James H. Bruce v. Jamie Kothmann, Joe Esnoz, and Ted Lee

• Court: Court of Appeals of Texas
• Decided: August 16, 1995
• Docket: 03-94-00598-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-94-00598-CV

James H. Bruce, Appellant

v.

Jamie Kothmann, Joe Esnoz, and Ted Lee, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT

NO. 92-14036-A, HONORABLE W. JEANNE MEURER, JUDGE PRESIDING

PER CURIAM

Appellant James H. Bruce challenges a take-nothing judgment rendered against him and in favor of appellees Jamie Kothmann, Joe Esnoz, and Ted Lee. We will affirm the trial court's judgment.

FACTS

The dispute arose out of Bruce's June 27, 1991, contract of employment with American Lamb Producers, Inc. (ALPI). ALPI was a start-up company that planned to process and market lamb. Under the agreement, ALPI was to employ Bruce as its general manager and chief executive officer for five years at an annual salary of $90,000. ALPI also promised to provide him an automobile and, if it terminated him without cause, to pay him severance pay equal to one year's compensation. Since ALPI had no credit, Bruce personally signed the lease on the Volvo he rented in accordance with the contract.

The company soon suffered a cash-flow crisis. The directors believed that they could raise additional capital more readily if the existing officers resigned. Bruce tendered his resignation at a teleconference on June 19, 1992, and the board voted to accept it. Bruce testified that he offered to resign if ALPI, within two or three weeks, paid him $10,000 in severance, reimbursed him for "about $9,000" of expenses, and assumed the lease on the Volvo. The minutes of the teleconference reflect an offer for $10,000 severance and $8,000 in expenses; the issue of the transfer of the Volvo lease was not recorded. Also, the minutes reflect that the board determined that the offer should "have no greater priority than any other debts."

On June 25, 1992, Bruce offered by letter to resign effective June 21 if ALPI paid him $10,000 in severance, reimbursed him $9,300 for expenses, and assumed the lease on the Volvo. ⁽¹⁾ According to a notation purportedly made by Kothmann, the letter was "accepted" by the board on June 30, 1992. However, none of the conditions were met. And, because ALPI quit paying for the rental of the Volvo but did not transfer the lease agreement, the Volvo was ultimately repossessed. The repossession damaged Bruce's credit and delayed the refinancing of his home.

Bruce initially sued ALPI for breach of an employment contract, negligence and gross negligence. ALPI answered the lawsuit but did not defend itself at trial. Bruce obtained an "interlocutory" judgment against ALPI in the amount of $368,952, and, the same day, filed an amended pleading adding Kothmann, Esnoz, and Lee as defendants. He later filed an amended pleading that asserted that Kothmann, Esnoz, and Lee were personally liable for the judgment obtained against the corporation because they aided and abetted, directed, instigated, participated in, or knew of ALPI's conduct. On a motion from Kothmann, Esnoz, and Lee, the trial court severed the action against the individuals from that against the corporation. At trial Bruce sought to hold Kothmann, Esnoz, and Lee liable for the damages arising from the breach of the agreement to pay the $19,300 and to assume the lease of the Volvo.

REVIEW OF THE GRANT OF A MOTION FOR JUDGMENT

Bruce, citing Yarbrough v. Phillips Petroleum Co., 670 S.W.2d 270, 272 (Tex. App.--Houston [1st Dist.] 1984, writ ref'd n.r.e.), asserts that the proper standard for reviewing the grant of a motion for judgment in a bench trial is the same as the standard for the grant of a motion for a directed verdict in a jury trial and that the trial court erred by filing findings of fact and conclusions of law in this proceeding. Bruce is incorrect.

In a nonjury trial, the trial judge determines both the factual issues and the application of the law to those facts. Under these circumstances, the proper procedure on a motion for judgment is to permit the trial judge to rule on both the factual and legal issues at the close of the plaintiff's case. The court may make factual findings at that time if they are requested by a party. Qantel Business Sys., Inc. v. Custom Controls Co., 761 S.W.2d 302, 304 (Tex.1988); Moore v. Office of Atty. Gen., 820 S.W.2d 874, 876 (Tex.App.--Austin 1991, no writ). Here, Bruce himself requested the findings and conclusions that the trial court filed. We will review the judgment as if it had been rendered after the defense had rested.

ANALYSIS

By points of error one and two, Bruce complains that the trial court erred in granting appellee's motion for judgment because he established a prima facie case of negligent misrepresentation against both ALPI and the individual defendants Kothmann, Esnoz, and Lee, respectively. ⁽²⁾ Bruce briefed his points of error based on his erroneous assumption that he would only have to raise an issue of fact on each element to avoid a judgment rendered at the close of his case. He does not challenge any of the trial court's findings of fact or its failure to find any elements of the tort of negligent misrepresentation. He requested additional findings of fact and conclusions of law that would have supported a claim, but the trial court refused to make them. ⁽³⁾ Bruce does not challenge that refusal on appeal and has therefore waived any error regarding the refusal. Cameron v. MacDonell, 659 S.W.2d 911, 912 (Tex. App.--Dallas 1983, no writ). Arguably, Bruce presents nothing for appellate review.

However, reviewing courts construe briefs liberally to fairly and equitably adjudicate the rights of the litigants. Williams v. Khalaf, 802 S.W.2d 651, 658 (Tex. 1990); Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989). Under the points, Bruce challenges the trial court's conclusions of law that neither ALPI nor Kothmann, Esnoz, or Lee committed tortious acts with regard to Bruce. Conclusions of law denote the theory upon which the case was tried. De Benavides v. Warren, 674 S.W.2d 353, 362-3 (Tex. App.--San Antonio 1984, writ ref'd n.r.e.). A conclusion of law may be reviewed for legal correctness. However, even if the trial court erred in its conclusions of law, we would not reverse the judgment if it could be upheld on any legal basis. Vandever v. Goette, 678 S.W.2d 630, 635 (Tex. App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.); De Benavides, 674 S.W.2d at 362-3.

Bruce's basic complaint is that the trial court concluded that no tort had been committed while he claims to have proven a prima facie case of negligent misrepresentation. The trial court found that Bruce agreed to give up his rights under the employment contract if the requested payments were made and the lease was transferred. ⁽⁴⁾ Without addressing whether Bruce proved the elements of negligent misrepresentation, we note that the tort of negligent misrepresentation is generally not available when a contract exists. ⁽⁵⁾ See Airborne Freight Corp. v. C.R. Lee Enters., 847 S.W.2d 289, 295 (Tex. App.--El Paso 1992, writ denied). Tort obligations are generally obligations imposed by law that are independent of promises made between parties. Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991). When a defendant's conduct gives rise to liability because it breaches an agreement between the parties, the plaintiff's claim ordinarily sounds only in contract. Id. Further, the plaintiff's case sounds only in contract when the damages claimed arise solely from the breach of the contract. Id.; C.R. Lee Enters., 847 S.W.2d at 295-6.

The Texas Supreme Court, in Federal Land Bank Ass'n. v. Sloane, 825 S.W.2d 439 (Tex. 1991), held that a party cannot recover the benefit of the contract in an action for negligent misrepresentation. 825 S.W.2d at 443; Restatement (Second) of Torts § 552B (1977) ("the damages recoverable for a negligent misrepresentation do not include the benefit of the plaintiff's contract with the defendant"). See also River Consulting, Inc. v. Sullivan, 848 S.W.2d 165, 170 (Tex. App.--Houston [1st Dist.] 1992, writ denied) (summary judgment appropriate on claim for negligent misrepresentation because duty to pay arose from contract and damages arose from defendant's failure to pay under contract); C.R. Lee Enters., 847 S.W.2d at 296 (overturning jury award of $250,000 for negligent misrepresentation as matter of law since damages were for benefit of contract).

In the instant case, the duty to pay arose from the contract between ALPI and Bruce. Further, the damages Bruce sought to prove at trial included the $10,000 severance pay, unreimbursed expenses of $9,300, expenses incurred in retrieving and repairing the Volvo, and expenses incurred when he was unable to finance his house timely due to a poor credit rating he received as a result of the Volvo's repossession. All of the alleged damages arose from the breach of the contract and seek to recoup the benefit of his contract with ALPI. ⁽⁶⁾

As a matter of law, Bruce did not prove a cause of action for negligent misrepresentation since the duty to pay and the damages arose from the contract. We hold that the trial court's conclusion is correct. Points of error one and two are overruled.

The trial court's judgment is affirmed.

Before Justices Powers, Kidd and B. A. Smith

Affirmed

Filed: August 16, 1995

Do Not Publish

1.   The letter stated that it "supersedes any and all previous resignations, verbal and written."

2.   Kothmann, Esnoz, and Lee argue that Bruce did not plead negligent misrepresentation below. His third amended petition expressly pleaded only breach of contract, negligence, and gross negligence. The purpose of pleadings is to give the adverse parties notice of each party's claims, defenses, and relief sought. Perez v. Briercroft Serv. Corp., 809 S.W.2d 216, 217 (Tex. 1991). In determining whether a cause of action was pled, the plaintiff's pleadings must be adequate for the court to be able to ascertain the elements of the plaintiff's cause of action and the relief sought with sufficient information upon which to base a judgment. Stoner v. Thompson, 578 S.W.2d 679, 683 (Tex. 1979). The court will uphold the pleading even if some element of a cause of action has not been specifically alleged. Gulf, C. & S.F. Ry. Co. v. Bliss, 368 S.W.2d 594, 599 (Tex. 1963).

The elements of a cause of action for negligent misrepresentation are that: (1) the defendant, in the course of business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplied false information for the guidance of others in their business transactions; (3) the defendant failed to exercise reasonable care in obtaining or communicating the information; and (4) the plaintiff reasonably relied on the representation. Federal Land Bank Ass'n. v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). Here, Bruce pled that the defendants said the corporation would take certain action that was not taken, but did not allege that the statements were false when made; further, he did not allege that the defendants failed to use reasonable care in obtaining or communicating the information or that he reasonably relied on it. Moreover, Bruce requested only damages previously established against the corporation in the post answer default for breach of contract, negligence and gross negligence. Arguably, the pleadings did not give Kothmann, Esnoz, and Lee fair notice of a cause of action for negligent misrepresentation. Points of error predicated on unpleaded causes of action should be overruled. Gonzalez v. City of Harlingen, 814 S.W.2d 109, 112 (Tex. App.--Corpus Christi 1991, writ denied) (overruling point of error predicated on breach of contract when breach of contract not pleaded at trial).

However, since Bruce claims to have adduced evidence on all elements of the tort, and his petition alleged that defendants made untrue statements in the course of business that he relied upon, we will assume that the issue was tried by consent. Tex. R. Civ. P. 67; Roark v. Allen, 633 S.W.2d 804, 809 (Tex. 1982).

3.   The trial court refused to make the additional findings on the ground that "each of the additional and amended findings and conclusions is inappropriate, inasmuch as the Court has failed to find such requested facts from the record, and has previously entered both findings and conclusions inconsistent with this request."

4.   The trial court found that Bruce agreed to give up his rights under the employment contract in exchange for $10,000 in severance, reimbursement of $8,000 in out-of-pocket expenses, and the assumption of the lease on the Volvo; that the corporation owed Bruce this unsecured debt; and that ALPI "breached its agreement" to pay Bruce and to assume the lease.

5.   If a special relationship exists, a breach of contract may give rise to a tort cause of action such as professional malpractice.

6.   The person injured by a breach of contract is entitled to damages in an amount that will put him in as good a position as he would have been in had in the contract been performed. Little Darling Corp. v. Ald, Inc., 566 S.W.2d 347, 349 (Tex. Civ. App.--Dallas 1978, no writ).