Sam Rayburn Municipal Power Agency v. Ralph J. Gillis, Gillis Borchardt & Barthel LLP, Obain Associates Limited and the Jasper/VPPA Settlement Trust

• Court: Court of Appeals of Texas
• Decided: July 26, 2018
• Docket: 09-16-00339-CV
• Status: Published

Opinion

In The

Court of Appeals Ninth District of Texas at Beaumont ____________________ NO. 09-16-00339-CV ____________________

SAM RAYBURN MUNICIPAL POWER AGENCY, Appellant

V.

RALPH J. GILLIS, GILLIS BORCHARDT & BARTHEL LLP, OBAIN ASSOCIATES LIMITED AND THE JASPER/VPPA SETTLEMENT TRUST, Appellees

On Appeal from the 253rd District Court Liberty County, Texas Trial Cause No. CV1408743

MEMORANDUM OPINION

This appeal involves two complex energy projects and the relationship

between the members of the projects and an attorney that assisted the members in

structuring both projects. Sam Rayburn Municipal Power Agency (SRMPA,

Plaintiff, Appellant or Cross-Appellee) is a municipal energy provider, organized in

1979 by ordinances of three Texas cities: Jasper, Livingston, and Liberty. SRMPA

purchases electrical power wholesale and sells it to (1) its constituent members 1 Jasper, Livingston, and Liberty, (2) Vinton Public Power Authority (VPPA), which

is the electrical power arm of Vinton, Louisiana, and (3) other potential buyers.

SRMPA filed suit against its former attorney, Ralph J. Gillis (Gillis), and Gillis’s

law firm, Gillis Borchardt & Barthel LLP1 (the Gillis Firm), Obain Associates

Limited (Obain), and the Jasper/VPPA Settlement Trust (the Trust) (collectively

Defendants or Appellees) regarding what the parties referenced as the “Nisco Deal”

and the “Cambridge Project.” SRMPA alleged that Gillis and the Gillis Firm acted

as SRMPA’s “general counsel” at the time of both projects and that Gillis engaged

in wrongful conduct causing damages to SRMPA. It is undisputed that SRMPA was

not a participant in the Nisco Deal. SRMPA claims that Gillis failed to disclose the

opportunity to participate in the Nisco Deal to SRMPA. And, SRMPA contends in

its appellate brief that:

By using his alter ego, Obain Associates Limited (of which Gillis was the undisclosed principal), [], and intermediary trusts that Gillis also created, [], Gillis concealed from his client, SRMPA, that he would be personally receiving millions of dollars from each of these two sets of contracts. [] Gillis is even yet scheduled to receive an additional $1 million per year from the Cambridge Project until 2036, approximately another twenty million dollars. []

1 Gillis testified that Gillis, Borchardt & Barthel LLP was formerly known as Gillis & Angley, LLP. An exhibit introduced and admitted at trial included an annual report filed with the Massachusetts Secretary of the Commonwealth, Corporations Division, on March 1, 2013 by Gillis, Borchardt & Barthel LLP noted the partnership name changed when Edward Angley retired. 2 SRMPA also alleged that the City of Jasper and the Trust knowingly participated in

Gillis’s conduct.

Gillis denied the allegations made by SRMPA, and the City of Jasper and the

Trust also denied the allegations. The Trust filed a counterclaim against SRMPA for

contractual indemnity and filed a motion to bifurcate the counterclaim because “[n]o

party has alleged that the indemnity provision at issue is ambiguous, so there is no

liability issue to be submitted to the jury as to the [indemnity] [c]laim.” The trial

court signed an Order Bifurcating the Trust’s Indemnity Claim Against Plaintiff, and

reserving the counterclaim for post-verdict consideration by the trial court.

The claims of SRMPA were tried to a jury. In a 10-2 verdict, the jury

responded “No” to the first question, “Did Gillis comply with his fiduciary duty to

SRMPA regarding the NISCO Deal[.]” In response to the fourth question, the jury

awarded $5,000,000 in damages for the Nisco Deal. In the fifth question the jury

found that Gillis fraudulently concealed his breach of fiduciary duty in connection

with the Nisco Deal. In the sixth question the jury was asked to find the date on

which SRMPA obtained sufficient knowledge that would have required a reasonably

prudent person to make an inquiry that, if pursued would lead to discovery of the

breach, and the jury answered: “March 27, 2001.” In response to the seventh

question, the jury answered “No” to the question, “Did Gillis comply with his

3 fiduciary duty to SRMPA regarding the Cambridge Project[.]” In response to

question ten, the jury awarded SRMPA past damages of $1,799,059 for the

Cambridge Project, but no future damages. In response to question eleven, the jury

found that Gillis complied with his fiduciary duty to SRMPA with respect to the cost

of transmission upgrades. In response to question two, the jury found that the City

of Jasper did not knowingly participate in Gillis’s conduct regarding the Nisco Deal.

In response to question eight, the jury found that neither the City of Jasper nor the

Trust knowingly participated in Gillis’s conduct regarding the Cambridge Deal. The

jury answered “yes” to question thirteen, asking whether Obain was responsible for

the conduct of Gillis. Ten of the members of the jury also answered “yes” that the

harm to SRMPA resulted from gross negligence, malice, or fraud, but the jury left

blank the answer of the amount of exemplary damages and that question required

the jury to unanimously agree upon its answer.

The trial court struck the jury’s answer to question fourteen asking whether

the harm to SRMPA resulted from gross negligence, malice or fraud, because the

question’s predicate required a unanimous answer and only ten of the twelve jurors

agreed, and the court concluded that the jury plainly erred by answering the question

“on less than a unanimous vote and by not complying with the Question’s

predicate[.]” Because of the jury’s response to question six, the trial court concluded

4 that the claims against Gillis and the Gillis Firm as to the Nisco Deal were barred by

limitations. The trial court then awarded SRMPA $1,799,059 in damages for the

Cambridge Project in past damages and no future damages, denied the Trust’s

indemnity claim, and ordered SRMPA to pay all of the Trust’s costs of court.

SRMPA appealed, and Gillis, Obain, and the Trust cross appealed. We affirm the

trial court’s judgment.

Background Facts

Gillis is an attorney and, according to all parties, Gillis is knowledgeable

regarding the law, regulations, and contractual aspects of acquiring and selling

electrical power. Gillis represented SRMPA and VPPA for more than thirty years as

legal counsel in various energy transactions and projects.

According to the Plaintiff’s Fifth Amended Petition, the live pleading at the

time of trial (hereinafter “the petition”), SRMPA alleged that Gillis structured

business transactions that affected his client’s interests, Gillis utilized separate legal

entities of his creation that disguised the arrangements of the projects and that he

was making over $1 million yearly for over twenty years from the projects. The

Plaintiff alleged that Gillis, the Gillis Firm, and the entities he created, were liable

to SRMPA on theories of breach of fiduciary duty, fraud, unjust enrichment, money

5 had and received, alter ego, usurpation of opportunity, and interference with

prospective contract.

Specifically, SRMPA complained in the petition about two energy

arrangements or concepts, the “Nisco Deal” and the “Cambridge Project.” SRMPA

alleged that Gillis failed to disclose to SRMPA that the contracts for the Nisco Deal

violated SRMPA’s rights under its Power Supply Agreement with VPPA, and

SRMPA alleged that Gillis created Obain and the Trust to hide significant payments

that Obain (and thereby Gillis) would be receiving as a result of the new contracts

Gillis structured as part of the Nisco Deal. SRMPA also alleged Gillis and the parties

to the Nisco Deal contracts entered into confidentiality agreements on Gillis’s

advice, and SRMPA was “deprived of its opportunity to participate in the Nisco Deal

and has suffered damages in the amount of 50% of the Nisco Deal revenues

generated during 2001 through 2011.” SRMPA alleged that, until shortly before this

lawsuit was filed, SRMPA never learned what the Nisco Deal was, that Entergy had

brought the deal to Gillis as lawyer for SRMPA, that Gillis had taken the deal instead

to Jasper and VPPA, or that Gillis was benefiting personally from it.

SRMPA alleged that in response to a change in gas prices that occurred in

approximately 2003, amendments to the Nisco Deal agreements were made under

Gillis’s new concept, the Cambridge Project, and one of the necessary participants

6 of the Cambridge Project was SRMPA rather than Jasper. According to the petition,

the Cambridge Project involved SRMPA, three Entergy affiliates, Jasper, VPPA and

the Trust, and the Trust would receive the payments from SRMPA. SRMPA alleged

that Gillis created the Trust to help disguise the fact that much of the money that

SRMPA would be paying under the Cambridge Project was actually going to Obain

and Gillis. According to the petition, Gillis, the Gillis Firm, Obain, and the Trust

breached their fiduciary duty to SRMPA, Gillis and the Gillis Firm fraudulently

concealed that Obain was a beneficiary of the Trust, Obain was Gillis’s alter ego,

and the Defendants were unjustly enriched.

Evidence Regarding the Nisco Deal2

The Nisco Deal was developed in the late 1990s, became operational in 2001,

and continued in operation until December 1, 2011. The Nisco Deal was developed

from certain losses Entergy Gulf States Louisiana, L.L.C. (Entergy) was

experiencing in the 1990s from regulations, primarily in Texas, that affected

Entergy’s relationship with the owner of a power-generating operation fueled by

“petcoke,” a byproduct of three petrochemical plants and refineries near Lake

Charles, Louisiana. Former Entergy officer John Hurstell testified that he contacted

2 We have limited our discussion of the evidence in relation to the structure of the Nisco Deal and the Cambridge Project as necessary for the determination of the appellate issues presently before this Court. 7 Gillis about helping him structure a deal for Entergy to lower unrecovered costs.

Hurstell and Gillis discussed an assignment of the retail loads to VPPA which would

then have a “sleeve” that would be either SRMPA or Jasper. Gillis testified that he

told Hurstell that Jasper or SRMPA could be the intermediary wholesale purchaser,

and that Gillis preferred SRMPA because it was a stronger entity than Jasper. Gillis

testified that at that time he did not know if SRMPA would be interested because

SRMPA “was beginning to look at some structure to dissolve . . . and they had just

spent a lot of money over two years to get [another agreement] negotiated and in

place[,]” so Gillis suggested that Jasper be a “backup arrangement” if SRMPA “falls

through.”

According to Gillis, Hurstell told Gillis that Entergy agreed that VPPA could

be the retail distributor and that Entergy wanted a confidentiality agreement

regarding the potential assignment of the retail load to VPPA. Gillis testified that

when he met in 1999 with representatives of VPPA, Vinton, and Jasper to discuss

the potential deal, he was asked if he could work on a contingency basis and,

although he was uncomfortable with a contingency fee instead of an hourly rate, he

left the meeting with the understanding that one-third of whatever benefit the deal

produced would be his contingency fee and that each of the participating cities would

pay a share of that fee.

8 Bruce Halstead3 and R.C. Horn4, two former members of the SRMPA Board

of Directors, testified that Gillis presented the Nisco Deal to the SRMPA Board in

an executive session on January 26, 1999, but the SRMPA Board did not choose to

participate in the Nisco Deal. An email dated March 20, 2001, from Gillis to the

SRMPA Board President was also admitted into evidence. Bruce Halstead, who

served as an SRMPA Board member starting in the summer of 1998 and who was

elected as the SRMPA Board President in August of 1999, testified that the email

3 According to the appellate record, in 1998, Halstead was elected as the Mayor of Liberty, Texas, and when he ran for that position, he ran “on the issue of electricity.” As one of the three member cities that organized SRMPA, the City of Liberty had the right to appoint two Board members to the SRMPA Board. The City of Livingston had appointed its Mayor at the time, Ben Ogletree, and its City Manager, Sam Gordon. The City of Jasper had appointed its Mayor, R.C. Horn, and another individual, H.C. Dickerson, a City of Jasper council member, to the SRMPA Board. The City of Liberty then appointed Halstead, its Mayor, and Norman Dykes, its City Manager. In August of 1999, Halstead was elected by the SRMPA Board to serve as President of the SRMPA Board of Directors. 4 R.C. Horn was formerly the Mayor of Jasper, and he served on the SRMPA Board of Directors as the representative for the City of Jasper. Horn also served as the Secretary of the SRMPA Board in 1999. Horn identified Exhibit 66 as the minutes from the January 26, 1999 SRMPA Board meeting. Horn’s name appears on the minutes as Secretary. Horn testified that he recalled that Gillis made a presentation to the SRMPA Board in executive session on January 26, 1999, and that the presentation involved a proposal for SRMPA coming together with VPPA to supply power to some plants in Louisiana. According to Horn, SRMPA turned it down because they did not have all the information they needed. Horn also recalled that Gillis told the SRMPA Board that the proposal would be a good opportunity for SRMPA and the power association if they would take part in it. 9 from Gillis was sent to him shortly before the SRMPA Board meeting on March 27,

2001, and the email discussed SRMPA’s earlier refusal of the Nisco Deal.

Halstead testified that during an SRMPA Board meeting in 2001 a Board

member brought up a news article that discussed Jasper selling wholesale power

outside of the SRMPA, and the Board member inquired as to the legality because of

Jasper’s previous connection with SRMPA. According to Halstead, the Board

member requested an amendment to the agenda for the March 27, 2001 meeting so

the Board could discuss the news article. Halstead testified that the minutes for the

meeting reflect that he quoted Gillis and he explained to the Board that the contract

in question was a wholesale activity independent of SRMPA with customers outside

of Jasper. The minutes from the March 27, 2001 SRMPA Board meeting that were

admitted into evidence provided the following:

Sam Gordon addressed the Board regarding a story he became aware of in the news media in which the City of Jasper entered into a contract with Entergy for the purpose of wholesaling power. Mr. Gordon stated that he desired more information on this matter in light of the fact that the member cities of the SRMPA are required to buy all their power requirements from the Agency. Bruce Halstead quoted the Agency’s general counsel as saying that the contract in question is a wholesaling activity independent of the Agency with customers outside of Jasper. Additional discussion indicated that participant cities’ contracts with the Agency require them to buy all power requirements for their respective “captive” load from the Agency but that the contracts did not prohibit independent wholesale activities.

10 The contracts for the Nisco Deal had a term through April 30, 2008. Gillis testified

that the monthly profit to the participants in the Nisco Deal was around $30,000 in

2001 and 2002, and that profit was split among Jasper, Obain, and VPPA. According

to Gillis, due to the market driven nature of the Nisco Deal and gas prices, in 2003

there was no profit. Gillis explained that there had not been a minimum payment

established and that in 2004 he called Hurstell to negotiate a guaranteed minimum

payment. Ultimately, the minimum payment was negotiated to be a million dollars

annually, which was divided equally among VPPA, Obain, and Jasper on a monthly

basis.

Marilyn Sutton testified that in 1985 she was appointed City Secretary and

Financial Officer for the City of Livingston, and that in 2005, she was appointed

City Manager and Financial Officer for the City of Livingston. Sutton explained that

she attended the SRMPA Board meeting on January 26, 1999. She testified that she

had no memory of Gillis presenting anything about the Nisco Deal to the Board at

that meeting or at any other time and that her notes from the meetings during that

time frame do not reflect that Gillis presented the Nisco Deal to the Board. She

recalled Gillis leading the discussion at the January 26, 1999 executive session in

regards to the Board’s best course of action because of Senate Bill 7’s deregulation

legislation, which was the main issue before the SRMPA Board at that time.

11 According to Sutton, she also attended a Board meeting in 2001 when Board member

Gordon asked a question about Jasper buying power from Entergy to sell to VPPA.

Sutton testified that Gordon had seen an article in the “Jasper Newsboy” wherein the

City Council had discussed a wholesale power agreement Jasper had, and Gordon

asked that it be placed on the agenda for discussion at the next Board meeting.

According to Sutton, Gillis was not at the meeting and Bruce Halstead, who was

president of the SRMPA Board at the time, explained that he had talked to general

counsel and that the City of Jasper “was well within their limits” in entering into a

confidential wholesale power agreement outside the scope of SRMPA and that

SRMPA was not to know about it.

Ben Ogletree testified that he was appointed to the SRMPA Board in 1985

and was a Board representative and Mayor for the City of Livingston. He testified

he served on the SRMPA Board from 1985 to 1991, and then again from 1996 until

late 2011 or early 2012. Ogletree explained that, within a year of being appointed to

the SRMPA Board, he met Gillis in Gillis’s capacity as general counsel for SRMPA.

According to Ogletree, he remembered a discussion during a 2001 Board meeting

when Board member Sam Gordon raised an issue about how Jasper was buying

power outside of the SRMPA arrangement, but Ogletree did not recall at any time

Gillis presenting to the Board the Nisco Deal or a proposal for SRMPA to buy power

12 from Entergy and sell it to VPPA for its use in serving the IP loads near Lake

Charles. Ogletree testified that Halstead, after talking to Gillis, explained to the

Board that it was permissible for Jasper to buy power outside the SRMPA

agreement, but that no details could be disclosed due to confidentiality agreements.

According to Ogletree he was not aware that the arrangement inquired about by

Gordon in 2001 was called the “Nisco Deal” until the discussion and contract

negotiations for the Cambridge Project, and it concerned him that he could never get

details about the arrangement.

David Riggins testified by video deposition regarding his tenure as a Board

member of Vinton Public Power Authority (VPPA). From 1997 to 2001, as a Vinton

city councilmember, Riggins served on the VPPA Board. From 2001 to 2006, as

Mayor of Vinton, he continued to serve on the VPPA Board. He testified that it was

his understanding that initially SRMPA was first approached to be part of the power

project with VPPA, but according to VPPA representatives that attended the meeting

“sometime” in January of 1999, SRMPA “did not see the value in it and refused at

that time because they didn’t see that there was enough sufficient profit to participate

in it.” After that, VPPA decided to work with the City of Jasper to try and put the

transaction together. From the onset, Riggins understood that Gillis would be

compensated one-third of the profit. According to Riggins, SRMPA did not feel the

13 chances of success were “sufficient, but Jasper was willing to participate and that

the chances, based off of what Entergy had first said, was somewhere below 50

percent.” Riggins recalled that the project started off well but then there was a time

it was “mothballed” because another VPPA member, Donny Dupre,5 had a problem

with Gillis’s receipt of development fees. Later, after Riggins became Mayor of

Vinton in 2001, he reached out to Gillis and asked if they could move forward with

the project and get the Nisco Deal back on track. According to Riggins, eventually

the Nisco Deal was back on track and was profitable for Vinton. Riggins agreed that

he had described his understanding of Obain Associates Limited as being Gillis’s

“business development entity distinct from [Gillis’s’] lawyering[.]” Riggins also

agreed he had no first-hand knowledge of the basis for Dupre telling him SRMPA

had declined to move forward on the Nisco Deal, but he recalled that he interpreted

from what Dupre conveyed to him that it was because SRMPA “didn’t feel it was

profitable enough to move forward.” At trial, counsel for SRMPA asked Riggins

about Exhibit 249, which Riggins testified appeared to be a communication from

Dupre to Gillis, dated sometime on or after April 20, 2000, and it appeared to be in

response to Gillis’s April 20, 2000 email to Dupre. Riggins testified he did not recall

ever seeing the document prior to trial. Riggins agreed that in the communication

5 According to Riggins, Dupre is deceased. 14 Dupre purportedly states (1) he wants Vinton’s share of the profits to be equal to the

three Texas cities that make up SRMPA, (2) that Dupre states “[t]he last figure you

told me [for the deal] was about 24 million for Vinton’s part[,]” and (3) that Dupre

states in the communication that VPPA should fire its lawyers. Riggins maintained

that he did not know what was going on between Gillis and Dupre back in April of

2000 “other than [what] Mr. Dupre report[ed] back to us.”

Evidence Regarding the Cambridge Project

Paul Wellenius, SRMPA’s expert on the electrical power business and

electrical transactions, testified that as the Cambridge Project was being discussed

and developed, the Nisco Deal was extended to allow for the development of the

Cambridge Project as a replacement concept. As the Nisco Deal’s ending term

approached, the Cambridge Project became operational in December 2011. Gillis

testified that he created the Cambridge Project as an expansion of the Nisco Deal

and that the Cambridge Project would “wrap around” or “encapsulate” the Nisco

Deal. Gillis explained that Jasper and Vinton had already benefitted from the Nisco

Deal but he wanted to bring SRMPA into the Cambridge Project so that he could get

Livingston and Liberty “out of the well they had gotten into not through their own

fault[,]” and also so Livingston and Liberty could “share the wealth.” According to

15 Gillis, the four cities had always worked well together and “together they were a

formidable block.”

Bruce Halstead testified that Gillis contacted him around 2008 or 2009, with

an idea that Gillis thought of when Gillis was either a “guest lecturer” or “teaching

a course” at the University of Cambridge.6 Halstead also testified that Gillis brought

the idea of the Cambridge Project to SRMPA. Halstead testified that he understood

that Gillis would be getting compensation for his services in Nisco, and he

understood that Gillis’s compensation in the Cambridge Project was in the form of

a “reassignment fee.” According to Halstead, he was told that Gillis would be paid

a fee, but Gillis never discussed that Gillis was being paid part of the $3 million.

Halstead testified that he recalled the “reassignment fee” being part of the modeling

that SRMPA received from their consulting engineer, Doug Phethean, on the

Cambridge Project. Halstead agreed that SRMPA also had a financial adviser and

other consultants such as Fulbright & Jaworski7 and Finken who worked for SRMPA

6 Gillis testified that he was a “visiting fellow” at the University of Cambridge for two years while he also worked on a book that was published. 7 According to Halstead, SRMPA had to stay in contact with the Texas Public Utilities Commission and they made trips to Washington, D.C. for meetings and discussions regarding federal hydropower issues and other federal regulation, as well as had bond refunding going on at the time. Gillis went with them on the trips as SRMPA’s “general counsel.” SRMPA also had a lobbyist, and Fulbright & Jaworski was its bond counsel and tax counsel. Halstead testified that SRMPA had to have 16 on the Cambridge Project. Halstead testified that the modeling for the Cambridge

Project showed the “bottom line to [SRMPA]” would be profitable.

Q. Was this Cambridge Project, was this something that you wanted to see done as president of SRMPA?

A. When we were provided the modeling and the forecasting, most definitely wanted to move ahead with the project. The bottom line to the Agency was estimated on a monthly basis revenues anywhere from 400 to $450,000 a month; and because of the Cambridge concept and what would have to be in place, we would have to enter into a Supplemental Requirements Power Supply Agreement or an S-RPSA. Our RPSA would end in 2021. This deal would extend that delivered power through 2035.

Q. And was that a benefit to SRMPA?

A. Huge benefit. Look at the -- if they met the modeling -- and it was a conservative model -- if we met the model, [$]400,000 a month for 12 months through 2035 is a significant amount of money. That money coming through the Agency would then be distributed to the member cities. I wasn't mayor at the time and I was still on the board, but being a citizen of Liberty, I would want Liberty’s share of those revenues to come back to the city for lowering rates, stabilizing rates, infrastructure, and things of that nature.

Halstead was aware that there would need to be concessions from Jasper and VPPA

and he was also made aware of the Jasper/VPPA Settlement Trust.

the Fulbright & Jaworski attorneys review the Cambridge Deal to make sure there was no negative impact on the SRMPA bonds or bond rating, but he was not sure if they also reviewed it for tax consequences. He testified that the Fulbright & Jaworski attorneys did review the Cambridge contracts for SRMPA.

17 Q. Did you know at the time the Cambridge Project was being developed what concessions would be needed to deal with whatever Jasper and VPPA’s interests may have been from back earlier?

A. Other than those line items that were delineated in the modeling, the reassignment fee, and then also us, as Sam Rayburn, trying to realize the value of the asset of the headroom moving forward.

....

Q. That’s the extent of your awareness of whatever it was that was the need to be addressed with respect to back when in terms of Jasper and VPPA; right?

A. I believe closer to the signing of the Cambridge Deal that I was -- signed off on a document dealing with the Jasper/VPPA Settlement Trust and how that was to operate within Cambridge.

Halstead stated that during the time Gillis represented SRMPA he knew that

Gillis also represented VPPA. Halstead agreed that after the Cambridge Project

documents were signed, SRMPA decided to terminate Gillis as its general counsel.

Q. Now, how long after SRMPA signed the documents to enter into the Cambridge Project did it let Mr. Gillis go?

A. Cambridge Deal began December 2011; and Mr. Gillis was discharged midway through 2012, I believe.

Q. Why did the SRMPA board terminate Mr. Gillis?

A. Personalities on the board. I don’t believe, though, there were any bases logically for his termination given the length of service and what he had done. And I was a staunch supporter of his and actually voted to

18 retain him, and I thought it was a matter of some of the board members’ personalities getting in the way.

Q. But those personalities did not get in the way until after they signed the Cambridge documents; correct?

A. It arose at a later date, yes, ma’am.

Gillis testified that he initially presented the idea of bringing SRMPA into the

Cambridge Project to VPPA to persuade VPPA to invite SRMPA into the deal even

though SRMPA was not a necessary party. According to Gillis, after VPPA accepted

the idea, he contacted Halstead with SRMPA and explained that with the Cambridge

Project, the value of the Nisco Deal would continue, and the fee Gillis was receiving

from the Nisco Deal would also continue. According to Gillis, the reassignment fee

was capped at $3 million and it was to be retained by the Trust out of the VPPA

retail rate revenues and would then be paid one-third to VPPA, one-third to Jasper

for forgoing the Nisco Deal that was profitable for Jasper, and the remaining one-

third to Gillis as his fee. Gillis explained that the Nisco Deal still exists through

suspension agreements that continue into 2036.

Sutton testified that she knew that Jasper and Vinton received money from the

Cambridge Project. However, she did not become aware until around the time of the

filing of the lawsuit that Gillis’s company, Obain, received part of the reassignment

fee paid in connection with the Cambridge Project.

19 Edward Mintz testified that he practiced law full-time until he was hired in

2012 by SRMPA as its executive director, a position he still held at the time of trial.

According to Mintz, from 1999 until Gillis’s tenure as counsel for SRMPA ended in

2012, SRMPA looked to Gillis to give legal advice as general counsel, to generate

business opportunities and broker deals for SRMPA, and to represent SRMPA

before the regulatory agencies. Mintz testified that SRMPA regularly paid Gillis’s

hourly rate-based fees and paid the invoices from the Gillis Firm for Gillis’s work

on the Cambridge Project. Mintz explained that the contracts for the Cambridge

Project run through the year 2036, and SRMPA will continue benefitting from the

Cambridge Project.

According to Mintz, SRMPA agreed to pay the $3 million a year reassignment

fee through 2036 to the Trust, but Mintz testified that Gillis led him to believe that

the only beneficiaries of the Trust were the City of Jasper and VPPA, who were

being paid for giving up the Nisco Deal. Mintz agreed that Gillis never informed

SRMPA that Gillis and Gillis’s wife (through Obain) were receiving one-third of the

fee from the Trust. Mintz testified that after Gillis’s representation of SRMPA ended

in June of 2012, Mintz discovered that a portion of the amount being paid by the

Trust to Obain was then going to Gillis. According to Mintz, the Cambridge Project

has been the most profitable project in the history of SRMPA and, in the four-and-

20 a-half years prior to the trial, SRMPA had profits of approximately $70 million as a

result of its involvement in the Cambridge Project.

The Trial Court’s Judgment

The trial court entered a final judgment based upon the verdict of the jury and

after considering post-trial motions from the parties. In the final judgment the trial

court (1) awarded SRMPA no damages from Defendants as to the Nisco Deal

because the jury found that SRMPA should have discovered Gillis’s breach of

fiduciary duty in connection with the Nisco Deal by March 27, 2001, and therefore

the statute of limitations had run; (2) found Gillis violated his fiduciary duty to

SRMPA and awarded $1,799,059 in past damages, plus post-judgment interest, to

SRMPA from Gillis and Obain in connection with the Cambridge Project; (3) denied

SRMPA’s claims against Gillis, Borchardt & Barthel LLP and rendered a take-

nothing judgment as to those claims; (4) denied SRMPA’s claims relating to the

upgrade of the Entergy transmission system and rendered a take-nothing judgment

as to those claims; (5) denied SRMPA’s claim for exemplary damages against Gillis

and rendered a take-nothing judgment as to that claim; (6) denied SRMPA’s claims

for equitable relief against Defendants and rendered a take-nothing judgment in

favor of Defendants as to those claims; and (7) denied SRMPA’s claims against the

Trust and rendered a take-nothing judgment as to those claims. As to the Trust’s

21 bifurcated indemnity counterclaim, the trial court denied the Trust’s indemnification

claim but ordered SRMPA to pay all costs of court incurred by the Trust in the

matter.

Appellate Issues

SRMPA presents five issues on appeal. In its first issue, SRMPA argues that

the trial court erred in denying SRMPA’s claims for equitable relief because Gillis

“breached his fiduciary duty regarding both the Nisco Deal and the Cambridge

Project,” and that the trial court should have required Gillis to “disgorge the monies

he has already received from the Nisco Deal and the Cambridge Project” and should

have imposed a constructive trust on the funds Gillis is scheduled to continue

receiving under the Cambridge Project. In issue two, SRMPA argues that, as to the

Nisco Deal, the trial court erred in failing to disregard the jury’s answer on

limitations as immaterial and that, as a matter of law, SRMPA should recover the $5

million in damages that the jury found SRMPA suffered from Gillis’s breach of

fiduciary duty because the award is not barred by limitations. In its third issue,

SRMPA challenges the amount of the jury’s award relating to Gillis’s breach of

fiduciary duty in connection with the Cambridge Project. SRMPA alleges that

“[b]ased on the conclusive, undisputed evidence, the amount awarded as past

damages to SRMPA should now be rendered in the total amount of $4,350,074.90.”

22 In its fourth issue, SRMPA asserts that the Gillis Firm should be jointly and severally

liable with Gillis (and Obain as his alter ego) for the full damages awarded on the

basis of respondeat superior. In issue five, SRMPA argues the trial court erred in

failing to enjoin Gillis and the Gillis Firm from representing the Trust adversely to

SRMPA on matters related to Gillis’s past representation of SRMPA.

Cross-Appellants Gillis and Obain ask this Court to find there was no evidence

or legally insufficient evidence to support submission of certain jury questions, and

that the trial court should have granted Gillis’s and Obain’s motion for directed

verdict or motion for judgment notwithstanding the verdict. According to Cross-

Appellants Gillis and Obain, Gillis owed no fiduciary duty to SRMPA in the Nisco

Deal because SRMPA chose not to participate in the Nisco Deal. Obain and Gillis

also contend that as to the Cambridge Project, SRMPA had knowledge of Gillis’s

fee in the Cambridge Project, and SRMPA’s damages are foreclosed because it

signed the Cambridge Project documents with knowledge that Gillis, through Obain,

would receive a fee from Jasper and VPPA, and after obtaining such knowledge,

SRMPA continued to accept the benefits of the Cambridge Project so they should

be estopped from any recovery.

On cross appeal, the Trust argues that it is entitled to entry of judgment against

SRMPA on the Trust’s indemnity counterclaim because “the unambiguous language

23 of the parties’ agreement provides that [SRMPA] shall hold the Trust harmless from

the exact claims brought against it below.”

Analysis

Denial of Equitable Relief

In SRMPA’s first issue, it argues the trial court should have granted equitable

remedies “to prevent the lawyer defendant and his alter ego from benefit[t]ing

personally, and retaining ill-gotten gains, from their breaches of fiduciary duty and

self-dealing, by keeping $1 million per year for the next twenty years.” SMRPA

specifically argues that the equitable remedies of disgorgement and constructive

trust are necessary here, regardless of whether SRMPA suffered or benefitted from

Gillis’s alleged self-dealing.

We review a trial court’s decision granting or denying equitable relief for an

abuse of discretion. See Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 428-

29 (Tex. 2008). A trial court must balance the equities involved in a case seeking

equitable relief. See In re Gamble, 71 S.W.3d 313, 317 (Tex. 2002) (orig.

proceeding). We will not disturb a trial court’s ruling on a claim seeking equitable

relief unless it is arbitrary, unreasonable, and unsupported by guiding rules and

principles. See Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004); Downer v.

Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).

24 A jury does not determine the expediency, necessity, or propriety of equitable

relief such as disgorgement or constructive trust. See Burrow v. Arce, 997 S.W.2d

229, 245 (Tex. 1999). Whether “a constructive trust should be imposed must be

determined by a court based on the equity of the circumstances.” Id. The scope and

application of equitable relief such as a constructive trust “‘within some limitations,

is generally left to the discretion of the court imposing’ it.” Baker Botts, L.L.P. v.

Cailloux, 224 S.W.3d 723, 736 (Tex. App.—San Antonio 2007, pet. denied)

(quoting Wheeler v. Blacklands Product. Credit Ass’n, 627 S.W.2d 846, 849 (Tex.

App.—Fort Worth 1982, no writ)).

At the hearing on SRMPA’s Motion to Modify, Correct or Reform Final

Judgment,8 the trial court stated the following:

[F]or the record, I have literally reviewed this trial back and forth, over and over again, looked at various documents when I thought I needed help to do so, because I still have all that stuff from the summary judgment. And not -- so that it’s clear, I did not include anything that wasn’t testified about in the trial. Because I do think that it is the Court’s duty to look closely -- and I want to point out very simply that [Plaintiff’s counsel] made a statement in a previous argument when we signed the original judgment back in August, I believe it was, that the jury got this wrong on certain issues. And, so, I wanted to, in my mind, see if I thought that was true, looking at it from an equitable situation, not from necessarily the answers to the questions. 8 We review the denial of a motion to modify, correct, or reform a judgment for an abuse of discretion. See Wagner v. Edlund, 229 S.W.3d 870, 879 (Tex. App.— Dallas 2007, pet. denied). 25 But in order to do that, I’ve gone back through the Charge; and I even considered how we put the Charge together. And I will say, for the record, the Charge was basically the Charge the Court wanted with the input, obviously, by counsel; and I would think the Charge was, more or less, what the plaintiff wanted, as well -- objections aside, of course -- and was geared in a way to get to the point of whether Mr. Gillis violated a fiduciary duty and, if he did, when did it become known and so forth with all the questions that we asked. So, in my overall review, I took the Charge and acted as a juror, as well, to see if I thought they had gotten it wrong. And I’ve come to conclusions, and I’ve come to what I think are going to be my rulings in this case. .... . . . [I]f I’m going to create a constructive trust, I have to go forward and find out, one, in my mind, if the jury did get it right or close enough to right or reasonably right or do I find that, based on [Gillis’s] conduct, that he should be punished more than the jury indicated? . . . But what does “equity” mean? It means what is fair. You know, if someone does a wrong, what is fair? What is their fair treatment? And we are talking about money here, period. And vice versa, what is the justice of this case? So, in reviewing all the facts and in reviewing all the things that I think I had the duty to do, which I am telling you, whether I’m right or wrong, I have looked at for hours in this case, I can see where the jury, without just that one bit of evidence that’s been argued before me about the profits of [SRMPA], I can see where the jury imposed the 1.79 -- or whatever it was -- million dollars’ damage against Mr. Gillis because he was in violation of his fiduciary duties by not disclosing he was getting a fee just on that one basis alone in the -- in the Cambridge [Project]. However, if I recall, . . . [Bruce Halstead] got a memo -- and it wasn’t on the date that the jury found -- but he got a memo from Gillis before that indicating that this deal was in place and next time I come to you with a wacky deal . . . I believe he was still the president of [SRMPA] at the time that they called off the deal and also still the president at the time they committed to the deal. And he knew he was getting a fee for Nisco,

26 which he knew was a partnership between Jasper and VPPA and however Entergy was involved in that deal. But does that knowledge carry over? And would Gillis have had any damage had he simply said to [SRMPA], “Yes, I’m getting a fee; and it’s whatever it is. I am getting a fee, and that’s part of the Trust that I’ve set up. I’m going to get paid for these activities”? I don’t know that we would even be here at this point in time. I mean, [SRMPA] would have either gone along with it or not and there would be a Cambridge [Project] or there wouldn’t[.] So, . . . I think the jury got it pretty close to right. And I think they awarded damages for his violation of fiduciary duty up to the date of this trial, when it was finally known, by virtue of their verdict, and the Nisco Deal was ruled on fairly, in my mind, legally, as well as factually. And, so, I am not going to set up a constructive trust in this case, and the jury judgment that I signed before is the one that will remain in place at this time.

The trial court signed an order denying SRMPA’s Motion to Modify, Correct or

Reform.

SRMPA cites to First United Pentecostal Church of Beaumont v. Parker, 514

S.W.3d 214 (Tex. 2017), in support of its argument that the trial court erred in failing

to grant equitable relief. According to SRMPA, Parker “stands in a long line of

precedents that, without regard to whether a fiduciary such as Gillis has caused his

client damage, the fiduciary must not be permitted to benefit from the transactions

affected by his breach of fiduciary duty.”

In Parker, the First United Pentecostal Church of Beaumont sued The Lamb

Law Firm, P.C., Kip Lamb, and Leigh Parker, for theft, embezzlement,

27 misapplication of funds by a fiduciary, breach of fiduciary duty, fraud, legal

malpractice, conspiracy, and “other wrongful conduct[,]” after the law firm spent

over a million dollars that the church had entrusted for safekeeping to the law firm.

514 S.W.3d at 217-18. Parker claimed that he was a contract attorney with the Lamb

Law Firm and that he did not find out about the theft until 2010, but the church

alleged that Parker was associated with or worked for the firm, was part of a joint

venture with Lamb and the firm, that Parker knowingly participated in Lamb’s

breach of fiduciary duty, made intentional misrepresentations to the church to cover

up the fact that the money was gone, and he was jointly and severally liable for the

church’s damages. Id. In his no-evidence motion for summary judgment, Parker

argued that the church had not produced any evidence of causation between his

actions and the church’s damages. Id. at 218. In support of his traditional motion for

summary judgment, Parker attached his affidavit in which he averred he was a

contract attorney for the firm, that he had no knowledge of Lamb’s scheme until the

summer of 2010, and that he did not control or receive any of the church’s money.

Id. He also attached a copy of Lamb’s reply to a criminal presentencing investigation

in which Lamb admitted he used the church’s funds. Id. The trial court granted

Parker’s motion for summary judgment without specifying the reasons and this

Court, in a split decision, affirmed the trial court’s ruling. Id. at 219 (citing 520

28 S.W.3d 53 (Tex. App.—Beaumont 2015)). In appealing this Court’s decision

affirming the granting of summary judgment in favor of Parker, the church argued,

in relevant part, that it did not need to provide evidence of causation in order to

survive summary judgment on its breach of fiduciary duty claim. Id. Parker argued

the church failed to preserve error, and even if error was preserved, evidence of

proximate cause of the church’s damages was necessary to survive summary

judgment and the church did not present such evidence. Id.

The Texas Supreme Court held that this Court erred by determining that

summary judgment for Parker was proper on the breach of fiduciary duty claim but

the church was entitled to proceed with its claim for equitable relief. Id. at 221-22.

In so ruling, the Texas Supreme Court noted that, although Parker argued he did not

profit from his relationship with the church and the church failed to allege a factual

basis for fee forfeiture or disgorgement as to him, he did not address the equitable

remedies in his motion for summary judgment. Id. at 222.

Unlike Parker, the trial court in this case ruled upon the request for equitable

relief after presiding over a jury trial and after considering all of the evidence and

equities. A trial court has broad discretion in balancing the equities involved in a

case seeking equitable relief. See In re Gamble, 71 S.W.3d at 317; Craddock v.

Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (1939). In the present case, the record

29 reflects that the trial judge considered whether equitable remedies were fair and just

on the facts, and the trial judge stated that he spent hours reviewing evidence and

pleadings related to that issue before deciding to deny equitable relief. After

reviewing the appellate record and facts in this case, we cannot say the trial court

acted arbitrarily or unreasonably or that the trial court’s decision was unsupported

by guiding rules and principles. According to the record, the trial court weighed the

equities based upon the evidence presented at trial. We conclude the trial court did

not abuse its discretion in denying SRMPA’s request for equitable relief. See

Sheppard, 282 S.W.3d at 428-29; Cire, 134 S.W.3d at 838; Downer, 701 S.W.2d at

241-42. We overrule SRMPA’s first issue.

Limitations Regarding the Nisco Deal

SRMPA argues in its second appellate issue that the trial court erred in

“sustain[ing] the Defendants’ limitations defense and disregard[ing] the jury’s

finding that Gillis’[s] breach of fiduciary duty regarding the Nisco Deal damaged

SRMPA in the amount of $5 million.”

Jury question five asked “Did Gillis fraudulently conceal his breach of

fiduciary duty, in connection with the Nisco Deal, from SRMPA?”9 The jury

9 The question contained a definition for fraudulent concealment, and provided that

30 answered “yes[.]” Jury question six asked “On what date did SRMPA obtain

sufficient knowledge that would have required a reasonably prudent person to make

inquiry that, if pursued, would lead to discovery of Gillis’[s] breach of fiduciary duty

in connection with the Nisco deal?” The jury answered “March 27, 2001[.]” SRMPA

requested an additional instruction for question six that was refused by the trial court.

The instruction SRMPA requested stated as follows:

In answering this question, you are instructed that, as a fiduciary, an attorney is obligated to render a full and fair disclosure of facts material to the client’s representation. Therefore, facts which might ordinarily require a person to make inquiry may not raise suspicion where a fiduciary relationship is involved.

According to SRMPA, the evidence conclusively established fraudulent

concealment, and the jury’s answer on the limitations issue is inadequate to override

the finding on fraudulent concealment because the limitations question was

“infirm[]” and “without a proper instruction.” SRMPA also argues that the evidence

did not support the jury’s answer on the “discovery” question if the issue had been

Fraudulent concealment occurs when: 1. the defendant has actual knowledge that he committed a wrong; 2. the defendant concealed the wrong by making a misrepresentation or by remaining silent when he had a duty to speak; 3. the defendant had a fixed purpose to conceal the wrong; and 4. the plaintiff reasonably relied on the misrepresentation or silence.

31 properly framed and that the jury’s answer to the “discovery” question should be

disregarded as immaterial.

The statute of limitations for a claim of breach of fiduciary duty is four years.

Tex. Civ. Prac. & Rem. Code § 16.004(a)(5) (West 2002). SRMPA contends that

the doctrine of fraudulent concealment tolls limitations “because a person cannot be

permitted to avoid liability for his actions by deceitfully concealing wrongdoing

until limitations has run.” S.V. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996).

A trial court must submit in its charge to the jury all questions, instructions,

and definitions that are raised by the pleadings and the evidence. See Tex. R. Civ. P.

278; Hyundai Motor Co. v. Rodriguez, 995 S.W.2d 661, 663-64 (Tex. 1999); E.I.

DuPont de Nemours & Co. v. Roye, 447 S.W.3d 48, 56 (Tex. App.—Houston [14th

Dist.] 2014, pet. dism’d). The parties have the right to be judged by a jury properly

instructed in the law. Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 388 (Tex.

2000). The goal, therefore, is to submit to the jury the issues for decision logically,

simply, clearly, fairly, correctly, and completely. Roye, 447 S.W.3d at 56. To

achieve this goal, trial courts enjoy broad discretion so long as the charge is legally

correct. Id. We review a trial court’s decision to refuse a particular instruction under

an abuse of discretion. Thota v. Young, 366 S.W.3d 678, 687 (Tex. 2012); Shupe v.

Lingafelter, 192 S.W.3d 577, 579 (Tex. 2006). Explanatory instructions should be

32 submitted when, in the sole discretion of the trial court, they will help the jurors

understand the meaning and effect of the law and the presumptions the law creates.

Pitts v. Sabine River Auth. of Tex., 107 S.W.3d 811, 819 (Tex. App.—Texarkana

2003, pet. denied). The court should not burden the jury with surplus instructions.

Acord v. Gen. Motors Corp., 669 S.W.2d 111, 116 (Tex. 1984). Consequently, every

correct statement of the law does not necessarily belong in the jury charge. Maddox

v. Denka Chem. Corp., 930 S.W.2d 668, 671 (Tex. App.—Houston [1st Dist.] 1996,

no writ). When a trial court refuses to submit a requested instruction, the question

on appeal is whether the request was reasonably necessary to enable the jury to

render a proper verdict. Tex. Workers’ Comp. Ins. Fund v. Mandlbauer, 34 S.W.3d

909, 912 (Tex. 2000). A trial court’s error in refusing an instruction is reversible

only if it “probably caused the rendition of an improper judgment.” Union Pac. R.R.

Co. v. Williams, 85 S.W.3d 162, 166 (Tex. 2002); see also Tex. R. App. P. 44.1(a)

(addressing reversible error in civil cases).

Tendering a proposed jury question or instruction will not suffice to preserve

error when a proper objection has not been made to the question or instruction

submitted. See Kirkpatrick v. Mem’l Hosp. of Garland, 862 S.W.2d 762, 769 (Tex.

App.—Dallas 1993, writ denied); see also Carr v. Weiss, 984 S.W.2d 753, 766 (Tex.

App.—Amarillo 1999, pet. denied); Boorhem-Fields, Inc. v. Burlington N. R.R. Co.,

33 884 S.W.2d 530, 535 (Tex. App.—Texarkana 1994, no writ); Schutz v. S. Union Gas

Co., 617 S.W.2d 299, 302 (Tex. Civ. App.—Tyler 1981, no writ). “A request for

submission is required to preserve the right to complain of a trial court’s failure to

submit a question; whereas, an objection is required to preserve a complaint as to a

defective question.” Hartnett v. Hampton Inns, Inc., 870 S.W.2d 162, 166 (Tex.

App.—San Antonio 1993, writ denied) (citing Tex. R. Civ. P. 274, 278). Appellant

only objected that question six was incomplete, and not that it was improper. And,

Appellant did not explain to the trial court why the requested instruction was

reasonably necessary in order for the jury to render a proper verdict. See Tex. R. Civ.

P. 274.

In Carr, the court explained:

Objections to the charge and requests for submission of issues are not alternatively permissible methods for complaining of the charge. Because a request for another charge is not a substitute for an objection, in the absence of a specific objection to the submitted question and instruction, the tender of a correct question is not sufficient to preserve error, even if a defectively worded special instruction is contained in the court’s proposed charge. Moreover, it is the rule that if a trial court’s charge fairly and fully presents all controlling questions to the jury, it is not error to refuse to submit additional issues or instructions which are mere shades or variations of the questions already submitted.

984 S.W.2d at 766 (citations omitted). Appellant’s objection at trial did not

specifically assert that the question six was improper. See Tex. R. Civ. P. 274; Garza

v. Southland Corp., 836 S.W.2d 214, 218 (Tex. App.—Houston [14th Dist.] 1992, 34 no writ) (“A mere request to submit a different instruction or issue [other] than that

proposed by the court does not sufficiently point out the specific objectionable

matter and will not be considered an ‘objection’ for the purposes of Rule 274.”).

Generally, a request for a different instruction is not a substitute for an objection and

does not preserve error. See Hernandez v. Montgomery Ward & Co., 652 S.W.2d

923, 925 (Tex. 1983), overruled on other grounds by Acord v. Gen. Motors Corp.,

669 S.W.2d 111, 114 (Tex. 1984); but see State Dep’t of Highways & Pub. Transp.,

838 S.W.2d 235, 240-41 (Tex. 1992) (concluding a request can serve as an objection

for preservation purposes if the trial court is made aware of the complaint and issues

a ruling). Appellant’s request for an instruction and the generic “incomplete”

objection was insufficient to preserve the error Appellant asserts on appeal.

Therefore, Appellant waived any complaint regarding the court’s rejection of the

instruction.

Nevertheless, even assuming SRMPA preserved the argument it makes in its

second issue, we cannot say that the trial court abused its discretion in rejecting the

instruction requested by SRMPA. A jury instruction is proper when it assists the

jury, accurately states the law, and is supported by the pleadings and evidence.

McIntyre v. Comm’n for Lawyer Discipline, 247 S.W.3d 434, 446 (Tex. App.—

Dallas 2008, pet. denied). However, “[a]n incorrect jury instruction is grounds for

35 reversal only if it likely caused the rendition of an improper verdict.” Id. at 444

(citing Tex. R. App. P. 44.1(a) and Williams, 85 S.W.3d at 166). When a trial court

denies the request to include an instruction, the question on appeal is whether the

proposed instruction was reasonably necessary to enable the jury to render a proper

verdict. Id. at 446.

SRMPA argues on appeal that it cited to Willis v. Maverick, 760 S.W.2d 642,

645 (Tex. 1988) and Courseview, Inc. v. Phillips Petroleum Co., 312 S.W.2d 197,

205 (Tex. 1957) in the trial court in support of its requested instruction. However,

the cases cited by SRMPA do not support its argument on appeal that the absence of

SRMPA’s requested instruction prevented the jury from “deal[ing] intelligently with

the questions submitted.” We note that included within the instructions on jury

question one, the trial court instructed the jury that in order to prove he complied

with his duty, Gillis “must show— . . . 3. Gillis acted in utmost good faith and

exercised the most scrupulous honesty toward SRMPA; and . . . 5. [that] Gillis fully

and fairly disclosed all important information to SRMPA concerning the

transactions.” We further note that the party that is seeking to avoid limitations

has the burden to plead, prove, and obtain favorable jury findings on the issue

of discovery as a matter of avoidance of limitations. Woods v. William M. Mercer,

Inc., 769 S.W.2d 515, 518 (Tex. 1988).

36 The Texas Supreme Court has recognized two doctrines that may apply

to extend the running of a statute of limitations: fraudulent concealment and

the discovery rule. Shell Oil Co. v. Ross, 356 S.W.3d 924, 927-30 (Tex. 2011).

Fraudulent concealment is a fact-specific equitable doctrine that may toll the

statute of limitations until the fraud is discovered or could have been

discovered with reasonable diligence. Id. at 927; Borderlon v. Peck, 661 S.W.2d

907, 909 (Tex. 1983). The discovery rule is a limited exception, and it may also

defer the accrual date of a cause of action until an injury “was or could have

reasonably been discovered.” Ross, 356 S.W.3d at 929-30. The concepts require

the injured party to exercise “reasonable diligence” or act “reasonably” with

respect to the discovery of the alleged wrongdoing. Id. at 927-30.

We cannot say that the trial court abused its discretion in refusing to submit

the instruction requested by SRMPA. The trial court correctly noted that jury

question six asked the jury to find the date on which SRMPA obtained sufficient

knowledge that would have required a reasonable and prudent person to make an

inquiry that, if pursued, would have lead SRMPA to discover Gillis’s breach of

fiduciary duty in connection with the Nisco Deal. We conclude that the additional

instruction proposed by SRMPA was not “reasonably necessary to enable the jury

to render a proper verdict.” See Mandlbauer, 34 S.W.3d at 912. Accordingly, the

37 trial court did not abuse its discretion when it refused to submit the instruction to the

jury. Furthermore, we cannot say that the trial court’s refusal of the requested

instruction probably caused the rendition of an improper judgment. Dew, 208

S.W.3d at 456; see also Tex. R. App. P. 44.1(a). Therefore, the alleged error, if any,

was harmless.

Because we have already determined (1) that the trial court did not abuse its

discretion in refusing to submit the requested instruction and (2) the trial court did

not abuse its discretion in denying SRMPA equitable relief, we need not address

SRMPA’s argument that the jury’s “limitations” answer to jury question 6 should be

disregarded because Gillis’s limitations defense has no application to an equitable

claim or that the limitations finding is immaterial “in an equitable context.” We

overrule SRMPA’s second issue.

Damages Awarded Relating to the Cambridge Project

In issue three, SRMPA argues that there is “conclusive evidence” in the record

of the actual amounts the Trust distributed to Obain from the Cambridge Project

prior to trial, “but the trial court failed to use that evidence to award an accurate

amount of SRMPA’s past damages regarding the Cambridge Project.” According to

SRMPA, the jury awarded SRMPA $1,799,059 in damages regarding the Cambridge

Project, which was the exact amount presented in an exhibit by SRMPA’s damage

38 expert as “Cambridge Deal (Past [Damages])” attributable to “Gillis (Obain

Associates Limited)[.]” SRMPA contends, however, that the expert clarified in his

testimony at trial that the figure in his exhibit only represented past damages through

2013 and it did not include damages from 2013 to 2016 (the date of the trial) and

that the expert included the damages amount from 2014 and up until trial in his

calculations for the “Cambridge Deal (Future [Damages])” attributable to “Gillis

(Obain Associates Limited)” on an exhibit. According to SRMPA, the jury

“apparently us[ed] the chart” and “overlook[ed] the undisputed testimony” and other

exhibits establishing that an additional $2,551,015 should have been included with

the $1,799,059 awarded to arrive at the “full” and “correct amount” of past damages

against Gillis and Obain.

Under Texas law, “whether to award damages and how much is uniquely

within the factfinder’s discretion.” Golden Eagle Archery, Inc. v. Jackson, 116

S.W.3d 757, 772 (Tex. 2003). The evidence need not correspond to the precise

amount found by the jury. See Pleasant v. Bradford, 260 S.W.3d 546, 559 (Tex.

App.—Austin 2008, pet. denied). A jury is “not tied to awarding damages exactly as

requested by the injured party[,]” and it does not have to rely solely on an expert’s

opinion in calculating damages. Bayer Corp. v. DX Terminals, Ltd., 214 S.W.3d 586,

606 (Tex. App.—Houston [14th Dist.] 2006, pet. denied); see also Main Bank &

39 Trust v. York, 498 S.W.2d 953, 957 (Tex. App.—San Antonio 1973, writ ref’d n.r.e.)

(a jury may disbelieve an expert and “the factfinder is not cut off from exercising

considerable personal judgment about how far such opinions are to be relied on[]”).

When the evidence at the trial supports a range of damages, “an award within that

range is an appropriate exercise of the jury’s discretion, and a reviewing court is not

permitted to speculate on how the jury actually arrived at its award.” Drury Sw., Inc.

v. Louie Ledeaux #1, Inc., 350 S.W.3d 287, 292 (Tex. App.—San Antonio 2011, pet.

denied). The jury could have disbelieved the expert testimony regarding the future

damages. In fact, the jury awarded SRMPA nothing for future damages. However,

SRMPA does not complain on appeal about the jury’s decision not to award SRMPA

any future damages in relation to the Cambridge Project. We conclude that the

evidence is sufficient to support the jury’s award and we may not substitute our

judgment for that of the factfinder. See City of Keller v. Wilson, 168 S.W.3d 802,

822 (Tex. 2005) (appellate court may not substitute its judgment for that of the

factfinder so long as the evidence falls within the zone of reasonable disagreement).

We overrule SRMPA’s third issue.

Respondeat Superior

In SRMPA’s fourth issue it argues the Gillis Firm should be jointly and

severally liable with Gillis (and Obain as his alter ego) for the full damages awarded

40 to SRMPA on the basis of respondeat superior. According to SRMPA, the trial court

erred in limiting the liability of damages to Gillis and Obain and in not also imposing

that liability on the Gillis Firm.

On appeal, the Gillis Defendants argue that SRMPA presented this argument

for the first time on appeal. The Gillis Defendants further argue that SRMPA did not

plead respondeat superior against the Gillis Firm and that SRMPA did not submit a

respondeat superior question to the jury. In their Reply Brief, SRMPA argues that it

presented the argument to the trial court in its post-verdict Motion to Modify, Correct

or Reform Final Judgment, when SRMPA made the statement in one sentence in its

post-verdict Reply Brief that “‘all of the foregoing amounts of damages should be

awarded against Gillis, Borchardt & Barthel LLP on the basis of

vicarious/respondeat superior liability.’”

SRMPA does not cite to any other pleading or part of the appellate record to

support its contention that the trial court was made aware of its argument regarding

respondeat superior. In its Motion to Modify, Correct or Reform Final Judgment,

although SRMPA asked the trial court to award the damages against the Gillis law

Firm, Gillis, and Obain on the basis of “vicarious/respondeat superior liability[,]”

SRMPA did not provide any legal authority to the trial court to support its argument.

SRMPA bore the burden of proof on this issue. See 20801, Inc. v. Parker, 249

41 S.W.3d 392, 397 n.6 (Tex. 2008) (plaintiff pleading respondeat superior bears the

burden of proof). Furthermore, SRMPA does not cite to any other place in the record

where it pleaded, proved, or secured a finding in support of its vicarious liability

claim against the Gillis Firm. Accordingly, we cannot say that the trial court abused

its discretion in refusing to modify the final judgment on this issue. See Wagner v.

Edlund, 229 S.W.3d 870, 879 (Tex. App.—Dallas 2007, pet. denied) (appellate court

reviews the denial of a motion to modify, correct, or reform a judgment for an abuse

of discretion). Therefore, we overrule issue four.

SRMPA’s Request for a Permanent Injunction Against Gillis and the Gillis Firm

In issue five, SRMPA argues that Gillis and the Gillis Firm should be

permanently enjoined from representing VPPA because after SRMPA discharged

Gillis and the Gillis Firm in 2012 he continued to represent VPPA “against

SRMPA’s interests on the same subject matter on which he had previously

represented SRMPA.” According to SRMPA, “[t]his is the only appropriate relief

possible when a fiduciary violates his position of trust.” SRMPA includes no

citations to the appellate record on this issue. SRMPA did not secure a ruling on any

request as to this “remedy[,]” and there was no jury question presented on this issue.

As such, SRMPA has not preserved this issue for appeal, and there is nothing for

42 this Court to review.10 See Tex. R. App. P. 33.1; 38.1(i). We overrule SRMPA’s fifth

issue.

Cross-Appeal by Gillis and Obain Regarding Sufficiency of the Evidence to Support Submission of Certain Jury Questions and Denial of Motion for Directed Verdict/Motion for Judgment JNOV

In their cross appeal, Gillis and Obain argue that Gillis is entitled to judgment

on all issues regarding the Nisco Deal because SRMPA did not submit evidence or

provide legally sufficient evidence that SRMPA ever engaged Gillis to pursue the

Nisco Deal; that SRMPA failed to submit evidence or present legally sufficient

evidence that the Nisco Deal was a business opportunity that SRMPA would have

actually pursued, agreed upon, and implemented; that SRMPA failed to establish

that Gillis concealed his relationship with Obain when the Cambridge Project

agreements were being negotiated and executed; and that SRMPA failed to establish

that it suffered actual damages or that Gillis’s alleged concealment profited Gillis to

the detriment of SRMPA. Gillis and Obain contend that SRMPA’s request for a

10 We also note that the only authority SRMPA cites in support of this argument is Intermarque Automotive Products, Inc. v. Feldman, 21 S.W.3d 544, 553 (Tex. App.—Texarkana 2000, no pet.). Feldman does not address the propriety of the grant of a permanent injunction against an attorney from representing another client. In Feldman, the court of appeals merely included a footnote wherein it generally discusses the remedy of fee forfeiture and references Burrow v. Arce, 997 S.W.2d 299 (Tex. 1999). See Feldman, 21 S.W.3d at 553 n.17 (quoting Burrow, 997 S.W.2d at 544). 43 constructive trust asks this Court to circumvent the Texas Utilities Code. Gillis and

Obain assert that they are not asking this Court to reverse the jury’s findings, but are

asking this Court to hold that (1) there was no evidence or only legally insufficient

evidence to support submission of certain jury questions, and (2) the trial court

should have granted Gillis’s and Obain’s motion for directed verdict or motion for

judgment notwithstanding the verdict.

We first address Gillis’s and Obain’s argument that the trial court erred in

denying its motion for directed verdict on Gillis’s and Obain’s ratification defense.

Gillis and Obain argued in their motion for directed verdict and in their cross appeal

that SRMPA has ratified Gillis’s and Obain’s alleged wrongful receipt of the fee

because SRMPA continues to participate in the Cambridge Project and retain its

benefits. In denying the motion for directed verdict on ratification, the trial court

stated the following:

So, ratification, another interesting issue; but in reading the language put forth in the Charge submitted, proposed charge and instructions submitted, it practically calls for a jury nullification of some of the other issues in this. I don’t think a party is, because they continue into a lucrative contract, can’t carve out an alleged wrongdoing rather than just saying, okay, everybody’s done at the expense and cost of people that aren’t even parties to this lawsuit. So, although I find that an interesting issue, as well, I’m going to deny your Motion on ratification.

We review a trial court’s decision on a motion for directed verdict under the

same standard of review as a legal sufficiency, or no-evidence, challenge. See 44 City of Keller, 168 S.W.3d at 823; Haynes & Boone, L.L.P. v. Chason, 81 S.W.3d

307, 309 (Tex. App.—Tyler 2001, pet. denied) (“An appeal from the denial of a

motion for directed verdict is . . . a challenge to the legal sufficiency of the

evidence.”). “[A] directed verdict is proper only if the evidence conclusively

establishes the movant’s right to judgment, negates the opponent’s right to judgment,

or is insufficient to raise a fact issue on a vital fact.” In re Estate of Longron, 211

S.W.3d 434, 438 (Tex. App.—Beaumont 2006, pet. denied) (citing Prudential Ins.

Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000)).

Because ratification is an affirmative defense, the party raising the issue bears

the burden to offer proof on each of the elements of the defense: (1) approval by act,

word, or conduct; (2) with full knowledge of the facts of the earlier act; and (3) with

the intention of giving validity to the earlier act. Motel Enters., Inc. v. Nobani, 784

S.W.2d 545, 547 (Tex. App.—Houston [1st Dist.] 1990, no pet.). Even assuming

without deciding that a ratification defense applies in this context, Gillis and Obain

failed to cite the trial court to evidence that would support each of the elements of a

ratification defense, and we agree with the trial court that granting the directed

verdict on ratification could potentially nullify other jury answers. We overrule

Gillis’s and Obain’s cross appeal regarding ratification. Because we have already

overruled SRMPA’s issues regarding equitable relief, limitations and damages,

45 Gillis’s and Obain’s other issues on cross appeal are moot. Therefore, we overrule

all of Gillis’s and Obain’s issues on cross appeal.

The Trust’s Indemnity Counterclaim

In its cross appeal, the Trust asserts that it does not challenge the portion of

the judgment that SRMPA take nothing against the Trust but the Trust argues that it

is entitled to entry of judgment against SRMPA on the Trust’s indemnity

counterclaim because “the unambiguous language of the parties’ agreement provides

that [SRMPA] shall hold the Trust harmless from the exact claims brought against

it below.” The Trust filed a proposed final judgment that included the following in

relevant part:

VII. It is therefore, ORDERED that FINAL JUDGMENT is hereby rendered in this matter: .... AS TO DEFENDANT THE TRUST’S INDEMNITY CLAIM: (8) Defendant The Jasper/VPPA Settlement Trust shall have and recover actual damages from Plaintiff Sam Rayburn Municipal Power Agency in the amount of $391,519.91, as the Trust’s reasonable and necessary fees and expenses incurred to date in defending against Plaintiff’s claims in this litigation. In the event of an appeal of this Final Judgment by Plaintiff to the court of appeals, if the appeal is unsuccessful, Defendant The Jasper/VPPA Settlement Trust shall have and recover further damages from Plaintiff Sam Rayburn Municipal Power Agency in the amount of $50,000.00 as its reasonable appellate fees in that court; and in the event of an appeal by Plaintiff to the Supreme Court of Texas, if the appeal is unsuccessful, Defendant The Jasper/VPPA Settlement Trust shall have and recover further damages from Plaintiff Sam Rayburn Municipal Power Agency in the amount of 46 $25,000.00 as its reasonable appellate fees in that court. Post-judgment interest will accrue on this judgment at a rate of 5% per annum until the judgment is paid by Plaintiff; (9) All costs of court incurred by Defendant The Jasper/VPPA Settlement Trust in this matter shall be taxed against, and payable by, Plaintiff Sam Rayburn Municipal Power Agency; and (10) All relief not expressly granted in this Judgment is hereby denied.

The Trust filed its Motion for Entry of Final Judgment on Jury’s Verdict and

on Its Counterclaim for Indemnity, and argued that, because the jury found no

liability against the Trust, “the Trust is entitled to entry of Final Judgment in its favor

that SRMPA take nothing by way of all of its claims and allegations against the

Trust[,]” and that “[t]he Trust is also entitled to judgment in its favor against SRMPA

for all of the costs of court incurred by SRMPA in this matter.” At the hearing on

the motion, the trial court discussed its ruling on the indemnity as follows:

THE COURT: . . . I think I’m going to find that [SRMPA], by virtue of that contract and that [] clause, did not indemnify them for this -- this type of action; and, so, I am definitely going to take out No. 8.

[Counsel for the Trust]: That’s fine, Your Honor. I would suggest, one, that the Court could simply take that out by just circling the whole paragraph, marking it out, and initialing it, I think, would be sufficient. But I would say that No. 9, because they did not prevail on their claims against us, we’re still entitled to costs of court.

THE COURT: . . . I didn’t question it.

[Counsel for the Trust]: Thank you.

47 THE COURT: That was another reason I was thinking about awarding it was because it could be viewed as a frivolous lawsuit, or frivolous. Obviously, they had a -- they had a point to make and tried to do that with that. So, I am, on Page 5 [of the Trust’s proposed final judgment], going to mark that out and rule in the bifurcated trial that the settlement trust is not entitled to indemnity by [SRMPA] at this time.

The parties both argue that the language in the indemnity provision is

unambiguous. The parties disagree on the application of the indemnity language. By

its plain language, the provision in question is an indemnity provision. As a general

rule, an indemnity provision does not apply to claims between the parties to an

agreement. See Claybar v. Samson Expl., LLC, No. 09-16-00435-CV, 2018 Tex.

App. LEXIS 928, at *7 (Tex. App.—Beaumont Feb. 1, 2018, pet. filed); Nat’l City

Mortg. Co. v. Adams, 310 S.W.3d 139, 144 (Tex. App.—Fort Worth 2010, no pet.);

MG Bldg. Materials, Ltd. v Moses Lopez Custom Homes, Inc., 179 S.W.3d 51, 63

(Tex. App.—San Antonio 2005, pet. denied); Ganske v. Spence, 129 S.W.3d 701,

708 (Tex. App.—Waco 2004, no pet.); Wallerstein v. Spirt, 8 S.W.3d 774, 780 (Tex.

App.—Austin 1999, no pet.); Derr Constr. Co. v. City of Houston, 846 S.W.2d 854,

858 (Tex. App.—Houston [14th Dist.] 1992, no writ). For the Trust to make the

claim that it is entitled to indemnification, the Trust bears the burden to prove that

the indemnity provision is applicable, that is, that a third party has filed a claim

against the Trust, or the indemnity clause expressly includes language indicating that

48 it also applies to direct claims between the indemnitor and indemnitee. See generally

MG Bldg. Materials, Ltd., 179 S.W.3d at 63; Ganske, 129 S.W.3d at 708; Coastal

Transp. Co. v. Crown Centr. Petroleum Co., 20 S.W.3d 119, 130 (Tex. App.—

Houston [14th Dist.] 2000, pet. denied). We conclude that on this record the Trust

has not met its burden. In denying the Trust’s indemnity counterclaim, the trial court

stated on the record that the indemnity provision was not triggered by “this type of

action[.]” We agree, and we overrule the Trust’s issue on cross appeal.

Having overruled Appellant’s and Cross-Appellants’ issues, we affirm the

AFFIRMED.

_________________________ LEANNE JOHNSON Justice

Submitted on March 13, 2018 Opinion Delivered July 26, 2018

Before McKeithen, C.J., Kreger and Johnson, JJ.