           IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT   United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                        December 15, 2008

                                      No. 07-51101                    Charles R. Fulbruge III
                                                                              Clerk

NUTRASEP LLC

                                                 Plaintiff - Appellant
v.

TOPC TEXAS LLC; THUMB OILSEED PRODUCERS COOPERATIVE

                                                 Defendants - Appellees



                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 1:05-CV-523


Before KING, HIGGINBOTHAM, and WIENER, Circuit Judges.
PER CURIAM:*
      Plaintiff-Appellant Nutrasep LLC (“Nutrasep”) entered into a series of
contracts to provide to Defendants-Appellees Thumb Oilseed Producers
Cooperative (“Thumb”) and TOPC Texas LLC1 (“TOPC Texas”) proprietary




       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
       1
        Thumb and Nutrasep formed TOPC Texas to undertake the project. Thumb is TOPC
Texas’s sole member.
                                         No. 07-51101

technology for processing the byproduct of soybean refining into lecithin.2 As
an up-front licensing fee, TOPC Texas signed a $350,000 Promissory Note (the
“Note”) payable to Nutrasep and due February 14, 2005. Thumb guaranteed the
Note in an accompanying security agreement. When Thumb and TOPC Texas
failed to pay on the Note, Nutrasep sued them. Claiming that Nutrasep misled
them about its technological know-how, which they insist never worked, Thumb
and TOPC Texas filed a counter-claim against Nutrasep. A jury found that all
three parties — Thumb and TOPC Texas on one side, and Nutrasep on the
opposite side — breached one of the four contracts, awarding $67,500 in damages
to Thumb and nothing to the other parties. Neither Thumb nor TOPC Texas
appealed, but Nutrasep appealed the denial of its motion for a judgment as a
matter of law (“jmol”). We affirm in part and reverse in part.
                                        I. ANALYSIS
A. Applicable Law
       In diversity cases like this one, we apply state substantive law and federal
procedural law.3 In this case, the applicable law is that of Texas.
B. Standard of Review
       A district court must deny a motion for jmol “unless the facts and
inferences point ‘so strongly and overwhelmingly in the movant’s favor that
reasonable jurors could not reach a contrary conclusion.’”4 We review denials of
motions for jmol de novo, applying the same legal standard as the district court.5
We consider all of the evidence, drawing all reasonable inferences and resolving


       2
        Lecithin is an emulsifier (a thickening agent) commonly found in many food products,
such as chocolate and ice cream.
       3
        Foradori v. Harris, 523 F.3d 477, 486 (5th Cir. 2008) (citing Erie R.R. v. Tompkins,
304 U.S. 64 (1938)).
       4
           Flowers v. S. Reg’l Physician Servs. Inc., 247 F.3d 229, 235 (5th Cir. 2001).
       5
           Id.

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all credibility determinations in the light most favorable to the non-moving
party. “Although we review denial of a motion for [jmol], we note that our
standard of review with respect to a jury verdict is especially deferential.”6
C. Breach of Contract
       Four contracts signed by the parties were at issue in this dispute: the
Note, the Security Agreement, the Technology License Agreement (the “TLA”),
and the Manufacturing and Supply Agreement. These contracts obligated
Nutrasep to provide the contemplated technology and obligated TOPC Texas,
with Thumb as its guarantor, to pay Nutrasep $350,000 as an initial licensing
fee, followed by continuing licensing fees and royalties. The total value to
Nutrasep over the life of the contracts was $3.35 million, including the initial
licensing payment and ongoing licensing and royalty payments for 20 years. The
Note was due on February 14, 2005; neither TOPC Texas nor Thumb paid,
claiming Nutrasep’s technology was not “unique” and was incapable of producing
marketable soy lecithin. The jury found that all three entities breached the
TLA, and Nutrasep filed a motion for jmol. It sought reversal of the jury finding
that it had breached the TLA and the award of damages to Thumb.
       The district court may grant jmol only if “there is no legally sufficient
evidentiary basis for a reasonable jury to have found for that party with respect
to that issue.”7 Our review of the record convinces us that there was substantial
evidence on both sides of the controversy for a rational trier of fact to find that
all three failed to perform under the contract.8 The question was one of fact for


       6
           Brown v. Bryan County, Okla., 219 F.3d 450, 456 (5th Cir. 2000).
       7
           Flowers, 247 F.3d at 235.
       8
          Both sides raised numerous arguments in support of and in opposition to the
sufficiency question, including whether the TLA was orally modified, remittur, and whether
any of the breaches were excused, in what appears to be an attempt to relitigate the case in
this court. We do not reach most of these because we are satisfied that the verdict should
stand.

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the jury, and the district court properly denied Nutrasep’s jmol motion. We
therefore affirm.
D. Damages
       The jury awarded Thumb $67,500 in damages suffered as a result of
Nutrasep’s breach.          On appeal, Nutrasep asserts that the evidence was
insufficient to support the award, so that the district court erred when it denied
Nutrasep’s motion for jmol on this issue. We agree with Nutrasep.
       To win compensatory damages in a breach of contract case under Texas
law, a plaintiff must show that he suffered a pecuniary loss as a result of the
breach.9 He must prove those damages with “reasonable certainty.”10 “The
causation or causal connection between the event sued upon and the plaintiff’s
injuries or damages must be demonstrated by evidence of probative value.”11
       Thumb sought to recover the money that it had laid out in reliance on its
deal with Nutrasep. Thumb supported its claim with testimony by its executives
that the co-op had paid to hook up the processing machines that Nutrasep
leased, paid electrical bills, and leased trailers in which to store barrels of wet
gums, the byproduct of soybean refining that was to be turned into marketable
lecithin. Standing alone, this testimony is meager: The entirety of the Thumb
executives’ speculation of the amounts spent and for what is contained in but a
few of the roughly 800 pages of trial testimony and mentions few specifics.




       9
        Diaz v. State & County Mut. Fire Ins. Co., No. 04-06-00373-CV, 2007 Tex. App. LEXIS
3935, at *6 (Tex. App.—San Antonio 2007, no pet.) (citing Prudential Sec., Inc. v. Haugland,
973 S.W.2d 394, 396-97 (Tex. App.—El Paso 1998, pet. denied)).
       10
           City of Beaumont v. Excavators & Constructors, 870 S.W.2d 123, 139 (Tex.
App.—Beaumont 1993, writ denied). That is not to say that damages must be established with
precision, they need not be. Stewart & Stevenson Servs., Inc. v. Enserve, Inc., 719 S.W.2d 337,
346 (Tex. App.—Houston [14th Dist.] 1986, writ ref’d).
       11
            City of Beaumont, 870 S.W.2d at 139.

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       The testimony might have been successfully bolstered by invoices or other
supporting documentation, which Thumb did provide; but Thumb did nothing
more than hand the jury hundreds of invoices and receipts with no explanations,
summaries, compilations or the like. Thumb executives testified that the co-op
spent $80,000 to $100,000 in the expectation that the project would go forward,
yet none of that testimony attempted to connect this to the raw stack of receipts
and invoices that they tendered. For example, we have located no receipt for
electrical bills, other than Thumb’s unsubstantiated invoices to TOPC Texas,
despite both Thumb witnesses testifying that this was a large part of the co-op’s
expense.12 In fact, the sums represented in the financial documents handed to
the jury total vastly more than the damages Thumb claimed. And, many of the
invoices are duplicative. For example, there are more than a dozen copies of
receipts for a single expenditure. 13 Additionally, the expenditures span at least
a year, bracketing the time when Nutrasep demanded payment on the Note.
Some expenditures even post-date Nutrasep’s filing of the lawsuit,
unquestionably after the parties ceased (or should have ceased) to rely on the
contract.14 Although it is possible that the non-duplicative receipts represent
valid expenditures, Thumb made no effort to demonstrate this.



       12
        Thumb did include bills from an electrical company though these seem to be for parts
and labor.
       13
        A sizeable portion of the documents turned over to the jury is invoices sent by Thumb
to TOPC Texas for payments Thumb made on TOPC Texas’s behalf, many of which represent
the same bill from one month to the next augmented by service charges.
       14
          Thumb essentially sought reliance damages, which “‘include expenditures made in
preparation for performance or in performance, less any loss that the party in breach can prove
with reasonable certainty the injured party would have suffered had the contract been
performed.’” Bechtel Corp. v. Citgo Prods. Pipeline Co., ___ S.W.3d ___, 2008 WL 4482688, at
*20 (Tex. App.—Austin 2008, no pet.) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 349);
see also O’Farrill Avila v. Gonzalez, 974 S.W.2d 237, 247 (Tex. App.—San Antonio 1998, pet.
denied) (damages in contract suits protect three interests: restitution, reliance and
expectation).

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      To prove its damages with “reasonable certainty,” a party must do more
than guess at its expenses then dump a ream of unexplained receipts in the
jury’s lap. The jury is not required to construct a party’s case from the raw data
when the party fails to do so. We conclude that Thumb did not provide legally
sufficient evidence on the basis of which a reasonable juror could determine that
Thumb suffered damages in the amount of $67,500 — or any other amount, for
that matter. Consequently, the district court erred in denying Nutrasep’s
motion for jmol on the jury’s award of damages to Thumb. We reverse this
award and render judgment that Thumb take nothing.
AFFIRMED in part; REVERSED and RENDERED in part.




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