN2 An agreement that is not to be performed SBC sent ADAR a formal letter terminating within one year from the date of its making the MSA on May 6, 1998. BEI [*466]

must be in writing to be enforceable. Id. If sued SBC for breach of contract and fraud. a contract explicitly calls for performance A jury found SBC liable and awarded BEI over a period longer than one year, the $ 3.6 million for breach of the MSA, $ mere theoretical possibility of termination 94,000 for breach of an oral call center of the contract within one year because of agreement, $ 4.6 million for fraud, $ 4.75 death or another fortuitous event does not million in exemplary damages, 1 and $ take the contract out of the statute of 1.02 million in attorneys’ fees, with frauds. Young v. Ward, 917 S.W.2d 506, 511 additional attorneys’ fees contingent on [**7] (Tex. App.--Waco 1996, no writ). appeal. BEI elected to recover the damages for the fraud claim. SBC and SBTC timely In this case, BEI agreed to take over the filed this appeal. call center functions for the full launch of BizLink. In the November 1997 business 1 The jury awarded BEI $ 2.85 million in exemplary damages against SBC and $ 1.9 million in exemplary damages against SBTC.

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strategy presentation, the full launch would 1996, writ denied). What constitutes begin in April of 1998 and continue through reasonably certain evidence of lost profits the end of 1999, a period in excess of one is a fact intensive determination. year. The possibility that SBC could Szczepanik, 883 S.W.2d at 649; Samaras, terminate BizLink within one year does 929 S.W.2d at 629. At a minimum, opinions not take the contract out of the statute of or estimates of lost profits must be based frauds. Id. on objective facts, figures, or data from which the amount of lost profits may be SUFFICIENCY OF THE EVIDENCE - ascertained. Szczepanik, 883 S.W.2d at 649. LOST PROFITS AND TERMINAL VALUE HN5 The ″reasonable certainty″ test has SBC and SBTC contend there is legally clear parameters. Texas Instruments, Inc. v. and factually insufficient evidence to Teletron Energy Mgmt., Inc., 877 S.W.2d support the jury’s award of lost profits and 276, 279 (Tex. 1994). Profits that are terminal value. We conclude that the largely speculative, as from an activity no-evidence challenge is dispositive of all dependent on uncertain or changing market remaining issues on appeal. HN3 In conditions, or on chancy business reviewing the no-evidence challenge, we opportunities, or on promotion of untested consider only the evidence in the light products or entry into unknown or unviable most favorable to the finding on lost profits markets, or on the [**9] success of a new and terminal value, and we disregard all and unproven enterprise, cannot be evidence and inferences to the contrary. recovered. Id. Factors like these and others See Vickery v. Vickery, 999 S.W.2d 342, that make a business venture risky in 375-76 (Tex. 1999). If there is a scintilla of prospect preclude recovery of lost profits evidence to support the finding, the finding in retrospect. Id. will be upheld. See id. HN6 Where estimates are based on objective facts or data and there are firm A. The Lost Profits ″Reasonable reasons to expect a business to yield a Certainty″ Test profit, recovery is not prohibited simply HN4 Loss of profits damages [**8] need because the enterprise is new Samaras, only be proven with reasonable certainty, 929 S.W.2d at 629. It is the activity that is and the rule regarding such proof is the enterprise, and if the activity is intended to be flexible so as to well-established, the fact that a newly accommodate the various circumstances in formed entity is engaging in the activity which claims for lost profits arise. will not preclude recovery. Samaras, 929 Szczepanik v. First S. Trust Co., 883 S.W.2d S.W.2d at 629. 648, 649 (Tex. 1994); America’s Favorite BEI called three experts to the stand. Chicken Co. v. Samaras, 929 S.W.2d 617, James Perdiew testified regarding the 629 (Tex. App.-- [*467] San Antonio anticipated revenues and expenses for the

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BizLink program during the three-year to ADAR or BEI for year one, because he term of the MSA; Dr. Harvey Sundel was understood SBC would bear that cost in retained to project the revenues and costs the first year. In years two and three, he associated with the BizLink program over attributed 100% of the marketing cost to three years; and David Marshall testified ADAR and BEI, because SBC would not regarding the terminal value of the BizLink sponsor [**11] the program after year one. program. He did not deduct general and administrative expenses for the three-year B. PERDIEW’S EXPERT OPINION projection. He did not apportion 60% of Perdiew created an econometric model of the royalties due SBC in the first year or BizLink to determine the profits BizLink divide the royalties between ADAR and would have earned had SBC completed the BEI in any of the three years for which he full incremental [**10] launch. The model gave estimates. contains variables based upon SBC’s Perdiew opined that the net value of the representations, including a complete BizLink program for the full three years launch to two million SBC and PacBell [*468] would be $ 14,153,470, based on customers, outbound and inbound $ 3,862,945 in year one; $ 3,642,031 in telemarketing, and a three-year term. year two; and $ 6,648,494 in year three. Among Perdiew’s variables were the response and purchase rates, based on his Although Perdiew has vast experience in experience or vendor information. direct marketing, we conclude that his testimony was not reliable because he did Perdiew’s model has twenty ″drivers″ or not factor in actual data from the test assumptions that underlie his calculations, launch; thus, his testimony provides no including: (1) a 10% response rate; (2) an evidence of lost profits. estimated cost of $ 800 per thousand direct mail pieces that was only charged to the C. SUNDEL’S EXPERT OPINION program in years two and three because Sundel was retained to project the revenues SBC bore the cost in year one; (3) a 15% and costs associated with BizLink over downward adjustment for the loss of SBC three years. Sundel explained his testimony as the program sponsor after year one; (4)

differed from Perdiew’s because Perdiew’s a 20% upward adjustment in year two and assumptions included projections based on three due to improvements made in the Perdiew’s experience while his projections marketing effort through experience; and were based on the information obtained (5) a separate response and activation rate through the test launch of BizLink. Sundel for each vendor based on Perdiew’s was critical of the results reported from the experience and SBC’s estimates.

test launch because the results were only Perdiew’s model also included cost measured for forty-eight days. He [**12] variables. He attributed no marketing costs used the number of activators and the

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average royalty per purchase reported from dollar amount of the royalties for the same the test launch. Sundel applied these period. numbers to a full roll-out of the program to Sundel testified that the information all SBC and PacBell customers, with the regarding operating expenses was provided timing based on the launch strategy by BEI and ADAR and certain items he described in the business plan. He provided based on his experience. Sundel explained that he adjusted some of the included general and administrative figures for use in later mailings because of expenses and an expense to inform the number of non-deliverables and customers that SBC would no longer be subsequent mailing lists would not include associated with BizLink after the full those non-deliverables. Sundel did not launch. He also included a cost for adjust his results for any anticipated purchasing new business lists. growth, although he expected growth. Sundel included telemarketing because Based on the $ 6.61 royalty, Sundel telemarketing was undertaken in the test calculated that the present day value of the launch and the modified business plan total net profit over the three year period included telemarketing. Based on Sundel’s was $ 22,971,315. Based on the $ 3.50 experience in telemarketing, he estimated royalty, Sundel calculated that the present the enrollment rate that would be achieved day value of the total net profit over the by using telemarketing to new connects or three year period was $ 9,546,445. new customers. He explained that the cost Despite the mathematical precision with of the direct mailing was charged to SBC, which Sundel calculated BEI’s lost profits, while the cost of the telemarketing was we conclude there is little, if any, factual charged to BEI and ADAR. Sundel basis for the assumptions underlying many included an attrition rate percentage in his of [**14] his figures. Sundel’s estimates calculations. Sundel testified that he based were not based on the realities of how the purchase rate percentage each month well-or how poorly-the program performed on SBC’s projected 65%, but he reduced during the media test but rather on the estimated percentage to a more assumptions, based on his experience, conservative [**13] 50% based on his about the success of the program’s potential experience. expansion. Sundel provided two calculations. One [*469] Sundel’s projection of future calculation included a $ 3.50 royalty that revenue and expenses was based on was based on SBC’s forecast after the assumptions that the program would media test. The second calculation included continue to attract new enrollees, who a $ 6.61 royalty that was computed by would make increased purchases under the dividing the dollar amount of the actual program. Unfortunately, these assumptions purchases following the test launch by the had no basis in fact. Certainly the

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approximately eight thousand enrollees The jury found that SBC breached the from a mailing of close to 160,000 did not MSA and committed fraud against BEI, justify these assumptions. Further, only and awarded damages. On appeal, SBC 203 purchases resulted from all the and SBTC challenge both the liability mailings and additional contacts through findings and the damage award. the service centers. Although the purchase rate was 2.50%, Sundel’s assumptions The jury was instructed to consider only included a 50% purchase rate, based on his lost profits and terminal value in their experience. calculation of the amount of damages owed for breach of the MSA and fraud. Having Although the concept of an affinity found no evidence to support BEI’s lost program such as BizLink is not new and profits or BizLinks’ terminal value, we the possibility of BizLink’s success was need not detail the lack of evidentiary ably demonstrated by Sundel, the fact of support for the amount of damages awarded its success, based on the media test, was by the jury, [**16] and we do not address very much in doubt. Because Sundel’s SBC and SBTC’s challenge to the liability conclusions about BEI’s lost profits were findings. based on his assumptions, there is no evidence of objective facts, figures, and CONCLUSION [**15] data from historical profitability; thus, Sundel’s testimony provides no We reverse the judgment in favor of BEI evidence of lost profits. and render a take-nothing judgment in favor of SBC and SBTC.

D. Terminal Value Tom Rickhoff, Justice

David Marshall testified regarding the terminal value of the BizLink program. Dissent by: PHIL HARDBERGER Marshall took Sundel’s lost profits projection for the third year of the BizLink Dissent program, less taxes, multiplied this number by three, and arrived at his value of DISSENTING OPINION BizLink’s future income. Because we have determined that Sundel’s projections This case tests the abuse of discretion constitute no evidence of lost profits, we standard for the trial court acting as the conclude that Marshall’s testimony is not ″gatekeeper″ for expert testimony. The sufficiently reliable for purposes of trial court took all the appropriate steps admissibility. Thus, there is no evidence of that a ″gatekeeper″ is supposed to take BizLink’s terminal value. and, in my opinion, decided the admissibility question with ample evidence FRAUD AND BREACH OF MSA to make the court’s decision a reasonable CLAIMS one. I do not think there was an abuse of

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discretion, but my learned colleagues requirements. Id. The trial court has broad disagree, so I must respectfully dissent. I discretion to determine admissibility, and dissent to all of the majority opinion with we will reverse only if there is an abuse of the sole exception of the majority’s that discretion. Id. conclusion that the oral call center contract was barred by the statute of frauds. I agree In E.I. du Pont de Nemours and Co., Inc. v. it was. Robinson, six nonexclusive factors were identified to determine whether an expert’s The majority concludes that the evidence testimony is [**18] reliable. 923 S.W.2d is legally insufficient to support the jury’s 549, 557 (Tex. 1995). However, the Texas damage award. The basis of the majority’s Supreme Court has recognized that the conclusion is the majority’s determination Robinson factors will not apply to all that the testimony of James Perdiew and experts’ testimony. See Gammill v. Jack Dr. Harvey Sundel was unreliable. [*470] Williams Chevrolet, Inc., 972 S.W.2d 713, Perdiew and Dr. Sundel testified regarding 726-27 (Tex. 1998). In those instances, the projected [**17] net profit of the there still must be some basis for the BizLink program had it been fully launched opinion offered to show its reliability, and, as represented by SBC. Because a third ultimately, the trial court must determine expert, David Marshall, used the net profit how to assess reliability. Helena, 47 S.W.3d projections provided by Dr. Sundel in at 499. calculating the terminal value of the B. James Perdiew BizLink program, the majority also rejects James Perdiew was called as an expert to Marshall’s testimony as unreliable. I testify regarding the anticipated revenues respectfully dissent because the trial court and expenses for the BizLink program did not abuse its discretion in determining during the three-year term of the MSA.

that the testimony of Perdiew and Dr.

Perdiew testified that he has been involved Sundel was sufficiently reliable and, in direct marketing for thirty years. For six therefore, was admissible.

years, Perdiew had worked in market A. Standard of Review planning and analysis, advertising and sales promotion at a large department store chain.

A two-part test governs whether expert Perdiew then worked eleven years as a testimony is admissible: (1) the expert national account executive for a company must be qualified; and (2) the testimony that provided consultative direct marketing must be relevant and be based on a reliable services for a variety of direct marketing foundation. Helena Chemical Co. v. firms around the United States. In 1982, Wilkins, 47 S.W.3d 486, 499 (Tex. 2001). Perdiew started his own firm that provides The trial court makes the initial consultative direct marketing services to determination about whether the expert various clients. [**19] Perdiew had and the proffered testimony meet these worked on programs offering a package of

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benefits or services to small businesses was due to the early cut-off of results. similar to the BizLink program. As part of Perdiew explained that the results were his services, Perdiew worked to develop only counted for forty-eight days; therefore, projections by building econometric the actual reported response rate was not a models, which are ″mathematical proper measure. depictions of a business″ that ″try to take (3) Perdiew used higher response rates for into account all of the key things that affect certain vendors based on his experience, a business so that from a mathematical and and Perdiew’s estimation of enrollment financial point of view, [we] can evaluate rate and growth rate were unreliable.

the affect [sic] of changes and so we can project what happens over time.″ Perdiew The higher response rates were based both stated that he uses a 90 percent level of on Perdiew’s experience and SBC’s confidence in his calculations. Perdiew estimates. Just as ″observations of enough testified that his methodology is called bees in various circumstances to show a ″standard procedures″ in the direct pattern would be enough to support [a marketing business. beekeeper’s] opinion,″ Gammill, 972 S.W.2d 713, the measuring of response SBC and SBTC assert numerous specific rates to various vendors in numerous direct reasons to support their contention that marketing programs provides a basis for Perdiew’s opinion was unreliable. The Perdiew to use his experience in providing following summarizes the assertions and a response rate taking into consideration the reason I believe the record does not SBC’s estimates. Furthermore, Perdiew’s support the assertions.

estimation of enrollment rate and growth (1) Perdiew is a marketing expert and, rate were based on his vast experience in therefore, is not qualified to testify as a direct marketing programs. damages expert. (4) Perdiew should not have included The evidence showed that Perdiew has [**21] telemarketing efforts in his thirty years of direct marketing experience calculation. and routinely develops econometric models Perdiew stated that telemarketing was used in the course of his business. Accordingly, in reality, telemarketing was included in Perdiew was qualified [**20] to give his the business plan, and ″part of [Perdiew’s] testimony. role [was] to project how the BizLink [*471] (2) Perdiew used response rates business would have performed if allowed that were based on predictions as opposed to go forward using the best practices in to actual results. direct marketing. That would have included telemarketing.″ This is a sufficient Perdiew explained that the reason he did explanation of Perdiew’s reason for not use the response rate reported by RMG including telemarketing.

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(5) Perdiew failed to allocate the lost taught marketing and been involved in profits between SBC, BEI, and ADAR, marketing research for over 30 years. Dr. failed to include general and administrative Sundel has his own consulting firm which costs, and failed to consider the financial does market research. Dr. Sundel has condition of BEI and ADAR. performed services for numerous industries including telecommunications. Dr. Sundel’s Perdiew explained that the allocation of telecommunications clients include [*472] the lost profits was not within the scope of AT&T, U.S. West, Nextel Communications, his assignment. Perdiew was assigned to and Southwestern Bell. Dr. Sundel’s firm evaluate the BizLink program. Perdiew did performs approximately 200 projects a not evaluate ADAR, BEI or SBC. If BEI or year. Approximately 20% of the projects ADAR had a negative net worth, Perdiew Sundel performs require projections.

explained that ″it would have no bearing on the vitality of the BizLink program’s SBC and SBTC assert numerous [**23] royalties.″ Finally, Perdiew explained that specific criticisms of Dr. Sundel’s ″G&A is allocated to specific programs,″ testimony. The following summarizes the and ″the allocations are arbitrary and assertions and the reason I believe the judgmental within each individual record does not support the assertions. corporation. The direct costs involved with (1) Dr. Sundel has no qualifications in operating a program or a part of a [**22] either cost accounting or in performing a business are necessary to evaluate the damage calculation. feasibility of the business.″ The evidence showed that Dr. Sundel has Considering Perdiew’s testimony as a marketing degrees and wide experience in whole, the trial court did not abuse its conducting marketing research, including discretion in admitting Perdiew’s testimony making projections regarding a project’s because it was sufficiently reliable. revenues and expenses. Perdiew’s econometric model requires (2) Dr. Sundel’s calculations included rates certain assumptions to be made. Perdiew that ″bore no resemblance to actual explained those assumptions and the basis experience.″

for them. In those instances in which the assumptions differed from actual results, Dr. Sundel explained the basis for each Perdiew explained why the data from the figure included in the calculation. The test launch was unreliable. figures were based on either actual results adjusted for information learned in the test C. Dr. Harvey H. Sundel launch that would be applied in the full Dr. Harvey Sundel has a bachelor’s and roll-out or Dr. Sundel’s experience applied master’s degree in marketing. He also has to SBC’s planned projections. a Ph.D in business administration with an (3) Dr. Sundel included telemarketing after emphasis in marketing. Dr. Sundel has SBC was out of the program.

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Dr. Sundel stated that telemarketing was data from the test launch,″ and the used during the test launch and BEI majority’s primary criticism of Dr. Sundel informed him BEI intended to continue is that his conclusions ″were based on his telemarketing efforts. assumptions″ which had ″no basis in fact.″ However, Perdiew explained his ″standard (4) Dr. Sundel did not include an procedures″ methodology [**25] which is adjustment for the advent of the internet.

used in the direct marketing business, and Nothing in the record would support the he further explained the concept of the need for including such an adjustment. econometric model he used. In addition, Dr. Sundel explained that he used the data [**24] (5) Dr. Sundel accepted the expense from the media test that was reliable. Both amounts provided by BEI. Perdiew and Dr. Sundel only made SBC and SBTC provide no record citations assumptions when the media test data was to evidence indicating that those numbers unreliable because SBC cut off the are unreliable. collection of data before the data could reliably measure the response to the (6) Dr. Sundel’s model did not divide the BizLink program. In view of the prior royalties between SBC, BEI, and ADAR. focus group study demonstrating that customers needed time in order to be Dr. Sundel was reviewing the revenues and convinced that the BizLink program did costs for the BizLink Program, not not come with a ″catch,″ SBC was aware determining what each of the participating that the data would not reliably measure companies would receive as a result.

the response to the BizLink program if the Considering Dr. Sundel’s testimony as a results were prematurely cut [*473] off. whole, the trial court did not abuse its Therefore, Perdiew and Dr. Sundel properly discretion in admitting Dr. Sundel’s refused to base their calculations on SBC’s testimony because it was sufficiently reported data because opinions drawn from reliable. Although Dr. Sundel’s calculations unreliable foundational data are likewise required certain assumptions to be made, unreliable. See Helena, 47 S.W.3d at 499. Dr. Sundel explained those assumptions Both Perdiew and Dr. Sundel demonstrated and the basis for them. In those instances that their opinions comported with in which the assumptions differed from applicable professional standards and had actual results, Dr. Sundel explained why a reliable basis in the knowledge and the data from the test launch was unreliable experience of their marketing discipline. or adjusted. See id.

Because the trial court did not abuse its D. Conclusion discretion [**26] in admitting the testimony The majority’s primary criticism of of Perdiew and Dr. Sundel, their testimony Perdiew is that he ″did not factor in actual was more than a scintilla of evidence to

75 S.W.3d 462, *473; 2001 Tex. App. LEXIS 8358, **26

support the jury’s damage award. I would PHIL HARDBERGER, affirm the jury’s verdict with the exception of the damages awarded for the breach of CHIEF JUSTICE the oral call center contract.

| | Positive As of: February 20, 2015 2:17 PM EST

Berryman’s South Fork, Inc. v. J. Baxter Brinkmann Int’l Corp.

Court of Appeals of Texas, Fifth District, Dallas November 20, 2013, Opinion Filed No. 05-12-00492-CV

Reporter 418 S.W.3d 172; 2013 Tex. App. LEXIS 14226; 2013 WL 6097965 BERRYMAN’S SOUTH FORK, INC. Case Summary AND RICHARD BERRYMAN, Appellants v. J. BAXTER BRINKMANN Overview INTERNATIONAL CORPORATION, THE BRINKMANN CORPORATION HOLDINGS: [1]-Appellees did not meet AND J. BAXTER BRINKMANN, their summary judgment burden as to their Appellees breach of contract claim, for purposes of Tex. R. Civ. P. 166a(c); [2]-The court has Subsequent History: Petition for review found no authority for the position that a denied by Berryman’s S. Fork v. J. Baxter modification not capable of being Brinkmann Int’l Corp., 2014 Tex. LEXIS performed within one year falls outside the 333 (Tex., Apr. 25, 2014)

statute of frauds if it constitutes an Prior History: [**1] On Appeal from the immaterial change to the original contract, 192nd Judicial District Court, Dallas for purposes of Tex. Bus. & Com. Code County, Texas. Trial Court Cause No. Ann. § 26.01(b)(6); [3]-The court thus 08-05771. could not agree that the materiality of a modification had any bearing on the Core Terms application of the statute of frauds in this case; [4]-Appellants’ argument as to part appellees, trial court, appellants’, damages, performance contained no other analysis attorneys’, statute of frauds, summary and they did not meet their burden to raise judgment, expenses, termination, pet, a fact issue as to partial performance, and reimburse, declaration, declaratory thus the requirements of the statute of judgment, costs, Oil, plaintiffs’, parties, frauds applied to the alleged agreement to one year, appellant contention, appellants reimburse expenses. assert, record shows, summary judgment motion, breach of contract, modification, Outcome breach of contract claim, defendants’, segregated, renewal, trial court’s judgment, Judgment reversed in part, rendered in granting summary judgment part, and otherwise affirmed.

Jamie Graham

418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1

LexisNexis® Headnotes Civil Procedure > ... > Summary Judgment > Burdens of Proof > Movant Civil Procedure > Appeals > Summary Persuasion & Proof Judgment Review > Appealability Civil Procedure > ... > Summary Civil Procedure > Appeals > Summary Judgment > Burdens of Proof > Nonmovant Judgment Review > Standards of Review Persuasion & Proof Civil Procedure > ... > Summary HN1 The appellate court reviews a Judgment > Evidentiary Considerations > summary judgment de novo to determine Scintilla Rule whether a party’s right to prevail is Civil Procedure > ... > Summary established as a matter of law. The appellate Judgment > Entitlement as Matter of Law > court reviews the evidence presented by Genuine Disputes the motion and response in the light most favorable to the party against whom the HN2 A party seeking a no-evidence motion for summary judgment must assert that no summary judgment was rendered, crediting evidence exists as to one or more of the evidence favorable to that party if essential elements of the nonmovant’s reasonable jurors could, and disregarding claim on which the nonmovant would have contrary evidence unless reasonable jurors the burden of proof. Tex. R. Civ. P. 166a(i). could not. The appellate court must take The burden then shifts to the nonmovant to evidence favorable to the nonmovant as produce more than a scintilla of summary true and indulge every reasonable inference judgment evidence that raises a genuine and resolve any doubts in favor of the issue of material fact as to each essential nonmovant. When summary judgment is element identified in the motion. Tex. R. sought and granted on multiple grounds, Civ. P. 166a(i). More than a scintilla of the appellate court will affirm if any of the evidence exists if the evidence would allow grounds is meritorious. Further, with the reasonable and fair-minded people to reach exception of an attack on the legal the verdict under review. sufficiency of the grounds expressly raised Civil Procedure > ... > Defenses, Demurrers by the movant in his motion for summary & Objections > Affirmative Defenses > judgment, issues not expressly presented General Overview to the trial court by written motion, answer, Civil Procedure > Appeals > Summary or other response shall not be considered Judgment Review > Standards of Review on appeal as grounds for reversal. Tex. R. Civ. P. 166a(c). Civil Procedure > ... > Summary Judgment > Burdens of Proof > Movant Civil Procedure > ... > Summary Persuasion & Proof Judgment > Evidentiary Considerations > Civil Procedure > ... > Summary Absence of Essential Element Judgment > Burdens of Proof > Nonmovant Persuasion & Proof

418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1

Civil Procedure > ... > Summary and (4) damages sustained by the plaintiff Judgment > Entitlement as Matter of Law > as a result of the breach. Where damages General Overview evidence does not relate to the amount of HN3 In a traditional summary judgment, damages sustained under the proper the party moving for summary judgment measure of damages, that evidence is both has the burden to establish that there is no irrelevant and legally insufficient to support genuine issue of material fact and it is a judgment. entitled to judgment as a matter of law.

Civil Procedure > Appeals > Summary Tex. R. Civ. P. 166a(c). When reviewing a Judgment Review > Appealability traditional summary judgment granted in favor of the defendant, the appellate court Civil Procedure > ... > Standards of determines whether the defendant Review > Substantial Evidence > conclusively disproved at least one element Sufficiency of Evidence of the plaintiff’s claim or conclusively Evidence > ... > Procedural Matters > proved every element of an affirmative Objections & Offers of Proof > Objections defense. A matter is conclusively HN5 A party may challenge the legal established if ordinary minds cannot differ as to the conclusion to be drawn from thesufficiency of the evidence even in the absence of any objection to its evidence. If the movant satisfies its burden, the burden shifts to the nonmovant to admissibility. Further, an attack on the preclude summary judgment by presenting legal sufficiency of the grounds expressly evidence that raises a genuine issue of raised by the movant in his motion for material fact. summary judgment is an exception to the general rule that issues not expressly Civil Procedure > Remedies > Damages > presented to the trial court by written General Overview motion, answer, or other response shall not Civil Procedure > ... > Standards of be considered on appeal as grounds for Review > Substantial Evidence > reversal. Tex. R. Civ. P. 166a(c). Sufficiency of Evidence Contracts Law > Breach > Breach of Contracts Law > Remedies > Specific Contract Actions > Elements of Contract Performance Claims Contracts Law > Types of Contracts > Evidence > Relevance > Relevant Evidence Personal Service Agreements

HN4 A successful breach of contract claim HN6 A contract for personal services is requires proof of the following elements: not specifically enforceable. (1) a valid contract; (2) performance or Contracts Law > Standards of tendered performance by the plaintiff; (3)

Performance > General Overview breach of the contract by the defendant;

418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1

Contracts Law > ... > Types of Damages > Evidence > ... > Exemptions > Statements Compensatory Damages > General by Party Opponents > General Overview Overview HN10 Tex. R. Evid. 801(e)(2)(D) provides Contracts Law > Remedies > Specific a hearsay exception for a statement by a Performance party’s agent or servant concerning a matter within the scope of agency or employment HN7 Except in cases where specific made during the existence of the performance is proper, a non-repudiating relationship. Rule 801(e)(2)(D) provides a party cannot afterwards go on, and thereby hearsay exception for certain statements increase the damages, and then recover by a party’s agent or servant. such damages from the other party.

Contracts Law > ... > Statute of Frauds > Contracts Law > ... > Estoppel > Equitable Requirements > Signatures Estoppel > General Overview Contracts Law > ... > Statute of Frauds > Contracts Law > Defenses > Volunteers Requirements > Writings

HN8 The court has found no authority to Evidence > Burdens of Proof > Allocation support the assertion that the voluntary HN11 Under the statute of frauds, certain payment rule is a sub-defense of a general contracts are not enforceable unless they equitable estoppel defense. are in writing and signed by the person against whom enforcement of the contract Civil Procedure > Appeals > Summary is sought. Tex. Bus. & Com. Code Ann. § Judgment Review > Appealability 26.01(a) (2009). The party pleading the Civil Procedure > Appeals > Summary statute of frauds bears the burden of Judgment Review > Standards of Review establishing its applicability. Civil Procedure > Judgments > Summary Contracts Law > ... > Statute of Frauds > Judgment > Evidentiary Considerations Exceptions > General Overview HN9 The appellate court reviews a trial Contracts Law > ... > Statute of Frauds > court’s ruling that sustains an objection to Requirements > Signatures summary judgment evidence for an abuse Contracts Law > ... > Statute of Frauds > of discretion. When an appellee urges Requirements > Writings

several objections to a particular piece of evidence and, on appeal, the appellant HN12 The statute of frauds applies to an complains of its exclusion on only one of agreement which is not to be performed those bases, the appellant has waived that within one year from the date of the issue for appeal because he has not making of the agreement. Tex. Bus. & challenged all possible grounds for the Com. Code Ann. § 26.01(b)(6). When a trial court’s ruling that sustained the promise or agreement, either by its terms objection. or by the nature of the required acts,

418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1

cannot be completed within one year, it HN14 Under the partial performance falls within the statute of frauds and is exception to the statute of frauds, contracts unenforceable unless it is in writing and that have been partly performed, but do not signed by the person to be charged. Tex. meet the requirements of the statute of Bus. & Com. Code Ann. § 26.01(a), (b)(6). frauds, may be enforced in equity if denial If the agreement is capable of being of enforcement would amount to a virtual performed within one year, it is not within fraud. The partial performance must be the statute of frauds. The question of unequivocally referable to the agreement whether an agreement falls within the and corroborative of the fact that a contract statute of frauds is one of law. However, actually was made. The performance a whether the circumstances of a particular party relies on to remove a parol agreement case fall within an exception to the statutefrom the statute of frauds must be such as of frauds is generally a question of fact. could have been done with no other design than to fulfill the particular agreement Contracts Law > ... > Statute of Frauds > sought to be enforced. Without such Exceptions > General Overview precision, the acts of performance do not Contracts Law > ... > Statute of Frauds > tend to prove the existence of the parol Requirements > Writings agreement sought to be enforced. HN13 In deciding whether an agreement is Contracts Law > ... > Statute of Frauds > capable of being performed within one Exceptions > General Overview year, the court compares the date of the agreement to the date when the HN15 The court has found no authority to performance under the agreement is to be support the position that a modification not completed. If there is a year or more capable of being performed within one between those two reference points, a year falls outside the statute of frauds if it writing is required to render the agreement constitutes an immaterial change to the enforceable. When the date performance original contract. Tex. Bus. & Com. Code will be completed cannot be readily Ann. § 26.01(b)(6). ascertained, the law provides that if Civil Procedure > Judgments > Summary performance could conceivably be Judgment > Evidentiary Considerations completed within one year of the agreement’s making, a writing is not HN16 A party submitting summary required to enforce it. If a contract can, judgment evidence must specifically from the terms of the agreement, be identify the supporting proof on file that it performed within one year it is not within seeks to have considered by the trial court. the Statute of Frauds.

Civil Procedure > ... > Declaratory Contracts Law > ... > Statute of Frauds > Judgments > State Declaratory Judgments > Exceptions > Partial Performance Scope of Declaratory Judgments

418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1

HN17 See Tex. Civ. Prac. & Rem. Code as are equitable and just. Tex. Civ. Prac. & Ann. § 37.004(a). Rem. Code Ann. § 37.009.

Civil Procedure > ... > Declaratory Civil Procedure > ... > Costs & Attorney Judgments > State Declaratory Judgments > Fees > Attorney Fees & Expenses > General Appellate Review Overview HN18 The appellate court reviews Evidence > Burdens of Proof > Allocation declaratory judgments under the same standards as other judgments. Tex. Civ. HN20 If any attorneys’ fees relate solely Prac. & Rem. Code Ann. § 37.010. The to a claim for which such fees are appellate court looks to the procedure used unrecoverable, a claimant must segregate to resolve the issue at trial to determine the recoverable from unrecoverable fees. It is standard of review on appeal. only when discrete legal services advance both a recoverable and unrecoverable claim Civil Procedure > ... > Declaratory that they are so intertwined that they need Judgments > State Declaratory Judgments > not be segregated. This standard does not Scope of Declaratory Judgments require more precise proof for attorneys’

Civil Procedure > ... > Attorney Fees & fees than for any other claims or expense. Expenses > Basis of Recovery > Statutory To meet a party’s burden to segregate its Awards attorneys’ fees, it is sufficient to submit to Contracts Law > Breach > Breach of the fact-finder testimony from a party’s Contract Actions > General Overview attorney concerning the percentage of hours Contracts Law > Contract Conditions & that related solely to a claim for which fees Provisions > General Overview are not recoverable. HN19 Texas law does not allow recovery Civil Procedure > ... > Costs & Attorney of attorneys’ fees unless authorized by Fees > Attorney Fees & Expenses > General statute or contract. A person may recover Overview

reasonable attorneys’ fees from an individual or corporation, in addition to the Civil Procedure > Appeals > Reviewability amount of a valid claim and costs, if the of Lower Court Decisions > Preservation claim is for an oral or written contract. Tex. for Review Civ. Prac. & Rem. Code Ann. § 38.001(8). Evidence > ... > Procedural Matters > To qualify for fees under § 38.001(8), a Objections & Offers of Proof > Objections litigant must prevail on a breach of contract claim and recover damages. Additionally, HN21 If no one objects to the fact that the under Tex. Civ. Prac. & Rem. Code Ann. § attorney’s fees are not segregated as to 37.009, the trial court in a declaratory specific claims, then the objection is judgment proceeding may award waived. reasonable and necessary attorney’s fees

418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1

Civil Procedure > ... > Declaratory Civil Procedure > Pleading & Practice > Judgments > State Declaratory Judgments > Pleadings > General Overview Appellate Review Civil Procedure > Judgments > Entry of Civil Procedure > ... > Attorney Fees & Judgments > General Overview Expenses > Basis of Recovery > Statutory Awards HN24 Tex. R. Civ. P. 301 provides that a judgment of trial court shall conform to the Civil Procedure > Appeals > Remands pleadings.

HN22 After a declaratory judgment is reversed on appeal, an award of attorneys’ Counsel: For Appellants: F. Leighton fees may no longer be equitable and just. Durham, Dallas, TX; Kirk L. Pittard, Therefore, when the appellate court Dallas, TX; Christy Denison Wollin, Dallas, reverses a declaratory judgment and the TX; Peter M. Kelly, Dallas, TX; Sean trial court awarded attorneys’ fees to the Reed Cox, Dallas, TX; Barbara Thompson party who prevailed at trial, the appellate Hale, Dallas, TX; Thad D. Spalding, Kelly, court may remand the attorneys’ fee award Durham & Pittard, LLP, Dallas, TX. for reconsideration in light of our disposition on appeal. The appellate court For Appellees: Michael G. Brown, Figari is not required to do so, however. Davenport, LLP, Dallas, TX; Amber Grand, Figari & Davenport, LLP, Dallas, TX.

Civil Procedure > ... > Costs & Attorney Fees > Costs > General Overview Judges: Before Justices FitzGerald, Lang, Civil Procedure > Remedies > Judgment and Myers. DOUGLAS S. LANG. Interest > Postjudgment Interest Opinion by: DOUGLAS S. LANG HN23 Under Tex. R. Civ. P. 559, the successful party in the suit shall recover Opinion his costs, except in cases where it is otherwise expressly provided. Tex. R. Civ. [*178] This case arises from a written P. 559. Further, Tex. Fin. Code Ann. § contract (the ″Agreement″) under which 304.003(a) (2006) provides in part that a appellee J. Baxter Brinkmann International money judgment of a court of this state, Corporation (″JBBI″) employed appellant including court costs awarded in the Berryman’s South Fork, Inc. (″BSF″) for judgment and prejudgment interest, if any, the purpose of ″engaging the full-time earns postjudgment interest at the rate services″ of appellant Richard Berryman determined under this section. Tex. Fin. (″Berryman″) as a ″sales and marketing Code Ann. § 304.003(a) (2006). representative.″ Appellees JBBI and The Postjudgment interest accrues on entire Brinkmann Corporation (″TBC″) filed this amount of final judgment, including court lawsuit against appellants asserting claims costs and prejudgment interest, from date for, in part, declaratory judgment, breach of judgment until paid. of contract, and money had and received.

418 S.W.3d 172, *178; 2013 Tex. App. LEXIS 14226, **1

Appellants (1) counterclaimed against JBBI Berryman’s affidavit constituted an abuse for, in part, breach of an alleged contract to of discretion. pay Berryman’s expenses and (2) asserted claims against J. Baxter Brinkmann, For the reasons below, on this voluminous individually, (″Brinkmann″) as a third party summary judgment record, we reverse the defendant.1 Appellees filed a motion for trial court’s [**3] judgment in part, render (1) traditional summary judgment in their judgment in part, and otherwise affirm the favor on the claims asserted by JBBI and trial court’s judgment. TBC and appellants’ counterclaims and (2) no-evidence summary judgment in their I. FACTUAL AND PROCEDURAL favor on appellants’ counterclaims. The BACKGROUND trial court signed a final judgment in which The Agreement was executed on July 2, [**2] it (1) sustained appellees’ objections [*179] 2001.2 It stated in part that JBBI to an affidavit of Berryman filed by ″desires to employ the services of appellants as summary judgment evidence, [Berryman], through [BSF], for the benefit (2) granted appellees’ motion for summary of [JBBI] and its affiliated companies.″ judgment, (3) made declarations respecting Additionally, the Agreement provided in the Agreement, and (4) awarded appellees part

damages, attorneys’ fees, interest, and costs of court. 2. Compensation In eleven issues on appeal, appellants In exchange for the services to be contend the trial court erred because (1) rendered hereunder by [Berryman], the evidence raises fact issues as to the [JBBI] shall pay, or cause to be paid, parties’ claims; (2) the declaratory relief the sum of one million dollars per requested by JBBI and TBC was year in equal monthly installments. . ″redundant with″ their breach of contract .. claim and therefore was ″barred as a matter 3. Term

of law″; (3) appellees ″failed to conclusively prove the reasonableness and This Agreement is for a term of five necessity of the claimed [attorneys’] fees years starting August 1, 2001 and is by not segregating fees″; (4) Brinkmann, to be renewed annually thereafter individually, did not recover on any cause unless either parties [sic] gives notice of action and therefore should not have in writing 90 days prior to the end of been awarded damages, attorneys’ fees, any anniversary date. interest, or costs of court; and (5) the Notwithstanding the five year fixed sustaining of appellees’ objections to term, [JBBI] may terminate this 1 In this opinion, unless otherwise specified, ″appellees″ refers to, collectively, JBBI, TBC, and Brinkmann.

2 As described above, the parties to the Agreement were JBBI and BSF. Additionally, Berryman, individually, [**4] guaranteed the obligations of BSF.

418 S.W.3d 172, *179; 2013 Tex. App. LEXIS 14226, **3

Agreement and have no further their required duties under the terms of the payment obligation if [Berryman] is [Agreement]″; (2) that plaintiffs have not unable to perform full-time services violated the terms of their ″agreements or due to death or disability or has obligations, if any,″ to defendants; and (3) failed to carry out the duties of a ″other declaratory relief as necessary to senior sales and marketing terminate the controversy and remove representative in accord with general uncertainty relating to the [plaintiffs’] industry standards. alleged remaining rights and obligations to [d]efendants, if any.″ Further, plaintiffs Approximately seven years after the requested ″reasonable and necessary Agreement was executed, an attorney for attorneys’ fees incurred herein and on any appellants sent JBBI a letter dated May 20, appeal.″ 2008. In that letter, appellants’ attorney stated that as a result of actions taken by In a letter to defendants dated August 29, JBBI, ″including, but not limited to, making 2008, counsel for JBBI stated (1) defamatory statements″ to JBBI employees defendants had failed to perform as and others, JBBI had ″substantially obligated under the Agreement ″for some undermined [Berryman’s] ability to months now″ and (2) JBBI ″hereby perform his job duties and responsibilities″ terminates the Agreement as permitted in and therefore had ″constructively Section 3 and as otherwise allowed by terminated [Berryman] and breached the law.″ Subsequent to that letter, plaintiffs implied covenant of good faith and fair filed supplements to their original petition dealing with respect to the Agreement.″ in which they added claims for breach of Further, appellants’ attorney (1) stated JBBI contract and ″money had and had ″failed and refused″ to reimburse received/unjust [*180] enrichment.″ In Berryman for approximately $160,000 in their breach of contract claim, plaintiffs expenses that JBBI was ″obligated to pay″ alleged in part that defendants ″failed and pursuant to ″Mr. Berryman’s contract″ with refused and continue to fail and refuse to JBBI and (2) requested that JBBI contact fulfill their obligations under the him to ″negotiate a fair and equitable [Agreement],″ thus entitling plaintiffs to severance for Mr. Berryman.″ damages and attorneys’ fees. In their claim [**6] for ″money had and received/unjust On May 23, 2008, JBBI and TBC enrichment,″ plaintiffs asserted in part that (″plaintiffs″) filed this lawsuit against BSF ″during the May 2008 through August and Berryman (″defendants″). In their 2008 time period,″ defendants ″received original petition, plaintiffs asserted a claim monies they were not entitled to keep and for ″declaratory judgment relief.″ to which they have been unjustly enriched.″ Specifically, plaintiffs requested in part Pursuant to that claim, plaintiffs sought to that the trial court declare (1) ″whether recover approximately $334,000 received [d]efendants [**5] have carried on its or by defendants during that time period,

418 S.W.3d 172, *180; 2013 Tex. App. LEXIS 14226, **6

including (1) ″$291,666.66 paid during a contract, money had and received, and time period [defendants] performed no declaratory judgment claims and work for [plaintiffs]″ and (2) approximately defendants’ counterclaims and (2) $42,000 in ″Airplane Allowance payments″ no-evidence summary judgment on made to defendants pursuant to a ″separate defendants’ counterclaims. In their motion, verbal agreement″ that plaintiffs would plaintiffs stated in part (1) ″[b]ased on ″provide [d]efendants an upfront allowance [d]efendants’ breach of contract, [p]laintiffs for expenses (up to $12,000 per month) are entitled to elect as their remedy the [d]efendants incurred related to the recovery of the largest damage amount operation of an aircraft to be used to assist suffered due to [d]efendants’ breach, such [d]efendants in performing their duties amount being the $291,666,67 paid from owed to [p]laintiffs″ (the ″Airplane May through August 2008, plus attorney’s Allowance″). fees totaling $160,948.00″; (2) to ″prevent unjust enrichment,″ defendants must return Defendants filed a general denial answer to plaintiffs ″overpayments″ of and asserted several affirmative defenses, ″$291.666.67 for work not performed″3 including ″equitable estoppel.″ and ″$41,999.96 in Airplane Allowance Additionally, defendants asserted (1) a [**8] payments″; (3) defendants ″ceased counterclaim against JBBI for ″breach of performing under the Agreement in at least contract relating to reimbursement of May of 2008, and thereby materially expenses,″ in which defendants contended breached same″; (4) ″[t]he Agreement was they were owed $157,600.83 in ″expenses terminable from [May of 2008] forward by not paid″ by JBBI; [**7] and (2) claims for [p]laintiffs, and no further obligations are business disparagement, defamation, and due under the Agreement following its exemplary damages against Brinkmann as lawful termination in August 2008″; (5) a third-party defendant. ″[n]otwithstanding [p]laintiffs’ proper JBBI and Brinkmann filed separate general termination of Agreement for cause, the denial answers to defendants’ Agreement actually expired on August 1, counterclaims. Additionally, JBBI asserted 2008″; and (6) JBBI did not breach the several affirmative defenses, including the Agreement or ″any ancillary agreement to statute of frauds. Further, in Brinkmann’s pay business expenses.″ prayer for relief in his answer, he requested, The appendix filed in support of the in part, that he recover costs of court. summary judgment motion included, in part (1) excerpts from depositions of On December 12, 2011, plaintiffs and Berryman and Brinkmann; (2) an affidavit Brinkmann filed a motion for (1) traditional of Brinkmann; (3) copies of the Agreement summary judgment on plaintiffs’ breach of and correspondence described above; and 3 Plaintiffs stated in their brief in support of their motion for summary judgment that they ″will only be entitled to collect and will only seek the $291,666.67 once.″

418 S.W.3d 172, *180; 2013 Tex. App. LEXIS 14226, **10

(4) an affidavit of plaintiffs’ counsel [**10] to receive and accept checks from respecting attorneys’ fees. Brinkmann.

Berryman stated in part in his deposition Brinkmann testified in part in his deposition that (1) his job responsibilities pursuant to and affidavit (1) although reimbursement the Agreement included preparing for and of Berryman’s expenses was not part of attending meetings with retailers’ [*181] ″the deal,″ he reimbursed Berryman for representatives to solicit [**9] orders for various expenses starting in 2001 and continuing until at least 2006; (2)

JBBI’s products, communicating ″almost defendants ceased performing their on a daily basis″ with Brinkmann, and required duties under the Agreement ″as participating in the ″finalization″ process early as the first half of May 2008″; (3)

respecting retailers’ orders; (2) during two after defendants ceased performing under separate meetings in 2006 and 2008, the Agreement, JBBI ″hoped [d]efendants Brinkmann complained in front of retailers’

would resume performance″ and paid BSF representatives that Berryman ″didn’t $41,999.96 in airplane allowance payments work″ and buyers did not want to do and an additional sum of more than business with Berryman; (3) Berryman $291,666.67; and (4) BSF and Berryman was still able to perform his duties after have not returned those amounts to Brinkmann’s negative comments were plaintiffs. made; (4) in approximately April 2008, JBBI hired Mike Bush; (5) at the time Finally, counsel for plaintiffs testified in Bush was hired, Bush told Berryman that part in his affidavit (1) at least 85%, or Berryman was ″being replaced″ by Bush; $127,073, of the attorneys’ fees and (6) Berryman was not replaced by Bush; paralegal fees incurred by plaintiffs so far (7) there is no written agreement for ″are recoverable against the [d]efendants reimbursement of expenses; (8) at in this lawsuit″; (2) ″it is reasonable to approximately the same time the conclude that [plaintiffs’] counsel’s Agreement was executed in 2001, activities cannot all be segregated by task Berryman and Brinkmann entered into an and as such are dependent on the same or oral agreement that Berryman’s business similar sets of facts and circumstances, are expenses would be reimbursed by JBBI; part of many of the same tasks, and are (9) after May 20, 2008, Berryman did not therefore so intertwined that they cannot return Brinkmann’s calls, with one be so separated [**11] or segregated″; (3) exception in which he told Brinkmann his a fair estimate of additional attorneys’ fees attorney had advised him not to speak with likely be incurred by plaintiffs through the Brinkmann; did not participate in hearing on plaintiffs’ motion for summary ″finalization″ negotiations; and did not judgment to advance plaintiffs’ ″affirmative attend any meetings; and (10) from May claims″ against defendants is at least 2008 to August 2008, Berryman continued $33,875; and (4) in the event of appeal of

418 S.W.3d 172, *181; 2013 Tex. App. LEXIS 14226, **11

plaintiffs’ ″affirmative claims,″ plaintiffs ″outstanding″ expenses incurred by will likely incur at least an additional Berryman from 2006 to 2008. $35,000 in fees in defense of an appeal to Plaintiffs filed (1) ″objections to and the Dallas Court of Appeals, $20,000 in motion to strike defendants’ ’evidence’ in fees in briefing an appeal to the Texas support of their amended response″ and (2)

Supreme Court, and $15,000 in fees if the supplemental objections to defendants’

Texas Supreme Court grants a hearing on summary judgment evidence. Therein, such appeal.

plaintiffs contended Berryman’s affidavit In their amended response to plaintiff’s (1) contains irrelevant testimony; (2) lacks motion for summary judgment, defendants necessary attachments; (3) is a ″sham argued in part (1) the agreement to pay affidavit″ as to specified statements of expenses was an enforceable ″oral Berryman in paragraphs 9, 12, 15, 16, 19, modification″ and/or ″implied in fact 22, 24, and 28; (4) ″fails to set forth actual modification″ of the ″original contract″ facts based upon Berryman’s personal entered into between the parties on July 2, knowledge″; and (5) ″cites Berryman’s 2001; (2) Berryman was justified in [**13] conclusory personal beliefs based discontinuing performance under ″the upon conjecture and hearsay.″ Specifically, written contract and oral modification of in an objection to Berryman’s affidavit ″as the contract″ in May 2008 because he was a whole,″ plaintiffs stated in part relieved of performance by plaintiffs’ ″material breach,″ i.e. plaintiffs’ Berryman amended his [affidavit] to ″slanderous statements,″ hiring of Bush, assert that he possessed personal and failure to pay Berryman’s expenses; knowledge of all of ″the facts set (3) equitable relief is not [**12] warranted forth″ in the [affidavit], based upon because Berryman received and accepted (1) his conversations with the sums paid to him as part of the damages [Brinkmann], (2) conversations with he is entitled to receive as a [*182] result unidentified employees of JBBI, (3) of plaintiffs’ ″material breach″ of the the unattached ″business records″ of ″contract between the parties″; and (4) the JBBI . . . and (4) the unattached statute of frauds does not apply to the oral ″business records″ of [BSF]. agreement to reimburse expenses because Berryman cannot rely on hearsay to ″each of the claims was capable of being demonstrate his ″personal performed within one year″ and, knowledge.″ alternatively, ″part performance by the (citation to record omitted).

parties″ takes the oral agreement outside the statute of frauds. Attachments to Additionally, plaintiffs filed a reply to defendants’ response included an affidavit defendants’ response to the motion for of Berryman and an ″Expense Report summary judgment. Plaintiffs asserted in Tracking Log″ that showed $157,600.83 in part (1) defendants’ election to continue

418 S.W.3d 172, *182; 2013 Tex. App. LEXIS 14226, **13

performance after plaintiffs’ alleged severally,″ (1) ″actual damages in the nonpayment of expenses starting in 2006 amount of $333,666.63,″ which ″includes precluded any excuse for defendants’ $291,666.67 for contract payments made terminating performance; (2) defendants’ by Plaintiffs to Defendants when work was response did not raise a legal claim or fact not being performed by Defendants, and issue respecting defendants’ contentions $41,999.96 in Airplane Allowance that plaintiffs ″prevented [d]efendants from payments made by Plaintiffs to [*183] being able to perform under the Defendants when work was not being [Agreement]″ or ″’constructively performed by Defendants″; (2) ″their terminated’ [d]efendants″; (3) defendants reasonable [**15] and necessary attorneys’ have no damages for breach because fees as a result of the above-mentioned plaintiffs [**14] ″paid the entire value″ of breach of contract and declaratory the Agreement; (4) the oral agreement judgment claims in the amount of alleged by defendants respecting payment $160,948.00″; (3) ″$49,117.95 in of expenses was not performable within pre-judgment interest on the aforesaid one year and therefore is precluded by the amount (excluding attorney’s fees)″; (4)

statute of frauds and, alternatively, ″lacks additional attorneys’ fees in the event of definitive contract terms″; and (5) while appeal ″as set forth in the Movants’

defendants’ response ″appears to argue″ uncontested attorneys’ fees affidavit″; and that application of the statute of frauds is precluded by ″partial performance,″ (5) ″all costs of court incurred and filed defendants provide ″only a footnote citation with the Court in this action.″ Additionally, without analysis″ respecting that argument. the trial court ordered that ″the total amount of this Judgment, $543,732.58, plus costs In the final judgment described above,4 the of court, will bear post-judgment interest trial court (1) defined ″movants″ as JBBI, at the rate of 5%, compounded annually.″ TBC, and Brinkmann, collectively, and (2) Finally, the trial court made declarations ordered that ″summary judgment is granted respecting plaintiffs’ declaratory judgment in favor of Movants on their breach of claim.5 contract, money had and received, and declaratory judgment claims.″ Further, the Defendants filed a timely motion for new trial court ordered therein that ″Movants trial, which was overruled by operation of shall recover from Defendants, jointly and law. This appeal timely followed. 4 The record shows a hearing on appellees’ motion for summary judgment was scheduled. However, the record contains no reporter’s record of such hearing. 5 Specifically, the trial court stated in the final judgment

[T]he court holds the following as a matter of undisputed fact and law as it related to Movants’ declaratory judgment claim:

a. Defendants ceased performing under the Agreement in, at least, May of 2008 when Berryman refused to fulfill his duties and obligations for [**16] Plaintiffs. This constituted a material breach of the Agreement. The Agreement was at a minimum terminable from that point forward by Plaintiffs, and after making every reasonable effort to

418 S.W.3d 172, *183; 2013 Tex. App. LEXIS 14226, **15

II. SUMMARY JUDGMENT 2009, no pet.). ″When summary judgment is sought and granted on multiple grounds, A. Standard of Review we will affirm if any of the grounds is HN1 We [**17] review a summary meritorious.″ Zimmerhanzel v. Green, 346 judgment de novo to determine whether a S.W.3d 721, 724 (Tex. App.—El Paso 2011, party’s right to prevail is established as a pet. denied). [**18] Further, with the matter of law. Mann Frankfort Stein & exception of an attack on the legal Lipp Advisors, Inc. v. Fielding, 289 S.W.3d sufficiency of the grounds expressly raised 844, 848 (Tex. 2009); Valence Operating by the movant in his motion for summary Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. judgment, [*184] ″[i]ssues not expressly 2005); Nixon v. Mr. Prop. Mgmt. Co., 690 presented to the trial court by written S.W.2d 546, 548 (Tex. 1985). We review motion, answer, or other response shall not the evidence presented by the motion and be considered on appeal as grounds for response in the light most favorable to the reversal.″ TEX. R. CIV. P. 166a(c); see party against whom the summary judgment McConnell v. Southside Indep. Sch. Dist., was rendered, crediting evidence favorable 858 S.W.2d 337, 343 (Tex. 1993); City of to that party if reasonable jurors could, and Houston v. Clear Creek Basin Auth., 589 disregarding contrary evidence unless S.W.2d 671, 676-77 (Tex. 1979). reasonable jurors could not. Timpte Indus., HN2 A party seeking a no-evidence motion Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. for summary judgment must assert that no 2009). We must take evidence favorable to evidence exists as to one or more of the the nonmovant as true and indulge every essential elements of the nonmovant’s reasonable inference and resolve any claim on which the nonmovant would have doubts in favor of the nonmovant. City of the burden of proof. See TEX. R. CIV. P. Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 166a(i). The burden then shifts to the 2005); Sysco Food Servs., Inc. v. Trapnell, nonmovant to produce more than a scintilla 890 S.W.2d 796, 800 (Tex. 1994); Nixon, of summary judgment evidence that raises 690 S.W.2d at 549; In re Estate of Berry, a genuine issue of material fact as to each 280 S.W.3d 478, 480 (Tex. App.—Dallas essential element identified in the motion.

communicate with Berryman, Plaintiffs lawfully terminated the Agreement in August 2008. Thus, no further obligations are owed or due to Defendants under the Agreement.

b. Notwithstanding Plaintiffs’ lawful termination of the Agreement, the Agreement expired on August 1, 2008. The Agreement provides for automatic renewal upon the anniversary date of the contract only if neither party provides written notice to the other party to the contrary. Here, Defendants’ Agreement Termination Letter was received by Plaintiffs in May of 2008, and the Agreement expired by its own terms on August 1, 2008 as a result.

c. The Agreement is defined by the four comers of the document, and the alleged oral contracts for expense reimbursement and Airplane allowance are not a part of the Agreement.

d. JBBI did not, constructively or otherwise, breach the Agreement.

418 S.W.3d 172, *184; 2013 Tex. App. LEXIS 14226, **18

Id.; Timpte Indus., Inc., 286 S.W.3d at 310. We begin with appellants’ second issue, in More than a scintilla of evidence exists if which they [**20] contend ″the trial court the evidence would allow reasonable and erred in granting summary judgment on fair-minded people to reach the verdict [a]ppellees’ claim for breach of contract under review. See City of Keller, 168 because it applied an incorrect measure of S.W.3d at 827. damages and there was no evidence of recoverable damages.″ According to HN3 In a traditional summary judgment, appellants, ″the evidence of damages was the party [**19] moving for summary legally insufficient because the evidence judgment has the burden to establish that represented overpayments that occurred there is no genuine issue of material fact for approximately three months after the and it is entitled to judgment as a matter of alleged breach and thus caused the trial law. TEX. R. CIV. P. 166a(c); Provident Life court to utilize an improper measure of & Accident Ins. Co. v. Knott, 128 S.W.3d damages (an incorrect time period).″ 211, 215-16 (Tex. 2003); Nixon, 690 S.W.2d Additionally, appellants assert in their reply at 548-49. When reviewing a traditional brief in this Court that ″[appellees’] only summary judgment granted in favor of the damage evidence relates to amounts that defendant, we determine whether the are not recoverable, rendering their defendant conclusively disproved at least evidence legally insufficient.″ one element of the plaintiff’s claim or conclusively proved every element of an Appellees respond (1) appellants ″failed to affirmative defense. Kalmus v. Oliver, 390 object or otherwise raise to the trial court S.W.3d 586, 588 (Tex. App.—Dallas 2012, any allegation that the measure of damages no pet.) (citing Am. Tobacco Co. v. provided by [a]ppellees was somehow Grinnell, 951 S.W.2d 420, 425 (Tex. 1997)). improper″ and therefore waived the alleged A matter is conclusively established if error, (2) appellants ″ignore [a]ppellees’ ordinary minds cannot differ as to the right to elect to continue to perform under conclusion to be drawn from the evidence. the Agreement″ and ″sue for damages as Id. at 588-89. If the movant satisfies its they accrue when the time for performance burden, the burden shifts to the nonmovant under the contract is due,″ and (3) to preclude summary judgment by ″[a]ppellants’ arguments that [a]ppellees presenting evidence that raises a genuine could not ’create or increase’ their damages issue of material fact. See Affordable Motor [**21] are actually arguing a failure to Co., Inc. v. LNA, LLC, 351 S.W.3d 515, mitigate,″ an affirmative defense that 519 (Tex. App.—Dallas 2011, pet. denied). appellants did not plead.

B. Analysis HN4 ″A successful breach of [*185]

contract claim requires proof of the 1. Breach of Contract Claim Asserted by following elements: (1) a valid contract; JBBI and TBC (2) performance or tendered performance

418 S.W.3d 172, *185; 2013 Tex. App. LEXIS 14226, **21

by the plaintiff; (3) breach of the contract In support of their assertion that the proper by the defendant; and (4) damages measure of damages was applied in this sustained by the plaintiff as a result of the case, appellees state ″when one party breach.″ Petras v. Criswell, 248 S.W.3d repudiates a contract, the other party may 471, 477 (Tex. App.—Dallas 2008, no then elect to ’treat the repudiation as pet.); see Barnett v. Coppell N. Tex. Court, inoperative and sue for damages as they Ltd., 123 S.W.3d 804, 815 (Tex. accrue when the time for performance App.—Dallas 2003, pet. denied). ″Where under the contract is due.’″ (quoting damages evidence does not relate to the America’s Favorite Chicken Co. v. amount of damages sustained under the Samaras, 929 S.W.2d 617, 626 (Tex. proper measure of damages, that evidence App.—San Antonio 1996, writ denied)). is both irrelevant and legally insufficient to Appellees contend they (1) ″elected to support a judgment.″ De Escabedo v. continue the Agreement in force in an Haygood, 283 S.W.3d 3, 6 (Tex. App.—Tyler effort to have [a]ppellants resume 2009), aff’d sub nom., 356 S.W.3d 390 performance and therefore continued to (Tex. 2011). make payments″ and (2) ″are entitled to The record does not show appellants recover [**23] the $291,666.67 paid during objected to the evidence respecting the the time of [a]ppellants’ non-performance measure of damages or otherwise raised under the Agreement.″ that issue in the trial court. However, HN5 Appellants cite the following statement of ″a party may challenge the legal sufficiency law in support of their position: ″A party, of the evidence even in the absence of any while in the performance of a contract, objection to its admissibility.″ Coastal when served with notice of its repudiation Transp. Co., Inc. v. Crown Cent. Petroleum by the other party, cannot proceed with the Corp., 136 S.W.3d 227, 233 (Tex. 2004). performance of the contract except it be [**22] Further, an attack on the legal one of which specific performance may be sufficiency of the grounds expressly raised enforced and increase the damages to which by the movant in his motion for summary he would otherwise be entitled.″ Osage Oil judgment is an exception to the general & Ref. Co. v. Lee Farm Oil Co., 230 S.W. rule that ″[i]ssues not expressly presented 518, 522 (Tex. Civ. App.—Amarillo 1921, to the trial court by written motion, answer, writ ref’d). According to appellants, (1) the or other response shall not be considered Agreement was a contract for services and on appeal as grounds for reversal.″ TEX. R. therefore was not subject to specific CIV. P. 166a(c); see McConnell, 858 S.W.2d performance and (2) appellees were not at 343; Clear Creek Basin Auth., 589 entitled to recover ″overpayments that S.W.2d at 676-77. Therefore, we conclude occurred for approximately three months appellants did not waive error pertaining to after the alleged breach.″ the legal sufficiency of the evidence During oral argument before this Court, respecting breach of contract damages. appellees contended (1) the rule quoted

418 S.W.3d 172, *185; 2013 Tex. App. LEXIS 14226, **23

above from Osage Oil ″has not been asserting HOPCO was liable to C.K. in tort followed by a single court″ and (2) current for refusing to accept C.K.’s breach of the case law allows a non-repudiating party to contract. [**25] Id. The trial court granted choose to treat the contract as continuing a motion by C.K. for partial summary regardless of whether specific performance judgment denying specific performance is available. In support of those arguments, and the remaining issues were tried before appellees cited three cases. See Bumb v. a jury. Id. The jury found in favor of Intercomp Tech., L.L.C., 64 S.W.3d 123 HOPCO and awarded HOPCO damages (Tex. App.—Houston [14th Dist.] 2001, no that included its expenses incurred in pet.); [**24] Avasthi & Assocs., Inc. v. operating the leases after the date of the [*186] Dronamraju, No. 01-11-00786-CV, purported termination. Id. On appeal, C.K. 2012 Tex. App. LEXIS 10511, 2012 WL argued in part that pursuant to the rule 6644873 (Tex. App.—Houston [1st Dist.] stated in Osage Oil, HOPCO was (1) Dec. 20, 2012, pet. denied) (mem. op.); required to accept C.K.’s repudiation and C.K. Oil Props., Inc. v. Hrubetz Operating (2) not entitled to recover any damages for Co., No. 11-99-00066-CV, 2002 WL expenses incurred in operating the lease 32344609 (Tex. App.—Eastland Apr. 25, after the date of the purported termination. 2002, no pet.) (not designated for Id. at *8, *14. The Eleventh District Court publication). of Appeals in Eastland disagreed with C.K.

Id. The court stated that the ″damage rule″ In C.K. Oil, Hrubetz Operating Company announced in Osage Oil ″does not apply to (″HOPCO″) contracted to operate certain affirmative claims for relief which a gas and oil leases. C.K. Oil, 2002 WL repudiating party asserts against the 32344609, at *1. Subsequently, a working non-breaching party for failing to accept interest in the leases was conveyed to C.K. the breach.″ Id. at *8. Therefore, the court Oil Properties, Inc. (″C.K.″). Id. C.K. concluded, HOPCO was ″not required to informed HOPCO that HOPCO was accept C.K.’s repudiation.″ Id. Further, in terminated as operator and advised HOPCO considering HOPCO’s claim for damages, that C.K. would not reimburse HOPCO for the court stated in part, ″For the same any operating expenses incurred after reasons that we have rejected the ruling in November 10, 1997. Id. HOPCO continued Osage Oil as serving as a basis for [C.K.’s] to operate the leases. Id. Additionally, counterclaims sounding in [**26] tort, we HOPCO filed suit against C.K. to do not find Osage Oil to be controlling on specifically enforce the terms of its contract the issue of HOPCO’s damages.″ Id. at and sought damages from C.K. as a result *14. The court concluded, ″Because the of the attempted termination. Id. at *2. ruling in Osage Oil directly conflicts with Those damages included expenses for the non-breaching party’s option of treating operating the leases from the date of the the repudiation as inoperative, we decline purported termination through the date of to apply Osage Oil to the facts of this trial. Id. C.K. counterclaimed for trespass, case.″ Id.

418 S.W.3d 172, *186; 2013 Tex. App. LEXIS 14226, **26

Unlike the case before us, C.K. Oil involved failing to pay his salary and expenses on not only a non-repudiating party claiming October 1, 1995. Id. The trial court granted damages, but also a repudiating party InterComp’s motion for summary seeking to use the rule in Osage Oil to judgment. Id. at 125. The Fourteenth profit from its own breach. See id. at *8. District Court of Appeals in Houston We cannot agree with appellees that the affirmed, stating ″an anticipatory C.K. Oil court’s conclusion that Osage Oil repudiation gives the nonrepudiating party was not controlling on the facts of that the option to treat the repudiation as a case supports appellees’ position that breach, or ignore it and await the agreed Osage Oil is inapplicable in the case before upon time of performance.″ Id. The court us. reasoned that ″by waiting to sue until after InterComp’s performance was due, Bumb Bumb involved an employee, John W. was obligated to continue performing under Bumb, whose employment contract the contract, and any breach on his own provided that either he or his employer, part prior to the November 3, 1995 InterComp Technologies, L.L.C. termination [**28] date excused InterComp (″InterComp″), could terminate their from further performance.″ Id. Therefore, relationship at will by giving ninety days’ the court concluded, Bumb’s October 12, notice. Bumb, 64 S.W.3d at 124. On August 1995 breach barred his suit for any breaches 4, 1995, InterComp notified Bumb that his by InterComp thereafter. Id. As to breaches employment was terminated effective by InterComp prior to October 12, 1995, November 3, 1995. Id. On September 25, the court observed that the contract 1995, InterComp allegedly told Bumb that provided Bumb’s monthly salary was it would no longer pay his salary or payable ″in arrears.″ Id. Thus, payment for reimburse him [**27] for expenses. Id. Bumb’s services during October was not However, Bumb continued [*187] to due until November 1, 1995, a date after perform his duties until November 3, 1995. Bumb’s October 12, 1995 breach of Id. On October 12, 1995, Bumb contract. Id. Further, as to Bumb’s claim downloaded copies of InterComp software for expenses, the court observed that the in violation of his employment contract. contract required ″appropriate support″ Id. Almost four years later, Bumb filed suit before expenses would be reimbursed. Id. against InterComp for unpaid salary and The court stated there was no proof the expenses. Id. Intercomp moved for required support had been provided to summary judgment, alleging it was excused Intercomp until a date after Bumb’s from further performance under the October 12, 1995 breach. Id. contract when Bumb breached the contract by downloading software. Id. In response, Appellees assert Bumb demonstrates that Bumb claimed InterComp breached the the rule of Osage Oil is not currently the contract first by orally repudiating the law in cases involving contracts for contract on September 25, 1995, and by services. However, the court in Bumb did

418 S.W.3d 172, *187; 2013 Tex. App. LEXIS 14226, **28

not specifically address the issue of material breach of the same contract, i.e. whether, when a contract is repudiated, the the failure to timely bill. 2012 Tex. App. non-repudiating party can ″increase the LEXIS 10511, [WL] at *6. [**30] The First damages to which he would otherwise be District Court of Appeals in Houston entitled″ by continuing to perform. See disagreed. 2012 Tex. App. LEXIS 10511, Osage Oil, 230 S.W. at 522. We cannot [WL] at *7. The court concluded that by agree with appellees that Bumb seeking to continue [*188] benefiting [**29] supports their position that Osage from the contract by requesting Dronamraju Oil is inapplicable to the case before us. continue performing work, ″A & A waived Finally, in Avasthi, Sharma Dronamraju its ability to treat Dronamraju’s breach as a contracted with a petroleum consulting justification for non-performance.″ 2012 company, Avasthi & Associates, Inc. (″A & Tex. App. LEXIS 10511, [WL] at *8. Unlike A″), to provide geological services for a the case before us, Avasthi did not involve specific project. Avasthi, 2012 Tex. App. a non-repudiating party seeking to recover LEXIS 10511, 2012 WL 6644873 at *1. damages for breach of contract after The contract contained detailed reporting continuing performance. See id. Therefore, and billing requirements. Id. It was that case is inapposite as to whether Osage undisputed that Dronamraju ″never timely Oil applies to such a fact situation. complied″ with those requirements during As described above, the Agreement stated the ten-month time period that he worked JBBI was employing BSF ″for the purpose for A & A. 2012 Tex. App. LEXIS 10511, of engaging the full-time services of [WL] at *2. Despite such noncompliance, [Berryman].″ HN6 A contract for personal A & A paid Dronamraju on numerous services is not specifically enforceable. occasions and continued to request him to See Gage v. Wimberley, 476 S.W.2d 724, perform work on the project. 2012 Tex. 731 (Tex. Civ. App.—Tyler 1972, writ ref’d App. LEXIS 10511, [WL] at *3-4. After the n.r.e.); Chain v. Pye, 429 S.W.2d 630, 635 project was completed, A & A informed (Tex. Civ. App.—Beaumont 1968, writ ref’d Dronamraju that certain bills for his time n.r.e.). Further, appellees assert in their ″had been submitted too late″ and would brief on appeal that ″[a]s early as the first not be paid by A & A. 2012 Tex. App. half of May of 2008, [a]ppellants altogether LEXIS 10511, [WL] at *3. Dronamraju ceased performance under the Agreement.″ filed suit against A & A for breach of The record shows that at that point, the contract, seeking payment of his unpaid $291,666.67 claimed by appellees as breach bills. Id. The jury found in favor of of contract damages [**31] had not been Dronamraju. 2012 Tex. App. LEXIS 10511, paid to appellants. Appellees assert they [WL] at *4. On appeal, A & A argued that continued to pay appellants in May, June, as a matter of law, it was excused from July, and August of 2008, even though performing under the contract, i.e. paying appellants ″never resumed performance Dronamraju, because of Dronamraju’s prior under the Agreement.″ Thus, the record

418 S.W.3d 172, *188; 2013 Tex. App. LEXIS 14226, **31

shows that absent the continuation of fails because appellants did not plead payments by appellees, they would not voluntary payment as an affirmative ″otherwise be entitled″ to the $291,666.67 defense and ″did not cite evidence to or they claim as breach of contract damages. raise the issue of voluntary payment″ in See Osage Oil, 230 S.W. at 522. On this their summary judgment response in the record, we conclude those sums are not trial court. In their reply brief in this Court, recoverable as breach of contract damages. appellants assert in part (1) ″[t]he voluntary See id.; see also Tower Contracting Co., payment doctrine is an equitable Inc. v. Flores, 294 S.W.2d 266, 273 (Tex. estoppel-based defense,″ (2) appellants Civ. App.—Galveston 1956), aff’d as ″pled equitable estoppel″ in their answer, modified, 157 Tex. 297, 302 S.W.2d 396 and (3) ″[b]ecause [**33] [plaintiffs] failed (Tex. 1957) HN7 (except in cases where to specially except to [defendants’] specific performance is proper, affirmative defenses, asserting a general non-repudiating party ″cannot afterwards equitable estoppel defense was sufficient go on, and thereby increase the damages, to plead the sub-defense of voluntary and then recover such damages from the payment.″ other party″). The record shows no [*189] ″Money had and received is a evidence of other breach of contract category of general assumpsit to restore damages claimed by appellees. money where equity and good conscience Consequently, we conclude appellees did require refund.″ MGA Ins. Co. v. Charles not meet their summary judgment burden R. Chesnutt, P.C., 358 S.W.3d 808, 813 as to their breach of contract claim. See (Tex. App.—Dallas 2012, no pet.); accord Petras, 248 S.W.3d at 477; Barnett, 123 Edwards v. Mid-Continent Office Distribs., S.W.3d at 815; see also TEX. R. CIV. P. L.P., 252 S.W.3d 833, 837 (Tex. 166a(c). App.—Dallas 2008, pet. denied). ″A cause of action for money had and received is not We decide in favor of appellants on their premised on wrongdoing, but ’looks only second issue.6 to the justice of the case and inquires 2. Money Had and Received whether the defendant has received money which rightfully belongs to another.’″ MGA In their third issue, appellants contend ″the Ins. Co., 358 S.W.3d at 813 (quoting Amoco trial court erred in granting summary Prod. Co. v. Smith, 946 S.W.2d 162, 164 judgment on [a]ppellees’ claims for money (Tex. App.—El Paso 1997, no writ)). ″In had and received because recovery is barred short, it is an equitable doctrine applied to by the voluntary payment doctrine.″ prevent unjust enrichment.″ Id. ″To prove Appellees respond in part that this argument a claim for money had and received, a 6 In their [**32] first issue, appellants contend ″the trial court erred in granting summary judgment on [a]ppellees’ claim for breach of contract because [a]ppellees failed to conclusively prove causation.″ In light of our disposition of appellants’ second issue, we need not reach appellants’ first issue. See TEX. R. APP. P. 47.1.

418 S.W.3d 172, *189; 2013 Tex. App. LEXIS 14226, **33

plaintiff must show that a defendant holds 515-16 (Tex. 1998) (″[T]he doctrine money which in equity and good [**35] of equitable estoppel requires: (1) a conscience belongs to him.″ Id. false representation or concealment of Under the voluntary payment rule, material facts; (2) made with knowledge, ″’[m]oney voluntarily paid on a claim of actual or constructive, of those facts; (3) right, with full knowledge of [**34] all the with the intention that it should be acted facts, in the absence of fraud, deception, on; (4) to a party without knowledge or duress, or compulsion, cannot be recovered means of obtaining knowledge of the facts; back merely because the party at the time (5) who detrimentally relies on the of payment was ignorant of or mistook the representations.″). We conclude appellants’ law as to his liability.’″ BMG Direct Mktg., third issue presents nothing for this Court’s Inc. v. Peake, 178 S.W.3d 763, 768 (Tex. review. See TEX. R. CIV. P. 166a(c). 2005) (quoting Pennell v. United Ins. Co., We decide against appellants on their third 150 Tex. 541, 243 S.W.2d 572, 576 (Tex. issue.7 1951)). ″The rule is a defense to claims asserting unjust enrichment; that is, when a 3. Objections to Berryman’s Affidavit plaintiff sues for restitution claiming a payment constitutes unjust enrichment, a Next, we address appellants’ ninth issue, defendant may respond with the in which they assert the trial court ″erred in voluntary-payment rule as a defense.″ Id.; sustaining [a]ppellees’ objections to see Miga v. Jensen, 299 S.W.3d 98, 103 [a]ppellants’ summary judgment evidence.″ (Tex. 2009) (voluntary payment rule is ″a Specifically, appellants assert the trial court defense to a restitution claim″). abused its discretion by [**36] sustaining appellees’ objections to Berryman’s The record shows appellants did not assert affidavit respecting ″improper conclusions the voluntary payment rule as a defense or and opinions,″ irrelevant testimony, hearsay address voluntary payment in their testimony, and lack of required attachments.

summary judgment response. See BMG Direct Mktg., Inc., 178 S.W.3d at 768; [*190] Appellees respond in part that TEX. R. CIV. P. 166a(c). Further, appellants ″[a]ppellants waived any alleged error by cite no authority, and HN8 we have found failing to address independent and none, to support their assertion that the alternative grounds to exclude evidence.″ voluntary payment rule is a ″sub-defense″ Specifically, appellees assert in part that of a ″general equitable estoppel defense.″ appellants ″nowhere address″ appellees’ Cf. Johnson & Higgins of Tex., Inc. v. (1) supplemental objection ″to the entirety Kenneco Energy, Inc., 962 S.W.2d 507, of Berryman’s affidavit for failing to be 7 The record shows that in their motion for summary judgment, appellees requested damages of $333,666.63 in connection with plaintiffs’ claim for money had and received. Further, the trial court’s judgment does not show the damages awarded therein are based on a particular claim. Therefore, the record shows plaintiffs’ claim for money had and received, alone, supports the full amount of damages awarded in the judgment.

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based on personal knowledge″ and (2) As to appellees’ objection ″to the entirety ″objections to paragraphs 9, 12, 15, 16, 19, of Berryman’s affidavit for failing to be 22, 24, and 28 of Berryman’s affidavit as based on personal knowledge,″ appellants being a sham affidavit that directly contend in their reply brief in this Court contradicted his deposition testimony.″ that they ″properly addressed [appellees’]

personal knowledge arguments, and HN9 We review a trial court’s ruling that therefore, did not waive their right to argue sustains an objection to summary judgment against them on appeal.″ According to evidence for an abuse of discretion. Cantu appellants, in their initial appellate brief, v. Horany, 195 S.W.3d 867, 871 (Tex. they (1) ″cite to [Berryman’s] testimony App.—Dallas 2006, no pet.); Bradford that he was present [**38] during his Partners II, L.P. v. Fahning, 231 S.W.3d conversations with [Brinkmann] and certain 513, 521 (Tex. App.—Dallas 2007, no JBBI employees, and therefore pet.). ″[W]hen an appellee urges several demonstrated he had the personal objections to a particular piece of evidence knowledge regarding what statements were and, on appeal, the appellant complains of made during those conversations″; (2) its exclusion on only one of those bases, ″dedicated an entire section of their brief the appellant has waived that issue for to explaining how the statements of appeal because he [**37] has not Brinkmann and his employees were not challenged all possible grounds for the hearsay because the statements constitute trial court’s ruling that sustained the admissions by a party opponent″; and (3) objection.″ Cantu, 195 S.W.3d at 871; see explained ″how [appellees’] own internal Bradford Partners, 231 S.W.3d at 521; business records were the source of Goodenberger v. Ellis, 343 S.W.3d 536, [Berryman’s] personal knowledge.″ 540 (Tex. App.—Dallas 2011, pet. denied). First, appellants’ citations in their initial appellate brief that purportedly show As described above, appellants filed an Berryman’s ″personal knowledge″ as to initial brief and a reply brief in this Court.

his conversations with Brinkmann and In those briefs, appellants do not address JBBI employees appear in a section of appellees’ objections that portions of appellants’ brief addressing objections to Berryman’s affidavit constituted a ″sham ″conclusory statements″ of Berryman. The affidavit.″ Therefore, we conclude issue of whether Berryman’s ″personal appellants have presented no challenge in knowledge″ was based on hearsay was not this Court to the trial court’s sustaining of addressed with respect to those statements. appellees’ ″sham affidavit″ objections respecting paragraphs 9, 12, 15, 16, 19, 22, Second, in the portion of appellants’ initial 24, and 28 of Berryman’s affidavit. See appellate brief addressing appellees’ Cantu, 195 S.W.3d at 871; Bradford hearsay objections, appellants assert Partners, 231 S.W.3d at 521. appellees are ″incorrect″ that Berryman’s

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affidavit contained hearsay. Then, show testimony fits within exception). appellants contend, ″For one, contrary to Appellants do not otherwise cite any [appellees’] arguments, the statements of ″statements of Brinkmann and his people in [**39] [appellees’] accounting employees″ that they contend ″constitute department that certain submitted admissions by a party opponent.″ reimbursements had been approved (CR at Finally, in the third portion of appellants’

712) fall under the hearsay exception for initial brief to which they direct this Court, admissions [*191] of a party opponent.″ appellants specifically address appellees’

In support of that contention, appellants objection that Berryman’s affidavit should cite Texas Rule of Evidence 801(e)(2)(D). See HN10 TEX. R. EVID. 801(e)(2)(D) be struck because Berryman did not attach (providing hearsay exception for statement required documents pursuant to Texas Rule by party’s agent or servant concerning of Civil Procedure 166a(f). See TEX. R. CIV. matter within scope of agency or P. 166a(f) (providing in part that ″[s]worn employment made during existence of or certified copies of all papers or parts relationship). The page of the record thereof referred to in an affidavit shall be specifically cited by appellants, page 712, attached thereto″). Appellants cite the is a page of Berryman’s affidavit that following statement of Berryman in his contains paragraphs 26 and 27 and portions affidavit: of paragraphs 25 and 28. The only I am personally aware of my own statement on that page pertaining to actions [**41] since 2001, and the appellees’ ″accounting department″ reads damages claimed by [d]efendants in as follows: ″Part of my claim for breach of this action. In addition, I have contract based on unreimbursed expenses personal knowledge of the facts set occurred in 2006 and 2007 as well as 2008. forth below based on my direct I was assured that these reimbursements conversations with [Brinkmann]; had been approved by the accounting employees of [JBBI]; the business department and would be forwarded to records of [JBBI] . . . ; and the me.″ While rule 801(e)(2)(D) provides a business records of [BSF]. hearsay exception for certain statements by a ″party’s agent or servant,″ the page of Then, appellants argue that because Berryman’s affidavit cited by appellants Berryman ″simply identified a source from does not state who ″assured″ Berryman the which his personal knowledge was reimbursements in question had been developed″ and ″does not refer to [**40] approved.8 See Volkswagen of Am., documents in this paragraph,″ he ″was not Inc. v. Ramirez, 159 S.W.3d 897, 908 (Tex. required to attach documents.″ Appellants 2004) (proponent of hearsay has burden to do not address hearsay in that argument. 8 The record shows paragraph 24 of Berryman’s affidavit also addressed approval of reimbursements. However, (1) appellants do not cite to paragraph 24 in their appellate argument respecting hearsay and (2) Berryman’s statements in paragraph 24 were among those objected to pursuant to the ″sham affidavit″ objections described above.

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Because the trial court could have granted performance does not bar application of appellees’ objections to Berryman’s the statute of frauds in this case because affidavit on grounds not challenged by appellants waived that defense. appellants, we conclude appellants have HN11 Under the statute of frauds, certain waived their complaint that the trial court contracts are not enforceable unless they erred by sustaining appellees’ objections are in writing and signed by the person to their summary judgment evidence. See against whom enforcement of the contract Goodenberger, 343 S.W.3d at 540 (citing is sought. See TEX. BUS. & COM. CODE ANN. Cantu, 195 S.W.3d at 871). § 26.01(a) (West 2009); S & I Mgmt., Inc. We decide appellants’ ninth issue against v. Sungju Choi, 331 S.W.3d 849, 854 (Tex. them. App.—Dallas 2011, no pet.). The party pleading the statute of [**43] frauds bears 4. Appellants’ Breach of Contract the burden of establishing its applicability. Counterclaim See Kalmus, 390 S.W.3d at 589. Now, we address together appellants’ tenth HN12 The statute of frauds applies to, and eleventh issues, in which they assert inter alia, ″an agreement which is not to be error by the trial court in granting summary performed within one year from the date of judgment on their counterclaim for ″breach the making of the agreement.″ TEX. BUS. & of the agreement to reimburse expenses.″ COM. CODE ANN. § 26.01(b)(6). When a [**42] Specifically, in their tenth issue, promise or agreement, either by its terms [*192] appellants assert the evidence or by the nature of the required acts, ″raises material questions of fact as to the cannot be completed within one year, it existence, terms, and breach″ of the falls within the statute of frauds and is agreement to reimburse expenses. In their unenforceable unless it is in writing and eleventh issue, appellants contend in part signed by the person to be charged. See id. that material fact questions exist pertaining § 26.01(a), (b)(6); Kalmus, 390 S.W.3d at to the applicability of the statute of frauds, 589. If the agreement is capable of being including whether the agreement to performed within one year, it is not within reimburse expenses (1) was an immaterial the statute of frauds. Kalmus, 390 S.W.3d at 589 (citing Gerstacker v. Blum change to the Agreement, (2) ″modified Consulting Eng’rs., Inc., 884 S.W.2d 845, only the one year renewals of the 849 (Tex. App.—Dallas 1994, writ denied)).

Agreement,″ (3) ″was independent of the The question of whether an agreement Agreement,″ and (4) is enforceable under falls within the statute of frauds is one of the doctrine of partial performance.

law. See Bratcher v. Dozier, 162 Tex. 319, Appellees respond that ″the statute of 346 S.W.2d 795, 796 (Tex. 1961); Biko v. frauds bars appellants’ expense Siemens Corp., 246 S.W.3d 148, 159 (Tex. reimbursement breach of contract claim.″ App.—Dallas 2007, pet. denied). However, Further, appellees argue partial whether the circumstances of a particular

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case fall within an exception to the statute Dekkers, 380 S.W.3d 315, 324 (Tex. of frauds is generally a question of fact. App.—Dallas 2012, no pet.). The See Kalmus, 390 S.W.3d at 589; performance a party relies on to remove a [**44] Adams v. Petrade Int’l, Inc., 754 parol agreement from the statute of frauds S.W.2d 696, 705 (Tex. App.—Houston [1st ″must be such as could have been done Dist.] 1988, writ denied). with no other design than to fulfill the particular agreement sought to be HN13 In deciding whether an agreement is capable of being performed within one enforced.″ Breezevale, 82 S.W.3d at 439-40. year, we compare the date of the agreement Without such precision, the acts of to the date when the performance under performance do not tend to prove the the agreement is to be completed. Kalmus, existence of the parol agreement sought to 390 S.W.3d at 590. If there is a year or be enforced. Id. at 440. more between those two reference points, First, we address appellants’ argument in a writing is required to render the their eleventh issue that the alleged agreement enforceable. Id. When the date agreement to reimburse expenses ″modified performance will be completed cannot be only the one year renewals of the readily ascertained, the law provides that if Agreement″ and therefore was not barred performance could conceivably be by the statute of frauds. Appellants contend completed within one year of the ″[e]ven if the statute of frauds initially agreement’s making, a writing is not applied to the expense reimbursement required to enforce it. Id.; see also Miller v. agreement as a modification of the 2001 Riata Cadillac Co., 517 S.W.2d 773, 775 Agreement, an agreement to reimburse (Tex. 1974) (″If a contract can, from the expenses can be implied regarding the one terms of the agreement, be performed year renewals of the 2001 Agreement that within one year it is not within the Statute would not be barred by the statute of of Frauds.″). frauds.″ According to appellants, (1) HN14 Under the partial performance ″[o]nce the initial term of the 2001 exception to the statute of frauds, contracts Agreement [**46] expired, and it that have been partly performed, but do not automatically renewed on an annual basis, meet the requirements of the statute of it was no longer covered by the statute of frauds, may be enforced in equity if denial frauds because it was capable of being of enforcement would amount to a virtual performed within a year″ and (2) fraud. Exxon Corp. v. Breezevale Ltd., 82 ″[l]ikewise, the modification of the 2001 S.W.3d 429, 439 (Tex. App.— [*193] Dallas Agreement to allow for expense 2002, pet. denied). [**45] The partial reimbursement would not be covered by performance must be unequivocally the Statute of Frauds.″ In support of their referable to the agreement and argument, appellants cite Garcia v. Karam, corroborative of the fact that a contract 154 Tex. 240, 276 S.W.2d 255, 257 (Tex. actually was made. Id.; Holloway v. 1955), for the statement that ″[i]f neither

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the portion of the written contract affected convey without an inventory, the Statute of by the subsequent modification nor the Frauds would have been wholly matter encompassed by the modification inapplicable.″ Id. at 257. The court stated itself is required by the Statute of Frauds to that the oral modification did not change be in writing, then the oral modification the ″subject matter of the contract,″ but will not render the contract unenforceable.″ ″only the method of performing it.″ Id. Additionally, appellants cite Miller for the Therefore, the court concluded, the statement that ″contracts that can be subsequent oral modification of the written performed within one year are not within contract was valid. Id. the Statute of Frauds.″ Miller, 517 S.W.2d at 775. In Miller, [**48] Kenneth F. Miller was employed by Riata Cadillac Co. as a used Garcia involved a purchaser’s action for a car manager pursuant to an oral contract. seller’s alleged breach of a written contract [*194] Miller, 517 S.W.2d at 774. Miller for the sale of realty. Garcia, 276 S.W.2d at was terminated after approximately three 256; see also TEX. BUS. & COM. CODE ANN. and one-half years and filed suit against § 26.01 (b)(4) (providing contract for sale Riata to enforce the alleged terms of the of real estate is within statute of frauds). oral contract. Id. Riata argued the contract The contract provided that $20,000 of the was an unenforceable contract within the purchase price was to [**47] be paid by statute of frauds. Id. On appeal, the supreme merchandise. Garcia, 276 S.W.2d at 256. court concluded in part that because it was Subsequent to executing the written undisputed that the contract was an contract, the parties orally agreed that the ″indefinite term employment contract,″ it seller would accept the merchandise was considered performable in one year without the necessity of taking inventory. and therefore was not within the statute of Id. The purchaser later filed and prevailed frauds. Id. at 776. in a suit to enforce the contract as modified Unlike the case before us, neither Garcia by the oral agreement. Id. On appeal to the nor Miller involved a contract with an supreme court, the seller contended the initial term longer than one year followed oral modification of the contract was by automatic annual renewals. Further, prohibited by the statute of frauds because neither case discussed application of the it amounted to a ″complete change″ of the statute of frauds to such a contract. terms of the contract between the parties Therefore, we do not find those cases and was an attempt to ″substitute an entirely instructive. Appellants cite no other new consideration″ for the one required by authority, and we have found none, to the writing. Id. The supreme court support their position that ″[o]nce the initial reasoned, ″Had the [plaintiff] contracted in term of the 2001 Agreement expired, . . . it writing for the sale of his merchandise for was no longer covered by the statute of ’$20,000.00, at invoice’, and subsequently frauds because it was capable of being agreed orally with the [defendant] to performed within a year.″ Cf. Hampton v.

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Lum, 544 S.W.2d 839, 841 (Tex. Civ. position, appellants cite a case involving App.—Texarkana 1976, no writ) an oral modification to reduce a real estate [**49] (construing lease as ″demise for brokerage commission in a contract to sell twenty-four months″ where lease provided real estate. See Am. Garment Props., Inc. v. for one-year period that automatically CB Richard Ellis-El Paso, L.L.C., 155 renewed for another year in the absence of S.W.3d 431, 437 (Tex. App.—El Paso 2004, notice). no pet.). However, we concluded above that the alleged modification of the 2001 As described above, the record shows the Agreement to allow for expense Agreement stated it was for ″a term of five reimbursement was not capable of being years starting August 1, 2001 and is to be performed within one year. Appellants cite renewed annually thereafter unless either no authority, and HN15 we have found parties [sic] gives notice in writing 90 days none, to support the position that a prior to the end of any anniversary date.″ modification not capable of being Additionally, the record shows (1) performed within one year falls outside the Berryman testified in part in his deposition statute of frauds if it constitutes an that at approximately the same time the ″immaterial change″ to the original Agreement was executed in 2001, he and contract. See TEX. BUS. & COM. CODE ANN. § JBBI entered into an oral agreement that 26.01(b)(6). We cannot agree with Berryman’s business expenses would be appellants that the materiality of the reimbursed by JBBI and (2) Brinkmann modification in question has any bearing testified JBBI reimbursed Berryman for on the application of the statute of frauds various expenses starting in 2001 and in this case. continuing until at least 2006. We cannot agree with appellants that there is evidence Third, appellants contend in their eleventh in the record that the alleged modification issue that ″[e]ven if the statute of frauds of the 2001 Agreement to allow for expense applies to modifications [**51] of the reimbursement was capable of being 2001 Agreement, the expense performed within one year. reimbursement agreement alternatively should be viewed [*195] not as a direct Second, we address appellants’ assertion modification of the 2001 Agreement, but in their eleventh issue that the statute of rather as independent of the 2001 frauds does not bar the modification in Agreement.″ According to appellants, question because it was ″an immaterial because there is no time period fixed for change to the Agreement.″ performing the ″independent″ expense [**50] According to appellants, the statute reimbursement agreement, ″it must be of frauds is applicable to the modification treated as capable of being performed in this case only if ″the modification within a year.″ Therefore, appellants assert, materially effects the obligations of the ″if the expense reimbursement agreement underlying agreement.″ In support of that is independent of the 2001 Agreement, the

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statute of frauds would not bar its takes the Agreement outside the statute of enforcement.″ frauds.″ In a footnote to that statement, appellants cited the portion of Breezevale Appellees contend appellants pleaded and that states the law described above argued in the trial court that ″there was an respecting partial performance. See 82 oral modification of the written S.W.3d at 439. Appellants’ argument as to Agreement.″ (emphasis original). ″part performance″ in the trial court According to appellees, appellants did not contained no other statements, analysis, or assert in the trial court that ″the expense citations to authority or to the record. reimbursement agreement was a stand alone agreement″ and therefore appellants HN16 ″[A] party submitting summary cannot make that contention for the first judgment evidence ’must specifically time on appeal. Further, appellees argue, identify the supporting proof on file that it ″even if such an agreement existed, it seeks [**53] to have considered by the could not have been performed within one trial court.’″ Bich Ngoc Nguyen v. Allstate year because it would necessarily correlate Ins. Co., 404 S.W.3d 770, 776 (Tex. to the five (5) year term of the Agreement.″ App.—Dallas 2013, pet. denied) (quoting Arredondo v. Rodriguez, 198 S.W.3d 236, The record shows appellants asserted in 238 (Tex. App.—San Antonio 2006, no their amended response to the motion for pet.)). On this record, we conclude the trial summary [**52] judgment that the court did not err by concluding appellants agreement to pay expenses was an ″oral did not satisfy their burden to raise a fact modification″ of the Agreement and/or an issue as to partial performance. See id. at ″implied in fact modification.″ Appellants 777; see also MGA Ins. Co., 358 S.W.3d at did not argue in the trial court that ″the 815; TEX. R. CIV. P. 166a(i). expense reimbursement agreement is Based on the preceding analysis, we independent of the 2001 Agreement.″ conclude the trial court did not err by Consequently, that argument presents concluding the requirements of the statute nothing for this Court’s review. See TEX. R.

of frauds apply to the alleged agreement to CIV. P. 166a(c); McConnell, 858 S.W.2d at reimburse expenses. TEX. BUS. & COM.

343; Clear Creek Basin Auth., 589 S.W.2d CODE ANN. § 26.01(a), (b)(6). We decide at 676-77.

against appellants on their eleventh issue.

Fourth, we address appellants’ argument In their tenth issue, appellants assert that that the partial performance exception to even if the trial court properly excluded the statute of frauds applies in this case. Berryman’s affidavit, the remaining The record shows that in their amended evidence in the record ″raises material response to appellees’ motion for summary questions of fact as to the existence, terms, judgment in the trial court, appellants and breach″ of the agreement to reimburse asserted ″part performance by the parties expenses. In a footnote to their appellate

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argument on this issue, appellants contend Id. § 37.004(a). appellees ″err in assuming that the expense reimbursement agreement must have been HN18 We review [**55] declaratory in writing.″ However, we concluded judgments under the same standards as [**54] above that the trial court did not other judgments. Id. § 37.010; Lidawi v.

[*196] err by concluding the expense Progressive Cnty. Mut. Ins. Co., 112 S.W.3d reimbursement agreement was within the 725, 730 (Tex. App.—Houston [14th Dist.] statute of frauds. See id. Because the 2003, no pet.). We look to the procedure record does not show the expense used to resolve the issue at trial to reimbursement agreement was in writing determine the standard of review on appeal. and signed by the party to be charged, that Lidawi, 112 S.W.3d at 730. Thus, in the agreement is unenforceable. Id. case before us, we review the propriety of Consequently, the evidence described by the trial court’s declaratory judgment under appellants has no bearing on whether the the same standards we apply to a summary trial court erred in granting summary judgment. Id. judgment respecting the agreement to a. Redundancy reimburse expenses.

In their fourth issue, appellants assert ″the We decide appellants’ tenth issue against trial court erred in granting summary them. judgment on [a]ppellees’ declaratory 5. Declaratory Judgment judgment claim because declaratory relief was redundant with [a]ppellees’ breach of Chapter 37 of the Texas Civil Practice and contract claim and therefore barred as a Remedies Code is titled ″Declaratory matter of law.″ Appellees respond in part Judgments.″ See TEX. CIV. PRAC. & REM. that ″[a]ppellants did not object or CODE ANN. §§ 37.001-37.011 (West 2008). otherwise argue to the trial court that Section 37.004 of that chapter provides in declaratory relief was ’merely redundant part or duplicative’ of [a]ppellees’ other claims″ HN17 A person interested under a and ″cannot do so for the first time on deed, will, written contract, or other appeal.″ Appellants argue in their reply writings constituting a contract or brief in this Court that their complaint whose rights, status, or other legal respecting the redundancy of the relations are affected by a statute, declaratory judgment claim was not municipal ordinance, contract, or ″waived″ by their failure to object at the franchise may have determined any trial level because (1) [**56] ″[a] failure to question of construction or validity object is not waiver when error is apparent arising under the instrument, statute, from the face of the record″ and (2) ″it is ordinance, contract, or franchise and apparent from the face of the record that obtain a declaration of rights, status, [plaintiffs’] breach of contract and or other legal relations thereunder. declaratory judgment claims involve the

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same issues and resolution of one adds to consider complaint that declaratory nothing to the other.″ judgment claim was ″duplicative″ as In support of their argument that their grounds for reversal of summary judgment failure to object did not constitute ″waiver,″ because such issue was not raised in trial appellants cite Coastal Transport Co., Inc. court). See 136 S.W.3d at 233. However, unlike We decide against appellants on their fourth the case before us, that case involved a issue.

no-evidence challenge asserted for the first time on appeal. The supreme court b. Fact Questions Respecting Trial Court’s concluded in that case that when such a Declarations challenge is ″restricted to the face of the record (for example, when expert testimony In their fifth and sixth issues, appellants is speculative or conclusory on its face),″ a contend the trial court erred in granting party ″may challenge the legal sufficiency summary judgment on appellees’ of the evidence even in the absence of any declaratory judgment claim because fact objection to its admissibility.″ In the case questions exist (1) ″as to the trial court’s before us, appellants do not explain, and declarations″ and (2) ″concerning whether the record does not show, how their [a]ppellees’ conduct excused further complaint respecting redundancy is a performance by [a]ppellants.″9 challenge to the legal sufficiency of the First, we consider appellants’ assertion in evidence.

their sixth issue that ″any breach by [*197] On this record, we conclude [appellants] was excused by [appellees’]

appellants’ fourth issue presents nothing conduct.″ In support of their argument, for this Court’s review. See TEX. R. CIV. P. appellants cite the general rule that 166a(c); cf. Narisi v. Legend Diversified ″performance is excused when a party to a Inv., 715 S.W.2d 49, 51-52 (Tex. contract prevents the other from App.—Dallas 1986, writ ref’d n.r.e.) performing.″ See O’Shea v. Int’l Bus. Mach. [**57] (rejecting argument that declaratory Corp., 578 S.W.2d 844, 846 (Tex. Civ. judgment counterclaim was redundant App.—Houston [1st Dist.] 1979, writ ref’d where issue was not raised until after n.r.e.). Appellants contend that ″[u]nder judgment was signed); City of Dallas/DISD this general rule, actions of [appellees] that v. US W. Fin. Servs., Inc., No. undermined or interfered with [appellants’] 05-92-01106-CV, 1993 WL 147262, at *5 ability to sell or market products excused (Tex. App.—Dallas Apr. 27, 1993, no writ) any alleged breach of such duties because (not designated for publication) (declining such actions prevented performance.″ 9 Additionally, appellants assert in part in their sixth issue that summary judgment on appellees’ breach of contract claim was precluded by fact issues respecting whether appellants’ performance was excused. However, we concluded in our analysis pertaining to issue two above that the trial court erred by granting [**58] summary judgment in favor of appellees on their breach of contract claim. Therefore, we need not address the portion of appellants’ sixth issue pertaining to appellees’ breach of contract claim.

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Additionally, appellants cite O’Shea in excerpts from Berryman’s deposition cited support of their position that ″[a]ny by appellants include Berryman’s question of fact as to whether [appellees] testimony that (1) during two separate interfered with [appellants’] performance meetings in 2006 and 2008, Brinkmann would preclude summary judgment.″ stated in front of retailers’ representatives that Berryman ″didn’t work″ and buyers Appellees respond in part that appellants did not want to do business with Berryman; ″cite [**59] no authority for the proposition (2) in approximately April 2008, JBBI that ’undermining’ or ’interfering’ are the hired Mike Bush; and (3) at the time Bush equivalent of preventing performance.″ was hired, Bush told Berryman that Further, appellees argue the trial court Berryman was ″being replaced″ by Bush. ″properly disposed of appellants’ attempt Additionally, appellants cite deposition to excuse their breach as a matter of law″ testimony of Brinkmann respecting the because ″[a]ppellees presented to the trial hiring of Bush. court undisputed evidence that [a]ppellants The record shows Berryman testified in his were at all times able to perform despite deposition that he was still able to perform the actions [a]ppellants want to complain his duties under the Agreement after the about.″ negative comments made by Brinkmann in The court in O’Shea did not address the 2006 and 2008. Therefore, we cannot question of whether evidence that a party conclude those comments prevented ″interfered″ with performance constitutes Berryman’s performance. In their reply evidence that performance was prevented. brief in this Court, appellants assert that See 578 S.W.2d at 846. Appellants cite no even if the ″defamatory statements″ of other authority, and we have found none, Brinkmann did not prevent performance, in support of their position that ″[a]ny appellees ″wholly frustrated [appellants’] question of fact as to whether [appellees] ability to perform″ because they interfered with [appellants’] performance ″effectively eliminated [Berryman’s] would preclude summary judgment.″ In position″ by hiring Bush and ″wresting support of their argument that the evidence away [Berryman’s] authority to act on his raises a fact question as to whether accounts.″ However, the deposition appellants’ performance of the Agreement [**61] testimony cited by appellants does was ″prevented,″ appellants cite portions not show Berryman’s performance was of (1) Berryman’s affidavit and (2) the prevented by the hiring of Bush. Further, depositions of Berryman and [*198] Berryman testified in his deposition that he Brinkmann. We concluded above that the was not replaced by Bush. On this record, trial court did not err by sustaining we cannot conclude the evidence raises a appellees’ objection to Berryman’s fact question as to whether appellants’ affidavit. Therefore, we [**60] do not performance of the Agreement was consider that affidavit in our analysis. The ″excused.″

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We decide against appellants on their sixth notice to the other party to the issue. contrary. Here, Defendants’

Agreement Termination Letter was As to the trial court’s four declarations in received by Plaintiffs in May of the judgment, all are challenged by 2008, and the Agreement expired by appellants. However, in light of our its own terms on August 1, 2008 as conclusions above, appellants’ arguments a result. respecting the trial court’s declaration ″c″ need not be addressed.10 Consequently, we .... address only appellants’ challenges [*199] d. JBBI did not, respecting the following declarations: constructively or otherwise, breach the Agreement.

a. Defendants ceased performing under the Agreement in, at least, With respect to declaration ″a,″ appellants May of 2008 when Berryman argue they ″presented evidence that the refused to fulfill his duties and 2001 Agreement had [**63] already been obligations for Plaintiffs. This constructively terminated by [appellees’] constituted a material breach of the conduct that undermined and interfered Agreement. The Agreement was at a with [appellants’] performance of the minimum terminable from that point contract.″ According to appellants, ″[t]his forward by Plaintiffs, and after evidence raised a fact question as to making every reasonable effort to whether [appellees] breached the communicate with Berryman, agreement, which should have prevented Plaintiffs lawfully terminated the the trial court from entering summary Agreement in August 2008. Thus, judgment and making the above no further obligations are owed or declaration.″ due to Defendants under the Appellees respond in part that appellants’ Agreement. argument respecting ″constructive b. Notwithstanding [**62] Plaintiffs’ termination″ is waived because appellants lawful termination of the Agreement, ″do not cite or analyze any cases in alleged the Agreement expired on August 1, support of their contention that constructive 2008. The Agreement provides for termination principles apply in automatic renewal upon the non-employment contract cases or, if such anniversary date of the contract only did apply, connecting evidence to elements if neither party provides written of constructive termination to demonstrate 10 Specifically, appellants contend the trial court’s declaration ″c″ was issued in error because ″[t]he existence of fact questions surrounding the partial performance doctrine and the modification of the 2001 Agreement’s one year extensions prevented [appellees] from conclusively proving that the oral agreements [to reimburse expenses] were not part of the 2001 Agreement.″ We concluded in the analysis above pertaining to issue eleven that the trial court did not err by concluding no fact questions existed as to partial performance and ″modification of the 2001 Agreement’s one year extensions.″

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the existence of a fact issue.″ Additionally, [appellees’] contention that ’constructive appellees contend ″[t]he evidence is termination’ is a concept limited to uncontroverted that working conditions did application in the employment context.″ not force [a]ppellants to stop performing, According to appellants, ″constructive and that [a]ppellants did not ’resign’ or [**65] termination is a concept that is stop performance when the alleged recognized in many types of relationships.″ offending incidents occurred, such being In support of that assertion, appellants cite requirements of a constructive discharge cases that purportedly relate to constructive claim in the employment context.″ termination in the contexts of franchise In their reply brief in this Court, appellants agreements, licensing agreements, and contend appellees’ allegations of ″waiver″ leases. However, appellants do not address fail for two [**64] reasons. First, appellants the elements of constructive termination in assert appellees ″misunderstand the point″ their briefs in this Court or explain how of appellants’ argument. Specifically, appellees’ alleged conduct in question appellants assert ″[t]he ’constructive constituted constructive termination. termination’ language was loosely used to Consequently, we conclude appellants’ argue that [appellees] breached before argument respecting constructive [appellants’] alleged breach, and therefore, termination presents nothing for this the further performance by [appellants] Court’s review.11 See TEX. R. APP. P. 38.1(i). was excused.″ Appellants contend they As to declaration ″d,″ appellants contend ″presented summary judgment evidence that declaration was issued in error because that [appellees] breached before [May appellants ″presented evidence that raised 2008] by engaging in conduct that a fact question as to [appellees’] breach of undermined and interfered with the 2001 Agreement by undermining and [appellants’] performance of the contract.″ interfering with [appellants’] performance.″ In support of that assertion, appellants cite In support of that argument, appellants cite the same evidence cited by them in their to their analysis pertaining [*200] to their argument pertaining to prevention of sixth issue and the evidence cited therein. performance in their sixth issue above. To However, again, to the extent appellants the extent appellants assert an argument assert an argument distinct [**66] from distinct from their argument pertaining to their argument pertaining to their sixth their sixth issue, appellants do not provide issue, appellants do not provide analysis or analysis or authority for such argument. authority for such argument and therefore Therefore, such argument presents nothing present nothing for this Court’s review. for this Court’s review. See TEX. R. APP. P. See TEX. R. APP. P. 38.1(i). 38.1(i). Second, appellants assert in their As to the trial court’s declaration ″b,″ reply brief that ″there is no merit to appellants contend they presented evidence 11 In oral argument before this Court, counsel for appellants asserted the Agreement was terminated according to its terms on August 29, 2008.

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that raises fact questions as to the contract provisions and cessation of termination of the Agreement. Specifically, performance due to breach. See Long Trusts appellants assert v. Griffin, 222 S.W.3d 412, 415-16 (Tex.

2006); Guzman v. Ugly Duckling Car Sales [T]he evidence shows that the of Tex., L.L.P., 63 S.W.3d 522, 528 (Tex. termination provision requires 90 App.—San Antonio 2001, pet. denied); days’ notice for any termination. Roma Indep. Sch. Dist. v. Ewing Constr. Otherwise the 2001 Agreement Co., No. 04-12-00035-CV, 2012 Tex. App. automatically renews. It is LEXIS 5968, 2012 WL 3025927, at *2 undisputed that 90 days’ notice was (Tex. App.—San Antonio July 25, 2012, no not provided by either party. Thus, pet.) (mem. op.); Atkinson v. Saddlewood under the express terms of the 2001 Partners, I, Ltd., No. 04-98-00681-CV, Agreement no termination occurred. 1999 Tex. App. LEXIS 4284, 1999 WL At the very least, a fact question 371285, at *4 (Tex. App.—San Antonio exists that should have prevented June 9, 1999, pet. denied) (not designated the trial court from making this for publication). declaration.

In their reply brief in this Court, appellants (citations to record omitted). contend in part that ″[n]o case law is necessary″ to resolve this issue in their Appellees respond in part that because favor because ″it is apparent on the face of appellants ″cite and analyze no cases for the record that no evidence supports their position that the Agreement did not [**68] the trial court’s declaration that ’the expire in August 2008 as determined,″ that Agreement expired by its own terms on argument is waived. Additionally, appellees August 1, 2008.’″

assert (1) ″[a]ppellants’ Termination Letter sent 72 days prior to renewal when coupled Because appellants’ argument is based on with [a]ppellants’ failure to resume the language of the Agreement, we cannot performance of the Agreement precluded agree with appellees that appellants waived [**67] automatic renewal as [a]ppellees this argument by not citing case law. under such circumstances are not obligated Further, the cases cited by appellees in to require [a]ppellants to comply with the support of their argument do not involve Agreement’s notice provision″; (2) compliance with a contract provision [a]ppellants’ breach precluded the respecting notice that precludes automatic Agreement’s renewal″; and (3) ″[n]o fact renewal of the contract. Therefore, we do questions could exist on this point in any not find those cases instructive. event″ because ″[t]he meaning of contract language is a question of law for the The record shows paragraph three of the court.″ In support of their argument, Agreement stated in part, ″This Agreement appellees cite cases pertaining to waiver of is for a term of five years starting August

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1, 2001 and is to be renewed annually 6. Attorneys’ Fees thereafter unless either parties [sic] gives In their seventh issue, appellants assert in notice in writing 90 days prior to the end of part ″the trial court erred in awarding any anniversary date.″ Berryman’s letter [a]ppellees attorneys’ fees when [a]ppellees alleging he had been ″constructively failed to conclusively prove the terminated″ was dated May 20, 2008, reasonableness and necessity of the claimed which the parties do not dispute is less fees by not segregating fees incurred for than ninety days prior to August 1, 2008.

work on causes of action for which such Thus, while the trial court’s statement that fees are permitted, from causes of action ″Defendants’ Agreement Termination for which such fees [**70] are barred.″12 Letter was received by [*201] Plaintiffs in According to appellants, (1) ″because May of 2008″ is not incorrect, we cannot [appellees’] cause of action for breach of agree that ″the Agreement expired by its contract fails, the trial court’s award of own terms on August 1, 2008 as a result.″ attorneys’ fees cannot be based on that We conclude [**69] no evidence supports action,″ (2) ″[i]t is undisputed that the trial court’s declaration ″b.″ [appellees] presented no evidence We decide in favor of appellants on the segregating the fees incurred in pursuing portion of their fifth issue respecting the their claims,″ and (3) no attempt was made trial court’s declaration ″b.″ Appellants’ to segregate attorneys’ fees incurred in fifth issue is otherwise decided against pursuing third-party claims asserted by them. We reverse declaration ″b″ of the Brinkmann, individually, that were later trial court’s judgment and render judgment nonsuited. denying summary judgment as to that Appellees contend appellants ″waived any declaration.

complaint″ respecting segregation of However, the record shows (1) the attorneys’ fees because they ″did not object summary judgment in question was sought to [a]ppellees’ attorneys’ fees evidence or and granted on multiple grounds and (2) provide controverting evidence.″ Further, declaration ″b″ is immaterial to summary appellees argue, counsel for appellees judgment as prayed for by appellees on the testified to the trial court ″in great detail″ ground of money had and received and in his affidavit, ″including segregating 15 declarations ″a,″ ″c,″ and ″d.″ Therefore, percent of the attorney’s fees incurred.″ the trial court’s error respecting declaration ″b″ does not necessitate reversal of the HN19 Texas law does not [**71] allow entirety of the trial court’s summary recovery of attorneys’ fees unless judgment. See Zimmerhanzel, 346 S.W.3d authorized by statute or contract. See, e.g., at 724; see also TEX. R. APP. P. 44.1. Tony Gullo Motors I, L.P. v. Chapa, 212 12 Additionally, appellants contend in their seventh issue that ″[a]ppellees’ redundant declaratory judgment action was used simply to pave a way to attorney fees.″ As described above, appellants’ arguments respecting the redundancy of the declaratory judgment action were not raised below and present nothing for this Court’s review.

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S.W.3d 299, 310 (Tex. 2006). A person may Co., L.P. v. Strategic Energy, L.L.C., 348 recover reasonable attorneys’ fees from an S.W.3d 444, 453 (Tex. App.—Dallas 2011, individual or corporation, in addition to the no pet.); see CA Partners v. Spears, 274 amount of a valid claim and costs, if the S.W.3d 51, 82 (Tex. App.—Houston [14th claim is for an oral or written contract. TEX. Dist.] 2008, pet. denied). CIV. PRAC. & REM. CODE ANN. § 38.001(8); see Ashford Partners, Ltd. v. ECO Res., We concluded above that the trial court Inc., 401 S.W.3d 35, 40 (Tex. 2012) (″[T]o erred by granting summary judgment on qualify for fees under [section 38.001(8)], plaintiffs’ breach of contract claim. a litigant must prevail on a breach of Therefore, attorneys’ fees based on that contract claim and recover damages.″). cause of action cannot be recovered. See Additionally, under section 37.009 of the TEX. CIV. PRAC. & REM. CODE ANN. § civil practice and remedies code, the trial 38.001(8). However, as described above, court in a declaratory judgment proceeding appellants’ issues pertaining to declarations may award ″reasonable and necessary ″a,″ ″c,″ and ″d″ in the final judgment are attorney’s fees as are equitable and just.″ decided against them in this appeal. TEX. CIV. PRAC. & REM. CODE ANN. § 37.009; Therefore, a basis for recovery of attorneys’ see also Jarvis v. Rocanville Corp., 298 fees remains. See TEX. CIV. PRAC. &REM. S.W.3d 305, 317 (Tex. App.—Dallas 2009, CODE ANN. § 37.009. pet. denied).

The record shows that [**73] in an affidavit HN20 If any attorneys’ fees relate solely in the appendix to appellees’ motion for to a claim for which such fees are summary judgment, counsel for appellees unrecoverable, a claimant must segregate testified in part (1) at least 85%, or recoverable from unrecoverable fees. $127,073, of the attorneys’ fees and [*202] Tony Gullo Motors, 212 S.W.3d at paralegal fees incurred by plaintiffs so far 313. ″[I]t is only when discrete legal ″are recoverable against the [d]efendants services advance both a recoverable and in this lawsuit″; (2) ″it is reasonable to [**72] unrecoverable claim that they are conclude that [plaintiffs’] counsel’s so intertwined that they need not be activities cannot all be segregated by task segregated.″ Id. at 313-14. This standard and as such are dependent on the same or does not require more precise proof for similar sets of facts and circumstances, are attorneys’ fees than for any other claims or part of many of the same tasks, and are expense. Id. at 314. ″[T]o meet a party’s therefore so intertwined that they cannot burden to segregate its attorneys’ fees, it is be so separated or segregated″ (3) a fair sufficient to submit to the fact-finder estimate of additional attorneys’ fees likely testimony from a party’s attorney be incurred by plaintiffs through the hearing concerning the percentage of hours that on plaintiffs’ motion for summary related solely to a claim for which fees are judgment to advance plaintiffs’ ″affirmative not recoverable.″ RM Crowe Prop. Servs. claims″ against defendants is at least

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$33,875; and (4) in the event of appeal any cause of action.″ Appellants assert that respecting plaintiffs’ ″affirmative claims,″ at the time the final judgment was entered, plaintiffs will likely incur at least an Brinkmann ″was not a party to the additional $35,000 in fees in defense of an affirmative causes of action on which appeal to the Dallas Court of Appeals, judgment was entered.″ According to $20,000 in fees in briefing an appeal to the appellants, ″[t]he trial court’s judgment Texas Supreme Court, and $15,000 in fees must be reversed because it awarded if the Texas Supreme Court grants a hearing damages, attorneys’ fees, costs and interest on such appeal. Appellants did not object to an individual who was not a party to any to this evidence [**74] or provide cause of action on which those amounts controverting evidence respecting were awarded.″ segregation of attorneys’ fees. On this Appellees ″agree that the final judgment record, we conclude appellees met their [**76] should be modified so Brinkmann burden as to segregation of attorneys’ fees.

individually is removed from the award of See Tony Gullo Motors, 212 S.W.3d at damages or fees because he never requested 313-14; RM Crowe Prop. Servs. Co., L.P., that relief.″ Specifically, appellees contend 348 S.W.3d at 453; see also Green Int’l, in a footnote in their appellate brief Inc. v. Solis, 951 S.W.2d 384, 389 (Tex. 1997) HN21 (″if no one objects to the fact The Final Judgment provides for that the attorney’s fees are not segregated recovery of damages and fees to as to specific claims, then the objection is ″Movants″ collectively, which was a waived″). defined term that included both Plaintiffs/Appellees as well as Third We decide against appellants on their Party Defendant/Brinkmann seventh issue.13 individually. Brinkmann was not a 7. Damages, Attorneys’ Fees, [*203] party to the Agreement, or any Costs, and Interest Awarded to Brinkmann alleged oral agreements with Appellants and did not assert breach Lastly, in their eighth issue, appellants of Agreement or declaratory contend ″the trial court erred in entering judgment claims in any pleading or judgment in favor of [Brinkmann], as a part of Appellees’ and individually, when he did not recover on Brinkmann’s summary judgment 13 This Court has stated that HN22 ″after a declaratory judgment is reversed on appeal, an award of attorneys’ fees may no longer be equitable and just.″ SAVA Gumarska in Kemijska Industria D.D. v. Advanced Polymer Sciences, Inc., 128 S.W.3d 304, 324 (Tex. App.—Dallas 2004, no pet.). ″Therefore, when we reverse a declaratory judgment and the trial court awarded attorneys’ fees to the party who prevailed at trial, we may remand the attorneys’ fee award for reconsideration in light of our disposition on appeal.″ Id. ″We are not required to do so, however.″ Id.; see City of Temple v. Taylor, 268 S.W.3d 852, 858 (Tex. App.—Austin 2008, pet. denied). In the case before us, the outcome [**75] in the trial court as to the declaratory judgment is not substantially affected by our conclusions above. Therefore, we conclude reconsideration of attorneys’ fees is not warranted in this case. See Advanced Polymer Sciences, Inc., 128 S.W.3d at 324; Taylor, 268 S.W.3d at 858; cf. Funes v. Villatoro, 352 S.W.3d 200, 217 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (where reversal of portion of declaratory relief ″substantially affects″ trial court’s judgment, remand as to attorneys’ fees is warranted).

418 S.W.3d 172, *203; 2013 Tex. App. LEXIS 14226, **76

motion. Appellants’ third party (postjudgment interest accrues on entire claims of defamation and business amount of final judgment, including court disparagement asserted against costs and prejudgment interest, from date Appellees and Brinkmann were of judgment until paid). dismissed by the trial court and not The record shows that at the time the final raised on appeal. Brinkmann non-suited his affirmative claims judgment in this case [**78] was signed, against Appellants. Brinkmann was a third-party defendant as to appellants’ claims for business (citations to record omitted).14 However, disparagement, [*204] defamation, and appellees assert, ″[a]ppellants’ desire to exemplary damages and had requested reverse the entire judgment due to this costs of court respecting those claims in correctable inadvertent drafting error is not his answer in the trial court. The trial court authorized or required.″ According to granted summary judgment against appellees, ″[a]ppellants’ request beyond appellants on those claims and those claims deleting the award of damages and fees to were dismissed and not raised on appeal. Brinkmann individually [**77] should be However, the record also shows (1) denied.″ Brinkmann was not a party to the affirmative causes of action on which HN23 Under rule 559 of the Texas Rules of judgment was rendered, i.e. breach of Civil Procedure, ″[t]he successful party in contract, money had and received, and the suit shall recover his costs, except in declaratory judgment and (2) the trial cases where it is otherwise expressly court’s awards of damages, attorneys’ fees, provided.″ See TEX. R. CIV. P. 559. Further, and prejudgment interest pertain to those section 304.003(a) of the Texas Finance claims. Accordingly, we conclude all Code provides in part that ″[a] money recoveries in favor of Brinkmann except judgment of a court of this state . . . , costs of court and interest on such costs including court costs awarded in the cannot stand.15 See HN24 TEX. R. CIV. P.

judgment and prejudgment interest, if any, 301 (judgment of trial court shall conform earns postjudgment interest at the rate to pleadings).

determined under this section.″ TEX. FIN. CODE ANN. § 304.003(a) (West 2006); see We reverse the portions of the trial court’s Dallas Cnty., Tex. v. Crestview Corners judgment (1) granting summary judgment Car Wash, 370 S.W.3d 25, 50 (Tex. in favor of Brinkmann on the claims App.—Dallas 2012, pet. denied) asserted by JBBI and TBC for breach of 14 With respect to the ″affirmative claims″ of Brinkmann described by appellees, the record shows that after Brinkmann was named as a third-party defendant, he asserted several claims not relevant to this appeal against appellants in the trial court, then nonsuited those claims prior to the time the trial court’s judgment was rendered. 15 The trial court’s judgment provided in part that ″Movants shall recover from Defendants, jointly and severally, all costs of court incurred and filed with the Court in this action.″ The record does not show the parties raised or addressed apportionment of costs in the trial court, nor is apportionment of costs raised [**79] or addressed on appeal.

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contract, money had and received, and judgment as to declaration ″b″ and the declaratory judgment and (2) awarding breach of contract claim asserted by JBBI Brinkmann damages, attorneys’ fees, and TBC and (2) modifying the judgment prejudgment interest, and postjudgment to omit Brinkmann from the parties granted interest on items other than costs of court. summary judgment on the affirmative Additionally, we render judgment omitting claims asserted by JBBI and TBC and Brinkmann from (1) the portion of the from the trial court’s award of damages, summary judgment respecting the claims attorneys’ fees, prejudgment interest, and asserted by JBBI and TBC for breach of postjudgment interest on items other than contract, money had and received, and costs of court. The trial court’s judgment is declaratory judgment and (2) the award of otherwise affirmed. damages, attorneys’ fees, prejudgment interest, and postjudgment interest on items /s/ Douglas Lang other than costs of court. See TEX. R. APP. P. DOUGLAS S. LANG 43.2(c) (providing appellate court may reverse trial court’s judgment in part and JUSTICE render judgment trial court should have rendered). Appellants’ eighth issue is JUDGMENT otherwise decided against them. In accordance with this Court’s opinion of this date, we REVERSE the trial court’s III. CONCLUSION judgment, in part, as to (1) declaration ″b″;

We decide in favor of appellants on their (2) summary judgment on the breach of second issue and portions of their fifth and contract claim asserted by appellees J. eighth issues. We need not reach appellants’ Baxter Brinkmann International first issue. Appellants’ remaining issues Corporation and The Brinkmann are decided against them. Corporation; (3) summary judgment in [**81] favor of appellee J. Baxter We reverse the trial court’s judgment, in Brinkmann on the claims asserted by J. part, [**80] as to (1) declaration ″b″; (2) Baxter Brinkmann International summary judgment on the breach of Corporation and The Brinkmann contract claim asserted by JBBI and TBC; Corporation for money had and received (3) summary judgment in favor of and declaratory judgment; and (4) the Brinkmann on the claims asserted by JBBI award to J. Baxter Brinkmann of damages, and TBC for money had and received and attorneys’ fees, prejudgment interest, and declaratory judgment; and (4) the award to postjudgment interest on items other than Brinkmann of damages, attorneys’ fees, costs of court. We RENDER judgment (1) prejudgment interest, and postjudgment denying summary judgment as to interest on items other than costs of court. declaration ″b″ and the breach of contract We render judgment (1) denying summary claim asserted by J. Baxter Brinkmann

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International Corporation and The which they [**82] are entitled under the Brinkmann Corporation and (2) modifying trial court’s judgment from appellants the judgment to omit J. Baxter Brinkmann Berryman’s South Fork, Inc. and Richard from the parties granted summary judgment Berryman and from any supersedeas bond on the affirmative claims asserted by J. or cash deposit in lieu of supersedeas Baxter Brinkmann International bond. After the judgment and appellants’ Corporation and The Brinkmann costs of this appeal have been paid, the Corporation and from the trial court’s clerk of the trial court is DIRECTED to award of damages, attorneys’ fees, release the balance, if any, of any cash prejudgment interest, and postjudgment deposit in lieu of supersedeas bond to the interest on items other than costs of court. person who made the deposit. In all other respects, the trial court’s judgment is AFFIRMED. Judgment entered this 20th day of November, 2013.

It is ORDERED that each party bear their own costs of this appeal. Further, it is /Douglas S. Lang/ ORDERED that appellees J. Baxter DOUGLAS S. LANG Brinkmann International Corporation, The Brinkmann Corporation, and J. Baxter JUSTICE Brinkmann recover the full amounts to