Examination Management Services, Inc. v. Kersh Risk Management, Inc.

367 S.W.3d 835, 2012 WL 1881418, 2012 Tex. App. LEXIS 3347
CourtCourt of Appeals of Texas
DecidedApril 27, 2012
DocketNo. 05-10-00777-CV
StatusPublished
Cited by35 cases

This text of 367 S.W.3d 835 (Examination Management Services, Inc. v. Kersh Risk Management, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Examination Management Services, Inc. v. Kersh Risk Management, Inc., 367 S.W.3d 835, 2012 WL 1881418, 2012 Tex. App. LEXIS 3347 (Tex. Ct. App. 2012).

Opinion

OPINION

Opinion By Justice MYERS.

Appellant, Examination Management Services, Inc. (EMSI), appeals a judgment granted in favor of appellee, Kersh Risk Management, Inc. d/b/a Kersh Wellness (Kersh). In four issues, EMSI argues (1) there is neither legally nor factually sufficient evidence to support the $156,996.05 of lost profits damages awarded by the jury; (2) there is neither legally nor factu[838]*838ally sufficient evidence EMSI failed to comply with a material obligation of the contract; (3) there is neither legally nor factually sufficient evidence EMSI breached the contract first; and (4) the evidence established as a matter of law that Kersh wrongfully refused to pay EMSI $245,586.60. In a cross-issue, Kersh contends the trial court abused its discretion by awarding Kersh $80,000 in attorney’s fees for its breach of contract claim because the evidence established reasonable and necessary attorney’s fees of $124,809.80. For the following reasons, we reverse the award of lost profits and render judgment that Kersh take nothing.

Background and Procedural History

EMSI is in the business of providing biometric testing services for corporate “wellness” programs. Wellness plans are incentive programs offered by companies to their employees to reduce insurance premiums, and often include biometric testing such as recording the medical history of participating employees, taking their body weight and blood pressure information, and testing the glucose and cholesterol levels of their blood. Those blood tests, in turn, typically involved a trained examiner drawing a drop of an employee’s blood with a prick of the finger and placing the blood onto a “cassette,” which was then placed in a machine that measured blood glucose and cholesterol. The cassettes were maintained in sealed packages that had a limited shelf life. Because of the limited shelf life, EMSI typically required customers to pay for all of the cassettes ordered for a particular wellness event, even if they were not actually used at the event.

In 2005, Kersh entered into agreements with various companies to provide wellness programs, and one of those companies was Envelopes Unlimited (EU). Another Kersh client, Bemis Company, Inc. (Bem-is), was Kersh’s largest account, comprising approximately seventy percent of its business. In May of 2005, Kersh subcontracted to use EMSI to perform biometric testing services, particularly with the Bem-is wellness program. The two page agreement between Kersh and EMSI provided that, for cholesterol screenings, Kersh was to be charged “$25.00 per test.” The agreement specified that “[t]ests are performed with fingerstick methodology, utilizing Cholestech LDX Analyzers.”

EMSI started working for Kersh in the fall of 2005 and began billing Kersh in September of 2005. The relationship between the two parties, however, soon deteriorated. Kersh contended EMSI employees failed to “show up” at one Bemis work site, were late at others, lacked sufficient equipment to conduct the cholesterol tests, and were “unprofessional” in the way they conducted the tests because of a lack of proper training in how to use the testing equipment. Kersh also contended it was not being charged for tests actually “performed,” as the contract required, and it was instead charged for every cassette ordered by EMSI, regardless of whether they were used. EMSI alleged Kersh was not paying its bills within thirty days as required under the contract, and that it was forced to “front” money to pay for cassettes and examiners it had used at Kersh’s events.

Kersh was billed a total of $390,586.60 by EMSI, for the period of September of 2005 through April of 2006. In February of 2006, Kersh made its first payment to EMSI of $88,425.25. In May of that same year, Kersh made a $56,574.75 payment, for a total of $145,000 paid to EMSI. [839]*839EMSI attempted to collect $245,586.60 from Kersh in unpaid invoices, eventually referring the matter to a collection agency.

On April 5, 2007, Kersh sued EMSI for breach of contract, breach of express warranty, violation of the Texas Deceptive Trade Practices Act, and negligence. Kersh alleged EMSI’s examiners were inadequately trained, were provided in insufficient numbers, used insufficient testing equipment, and that the testing equipment was improperly calibrated. EMSI counter-claimed for breach of contract. Shortly before the start of trial, Kersh nonsuit-ed all its causes of action against EMSI other than breach of contract.

At trial, Kersh argued EMSI improperly charged it $101,550 for cassettes and that EMSI caused Kersh to lose $8.6 million in profits from EU and over $165,000 from Bemis. EMSI argued Kersh owed it $245,586.60 for unpaid invoices, after credits for payments. Kersh abandoned the portion of its lost profits claim that was based on EU; the trial court granted a partial directed verdict as to the EU claim. The jury was asked (1) whether EMSI breached the contract; (2) whether Kersh breached the contract; (3) who breached first; (4) if EMSI breached first, the damages Kersh sustained from (a) overcharges for cassettes and (b) lost profits; and (5) if Kersh breached first, the damages EMSI sustained from the loss of the “benefit of the bargain.”1

The jury found both parties breached the contract and that EMSI breached first. In response to question four, the jury found “zero” damages on Kersh’s claim that EMSI breached by overcharging for cassettes, and that Kersh lost profits in the amount of $156,996.05. As a result of the conditioning language in the charge, the jury did not answer question five regarding EMSI’s damages for unpaid invoices, because it found EMSI breached the contract first. Both parties agreed before trial to submit the issue of attorney’s fees for the prevailing party to the court following the jury verdict. The trial court awarded attorney’s fees to Kersh but reduced Kersh’s requested amount of attorney’s fees from $124,809.80 to $80,000. Both parties filed notices of appeal.

Discussion

Lost Profits

In its first issue, EMSI alleges there is neither legally nor factually sufficient evidence to show Kersh sustained lost profits damages in the amount of $156,996.05, which is the amount found by the jury in response to question 4(b) of the charge.

When, as in this case, an appellant attacks the legal sufficiency of an adverse finding on an issue on which it did not have the burden of proof, it must demonstrate that no evidence supports the finding. See Exel Transp. Servs., Inc. v. Aim High Logistics Servs., LLC, 323 S.W.3d 224, 232 (Tex.App.-Dallas, 2010, pet.denied); Private Mini Storage Realty, L.P. v. Larry F. Smith, Inc., 304 S.W.3d 854, 860 (Tex.App.-Dallas 2010, no pet.) (citing Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983)). We review the evidence presented at trial in the light most favorable [840]*840to the jury’s verdict, crediting evidence favorable to that party if reasonable jurors could and disregarding evidence unless reasonable jurors could not. See Exel Transp. Services, 323 S.W.3d at 232. Anything more than a “scintilla of evidence” is legally sufficient to support the jury’s finding. Id.

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Cite This Page — Counsel Stack

Bluebook (online)
367 S.W.3d 835, 2012 WL 1881418, 2012 Tex. App. LEXIS 3347, Counsel Stack Legal Research, https://law.counselstack.com/opinion/examination-management-services-inc-v-kersh-risk-management-inc-texapp-2012.