Metroplex Mailing Services, LLC, Jesse R. Marion v. RR Donnelley & Sons Company

410 S.W.3d 889, 2013 WL 5202069, 2013 Tex. App. LEXIS 11754
CourtCourt of Appeals of Texas
DecidedSeptember 17, 2013
Docket05-12-00267-CV
StatusPublished
Cited by32 cases

This text of 410 S.W.3d 889 (Metroplex Mailing Services, LLC, Jesse R. Marion v. RR Donnelley & Sons Company) 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
Metroplex Mailing Services, LLC, Jesse R. Marion v. RR Donnelley & Sons Company, 410 S.W.3d 889, 2013 WL 5202069, 2013 Tex. App. LEXIS 11754 (Tex. Ct. App. 2013).

Opinion

OPINION

Opinion by

Justice EVANS.

In this appeal following a jury trial, Metroplex Mailing Services, LLC. and Jesse R. Marion bring three issues challenging the trial court’s judgment in favor of RR Donnelley & Sons Company. Me-troplex and Marion first contend the evidence is legally insufficient to support the jury’s finding that Metroplex breached the mail processing agreement made the subject of the suit. In their second issue, they contend the trial court erred in rendering judgment against Marion individually for Metroplex’s alleged breach. Finally, in their third issue, they contend the evidence is legally and factually insufficient to support the trial court’s award of attorney’s fees which they argue was excessive and disproportionate to the actual damages awarded. After reviewing the record and arguments on appeal, we affirm the trial court’s judgment against Metroplex as well as the award of attorney’s fees. We reverse the trial court’s judgment against Marion individually, however, because we conclude there is no evidence to support piercing the corporate veil. Accordingly, we render judgment that Don-nelley take nothing by its claims against Marion.

FACTUAL BACKGROUND

Metroplex is a presort mailing company based in Dallas, Texas. The company was formed by Marion as a single-member limited liability company with Marion serving as president and CEO. In May 2008, Me-troplex entered into a mail processing agreement with Bowne & Co. 1 under which Metroplex would sort mail for Bowne’s Dallas facility customers. In return Bowne agreed to pay Metroplex a minimum of $50,000 per month regardless of the volume of mail Bowne provided for sorting.

The agreement between Metroplex and Bowne was initially for a five-year term. The agreement could be terminated by Bowne immediately, however, if Metroplex failed to “perform against agreed upon SLA’s [service level agreements]” or had “other service/delivery/or noncompliance issues” that resulted in failures to perform between Bowne and its clients. Bowne could also terminate the agreement if Me-troplex failed to achieve a “8 digit [sort] rate on 92% of the mail on a consistent basis.” A “consistent basis” was defined as an average of more than three months.

The agreement also required Bowne to keep a certain amount of money on deposit with Metroplex. The amount would be determined by Metroplex alone. Following expiration or termination of the agreement, Metroplex was required to return the deposit to Bowne less any amounts still owed for services and postage. During the initial two months of the contract term, Bowne placed $2,100,000 on deposit with Metroplex.

Because the contract with Bowne was expected to significantly increase the amount of mail Metroplex would need to process on a monthly basis, Metroplex entered into a separate agreement with an affiliate of Bowne’s to purchase additional mail sorting equipment for $1 million. *894 Metroplex was unable to obtain financing for the purchase, and instead Marion took out a personal loan for $750,000 using the sorting equipment as security. The security agreement between Marion and the bank stated that “all proceeds from any disposition of the collateral [would] be held in trust for [the bank]” and that Marion would deliver the sale proceeds to the bank upon receipt. Marion then added $250,000 of his own money to purchase the equipment and leased the machines to Me-troplex for a three-year term.

At the time Metroplex and Bowne entered into the sorting agreement, Columbia House was one of Bowne’s major customers. In the fall of 2008, however, Bowne and Columbia House terminated their relationship. Bowne was struggling financially and suffered a net loss during the course of the year of over $30 million. The volume of mail Bowne provided Me-troplex for sorting declined substantially from roughly 10,000,000 pieces per month to less than 3,000,000 pieces per month.

By September 2008, Metroplex was no longer using one of the pieces of equipment purchased with the loan proceeds. Marion sold the equipment to a third party and the third party wired its payment to Metroplex’s operating account. Metroplex then used the sale proceeds to make a payment to the bank to reduce the principal on Marion’s personal loan as required by the security agreement.

In October 2008, Bowne decided that a substantial portion of the money it had on deposit with Metroplex had not been properly segregated to be applied to postage and it requested a refund of $586,000 from the remaining $700,000 balance. Bowne acknowledged that it did not have a right to a refund under the terms of the agreement because the contract had neither expired nor been terminated. But Bowne decided that nothing in the contract prevented it from requesting a refund. In response, Metroplex voluntarily returned $200,000 of the deposit.

On January 13, 2009, Bowne notified Metroplex that it would not pay any further invoices until it received the remaining $386,000 of its requested refund. Less than two weeks later, Metroplex informed Bowne that it was ceasing operations. Bowne again requested return of its deposit and was told the funds were not available. Accordingly, on January 23, 2009, a lawyer representing Bowne sent Metroplex a letter stating that Bowne was terminating the mail processing agreement effective immediately.

On the same day the termination letter was sent, Bowne filed suit against Metro-plex seeking the return of the money it had on deposit. Bowne asserted claims for breach of contract, conversion, unjust enrichment, and replevin. Bowne later added various tort claims and added Marion, individually, as a defendant. Metroplex asserted counterclaims for breach of contract, common law fraud, fraud in the inducement, quantum meruit, and promissory estoppel. Eight months before trial, RR Donnelley & Sons Company appeared as the new plaintiff in the suit pleading that it was the successor in interest to Bowne.

In September 2011, the case was tried before a jury. After hearing the evidence, the jury found that Metroplex failed to comply with the mail processing agreement and Bowne did not fail to comply with the agreement. The jury further found that Marion was responsible for the conduct of Metroplex. After various post-trial proceedings, the trial court signed a final judgment ordering that Donnelley recover $40,391.28 in actual damages and $538,358.32 in attorney’s fees from both Metroplex and Marion. It was ordered that all parties take nothing by their other *895 claims. Metroplex and Marion now bring this appeal.

ANALYSIS

I. Breach of Contract

In their first issue on appeal, Metroplex and Marion contend the evidence is legally insufficient to support the trial court’s judgment against Metroplex for breach of contract. When reviewing a legal sufficiency challenge, we consider the evidence in the light most favorable to the verdict and indulge every reasonable inference that would support it. See Latham v. Burgher, 320 S.W.3d 602, 607 (Tex.App.-Dallas 2010, no pet.). We credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. Id.

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Cite This Page — Counsel Stack

Bluebook (online)
410 S.W.3d 889, 2013 WL 5202069, 2013 Tex. App. LEXIS 11754, Counsel Stack Legal Research, https://law.counselstack.com/opinion/metroplex-mailing-services-llc-jesse-r-marion-v-rr-donnelley-sons-texapp-2013.