First State Bank, N.A. v. Morse

227 S.W.3d 820, 2007 Tex. App. LEXIS 4689, 2007 WL 1345458
CourtCourt of Appeals of Texas
DecidedJune 14, 2007
Docket07-05-0138-CV
StatusPublished
Cited by11 cases

This text of 227 S.W.3d 820 (First State Bank, N.A. v. Morse) 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
First State Bank, N.A. v. Morse, 227 S.W.3d 820, 2007 Tex. App. LEXIS 4689, 2007 WL 1345458 (Tex. Ct. App. 2007).

Opinions

Opinion

BRIAN QUINN, Chief Justice.

First State Bank (First State) appeals from a judgment rendered in favor of C.D. Morse d/b/a 38th & Q Auto (Morse). Via six issues, it contends that the trial court erred in 1) entering judgment on responses to jury questions concerning negligence, 2) granting judgment on insufficient evidence, 3) admitting purported expert testimony of lost profits, and 4) entering judgment on factually insufficient evidence supporting the jury’s determination regarding comparative responsibility, joint enterprise and agency. On cross appeal, Morse contends that the trial court erred by 1) failing to submit a charge involving the Texas Theft Liability Act and gross negligence, 2) failing to impose a constructive trust for the benefit of Morse and 3) [824]*824disregarding the jury’s answer on the issue of conversion. We affirm in part and reverse and render in part.

Background

The dispute arose when First State released to Monte Scarbrough a large number of car titles owned by Morse. First State had held the titles as collateral for a floor plan line of credit it extended to Morse. Furthermore, the latter testified that he had directed First State to refrain from releasing the documents to anyone other than himself and an individual named Lopez. Nonetheless, First State gave Scarbrough the titles without Morse’s approval. Scarbrough then sold various of the vehicles represented by the titles and used the proceeds to reduce his own separate debt owed to First State.

Issues One and Two — Negligence Finding

Through its first two issues, First State attacks the jury’s finding of negligence. Purportedly, it had no duty regarding viz the preservation of the titles, and the evidence of causation was non-existent or factually insufficient. We sustain the latter, which dispenses with the need to address the former.2

According to First State the evidence is deficient because it did not foresee “that Scarbrough would misappropriate titles, vehicles and funds.” Moreover, the damages purportedly suffered arose not from its decision to release the titles to him but its successor’s decision “to terminate immediate credit to Morse at any time, without regard to whether it had extended such privilege in the past.”3 We sustain the argument in part.

The applicable standard of review is well known and needs little explanation. Regarding the matter of legal sufficiency, we determine whether the evidence would enable reasonable and fair-minded people to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). And, in deciding that, we must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. Id. Concerning the factual sufficiency of the evidence, we assess the quantum of evidence supporting the verdict and determine whether it was too weak or somehow overwhelmed by the contrary evidence. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986), overruled on other grounds by Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex.2000) (holding that the court of appeals must consider and weigh all of the evidence, and may only set aside the finding if the evidence is so weak, or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust).

Next, to satisfy the element of causation under a claim of negligence, the proponent must prove that the breached duty was both a cause in fact of the injury and that injury arising from the act was reasonably foreseeable. Read v. Scott Fetzer Co., 990 S.W.2d 732, 737 (Tex.1998); Schneider v. Haws, 118 S.W.3d 886, 892 (Tex.App.-Amarillo 2003, no pet.). To be a [825]*825cause in fact, there need only be a reasonable probability that the act or omission gave rise to the harm. Kramer v. Lewisville Memorial Hosp., 858 S.W.2d 897, 399-400 (Tex.1993); Schneider v. Haws, 118 S.W.3d at 892. And, such a probability exists if the act or omission was a substantial factor in bringing about an injury, without which the harm would not have occurred. Schneider v. Haws, 118 S.W.3d at 892. Regarding foreseeability, it requires proof that a person of ordinary intelligence should have anticipated the danger caused by the negligent act or omission. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex.1995). With this said, we turn to the evidence of record.

It cannot be denied that before Scarbrough could effectuate the sale of the vehicles and convert the proceeds, he had to acquire the titles. Since First State held them, their release by that entity was elemental to the success of his plan. Thus, in First State’s releasing them to Scarb-rough contrary to the directives of Morse and its duties to exercise reasonable care over (and to preserve) the collateral, a jury had reasonable basis to conclude that First State’s act was a substantial factor in bringing about the injury suffered by Morse. At the very least, a jury could so reasonably conclude if it accepted Morse’s testimony as true.

Regarding the element of foreseeability, we note that the injury at issue stemmed from two roots. One involved First State’s act of releasing the titles to Scarbrough. The second encompassed his conversion of those titles to his own benefit. Furthermore, the record illustrates that Morse had, on many occasions, authorized First State to release car titles to Scarbrough. Yet, nowhere are we cited to evidence of prior misconduct by Scarbrough viz those titles or his activities in general. Nor did we find any evidence of misconduct of the ilk that would have placed First State on notice that Scarbrough may use the titles for his personal, unlawful gain. Indeed, Morse himself stated that he did not distrust Scarbrough before the incident in question. Similarly, Edwina Meyer (the bank employee who normally dealt with Scarbrough) stated that she could not recall Morse complaining about Scarbrough’s integrity, honesty, or performance. Nor could she recall being told that Scarbrough should be watched. And, when asked if anyone had “ever reported] to [her] any problem” regarding the relationship between Scarbrough and Morse, she answered “no.”

It has long been the rule that the criminal conduct of a third party normally constitutes a superseding cause relieving a negligent actor of liability. Phan Son Van v. Pena, 990 S.W.2d 751, 753 (Tex.1999); Nixon v. Mr. Prop. Mgt. Co., 690 S.W.2d 546, 549-50 (Tex.1985); Pichardo v. Big Diamond, Inc., 215 S.W.3d 497, 501 (Tex.App.-Fort Worth 2007, no pet.). Though an exception to the rule arises when the criminal conduct is foreseeable, Pichardo v. Big Diamond, Inc.,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
227 S.W.3d 820, 2007 Tex. App. LEXIS 4689, 2007 WL 1345458, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-state-bank-na-v-morse-texapp-2007.