                                                                                                  ACCEPTED
                                                                                              12-14-00288-CV
                                                                                 TWELFTH COURT OF APPEALS
                                                                                               TYLER, TEXAS
                                                                                         5/21/2015 1:34:05 PM
                                                                                                CATHY LUSK
                                                                                                       CLERK


                                                               Oral Argument Requested

                                                                              FILED IN
                                                                       12th COURT OF APPEALS
                          No. 12-14-00288-CV                                TYLER, TEXAS
                                                                       5/21/2015 1:34:05 PM
                                                                            CATHY S. LUSK
                                                                                Clerk
                        In the Twelfth Court of Appeals
                                Tyler, Texas


                               J. MARK SWINNEA
                                                            Appellant

                                           v.

                    ERI CONSULTING ENGINEERS, INC.
                         AND LARRY SNODGRASS
                                           Appellees


                     Appealed from the 114th Judicial District Court
                                 Smith County, Texas


                      APPELLANT’S AMENDED BRIEF


Michael E. Gazette                              Greg Smith
Texas Bar No. 07784500                          Texas Bar No. 18600600
Law Office of Michael E. Gazette                Nolan Smith
100 E. Ferguson, Suite 1000                     Texas Bar No. 24075632
Tyler, Texas 75702                              RAMEY & FLOCK, P.C.
Telephone: 903-596-9911                         100 E. Ferguson, Suite 500
Facsimile: 903-596-9922                         Tyler, Texas 75702
megazette@suddenlink.com                        Telephone: 903-597-3301
                                                Facsimile: 903-597-2413
                                                gsmith@rameyflock.com
                                                nolans@rameyflock.com
                          ATTORNEYS FOR APPELLANT
                         The Parties and Their Counsel


I.     Appellant:

       J. Mark Swinnea


II.    Appellees:

       ERI Consulting Engineers, Inc.
       Larry Snodgrass


III.   Counsel for Appellant:

       Gregory D. Smith
       Nolan Smith
       RAMEY & FLOCK, P.C.
       100 E. Ferguson, Suite 500
       Tyler, TX 75702
       Telephone: (903) 597-3301
       Facsimile: (903) 597-2413
       gregs@rameyflock.com
       nolans@rameyflock.com

       Michael E. Gazette
       Law Office of Michael E. Gazette
       100 E. Ferguson, Suite 1000
       Tyler, TX 75702
       Telephone: (903) 596-9911
       Facsimile: (903) 596-9922
       megazette@suddenlink.com




                                          i
IV.   Counsel for Appellees:


      Deborah Race
      Ireland, Carroll & Kelley, P.C.
      6101 S. Broadway, Suite 500
      Tyler, TX 75703
      Telephone: (903) 561-1600
      Facsimile: (903) 581-1071
      drace@icklaw.com

      Mike A. Hatchell
      Locke Lord, LLP
      100 Congress Avenue, Suite 300
      Austin, TX 78701
      Telephone: (512) 305-4752
      Facsimile: (512) 305-4800
      mahatchell@lockelord.com

      Roger W. Anderson
      Gillen & Anderson
      613 Shelley Park Plaza
      Tyler, TX 75701
      Telephone: (903) 581-8600
      Facsimile: (903) 581-8790
      randerson@gillenanderson.com




                                             /s/ Gregory D. Smith
                                             GREGORY D. SMITH




                                        ii
                                                  CONTENTS

Authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

The Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Summary of the Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

          I.        Snodgrass should take nothing. . . . . . . . . . . . . . . . . . . . . . . . . . . 8

                    A.        Because Snodgrass has proved no individually
                              recoverable actual damages, he cannot recover. . . . . . . . . 8

                    B.        The Court should have addressed Swinnea’s attacks
                              on Snodgrass’s standing to recover ERI’s lost profits
                              and punitive damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

          II.       The Court should eliminate or revise the trial court’s
                    disgorgement award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

                    A.        If punitive disgorgement is to be allowed in this case, it
                              is subject to all recognized limitations on the recovery
                              and amount of punitive damages. . . . . . . . . . . . . . . . . . . 11

                              1.        Disgorgement that ventures beyond restoring a
                                        windfall is a species of punitive damages. . . . . . . 11

                              2.        The plaintiffs have been awarded a punitive
                                        disgorgement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12




                                                           iii
                                   a.       Being punitive and not restitutionary, the
                                            disgorgement is subject to all restrictions
                                            upon the recovery and amount of punitive
                                            damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

                B.       Because no actual damages have been recovered in
                         connection with the buy-out transaction, there is no
                         legal basis for even a punitive disgorgement.. . . . . . . . . 15

                C.       Because the law will not support two punitive-damage
                         awards for the same conduct, one or the other of the
                         $1 million punitive damages or the $720,000 punitive
                         disgorgement must go.. . . . . . . . . . . . . . . . . . . . . . . . . . . 16

III.   Because the $1 million punitive-damage award and the punitive
       disgorgement award have been entered without the required due-
       process analysis, the Court should, at a minimum, remand both
       awards for a proper excessiveness analysis. . . . . . . . . . . . . . . . . . . . . 17

       A.       The reduction in actual damages requires a new analysis of
                punitive damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

IV.    The $1 million punitive-damage award and the punitive disgorge-
       ment award necessarily are excessive, both individually and
       collectively. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

       A.       The disgorgement is excessive insofar as it requires Swinnea
                to return monies he did not come by in the buyout. . . . . . . . . . 24

       B.       Both punitive awards are excessive in relation to
                statutory limits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

                1.       The Court should reconsider and reverse its sua sponte
                         decision to invoke an inapplicable exception to the
                         statutory cap on punitive damages. . . . . . . . . . . . . . . . . . 25




                                                      iv
                           a.       When the Court invoked a cap-busting exception
                                    to affirm, it rendered an improper, sua sponte
                                    decision.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

                           b.       There has been no cap-busting offense. . . . . . . . . 27

                           c.       Because the criminal offense was not the subject
                                    of findings in the trial court, there is no basis for
                                    busting the statutory punitive-damage cap. . . . . . 30

                           d.       Because no actual damages have been awarded
                                    in connection with the cap-busting conduct, there
                                    is no predicate for an uncapped punitive-damage
                                    award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

                           e.       Because the disgorgement awarded is punitive, it
                                    must be aggregated with any punitive-damage
                                    recovery and the total subjected to a single
                                    statutory cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

         C.       The awards violate the Krause factors and are excessive in
                  relation to due-process limitations. . . . . . . . . . . . . . . . . . . . . . . 32

V.       The plaintiffs are not entitled to attorneys fees. . . . . . . . . . . . . . . . . . 36

VI.      The law of the case does not bar this Court from granting any of
         the relief Swinnea requests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Conclusion and Prayer.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Certificate of Service.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Certificate of Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Appendix




                                                       v
                                             AUTHORITIES

CASES:

Allstate Ins. Co. v. Kelly, 680 S.W.2d 595 (Tex. App.-Tyler 1984,
       writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Bennett v. Reynolds, 315 S.W.3d 867 (Tex. 2010). . . . . . . . . . . . . . . . . . 33, 34

Boyce Iron Works, Inc. v. Sw. Bell Tel. Co., 747 S.W.2d 785
      (Tex. 1988). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Boyer v. Wilmington Materials, Inc., 754 A.2d 881 (Del. Ch. Ct 1999). . . . 24

Bradleys’ Elec., Inc., v. Cigna Lloyds Ins. Co., 995 S.W.2d 675
      (Tex. 1999) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Briscoe v. Goodmark Corp., 102 S.W.3d 714 (Tex. 2003). . . . . . . . . . . 37, 38

Bunton v. Bentley, 153 S.W.3d 50 (Tex. 2004) (per curiam). . . . . . . . . . 17, 24

Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999). . . . . . . . . . . . . . . . . . . . . . 2, 18

City of Houston v. Jackson, 192 S.W.3d 764 (Tex. 2006). . . . . . . . . . . . 37, 40

Cleaver v. Cleaver, 140 S.W.3d 771 (Tex. App.-Tyler 2004, no pet.).. . . . . 21

Commodity Futures Trading Comm’n v. Sidoti, 178 F.3d 1132
    (11th Cir. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Comm. Gen. Life Ins. Co. v. Bryson, 219 S.W.2d 799 (Tex. 1949). . . . . . . . 38

Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000). . . . . . . . . . . . . 37

Doubleday & Co., Inc. v. Rogers, 674 S.W.2d 751 (Tex. 1984). . . . . . . . 9, 39




                                                       vi
Glazener v. Jansing, No. 03-02-00796-CV, 2003 WL 22207226,*6
     (Tex. App.-Austin Sept. 25, 2003, no pet.).. . . . . . . . . . . . . . . . . . . . . 28

Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001). . . . . . . . . . . . . . . . . . . . . 27, 28

Hernandez v. Sovereign Cherokee Nation Tejas, 343 S.W.3d 162
     (Tex. App.-Dallas 2011, pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . 35

Hopwood v. State of Texas, 236 F.3d 256 (5th Cir. 2000).. . . . . . . . . . . . . . . 40

Hudson v. Wakefield, 711 S.W.2d 628 (Tex. 1986). . . . . . . . . . . . . . . . . . . . 37

Int’l Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex. 1963). . 11, 12

Int’l Telecharge, Inc. v. Bomarko, Inc., 766 A.2d 437 (Del. 2000). . . . . . . . 16

Khorshid, Inc. v. Christian, 257 S.W.3d 748 (Tex. App.-Dallas
     2008, no pet.).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509
     (Tex. 1942). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Marin v. IESI TX Corp., 317 S.W.3d at 314 (Tex.App.--
     Houston [1st Dist.] 2010, pet denied). . . . . . . . . . . . . . . . . . . . . . . . . . 29

McCullough v. Scarbrough, Medlin & Assoc., Inc., 435 S.W.3d 871
    (Tex. App.–Dallas 2014, pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . 30

Miller v. Bank of Am., N.A., 326 P.3d 20 (N.M. Ct. App. 2013). . . . . . . . . . 16

Moore v. Jet Stream Invs., Ltd., 261 S.W.3d 412 (Tex. App.-
     Texarkana 2008, pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Morton v. Nguyen, 412 S.W.3d 506 (Tex. 2013). . . . . . . . . . . . . . . . . . . . . . 12

Mossler v. Nouri, 2010 WL 2133940 at *3 (Tex. App.-Austin 2010,
     pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

                                                      vii
Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35
     (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Pat Baker Co. v. Wilson, 971 S.W.2d 447 (Tex. 1998)(per curiam). . . . . . . 26

Peden v. State, 917 S.W.2d 941 (Tex. App.—Fort Worth 1996,
     pet. ref’d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Preston Carter Co. v. Tatum, 708 S.W.2d 23 (Tex. App.-Dallas 1986,
      writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Redmon v. Griffith, 202 S.W.3d 225 (Tex. App.-Tyler 2006, pet. denied). . . 8

Safeshred, Inc. v. Martinez, 365 S.W.3d 655 (Tex. 2012). . . . . . . . . . . . . . . 16

S.E.C. v. First City Fin. Corp., Ltd., 890 F.2d 1215 (D.C. Cir. 1989). . . . . . 25

Serv. Corp. Int’l v. Guerra, 348 S.W.3d 239 (Tex. App.-Corpus Christi
      2009, pet. granted).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

State Bar of Texas v. Evans, 774 S.W.2d 656 (Tex. 1989)(per curiam).. . . . . 9

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 208, 123 S. Ct.
      1513, 155 L.Ed.2d 585 (2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006). . . . . 19, 32

Trevino v. Turcotte, 564 S.W.2d 682 (Tex. 1978). . . . . . . . . . . . . . . . . . . . . 40

U.S. v. Project on Gov’t Oversight, 572 F. Supp.2d 73 (D.D.C. 2008). . . . . 16

Walling v. Metcalfe, 863 S.W.2d 56 (Tex. 1993). . . . . . . . . . . . . . . . . . . . . . 26

Wecosign, Inc. v. IFG Holdings, Inc., 845 F. Supp.2d 1072
     (C.D. Cal. 2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16



                                                       viii
Western Reserve Life Assurance Co. of Ohio v. Graben, 233 S.W3d
     360 (Tex. App.-Fort Worth 2007, no pet.). . . . . . . . . . . . . . . . . . . . . . 37

Wingate v. Hajdik, 795 S.W.2d 717 (Tex. 1990). . . . . . . . . . . . . . . . . . . . . . . 8




OTHER AUTHORITIES:

Bill Analysis, SB 25, Acts of April 11, 1995, 74th Leg., R.S.,
      ch. 19, 1995 Tex. Gen. Laws 108 (amended 2003). . . . . . . . . . . . . . . 27

Doug Dendleman, Measurement of Restitution, 68 WASH. & LEE
     L. REV. 973. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

George P. Roach, Unjust Enrichment in Texas: Is it a floor wax or a
     dessert topping? 65 BAYLOR L. REV. 153 (Winter 2013). . . . . . . . . . 11

RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT
     § 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT
     § 42 cmt d (2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT
     § 51 cmt. e (2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT
     § 51, cmt. f (2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT
     § 51 cmt h. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 45 cmt c. . . . . . . . . . . . 14

RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 45(1). . . . . . . . . . . . . . . 14

                                                        ix
RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 45
     reporter’s note, cmt c.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

TEX. ATTY. GEN. OP. NO. MW-582 (1983).. . . . . . . . . . . . . . . . . . . . . . . . . . 28

TEX. CIV. PRAC. & REM. CODE ANN. §41.004(a). . . . . . . . . . . . . . . . . . . . . . . 9

TEX. R. APP. P. 44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

TEX. R. APP. P. 47.1.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

TEX. R. APP. P. 49.9.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

TEX. UNIFORM TRADE SECRETS ACT § 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14




                                                       x
                                               The Case

           This case litigates claims for breach of fiduciary duty and fraud between

ERI Consulting Engineers, Inc., and its current sole owner, Larry Snodgrass, on

the one hand, and the company’s former 50% co-owner, Mark Swinnea, on the

other.

           After a bench trial, the Honorable Cynthia Stevens Kent, former presiding

Judge of the 114th District Court, found for ERI and Snodgrass, on claims for

fraud and fiduciary duty. ERI Consulting Eng’gs, Inc. v. Swinnea, 318 S.W.3d 867,

871 (Tex. 2010). Judge Kent rendered judgment awarding $720,000 as

disgorgement of the consideration Swinnea received in the buyout of his ERI

stock, together with $300,000 in lost-profit damages. 2 CR 173-74. 1 Snodgrass

recovered another $1,000,000 in punitive damages. Id.

           Swinnea appealed. In an opinion by Justice Griffith, this Court initially

rendered a take-nothing judgment, on the basis that there was no evidence of

any actual damage. Swinnea v. ERI Consulting Eng’gs, Inc., 236 S.W.3d 825, 832

(Tex. App.-Tyler 2007). On further review, the supreme court affirmed in part

and reversed in part: (1) it affirmed the holding that ERI and Snodgrass take

noting on civil conspiracy claims against Swinnea’s company, Brady

Environmental; (2) it reversed and remanded the buyout consideration awards


1
    All clerk’s record cites are cites to the clerk’s record from the original trial.
                                                     1
for the trial court to apply the equitable disgorgement facts set out in Burrow v.

Arce, 997 S.W.2d 229 (Tex. 1999); and, (3) finding some evidence of about

$178,000 in lost profits, reversed and remanded the lost profits issue together

with “any remaining issues concerning the trial court’s initial award of $1 million

in punitive damages . . .” ERI Consulting Eng’gs, Inc. v. Swinnea, 318 S.W.3d 867,

889, 882 (Tex. 2010).

      Next, this Court, in a second opinion by Justice Griffith, suggested a

remittitur of $121,398.95 in lost profit, which the plaintiffs accepted (reducing

actual damages to $178,601.25 in lost profits). ERI Consulting Eng’gs, 364 S.W.3d

at 422. The Court affirmed the $1 million punitive-damage award to Snodgrass--

-without addressing Swinnea’s arguments that Snodgrass lacked the necessary

actual-damage predicate and without addressing whether the award exceeded a

constitutionally permissible ratio---even though the recovery now far exceeds the

presumptive constitutional cap (a 4-to-1 ratio to actual damages).

      On further remand, the trial court, the Honorable Christy Kennedy, has

reinstated the same disgorgement that her predecessor initially awarded. She did

not conduct a requested due-process review of punitive damages because she

reasoned that this Court’s decision foreclosed that right.

                                      Issues
   1. May a corporate shareholder recover lost profits individually when the

      recovery is solely based on harm to a corporation? May such a

                                         2
   shareholder recover punitive damages if he has no properly recovered

   actual damages? And may the Court now address these matters, which it

   failed to address in its prior opinion in the case.

2. Should the punitive-damage award and the punitive disgorgement be

   remanded, for an aggregate analysis of compliance with common-law,

   statutory, and constitutional requirements, in light of the remitted and

   recharacterized actual damages?

3. Is the combination of a $1 million punitive-damage award and a $720,000

   punitive disgorgement statutorily or constitutionally excessive when actual

   damages are only $178,000 and the case does not involve death, grievous

   physical injury, financial ruin, or actions that endanger a large segment of

   the public?

4. Does a court err when it disgorges profits (such as, in this case, rental

   revenues) that were not obtained by wrongdoing?

5. Does concurrent recovery of both express punitive damages and punitive

   disgorgement violate principles forbidding double recovery of punitive

   damages?

6. Does it violate the one-satisfaction rule and other relevant principles to

   award a claimant attorney’s fees if the claimant’s greatest recovery is not in

   contract but is under a fiduciary-duty theory?



                                      3
                                            Facts

       As the Court will recall from prior proceedings, Larry Snodgrass and

Mark Swinnea owned equal interests in two business entities, ERI Consulting

Engineers, Inc., and Malmeba Company, Ltd., which they operated together for

ten years. 2 RR 21.2 Snodgrass and ERI then bought Swinnea’s ERI stock, in

2001. PX6; 4 RR 129. ERI paid $497,500 in cash consideration while Snodgrass

gave Swinnea Snodgrass’s half-interest in Malmeba, which owned the building

ERI officed in. PX7.

       Meanwhile, Chris Power, a key ERI employee who was restless to own his

own company, was preparing to leave ERI. When Swinnea learned of Power’s

intentions, he persuaded Power to remain at ERI. To satisfy Power’s desire for

business ownership, the two men and their wives formed an abatement

contractor, Air Quality Associates (AQA), which their wives owned and would

operate. 2 RR 64.

       While ERI was a consulting company, in the business of handling

abatement project design, bidding, and oversight, AQA instead handled the

complimentary tasks typical of an abatement contractor. The relationship

between the two types of businesses---consulting company and abatement




2
 Unless preceded by an “SH”, all record and exhibit cites are to the original trial record from
2005. Any citation to the status hearing that occurred in November 2013 is preceded by “SH.”
                                              4
contractor---was in respects similar to that of an architect and a building

contractor.

      Almost immediately, AQA began winning competitive bids for ERI-

administered projects. Merico, a Longview abatement contractor and AQA

competitor, investigated AQA’s ownership, discovering Power’s and Swinnea’s

involvement with the new company. 4 RR 136-41; 5 RR 10. (Power and Swinnea

were board members and their wives were officers, with Power’s wife being

AQA’s president. 2 RR 72, 79). Merico told Snodgrass it would sever its

relationship with ERI unless he agreed to block AQA from bidding on ERI-

administered projects. 5 RR 13. Pleased with the AQA relationship, Snodgrass

refused. Id. So Merico stopped bidding ERI projects. Id. About the same time,

the Swinneas exited AQA, selling out to Power and his wife.

      AQA won many more ERI-administered abatement projects. And both

companies---AQA and ERI---prospered. At ERI, corporate revenue doubled in

the three years after Swinnea sold his stock. 4 RR 201. In 2004, the year before

trial, ERI earned $800,000 in net profits---earning nearly twice the cash

consideration paid for Swinnea’s stock, in just a single year. 4 RR 114.

      ERI’s accountant concluded the inevitable: Swinnea’s share of the

business had been worth the consideration paid in the buyout. 4 RR 115. At the

hearing before Judge Kennedy, on remand, Swinnea’s accounting expert, Nick

Burkette, agreed. SH 73. Specifically, Burkette valued Swinnea’s share of the
                                         5
business in a range between $613,000 and $800,000. SH 73. Further, illustrating

the company’s post-buyout prosperity, Burkette concluded that a year after the

buyout, at the end of 2002, Swinnea’s ownership share had appreciated to

$979,000, and he estimated that two more years later (i.e., at the end of 2003), the

half interest ERI/Snodgrass had bought for $497,000 in cash consideration was

worth just shy of $1.5 million. SH 73.

      Meanwhile, the relationship between Swinnea and Snodgrass had

deteriorated. Snodgrass ultimately fired Swinnea. (A part of the buyout called for

Swinnea to remain at the company as an employee for several years.) Snodgrass

and ERi then sued Swinnea, Malmeba, and Brady Environmental.

      In    the   bench    trial,   Swinnea’s   counsel   was    outmatched     and

outmaneuvered. The result, as this Court knows, was a judgment (1) concluding

that Swinnea breached his fiduciary duty, committed fraud, and conspired with

Brady, and (2) awarding over a million dollars in what the court characterized as

actual damages---lost profits and disgorgement of buyout consideration---as well

as attorney’s fees and a million-dollar punitive-damage award to Sndograss.


                          Summary of the Argument

      The $178,000 in lost ERI profit is the only actual damage recovered.

Snodgrass, ERI’s shareholder, may not recover ERI’s lost profits, and thus his

failure to recover proper actual damages dooms his recovery of punitive

                                         6
damages. Swinnea briefed this matter in the initial appeal. But the Court never

reached it. The Court may and should do so now.

      This case also involves a $720,000 punitive disgorgement award. The

award is punitive and not restitutionary because Swinnea has not reaped any

windfall and thus has nothing needing to be restored. The evidence from both

disdes’ accountants is that the value of Swinnea’s ERI stock supported the

consideration given in exchange. Nonetheless, the trial court has reinstated the

same punitive disgorgement award while this Court has upheld the punitive

damages under a cursory analysis. No one has considered the punitive damages

in light of either the reinstated disgorgement or the vast reduction in actual

damages.

      Worse, this Court has short-circuited the statutory cap upon punitive

damages---which rightfully sets the maximum total amount of punitive

disgorgement and punitive damages at $356,000---and it has done so on an

unbriefed, sua sponte, ground for excepting this case from the statutory cap. Nor

has any court analyzed the excessiveness of the combination of both punitive

awards as measured against the U.S. Constitution’s due-process limitations on

excessive punishment. Yet the awards are clearly excessive. Both awards exceed

the 4:1 ratio of punitive damages to actual damages elicited by both the United

States and Texas Supreme Courts as a benchmark maximum. And the case lacks

the factual underpinnings that would be required to break free of this benchmark
                                       7
(death, grievous physical injury, financial ruin, or actions endangering a large

segment of the public).

      And, finally, the recovery of attorney’s fees violate the one-satisfaction

rule. Here, the plaintiffs’ greatest recovery comes under a fiduciary-duty theory,

which is a non-fee-bearing claim..


                                     Argument

I.    Snodgrass should take nothing.

      A.     Because Snodgrass has proved no individually recoverable
             actual damages, he cannot recover.

      A corporate shareholder like Snodgrass may not recover individually for a

loss sustained only by the corporation. Wingate v. Hajdik, 795 S.W.2d 717, 719

(Tex. 1990). The recovery must be the corporation’s, so that the damages can be

available to pay the corporation’s creditors. Id. In other words, a corporate

shareholder lacks standing to recover individually for a wrong done to the

corporation--even if he is injured by that wrong, see Redmon v. Griffith, 202 S.W.3d

225, 233 (Tex. App.-Tyler 2006, pet. denied), and even if a corporation only has

one shareholder. Mossler v. Nouri, 2010 WL 2133940 at *3 (Tex. App.-Austin

2010, pet. denied).

      Here, ERI alone owns the cause of action under which lost profits were

awarded because the sole evidence of lost profits derives from harm to the

corporation (ERI’s loss of a customer). See Amended Additional Findings of
                                         8
Fact and Conclusions of Law, Findings of Fact ¶ 6a (“recovery of lost profits,

alone, from the loss of the Merico relationship as actual damages . . .”). Because

Snodgrass lacks standing to recover ERI’s lost profits, two things follow. First,

the Court should reform the lost-profit award to eliminate Snodgrass as a

recipient. And second, because Snodgrass has not recovered any proper actual

damages, the court should also vacate the punitive-damage award, which has

been rendered solely in Snodgrass’s favor. See Tex. Civ. Prac. & Rem. Code Ann.

§ 41.004(a)(claimant seeking punitive damages must actually recover damages

other than nominal damages); Doubleday & Co., Inc. v. Rogers, 674 S.W.2d 751,

753-54 (Tex. 1984) (“Under Texas law, punitive damages are not recoverable as

a general rule in the absence of actual damages”). It is really that simple.


       B.     The Court should have addressed Swinnea’s attacks on
              Snodgrass’s standing to recover ERI’s lost profits and
              punitive damages.

       The Court was required to address all issues necessary to the rendition of

complete relief. See State Bar of Texas v. Evans, 774 S.W.2d 656, 659 n. 5 (Tex.

1989)(per curiam); Bradleys’ Elec., Inc., v. Cigna Lloyds Ins. Co., 995 S.W.2d 675

(Tex. 1999) (per curiam) (requiring consideration of all points affording greatest

relief). Swinnea on appeal challenged Snodgrass’s right to any recovery – be it

actual or punitive damages – on the ground that any lost profit was solely




                                          9
recoverable by ERI. See Appellant’s Brief at xiii, 45-48 (Appendix C). The Court

failed to address this claim-determinative argument.


II.    The Court should eliminate or revise the trial court’s disgorgement
       award.

       Here, Swinnea received no extra or additional contractual consideration

for his ERI stock as a result of any wrongdoing. As the undisputed evidence

establishes, the consideration Mr. Swinnea gave up – his ERI stock – was worth

as much as the consideration he received in return. And, the record is void of

any metric suggesting that Swinnea’s conduct increased the sales price. In such

circumstances, there is no need for disgorgement, whether as restitution or as

punishment. Rather, if Swinnea was to be punished, it should have been solely

through the award of punitive damages. There is no reason why a proper

punitive-damage recovery would not fully serve the purposes of such awards.

There has been a single award of actual damages–$178,000–conferred solely as

compensation for the profits ERI lost from severance of the Merico

relationship. So, it is fitting that there should be a single punitive award.

       The punitive disgorgement overlaps and duplicates the express punitive

damages and is unnecessary.




                                          10
       A.     If punitive disgorgement is to be allowed in this case, it is
              subject to all recognized limitations on the recovery and
              amount of punitive damages.

              1.     Disgorgement that ventures beyond restoring a windfall
                     is a species of punitive damage.

       Primarily, the disgorgement remedy seeks to neutralize windfalls to

defendants. RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT

§ 51 cmt. e (2011) (“the object of the disgorgement remedy—to eliminate the

possibility of profit from conscious wrongdoing”); George P. Roach, Unjust

Enrichment in Texas: Is it a floor wax or a dessert topping? 65 BAYLOR L. REV. 153, 248

(Winter 2013) (“disgorgement is measured by the defendant’s gain and

effectively seeks to restore the defendant to her original position”). A

restitutionary disgorgement award would neutralize any windfall to Swinnea from

the buyout: it would restore him as nearly as possible to the pre-buyout state. See

Int’l Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 576-77 (Tex. 1963) (limiting

disgorgement to only the incremental windfall – not total consideration – gained

because of improper conduct). If the recovery goes deeper, leaving a defendant

like Swinnea with less than he brought into the transaction, it is a species of

punitive damage. That is, when a court orders a defendant to disgorge more than

his net profits, the disgorgement award becomes a punitive damage award.

RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT § 51 cmt h

(“ . . . making the defendant liable in excess of net gains, results in a punitive

                                          11
sanction . . . ”); RESTATEMENT (THIRD)                   OF   RESTITUTION & UNJUST

ENRICHMENT §§ 42, 51 (2011) (disgorgement liability exceeding the defendant’s

windfall crosses the border into punitive damages).

       Here, in holding that disgorgement is available in cases involving

contractual or buy-out consideration, the Texas Supreme Court did not imply

that disgorgement may be used as a device purely to circumvent the traditional

and constitutional limitations upon punitive-damage recoveries. To say otherwise

would overturn decades of jurisprudence. See, e.g., Int’l Bankers Life Ins. Co., 368

S.W.2d at 576-77.


               2.      The plaintiffs         have     been     awarded       a    punitive
                       disgorgement.

       In this case, the disgorgement award is 100% a second punitive-damage

award. After all,

    • there is no windfall in Swinnea’s favor to be disgorged in restitution;

    • in promoting the award, the plaintiffs invoked punitive-damage principles;

    • the award’s judicial analyses have all been under the analytical framework
      applicable to punitive damages; and

    • while restitution should generally be mutual3, there has been no reciprocal
      restitution to Swinnea.



3
 See, e.g., Morton v. Nguyen, 412 S.W.3d 506, 509-10 (Tex. 2013)(discussing the “common alw
requirement of mutual restitution”).
                                             12
      As the undisputed evidence proves, the legitimate consideration Swinnea

gave up – principally his ERI stock – was worth as much as what he received in

return and now has been ordered to disgorge. Swinnea’s conduct, however

culpable the Court may perceive it to be, did not create any windfall such as

occurs when a fiduciary takes a secret commission. See, e.g., Kinzbach Tool Co. v.

Corbett-Wallace Corp., 160 S.W.2d 509 (Tex. 1942). Undisputed evidence shows

that Swinnea’s shares of ERI stock were very valuable. Swinnea came by the

shares honestly. And their value at the time of sale was derived honestly,

accumulated through years of toil. As the undisputed proof shows, these shares

were valued at or above the consideration paid to Swinnea in the buy out. Nor

did Swinnea profit from his brief engagement with AQA.

      Moreover, a proper restitutionary award would require ERI and Snodgrass

to likewise restore the consideration received in exchange. Here, there has been

no award returning reciprocal consideration.

      Even if there would have been some identifiable windfall to Swinnea, the

actual damages would fully offset it. This would eliminate any basis for

restitutionary disgorgement.

      The restitutionary remedy serves to deprive the defendant of unjust
      gains, but it also has the effect of compensating the plaintiff to the
      extent of the award for any losses resulting from the appropriation.
      Similarly, an award of the plaintiff’s proven losses also has the
      effect of reducing the defendant’s unjust enrichment by the amount
      of the award. An award of the greater of the two remedies thus ordinarily
      serves the objectives of both forms of relief and best prevents double recovery.
                                            13
       RESTATEMENT (THIRD)           OF   UNFAIR COMPETITION § 45 cmt c
       (emphasis added).

Consequently, a plaintiff is generally entitled to recover the greater of (1) his own

full loss or (2) the defendant’s windfall. RESTATEMENT (THIRD)                  OF   UNFAIR

COMPETITION § 45(1). 4 For this reason, when there are actual damages, the only

unjust enrichment that may be recovered is that unjust enrichment “that is not

taken into account in computing actual loss.” TEX. UNIFORM TRADE SECRETS

ACT § 3; accord RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 45 reporter’s

note, cmt c. A plaintiff’s recovery of both her damages and the defendant’s

profits would be “anomalous in restitution terms, constituting a punitive

sanction.” RESTATEMENT (THIRD)            OF   RESTITUTION & UNJUST ENRICHMENT §

42 cmt d (2011).

       In these circumstances, the disgorgement cannot be considered as

anything but a species of punitive-damage recovery. ERI essentially conceded

this. Its arguments to the trial court in support of disgorgement didn’t identify

any windfall and had nothing to do with neutralizing one. Instead, the pervasive

theme was that Swinnea should be punished.




4
 Accord Doug Dendleman, Measurement of Restitution, 68 WASH. & LEE L. REV. 973, 985 (citing
RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT ¶¶ 13-15, 40-43, 45-56)
(Where the plaintiff is damaged and the defendant unjustly enriched, “the plaintiff may choose
between compensatory damages and restitution”).
                                               14
                   a.     Being punitive and not restitutionary, the
                          disgorgement is subject to all restrictions upon
                          the recovery and amount of punitive damages.

      Three things follow from the fact that the disgorgement here is a punitive

damage. First, to be sustainable as a punitive-damage recovery, the conduct at

issue must have been the source of an actual-damage award. Second, the

disgorgement cannot overlap or duplicate another punitive-damage award. And

finally, any disgorgement must be screened for excessiveness under Texas

common law, statutory law, and the due-process clauses of the Texas and U.S.

constitutions. Due process does not allow any such disgorgement except to the

extent that the sum of disgorgement and any express punitive damages remains

within a constitutionally permissible ratio in relation to the remitted and

reconstituted actual damages. It cannot be any other way, or else these

fundamental protections would be too easily avoided.

      The disgorgement in this case violates each of these principles.

      B.    Because no actual damages have been recovered in
            connection with the buy-out transaction, there is no legal
            basis for a punitive disgorgement.
      While restitutionary relief, including restitutionary disgorgement, can be

awarded even where there are no actual damages proved, this applies only if the

award is in fact a restitutionary one. All punitive-damage awards, in contrast,




                                       15
require a predicate recovery of actual damages, even where the punitive award is

meted out in the form of a “disgorgement.”

      Here, the buyout did not cause any actual damage. Therefore, any

punitive-damage award tied to the buyout is improper.


      C.     Because the law will not support two punitive-damage awards
             for the same conduct, one or the other of the $1 million
             punitive damages or the $720,000 punitive disgorgement must
             go.

      Even if each punitive award would have otherwise been sustainable, they

could not both be recovered, because the law condemns “multiple punitive

damages awards for the same conduct.” State Farm Mut. Auto. Ins. Co. v. Campbell,

538 U.S. 208, 422, 123 S. Ct. 1513, 155 L.Ed.2d 585 (2003); Safeshred, Inc. v.

Martinez, 365 S.W.3d 655, 664 (Tex. 2012). A court may award one punitive-

damage recovery per injury. Allstate Ins. Co. v. Kelly, 680 S.W.2d 595, 606 (Tex.

App.-Tyler 1984, writ ref’d n.r.e.) (recovery of both exemplary damages and

treble damages amounted to an improper double recovery of punishment

damages). As a result, disgorgement may not be awarded, in addition to punitive

damages, when to do so results in double punishment. Int’l Telecharge, Inc. v.

Bomarko, Inc., 766 A.2d 437, 442 (Del. 2000); see also U.S. v. Project on Gov’t

Oversight, 572 F. Supp.2d 73, 77 (D.D.C. 2008); Miller v. Bank of Am., N.A., 326

P.3d 20, 32-33 (N.M. Ct. App. 2013); Wecosign, Inc. v. IFG Holdings, Inc., 845 F.

Supp.2d 1072, 1084 (C.D. Cal. 2012).
                                       16
       While disgorgement can sometimes co-exist with punitive damages, in

such cases the disgorgement should be strictly limited to merely neutralizing the

defendant’s windfall. It cannot spill into duplicative punishment for the same

conduct. Campbell, 538 U.S. at 423. Because the disgorgement in this case is

solely punitive, either it or the separate punitive-damage award must give way.

III.   Because the $1 million punitive-damage award and the punitive
       disgorgement award have been entered without the required due-
       process analysis, the Court should, at a minimum, remand both
       awards for a proper excessiveness analysis.

       A.    The reduction in actual damages requires a new analysis of
             the excessiveness of punitive damages.

       The reduction in actual damages---a five-fold reduction in what the trial

court perceived as actual damages when setting the punishment--requires a

remand for a new and coordinated look at all exemplary-damage awards. Bunton

v. Bentley, 153 S.W.3d 50, 53 (Tex. 2004) (per curiam). Indeed, any substantial

“adjustment of compensatory damages” “requires reevaluation of the factors

supporting an award of exemplary damages.” Id. Here, the actual damages have

been reduced by roughly 80 percent. The initial punitive-damage award was

rendered by a trial court that fictitiously construed the $720,000 in buy-out

consideration as actual damages and thought the lost profits were about twice as

much as actually was proved. The trial court formerly thought it was setting a 1:1

ratio of punitive to actual damages. To award $1 million in express punitive


                                        17
damages, let alone $1.72 in total punishment, would not have been possible in

this case---which does not involve death, grievous physical injury, or anything

approaching economic calamity---had the trial court known that actual damages

were only $178,000.

      Being a species of punitive damage, the disgorgement in this case must be

considered in connection with all other punitive damages when it comes to

evaluating the awards against the applicable statutory and constitutional limits.

Were the law to require anything less, the constraints on excessive punishment

could be circumvented merely by dividing an excessive punishment into two

smaller awards – one expressly termed punitive damages and another called

forfeiture or disgorgement.

      Not only must each punitive award withstand isolated scrutiny, but the

total of all such awards must satisfy all common-law, statutory, and

constitutional due-process requirements. Anything less would be illogical.

Because the disgorgement award is punitive and not restitution, it (together with

any award of express punitive damages to Snodgrass) must be analyzed by the

trial court as an initial matter and by this Court for constitutional excessiveness

and compliance with the Krause factors. The trial court has not done so.

Application of the Burrow factors, which have been applied to the disgorgement

award in isolation, does not avoid analysis under the Krause factors or the

statutory and constitutional requirements.
                                        18
      Despite clear Supreme-Court precedent requiring a due-process analysis,

Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998); Tony Gullo

Motors I, L.P. v. Chapa, 212 S.W.3d 299, 307 (Tex. 2006), no court has lifted a

finger to consider whether the combined $1.72 million in punitive awards might

be constitutionally excessive. They presumptively are because they far exceed the

4:1 ratio that is the presumptive dividing line between permissible and

constitutionally-invalid punishment.

      Rather than consider the limits due process places upon a defendant’s

punishment, once the supreme court had reversed in part on other grounds,

Justice Griffith’s opinion perfunctorily invoked Alamo National Bank v. Krause

with no real attempt at analysis, solely in connection with the express punitive

award to Snodgrass. When he did so, Justice Griffith


   • failed to attempt any constitutional due-process analysis,

   • invoked an impermissible, sua sponte ground to avoid the statutory cap, and

   • denied Swinnea any chance to brief any of these matters.

Justice Griffith’s discussion failed to acknowledge the effect of the lost-profits

remittitur, the supreme court’s reconstitution of the disgorgement as other than

actual damages, or even the fact that the latter award had been vacated and

remained to be reassessed on remand. Worse, the Court’s decision has precluded

the trial court from conducting any punitive-damage analysis in light of the

                                       19
revised actual damages and the remanded disgorgement. That, of course, put the

cart far in front of the horse, as even the plaintiffs acknowledged when they told

the supreme court a due-process analysis of the award to Snodgrass occurring in

isolation, before the punitive disgorgement could be assessed, would as a matter

of law be “premature.” See Response to Petition for Review at 3-7 (attached as

Appendix D).

      To convince the supreme court to deny Swinnea’s petition for review---

which sought a due-process excessiveness analysis---ERI and Snodgrass argued

that such analysis should be reserved to the trial court on remand, to be

performed in conjunction with the disgorgement-factor analysis. See Response to

Petition for Review at 3-4 (“. . . the trial court will no doubt follow this

Court’s instruction that a change in the underlying damage awards

requires a new due process review ”)(attached as Appendix D). The trial court,

however, didn’t perform any excessiveness analysis---in part because it didn’t

interpret this Court’s decision as allowing it to do so and in part because the

plaintiffs reversed field. Despite their estoppel/admission, ERI and Snodgrass

subsequently avoided a constitutional analysis of punitive damages, incorrectly

telling the District Court that it need not engage the necessary excessiveness

review because “[t]he Supreme Court and the Court of Appeals have disposed of

the issues with regard to the lost profits and punitive damages.” See 1 RR 4



                                       20
(November 12, 2013 Hrg). Their prior position in the appellate courts renders

the latter position void.

       By persuading the supreme court into denying review through an

argument that the trial court would perform a due-process review, ERI and

Snodgrass are estopped from arguing against the propriety of such a review now.

See Cleaver v. Cleaver, 140 S.W.3d 771, 775 (Tex. App.-Tyler 2004, no pet.)

(“judicial estoppel requires only that a party take an affirmative position that is

successfully maintained in the earlier proceeding, and that is contrary to the

position it now seeks to invoke”).

       The trial court did not set out to order punitive damages at a 5:1 ratio.

Instead, it is highly likely that the trial court, knowing what everyone now knows

about the modest level of actual damages---would today reshape the punitive-

damage award more in keeping with established norms, if given a chance. This

Court’s prior decision--affirming punitive damages notwithstanding the

remittitur of lost profits and the recasting of the disgorgement award to reveal its

punitive nature--has denied the trial court the chance to synchronize the

punishment, if any, with the true harm.

       When actual damages have been reduced to only about 15% of their

former amount, it should suggest taking a fresh look at the amount of punitive

damages, unencumbered by the initial punitive award---an award that was



                                          21
molded by and bears the mark of the trial court’s initial, judicially-repudiated

assessment of actual damages.

      A trial court that initially saw fit to punish Swinnea at what the court

mistakenly thought was a 1:1 ratio would likely reformulate its view of the

proper punishment in light of the reformulated actual damages. Most reasonable

jurists in this circumstance would adopt the position famously attributed to John

Maynard Keynes. When accused of a flip flop on economic policy, he is said to

have replied: “When the facts change, I change my mind. What do you do, sir?”

      Here, the sine qua non in assessing the amount of punitive damages---actual

damages---has changed dramatically. That the trial court initially saw a 1:1 ratio

of punitive to actual damages as appropriate, today implies a total punishment in

the range of $180,000. Judge Kennedy, the new trial judge, presumably also

would conform the punitive damages to fit the true level of actual damages. So,

the law, equity, and basic principles of fairness all say the trial court should be

afforded the opportunity to evaluate punitive damages anew, armed with

accurate knowledge of (1) the true actual damages, (2) the disgorgement award’s

status as a punitive-damage award, and (3) the necessity to measure propriety of

the combination of all punitive awards (disgorgement and express punitive

damages) against the applicable legal, statutory, and constitutional yardsticks.

      The punitive-damage award that this Court has affirmed is erroneous

because it arises from an erroneous trial-court analysis. The trial court’s
                                         22
disgorgement analysis is of course erroneous because, among other things, it

does not consider the disgorgement in context of the total punitive damages,

including the award to Snodgrass, and does not acknowledge that the

disgorgement would be subject to the traditional protections against excessive

punitive damages.

      This assuredly caused the rendition of an improper judgment, and is thus

reversible. TEX. R. APP. P. 44. It cannot be cured or papered over by appellate

review purporting to pronounce the punitive-damage amount to be within a

range that is statutorily and constitutionally permissible under the correct facts.

The punitive awards must be vacated and remanded because they rest on an

improper analysis, in circumstances that don’t allow the Court to find the error

harmless. It is simply not possible to say with any assurance that the trial court

would again issue a million dollar punishment on top of a $720,000 punitive

disgorgement (for a total of $1.72 million in punishment) now, in this $178,000

damage case, simply because its predecessor issued a million dollars in total

punishment when actual damages were purported to be $1,020,000.

      When the actual damages were reduced fivefold, it triggered the

requirement for a constitutional due-process review. Bunton, 153 S.W.3d at 53.

Ever since, Swinnea has sought such a review. And when it seemed in their

interest to do so, even the plaintiffs agreed such a review was required in the trial

court. Respectfully, the Court should have afforded Swinnea the prior
                                         23
opportunity to brief the constitutionality of punitive damages in light of the

major appellate reduction in underlying actual damages. Id. Now, a remand to

afford the trial court the chance to reevaluate the combined punitive awards is

required, and would be required even had the current punitive-damage amount

been constitutionally sustainable. Id.; See Moore v. Jet Stream Invs., Ltd., 261 S.W.3d

412, 432 (Tex. App.-Texarkana 2008, pet. denied) (remanding to the trial court

to reconsider attorney’s fee award in light of modified damage award).

       Because this complaint did not exist before appeal but arises from this

Court’s judgment, and because ERI shooed off supreme-court review with its

promise of a forthcoming, actual due-process review of the punitive damages,

this complaint is fair game for this appeal. Bunton, 153 S.W.3d at 53; TEX. R. APP.

P. 49.9.

       The punitive awards must be vacated and remanded for a proper analysis.


IV.    The $1 million punitive-damage award and the punitive
       disgorgement award necessarily are excessive, both individually and
       collectively.

       A.     The disgorgement award is excessive insofar as it requires
              Swinnea to return monies he did not come by in the buyout.

       A court may not disgorge profits that were not obtained as a result of

wrongdoing. Boyer v. Wilmington Materials, Inc., 754 A.2d 881, 907 (Del. Ch. Ct

1999); Commodity Futures Trading Comm’n v. Sidoti, 178 F.3d 1132, 1137-38 (11th

Cir. 1999). The courts must therefore distinguish between those profits that are
                                          24
obtained through wrongdoing (and thus are disgorgeable) from those that are

not. S.E.C. v. First City Fin. Corp., Ltd., 890 F.2d 1215, 1231 (D.C. Cir. 1989); see

also RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT § 51, cmt.

f (2011). The recovery in this case does not do so. Rather, it confiscates 100% of

the rentals ERI paid Swinnea to lease office space, even though half of this sum

is rentals earned on the 50% interest Swinnea acquired in the leased premises years before the

events at issue. The latter amount, totaling $66,500, is not disgorgeable under any

circumstance.


       B.      Both punitive awards are excessive in relation to statutory
               limits.


               1.      The Court should reconsider and reverse its sua sponte
                       decision to invoke an inapplicable exception to the
                       statutory cap on punitive damages.

       Today, Swinnea labors under $1.72 million burden of punitive awards---$1

million in punitive damages to Snodgrass and $720,000 in punitive disgorgement.

Per Section 41.008 of the Civil Practice and Remedies Code, these awards

cannot legally exceed about $356,000 (two times economic damages) in

combination.




                                             25
                    a.     When the Court invoked a cap-busting exception
                           to affirm, it rendered an improper, sua sponte
                           decision.
      Notwithstanding the facially applicable statutory punitive-damage cap, this

Court affirmed the entire $1 million in express punitive damages based on a

determination that the cap could be disregarded because the trial court

supposedly found “the type of conduct described in” one of the section

41.008(c) cap-busting exceptions (the subsection 41.008(c)(11) exception for the

felony offense of securing execution of a document by deception). Swinnea, 364

S.W.3d at 424. This was wrong. It not only afforded Swinnea no chance to brief

the issue of the statutory cap (or the issue of excessiveness in light of the

reduction in actual damages and reconstitution of disgorgement) but it violated

an important prohibition on sua sponte rulings.

      Respectfully, the issue of the cap-busting statute was never the Court’s to

decide. A court of appeals may not render a decision sua sponte upon an issue that

no party has raised or briefed. Pat Baker Co. v. Wilson, 971 S.W.2d 447, 450 (Tex.

1998)(per curiam); Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993). This is

axiomatic. Here, no one raised an issue of any cap-busting exception. So the

issue was not on the Court’s table.

      At a minimum, if the Court intended to address the exception’s potential

application, it should have afforded Swinnea notice and a prior opportunity to

brief the issue (including its preservation). Now, the Court should vacate its

                                        26
pronouncements about the exception and should instead render judgment that

the statute does not apply to the conduct at issue or, alternatively, does not apply

to the punitive damages awarded here because they necessarily relate to conduct

that does not support any cap-busting exception.


                    b.     There has been no cap-busting offense.

      This Court has applied the statutory exception for securing documents by

deception far too broadly. The legislature painstakingly has limited the

availability and magnitude of punitive damages, not once, but three times. Bill

Analysis, SB 25 (April 5, 1995); see Acts of April 11, 1995, 74th Leg., R.S., ch.19,

1995, 74th Leg., R.S., ch. 19, 1995 Tex. Gen. Laws 108, 108-113 (amended 2003).

At any of these times, the legislature could have declared fraudulent inducement

exempt from the statutory cap, but it did not do so. Instead, it enacted Section

41.008(c),   identifying specifically-enumerated     criminal offenses.     Section

41.008(c) is a narrow provision, as evidenced by the infrequency in which courts

have applied it. Conversely, the punitive-damage cap is far-reaching. This court’s

decision not only contradicts the proper statutory intent but invites others to

attempt similar end runs at the statutory cap, through other tort causes of action.

      Fraudulent inducement and securing a document by deception are

different, albeit they implicate potentially overlapping conduct. Fraudulent

inducement is a particular species of fraud arising in the context of a contract


                                        27
and requires the existence of a contract as part of its proof. Haase v. Glazner, 62

S.W.3d 795, 798-99 (Tex. 2001). Securing execution of documents by deception

focuses more sharply on situations where the gist of the culpable activity is an

undertaking to obtain execution of a document by deceptive means–typically a

check or authorization for government benefits. See, e.g., TEX. ATTY. GEN. OP.

NO. MW-582 (1983) (fraudulently obtaining food stamps). Here the buyout

transaction is papered by documents, but they are not the focus of the

fraudulent-inducement claim.

      If Swinnea’s conduct constitutes securing execution of documents by

deception, then every time a seller omits to disclose a material fact in connection

with a transaction that happens to be memorialized by a document, it would

abrogate the statutory cap on punitive damages in such widely-litigated matters

as statutory fraud in a real-estate transaction. But that is not what prior courts

have concluded. E.g., Glazener v. Jansing, No. 03-02-00796-CV, 2003 WL

22207226, *6 (Tex. App.-Austin Sept. 25, 2003, no pet.) (cap applied to statutory

fraud claim).

      Swinnea started a business that competed with an ERI customer and for a

while kept that fact from Snodgrass. That may perhaps breach a fiduciary duty.

But, it is a far cry from conduct that criminal offenses takes aim at–hoodwinking

a victim into signing a check, deed, or the like. The documents in this case were

freely negotiated, reviewed, and signed in an ordinary closing, after consultation
                                        28
with counsel. They are incidental to the current issues. The gist of the acts and

the gist of the plaintiffs’ claims does not focus on the securing of documents.

This distinction cannot be stressed enough.

       If the conduct alleged here---garden-variety fraudulent inducement---

sustains a cap-busting exception, then fraudulent inducement will never be

subject to the legislative caps on punitive damages. That surely cannot be the

law.

       This court’s decision raises concerns regarding fair notice. It is not at all

apparent that civil or tort allegations of secretly forming a new

vendor/contractor would, if proved, make Swinnea guilty of a felony, let alone

strip away the statutory cap protecting him against punitive damages exceeding

two times Snodgrass’s individually recoverable economic damages. To afford fair

notice and procedural due process, a claimant wishing to avoid the statutory cap

should be required to reveal that intention in a pleading that identifies an alleged

cap-busting criminal offense. Marin v. IESI TX Corp., 317 S.W.3d 314

(Tex.App.—Houston [1st Dist.] 2010, pet. denied) (holding it enough to plead

facts that in retrospect could be said to constitute the criminal elements).




                                         29
                    c.    Because the criminal offense was not the subject
                          of findings in the trial court, there is no basis for
                          busting the statutory punitive-damage cap.

      To bust the statutory cap on exemplary damages, Snodgrass needed to

secure trial court findings that Swinnea committed the criminal offense—that he

secured execution of a document by deception. See McCullough v. Scarbrough,

Medlin & Associates, Inc., 435 S.W.3d 871, 912 (Tex. App.-Dallas 2014, pet.

denied). It should not be enough that the trial court issued broad findings that

this Court then sua sponte and ex-post-facto pronounced as supporting the offense.

In McCullough, in contrast, the Charge actually submitted the offense to the jury

(theft in that case). Here, however, ERI and Snodgrass failed to request,

propose, or secure any finding that Swinnea committed the elements of the

criminal offense.


                    d.    Because no actual damages have been awarded
                          in connection with the cap-busting conduct,
                          there is no predicate for an uncapped punitive-
                          damage recovery.

      The mere existence of one liability theory that is similar to a cap-busting

offense does not lift the statutory cap for other conduct potentially supporting

punitive damages, contrary to the Court’s implicit presumption. If a cap-busting

exception is to be applied, it should govern only insofar as the punitive damages

actually punish the alleged cap-busting conduct (here, fraudulent inducement of

the buyout, that is, the loss to ERI/Snodgrass from having been induced into
                                       30
the buyout). There has been no recovery of any actual damage for such conduct. Rather, the

lost-profits award arises solely from the formation of the abatement contracting

company AQA, which caused ERI’s loss of the Merico business relationship.

       Further, a plaintiff asserting a punitive-damage-cap-busting offense

should secure findings on the amount of damages attributable to the alleged cap-

busting conduct. Serv. Corp. Int’l v. Guerra, 348 S.W.3d 239, 252 (Tex. App.-

Corpus Christi 2009, pet. granted) (evidence of cap-busting offense could not be

used to avoid statutory cap unless that conduct caused plaintiff’s actual damage),

rev’d on other grounds, 348 S.W.3d 221 (2011). Snodgrass failed to do so.

       Given that the only actual damages were sustained in connection with

theories other than fraudulent inducement, it makes sense that most, if not all,

punitive damages were likewise aimed at redressing other conduct. If the record

does not conclusively establish the applicability of the statutory cap on punitive

damages, the Court should consider remand to the trial court, to reassess

punitive damages and identify which, if any, punitive damages have been

awarded in connection with the buyout (for which there are no supporting actual

damages) and which have been awarded for Swinnea’s AQA involvement (which

is, as a matter of law, subject to the statutory cap).




                                           31
                    e.     Because the disgorgement awarded is punitive, it
                           must be aggregated with any punitive-damage
                           recovery and the total subjected to a single
                           statutory cap.
      As already stated, the law obviously requires that all punitive awards pass

the same statutory and constitutional muster. This means that if the punitive

damages in favor of Snodgrass survive, the award must be aggregated with the

punitive disgorgement award and the combined total must be subjected to a

single statutory cap. That is, the total of these combined awards cannot exceed

two times actual damages or approximately $356,000.


      C.     The awards violate the Krause factors and are excessive in
             relation to due-process limitations.

      Due Process. Exemplary damages are subject to an ultimate federal

constitutional check for exorbitance. Tony Gullo Motors I, L.P., 212 S.W.3d at 307.

Even if an assessment of exemplary damages is not deemed excessive under

governing state law, it may violate a party’s substantive due process right to

protection from “grossly excessive” exemplary damage awards. Khorshid, Inc. v.

Christian, 257 S.W.3d 748, 767 (Tex. App.-Dallas 2008, no pet.).

      The United States Supreme Court has concluded that four times the

amount of compensatory damages is close to the line of constitutional

impropriety for exemplary damages. Tony Gullo, 212 S.W.3d at 308. Here, both

punitive damage awards ($1 million punitive damage award and punitive


                                        32
disgorgement award) exceed the 4:1 ratio ($1 million to $178,000 equals 6 to 1

ratio; $720,000 to $178,000 equals 4.04 to 1). To push punitive damages past the

4:1 ratio would “seem[] a [constitutional] stretch” that (1) would “leave[] no

room for greater punishment in cases involving death, grievous physical injury,

financial ruin, or actions than endanger a large segment of the public” and (2)

could not “be squared with [the Texas Supreme Court’s] on-point Tony Gullo

Motors I, L.P. v. Chapa decision, another ‘scheme of deception’ case” in which the

Texas Supreme Court held that a ratio of 4.33 to 1 exceeded constitutional

limits. Tony Gullo, 212 S.W.3d at 308.

      While it is true that a rigid ratio of 4:1 is not universally required, the U.S.

Supreme Court has stated that “ratios greater than those we have previously

upheld may comport with due process where ‘a particularly egregious act has

resulted in a small amount of economic damages.’” Bennett v. Reynolds, 315

S.W.3d 867, 879 (Tex. 2010)(quoting State Farm Mut. Auto. Ins. Co. v. Campbell).

This exception, however, does not apply here because $178,000 is not a small

amount of economic damages. See Bennett, 315 S.W.3d at 879 (approximately

$6,000 award was not small amount of exemplary damages for purposes of

exception).

      Here, the harm is purely economic, does not approach the level of the

punitive award, and was mostly, if not completely, offset by profit obtained

through the AQA relationship. Properly understood, the case reflects only injury
                                         33
to the corporation, ERI, a party to which the trial court found no need of

awarding any express punitive damages at all. If it would have been possible to

uphold a punitive-damage award to Snodgrass, who has not personally sustained

a recoverable loss, it would nonetheless be impermissible to sustain any such

award in the amount of $1 million under the mere guise of the freewheeling

“reprehensibility exception.” Yet that is precisely what Justice Griffith’s analysis

on the Court’s behalf does. In the process, it “subvert[s] the constraining power

of the ratio guidepost.” Bennett, 315 S.W.3d at 879.

      This Court’s Kraus analysis in its 2012 opinion reached the wrong result.

Here, the harm was economic rather than physical. It was limited to dishonesty

and deceit occurring in a business relationship. And, despite the trial court’s

contrary findings, there is no evidence of any specific desire to harm the

plaintiff. Just the opposite. Swinnea, in forming AQA, sought a prosperous,

mutually beneficial relationship between the two companies, AQA and ERI.

      Swinnea’s ERI stock was always worth what was paid for it. Chris Power

had independent plans to leave ERI, but AQA’s formation prevented his

departure. Only one ERI customer relationship, with Merico, was affected.

AQA’s formation created an altogether new customer for ERI, to take Merico’s

place. ERI had a choice to pick the relationship with AQA or a continued

relationship with Merico. Merico worked only in the declining industry of

asbestos remediation, while AQA’s interests and prospects were broader. Power
                                        34
continued to work for ERI and with AQA. The relationship between ERI and

AQA was consensual, mutually beneficial, and grew rapidly. By all accounts,

both companies prospered. ERI’s profits grew immensely after the buyout, with

the increase in profit being many times larger than the Merico lost profit. And

the Merico lost profit is fully compensated by the actual-damage recovery.

       At bottom, Swinnea is being punished for helping form AQA when it

appears ERI is pleased to maintain a business relationship with AQA. As

between the parties, Swinnea is the only one who has not profited from AQA’s

existence.

       These are simply not the sort of conditions that support enormous

punitive damages in the range of ten times actual damages. See e.g., Hernandez v.

Sovereign Cherokee Nation Tejas, 343 S.W.3d 1162, 177-78 (Tex. App.-Dallas 2011,

pet. denied); see also Preston Carter Co. v. Tatum, 708 S.W.2d 23, 25 (Tex. App.-

Dallas 1986, writ ref’d n.r.e.). In such circumstances, “the punishment assessed

against [the defendant] should not be calamitous or ruinous.” Preston Carter Co.,

708 S.W.2d at 25. Preston Carter Co. is instructive. There, an award of exemplary

damages of $300,000 was excessive when (i) the appellate court had reduced

compensatory damages from $165,000 to $40,000 (creating a ratio of punitive

damages to actual damages of roughly 7 ½ : 1); (ii) the conduct did not spring

from ill will or any specific desire to do harm to the plaintiff, (iii) the transaction



                                          35
was purely a business affair, and (iv) the loss was purely financial. Preston Carter

Co., 708 S.W.2d at 25.

       Importantly, Justice Griffith’s analysis ignored the necessity to reserve room for

punishment of the most egregious violations – which, unlike this case, involve serious

personal injury, economic calamity, or actual and grievous harm to great

numbers of people. Here, the sole harm not only is economic, but it doubtless

has been offset (likely many times over) by profit ERI has obtained through the

wildly successful AQA relationship, which ERI has embraced and continues to

nurture and profit from, handsomely. ERI’s willing, longstanding acceptance of

AQA and their prosperous long-term relationship together cannot be over-

emphasized in any excessiveness analysis of punitive damages.

       Judge Kent, when she assessed punitive damages, must have thought she

was acting well within the mainstream, assessing punitive damages at a 1:1 ratio

(right at the mean of punitive-damage awards). Now, things are vastly different.

The notion of $1,020,000 in actual damages has been shattered. The punitive-

damages and punitive disgorgement approach an amazing 10:1 ratio to actual

damages. Punishment this big is insupportable statutorily and constitutionally.


V.     The plaintiffs are not entitled to attorney’s fees.

       The trial court’s judgment violates the one satisfaction rule. Under this

rule, a plaintiff is entitled to only one recovery, even when his injury could be

                                           36
said to result from multiple culpable acts. Crown Life Ins. Co. v. Casteel, 22 S.W.3d

378, 390 (Tex. 2000). The plaintiff may recover under his one best legal theory--

the one entitling him to the greatest relief. Boyce Iron Works, Inc. v. Sw. Bell Tel. Co.,

747 S.W.2d 785, 787 (Tex. 1988). Here, the plaintiffs’ greatest recovery is under

a fiduciary-duty claim. Breach of fiduciary duty is not a fee-bearing claim. See W.

Reserve Life Assurance Co. of Ohio v. Graben, 233 S.W3d 360, 377-78 (Tex. App.-

Fort Worth 2007, no pet.).


VI.    The law of the case does not bar this Court from granting any of the
       relief Swinnea requests.

       A conclusion reached by an intermediate appellate court does not
       bar reconsideration of the initial conclusion in a subsequent appeal,
       and the decision to revisit the conclusion is left to the discretion of
       the court under the particular circumstances of each case. City of
       Houston v. Jackson, 192 S.W.3d 764, 769 (Tex. 2006).

        Under the law-of-the-case doctrine, questions of law decided on appeal

to a court of last resort will govern the case throughout its subsequent states.

Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986). Under a corollary of the

doctrine, an intermediate court of appeals will ordinarily follow its original

decision in later appeals of the same case. Briscoe v. Goodmark Corp., 102 S.W.3d

714, 716 (Tex. 2003). The point is to “narrow[] the issues in successive stage of

the litigation,” so as to achieve the goal of “uniformity of decision as well as

judicial economy and efficiency.” Hudson, 711 S.W.2d at 630. And yet this is not

a doctrine that requires stubborn adherence, but only a matter of general
                                           37
practice. “A decision rendered on an issue before the appellate court does not

absolutely bar reconsideration of the same issue on a second appeal. Application

of the doctrine is discretionary, depending on the particular circumstances

surrounding that case.” Briscoe, 102 S.W.3d at 716-17. Because the law of the case

is required by neither the Constitution nor statute, it in fact “should be

disregarded when compelling circumstances require redetermination of the point

of law decided on the prior appeal.” Peden v. State, 917 S.W.2d 941, 956 (Tex.

App.—Fort Worth 1996, pet. ref’d). Thus, this Court has authority to revisit

rulings it made in this case on remand from the supreme court. And if on doing

so the Court determines that its original decision of any issue is erroneous, the

Court need not adhere to the erroneous ruling. Id. Indeed, the court’s duty “to

administer justice under the law” is a much higher duty and clearly “outweighs

[any secondary, minor] duty to be consistent.” Id. at 717, quoting Comm. Gen. Life

Ins. Co. v. Bryson, 219 S.W.2d 799, 800 (Tex. 1949).

      In Briscoe, the supreme court upheld the appellate court’s discretion, on a

second appeal, to reconsider and overturn its own prior decision. Briscoe, 102

S.W.3d at 717 (“Finding clear error in its first decision, [the court of appeals] had

the power to overturn that first decision on the second appeal. . . . Because its

first decision was clearly erroneous, the law of the case doctrine did not apply.”).

Thus, this Court has authority to revisit both express and implied rulings from

the prior appeal--such as its express rulings (a) busting the statutory cap on
                                         38
punitive-damage award and (b) affirming the $1million amount of punitive

damages as well as the implied ruling denying Swinnea’s attack on Snodgrass’s

standing to recover the actual damages necessary to upholding the punitive

damages in his favor.

       In this case, the Court, upon remand from the Texas Supreme Court and

without entertaining further briefing, affirmed a $1 million punitive-damage

award in favor of Snodgrass, a claimant who clearly recovered no actual damages

of his own and just as clearly lacked the standing to claim the right to recover

ERI’s corporate lost profit. This has occurred even though Swinnea briefed

these issues. The resulting error---the award of debilitating punitive damages by

one who has no basis to recover them---is fundamental and inarguable. In Texas,

“punitive damages are not recoverable as a general rule in the absence of actual

damages.” Doubleday & Co., Inc. v. Rogers, 674 S.W.2d 751, 753-54 (Tex. 1984).

And so far as we know, no American jurisdiction would sustain a punitive-

damage recovery in this circumstance.

       So the basis for revisiting the punitive-damage recovery is compelling.

And, in fact, the matter of Snodgrass’s punitive-damage recovery may not even

implicate the law of the case, for two reasons: first, to the extent that it addresses

a matter of Snodgrass’s standing, it is non-waivable and should always be within

the Court’s reach. Second, it is not clear that law-of-the-case principles address

issues that have not been expressly decided.
                                         39
      All indications here are that the Court on remand simply failed to address

Swinnea’s preserved, appellate-briefed attack on Snodgrass’s grounds for

individually recovering punitive damages. Swinnea was entitled to a decision on

the issue. TEX. R. APP. P. 47.1 (“the court of appeals must hand down a written

opinion that . . . addresses every issue raised and necessary to final disposition of

the appeal.) The Court should decide these issues and throw Snodgrass’s

recoveries out.

      What is more, the supreme court’s denial of Swinnea’s petition for review

is irrelevant here. See, e.g. Trevino v. Turcotte, 564 S.W.2d 682, 685 (Tex. 1978)

(holding that a court of appeals’ conclusion was not binding under the law of the

case doctrine when the petitioner’s first writ of error was denied by the Supreme

Court “writ refused, no reversible error”); see also City of Houston, 192 S.W.3d at

769 (citing and approving Trevino); accord Hopwood v. State of Texas, 236 F.3d 256,

274 (5th Cir. 2000) (“within the law of the case framework, it is not clear error for

a court of appeals to tackle legal questions that the Supreme Court has declined

to answer: lower courts are bound only by the Supreme Court holdings and not

by the Court’s election, either express or implied, to leave open particular legal

questions”).




                                         40
                            Conclusion and Prayer
      Mark Swinnea is not arguing that buyout consideration can never be

disgorged. But if such disgorgement is to be awarded here, it is a species of

punitive damage and must be treated as such. Such awards must be subject to

the principles forbidding duplicative and excessive punitive damages, including a

review for compliance with constitutional due process.

      The punitive damages to Snodgrass, and the duplicative, punitive

disgorgement violate the common law as well as the statutory and constitutional

prohibitions against excessive punitive damages.

      WHEREFORE, PREMISES CONSIDERED, the Court should

eliminate Snodgrass’s recovery of ERI’s lost profit, eliminate both plaintiffs’

recovery of attorney’s fees, eliminate or reduce the disgorgement, eliminate or

reduce the $1 million award of punitive damages, or alternatively remand for a

trial court evaluation of the aggregate of the punitive recoveries, as may be

appropriate. Of course, Swinnea prays for all other relief, in whatever form, that

may be proper under the grounds and arguments in this appeal.




                                       41
     Respectfully submitted,

        /s/ Greg Smith
     Greg Smith
     State Bar No. 18600600
     Nolan Smith
     Texas Bar No. 24075632
     RAMEY & FLOCK, P.C.
     100 East Ferguson, Suite 500
     Tyler, TX 75702
     Telephone: (903) 597-3301
     Facsimile: (903) 597-2413
     gsmith@rameyflock.com
     nolans@rameyflock.com

     Michael E. Gazette
     Law Office of Michael E. Gazette
     100 East Ferguson, Suite 1000
     Tyler, TX 75702
     Telephone: (903) 596-9911
     Facsimile: (903) 596-9922
     megazette@suddenlink.com

     COUNSEL FOR APPELLANT,
     J. MARK SWINNEA




42
                                Certificate of Service

      The undersigned certifies that a copy of the above and foregoing document

was served upon counsel for Appellees in accordance with the applicable Texas Rules

of Civil Procedure on this the 21st day of May, 2015, on the following:

      Via email drace@icklaw.com
      Deborah Race
      Ireland, Carroll & Kelley, P.C.
      6101 S. Broadway, Suite 500
      Tyler, TX 75703

      Via email mahatchell@lockelord.com
      Mike A. Hatchell
      Locke Lord, LLP
      100 Congress Avenue, Suite 300
      Austin, TX 78701

      Via email randerson@gillenanderson.com
      Roger W. Anderson
      Gillen & Anderson
      613 Shelley Park Plaza
      Tyler, TX 75701



                                                 /s/ Greg Smith
                                               Greg Smith
                     CERTIFICATE OF COMPLIANCE

1.   This brief complies with the type-volume limitation of TEX. R. APP. P.
     9.4 because it contains 8,668 words, excluding the parts of the brief
     exempted by TEX. R. APP. P. 9.4(i)(2)(B).

2.   This brief complies with the typeface requirements of TEX. R. APP. P.
     9.4(e) because it has been prepared in the proportionally spaced
     typeface using Word Perfect X5 in 14 point Times New Roman font.

     Dated: May 21, 2015.



                                        /s/ Gregory D. Smith
                                        GREGORY D. SMITH




                                    1
                       No. 12-14-00288-CV

                 In the Twelfth Court of Appeals
                         Tyler, Texas


                        J. MARK SWINNEA
                                                     Appellant

                                    v.

            ERI CONSULTING ENGINEERS, INC.
                 AND LARRY SNODGRASS
                                   Appellees


              Appealed from the 114th Judicial District Court
                          Smith County, Texas


                            APPENDICES


A.   Amended Judgment
B.   Amended Additional Findings of Fact

C.   Excerpt from Appellant’s Original Brief

D.   Excerpt from Response to Petition for Review in Cause No. 12-0241
