Faucette v. Chantos

322 S.W.3d 901, 2010 Tex. App. LEXIS 7769, 2010 WL 3703255
CourtCourt of Appeals of Texas
DecidedSeptember 23, 2010
Docket14-08-00536-CV
StatusPublished
Cited by43 cases

This text of 322 S.W.3d 901 (Faucette v. Chantos) 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
Faucette v. Chantos, 322 S.W.3d 901, 2010 Tex. App. LEXIS 7769, 2010 WL 3703255 (Tex. Ct. App. 2010).

Opinions

OPINION

JEFFREY V. BROWN, Justice.

This case involves the failed sale of a company to its employees, who instead resigned from the company, formed their own business, and obtained some of the seller’s former lines of business. The company, A.J. Chantos <& Associates, Inc., d/b/a Sarco of Texas (“Sarco”) and its principal shareholder, Grace C. Chantos, sued former employees H. Frank Faucette and J. Lawrence Schadler, alleging breach of contract, tortious interference with contract, and other claims. Both sides moved for summary judgment on the breaeh-of-contract claim, and the trial court granted Chantos and Sarco’s motion for partial summary judgment on liability for breach of contract.

The case was then tried to a jury on damages for breach of contract and on the tortious-interference claim. The jury awarded Chantos $192,266.00 in damages for breach of contract. The jury found both defendants liable for tortious interference and awarded Sarco $201,407.21 in damages. The trial court granted Fau-[905]*905cette and Schadler’s motion for judgment notwithstanding the verdict on the tor-tious-interference claim, but entered a judgment on the breach-of-contract claim for the amount awarded by the jury, attorney’s fees, pre- and post-judgment interest, and costs.

On appeal, appellants Faucette and Schadler contend the trial court erred in granting Chantos and Sarco’s motion for partial summary judgment on the breach-of-contract claim and in not granting their motion for summary judgment. In resolving this issue, we are asked to consider the infrequent circumstance of a grantor of an option suing the holder of the option for allegedly breaching the option’s terms. The appellants also contend that the evidence at trial was legally and factually insufficient to prove damages for breach of contract.

On cross-appeal, Chantos and Sarco contend that the trial court erred in granting Faucette and Schadler’s motion for judgment notwithstanding the verdict because Chantos and Sarco presented legally sufficient evidence of each element of tortious interference.

For the reasons explained below, we affirm.

I

Grace Chantos and her husband, Andy, formed Sarco of Texas, a representative sales agency for plumbing supplies, in 1979. In 1983, they incorporated the agency as A.J. Chantos & Associates, Inc., d/b/a Sarco of Texas. Sarco had contracts with manufacturers in the plumbing, air-conditioning, and heating industry. It was standard in the industry that the contracts with the manufacturers had thirty-day termination provisions. Despite the thirty-day cancellation provision, Sarco represented several manufacturers for twenty years or more. These manufacturers included Elkay, Vanguard, McGuire, and Precision.

Grace and Andy had two children, Linda and Andrew. Andrew worked for Sarco until 1993, when he started his own agency, Sarco Central, in New Braunfels. Linda married Faucette, who worked for Sar-co for a few years in the 1980s, returned to Sarco as a salesman in 1994, and remained there until October 7, 2003. J. Lawrence Schadler worked as a salesman for Sarco from 1994 until October 7, 2003. The only other sales employee for Sarco was Lane Malmburg, who started with Sarco in 2002. Malmburg resigned the same day as Fau-cette and Schadler — October 7, 2003.

For many years, Andy Chantos had suffered from a serious illness. In 2001, he and Grace began to consider retiring and entered into negotiations with Chumley & Associates to sell the agency. Ultimately, Andy and Grace broke off negotiations with Chumley and offered to sell Sarco to Andrew, Faucette, and Schadler.1 Andrew already owned 260 of Sarco’s 1,000 shares, most of which were obtained in 2001 when Sarco acquired Andrew’s company, Sarco Central. In the spring and summer of 2001, the parties executed the “Sale and Purchase Agreement” containing the option to purchase all the shares of stock in Sarco (the “contract”).

The contract provided that, when Fau-cette, Schadler, and Andrew acquired forty-nine percent of the company, they would have the option to purchase the remainder of the company from Chantos. The relevant portion of the contract provided:

At such time as Buyers have acquired a total of forty-nine percent (49%) of the [906]*906authorized and outstanding shares of the Corporation, Buyers shall have the option to purchase the remaining shares, but only in a lump sum wherein Buyers purchase all remaining shares.
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This Agreement shall terminate unless the Sale and Purchase contemplated is completed in its entirety within thirty-two (32) months from the date of execution of the Agreement.

Andy became gravely ill in late 2001, and after that he and Grace did not actively participate in the operation of Sarco. Faucette, Schadler, and Linda operated Sarco on a day-to-day basis. On August 18, 2002, Andy died. Grace returned to work in May of 2008, and Linda resigned.

On July 22, 2003, Faucette, Schadler, Chantos, Andrew, and attorney Brad Walton met to discuss exercising the option. At the time of the meeting, Faucette owned 118 of Sarco’s 1,000 shares; Scha-dler owned 116 shares, and Andrew owned 260 shares. Thus, together they owned 494 shares, or 49.4 percent of the company.2 The parties discussed a plan in which Faucette and Schadler were to purchase enough shares from Chantos to bring their ownership to 260 shares each — the same number Andrew already owned.3 The company would then purchase the remaining shares. The parties also discussed having another meeting within sixty days, apparently to finalize the agreement. But no second meeting occurred, and Faucette and Schadler did not purchase the shares.

Sometime after the July 22 meeting, Faucette and Schadler’s business relationship with Grace deteriorated, and after one particularly heated encounter with Grace, they decided to leave Sarco and form their own representative agency. In early September, Faucette discussed leaving Sarco with Schadler and Malmburg. They all resigned on October 7, 2003. About a week or two before they resigned, Scha-dler went to some of the manufacturers with which Sarco had representative contracts, including Elkay, Vanguard, McGuire, and Precision, and posed a “hypothetical” question asking if he and the others left Sarco, whether they could represent those manufacturers. Also, in late September or early October, Faucette spoke with an attorney about incorporating a new manufacturer’s representative company to be called Tri-Rep Sales, Inc. Fau-cette, Schadler, and Malmburg did not inform Grace of their plans or that they were going to quit. They continued to represent to Grace and Andrew that they intended to complete the purchase of shares in Sarco.

On the day Faucette, Schadler, and Malmburg resigned, Grace was in California. Consequently, the office was left without salespeople and unable to function adequately.4 That same day, Vanguard sent Sarco written notice that it was terminating its manufacturer’s sales representa[907]*907tive contract with the company. Three days later, on October 10, 2008, Elkay also terminated its sales agreement with Sarco. Elkay and Vanguard signed representation agreements with Tri-Rep shortly after that.

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Cite This Page — Counsel Stack

Bluebook (online)
322 S.W.3d 901, 2010 Tex. App. LEXIS 7769, 2010 WL 3703255, Counsel Stack Legal Research, https://law.counselstack.com/opinion/faucette-v-chantos-texapp-2010.