Edmunds v. Sanders

2 S.W.3d 697, 1999 WL 796784
CourtCourt of Appeals of Texas
DecidedOctober 6, 1999
Docket08-96-00436-CV
StatusPublished
Cited by37 cases

This text of 2 S.W.3d 697 (Edmunds v. Sanders) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edmunds v. Sanders, 2 S.W.3d 697, 1999 WL 796784 (Tex. Ct. App. 1999).

Opinion

*699 OPINION

RICHARD BARAJAS, Chief Justice.

We withdraw our opinion and judgment of March 18, 1999, overrule Appellee’s and Appellants’ Motion for Rehearing as moot, and substitute the following opinion. This is an appeal from a jury finding that the Appellants converted a business, converted property which Appellee had contributed to the business, and tortiously interfered with Appellee’s prospective contracts with customers. The jury awarded Appellee both actual and punitive damages.

I. SUMMARY OF THE EVIDENCE

Anthony Hilary Foster (“Foster”) performed tool-and-die work in Mississippi. He had been in such business for about twenty-five years. In 1987, Foster approached Bill Sanders (“Sanders”), Appel-lee, who operated a tool-and-die and plastic injection molding business in Destín, Florida, to discuss opening such a business in El Paso. Sanders was the owner and operator of a successful tool-and-die and plastic injection molding business in Florida. Sanders, seeing the potential of such a venture, traveled to El Paso for the purpose of setting up the business and finding a location for the shop. On December 8, 1987, he leased a location at the Gateway Business Park on Gateway East. The space was leased from Commerce Gateway Partners, Ltd. Ted Edmunds and his father, Ed Edmunds, Jr. Appellants, were the property managers for Commerce Gateway Partners, Ltd. Ted Edmunds negotiated the lease with Sanders and Ed Edmunds, Jr. executed the lease.

On January 5, 1988, Foster and Sanders entered into a written agreement regarding their venture. The agreement required Sanders to provide equipment and financing for the business, while Foster was to move to El Paso and run the business. Sanders and Foster dispute whether the agreement, which contained several blank spaces, accurately reflects the arrangement between them. The agreement does not contain any final resolution for Foster’s participation in the business which includes the amount of money Foster was required to invest in the business in order to obtain an eventual ownership interest. Sanders testified that Foster really had no funds to invest, which was a primary reason why no final agreement was reached.

In February 1988, Foster moved to El Paso to open and manage the business at the leased location. The term of the lease on the space began February 1,1988. The business name was Sanders Manufacturing — El Paso. Foster himself filed the Assumed Name Certificate with the El Paso County Clerk establishing Sanders Manufacturing — El Paso, with Sanders listed as the only owner. Sanders Manufacturing— El Paso, began operations in February 1988. Foster believed he owned fifty percent of this sole proprietorship. Sanders provided the tool-and-die machinery which was to be used by the El Paso business.

The record shows that within a few months, Sanders became dissatisfied with the performance of the business although the tool-and-die and plastic injection molding business is said to be a profitable enterprise if properly managed. 1 Foster stated that as early as March 1988, his relationship with Sanders “wasn’t too good.” Sanders began pressuring Foster to try “to get him on the ball.” Sanders and Foster had a heated conversation with Sanders expressing his dissatisfaction with Foster’s performance because the business was losing money. Their relationship deteriorated severely after June of 1988. According to Sanders, they were “not communicating very good” in July of 1988. Foster agreed that they had difficulty communicating, beginning in June 1988, continuing through July and August, and *700 worsening thereafter. At approximately the same time, Foster began ignoring Sanders’ advice as to how the business should be conducted.

In September of 1988, Sanders concluded that he could not sustain any more losses in the El Paso business. Although he told Foster he would shut down the business if it did not improve, Sanders had no intention of closing his business or walking away from his substantial investment. If Foster was unable to properly manage their business, it was Sanders’ intention to come to El Paso and run the shop himself until such a time that he was able to hire another manager for the business.

Evidence Concerning the Acts of Ed Edmunds, Jr. and Ted Edmunds

At about the same time, Foster approached Ted Edmunds to tell him that he would probably have to close the business because he was broke, that Sanders refused to send additional money, and that Foster had put all the money he had into the business. Ted Edmunds suggested that Foster consult with his father, Ed Edmunds, Jr. because Ed Edmunds, Jr. had significant business experience and Ted Edmunds thought that he could help Foster. Ed Edmunds, Jr. offered Foster advice regarding cash flow, recommended an accounting firm for the business, and helped Foster obtain a line of credit. He also recommended that Foster seek the services of a particular attorney. Ed Ed-munds, Jr. reviewed the books of the business without Sanders’ knowledge or consent and essentially began to make all decisions related to the business as well as Foster’s dealings with Sanders.

Ed Edmunds, Jr. began consulting with Foster in the spring or summer of 1988. The record shows that his role as landlord quickly became one of consultant for Sanders Manufacturing — El Paso. Sanders purportedly had no knowledge that Foster had engaged the services of Ed Edmunds, Jr. The record shows Foster’s testimony as follows:

Q. When did you tell Mr. Sanders that you had retained Mr. Edmunds?
A. I don’t think I ever told him.
Q. When did you tell Mr. Sanders that you had hired him?
A. I don’t think I ever told him that either.

Ed Edmunds, Jr. did not charge Sanders for his services until June 1989, after deciding to invest in the business and to create Foster Mold. Ed Edmunds, Jr. was not charging for his consulting services unless he was successful in putting the business “back on its feet” and then he “would work out a reasonable fee.” Although Sanders successfully operated an identical business in Florida, his expertise was neither consulted nor followed after the Edmunds became involved with Sanders Manufacturing — El Paso. Ed Ed-munds, Jr., wanting to determine what kind of business Sanders and Foster had, looked over the entire operation. He stated that he was confused about whether the business was a partnership, sole proprietorship, or corporation. Ed Edmunds, Jr. admitted that Foster himself did not know what type of business it was, and he (Ed Edmunds, Jr.) never asked Sanders nor inquired with Sanders regarding what kind of business it was. He did however know that Sanders was wiring cash to the business and furnishing equipment.

Ed Edmunds, Jr. became further involved when he obtained a loan for Sanders Manufacturing — El Paso and personally guaranteed the loan. By reviewing the book and business records, Ed Edmunds, Jr. knew that Sanders Manufacturing — El Paso had good accounts receivable from companies which were all “Fortune 500 companies” with excellent credit. He testified that he did not see any risk in guaranteeing the loan himself because of such receivables and customers.

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Bluebook (online)
2 S.W.3d 697, 1999 WL 796784, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edmunds-v-sanders-texapp-1999.