                                                                               ACCEPTED
                                                                          04-14-00735-CV
                                                               FOURTH COURT OF APPEALS
                                                                    SAN ANTONIO, TEXAS
                                                                     2/20/2015 1:49:45 PM
                                                                            KEITH HOTTLE
                                                                                   CLERK



                      CAUSE NO. 04-14-00735-CV
         __________________________________________________
                                                        FILED IN
                                                    4th COURT OF APPEALS
                                                     SAN ANTONIO, TEXAS
                        IN THE COURT OF APPEALS     2/20/2015 1:49:45 PM
                                FOR THE               KEITH E. HOTTLE
                        FOURTH JUDICIAL DISTRICT            Clerk
                           SAN ANTONIO, TEXAS

              Thomas Christopher and Catrina Christopher
                                  v.
                   Brian C. Simcoe and Adria Simcoe
         __________________________________________________

          APPEAL FROM THE 45TH JUDICIAL DISTRICT COURT
                      BEXAR COUNTY, TEXAS
    HONORABLE JUDGE BARBARA HANSON NELLERMOE, JUDGE PRESIDING

                           BRIEF OF APPELLANT




Jamie L. Graham, SBOT 24027335
Sarah Anne Lishman, SBOT 24086267
JAMIE GRAHAM & ASSOCIATES, PLLC
310 S. St. Mary’s St, Ste. 845
San Antonio, Texas 78205
Telephone: (210) 308-6448
Telecopier: (210) 308-5669
Email: sarahanne.jgrahamlaw@yahoo.com
Attorney for Appellant, Brian C. Simcoe

Oral Argument Not Requested
                                                       Contents

IDENTITY OF PARTIES AND COUNSEL ............................................................4
INDEX OF AUTHORITIES......................................................................................5
STATEMENT OF THE CASE ..................................................................................6
STATEMENT OF FACTS ........................................................................................7
ISSUES PRESENTED.............................................................................................11
  I. Whether the evidence is legally sufficient to support the trial court’s finding
  that enforcement of the oral agreement was not barred by the statute of frauds. .11
  II. Whether the evidence is legally sufficient to support the trial court’s
  judgment solely against Appellant. .......................................................................11
SUMMARY OF THE ARGUMENTS ....................................................................12
ARGUMENTS AND AUTHORITIES ...................................................................13
  I. Whether the evidence is legally sufficient to support the trial court’s finding
  that enforcement of the oral agreement was not barred by the statute of frauds. .13
    Standard of review .............................................................................................13
    The statute of frauds barred enforcement of the alleged oral contract as a matter
    of law. .................................................................................................................14
    In order to enforce the purported oral contract, the burden was on the
    Christophers to show some exception to the statute of frauds. ..........................15
    Calculation of the time for performance depends on the tenor of the agreement
    and the understanding of the parties at the time the agreement is made,
    excluding merely fortuitous events. ...................................................................15
    The parties disputed what type of performance was required of the Simcoes
    under the oral contract. .......................................................................................16
    The evidence is legally insufficient to show that Payment Performance could
    have been completed within one year of the making of the oral contract. ........17
    The evidence is legally insufficient to support the trial court’s finding that
    Refinance Performance could conceivably have been completed within one
    year of the making of the oral agreement...........................................................19
    The trial court enforced the oral contract against Appellant, finding that
    Refinance Performance of the oral contract was to be completed within one
    year. RR 85:15-21. ............................................................................................19


                                                             2
  II. Whether the evidence is legally sufficient to support the trial court’s
  judgment solely against Appellant. .......................................................................20
     The undisputed evidence showed that both Appellant and Adria Simcoe were
     liable under the alleged oral contract. ................................................................20
CONCLUSION ........................................................................................................22
PRAYER ..................................................................................................................22
APPENDIX ..............................................................................................................25




                                                            3
                 IDENTITY OF PARTIES AND COUNSEL

Appellant: Brian C. Simcoe- Defendant in the underlying case

Appellees: Thomas Christopher- Plaintiff in the underlying case

            Catrina Christopher- Plaintiff in the underlying case

            Adria Simcoe- Third-party Defendant in the underlying case

Counsel for Appellant: Jamie L. Graham and Sarah Anne Lishman, Jamie Graham

      & Associates, PLLC, 310 S. St. Mary’s St., Suite 845, San Antonio, Texas

      78205

Counsel for Appellees Thomas Christopher and Catrina Christopher: James A.

      Rodriguez, 540 S. St. Mary’s St., San Antonio, Texas 78205

Adria Simcoe: Pro se; 115 Osprey Haven, San Antonio, Texas 78253




                                        4
                        INDEX OF AUTHORITIES

CASES

Burbage v. Burbage, 447 S.W.3d 249 (Tex. 2014)……….……………………….13

Dynegy, Inc. v. Yates, 422 S.W.3d 638 (Tex. 2013)………………………………13

City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005)……………………….14, 17

Ford Motor Co. v. Ridgway, 135 S.W.3d 598 (Tex. 2004)………………………..13

Young v. Ward, 917 S.W.2d 506 (Tex. App.—Waco, 10th Dist. 1996)…..15, 16, 17

Pitman v. Lightfoot, 937 S.W.2d 496 (Tex. App.—San Antonio 1996)…………...20

SBC Operations, Inc. v. Business Equation, Inc., 75 S.W.3d 462 (Tex. App.—San
     Antonio [4th Dist.] 2001)……………………………………………….16, 19

Berryman's South Fork, Inc. v. J. Baxter Brinkmann Int'l Corp., 418 S.W.3d 172
     (Tex. App.—Dallas [5th Dist.] 2013)………………………………………13

STATUTES

TEX. BUS. & COM. CODE § 26.01……………………………………………...14, 15




                                      5
                            STATEMENT OF THE CASE1

       The underlying suit is a breach of oral contract action filed on September 20,

2012 by Appellees Thomas and Catrina Christopher (hereafter “the Christophers”)

against Appellant Brian Simcoe. CR 1-4. Appellant filed his Original Answer on

October 5, 2012. CR 6-7. Appellant filed his First Amended Answer on October

24, 2012. CR 8-9. On June 5, 2013, Appellant filed his Second Amended Answer

and Petition to Joinder Third Party, joining Appellee Adria Simcoe, his ex-wife, as

a third-party defendant. CR 15-17. On August 16, 2013, Appellant filed his Second

Amended Answer and First Amended Petition to Join Third Party Defendant. CR

19-21. On February 11, 2014, Appellant filed his Third Amended Answer and

Second Amended Petition to Join Third Party Defendant.                      CR 23-25.       The

Christophers filed their Second Amended Petition for Breach of Oral Contract and

For Promissory Estoppel on February 20, 2014. CR 26-30.

       The final hearing of this matter was held on February 24, 2014, which

included Appellant’s motion to dismiss on the basis of the statute of frauds. CR 31.

The judgment was signed on July 9, 2014. CR 36-37.

       Appellant timely filed a Motion for New Trial on August 7, 2014, and a First

Amended Motion for New Trial on September 9, 2014. CR 40-82; CR 83-129. The


1
 In this Brief, the Clerk’s Record is cited as “CR,” and the Reporter’s Record from the hearing
on February 24, 2014 is cited as “RR.”

                                                6
Motion for New Trial was denied after hearing on September 25, 2014. CR 130-

131. Appellant filed his Notice of Appeal on October 21, 2014. CR 132-134.

                           STATEMENT OF FACTS
      In the summer of 2012, the Christophers’ daughter, Adria Simcoe, was

expecting her fourth child with her then-husband, Brian Simcoe.          RR 43:13.

Desiring to help the Simcoe family, it is undisputed that the Christophers purchased

a 2010 Chrysler Town and Country (hereafter “the Van”) and a Jeep, intending for

these vehicles to be used by the growing Simcoe family. RR 37:11-15; 43:19-25. It

is undisputed that at the time the Van was purchased by the Christophers, the

Simcoes’ credit score precluded them from acquiring financing for the Van in their

own names. RR 12:23-25; 13:1-4. It is undisputed that the Christophers signed a

five-year note for the Van. RR 21:9-13. It is undisputed while the Van was in the

possession of the Simcoes, the Simcoes made the monthly payments for the Van.

RR 14:24-25; 15:1-5.

      On February 21, 2012, Adria Simcoe filed for divorce. RR 51:15-20. Shortly

thereafter, Appellant returned the Van to the Christophers with a kind note

explaining that, in light of the pending divorce, he was no longer able to afford the

monthly payments. RR 16:6-13; 52:4-5. The Christophers had the Van repossessed

about one month later. RR 17:21-24. The Van was sold at auction, leaving a




                                         7
deficiency of $18,411.14, for which the Christophers were the named responsible

parties. RR 19:7-15.

      The Simcoes’ Final Decree of Divorce was signed on November 5, 2013. RR

40:21-22. Nowhere in the decree is the Van mentioned as an asset or a liability of

the marital estate. CR 113-114; RR 80:21-25; 81:1-5. The Jeep was awarded to

Adria Simcoe. CR 113-114.

      On September 20, 2012, the Christophers filed suit against Appellant, alleging

that he breached an oral contract whereby the Christophers were to obtain the Van

in their names and Appellant was to be responsible for all payments thereon. CR 1-

4. The Christophers sought to hold Appellant responsible for the entire amount of

the deficiency. Id. Appellant brought his ex-wife, Adria Simcoe, into the suit as a

third-party defendant, maintaining that if he was liable, she shared joint and several

liability with him as a responsible party to the alleged oral contract. CR 23-25.

      At the final hearing on February 24, 2014, the Christophers alleged that the

Simcoes were obligated to make the monthly payments for the Van, regardless of

whether or not the Simcoes had possession of it. Compare RR 11:24-25; 12:1-2; RR

34:25; 35:1-4, with RR 60:18-22; RR 70:6-12. The Christophers further alleged that

they agreed to acquire the Van in their names, but that the Simcoes were obligated

to make all payments under the five year note or to refinance the vehicle into their

names once their credit so permitted. RR 20:17-18; RR 24:13-19; RR 28:10-19.


                                          8
Conversely, Appellant maintained that the Simcoes agreed only to make payments

for the Van for so long as they had possession of it. RR 60:18-22; RR 70:6-12. In

other words, according to Appellant, by returning the Van to the Christophers, the

Simcoes’ obligation to make payments ceased. RR 71:16-20. Appellant further

argued that the time for performance, based upon the five-year note signed by the

Christophers, was greater than one year. RR 67:22-25; 68:1-3. As such, the statute

of frauds barred enforcement of the oral agreement because it was not in writing nor

was it signed by the parties to be bound.       RR 84:2-8.

      At the conclusion of the hearing, the trial court found that the alleged oral

contract was taken outside of the statute of frauds “by virtue of the fact that [the Van]

could have been refinanced as the plan was to refinance as soon as Mr. Simcoe’s

credit improved.” RR at 85:17-21. Judgment was rendered against Appellant for

$18,411.14, and an additional $5,000.00 was awarded to the Christophers for their

attorney’s fees. RR 86:2-4: CR 36-37. No judgment was rendered against Appellee

Adria Simcoe. RR 86:5-15; CR 36-37.

      Appellant timely filed a Motion for New Trial, and a hearing on said Motion

was held on September 11, 2014. CR 83-88. Appellant requested a new trial on the

grounds that there was no evidence the alleged oral agreement could be performed

or was intended to be performed within one year, and because Adria Simcoe




                                            9
should’ve been held jointly and severally liable.   Id. The trial court denied

Appellant’s Motion for New Trial and this appeal followed. CR 131-134.




                                      10
                              ISSUES PRESENTED
 I.   Whether the evidence is legally sufficient to support the trial court’s finding

      that enforcement of the oral agreement was not barred by the statute of frauds.


II.   Whether the evidence is legally sufficient to support the trial court’s judgment

      solely against Appellant.




                                         11
                      SUMMARY OF THE ARGUMENTS

      To be enforceable, the statute of frauds requires that a contract to answer for

the debt of another, like the one at issue in this case, be in writing and signed by the

party to be bound. It is undisputed that there was not a written and signed contract

between the Simcoes and the Christophers for the debt at issue. The statute of frauds

therefore barred enforceability of the alleged oral contract as a matter of law.

      Performance of the alleged oral contract, whether by payment in full or

refinancing of the debt, was not to be completed within one year, according to the

tenor of the agreement and the understanding of the parties at the time the agreement

was allegedly made. Performance within one year could only have been possible

upon the occurrence of some merely fortuitous event. The evidence was legally

insufficient to support the trial court’s finding that the oral contract was enforceable

because of the One-Year Exception to the statute of frauds.

      The undisputed evidence shows that both Appellant and Adria Simcoe were

parties to the oral contract at issue as promisors. The terms of the oral contract did

not differentiate or apportion liability between Appellant and Adria Simcoe.

Accordingly, the only theory of liability supported by the undisputed evidence

before the trial court was joint and several liability of both Appellant and Adria

Simcoe. There was legally insufficient evidence to support the trial court’s take-

nothing judgment with respect to Appellee Adria Simcoe.


                                          12
                      ARGUMENTS AND AUTHORITIES
     I.      Whether the evidence is legally sufficient to support the trial court’s

             finding that enforcement of the oral agreement was not barred by the

             statute of frauds.

Standard of review

      Whether a contract comes within the statute of frauds is a question of law,

which is reviewed de novo. Dynegy, Inc. v. Yates, 422 S.W.3d 638, 642 (Tex. 2013).

Whether the circumstances of a particular case fall within an exception to the statute

of frauds is generally a question of fact. Berryman's South Fork, Inc. v. J. Baxter

Brinkmann Int'l Corp., 418 S.W.3d 172, 192 (Tex. App.—Dallas [5th Dist.] 2013).

      For an issue where the opposing party bears the burden of proof, a legal-

sufficiency challenge to an adverse finding will be sustained if the evidence

demonstrates a complete absence of a vital fact, or if the evidence offered is no more

than a scintilla. Burbage v. Burbage, 447 S.W.3d 249, 259 (Tex. 2014). More than

a scintilla exists when the evidence would enable reasonable and fair-minded people

to reach different conclusions. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601

(Tex. 2004). Evidence that creates a mere surmise or suspicion of a vital fact is to

be regarded as, in legal effect, no evidence. Id. The reviewing court should consider

the evidence in the light most favorable to the judgment, “crediting favorable

evidence if reasonable jurors could, and disregarding contrary evidence unless


                                         13
reasonable jurors could not.” City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex.

2005).   In conducting a legal sufficiency review, the Court cannot disregard

undisputed evidence that allows of only one logical inference. Id. at 814.

The statute of frauds barred enforcement of the alleged oral contract as a matter of

law.

       The statute of frauds, as codified in Section 26.01 of the Texas Business and

Commerce Code, applies to “a promise by one person to answer for the debt, default,

or miscarriage of another person.”       TEX. BUS. & COM. CODE § 26.01(b)(2).

Enforceability of such promises or agreements is barred as a matter of law unless

they are “(1) in writing; and (2) signed by the person to be charged with the promise

or agreement or by someone lawfully authorized to sign for him.” TEX. BUS. & COM.

CODE § 26.01(a).

       The oral contract at issue in the present case falls within the purview of the

statute of frauds because the Simcoes allegedly agreed to answer for the debt of the

Christophers. See RR 12:23-25; 13:1-4. Accordingly, in order to be enforceable,

the statute of frauds required that this contract be in writing and signed by the

Simcoes. It is undisputed that there was not a written and signed contract between

the Simcoes and the Christophers for the debt at issue. RR 21:6-8; 52:6-9. The

statute of frauds therefore barred enforceability of the oral contract as a matter of

law.


                                         14
In order to enforce the purported oral contract, the burden was on the Christophers

to show some exception to the statute of frauds.

      At trial, the Christophers argued that an exception to the statute of frauds

applied in this case because performance of the oral contract could have been

completed within one year’s time (the “One-Year Exception”). RR 83:18-24. The

basis for the One-Year Exception is found in Section 26.01(b)(6) of the Texas

Business and Commerce Code, which states that the statute of frauds does not bar

enforcement of “an agreement which is not to be performed within one year from

the date of making the agreement.” The question for the trial court was whether the

alleged oral contract was to be performed within one year from the date the

agreement was made.

Calculation of the time for performance depends on the tenor of the agreement and

the understanding of the parties at the time the agreement is made, excluding merely

fortuitous events.

      To determine the time for performance, the court simply compares the date

the oral agreement is made to the date when the performance under the oral

agreement is to be completed, and if there is a year or more in between them, a

writing is required to render the oral agreement enforceable. Young v. Ward, 917

S.W.2d 506, 508 (Tex. App.—Waco, 10th Dist. 1996). In the absence of a known

date when performance will be completed, the statute of frauds does not apply if


                                         15
performance could conceivably be completed within one year of the agreement’s

making. Id. at 509. Whether performance could conceivably be completed within

one year depends on the tenor of the agreement and the understanding of the parties

at the time the agreement is made. Id. If performance within one year is dependent

upon some merely fortuitous event, a writing is required to enforce the oral

agreement. Id. at 510–511. If a contract explicitly calls for performance over a

period longer than one year, the mere theoretical possibility of termination of the

contract within one year because of a fortuitous event does not take the contract out

of the statute of frauds. SBC Operations, Inc. v. Business Equation, Inc., 75 S.W.3d

462, 466 (Tex. App.—San Antonio [4th Dist.] 2001).

The parties disputed what type of performance was required of the Simcoes under

the oral contract.

      In the instant case, the parties presented conflicting testimony as to what type

of performance was required of the Simcoes under the oral agreement. Appellant

testified that the Simcoes were only required to make payments for so long as they

had possession of the Van. RR 70:6-12; 71:16-20. The Christophers maintained

that performance would be completed when the Simcoes paid all monthly

installment payments for the Van owing under the finance agreement signed by the

Christophers, or, alternatively, when the Simcoes’ credit improved and they




                                         16
qualified to refinance the Van into their own names. RR 20:17-18; 24:13-19; 34:25;

35:1-4.

      If the parties to an oral contract testify to conflicting terms, a reviewing court

must presume the terms were those asserted by the winner. City of Keller, 168

S.W.3d at 819. Accordingly, the reviewing court must presume that performance

under the oral contract at issue was complete either upon payment of the debt in full

by the Simcoes (“Payment Performance”), or refinance of the debt into the Simcoes’

names (“Refinance Performance”).

      At trial the Christophers bore the burden of proving that either Payment

Performance or Refinance Performance could have been completed within one year

in order to enforce the oral contract under the One-Year Exception to the statute of

frauds.   The proper analysis for the trial court was whether the Christophers

presented sufficient evidence to show that performance could conceivably be

completed within one year of the agreement’s making, based upon the tenor of the

agreement and the understanding of the parties, and excluding the possibility of

some merely fortuitous event. See Young, 917 S.W.2d at 510–511.

The evidence is legally insufficient to show that Payment Performance could have

been completed within one year of the making of the oral contract.

      The only evidence presented to the trial court reflecting the time for

completion of Payment Performance was the note signed by the Christophers. RR


                                          17
21:9-13; 36:1-5. By the express term of that note, there was indeed a known date

when Payment Performance was to be completed. Payment Performance would be

completed after five years of monthly installment payments. Id.

      In conducting a legal sufficiency review, the Court cannot disregard

undisputed evidence that allows of only one logical inference. City of Keller v.

Wilson, 168 S.W.3d at 814. In the instant case, the only logical inference to be made

from the undisputed evidence presented to the trial court was that Payment

Performance was not to be completed within one year. While there may be some

conceivable possibility that the Simcoes could have paid off the Van within one year,

no evidence was presented at trial showing that was the tenor of the oral agreement

or the understanding of the parties at the time the oral agreement was made. No

evidence was presented to the trial court indicating the Christophers expected the

Simcoes to pay off the Van within one year. To the contrary, the evidence presented

to the trial court indicated that the Christophers knew that the Simcoes were

struggling financially, and could not afford to pay off the Van within one year. RR

67:22-25; 68:1-3. Completion of Payment Performance within one year could only

have been possible upon the occurrence of a merely fortuitous event that transformed

the financial circumstances of the Simcoe family.

      The evidence further demonstrated that the Simcoes actually made payments

for the Van for over a year, with no complaint from the Christophers or request that


                                         18
they pay the Van off in full. RR 14:24-25; 15:1-5. The fact that over a year lapsed

without completion of performance demonstrates that the parties never intended for

the Simcoes to pay off the Van in full within a year.

      Because the written finance agreement was for a five year term and

completion of Payment Performance within one year was only possible upon the

occurrence of a merely fortuitous event, the One-Year Exception does not apply and

the statute of frauds was a complete bar to enforcement of the oral agreement in this

case. See SBC Operations, Inc., 75 S.W.3d at 466.

The evidence is legally insufficient to support the trial court’s finding that Refinance

Performance could conceivably have been completed within one year of the making

of the oral agreement.

      The trial court enforced the oral contract against Appellant, finding that

Refinance Performance of the oral contract was to be completed within one year.

RR 85:15-21. Even considering the evidence in the light most favorable to the

judgment, there is no evidence to support the trial court’s finding “that [the Van]

could have been refinanced” within a year of the agreement’s making. RR at 85:17-

21. No evidence was presented at trial to show whether the Simcoes qualified to

refinance the Van into their names within a year after the alleged oral agreement was

made. Further, there was no evidence that it was the tenor of the agreement or the

understanding of the parties at the time the agreement was made that the Simcoes


                                          19
would refinance the Van within one year. No evidence was presented that the

Christophers asked the Simcoes to refinance within one year. No evidence was

presented that the Simcoes even attempted to refinance within one year.

       Absent any evidence that Refinance Performance could have been or was to

be completed within one year, the evidence is legally insufficient to support the trial

court’s finding that the One Year Exception applied to the alleged oral contract at

issue. Enforcement of the oral contract was barred by the statute of frauds as a matter

of law.

 II.   Whether the evidence is legally sufficient to support the trial court’s judgment

       solely against Appellant.


       Joint and several liability usually arises when two or more promisors in the

same contract promise the same or different performances to the same promisee.

Pitman v. Lightfoot, 937 S.W.2d 496, 528 (Tex. App.—San Antonio 1996).

Obligations of multiple parties to a contract are usually joint and several. Id.

The undisputed evidence showed that both Appellant and Adria Simcoe were liable

under the alleged oral contract.

       The undisputed evidence presented to the trial court showed that, under the

terms of the alleged oral contract sued upon, both Appellant and his then-wife,

Appellee Adria Simcoe, orally promised the Christophers to pay for the Van. RR

34:25; 35:1-4; 35:11-16; 43:19-25; 50:16-21. Evidence was presented that during

                                          20
the divorce of Appellant and Adria Simcoe, the Jeep was awarded to Adria Simcoe

and Appellant was asked to take the Van and assume all payments therefore. RR

45:7-16.35:11-16. The evidence further demonstrated that Appellant could not

afford to assume the Van payments individually, prompting him to return the Van to

the Christophers. RR 63:17-20.

      The oral contract that the Christophers sued upon was allegedly made on that

date when the Christophers acquired the Van. RR 14:24-25; 27:22. Regardless of

whatever subsequent negotiation or agreement was allegedly made regarding the

vehicles upon the divorce of Appellant and Adria Simcoe, the terms of the oral

contract as they stood on June 30, 2010 are controlling.

      It is undisputed that both Appellant and Adria Simcoe were parties to the oral

contract as promisors. The terms of the oral contract did not differentiate or

apportion liability between Appellant and Adria Simcoe.         See RR 50:16-21.

Accordingly, the only theory of liability supported by the undisputed evidence

before the trial court was joint and several liability of both Appellant and Adria

Simcoe. See Pitman, 937 S.W.2d at 528. There was legally insufficient evidence to

support the trial court’s take-nothing judgment with respect to Appellee Adria

Simcoe. RR 86:5-14.




                                         21
                                  CONCLUSION
      The undisputed evidence before the trial court was that the contract the

Christophers sued on was not in writing or signed by the Christophers. It was

therefore unenforceable under the statute of frauds.        There was no evidence

presented to the trial court to show that the Simcoes were to refinance the Van within

one year. The evidence is therefore factually insufficient evidence to support the

trial court’s finding that the oral contract was enforceable under the One Year

Exception to the statute of frauds.

      The undisputed evidence shows that both Appellant and Adria Simcoe were

parties to the oral contract at issue as promisors. The terms of the oral contract did

not differentiate or apportion liability between Appellant and Adria Simcoe.

Accordingly, the only theory of liability supported by the undisputed evidence

before the trial court was joint and several liability of both Appellant and Adria

Simcoe. There was legally insufficient evidence to support the trial court’s take-

nothing judgment with respect to Appellee Adria Simcoe.

                                      PRAYER
      Appellant Brian Simcoe respectfully prays this Court grant his appeal, and

hold that enforcement of the oral contract is barred by the statue of frauds. Appellant

further prays that this Court reverse the judgment of the trial court, and render

judgment that Appellees, the Christophers, take nothing against him by way of their


                                          22
claims. Appellant prays that, in the alternative, this Court reverse the judgment of

the trial court, and render judgment holding Appellee Adria Simcoe jointly and

severally liable for all damages and attorney’s fees awarded to Appellees, the

Christophers. Appellant further prays for all other and further relief to which he may

be entitled.

                                       Respectfully Submitted,

                                       /s/ Sarah Anne Lishman
                                       Sarah Anne Lishman
                                       State Bar No. 24086267
                                       Jamie L. Graham
                                       State Bar No. 24027335
                                       JAMIE GRAHAM & ASSOCIATES, PLLC
                                       310 S. St. Mary’s St., Suite 845
                                       San Antonio, Texas 78205
                                       Tel. (210) 308-6448
                                       Fax (210) 308-5669


                            Certificate of Compliance

      I certify that the Brief of Appellant is in compliance with the Texas Rules of

Appellate Procedure with respect to its word count, containing approximately 3,345

words.

                                     /s/ Sarah Anne Lishman
                                     Sarah Anne Lishman
                                     State Bar No. 24086267
                                     Attorney for Appellant, Brian Simcoe




                                         23
                               Certificate of Service

      I certify that a true copy of this Brief of Appellant was served in accordance

with rule 9.5 of the Texas Rules of Appellate Procedure on each party or that party's

lead counsel on February 20, 2015 as follows:

Party:                    Thomas Christopher
Lead attorney:            James A. Rodriguez
Address of service:       540 S. St. Mary’s St.
                          San Antonio, Texas 78205
Method of service:        Via Facsimile: (210) 224-8214
Date of service:          February 20, 2015

Party:                    Catrina Christopher
Lead attorney:            James A. Rodriguez
Address of service:       540 S. St. Mary’s St.
                          San Antonio, Texas 78205
Method of service:        Via Facsimile: (210) 224-8214
Date of service:          February 20, 2015

Party:                    Adria Joy Simcoe
Address of service:       115 Osprey Haven, San Antonio, Texas 78253
Method of service:        Via First class mail and certified mail
Date of service:          February 20, 2015


                                       /s/ Sarah Anne Lishman
                                       Sarah Anne Lishman
                                       State Bar No. 24086267
                                       Attorney for Appellant, Brian C. Simcoe




                                         24
                       APPENDIX

APPENDIX A: Judgment

APPENDIX B: Statutes

APPENDIX C: Cases




                          25
Appendix A:
 Judgment
36
37
Appendix B:
  Statutes
                         Tex. Bus. & Com. Code § 26.01
            This document is current through the 2013 3rd Called Session
Texas Statutes and Codes > BUSINESS AND COMMERCE CODE > TITLE 3. INSOLVENCY,
FRAUDULENT TRANSFERS, AND FRAUD > CHAPTER 26. STATUTE OF FRAUDS

§ 26.01. Promise or Agreement Must Be in Writing
  (a) A promise or agreement described in Subsection (b) of this section is not
     enforceable unless the promise or agreement, or a memorandum of it, is
     (1) in writing; and
     (2) signed by the person to be charged with the promise or agreement or by
         someone lawfully authorized to sign for him.
  (b) Subsection (a) of this section applies to:
     (1) a promise by an executor or administrator to answer out of his own estate for
         any debt or damage due from his testator or intestate;
     (2) a promise by one person to answer for the debt, default, or miscarriage of
         another person;
     (3) an agreement made on consideration of marriage or on consideration of
         nonmarital conjugal cohabitation;
     (4) a contract for the sale of real estate;
     (5) a lease of real estate for a term longer than one year;
     (6) an agreement which is not to be performed within one year from the date of
         making the agreement;
     (7) a promise or agreement to pay a commission for the sale or purchase of:
          (A) an oil or gas mining lease;
          (B) an oil or gas royalty;
          (C) minerals; or
          (D) a mineral interest; and
     (8) an agreement, promise, contract, or warranty of cure relating to medical care
         or results thereof made by a physician or health care provider as defined in
         Section 74.001, Civil Practice and Remedies Code. This section shall not apply
         to pharmacists.

History

Enacted by Acts 1967, 60th Leg., ch. 785 (H.B. 293), § 1, effective September 1, 1967;
am. Acts 1977, 65th Leg., ch. 817 (H.B. 1048), § 21.01, effective August 29, 1977; am.
                                        Jamie Graham
                                  Tex. Bus. & Com. Code § 26.01



Acts 1987, 70th Leg., ch. 551 (S.B. 281), § 1, effective August 31, 1987; am. Acts 2005,
79th Leg., ch. 187 (H.B. 735), § 1, effective September 1, 2005.
LexisNexis ® Texas Annotated Statutes
Copyright © 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group All rights
reserved.




                                   Jamie Graham Page 2 of 2
Appendix C:
   Cases
|   | Positive
As of: February 20, 2015 10:27 AM EST

                                    Burbage v. Burbage
                                  Supreme Court of Texas
                 January 9, 2014, Argued; August 29, 2014, Opinion Delivered
                                        NO. 12-0563

Reporter
447 S.W.3d 249; 2014 Tex. LEXIS 753; 57 Tex. Sup. J. 1303; 2014 WL 4252274
ALLEN    CHADWICK   BURBAGE,                    Case Summary
PETITIONER              AND
CROSS-RESPONDENT, v. W. KIRK                    Overview
BURBAGE AND BURBAGE FUNERAL                     HOLDINGS: [1]-In a defamation case
HOME,     RESPONDENTS   AND                     arising from statements defendant made
CROSS-PETITIONERS                               alleging plaintiff committed elder abuse,
                                                family abuse, and fraud, defendant failed
Prior History: [**1] ON PETITION FOR            to preserve error in the jury charge and the
REVIEW FROM THE COURT OF                        reviewing court could not reach the issue
APPEALS FOR THE THIRD DISTRICT                  of qualified privilege; [2]-There was no
OF TEXAS.                                       evidence to support the compensatory
Burbage v. Burbage, 447 S.W.3d 291, 2011        damage award, and the award of exemplary
Tex. App. LEXIS 10034 (Tex. App. Austin,        damages could not stand; [3]-Only
Dec. 21, 2011)                                  speculative evidence supported the actual
                                                impact of the defamatory statements
Core Terms                                      plaintiff’s funeral home business; [4]-The
                                                trial court’s permanent injunction making
damages, funeral home, trial court,             a broad prohibition on defendant’s future
qualified privilege, defamation, reputation,    speech about plaintiff’s actions was an
Questions, exemplary damages, court of          impermissible prior restraint on free speech
appeals, injunction, cemetery, jury award,      in violation of U.S. Const. amend. I.
defamatory, preservation, broad-form,
jury’s, evidence supports, mental anguish, Outcome
no evidence, privileged, estimate, funeral, Affirmed in part; and reversed in part.
invalid,      compensatory        damages,
                                             LexisNexis® Headnotes
defamatory statement, specific objection,
special damage, jury charge, compensate,      Governments > Courts > Common Law
cancelled
                                                  Torts > ... > Defenses > Privileges >
                                                   Qualified Privileges
                                         Jamie Graham
                          447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1



  Governments > Courts > Common Law              privileged publication unless the plaintiff’s
  Torts > ... > Defenses > Privileges >          petition       affirmatively     demonstrates
   Qualified Privileges                          privilege. If a defendant establishes the
                                                 privilege, the burden shifts to the plaintiff
HN1 The common law provides a qualified
                                                 to prove that the defendant made the
privilege against defamation liability when
                                                 statements with actual malice. Actual
a communication is made in good faith and
                                                 malice, in the defamation context, means
the author, the recipient or a third person,
or one of their family members, has an           the making of a statement with knowledge
interest that is sufficiently affected by the    that it is false, or with reckless disregard of
communication. Defamation actions                whether it is true.
necessarily inhibit free speech and, thus,
                                                    Torts > ... > Defenses > Privileges >
the qualified privilege offers an additional
                                                     Qualified Privileges
safeguard, even in cases of private,
non-political speech.                               Torts > ... > Defenses > Privileges >
                                                     Qualified Privileges
  Torts > ... > Defenses > Privileges >
   Qualified Privileges
                                        HN3 In a defamation action, qualified
                                                 privilege presents a question of law when
  Evidence > Burdens of Proof > Burden the  statements at issue employ
  Shifting                             unambiguous language and where the facts
  Civil Procedure > ... > Defenses, Demurrers and circumstances of publication are
  & Objections > Affirmative Defenses > undisputed.
   General Overview
                                                Civil Procedure > Appeals > Reviewability
  Torts > ... > Defamation > Public Figures >
                                                of Lower Court Decisions > Preservation
   Actual Malice
                                                for Review
  Torts > ... > Defenses > Privileges >
                                                Civil Procedure > ... > Jury Trials > Jury
   Qualified Privileges
                                                Instructions > Objections
  Evidence > Burdens of Proof > Burden
                                                Civil Procedure > Appeals > Reviewability
  Shifting
                                                of Lower Court Decisions > Preservation
  Civil Procedure > ... > Defenses, Demurrers   for Review
  & Objections > Affirmative Defenses >
                                                Civil Procedure > ... > Jury Trials > Jury
   General Overview
                                                Instructions > Objections
  Torts > ... > Defamation > Public Figures >
   Actual Malice                              HN4 Any complaint to a jury charge is
                                             waived unless specifically included in an
HN2 In a defamation action, the qualified objection.
privilege operates as an affirmative defense
in the nature of confession and avoidance;    Civil Procedure > ... > Jury Trials > Jury
the defendant bears the burden of proving     Instructions > General Overview
                                  Jamie Graham Page 2 of 20
                          447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1



  Civil Procedure > ... > Jury Trials > Jury the trial court and must point out distinctly
  Instructions > General Overview            the objectionable matter and the grounds
HN5 It is fundamental to the system of       of the objection. Tex. R. Civ. P. 274; Tex. R.
justice that parties have the right to be    App. P. 33.1. Under Tex. R. Civ. P. 274, any
judged by a jury properly instructed in the  complaint as to a question, definition, or
law.                                         instruction, on account of any defect,
                                             omission, or fault in pleading, is waived
  Civil Procedure > ... > Jury Trials > Jury unless specifically included in the
  Instructions > General Overview            objections. Tex. R. Civ. P. 274.
  Civil Procedure > Remedies > Damages >
  General Overview                                  Civil Procedure > Appeals > Reviewability
                                                    of Lower Court Decisions > Preservation
  Civil Procedure > Appeals > Standards of
  Review > Reversible Errors                        for Review

  Civil Procedure > ... > Jury Trials > Jury        Civil Procedure > Appeals > Reviewability
  Instructions > General Overview                   of Lower Court Decisions > Preservation
                                                    for Review
  Civil Procedure > Remedies > Damages >
  General Overview                         HN8 Preservation requires (1) a timely
  Civil Procedure > Appeals > Standards of objection stating the grounds for the ruling
  Review > Reversible Errors               that the complaining party sought from the
                                             trial court with sufficient specificity to
HN6 A broad-form damages submission
                                             make the trial court aware of the complaint,
mixing valid and invalid elements of
                                             unless the specific grounds were apparent
damages creates harmful error.
                                             from the context; and (2) a ruling. Tex. R.
  Civil Procedure > Appeals > Reviewability App. P. 33.1. The test ultimately asks
  of Lower Court Decisions > Preservation whether the party made the trial court
  for Review                                 aware of the complaint, timely and plainly,
  Civil Procedure > ... > Jury Trials > Jury and obtained a ruling.
  Instructions > Objections
                                                    Civil Procedure > ... > Jury Trials > Jury
  Civil Procedure > Appeals > Reviewability         Instructions > Objections
  of Lower Court Decisions > Preservation
  for Review                                        Civil Procedure > ... > Jury Trials > Jury
                                                    Instructions > Objections
  Civil Procedure > ... > Jury Trials > Jury
  Instructions > Objections                  HN9 Only by proper objection does a
                                           litigant afford the trial court sufficient
HN7 The Texas Rules of Civil Procedure opportunity to correct defects in the charge.
establish the preservation requirements to
raise a jury-charge complaint on appeal.      Civil Procedure > Appeals > General
The complaining party must object before      Overview
                                  Jamie Graham Page 3 of 20
                          447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1



  Governments > Courts > Rule Application fact, or if the evidence offered is no more
  & Interpretation                        than a scintilla. More than a scintilla exists
  Civil Procedure > Appeals > General when the evidence would enable reasonable
  Overview                            and fair-minded people to reach different
  Governments > Courts > Rule Application
                                                 conclusions. The appellate court regards
  & Interpretation                        evidence that creates a mere surmise or
                                                 suspicion of a vital fact as, in legal effect,
HN10 The court construes procedural rules        no evidence. The appellate court considers
liberally so that the right to appeal is not     the evidence in the light most favorable to
lost unnecessarily.                              the judgment, crediting favorable evidence
                                                 if reasonable jurors could, and disregarding
  Civil Procedure > Appeals > Reviewability
  of Lower Court Decisions > Preservation
                                                 contrary evidence unless reasonable jurors
  for Review                                     could not.
  Civil Procedure > Appeals > Reviewability         Evidence > Inferences & Presumptions >
  of Lower Court Decisions > Preservation            Presumptions
  for Review
                                                    Torts > ... > Defamation > Remedies >
HN11 When an objection fails to explain              Damages
the nature of the error, the appellate court        Civil Procedure > Remedies > Damages >
cannot make assumptions.                            General Damages
  Civil Procedure > ... > Standards of              Torts > Intentional Torts > Defamation >
  Review > Substantial Evidence >                    Defamation Per Se
  Sufficiency of Evidence                           Torts > ... > Damages > Types of Damages >
  Evidence > Burdens of Proof > Allocation           Nominal Damages
  Evidence > Weight & Sufficiency                   Evidence > Inferences & Presumptions >
                                                     Presumptions
  Civil Procedure > ... > Standards of
  Review > Substantial Evidence >                   Torts > ... > Defamation > Remedies >
  Sufficiency of Evidence                            Damages
  Evidence > Burdens of Proof > Allocation          Civil Procedure > Remedies > Damages >
                                                    General Damages
  Evidence > Weight & Sufficiency
                                                    Torts > Intentional Torts > Defamation >
HN12 The legal sufficiency review             Defamation Per Se
standards are well established. On an issue
                                             Torts > ... > Damages > Types of Damages >
where the opposing party bears the burden
                                              Nominal Damages
of proof, the appellate court sustains a
legal sufficiency challenge to an adverse HN13 Texas law presumes that defamatory
finding if a review of the evidence per se statements cause reputational harm
demonstrates a complete absence of a vital and entitle a plaintiff to general damages
                                  Jamie Graham Page 4 of 20
                         447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1



such as loss of reputation and mental           demanding standard than knowledge of
anguish. But this presumption yields only       falsity or reckless disregard for the truth
nominal damages. Beyond nominal                 may recover only such damages as are
damages, the appellate court reviews            sufficient to compensate him for actual
presumed damages for evidentiary support.       injury.

  Civil Procedure > Remedies > Damages >           Civil Procedure > ... > Standards of
  General Overview                                 Review > Substantial Evidence >
  Civil Procedure > Trials > Jury Trials >         Sufficiency of Evidence
  General Overview                                 Civil Procedure > ... > Jury Trials > Jury
  Civil Procedure > ... > Standards of             Instructions > General Overview
  Review > Substantial Evidence >                  Civil Procedure > Remedies > Damages >
  Sufficiency of Evidence                          General Damages
  Civil Procedure > Remedies > Damages >           Civil Procedure > ... > Standards of
  General Overview                                 Review > Substantial Evidence >
  Civil Procedure > Trials > Jury Trials >         Sufficiency of Evidence
  General Overview                                 Civil Procedure > ... > Jury Trials > Jury
  Civil Procedure > ... > Standards of             Instructions > General Overview
  Review > Substantial Evidence >                  Civil Procedure > Remedies > Damages >
  Sufficiency of Evidence                          General Damages

                                        HN16 The jury charge sets the standard for
HN14 In addition to the legal sufficiency
of evidence, the Supreme Court of Texas reviewing whether the evidence is legally
                                        sufficient to support the damages awarded.
has recognized an imperative that appellate
courts determine whether any evidence   It is the court’s charge, not some other
supports the amount of jury damages.    unidentified law, that measures the
                                        sufficiency of the evidence when the
  Torts > ... > Defamation > Remedies > opposing party fails to object to the charge.
  Damages
  Torts > ... > Types of Damages >                 Evidence > Types of         Evidence    >
    Compensatory Damages > General                  Circumstantial Evidence
  Overview                                         Evidence > Inferences & Presumptions >
  Torts > ... > Defamation > Remedies >             Inferences
   Damages                                         Civil Procedure > Trials > Jury Trials >
  Torts > ... > Types of Damages >                 Province of Court & Jury
    Compensatory Damages > General                 Evidence > Types of         Evidence    >
  Overview                                          Circumstantial Evidence
HN15 The private defamation plaintiff              Evidence > Inferences & Presumptions >
who establishes liability under a less              Inferences
                                 Jamie Graham Page 5 of 20
                          447 S.W.3d 249, *249; 2014 Tex. LEXIS 753, **1



  Civil Procedure > Trials > Jury Trials > For Burbage, Allen Chadwick, Petitioner:
  Province of Court & Jury                 James J. Scheske, James J. Scheske, PLLC,
                                                 Austin, TX; Jason P. Steed, Bell Nunnally
HN17 A jury may not reasonably infer an          & Martin LLP, Dallas, TX; Peter D.
ultimate fact from meager circumstantial         Kennedy, William Gerow Christian, Graves
evidence which could give rise to any            Dougherty Hearon & Moody PC, Austin,
number of inferences, none more probable         TX.
than another.
                                         For Burbage, W. Kirk, Respondent:
  Civil Procedure > Remedies > Damages > Gregory Scott Cagle, Savrick, Schumann,
  Punitive Damages                       Johnson, McGarr Kaminski & Shirley, LLP,
  Civil Procedure > Remedies > Damages > Austin, TX.
  Punitive Damages
                                         Judges: JUSTICE GREEN delivered the
HN18 A party may not recover exemplary opinion of the Court.
damages unless the plaintiff establishes
actual damages.                          Opinion by: Paul W. Green

  Civil Procedure > Remedies > Injunctions > Opinion
   General Overview                           [*252] In this defamation case, a jury
  Constitutional Law > ... > Fundamental assessed compensatory and exemplary
  Freedoms > Judicial & Legislative damages against Allen Chadwick Burbage
  Restraints > Prior Restraint               (Chad) for ten statements defaming his
  Civil Procedure > Remedies > Injunctions > brother, W. Kirk Burbage (Kirk). The trial
  General Overview                           court also permanently enjoined Chad from
                                                 making       similar      statements.   We   are
  Constitutional Law > ... > Fundamental presented with three issues: (1) whether
  Freedoms > Judicial & Legislative any defamatory statements fell within a
  Restraints > Prior Restraint
                                                 qualified privilege; (2) whether evidence
HN19 Prohibitive injunctions of future           supports the jury’s damage awards; and (3)
speech that is the same or similar to speech     whether the trial court abused its discretion
that has been adjudicated to be defamatory       by issuing the permanent injunction.
operate as impermissible prior restraints        Because we hold that Chad failed to
on free speech.                                  preserve error in the charge, we do not
                                                 reach the issue of qualified privilege. We
Counsel:      For Electronic Frontier            also hold that the permanent injunction
Foundation, Amicus Curiae: David Greene,         operates as an impermissible prior restraint
Electronic Frontier Foundation, San              on freedom of speech. Accordingly, we
Francisco, CA; Marc A. Fuller, Vinson &          affirm those parts of the court of appeals’
Elkins LLP, Dallas, TX.                          judgment. But, on damages, we hold that
                                  Jamie Graham Page 6 of 20
                          447 S.W.3d 249, *252; 2014 Tex. LEXIS 753, **1



no evidence supports the compensatory Chad and Patrice Burbage Lehmann
damage award. We reverse that part of the wanted to sell, while Kirk and his brother,
court of appeals’ judgment.               Keith, demurred. Throughout 2006 and
                                          2007, Chad exchanged heated emails with
I. Factual and Procedural Background Kirk’s attorney. In late 2007 and early
Kirk owns and operates the Burbage 2008, Chad created a website,
Funeral Home, a centuries-old family www.annaburbage.org, to air his grievances
business, [**2] in Worcester County, with Kirk. Chad placed several posters
Maryland. Chad is Kirk’s older brother. around town to publicize the website. The
Chad and Kirk’s grandmother, Anna website            contained      the   following
Burbage, managed the funeral home from allegations:
her husband’s death in the 1940s until her           • ″Anna Burbage (’Miss Anna’) was
death in 1985. In her will, Anna left the            a victim of Elder Abuse. The Abuser
funeral home and all of its assets to Kirk.          was her grandson, Kirk Burbage and
Anna bequeathed the land for the Burbage             others.″
family cemetery to her children, Richard                [*253]   • ″Virginia Burbage
Burbage, Sr., Chad and Kirk’s father, and            Markham was the principal of
Jean Burbage Prettyman. Although                     Stephen Decatur High School
primarily a family cemetery, Anna and                serving northern Worcester County
Richard gave permission for burial or                Maryland. At the present time, she is
entombment of several non-family                     being abused by her son, Kirk
members. Richard died in 1991; in his                Burbage, of the Burbage Funeral
will, he left his 50% undivided interest in          Home. She is currently a victim of
the family cemetery property to Chad and             ELDER as well as FAMILY
Kirk’s mother, Virginia Burbage Markham,             ABUSE.″
but the will was never probated. Virginia
                                                     • ″The methods [of abuse] include:
conveyed this interest to Kirk by quitclaim
                                                     lies, trespassing, grand larceny, will
deed in 2003. Chad felt Kirk obtained the
                                                     tampering/undue influence, gifts
funeral home and the family cemetery
                                                     with the intent to control his mother,
interest through manipulation, first of Anna
                                                     discrediting      fellow      siblings,
and later of Virginia.
                                                     deceptively misrepresenting the
Although the origin of the strife between            contents of legal documents
Chad and Kirk remains unclear, the ″Farm             requiring the signature of the
Property,″ a 23-acre tract that Virginia             ABUSED for personal gain and to
inherited from Richard in 1991, aggravated           cover up land fraud and involving
any existing discord. The potential sale of          the ABUSED ELDER in Cemetery
the property ultimately aligned Virginia’s           Land Fraud implicating several
four children against [**3] each other:              families including [**4] Shirley and
                                  Jamie Graham Page 7 of 20
                                      447 S.W.3d 249, *253; 2014 Tex. LEXIS 753, **4



     Brice Phillips of the Phillips Crab                               • ″Kirk Burbage did commit fraud.″
     House.″                                                       Kirk and the Burbage Funeral Home sued
     • ″Kirk Burbage has also been known                           Chad for defamation [**5] in Bastrop
     to abuse the dead, specifically his                           County.1 Chad appeared pro se. The trial
     cousin, Anne Prettyman Jones.″                                court submitted ten questions—one for
                                                                   each of the statements reproduced
Chad also sent letters to Shirley and Brice                        above—asking the jury whether Chad had
Phillips, family friends of the Burbages                           proven that the statements were
who had earlier obtained permission to                             substantially true. The jury answered ″no″
place a mausoleum in the Burbage                                   to all questions. The court also asked
cemetery. The letters espoused a common                            questions on compensatory and exemplary
interest in settling property rights to the                        damages for Kirk and, separately, for the
cemetery but stated, ″You currently have                           Burbage Funeral Home. The court
no title or right to be in the Burbage                             instructed the jury that all statements were
Family Cemetery.″ Chad made the                                    defamatory per se because each statement
following statements in the letters:                               either leveled a criminal charge or tended
     • ″Kirk Burbage has committed                                 to cause injury to the funeral home’s
     numerous abuses to family                                     business or to Kirk’s profession. The jury
     members.″                                                     awarded Kirk $6,552,000: $250,000 for
                                                                   past injury to reputation; $2,500,000 for
     • ″We are the victims of the selfish,                         future injury to reputation; $1,000 for past
     greedy and unlawful actions of Kirk                           mental anguish; $1,000 for future mental
     Burbage.″                                                     anguish; and $3,800,000 in exemplary
     • ″Kirk Burbage of the Burbage                                damages. The jury awarded the Burbage
     Funeral Home with the assistance of                           Funeral Home $3,050,000: $50,000 for
     his attorney Robert McIntosh have                             past injury to reputation; $1,000,000 for
     fraudulently misrepresented rights                            future injury to reputation; and $2,000,000
     which Kirk Burbage does not have .                            in exemplary damages. The trial court also
     . . .″                                                        permanently enjoined Chad from future
     • ″Kirk Burbage fraudulently                                  defamatory speech in a four-page list of
     obtained a Quit Claim [deed] from                             prohibited topics (tied to the ten defamatory
     our mother by what is believed to be                          statements).
     elder abuse . . . .″                                            [*254]   Chad appealed. The court of
     • ″Kirk Burbage and the Burbage                               appeals reduced the exemplary damages to
     Funeral Home violated Maryland                                $750,000 under Texas Civil Practice and
     law by not having a license to                                Remedies Code section 41.008(b), upheld
     operate a cemetery . . . .″                                   the other damage awards, and vacated the
1
    Chad was a resident of Bastrop County, Texas at the time [**6] the lawsuit was filed. See TEX. CIV. PRAC. & REM. CODE § 15.017.

                                                Jamie Graham Page 8 of 20
                          447 S.W.3d 249, *254; 2014 Tex. LEXIS 753, **5



injunction. 447 S.W.3d 291, 303, 2011 Tex.       a defendant establishes the privilege, the
App. LEXIS 10034, *25 (Tex. App.—Austin          burden shifts to the plaintiff to prove that
2011, pet. granted) (mem. op.). Each party       the defendant made the statements with
petitioned for review; we granted both           actual malice. Dun & Bradstreet, Inc. v.
petitions. 57 Tex. Sup. Ct. J. 38 (Nov. 1,       O’Neil, 456 S.W.2d 896, 898 (Tex. 1970).
2013).                                           Actual malice, in the defamation context,
                                                 means ″the making of a statement with
II. Qualified Privilege and Charge Error         knowledge that it is false, or with reckless
We first address Chad’s contention that          disregard of whether it is true.″ Hagler v.
qualified privilege barred Kirk’s recovery       Proctor & Gamble Mfg. Co., 884 S.W.2d
based on Chad’s defamatory statements to         771, 772 (Tex. 1994) (per curiam). HN3
the Phillipses. If Chad’s statements were        Qualified privilege presents a question of
privileged, the jury’s answers on damages        law when the statements at issue employ
would rest upon invalidly submitted              unambiguous language and where the facts
theories of liability. We hold that, even if     and circumstances of publication are
the privilege applied, Chad failed to            undisputed. Fitzjarrald v. Panhandle Pub.
preserve jury charge error on this point.        Co., 149 Tex. 87, 228 S.W.2d 499, 505
                                                 (Tex. 1950).
A. Chad’s Qualified Privilege Claim
                                                 Of the ten statements that the trial court
HN1 The common law provides a qualified          found defamatory per se, Chad made six of
privilege against defamation liability when      those statements in letters to the Phillipses,
″communication is made in good faith and         while four appeared on the web site or
the author, the recipient or a third person,     posters. Chad argues that a qualified
or one of their family members, has an           privilege protects his communication with
interest that is sufficiently affected by the    the Phillipses because both he and they
communication.″ Cain v. Hearst Corp.,            had an interest ″sufficiently affected by the
878 S.W.2d 577, 582 (Tex. 1994). We have         communication.″ The Phillipses obviously
recognized that defamation actions               had an interest, Chad suggests, in whether
necessarily inhibit free speech and, thus,       Kirk had the right to sell them a mausoleum
the qualified privilege offers an additional     and whether any other Burbage family
safeguard, even in cases of private,             members objected to interring [**8] the
non-political speech. See id. HN2 The            Phillipses at the family cemetery. Chad
privilege operates as an affirmative defense     contends that the court of appeals erred
 [**7] in the nature of confession and           when it found the letter unprotected by the
avoidance; the defendant bears the burden        ″common-interest privilege″; specifically,
of proving privileged publication unless         Chad objects to the court of appeals’
the plaintiff’s petition affirmatively           suggestion that ″antithetical″ interests
demonstrates privilege. Denton Pub. Co. v.       cannot form the basis for a qualified
Boyd, 460 S.W.2d 881, 884 (Tex. 1970). If        privilege. 2011 Tex. App. LEXIS 10034,
                                  Jamie Graham Page 9 of 20
                                        447 S.W.3d 249, *254; 2014 Tex. LEXIS 753, **8



2011 WL 6756979, at *9. While the court                               potentially privileged statements because
of appeals seized on the ″common-interest″                            he ″did not object in the trial court to the
language, which Chad sometimes used in                                submission of broad-form damages
briefing, our case law identifies the                                 questions.″     S.W. 3d at        (citing In re
affirmative defense at issue here as                                  B.L.D., 113 S.W.3d at 349). In In re B.L.D.,
qualified privilege.2                                                 we held that the court of appeals erred by
                                                                      reviewing a jury charge complaint when
    [*255] The trial court submitted the ten                          the parties did not object at trial to the form
statements—four unprivileged and six                                  of submission. 113 S.W.3d at 349, 355.
potentially privileged—for the jury to                                Chad suggests that this case differs because
determine if each statement was                                       he raised an objection on qualified
substantially true at the time it was made.                           privilege, which preserved [**10] error in
On damages, [**9] the trial court submitted                           any derivative damages question. Kirk
broad-form questions that incorporated the                            responds that Chad must specifically object
jury’s answers for all ten statements. If the                         to the damages question’s form, not merely
qualified privilege applied to any
                                                                      to the underlying liability issue. Kirk
statements, then, the broad-form damages
                                                                      further argues that even Chad’s qualified
questions incorporated both valid and
                                                                      privilege objection failed to preserve error.
invalid bases for liability. Such
commingling may result in harmful error.                              1. Charge Error Based on Valid and
Cf. Crown Life Ins. Co. v. Casteel, 22                                Invalid Liability Theories
S.W.3d 378, 388 (Tex. 2000) (reversing for
new trial due to erroneous commingling of  HN5 ″It is fundamental to our system of
valid and invalid liability theories in a  justice that parties have the right to be
single broad-form liability question). To  judged by a jury properly instructed in the
obtain reversal due to such a charge error,law.″ Casteel, 22 S.W.3d at 388. Thus, in
Chad must have preserved the error at trial.
                                           Casteel, we required a new trial when a
In re B.L.D., 113 S.W.3d 340, 349 (Tex.    timely and specific objection preserved the
2003) (″HN4 [A]ny complaint to a jury      issue of erroneous commingling of valid
charge is waived unless specifically       and invalid theories of liability in a
included in an objection.″). We now turn tobroad-form liability question, such that the
this preservation question.                appellate court could not determine whether
                                           the jury based its verdict on an improperly
B. Preservation of Charge Error
                                           submitted theory. Id. (citing TEX. R. APP. P.
The court of appeals held that Chad waived 61.1). Extending this principle in Harris
any claim of error in the submission of County v. Smith, 96 S.W.3d 230, 234 (Tex.
2
    Compare Cain, 878 S.W.2d at 582 (privileging communication when made ″in good faith and the author, the recipient or a third
person, or one of their family members, has an interest that is sufficiently affected by the communication″), with RESTATEMENT (SECOND)
OF TORTS § 596 (1977) (describing the common-interest privilege, which arises when ″circumstances lead any one of several persons
having a common interest in a particular subject matter correctly or reasonably to believe that there is information that another sharing
the common interest is entitled to know″).

                                                 Jamie Graham Page 10 of 20
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2002), we determined that HN6 a                    bypassing the crucial step of allowing the
broad-form damages submission mixing               trial judge to correct any errors in the
valid and invalid elements of damages              charge.
created the same type of harmful error.
                                                   In Romero, we declined to address whether
And in Romero v. KPH Consolidation,
                                                   the appellant must object both to the lack
Inc., 166 S.W.3d 212, 225 (Tex. 2005),
                                                   of evidence to support submission [**12]
where evidence supported the jury’s
                                                   of a jury question and the form of the
negligence finding but not its malicious           submission, because in that case the
credentialing finding, we held that the trial      appellant did both. 166 S.W.3d at 229 &
court committed harmful error by                   n.55 (acknowledging the difficult question
submitting an apportionment question               of whether an additional broad-form
which allowed the jury to consider                 objection is required) (citing Pan E.
malicious [**11]        credentialing. We          Exploration Co. v. Hufo Oils, 855 F.2d
explained that ″[e]ven if the jury could still     1106, 1124 (5th Cir. 1988)). But whether or
have made the same apportionment of                not an objection to both is required, some
fault [without considering malicious               timely and specific objection must raise
credentialing], the error in the question is       the issue in the trial court. See Thota v.
nevertheless reversible because it                 Young, 366 S.W.3d 678, 691 (Tex. 2012)
effectively prevents [the appellant] from          (requiring ″some objection to the charge,″
complaining [*256] on appeal that they             whether to evidentiary support or to form,
would not have done so.″ Id. at 226.               to preserve error for appellate review).
We continue to adhere to these principles.         Here, Chad objected based on qualified
Yet in addition to the common animating            privilege, but he made no objection to the
principle of properly instructing the jury in      form of submission. If Chad’s initial
the law, these cases share another link:           objection on qualified privilege did not
some timely and specific objection.                preserve error, we need not address whether
Romero, 166 S.W.3d at 229; Harris Cnty.,           a further Casteel-type objection is required.
96 S.W.3d at 232; Casteel, 22 S.W.3d at
                                                   2. Specific Objections
387. In other words, in situations where a
party does not raise a Casteel-type                HN7 Our rules of procedure establish the
objection, that party surely cannot raise a        preservation requirements to raise a
Casteel issue when it failed to preserve a         jury-charge complaint on appeal. Id. at
claim of an invalid theory of liability that       689. The complaining party must object
forms the basis of a Casteel-type error. If        before the trial court and ″must point out
we allowed litigants to raise a Casteel            distinctly the objectionable matter and the
issue with no valid objection, either to           grounds of the objection.″ TEX. R. CIV. P.
liability or submission form, those litigants      274; see also TEX. R. APP. P. 33.1. Under
could use a post-trial motion to raise a lack      Rule of Civil Procedure 274, ″[a]ny
of evidence on the liability question, thus        complaint as to a question, definition, or
                                   Jamie Graham Page 11 of 20
                                       447 S.W.3d 249, *257; 2014 Tex. LEXIS 753, **12



instruction, on account of any defect,                                       [*257] Mr. Cagle:3 I’m not sure if
omission, or fault in pleading, is waived                                   this is an objection. I apologize,
unless specifically included in the                                         Your Honor. But the matter of in the
objections.″ TEX. R. CIV. P. 274. As [**13]                                 amended-- defendant’s amended--
a general rule, HN8 preservation requires                                   first amendment to the original
(1) a timely objection ″stating the grounds                                 response, defendant has requested
for the ruling that the complaining party                                   that there be a qualified privilege
sought from the trial court with sufficient                                 relative to the letter, and [**14] the
specificity to make the trial court aware of                                reason for the qualified privilege is
the complaint, unless the specific grounds                                  it represents common interests, a
were apparent from the context,″ and (2) a                                  continuation of a prior judicial
ruling. See TEX. R. APP. P. 33.1. Stated                                    proceeding in Maryland and a
differently, the test ultimately asks ″whether                              continuation of trying to resolve
the party made the trial court aware of the                                 matters of mutual concern between
complaint, timely and plainly, and obtained                                 the parties of the cemetery.
a ruling.″ State Dep’t of Highways & Pub.                                   The Court: All right. Do you have a
Transp. v. Payne, 838 S.W.2d 235, 241                                       requested instruction that you’re
(Tex. 1992).                                                                asking the Court to consider and to
                                                                            include in the charge?
Importantly, the ″purpose of Rule 274 is to
                                                                            Mr. A. Burbage: I have-- it seems as
afford trial courts an opportunity to correct
                                                                            though it would-- it would require
errors in the charge by requiring objections                                the-- a question in the line after--
both to clearly designate the error and to                                  after you find that the statement
explain the grounds for complaint.″ Wilgus                                  inflammatory, then there would be a
v. Bond, 730 S.W.2d 670, 672 (Tex. 1987);                                   question do you find the statement
see Payne, 838 S.W.2d at 243 (Mauzy, J.,                                    blah-blah-blah was false at the time
dissenting) (″HN9 Only by proper                                            it was made as it related to--
objection does a litigant afford the trial
                                                                            The Court: All right. Anything
court sufficient opportunity to correct
                                                                            further on that? On that particular
defects in the charge.″). We apply these                                    issue is there anything further?
rules to Chad’s objection.
                                                                            Mr. A. Burbage: No. It was-- it’s
3. Chad’s Objection                                                         been mentioned in the testimony.
                                                                            The Court: All right. The objection
The following dialogue occurred at the                                      is overruled. The requested
formal charge conference:                                                   instruction is denied.
3
    The record states that Mr. Cagle, Kirk’s attorney, initially made the objection. The reproduction in Kirk’s brief on the merits instead
attributes the objection to Chad. Indeed, it makes more sense in context that Chad made the initial objection. We decline to attach
importance to this potential record error [**15] because we find either objection insufficient to preserve error.

                                                  Jamie Graham Page 12 of 20
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Chad claims that the trial court erred in                             We note that when Chad wanted to object
submitting liability questions on the                                 to a specific question at the charge
potentially      privileged      statements.                          conference, he did so. Before the objection
Therefore, Chad’s objection needed to                                 on qualified privilege at issue here, Chad
communicate to the trial court that it was                            objected [**17] to Question 10 because it
improper to submit Questions 5 through 10                             duplicated elements of Questions 7 and 8.
(on statements in the Phillips letters) to the                        The trial court initially sustained this
jury. The objection does raise the subject                            objection (although it reversed that ruling
of the qualified privilege. But, crucially,                           at the end of the charge conference). Chad’s
the objection must apprise the trial court of                         objection to qualified privilege, in order to
the error alleged such that the court has the                         preserve error, needed to distinctly raise
opportunity to correct the problem. See                               the issue of withdrawing Questions 5
Wilgus, 730 S.W.2d at 672. When the trial                             through 10 from the jury. By its language,
court asked Chad whether he had a                                     it does not do this. And it would make little
requested instruction, Chad responded only                            sense for Chad to raise an objection to
with a request for a question that appears
                                                                      qualified privilege to eliminate Questions
to address the falsity of the statements
                                                                      5 through 10 when, only moments before,
themselves. As Chad has argued, a qualified
                                                                      he eliminated Question 10 only because it
privilege may still apply even when the
                                                                      was duplicative of Questions 7 and 8, not
statements are false. See O’Neil, 456 S.W.2d
                                                                      because the Questions 7 and 8 were
at 898. It is unclear what Chad hoped to
                                                                      improper to submit to the jury. With this in
accomplish by requesting an additional
                                                                      mind, we cannot conclude that Chad’s
question if he wanted the court to withhold
                                                                      intent to remove Questions 5 through 10
Question 5 through 10 from the jury.4 And
                                                                      was ″apparent from the context.″ TEX. R.
it is uncertain even to which questions
                                                                      APP. P. 31.4(a)(1). We hold that Chad’s
Chad referred (presumably Questions 5
                                                                      objection was insufficiently specific and
through 10, but the word ″inflammatory,″
                                                                      did not preserve his claim of error in the
which Chad uses to describe the placement
                                                                      submission of Questions 5 through 10.
of his proposed question, [**16] appears
nowhere in the charge). Quite simply, Chad                            Our procedural rules are technical, but not
has not provided a specific objection                                 trivial. HN10 We construe such rules
indicating the alleged error in the charge                            liberally so that the right to appeal is not
and allowing [*258] the trial court the                               lost unnecessarily. Arkoma Basin
opportunity to correct the error.                                     Exploration Co. v. FMF Assocs. 1990-A,
4
    We cannot safely engage in assumptions about what Chad might have meant. Whether the statements were false and Chad knew of
their falsity—compared with the jury’s actual finding that the statements were not substantially true—would have relevance to the
question of whether Chad acted with actual malice. But the trial court gave the incorrect common law definition of malice, Chad did
not object to the incorrect malice definition, and, as Chad argues, the burden on actual malice falls to Kirk, not Chad. Such a confusing
objection, raised during the crucial charge conference, could not have apprised the trial judge that Chad objected to the submission of
the offending questions. Chad explained his desire more coherently at a hearing on his request for findings of fact and conclusions of
law, but at that point it was too late.

                                                 Jamie Graham Page 13 of 20
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Ltd., 249 S.W.3d 380, 388 (Tex. 2008). But                        III. Damages
HN11 when an objection fails to explain
the nature of the [**18] error, we cannot                         We next consider the jury’s compensatory
make assumptions. Preservation of error                           and exemplary damage awards. The [**19]
reflects important prudential considerations                      jury awarded Kirk and the Burbage Funeral
recognizing that the judicial process                             Home $3,802,000 in compensatory
benefits greatly when trial courts have the                       damages and $5,800,000 in exemplary
opportunity to first consider and rule on                         damages, but the court of appeals reduced
error. In re B.L.D., 113 S.W.3d at 350                            exemplary damages to $750,000.5 After
(citing In re C.O.S., 988 S.W.2d 760, 765                         reviewing the record, we hold that no
(Tex. 1999)). Affording courts this                               evidence supports the amount of
opportunity conserves judicial resources                          compensatory [*259] damages and,
and promotes fairness by ensuring that a                          consequently, exemplary damages cannot
party does not neglect a complaint at trial                       stand.
and raise it for the first time on appeal. Id.
                                                                  A. Compensatory Damages
(citing Pirtle v. Gregory, 629 S.W.2d 919,
920 (Tex. 1982) (per curiam)). Nor may we                         Chad argues that the jury’s $3.8 million
stray from these rules because Chad                               award lacks evidentiary support and offends
represented himself at trial. See Mansfield                       the First Amendment. Specifically, Chad
State Bank v. Cohn, 573 S.W.2d 181, 184-85                        contends that the $3.5 million awarded for
(Tex. 1978).                                                      future damages punishes Chad for his
                                                                  speech, rather than fairly compensates Kirk
4. Application
                                                                  for his injury. Kirk responds that Texas law
Chad argues that the court impermissibly                          presumes damages for defamatory per se
combined valid and invalid theories of                            statements and ample evidence supports
liability when the broad-form damages                             the jury’s awards. Kirk suggests that
question      incorporated       privileged                       trust-based businesses like funeral homes
statements. Chad did not make a                                   suffer greatly from the mere insinuation of
Casteel-type objection to form; thus, to                          unseemly acts. Further, Kirk argues that
preserve error, Chad must have raised                             non-media defendants like Chad fail to
some specific objection to the submission                         present the same First Amendment concerns
of Questions 5 through 10. See In re
                                                                  as media defendants.
B.L.D., 113 S.W.3d at 349-50 (holding that
a complaint to a jury charge was waived                           HN12 Our legal-sufficiency review
because it was not specifically included in                       standards are well established. On an issue
an objection). He did not. Thus, we hold                          where the opposing party bears the burden
that Chad’s failure to object waives his                             [**20]     of proof, we sustain a
right to complain of the charge on appeal.                        legal-sufficiency challenge to an adverse
5
    Chad does not specifically challenge the $2,000 awarded as mental anguish damages. Therefore, we do not address those damages.

                                               Jamie Graham Page 14 of 20
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finding if our review of the evidence            defamation after a call-in talk show host
demonstrates a complete absence of a vital       repeatedly made on-air imputations of
fact, or if the evidence offered is no more      corruption. Id. at 566-67. The jury assessed
than a scintilla. See Waste Mgmt. of Tex.,       $7 million in damages for mental anguish
Inc. v. Tex. Disposal Sys. Landfill, Ltd.,       and $150,000 in reputation and character
434 S.W.3d 142, 156 (Tex. 2014). More            damages. Id. at 605. We recognized that
than a scintilla exists when the evidence        the inherent difficulty in quantifying such
would enable reasonable and fair-minded          noneconomic damages necessarily allows
people to reach different conclusions. Ford      the jury latitude. Id. Yet this latitude has
Motor Co. v. Ridgway, 135 S.W.3d 598,            limits; latitude does not ″give [the jury]
601 (Tex. 2004). We regard evidence that         carte blanche to do whatever it will, and
creates a mere surmise or suspicion of a         this is especially true in defamation actions
vital fact as, in legal effect, no evidence.     brought by public officials.″ Id. Even in a
Id. We consider the evidence in the light        case outside the realm of media defendants
most favorable to the judgment, ″crediting       and public officials, judicial review of jury
favorable evidence if reasonable jurors          discretion remains important to protect
could, and disregarding contrary evidence        free speech. See id. We must ensure that
unless reasonable jurors could not.″ City of     noneconomic damages compensate for
Keller v. Wilson, 168 S.W.3d 802, 807 (Tex.      actual injuries and are not simply ″a
2005).                                           disguised disapproval of the defendant.″
HN13 Texas law presumes that defamatory          Id.; see also Gertz v. Robert Welch, Inc.,
per se statements cause reputational harm        418 U.S. 323, 350, 94 S. Ct. 2997, 41 L.
and entitle a plaintiff to general damages       Ed. 2d 789 (1974) (″HN15 [T]he private
such as loss of reputation and mental            defamation plaintiff who establishes
anguish. Bentley v. Bunton, 94 S.W.3d 561,       liability under a less demanding standard
604 (Tex. 2002) (plurality opinion). But         than [knowledge of falsity or reckless
this presumption yields only nominal             disregard for the truth] may recover only
damages. See Salinas v. Salinas, 365 S.W.3d      such damages as are sufficient to
318, 320 (Tex. 2012) (per curiam). Beyond        compensate him for actual injury.″).
nominal damages, we review presumed
                                             [*260] Before turning to the evidence, we
damages for evidentiary support. See
                                            must delimit our review. HN16 The jury
Hancock v. Variyam, 400 S.W.3d 59, 66
                                            charge sets the standard. See Osterberg v.
(Tex. 2013).
                                            Peca, 12 S.W.3d 31, 55 (Tex. 2000) (″[I]t is
HN14 In addition to the legal sufficiency the court’s charge, not [**22] some other
of evidence, we have recognized an unidentified law, that measures the
imperative that appellate courts determine sufficiency of the evidence when the
whether any evidence supports the amount opposing party fails to object to the
of jury damages. See Bentley, 94 S.W.3d at charge.″). Questions 11 and 12 asked what
606. In Bentley, a judge sued [**21] for sum of money ″would fairly and reasonably
                                 Jamie Graham Page 15 of 20
                          447 S.W.3d 249, *260; 2014 Tex. LEXIS 753, **22



compensate″ for injuries sustained. The               Q. If you sold the funeral home
trial court instructed the jury that ″[y]ou           today, what would the value of that
must make a finding of at least nominal               funeral home be-- of the business, as
damages for injury to reputation in the               an ongoing business?
past.″ In response, the jury awarded
                                                      A. I never had any intention nor do
$300,000 to Kirk and the Burbage Funeral
                                                      I have any interest in selling the
Home. But on future reputation damages,
                                                      funeral home, so I never really-- if I
the court instructed the jury to determine
                                                      had to throw something out there
the appropriate compensation for injury
                                                      and just-- this is just from experience
″that, in reasonable probability, [Kirk] will
                                                      with hearing about other firms, but I
sustain in the future″ (and did not require
                                                      don’t-- I don’t really know. I’d say a
the jury to find at least nominal damages).
                                                      few million dollars.
The jury awarded a combined $3.5 million
in response. We must conduct a meaningful         This estimate is practically and
appellate review of the jury’s determination      linguistically     troubling.      Practically
of an amount that ″would fairly and               speaking, Kirk admits in the previous
reasonably compensate″ for the loss.              sentence that he does not know the value,
With these principles in mind, we turn to         and the phrase ″if I had to throw something
the evidence. Chad and Kirk vigorously            out there″ qualifies his response. We require
disagree about the defamation’s effect on         some concrete basis [**24] for an estimate.
the Burbage Funeral Home’s business. The          Cf. Nat. Gas Pipeline Co. of Am. v. Justiss,
court of appeals upheld the large                 397 S.W.3d 150, 159-61 (Tex. 2012)
compensatory damage award in part                 (concluding that speculative and conclusory
because the funeral home ″had a market            testimony, lacking in demonstrable factual
value of at least $3 million [**23] and . .       explanation, could not support an award of
. this value would likely be lost because of      damages based on diminished market value
Chad’s statements.″ S.W.3d at . The               of a home in a permanent nuisance claim).
court stated that Kirk was not required to        And Kirk’s language adds ambiguity. How
substantiate the value with documentary           many is a few? The court of appeals
evidence. Id.                                     interprets this as at least $3 million, but
Although we agree that the jury generally         this is not clear: definitions of ″few″ vary.
has broad latitude in determining damages,        See, e.g., AMERICAN HERITAGE COLLEGE
we find no evidence of actual injury in the       DICTIONARY 505 (3d. ed. 2000) (″[b]eing
record. To begin, we cannot credit the            more than one but indefinitely small in
purported value of the funeral home               number″); RANDOM HOUSE DICTIONARY OF
business (leaving aside that this does not        THE ENGLISH LANGUAGE 712 (2d. ed. 1987)
reflect actual damage to reputation). Kirk        (″not many but more than one″); WEBSTER’S
reluctantly offered a questionable estimate       THIRD NEW INTERNATIONAL DICTIONARY 843
of the funeral home’s value:                      (1961) (″not many persons or things″).
                                  Jamie Graham Page 16 of 20
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We recently addressed an analogous                                    evidence of actual damages for injury to
situation in Waste Management of Texas,                               the business’s reputation.6
Inc. v. Texas Disposal Systems Landfill,                              The record contains only speculative
Ltd., 434 S.W.3d 142 (Tex. 2014). In that                             evidence that the value, if established,
case, the key evidence of injury to Texas                             ″would likely be lost,″ as the court of
 [*261] Disposal Systems’ reputation was                              appeals found. [**27] See S.W.3d at .
its CEO’s testimony estimating the value                              Questioned whether the defamation could
of its reputation at $10 million, and three                           destroy the funeral home’s reputation, Kirk
exhibits purportedly supported that                                   said: ″[P]otentially. In my opinion.″ Kirk
testimony. Id. at 160. The exhibits                                   said the value would be ″zero″ only when
estimated lost profits and evidenced a                                questioned on what would happen if the
decrease in ″base business.″ Id. First, we                            funeral home was ″run out of business.″
held that damages such as lost profits ″are                           Keith, Kirk’s brother, testified that, in a
not the sort of general damages that                                  small community, such allegations ″can
necessarily flow from such a defamatory                               ruin that entire business.″ A theoretical
publication.″ [**25] Id. Then, we stated                              possibility, however, is a far cry from a
that the ″evidence must support the amount                            likely event.
awarded by the jury; it must not be an                                Similarly speculative evidence supports
’indicator’ that supports the estimates                               the actual impact on the funeral home.
offered by the corporate executive.″ Id.                              Kirk testified that some customers,
Turning to this case, Kirk provided even                              including customers with previous business
less evidence than the ″indicators″ we                                at the funeral home, cancelled pre-paid
found insufficient in Waste Management.                               contracts:
Kirk’s ballpark estimate of the Burbage                                    Q. Since these allegations have been
Funeral Home’s value does not equate to                                    made, have you had people who
                                                                           have cancelled those?
6
    Furthermore, the purported evidence on the value of the business blurs the lines between the torts of business disparagement and
business defamation. In Waste Management, we noted ″the similarity between the two claims, but that one difference is that one claim
seeks to protect reputation interests and the other seeks to protect economic interests against pecuniary loss.″ 434 S.W.3d at 155 (citing
Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003)). The publication at issue in that case was defamatory of
the owner of the business, and not the landfill-services business itself. Id. at 150-51 n.35. In other words, defamation injures the
reputation of the owner, not the owner’s business. Id. In a defamation per se claim, general damages are presumed, while special damages
are not; special damages, on the other hand, are an essential [**26] element of a business disparagement claim. Id. at 155. We distinguish
between ″general damages (which are non-economic damages such as for loss of reputation or mental anguish) and special damages
(which are economic damages such as for lost income).″ Hancock v. Variyam, 400 S.W.3d 59, 65 (Tex. 2013).
Turning back to this case, Kirk seems to seek damages to the business, rather than damages for loss of the business’s reputation. This
fine distinction matters. If Kirk desired damages to protect the economic interests of the Burbage Funeral Home, a business
disparagement claim provides the correct vehicle. See Forbes, 124 S.W.3d at 170. And, whether under defamation or business
disparagement, we require a plaintiff requesting special damages to prove those damages. See Hancock, 400 S.W.3d at 66. Here, the type
of damages Kirk seeks, economic damages, are distinct from the noneconomic damages that are presumed in a defamation per se case.
Kirk did not plead these special damages and certainly has not proven them. Kirk could have brought business disparagement or
defamation claims (or both), but in any case his proof will not suffice for recovery of special damages.

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   A. Yes, I have.                               damage award compensates—Kirk offered
   Q. Even as recently as last week?             only vague testimony:

   A. Yes, sir.                                      Q. How would you say that these
   Q. Have you ever asked them why                   accusations have affected your
   they’re cancelling it?                            reputation in the community? Do
                                                     you still have one?
   [*262] A. Couldn’t bring myself to.
                                                     A. I’d like to think that I do. I’d like
   Q. Are you afraid its because of                  to think that there’s those people
   these accusations?                                that know me and-- that truly know
   A. Yes.                                           me and that they’re going to give it
                                                     credence. Sure, they’re going to
In Hancock v. Variyam, a doctor claimed              listen up, because they’d be stupid
that the submission of a defamatory letter           not to, but I’d like to believe that--
to an accrediting body, which later denied           you know, that it-- that it doesn’t
the doctor accreditation, provided evidence          affect everybody. I’d like to believe
of reputation damages. 400 S.W.3d at 70.             that.
This Court held that HN17 ″a jury may not
                                                     Q. But you don’t know.
reasonably infer an ultimate fact from
’meager circumstantial [**28] evidence               A. No, I don’t [**29] know.
which could give rise to any number of
inferences, none more probable than              Kirk’s mother, Virginia, when asked about
another.’″ Id. at 70-71 (quoting Hammerly        the impact on the Burbage family name,
Oaks, Inc. v. Edwards, 958 S.W.2d 387,           said ″I’m sure it could hurt some, but I
392 (Tex. 1997)). Similarly, the jury cannot     think most people would not believe it.″
reasonably infer that defamation caused          Further, Kirk’s testimony undermines the
the cancellations when the cancellations         scope of the impact on him, personally:
could have occurred for any number of                Q. You don’t advertise with your
reasons. Indeed, Kirk admitted that he did           photo anywhere or your name
not ask why the customers cancelled, only            anywhere?
that he was ″afraid″ it was because of
accusations.                                         A. No, sir.
                                                     Q. Have there been any newspaper
Some evidence does suggest community                 articles about you in conjunction
awareness of and discussion of Chad’s                with the funeral home or community
statements. And Chad, in earlier menacing            service?
letters, suggested that the statements would
have ″significant repercussions.″ But in             A. Not that I can recall anyway.
terms of actual impact of the                        Q. Are you the only funeral director
defamation—the basis for which the                   there at the Burbage Funeral Home?
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                                       447 S.W.3d 249, *262; 2014 Tex. LEXIS 753, **29



     A. No. There are three others.                                    71. Because we hold that no evidence
     Q. Are you-- are you-- Anna Burbage                               supports the jury’s award of actual
     was the face of the Burbage Funeral                               damages, exemplary damages are not
     Home; is that right?                                              available. See id.

     A. In her lifetime.                                               IV. Prohibitive Injunction
     Q. Are you considered the face of
                                                                       As part of its final judgment, the trial court
     the Burbage Funeral Home?
                                                                       permanently enjoined Chad from
     A. I don’t know if I would be                                     ″publishing, disseminating or causing to
     considered the face because I don’t                               be published or disseminated, . . . to
     meet with a lot of the families any                               third-parties by any means, . . . any
     more unless it’s a family that I                                  statement or representation that states,
     know. That’s what I have the other                                implies or suggests in whole or part″ any
     directors to do. I’m a lot more behind                            of four pages of forbidden topics. The
     the scenes.                                                       injunction tracks the language of the ten
The court of appeals distinguished Bentley                             defamatory statements, and for many
as a public-official case. S.W.3d at .                                 statements the injunction lists numerous
                                                                       ways Chad may run afoul of the court’s
While the concern for baseless jury awards
                                                                       order. For instance, Chad may not assert
has stronger resonance in public-official
                                                                       that he or any third party suffered from any
cases, such concerns are not absent here.
                                                                       of Kirk’s selfish, greedy, or unlawful
The evidence does not show actual loss of
                                                                       actions. This extraordinarily broad [**31]
 [**30] reputation, that anyone believed
the defamation, that the Burbage Funeral                               prohibition on future speech need not detain
Home suffered an actual loss, or even the                              us long. HN19 Prohibitive injunctions of
funeral home’s actual value. On the record                             future speech that is the same or similar to
here, we hold [*263] that no evidence                                  speech that has been adjudicated to be
supports the jury’s award of $3.8 million                              defamatory operate as impermissible prior
in actual damages. We reverse the judgment                             restraints on free speech.7 Kinney v. Barnes,
of the court of appeals in part.                                       443 S.W.3d 87, 92-93, 2014 Tex. LEXIS
                                                                       764, *4 (Tex. 2014). Under Kinney, the
B. Exemplary Damages                                                   trial court’s prohibitive injunction cannot
                                                                       stand. Therefore, we affirm that part of the
HN18 A party may not recover exemplary                                 court of appeals’ judgment.
damages unless the plaintiff establishes
actual damages. Hancock, 400 S.W.3d at V. Conclusion
7
    A mandatory injunction requiring the removal or deletion of posted speech that has been adjudicated defamatory is not a prior restraint
on speech. Kinney v. Barnes, 443 S.W.3d 87, 89, 2014 Tex. LEXIS 764 , *4 (Tex. 2014). But here the injunction did not require Chad
to remove or delete any previously-made defamatory statements. Although Chad published several defamatory statements to his website
and on posters, the website was only operative for approximately four months and the posters had been removed by trial.

                                                  Jamie Graham Page 19 of 20
                           447 S.W.3d 249, *263; 2014 Tex. LEXIS 753, **31



Chad failed to preserve for appeal his             as a matter of law that the plaintiff is
complaint of the jury charge; thus, we do          entitled only to nominal damages, the
not reach whether a qualified privilege            appellate court will not reverse merely to
protected any of Chad’s statements. We             enable him to recover such damages″ and
therefore affirm in part the court of appeals’     instead rendering a take-nothing judgment).
judgment. We do, however, hold that no             However, we do not reach mental anguish
evidence supports the jury’s award of              damages because Chad made no challenge
compensatory damages, and that exemplary           in this Court. Finally, we hold that the
damages cannot stand. We reverse that part         prohibitive injunction impermissibly
of the [**32] court of appeals’ judgment           restrains speech; therefore, we affirm that
and render judgment that Kirk and the              part of the court of appeals’ judgment.
Burbage Funeral Home take nothing as
compensatory and exemplary damages on              Paul W. Green
their defamation claims. See MBM Fin.              Justice
Corp. v. Woodlands Operating Co., L.P.,
292 S.W.3d 660, 666 (Tex. 2009)                    OPINION DELIVERED: August 29, 2014
(recognizing that ″where the record shows




                                   Jamie Graham Page 20 of 20
|   | Neutral
As of: December 3, 2014 5:24 PM EST

                                 Dynegy, Inc. v. Yates
                               Supreme Court of Texas
                         August 30, 2013, Opinion Delivered
                                     NO. 11-0541

Reporter
422 S.W.3d 638; 2013 Tex. LEXIS 679; 56 Tex. Sup. J. 1092; 2013 WL 4608711

DYNEGY, INC., PETITIONER, v. TERRY W. YATES, INDIVIDUALLY, AND
TERRY W. YATES, P.C., RESPONDENTS

Subsequent History: Released for Publication March 21, 2014.
Rehearing denied by Dynegy Inc. v. Yates, 2014 Tex. LEXIS 224 (Tex., Mar. 21, 2014)

Prior History: [**1] ON PETITION FOR REVIEW FROM THE COURT OF
APPEALS FOR THE FOURTH DISTRICT OF TEXAS.
Dynegy, Inc. v. Yates, 345 S.W.3d 516, 2011 Tex. App. LEXIS 1272 (Tex. App. San
Antonio, 2011)

Core Terms

statute of frauds, suretyship, main purpose doctrine, promise to pay, court of appeals,
guarantor, surety, initial burden, fee agreement, third person, legal fees, applies,
attorney’s fees, oral promise, inducement, another’s, billed

Case Summary

Overview
HOLDINGS: [1]-The company pleaded the statute of frauds under Tex. Bus. & Com.
Code Ann. § 26.01(a), (b)(2) as an affirmative defense and had the burden to establish
that the alleged promise fell within the statute of frauds; [2]-The company’s former
officer hired the attorney to represent him in criminal proceedings, and the company
orally promised to pay the fees associated with the defense that under the fee agreement
were the officer’s obligation, and thus the company established the statute of frauds’
suretyship provision initially applied to bar the claims against the company; [3]-The
burden was on the attorney to secure favorable findings on the main purpose doctrine,
and his failure to do so constituted a waiver of the issue under Tex. R. Civ. P. 279;
                                      Jamie Graham
                           422 S.W.3d 638, *638; 2013 Tex. LEXIS 679, **1



[4]-Because the statute of frauds rendered the oral agreement unenforceable, the
attorney could not recover on his claims.

Outcome
Appellate court’s judgment reversed and a take-nothing judgment rendered in favor of
the company.

LexisNexis® Headnotes

  Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN1 The statute of frauds’ suretyship provision provides that an oral promise by one
person to answer for the debt, default, or miscarriage of another person is generally
unenforceable. Tex. Bus. & Com. Code Ann. § 26.01(a), (b)(2).

  Civil Procedure > ... > Defenses, Demurrers & Objections > Affirmative Defenses > Burdens
  of Proof
  Civil Procedure > ... > Defenses, Demurrers & Objections > Affirmative Defenses > Statute
  of Frauds
  Contracts Law > ... > Statute of Frauds > Exceptions > General Overview

HN2 The statute of frauds generally renders a contract that falls within its purview
unenforceable. Tex. Bus. & Com. Code Ann. § 26.01(a). The party pleading the statute
of frauds bears the initial burden of establishing its applicability. Tex. R. Civ. P. 94. Once
that party meets its initial burden, the burden shifts to the opposing party to establish an
exception that would take the verbal contract out of the statute of frauds. One
recognized exception to the statute of frauds’ suretyship provision is the main purpose
doctrine. The party seeking to avoid the statute of frauds must plead, prove, and secure
findings as to an exception or risk waiver under Tex. R. Civ. P. 279. A party who
contends that an agreement falls within an exception to the statute of frauds must request
and obtain a jury finding on the exception. Case law places the burden on the plaintiff
to plead and prove an exception to the statute of frauds.

  Civil Procedure > Appeals > Standards of Review > Abuse of Discretion
  Civil Procedure > Appeals > Standards of Review > Questions of Fact & Law
  Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN3 Whether a contract comes within the statute of frauds is a question of law, which
the appellate court reviews de novo. The statute of frauds’ suretyship provision applies
to a promise by one person to answer for the debt, default, or miscarriage of another
                                   Jamie Graham Page 2 of 11
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person. Tex. Bus. & Com. Code Ann. § 26.01(b)(2). The suretyship provision applies
regardless of whether the debt was already incurred or to be incurred in the future.

  Civil Procedure > ... > Pleadings > Complaints > Requirements for Complaint
  Contracts Law > ... > Statute of Frauds > Exceptions > General Overview

HN4 A plaintiff relying on a primary obligor theory under the main purpose doctrine
must plead and establish facts to take a verbal contract out of the statute of frauds. Tex.
Bus. & Com. Code Ann. § 26.01(b)(2) provides that a promise by one person to answer
for the debt of another person falls within the statute of frauds.

  Contracts Law > ... > Measurement of Damages > Foreseeable Damages > Benefit of the
  Bargain
  Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN5 The statute of frauds bars a fraud claim to the extent the plaintiff seeks to recover
as damages the benefit of a bargain that cannot otherwise be enforced because it fails
to comply with the statute of frauds.

Counsel: For Dynegy, Inc., Petitioner: Bruce D. Oakley, Christopher Mohr Odell,
Hogan Lovells L.L.P., Houston, TX; David J. Beck, David M. Gunn, Russell S. Post,
Beck Redden LLP, Houston, TX.

For Terry W. Yates, Respondent: Elizabeth Holman Rivers, Kathleen S. Rose, Thomas
C. Wright, Wanda McKee Fowler, Wright & Close LLP, Houston, TX; Lloyd E. Kelley,
The Kelley Law Firm, Houston, TX.

Judges: JUSTICE GREEN delivered the opinion of the Court, in which CHIEF
JUSTICE JEFFERSON, JUSTICE HECHT, JUSTICE JOHNSON, JUSTICE WILLETT,
JUSTICE LEHRMANN, and JUSTICE BOYD joined. JUSTICE DEVINE filed a
dissenting opinion. JUSTICE GUZMAN did not participate in the decision. JUSTICE
DEVINE, dissenting.

Opinion by: Paul W. Green

Opinion

 [*639] HN1 The statute of frauds’ suretyship provision provides that an oral promise
″by one [*640] person to answer for the debt, default, or miscarriage of another person″
is generally unenforceable. See TEX. BUS. & COM. CODE § 26.01(a), (b)(2). Dynegy, Inc.
contends that this provision bars the current suit because both the fraudulent inducement
and breach of contract claims against it are based on an oral promise to an attorney to
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                          422 S.W.3d 638, *640; 2013 Tex. LEXIS 679, **1



pay the attorney’s fees incurred by one of Dynegy’s former officers. We agree.
Accordingly, we reverse the court of appeals’ judgment and render a take-nothing
judgment in favor of Dynegy.

I. Background
A grand jury indicted James Olis, a former officer of Dynegy, on multiple counts of
securities fraud, mail and wire fraud, and conspiracy arising out of work he performed
while at Dynegy. [**2] Dynegy’s board of directors passed a resolution authorizing the
advancement of attorney’s fees for Olis’s defense provided that Olis acted in good faith,
in Dynegy’s best interests, and in compliance with applicable law. The resolution
provided that it ″may be modified or revoked by this Board at any time as a result of
changes in circumstances or further analysis.″
Olis hired Terry Yates, a criminal defense attorney, to defend him in the federal criminal
investigation and an ongoing civil investigation conducted by the Securities and
Exchange Commission. Olis told Yates and Mark Clark, Yates’s associate, that Dynegy
would be paying his legal fees. Clark called Cristin Cracraft, an attorney in Dynegy’s
legal department, who orally confirmed that Dynegy would pay Olis’s legal fees. Clark
testified that Cracraft stated, ″The Board has passed a resolution, so, yes, we are paying
Jamie Olis’s fees,″ and instructed Clark that the bills should be submitted to her.
Cracraft’s trial testimony was similar to Clark’s version of the conversation. Olis signed
a written fee agreement with Yates under which Olis agreed that he was responsible for
payment of his legal fees. The contract stated that [**3] ″all fees are due when billed
unless other specific arrangements have been made.″ Yates testified that, despite the
written fee agreement, he had an oral agreement with Olis under which Yates would
never look to Olis for payment of fees, but instead would look to Dynegy for payment.
Yates testified that he spoke to Cracraft after faxing his fee agreement and hourly rate
to Dynegy and that Cracraft told him Dynegy would pay Olis’s legal fees through trial.
Cracraft contradicted Yates’s testimony about the phone call, however, stating that she
had spoken only to Clark and never to Yates as of the date of the trial.
Dynegy then hand-delivered a letter notifying Yates that it would pay him directly for
Olis’s legal fees through August 17, 2003, but the remaining fees incurred were to be
paid into escrow pursuant to a board resolution. Dynegy paid Yates’s initial invoice for
$15,000. Yates submitted his $105,176 July bill in August, but Dynegy did not pay it
until after trial in November. Olis was ultimately convicted of securities fraud, mail and
wire fraud, and conspiracy. United States v. Olis, 429 F.3d 540, 549 (5th Cir. 2005)
(affirming the conviction but remanding to the trial court [**4] to reconsider the proper
sentencing guidelines). Yates submitted a third and final invoice for $448,556,
representing all work performed from August 2003 through April 2004, including the
                                  Jamie Graham Page 4 of 11
                          422 S.W.3d 638, *640; 2013 Tex. LEXIS 679, **4



November 2003 trial. Dynegy initially escrowed that amount pursuant to the board
resolution, but later refused to release the escrowed funds after concluding that Olis did
not meet the ″good faith″ standard for indemnification as required by the board’s
resolution.
Yates filed suit against Dynegy to recover the unpaid attorney’s fees, alleging that
Dynegy orally promised that it would pay Yates’s fees through Olis’s trial. Yates
asserted claims for breach of contract and [*641] fraudulent inducement and sought
benefit-of-the-bargain damages for both claims. After a three-week trial, the jury found
for Yates on both claims. Yates ultimately elected to recover under his fraudulent
inducement claim, and the trial court rendered judgment on that claim in favor of Yates.
Dynegy filed a motion for judgment notwithstanding the verdict on its affirmative
defense of statute of frauds, which the trial court denied. Dynegy appealed.
The court of appeals initially reversed and rendered judgment for Dynegy based on its
 [**5] affirmative defense of statute of frauds. No. 04-10-00041-CV, 2010 Tex. App.
LEXIS 3556, at *1 (Tex. App.—San Antonio May 12, 2010). Thereafter, the court of
appeals denied Yates’s motion for rehearing while also issuing a revised opinion. No.
04-10-00041-CV, 2010 Tex. App. LEXIS 6915, at *1 (Tex. App.—San Antonio Aug. 25,
2010). Then the same panel, on its own motion, reconsidered and granted Yates’s
motion for rehearing. 345 S.W.3d 516, 519 (Tex. App.—San Antonio 2011). In its third
opinion, the court of appeals reversed itself based on the main purpose doctrine, holding
that Dynegy intended to bind itself to a primary obligation rather than a promise to pay
the debt of another, and the statute of frauds was therefore inapplicable. Id. at 520,
523-25. The court of appeals also reversed the trial court’s judgment based on the jury’s
fraud finding, holding that the evidence was legally insufficient. Id. at 534. The court
of appeals then rendered judgment for Yates on his breach of contract claim. Id. at 536.
Dynegy petitions this Court for review, arguing that the court of appeals erred by
considering an element of the main purpose doctrine, which is an exception to the
statute of [**6] frauds, as a part of Dynegy’s initial burden on its statute of frauds
affirmative defense. We agree.

II. Analysis
HN2 The statute of frauds generally renders a contract that falls within its purview
unenforceable. TEX. BUS. & COM. CODE § 26.01(a). The party pleading the statute of
frauds bears the initial burden of establishing its applicability. TEX. R. CIV. P. 94; cf.
Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988) (holding that the
party pleading statute of limitations has the initial burden of proof). Once that party
meets its initial burden, the burden shifts to the opposing party to establish an exception
that would take the verbal contract out of the statute of frauds. See Cobb v. Johnson, 101
                                  Jamie Graham Page 5 of 11
                          422 S.W.3d 638, *641; 2013 Tex. LEXIS 679, **6



Tex. 440, 108 S.W. 811, 812 (Tex. 1908). One recognized exception to the statute of
frauds’ suretyship provision is the main purpose doctrine. See Cruz v. Andrews
Restoration, Inc., 364 S.W.3d 817, 827-28 (Tex. 2012). The party seeking to avoid the
statute of frauds must plead, prove, and secure findings as to an exception or risk waiver
under Rule 279 of the Texas Rules of Civil Procedure. See, e.g., Crown Ranch Dev., Ltd.
v. Cromwell, No. 09-10-00458-CV, 2012 Tex. App. LEXIS 1345, at *14-15 (Tex.
App.—Beaumont Feb. 23, 2012, pet. denied) [**7] (mem. op.) (″A party who contends
that an agreement falls within an exception to the statute of frauds must request and
obtain a jury finding on the exception.″); W.H. McCrory & Co. v. Contractors Equip. &
Supply Co., 691 S.W.2d 717, 720-21 (Tex. App.—Austin 1985, writ ref’d n.r.e.) (placing
the burden on the plaintiff to plead and prove an exception to the statute of frauds); cf.
Woods, 769 S.W.2d at 517-18 (holding that the discovery rule, as a defense to the statute
of limitations, is a plea in confession and avoidance that is waived if not pled).

A. Dynegy Met its Initial Burden to Establish Applicability of the Statute of Frauds
[*642] Here, Dynegy pled the statute of frauds as an affirmative defense and thus had
the initial burden to establish that the alleged promise fell within the statute of frauds.
See TEX. BUS. & COM. CODE § 26.01(a), (b)(2); TEX. R. CIV. P. 94. HN3 Whether a contract
comes within the statute of frauds is a question of law, which we review de novo. See
Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796 (Tex. 1961). The statute of frauds’
suretyship provision applies to ″a promise by one person to answer for the debt, default,
or miscarriage [**8] of another person.″ TEX. BUS. & COM. CODE § 26.01(b)(2). Yates
argues that the suretyship provision does not apply to the oral agreement in this case
because there is not a preexisting debt. On the contrary, the suretyship provision applies
regardless of ″whether [the debt was] already incurred or to be incurred in the future.″
See RESTATEMENT (SECOND) OF CONTRACTS § 112 cmt. b (1981).
The record indicates that Olis hired Yates to represent him in the criminal proceedings.
Olis signed a fee agreement with Yates, in which Dynegy was not mentioned. Yates
agreed to defend Olis, and Olis agreed in exchange that fees were due when billed
unless other arrangements were made. Both Clark and Yates testified that Cracraft orally
promised that Dynegy would be paying Olis’s fees through trial, and it is undisputed
that this agreement was never reduced to writing. These facts establish one conclusion:
Dynegy orally promised to pay attorney’s fees associated with Olis’s defense that, under
the fee agreement, were Olis’s obligation (i.e., Olis’s debt). The dissent, like the court
of appeals, believes that Dynegy’s promise to pay Olis’s legal fees was a primary
obligation and not a promise to pay [**9] another’s debts, and therefore the statute of
frauds does not bar Yates’s recovery on his breach of contract claim. But, as we have
explained, HN4 a plaintiff relying on a primary obligor theory under the main purpose
doctrine must plead and establish facts to take a verbal contract out of the statute of
                                  Jamie Graham Page 6 of 11
                                        422 S.W.3d 638, *642; 2013 Tex. LEXIS 679, **9



frauds. See Cruz, 364 S.W.3d at 828; Gulf Liquid Fertilizer Co. v. Titus, 163 Tex. 260,
354 S.W.2d 378, 382-83 (Tex. 1962); Cobb, 108 S.W. at 812. We hold that Dynegy
established as a matter of law that the statute of frauds’ suretyship provision initially
applied to bar the claims against it. See TEX. BUS. & COM. CODE § 26.01(b)(2) (providing
that ″a promise by one person to answer for the debt . . . of another person″ falls within
the statute of frauds). The court of appeals erred when it held otherwise.

B. The Burden Shifted to Yates
At this point, the burden shifted to Yates to establish an exception that would take the
verbal contract out of the statute of frauds—namely, the main purpose doctrine. See
Cobb, 108 S.W. at 812. The main purpose doctrine required Yates to prove: (1) Dynegy
intended to create primary responsibility in itself to pay the debt; (2) there was
consideration for the promise; [**10] and (3) the consideration given for the promise
was primarily for Dynegy’s own use and benefit—that is, the benefit it received was
Dynegy’s main purpose for making the promise. See Cruz, 364 S.W.3d at 828. We have
noted that the question of intent to be primarily responsible for the debt is a question for
the finder of fact, taking into account all the facts and circumstances of the case. See
Haas Drilling Co. v. First Nat’l Bank, 456 S.W.2d 886, 889 (Tex. 1970) (citing Gulf
Liquid Fertilizer Co., 354 S.W.2d at 384). Thus, the burden was on Yates to secure
favorable findings on the main purpose doctrine.1 Yates’s failure to do so constituted a
waiver of the issue under Rule 279 of the Texas Rules of Civil Procedure. [*643] See
TEX. R. CIV. P. 279; W.H. McCrory & Co., 691 S.W.2d at 720-21; cf. Woods, 769 S.W.2d
at 518 (holding the discovery rule waived when a party neither pled nor obtained
findings on the issue in response to the opposing party’s limitations defense). Therefore,
the court of appeals erred by considering the intent element of the main purpose doctrine
in conjunction with determining whether Dynegy met its initial burden to show
applicability of the statute of frauds.2

III. Conclusion
Based on the preceding analysis, we hold that the statute of frauds renders the oral
agreement between Dynegy and Yates unenforceable. Consequently, Yates cannot
recover under his breach of contract claim. In addition, Yates’s claim for
benefit-of-the-bargain damages pursuant to his alternative fraudulent inducement action
is barred. See Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001) HN5 (″[T]he Statute
1
    Dynegy [**11] even pointed out to the trial court and Yates the omission of any jury questions related to an exception to the statute
of frauds in its written charge objections.
2
    The dissent also argues that the main purpose doctrine takes Dynegy’s promise out of the statute of frauds based on Dynegy’s
self-serving reasons for promising to pay Olis’s legal fees. But, as with the intent element, Yates failed to plead and prove the
consideration elements of the main purpose exception.

                                                  Jamie Graham Page 7 of 11
                                       422 S.W.3d 638, *643; 2013 Tex. LEXIS 679, **11



of Frauds bars a fraud claim to the extent the plaintiff seeks to recover as damages the
benefit of a bargain that cannot otherwise be enforced because it fails to comply with
the Statute of Frauds.″). Accordingly, we grant Dynegy’s petition for review and,
without hearing oral argument, TEX. R. APP. P. 59.1, [**12] we reverse the court of
appeals’ judgment and render judgment that Yates take nothing on his claims.

Paul W. Green

Justice

OPINION DELIVERED: August 30, 2013

Dissent by: John P. Devine

Dissent

JUSTICE DEVINE, dissenting.

The Statute of Frauds ″is a two-edged sword. It . . . may be used to perpetrate frauds as
well as to prevent them. Under it a person may obtain an oral promise to pay the debt
of a third person and then resist payment on the ground that this promise is oral and
therefore unenforceable under the Statute of Frauds. Because of this and other dangers,
the courts of England and this country have sought to keep the Statute within its
intended purpose.″1

In this case, the Court applies the Statute of Frauds’ suretyship provision to, what the
jury found to be, an unconditional promise by a company to pay an attorney to defend
one of its employees from a work-related prosecution. Because I do not believe the
Statute was intended to apply to such promises, I respectfully dissent.

The Statute of Frauds’ suretyship provision applies when a creditor seeks to recover
from a guarantor because of a third person’s failure to perform.2 The provision
 [**13] discourages false allegations that a person promised to pay if the primary debtor
could not.3 The provision also protects [*644] those closely associated with the
principal debtor from making rash or emotionally-driven oral promises before having
″any real opportunity for awareness of the nature and magnitude of the risks
1
    Gulf Liquid Fertilizer Co. v. Titus, 163 Tex. 260, 354 S.W.2d 378, 382 (Tex. 1962).
2
    The essential elements of a surety relationship are (1) the third person and the surety are each bound to the same performance; and,
(2) the third person, rather than the surety, should be the one to perform. RESTATEMENT (SECOND) OF CONTRACTS § 112 cmt. c.; see also 4
CAROLINE N. BROWN, CORBIN ON CONTRACTS § 15.14, at 290 (Joseph M. Perillo ed., rev. ed. 1997) (″To be within the suretyship clause of
the statute, the defendant’s (S’s) duty to pay must be conditional on nonpayment by the third person (P) . . . .″) (emphasis added).
3
    Cooper Petroleum Co. v. LaGloria Oil & Gas Co., 436 S.W.2d 889, 895 (Tex. 1969).

                                                  Jamie Graham Page 8 of 11
                                        422 S.W.3d 638, *644; 2013 Tex. LEXIS 679, **15



undertaken.″4 The suretyship provision, however, is not intended to provide more
certainty to the terms of an oral contract for the benefit of a third person.5 Nor is it
intended to discourage oral promises to assume the debt of a third person.6

The Court states that the facts here ″establish one conclusion: Dynegy orally promised
to pay attorney’s fees associated with Olis’ defense [that would have otherwise been
Olis’ obligation.]″ S.W.3d at . I agree, but the inference I draw from that conclusion
is that Dynegy assumed the role of primary obligor, not surety. As we explained in Bank
of Garvin v. Freeman, the Statute of Frauds’ suretyship provision does not bar an oral
promise to assume primary responsibility for the debt of another:

     The meaning of that statute is to require a promise as surety for another’s debt,
     or guarantor of another’s debt, to be in writing. It never was intended to prohibit
     one person from assuming the payment of another’s debt, as his own debt, where
     there is a valid consideration moving between the parties to such contract. In
     other words, one person for a valuable consideration may assume as his own debt
     the debt of another, and it need not be in writing, but he cannot [**15] contract
     with one person to become surety or guarantor for the debt of another person
     except it be in writing.7

Here, Dynegy does not claim that a surety relationship existed between Olis and itself.
Dynegy argues instead that the suretyship provision applies merely because Olis and
Yates entered into a written fee agreement, creating a debt. But if the creation of a debt
was all that was necessary to invoke the Statute of Frauds, it would not be possible to
assume another’s debt by oral agreement, and the Court was wrong to say otherwise in
Bank of Garvin.8

For its part, Dynegy does not claim to be the guarantor of Olis’ debt. Dynegy instead
concedes that it agreed to pay Yates for Olis’ defense, but argues that a condition in the
board resolution allowed it to stop paying Yates if Dynegy’s board determined that Olis
did not act in good faith. At that point, according to Dynegy, Olis became responsible
for Yates’ fee. But the board resolution did not make Dynegy the guarantor of Olis’ debt,
nor did it give the company the right to stop or suspend payment to the attorney
 [**16] for services already rendered. The board resolution merely stated that the
4
    4 BROWN, supra, § 16.1, [**14] at 317.
5
    See id. § 15.7, at 268 (″[I]t is enough to take the defendant’s promise out of the statute that the third person was not bound at all to
the promisee.″).
6
    See Bank of Garvin v. Freeman, 107 Tex. 523, 181 S.W. 187, 190-91 (Tex. 1915).
7
    Titus, 354 S.W.2d at 383-84 (quoting Bank of Garvin, 181 S.W. at 191 (emphasis added)).
8
    Bank of Garvin, 181 S.W. at 191.

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employee was to repay the company if his actions were determined not to have been in
good faith.
The dispute in this case is therefore not about whether Dynegy agreed to pay Yates; it
clearly did. The dispute instead is about the extent of Dynegy’s promise. Dynegy
contends that its promise to Yates was conditioned by the terms of the board resolution.
Yates contends that Dynegy’s promise to pay for Olis’ defense through trial was
unconditional and, as to Yates, primarily the company’s responsibility.
The dispute was submitted to a jury, which was asked to determine the extent of
Dynegy’s agreement with Yates. The [*645] charge instructed the jury that an essential
term of the asserted agreement was whether Dynegy agreed to pay Yates for his legal
services to Olis through trial.9 In closing argument, Dynegy argued that the jury should
not find it in breach of the agreement unless it believed Dynegy made an unconditional
promise to pay Yates through trial. The jury found Dynegy in breach of its agreement
to pay Yates and awarded damages, apparently reasoning that the conditional payment
terms of the board resolution did [**17] not apply to the oral contract between Dynegy
and Yates.
The Court concludes, however, that the written fee agreement between Yates and Olis
conclusively establishes Olis as the primary obligor, making Dynegy merely the surety
of that obligation. Because Dynegy never intended to act as a guarantor of Olis’ debt,
however, the Statute of Frauds’ suretyship provision should not apply as a matter of law.
I therefore disagree with the Court’s conclusion, but even if I agreed with it, I would
nevertheless hold that the main purpose exception takes Dynegy’s promise to Yates out
of the Statute.
The main purpose doctrine, or leading object rule, takes a promise out of the Statute
where ″the consideration given for the promise is primarily for the promisor’s own use
and benefit.″10 The test focuses on the purpose of the promise, rather than on who
receives the benefit of the promise.11 This test was devised by the courts to determine
whether ″the promise was manifestly induced by other than [**18] gratuitous or
sentimental purposes.″12
The circumstances surrounding the promise in this case began with an SEC investigation
into Project Alpha. Dynegy originally billed Project Alpha as a complex transaction that
9
   The charge instructions also stated that the terms of an agreement may be oral or written, or both, and that the parties must have the
same understanding of the subject matter at the time of the agreement.
10
     Titus, 354 S.W.2d at 383.
11
     Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817, 828 (Tex. 2012).
12
    4 BROWN, supra, § 16.1, at 317; see also Cooper, 436 S.W.2d at 895 (″[T]he basic reason for requiring that a promise to answer for
the default of another be in writing is that the promisor has received no direct benefit from the transaction.″).

                                                  Jamie Graham Page 10 of 11
                                      422 S.W.3d 638, *645; 2013 Tex. LEXIS 679, **18



would provide the company a significant long-term supply of physical natural gas, cash
funding, and a permanent tax benefit. The SEC investigation resulted in a civil fine
related to the company’s tax classification of the assets involved. However, the
Department of Justice’s investigation was just beginning.
As media publicity and threats of indictment by the Department of Justice increased,
Dynegy’s board passed a resolution promising to advance attorney’s fees to officers and
employees of the company who were involved with Project Alpha. Dynegy’s bylaws
required the company to indemnify its directors and officers for any civil or criminal
 [**19] proceedings arising out of their role as a Dynegy director or officer. Dynegy paid
Olis’ first attorney directly and, when Olis desired to hire Yates, the company told Yates
to send the bills to the company and that it would pay him directly. The urgency in
securing the services of Yates, a more experienced trial attorney, was heightened by
Olis’ recent indictment. Therefore, Dynegy had at least two self-serving reasons to
promise to pay Yates to represent Olis: (1) to protect the company’s interests; and (2)
to comply with its bylaws. Yates should therefore be able to enforce Dynegy’s oral
contract to [*646] pay him through trial because Dynegy was acting for its own
purposes and not merely as a guarantor of its employee’s obligation.13
In conclusion, Dynegy has not asserted or argued that it intended to act as a guarantor
of Olis’ debt. Moreover, the jury agreed that [**20] Dynegy’s promise to pay Yates
through trial was not conditional, and thus its promise does not fall within the Statute
of Frauds’ suretyship provision. However, even were I to agree that the suretyship
provision otherwise applies to this transaction, I would conclude that the main purpose
exception takes Dynegy’s promise out of the Statute. Because the Court holds the
Statute of Frauds applies to bar Dynegy’s oral contract with Yates, I respectfully dissent.
John P. Devine
Justice
Opinion Delivered: August 30, 2013




13
     See Haas Drilling Co. v. First Nat’l Bank, 456 S.W.2d 886, 890-91 (Tex. 1970) (holding that main purpose doctrine was satisfied
″as a matter of law″ where prospect of maintaining value of oil-producing property was sufficient benefit to enforce bank’s promise to
pay jetting gas company the past-due debt of the former owner).

                                                 Jamie Graham Page 11 of 11
|   | Warning
As of: December 4, 2014 12:08 PM EST

                                City of Keller v. Wilson
                                Supreme Court of Texas
                 October 19, 2004, Argued ; June 10, 2005, Delivered
                                      NO. 02-1012

Reporter
168 S.W.3d 802; 2005 Tex. LEXIS 436; 48 Tex. Sup. J. 848

THE CITY OF KELLER, PETITIONER v. JOHN W. WILSON, GRACE S. WILSON,
JOHNNY L. WILSON AND NANCY A. WILSON, RESPONDENTS

Subsequent History: [**1]
Rehearing denied by City of Keller v. Wilson, 2005 Tex. LEXIS 688 (Tex., Sept. 2, 2005)
On remand at City of Keller v. Wilson, 2006 Tex. App. LEXIS 5361 (Tex. App. Fort
Worth, June 22, 2006)

Prior History: ON PETITION FOR REVIEW FROM THE COURT OF APPEALS
FOR THE SECOND DISTRICT OF TEXAS.
City of Keller v. Wilson, 86 S.W.3d 693, 2002 Tex. App. LEXIS 7837 (Tex. App. Fort
Worth, 2002)

Disposition: The court reversed the judgment of the court of appeals and remanded.

Core Terms

jurors, reviewing court, City’s, flooding, contrary evidence, no evidence, cases,
conclusively, disregarded, inferences, per curiam, insurer, no-evidence, legal sufficiency,
parties, scope of review, damages, courts, reasonable juror, jury’s, drainage, plans,
evidence supports, court of appeals, appellate court, inclusive, vital fact, credibility,
undisputed, engineers

Case Summary

Procedural Posture
Appellant city petitioned for review of a decision of the Court of Appeals for the Second
District of Texas, which upheld the trial court’s ruling that there was an intentional
taking by the city under Tex. Const. art. I, § 17 of appellee property owners’ property
that they claimed by flooded due to a drainage ditch.
                                       Jamie Graham
                           168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1



Overview
The owners contended that the city approved revised plans that it knew were certain to
have the effect of flooding their land. The question was whether the court of appeals
applied the correct standard in its legal sufficiency review by considering only the
evidence and inferences that supported the finding. The court held that both the
inclusive and exclusive standards for the scope of legal-sufficiency review, properly
applied, must arrive at the same result, disregarding evidence contrary to the verdict
unless reasonable jurors could not. The court reversed the judgment, holding that the
court of appeals did not properly apply the scope of review in that the critical question
was the city’s state of mind because the owners had to prove the city knew that flooding
was substantially certain, and the court of appeals disregarded the evidence regarding
why the city approved the plan. It was uncontroverted that three sets of engineers
certified that the revised plans met the city’s codes and regulations, and thus would not
increase downstream flooding. Further, the court of appeals declined to address the
jury’s alternate verdict on a claim under the Texas Water Code.

Outcome
The court reversed the judgment of the court of appeals and remanded.

LexisNexis® Headnotes

  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN1 ″No evidence″ points must, and may only, be sustained when the record discloses
one of the following situations: (a) a complete absence of evidence of a vital fact; (b)
the court is barred by rules of law or of evidence from giving weight to the only
evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no
more than a mere scintilla; (d) the evidence establishes conclusively the opposite of the
vital fact. It is in deciding ″no evidence″ points in situation (c) that the courts follow the
further rule of viewing the evidence in its most favorable light in support of the finding
of the vital fact, considering only the evidence and the inferences which support the
finding and rejecting the evidence and the inferences which are contrary to the finding.

  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN2 The traditional rule in Texas has never been that appellate courts must reject
contrary evidence in every no-evidence review. Instead, the traditional scope of review
does not disregard contrary evidence if there is no favorable evidence, or if contrary
evidence renders supporting evidence incompetent or conclusively establishes the
opposite.
                                   Jamie Graham Page 2 of 41
                          168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1



  Admiralty & Maritime Law > Maritime Contracts > General Overview
  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN3 In a legal sufficiency review, evidence can be disregarded whenever reasonable
jurors could do so, an inquiry that is necessarily fact-specific. But it is important that
when courts use the exclusive standard and disregard contrary evidence, they must
recognize certain exceptions to it.

  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN4 If evidence may be legally sufficient in one context but insufficient in another, the
context cannot be disregarded even if that means rendering judgment contrary to the
jury’s verdict. Either ″evidence contrary to the verdict″ must be defined to exclude
material contextual evidence, or it must be an exception to the general rule.

  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview
  Evidence > ... > Procedural Matters > Objections & Offers of Proof > Objections

HN5 Incompetent evidence is legally insufficient to support a judgment, even if
admitted without objection. Thus, evidence showing it to be incompetent cannot be
disregarded, even if the result is contrary to the verdict. If the rule were otherwise,
incompetent evidence would always be legally sufficient, because the evidence showing
it to be incompetent could never be considered.

  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN6 Evidence that might be ″some evidence″ when considered in isolation is
nevertheless rendered ″no evidence″ when contrary evidence shows it to be incompetent.
Such evidence cannot be disregarded; it must be an exception either to the exclusive
standard of review or to the definition of contrary evidence.

  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview
  Evidence > Types of Evidence > Circumstantial Evidence
  Evidence > Admissibility > Circumstantial & Direct Evidence

HN7 When circumstantial evidence of a vital fact is meager, a reviewing court must
consider not just favorable but all the circumstantial evidence, and competing inferences
as well.

  Civil Procedure > ... > Jury Trials > Jurors > General Overview
  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview
                                  Jamie Graham Page 3 of 41
                          168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1



HN8 There are several types of conclusive evidence. First, an appellate court
conducting a legal sufficiency review cannot disregard undisputed evidence that allows
of only one logical inference. By definition, such evidence can be viewed in only one
light, and reasonable jurors can reach only one conclusion from it. Jurors are not free
to reach a verdict contrary to such evidence; indeed, uncontroverted issues need not be
submitted to a jury at all.

  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN9 Reviewing legal sufficiency in such cases encompasses a general no-evidence
review, because if some evidence supports the verdict then the contrary evidence was
not ″undisputed.″ But the review does not stop there; the evidence must also have only
one logical inference. Undisputed evidence that reasonable jurors could disbelieve has
two: (1) it is true, or (2) it is not. Most often, undisputed contrary evidence becomes
conclusive (and thus cannot be disregarded) when it concerns physical facts that cannot
be denied. Undisputed contrary evidence may also become conclusive when a party
admits it is true.

  Evidence > Inferences & Presumptions > General Overview

HN10 Undisputed evidence and conclusive evidence are not the same -- undisputed
evidence may or may not be conclusive, and conclusive evidence may or may not be
undisputed.

  Civil Procedure > ... > Jury Trials > Jurors > General Overview
  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN11 Proper legal-sufficiency review prevents reviewing courts from substituting their
opinions on credibility for those of the jurors, but proper review also prevents jurors
from substituting their opinions for undisputed truth. When evidence contrary to a
verdict is conclusive, it cannot be disregarded.

  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Evidence > ... > Testimony > Credibility of Witnesses > General Overview

HN12 Jurors are the sole judges of the credibility of the witnesses and the weight to give
their testimony. They may choose to believe one witness and disbelieve another.
Reviewing courts cannot impose their own opinions to the contrary.

  Civil Procedure > ... > Jury Trials > Jurors > General Overview
  Civil Procedure > Appeals > Standards of Review > General Overview
                                  Jamie Graham Page 4 of 41
                          168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1



  Evidence > ... > Testimony > Credibility of Witnesses > General Overview

HN13 Most credibility questions are implicit rather than explicit in a jury’s verdict.
Thus, reviewing courts must assume jurors decided all of them in favor of the verdict
if reasonable human beings could do so. Courts reviewing all the evidence in a light
favorable to the verdict thus assume that jurors credited testimony favorable to the
verdict and disbelieved testimony contrary to it.

  Civil Procedure > ... > Jury Trials > Jurors > General Overview
  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Evidence > ... > Testimony > Expert Witnesses > General Overview

HN14 Jurors may disregard even uncontradicted and unimpeached testimony from
disinterested witnesses. Even uncontroverted expert testimony does not bind jurors
unless the subject matter is one for experts alone.

  Civil Procedure > ... > Jury Trials > Jurors > General Overview
  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Evidence > ... > Testimony > Credibility of Witnesses > General Overview

HN15 The jury’s decisions regarding credibility must be reasonable. Jurors cannot
ignore undisputed testimony that is clear, positive, direct, otherwise credible, free from
contradictions and inconsistencies, and could have been readily controverted. They are
not free to believe testimony that is conclusively negated by undisputed facts. But
whenever reasonable jurors could decide what testimony to discard, a reviewing court
must assume they did so in favor of their verdict, and disregard it in the course of legal
sufficiency review.

  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Civil Procedure > Appeals > Standards of Review > General Overview

HN16 It is the province of the jury to resolve conflicts in the evidence. Accordingly,
courts reviewing all the evidence in a light favorable to the verdict must assume that
jurors resolved all conflicts in accordance with that verdict.

  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Civil Procedure > Appeals > Standards of Review > General Overview
  Torts > Malpractice & Professional Liability > Healthcare Providers

HN17 Evidence is not conflicting just because the parties cannot agree to it. But in
every circumstance in which reasonable jurors could resolve conflicting evidence either
                                  Jamie Graham Page 5 of 41
                          168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1



way, reviewing courts must presume they did so in favor of the prevailing party, and
disregard the conflicting evidence in their legal sufficiency review.

  Civil Procedure > ... > Jury Trials > Jurors > General Overview
  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Civil Procedure > Appeals > Standards of Review > General Overview
  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview
  Transportation Law > Private Vehicles > Traffic Regulation > One Way Streets

HN18 Even if evidence is undisputed, it is the province of the jury to draw from it
whatever inferences they wish, so long as more than one is possible and the jury must
not simply guess. Accordingly, courts reviewing all the evidence in a light favorable to
the verdict must assume jurors made all inferences in favor of their verdict if reasonable
minds could, and disregard all other inferences in their legal sufficiency review.

  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview

HN19 Whether a court begins by reviewing all the evidence or disregarding part in a
legal-sufficiency review, there can be no disagreement about where that review should
end. If the evidence at trial would enable reasonable and fair-minded people to differ in
their conclusions, then jurors must be allowed to do so. A reviewing court cannot
substitute its judgment for that of the trier-of-fact, so long as the evidence falls within
this zone of reasonable disagreement.

  Civil Procedure > Appeals > Record on Appeal
  Civil Procedure > Appeals > Standards of Review > General Overview
  Evidence > Inferences & Presumptions > Inferences

HN20 Whether a reviewing court starts with all or only part of the record, the court must
consider evidence in the light most favorable to the verdict, and indulge every
reasonable inference that would support it. But if the evidence allows of only one
inference, neither jurors nor the reviewing court may disregard it.

  Civil Procedure > Appeals > Appellate Jurisdiction > State Court Review
  Civil Procedure > Appeals > Record on Appeal
  Civil Procedure > Appeals > Standards of Review > Questions of Fact & Law
  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview
                                  Jamie Graham Page 6 of 41
                          168 S.W.3d 802, *802; 2005 Tex. LEXIS 436, **1



HN21 The exclusive and inclusive standards of review must coincide if the Texas
Supreme Court is to perform its constitutional duties. Although factual sufficiency has
been the sole domain of the intermediate appellate courts in Texas since 1891, The
supreme court ’s jurisdiction has always included legal sufficiency, as that is a question
of law, not of fact. Construing either standard to require it to do less would be just as
unconstitutional as construing either to allow the court to do more.

  Civil Procedure > ... > Jury Trials > Jurors > General Overview
  Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview
  Civil Procedure > ... > Standards of Review > Substantial Evidence > Sufficiency of
  Evidence

HN22 The final test for legal sufficiency must always be whether the evidence at trial
would enable reasonable and fair-minded people to reach the verdict under review.
Whether a reviewing court begins by considering all the evidence or only the evidence
supporting the verdict, legal-sufficiency review in the proper light must credit favorable
evidence if reasonable jurors could, and disregard contrary evidence unless reasonable
jurors could not.

  Civil Procedure > Trials > Jury Trials > Province of Court & Jury
  Evidence > ... > Testimony > Expert Witnesses > General Overview

HN23 When a case involves scientific or technical issues requiring expert advice, jurors
cannot disregard a party’s reliance on experts hired for that very purpose without some
evidence supplying a reasonable basis for doing so.

Judges: JUSTICE BRISTER delivered the opinion of the Court, in which CHIEF
JUSTICE JEFFERSON, JUSTICE HECHT, JUSTICE WAINWRIGHT, and JUSTICE
GREEN joined, and in which JUSTICE O’NEILL and JUSTICE MEDINA joined as to
Parts I through IV. JUSTICE O’NEILL filed a concurring opinion in which JUSTICE
MEDINA joined. JUSTICE JOHNSON did not participate in the decision.

Opinion by: Scott Brister

Opinion

 [*807] Must an appellate court reviewing a verdict for legal sufficiency start by
considering all the evidence or only part? Over the years, we have stated both as the
proper scope of review. While some see the standards as opposing, we disagree; like a
glass that is half-full or half-empty, both arrive at the same point regardless of where
they start.
                                  Jamie Graham Page 7 of 41
                                        168 S.W.3d 802, *807; 2005 Tex. LEXIS 436, **1



But both standards must be properly applied. Rules and reason sometimes compel that
evidence must be credited or discarded whether it supports a verdict or contradicts it.
Under either scope of review, appellate courts must view the evidence in the light
favorable to the verdict, crediting favorable [**2] evidence if reasonable jurors could,
and disregarding contrary evidence unless reasonable jurors could not. As we find the
evidence here meets neither standard, we reverse.

I. Factual and Procedural History
The City of Keller is one of several fast-growing communities on the outskirts of [*808]
Fort Worth. 1 As part of that growth, the City approved plans for two new subdivisions,
Estates of Oak Run and Rancho Serena, including plans for storm water drainage.

The Wilsons own property southeast of the new subdivisions, with a tract owned by Z.T.
Sebastian lying between. Before development, surface water flowed generally north to
south from the land where the subdivisions were built, across the Sebastian and Wilson
properties, and into the Little Bear Creek Watershed.
In 1991, the [**3] City adopted a Master Drainage Plan providing for drainage
easements across both the Sebastian and Wilson properties, and thence into Little Bear
Creek. The City’s codes require developers to comply with the Master Plan, to provide
drainage for a 100-year rain event, and to avoid increasing the volume or velocity of
water discharged upon downhill properties.

The developers of Oak Run and Rancho Serena submitted plans to the City indicating
they would buy a drainage easement and build a ditch forty-five feet wide and more than
two hundred yards long across the Sebastian property, and deed both to the City upon
completion. 2 The plans also included detention basins on the subdivision properties, but
omitted any drainage easement or ditch across the Wilsons’ property. The City’s director
of public works approved the developers’ plans, and the City accepted the works on
completion.
    [**4] In accordance with the Master Plan, the City built a box culvert south of the
Wilsons’ property. But as the developers’ drainage ditch ended at the Wilsons’ north
property line, there was no link between the two. The Wilsons alleged and the jury found
this omission increased flooding on the Wilsons’ property, ruining eight acres of
farmland the jury valued at almost $ 300,000.
1
   The City of Fort Worth asserts in an amicus brief that in 2001 alone it approved 325 subdivision plats creating 5,857 residential lots
within its extraterritorial jurisdiction, which of course excludes surrounding communities.
2
   Evidence at trial and briefs by amici indicate that cities normally acquire title to these easements to ensure they are properly mowed
and maintained after the developers’ departure.

                                                  Jamie Graham Page 8 of 41
                                        168 S.W.3d 802, *808; 2005 Tex. LEXIS 436, **4



To recover damages for inverse condemnation, the Wilsons had to prove the City
intentionally took or damaged their property for public use, or was substantially certain
that would be the result. 3 They do not allege the City intentionally flooded their land,
but do allege it approved revised plans that it knew were substantially certain to have
that effect.
The City contends no evidence supports the jury’s finding of an intentional taking. It
presented evidence that engineers for the developers, for the City, and for an outside
 [**5] firm the City retained all certified that the revised drainage plan complied with
the City’s codes and regulations -- including the ban against increasing downstream
runoff. Thus, the City asserts it had no reason to be substantially certain the opposite
would occur, until it did.
A divided court of appeals rejected this contention. 4 In its legal sufficiency review, the
court refused to consider the various engineers’ certifications because ″we are to
consider only the evidence and inferences that tend to support the finding and disregard
all evidence and inferences to the contrary.″ 5 The City challenges [*809] this omission
as applying the wrong scope of review.
We have on many occasions stated the scope of review precisely as the court of appeals
says (the ″exclusive″ standard). 6 [**7] But we have also stated that a reviewing court
must consider ″all of the evidence″ in the light favorable to the verdict (the ″inclusive″
standard). [**6] 7 Sometimes we have mentioned neither reviewing all evidence nor

3
    TEX. CONST. art. I, § 17; City of Dallas v. Jennings, 142 S.W.3d 310, 313-14, 47 Tex. Sup. Ct. J. 715 (Tex. 2004).
4
    86 S.W.3d 693, 715, 717.
5
    Id. at 700.
6
    See, e.g., Wal-Mart Stores, Inc. v. Canchola, 121 S.W.3d 735, 739, 46 Tex. Sup. Ct. J. 1116 (Tex. 2003) (per curiam); Bradford v.
Vento, 48 S.W.3d 749, 754, 44 Tex. Sup. Ct. J. 655 (Tex. 2001); City of Fort Worth v. Zimlich, 29 S.W.3d 62, 69, 43 Tex. Sup. Ct. J.
972 (Tex. 2000); Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936, 41 Tex. Sup. Ct. J. 811 (Tex. 1998); Cont’l Coffee Prods. Co.
v. Cazarez, 937 S.W.2d 444, 450, 40 Tex. Sup. Ct. J. 172 (Tex. 1996); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499, 38 Tex.
Sup. Ct. J. 848 (Tex. 1995); Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928, 37 Tex. Sup. Ct. J. 118 (Tex. 1993); Holt Atherton
Indus., Inc. v. Heine, 835 S.W.2d 80, 84, 35 Tex. Sup. Ct. J. 881 (Tex. 1992); Weirich v. Weirich, 833 S.W.2d 942, 945, 35 Tex. Sup.
Ct. J. 952 (Tex. 1992); Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 458, 35 Tex. Sup. Ct. J. 523 (Tex. 1992); Lewelling v. Lewelling,
796 S.W.2d 164, 166, 33 Tex. Sup. Ct. J. 742 (Tex. 1990); Burkard v. ASCO Co., 779 S.W.2d 805, 806, 33 Tex. Sup. Ct. J. 80 (Tex. 1989)
(per curiam); Brown v. Edwards Transfer Co., 764 S.W.2d 220, 223, 32 Tex. Sup. Ct. J. 108 (Tex. 1988); City of Gladewater v. Pike,
727 S.W.2d 514, 518, 30 Tex. Sup. Ct. J. 322 (Tex. 1987); King v. Bauer, 688 S.W.2d 845, 846, 28 Tex. Sup. Ct. J. 406 (Tex. 1985);
Tomlinson v. Jones, 677 S.W.2d 490, 492, 27 Tex. Sup. Ct. J. 445 (Tex. 1984); Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401,
24 Tex. Sup. Ct. J. 482 (Tex. 1981) (per curiam); Holley v. Adams, 544 S.W.2d 367, 370, 20 Tex. Sup. Ct. J. 76 (Tex. 1976); Garza v.
Alviar, 395 S.W.2d 821, 823, 9 Tex. Sup. Ct. J. 76 (Tex. 1965); Wininger v. Ft. Worth & D.C. Ry. Co., 105 Tex. 56, 143 S.W. 1150, 1152
(Tex. 1912).
7
    See, e.g., St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 519, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.); Associated Indem. Corp.
v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86, 41 Tex. Sup. Ct. J. 389 (Tex. 1998); State Farm Lloyds Ins. Co. v. Maldonado, 963
S.W.2d 38, 40, 41 Tex. Sup. Ct. J. 443 (Tex. 1998); Formosa Plastics Corp. v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48,
41 Tex. Sup. Ct. J. 289 (Tex. 1998); Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711, 40 Tex. Sup. Ct. J. 846 (Tex. 1997);

                                                   Jamie Graham Page 9 of 41
                                        168 S.W.3d 802, *809; 2005 Tex. LEXIS 436, **6


                                              8
disregarding some part of it.                     [**8] Finally, we have sometimes expressly mentioned
both. 9
    [**9] Although this Court has used both the exclusive and the inclusive standards
interchangeably over the years, commentators say the two are different. 10 Because this
 [*810] important issue is dispositive here, we address it in some detail, and reserve for
another day the City’s arguments that a governmental entity cannot be liable for
approving a developer’s plans, or accepting rather than constructing the works at issue.

    [**10] II. Contrary Evidence That Cannot Be Disregarded
The question presented here is not a new one. More than 40 years ago, then Justice
Calvert 11 addressed the standards for reviewing legal and factual sufficiency in the
most-cited law review article in Texas legal history. 12 Frustrated that despite this
Court’s efforts to explain those standards ″a growing number of recent decisions
indicate a continuing misunderstanding,″ 13 the author summarized and attempted to
clarify Texas law up to 1960. 14 The article’s impact remains substantial today, having
been cited more than 100 times by Texas courts in the last five years.
White v. Southwestern Bell Tel. Co., 651 S.W.2d 260, 262, 26 Tex. Sup. Ct. J. 441 (Tex. 1983); Burk Royalty v. Walls, 616 S.W.2d 911,
922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981); Harbin v. Seale, 461 S.W.2d 591, 592, 14 Tex. Sup. Ct. J. 128 (Tex. 1970); De Winne v. Allen,
154 Tex. 316, 277 S.W.2d 95, 97 (Tex. 1955); Hall v. Med. Bldg. of Houston, Tex., 151 Tex. 425, 251 S.W.2d 497, 498 (Tex. 1952).
8
    Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 552, 47 Tex. Sup. Ct. J. 707 (Tex. 2004); Bostrom Seating, Inc. v. Crane Carrier
Co., 140 S.W.3d 681, 684, 47 Tex. Sup. Ct. J. 649 (Tex. 2004); Lozano v. Lozano, 52 S.W.3d 141, 144, 44 Tex. Sup. Ct. J. 499 (Tex.
2001) (per curiam); La.-Pac. Corp. v. Andrade, 19 S.W.3d 245, 247, 43 Tex. Sup. Ct. J. 56 (Tex. 1999); Latham v. Castillo, 972 S.W.2d
66, 68, 41 Tex. Sup. Ct. J. 994 (Tex. 1998); Brown v. Bank of Galveston, Nat’l Ass’n, 963 S.W.2d 511, 513, 41 Tex. Sup. Ct. J. 437 (Tex.
1998).
9
    See, e.g., Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 234, 47 Tex. Sup. Ct. J. 559 (Tex. 2004); Szczepanik
v. First S. Trust Co., 883 S.W.2d 648, 649, 37 Tex. Sup. Ct. J. 860 (Tex. 1994) (per curiam); compare Biggers v. Cont’l Bus Sys., Inc.,
157 Tex. 351, 303 S.W.2d 359, 363 (Tex. 1957) (″We may consider only that evidence, if any, which, viewed in its most favorable light,
supports the jury findings, and we must disregard all evidence which would lead to a contrary result.″) (emphasis added), with Biggers
v. Cont’l Bus Sys., Inc., 157 Tex. 367, 298 S.W.2d 79, 81 (Tex. 1956) (″The duty of this Court [is] to examine and consider all of the
evidence bearing on the controlling issues, and having done so to decide whether there is evidence of probative value to support the
answers made by the jury to the issues.″) (quotation omitted) (emphasis added), and Cartwright v. Canode, 106 Tex. 502, 171 S.W. 696,
698 (Tex. 1914) (″We must reject all evidence favorable to the plaintiffs in error, and consider only the facts and circumstances which
tend to sustain the verdict. . . . In considering this question, we must take into account all of the facts and circumstances attending the
transaction.″).
10
     See, e.g., W. Wendell Hall, Standards of Review in Texas, 34 ST. MARY’S L.J. 1, 159-62 (2002); William V. Dorsaneo, III, Judges,
Juries, & Reviewing Courts, 53 SMU L.R. 1497, 1498, 1507-11 (2000); Phil Hardberger, Juries Under Siege, 30 ST. MARY’S L.J. 1,
40-41 (1998). But see William Powers, Jr., Judge & Jury in the Texas Supreme Court, 75 TEX. L. REV. 1699, 1699-1700, 1704-19 (1997)
(concluding the Court is not changing the no-evidence standard of review but is moving away from broad definitions of duty and toward
particularized definitions of duty).
11
     Robert W. Calvert was an associate justice of this Court from 1950 to 1960, and Chief Justice from 1961 to 1972.
12
     Robert W. Calvert, ″No Evidence″ & ″Insufficient Evidence″ Points of Error, 38 TEX. L. REV. 361 (1960).
13
     Id. at 361.
14
    ″Most of what has been said here is repetitious of what has been said before in the cited cases and articles. The purpose of the writer
here has been to try to bring former writings on the subject into compact form and under somewhat closer analysis.″ Id. at 371.

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 [**11] According to the article:

     HN1 ″No evidence″ points must, and may only, be sustained when the record
     discloses one of the following situations: (a) a complete absence of evidence of
     a vital fact; (b) the court is barred by rules of law or of evidence from giving
     weight to the only evidence offered to prove a vital fact; (c) the evidence offered
     to prove a vital fact is no more than a mere scintilla; (d) the evidence establishes
     conclusively the opposite of the vital fact. 15
                                                                                            16
We have quoted a similar formulation on many occasions.
 [**12] Notably, Justice Calvert then proceeded to put the question before us in the
proper context:
   It is in deciding ″no evidence″ points in situation (c) that the courts follow the
   further rule of viewing the evidence in its most favorable light in support of the
   finding of the vital fact, considering only the evidence and the inferences which
   support the finding and rejecting the evidence and the inferences which are
   contrary to the finding. 17
Clearly, HN2 the traditional rule in Texas has never been that appellate courts must
reject contrary evidence in every no-evidence review. Instead, the traditional scope of
review does not disregard contrary evidence if there is no favorable evidence [*811]
(situation (a) above), or if contrary evidence renders supporting evidence incompetent
(situation (b) above) or conclusively establishes the opposite (situation (d) above).
As the following examples show, this has remained the rule since. We do not presume
to categorize all [**13] circumstances in which contrary evidence must be considered
in a legal sufficiency review. HN3 Evidence can be disregarded whenever reasonable
jurors could do so, 18 an inquiry that is necessarily fact-specific. But it is important that
when courts use the exclusive standard and disregard contrary evidence, they must
recognize certain exceptions to it.

A. Contextual Evidence
15
     Id. at 362-63.
16
     See, e.g., King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751, 46 Tex. Sup. Ct. J. 1093 (Tex. 2003); Marathon Corp. v. Pitzner, 106
S.W.3d 724, 727, 46 Tex. Sup. Ct. J. 689 (Tex. 2003) (per curiam); Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334, 42
Tex. Sup. Ct. J. 43 (Tex. 1998); Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 409, 41 Tex. Sup. Ct. J. 683 (Tex. 1998); Merrell Dow
Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997); Anderson v. City of Seven Points, 806 S.W.2d 791, 795 n.3, 34 Tex. Sup. Ct.
J. 356 (Tex. 1991); Cecil v. Smith, 804 S.W.2d 509, 510 n.2, 34 Tex. Sup. Ct. J. 383 (Tex. 1991); Juliette Fowler Homes, Inc. v. Welch
Assoc., Inc., 793 S.W.2d 660, 666 n.9, 33 Tex. Sup. Ct. J. 530 (Tex. 1990).
17
     Calvert, supra note 12, at 364.
18
    See In re J.F.C., 96 S.W.3d 256, 266, 46 Tex. Sup. Ct. J. 328 (Tex. 2002); Uniroyal, 977 S.W.2d at 340; Triton Oil & Gas Corp.
v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446, 26 Tex. Sup. Ct. J. 73 (Tex. 1982).

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In Justice Calvert’s first situation -- a complete absence of evidence of a vital fact -- it
is generally irrelevant whether a reviewing court considers contrary evidence. 19 If
supporting evidence is absent, opposing evidence cannot change that result. But in a
number of cases, the lack of supporting evidence may not appear until all the evidence
is reviewed in context.
 [**14] For example, publications alleged to be defamatory must be viewed as a whole
-- including accompanying statements, headlines, pictures, and the general tenor and
reputation of the source itself. 20 A court reviewing legal sufficiency cannot disregard
parts of a publication, considering only false statements to support a plaintiff’s verdict
or only true ones to support a defense verdict. 21

Similarly, reviewing courts must construe contracts as a whole; we do not consider only
the parts favoring one party [**15] and disregard the remainder, as that would render
the latter meaningless. 22 Even writings executed at different times must be considered
together if they pertain to the same transaction. 23

It is not just writings that reviewing courts must consider in context. For example, in
reviewing intentional infliction of emotional distress claims for legal sufficiency, ″we
consider the context and the relationship between the parties.″ 24 [**16] Acts that might
constitute outrageous conduct when dealing with a hearing-impaired consumer 25 may
be legally insufficient between [*812] business parties. 26 In our no-evidence reviews
of successful claims, we have invariably reviewed not just evidence showing the
conduct was outrageous, but also evidence showing that, in context, it was not. 27
19
    Calvert, supra note 12, at 364 (″If there is an absolute absence of evidence of a vital fact . . . an appellate court has no occasion
to concern itself with an abstract rule such as how minds of reasonable men might view the situation.″).
20
    New Times, Inc. v. Isaacks, 146 S.W.3d 144, 158-59, 47 Tex. Sup. Ct. J. 1140 (Tex. 2004); Turner v. KTRK Television, Inc., 38 S.W.3d
103, 114, 44 Tex. Sup. Ct. J. 244 (Tex. 2000); Guisti v. Galveston Tribune Co., 105 Tex. 497, 150 S.W. 874, 877-78 (1912).
21
    Bentley v. Bunton, 94 S.W.3d 561, 581, 45 Tex. Sup. Ct. J. 1172 (Tex. 2002) (considering remarks in context of series of talk-show
programs); Turner, 38 S.W.3d at 115 (holding defamation includes story in which details are right but gist is wrong).
22
     Shell Oil Co. v. Khan, 138 S.W.3d 288, 292, 47 Tex. Sup. Ct. J. 640 (Tex. 2004).
23
     DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 102, 42 Tex. Sup. Ct. J. 979 (Tex. 1999).
24
     Tiller v. McLure, 121 S.W.3d 709, 714, 46 Tex. Sup. Ct. J. 632 (Tex. 2003) (per curiam); see also Tex. Farm Bureau Mut. Ins. Cos.
v. Sears, 84 S.W.3d 604, 610-11, 45 Tex. Sup. Ct. J. 1245 (Tex. 2002); GTE Southwest, Inc. v. Bruce, 998 S.W.2d 605, 612, 42 Tex. Sup.
Ct. J. 907 (Tex. 1999).
25
    See George Grubbs Enters., Inc. v. Bien, 881 S.W.2d 843, 852-53 (Tex. App.--Fort Worth 1994) (holding that efforts to pressure
deaf-mute consumer to buy car were legally sufficient evidence of intentional infliction), rev’d on other grounds, 900 S.W.2d 337, 338,
38 Tex. Sup. Ct. J. 869 (Tex. 1995).
26
    See Tiller, 121 S.W.3d at 714 (holding efforts to pressure widow of contracting party to complete project were legally insufficient
evidence of intentional infliction).
27
    See, e.g., id. at 713-14 (discussing contrary evidence showing defendant’s reasonable concerns about timeliness of plaintiff’s work);
Sears, 84 S.W.3d at 612 (discussing contrary evidence that defendant believed claimant was involved in suspicious dealings).

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More generally, evidence cannot be taken out of context in a way that makes it seem to
support a verdict when in fact it never did. 28 If a witness’s statement ″I did not do that″
is contrary to the jury’s verdict, a reviewing court may need to disregard the whole
statement, but cannot rewrite [**17] it by disregarding the middle word alone.
Thus, HN4 if evidence may be legally sufficient in one context but insufficient in
another, the context cannot be disregarded even if that means rendering judgment
contrary to the jury’s verdict. Either ″evidence contrary to the verdict″ must be defined
to exclude material contextual evidence, or it must be an exception to the general rule.

B. Competency Evidence
It has long been the rule in Texas thatHN5 incompetent evidence is legally insufficient
to support a judgment, even if admitted without objection. 29 Thus, evidence showing
it to be incompetent cannot be disregarded, even if the result is contrary to the verdict.
If the rule were otherwise, incompetent evidence would always be legally sufficient,
because the evidence showing it to be incompetent could never be [**18] considered.

Thus, for example, if an eyewitness’s location renders a clear view of an accident
″physically impossible,″ it is no evidence of what occurred, even if the eyewitness
thinks otherwise. 30 Similarly, an employee’s testimony that he was in the course and
scope of his employment is legally insufficient to support a verdict against his employer
if the evidence shows that legal conclusion to be incompetent. 31
 [**19] This exception frequently applies to expert testimony. When expert testimony
is required, lay evidence supporting liability is legally insufficient. 32 In [*813] such
cases, a no-evidence review cannot disregard contrary evidence showing the witness
was unqualified to give an opinion. 33 And if an expert’s opinion is based on certain

28
    Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, 684, 685, 47 Tex. Sup. Ct. J. 649 (Tex. 2004) (holding no evidence
supported defect as comments from deposition ″were read out of context″).
29
     Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 n.1, 47 Tex. Sup. Ct. J. 559 (Tex. 2004) (citing Henry
v. Phillips, 105 Tex. 459, 151 S.W. 533, 538 (Tex. 1912)). This rule was changed for hearsay evidence in 1983. See TEX. R. EVID. 802
(″Inadmissible hearsay admitted without objection shall not be denied probative value merely because it is hearsay.″).
30
     Tex. & P. Ry. Co. v. Ball, 96 Tex. 622, 75 S.W. 4, 6 (Tex. 1903).
31
     Minyard Food Stores, Inc. v. Goodman, 80 S.W.3d 573, 579, 45 Tex. Sup. Ct. J. 828 (Tex. 2002) (holding defamation was not in
course and scope of employment as duties required employee to cooperate in investigation but not to lie); Robertson Tank Lines, Inc.
v. Van Cleave, 468 S.W.2d 354, 360, 14 Tex. Sup. Ct. J. 391 (Tex. 1971) (holding truck driver was not in course of employment during
social visit to his father).
32
    Bowles v. Bourdon, 148 Tex. 1, 219 S.W.2d 779, 782-83 (Tex. 1949) (affirming directed verdict against malpractice claim as
inadequate expert testimony from doctor of same school or practice as defendant rendered proof legally insufficient).
33
     See Leitch v. Hornsby, 935 S.W.2d 114, 119, 40 Tex. Sup. Ct. J. 159 (Tex. 1996).

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assumptions about the facts, we cannot disregard evidence showing those assumptions
were unfounded. 34
                                                                                                             35
 [**20] After we adopted gate-keeping standards for expert testimony,      evidence that
failed to meet reliability standards was rendered not only inadmissible but incompetent
as well. 36 Thus, an appellate court conducting a no-evidence review cannot consider
only an expert’s bare opinion, but must also consider contrary evidence showing it has
no scientific basis. 37 Similarly, review of an expert’s damage estimates cannot
disregard the expert’s admission on cross-examination that none can be verified. 38
Thus, HN6 evidence that might be ″some evidence″ when considered [**21] in isolation
is nevertheless rendered ″no evidence″ when contrary evidence shows it to be
incompetent. Again, such evidence cannot be disregarded; it must be an exception either
to the exclusive standard of review or to the definition of contrary evidence.

C. Circumstantial Equal Evidence

As noted above, Justice Calvert believed the exclusive standard applied only when a
no-evidence challenge asserted the evidence was no more than a scintilla. 39 But he went
on to note a ″variation″ that required contrary inferences to be considered when the
equal-inference rule applied. 40

In claims or defenses supported only by meager circumstantial evidence, the evidence
does not rise above a scintilla (and thus is legally insufficient) if jurors would have to
guess whether a vital fact exists. 41 ″When the circumstances are equally consistent with
34
    See Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499-500, 38 Tex. Sup. Ct. J. 848 (Tex. 1995) (holding opinion that spray
caused frostbite was legally insufficient as it assumed absence of redness when plaintiff admitted the contrary); Roark v. Allen, 633
S.W.2d 804, 809, 25 Tex. Sup. Ct. J. 348 (Tex. 1982) (holding opinion that physician should have warned of possible skull fracture was
legally insufficient as it assumed physician was aware of fracture when there was no proof he was).
35
    See E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 556, 38 Tex. Sup. Ct. J. 852 (Tex. 1995) (adopting reasoning
of Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 125 L. Ed. 2d 469, 113 S. Ct. 2786 (1993)).
36
     Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 714, 720 (Tex. 1997).
37
     Id. at 711, 724-30.
38
     Kerr-McGee Corp. v. Helton, 133 S.W.3d 245, 254-57, 47 Tex. Sup. Ct. J. 248 (Tex. 2004).
39
     Calvert, supra note 12, at 364.
40
     38 Tex. L. Rev. at 364-65.
41
    Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601, 47 Tex. Sup. Ct. J. 266 (Tex. 2004) (holding evidence that truck caught fire
unaccompanied by proof identifying any defect did not exceed a scintilla, as jurors would have to guess cause); Marathon Corp. v.
Pitzner, 106 S.W.3d 724, 729, 46 Tex. Sup. Ct. J. 689 (Tex. 2003) (per curiam); Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387, 392,
41 Tex. Sup. Ct. J. 187 (Tex. 1997); W. Tel. Corp. v. McCann, 128 Tex. 582, 99 S.W.2d 895, 900 (Tex. 1937); Calvert, supra note 12,
at 365.

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either of two facts, neither fact may be inferred.″ 42 In such cases, we must ″view each
piece of [**22] circumstantial [*814] evidence, not in isolation, but in light of all the
known circumstances.″ 43
Justice Calvert argued there was ″no necessity for [**23] the variation″ because drawing
an inference based on meager evidence was unreasonable whether or not the reviewing
court considered the opposing inferences. 44 Nevertheless, he recognized that ″the
opposing inference is present and it does no harm to note its presence.″ 45

In subsequent cases this Court has continued to note rather than disregard the presence
of equal but opposite inferences, often because lower courts have overlooked them.
Thus, for example, one might infer from cart tracks in spilled macaroni salad that it had
been on the floor a long time, but one might also infer the opposite-- that a sloppy
shopper recently did both. 46 [**24] Similarly, when injury or death occurs without
eyewitnesses and only meager circumstantial evidence suggests what happened, we
cannot disregard other meager evidence of equally likely causes. 47
Thus, HN7 when the circumstantial evidence of a vital fact is meager, a reviewing court
must consider not just favorable but all the circumstantial evidence, and competing
inferences as well.

D. Conclusive Evidence

Next, Justice Calvert noted that Texas courts conducting a no-evidence review
traditionally do not disregard contrary evidence that conclusively establishes the
opposite of a vital fact. 48 [**25] He argued that this is to some extent not a ″true″
42
    Tubelite, a Div. of Indal, Inc. v. Risica & Sons, Inc., 819 S.W.2d 801, 805, 35 Tex. Sup. Ct. J. 225 (Tex. 1991); see also Litton Indus.
Prods., Inc. v. Gammage, 668 S.W.2d 319, 324, 27 Tex. Sup. Ct. J. 166 (Tex. 1984) (citing Tex. Sling Co. v. Emanuel, 431 S.W.2d 538,
541, 11 Tex. Sup. Ct. J. 582 (Tex. 1968)).
43
     Lozano, 52 S.W.3d at 167.
44
     Calvert, supra note 12, at 365.
45
     Id.
46
     Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 938, 41 Tex. Sup. Ct. J. 811 (Tex. 1998).
47
     See Marathon Corp. v. Pitzner, 106 S.W.3d 724, 729, 46 Tex. Sup. Ct. J. 689 (Tex. 2003) (per curiam); McCann, 99 S.W.2d at 900.

48
    Calvert, supra note 12, at 363-64. But other commentators disagree. See Powers, supra note 10, at 1703-10. We have held that a
″conclusively and as a matter of law″ point may be asserted under a ″no evidence″ point. O’Neil v. Mack Trucks, Inc., 542 S.W.2d 112,
113, 19 Tex. Sup. Ct. J. 462 (Tex. 1976). And the cases in this section note that conclusive proof is often asserted by parties that do not
carry the burden of proof. See also Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241, 44 Tex. Sup. Ct. J. 664 (Tex. 2001) (per curiam)
(court must first examine record for evidence supporting verdict, ignoring all evidence to the contrary; if there is no such evidence, the
court then examines the entire record to see if the contrary finding is established as a matter of law).

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no-evidence claim, as proponents may have to show not only that no evidence supports
the verdict but that the opposite was proved as a matter of law. 49
HN8 There are several types of conclusive evidence. First, an appellate court
conducting a legal sufficiency review cannot ″disregard undisputed evidence that allows
of only one logical inference.″ 50 [**26] By definition, such evidence can be viewed in
only one light, and reasonable jurors can reach only one conclusion from it. Jurors are
not free to reach a verdict contrary to such evidence; 51 indeed, uncontroverted issues
 [*815] need not be submitted to a jury at all. 52

HN9 Reviewing legal sufficiency in such cases encompasses a general no-evidence
review, because if some evidence supports the verdict then the contrary evidence was
not ″undisputed.″ But the review does not stop there; [**27] the evidence must also
have only one logical inference. Undisputed evidence that reasonable jurors could
disbelieve has two: (1) it is true, or (2) it is not.
Most often, undisputed contrary evidence becomes conclusive (and thus cannot be
disregarded) when it concerns physical facts that cannot be denied. Thus, no evidence
supports an impaired-access claim if it is undisputed that access remains along 90
percent of a tract’s frontage. 53 Evidence that a buyer believed a product had been
repaired is conclusively negated by an accompanying letter to the contrary. 54 And an
insured’s liability has not been determined by an ″actual trial″ if the insured did not
appear, present evidence, or challenge anything presented by his opponent. 55
[**28] Undisputed contrary evidence may also become conclusive when a party admits
it is true. Thus, a claimant’s admission that he was aware of a dangerous premises


49
    Calvert, supra note 12, at 363-64. But see, e.g., Cecil v. Smith, 804 S.W.2d 509, 510 n.2, 34 Tex. Sup. Ct. J. 383 (Tex. 1991) (″Cecil’s
points that (1) there was no evidence to support the findings and (2) the contrary of each finding was established as a matter of law will
hereinafter collectively be referred to as her ″no evidence″ points.″).
50
    St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 519-20, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.) (quoting Universe Life Ins. Co.
v. Giles, 950 S.W.2d 48, 51 n.1, 40 Tex. Sup. Ct. J. 810 (Tex. 1997)).
51
     Tex. & N.O.R Co. v. Burden, 146 Tex. 109, 203 S.W.2d 522, 528, 530 (Tex. 1947); see also Prudential Ins. Co. of Am. v. Krayer,
366 S.W.2d 779, 783, 6 Tex. Sup. Ct. J. 381 (Tex. 1963) (finding evidence of suicide undisputed after disregarding disputed portion of
facts).
52
     Sullivan v. Barnett, 471 S.W.2d 39, 44, 14 Tex. Sup. Ct. J. 416 (Tex. 1971); Wright v. Vernon Compress Co., 156 Tex. 474, 296
S.W.2d 517, 523 (Tex. 1956) (″The trial court is required to submit only controverted issues. No jury finding is necessary to establish
undisputed facts.″); Clark v. Nat’l Life & Accident Ins. Co., 145 Tex. 575, 200 S.W.2d 820, 822 (Tex. 1947) (″Uncontroverted questions
of fact need not be and should not be submitted to the jury for its determination.″); S. Underwriters v. Wheeler, 132 Tex. 350, 123 S.W.2d
340, 341 (Tex. 1939).
53
     County of Bexar v. Santikos, 144 S.W.3d 455, 460-61, 47 Tex. Sup. Ct. J. 1010 (Tex. 2004).
54
     PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 97-98, 47 Tex. Sup. Ct. J. 822 (Tex. 2004).
55
     State Farm Lloyds Ins. Co. v. Maldonado, 963 S.W.2d 38, 40, 41 Tex. Sup. Ct. J. 443 (Tex. 1998).

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condition is conclusive evidence he needed no warning about it. 56 Similarly, an
ex-employee’s admission that she obtained other employment may prove conclusively
that she did not detrimentally rely on a defendant’s promise to re-hire her. 57 And jurors
may not find that an indictment was based on a defendant’s misleading report when the
district attorney admits it was his own mistake. 58
164 S.W.3d 607, 48 Tex. Sup. Ct. J. 226
     [**29]It is impossible to define precisely when undisputed evidence becomes
conclusive. For example, an injured employee’s return to work may prove conclusively
that an injury was not total, 59 or it may not. 60 Circumstances in which a body is found
may conclusively establish suicide, 61 or allow [*816] jurors to infer otherwise. 62
 [**30] Evidence is conclusive only if reasonable people could not differ in their
conclusions, 63 a matter that depends on the facts of each case.
There is another category of conclusive evidence, in which the evidence is disputed.
HN10 Undisputed evidence and conclusive evidence are not the same -- undisputed
evidence may or may not be conclusive, and conclusive evidence may or may not be
undisputed.
Thus, for example, in Murdock v. Murdock, we found no evidence to support a verdict
establishing the defendant’s paternity when blood tests conclusively proved he was not
the child’s father. 64 The evidence was directly disputed -- the child’s mother testified
she had conjugal relations with no one else during the relevant time. 65 [**31]

56
      Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709-10, 46 Tex. Sup. Ct. J. 530 (Tex. 2003) (per curiam).
57
      See Johnson & Johnson Med., Inc. v. Sanchez, 924 S.W.2d 925, 930, 39 Tex. Sup. Ct. J. 790 (Tex. 1996).
58
    King v. Graham, 126 S.W.3d 75, 78-79, 47 Tex. Sup. Ct. J. 85 (Tex. 2003) (per curiam) (holding no evidence supported malicious
prosecution claim as district attorney admitted prosecution was due to item he overlooked rather than any false statements by defendants).

59
    Travelers Ins. Co. v. Seabolt, 361 S.W.2d 204, 206, 6 Tex. Sup. Ct. J. 44 (Tex. 1962) (return to regular job in which use of hand
was required conclusively established claimant did not suffer total loss of use).
60
    Navarette v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 309-10, 29 Tex. Sup. Ct. J. 282 (Tex. 1986) (return to work did not
conclusively establish injury was not total as claimant could not do regular work and employer voluntarily accommodated her with lesser
duties).
61
      See, e.g., Prudential Ins. Co. of Am. v. Krayer, 366 S.W.2d 779, 783, 6 Tex. Sup. Ct. J. 381 (Tex. 1963).
62
      See Republic Nat’l Life Ins. Co. v. Heyward, 536 S.W.2d 549, 552, 19 Tex. Sup. Ct. J. 280 (Tex. 1976).
63
   Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 340, 42 Tex. Sup. Ct. J. 43 (Tex. 1998); Triton Oil & Gas Corp. v. Marine
Contractors & Supply, Inc., 644 S.W.2d 443, 446, 26 Tex. Sup. Ct. J. 73 (Tex. 1982).
64
      811 S.W.2d 557, 560, 34 Tex. Sup. Ct. J. 733 (Tex. 1991).
65
      Id. at 558.

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Nevertheless, we held there was no evidence to support the paternity verdict because of
conclusive evidence to the contrary. 66
Similarly, in Texas & New Orleans Railroad Co. v. Compton, we found no evidence that
a railroad’s negligence caused an automobile to slam into the sixtieth car of a
slow-moving train. 67 Again, the evidence was hotly disputed -- while railroad witnesses
testified that warning signs were in place at the crossing, the car’s driver and a passenger
testified they saw nothing, and would have been able to stop if they had. 68 Nevertheless,
we held there was no evidence to support the claim because, if the driver could not see
the side of a train before he hit it, he could not have seen a crossing sign either. 69

Of course, there are few instances in which disputed evidence is conclusive, and many
instances in which [**32] undisputed evidence is not. As our sister court has noted,
testimony by a paid informant is legally sufficient to support a conviction, even if
″twenty nuns testify that the defendant was with them at the time, far from the scene of
the crime … [and] twenty more nuns testify that they saw the informant commit the
crime.″ 70 But a more famous clerical hypothetical by Judge Learned Hand shows the
opposite limit:

      If, however, it were proved by twenty bishops that either party, when he used the
      words [in a contract], intended something else than the usual meaning which the
      law imposes upon them, he would still be held . . . . 71

While jurors may generally believe either sinners or saints, their discretion is limited
when it is proved beyond question that an ″eyewitness″ was actually far away in prison
or totally blind on the day of the crime.
     [**33]HN11 Proper legal-sufficiency review prevents reviewing courts from
substituting [*817] their opinions on credibility for those of the jurors, but proper
review also prevents jurors from substituting their opinions for undisputed truth. When
evidence contrary to a verdict is conclusive, it cannot be disregarded.

E. Clear-and-Convincing Evidence
66
      Id. at 560. In defense of jurors, it should be noted that the trier-of-fact in Murdock was a judge.
67
      135 Tex. 7, 136 S.W.2d 1113, 1115 (Tex. 1940).
68
      Id.
69
      Id.
70
      Clewis v. State, 922 S.W.2d 126, 133 n.12 (Tex. Crim. App. 1996) (en banc) (citation omitted).
71
      Hotchkiss v. Nat’l City Bank, 200 F. 287, 293 (S.D.N.Y. 1911).

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Since the time of Justice Calvert’s article, new claims and burdens of proof have arisen
that require additions to the four types of no-evidence review Justice Calvert considered
exhaustive.
Beginning with the United States Supreme Court’s opinion in Jackson v. Virginia,
appellate courts have recognized that, while ″one slender bit of evidence″ may be all a
reviewing court needs to affirm a verdict based on the preponderance of the evidence,
a higher burden of proof requires a higher standard of review. 72 As we recently stated,
the standard for legal sufficiency works in tandem with the standard of review --
″whenever the standard of proof at trial is elevated, the standard of appellate review
must likewise be elevated.″ 73 If the rule were otherwise, legally sufficient evidence to
support a preponderance-of-the-evidence verdict would satisfy [**34] the higher
burdens as well, thus rendering their differences meaningless. 74
Accordingly, we have held that a legal sufficiency review must consider all the evidence
(not just that favoring the verdict) in reviewing cases of parental termination, 75 [**35]
defamation, 76 and punitive damages. 77 In such cases, again, evidence contrary to a
verdict cannot be disregarded.

F. Consciousness Evidence
Further, we have had to particularize legal-sufficiency review in cases involving what
a party knew or why it took a certain course, as they are not amenable to review under
the exclusive standard.

Long before gross negligence had to meet a clear-and-convincing burden, we recognized
in Burk Royalty Co. v. Walls that no-evidence review of such findings had to include ″all
of the surrounding facts, circumstances, and conditions, not just individual elements or
facts.″ 78 [**36] As then Chief Justice Greenhill noted in concurring, speeding and
running a red light may not be legally sufficient evidence of gross negligence if one’s
72
     443 U.S. 307, 320 n.14, 61 L. Ed. 2d 560, 99 S. Ct. 2781 (1979).
73
     Southwestern Bell Tel. Co. v. Garza, ___ S.W.3d ___, ___, 48 Tex. Sup. J. 226 (Tex. 2004).
74
   Our sister court reviews the legal sufficiency of criminal convictions by considering ″all evidence which the jury was permitted,
whether rightly or wrongly, to consider″ in the light most favorable to the prosecution. Moff v. State, 131 S.W.3d 485, 488 (Tex. Crim.
App. 2004); see also Vodochodsky v. State, 158 S.W.3d 502, 509 (Tex. Crim. App. 2004).
75
     In re J.F.C., 96 S.W.3d 256, 266 (Tex. 2002).
76
    Bentley v. Bunton, 94 S.W.3d 561, 596, 45 Tex. Sup. Ct. J. 1172 (Tex. 2002); Turner v. KTRK Television, Inc., 38 S.W.3d 103, 120,
44 Tex. Sup. Ct. J. 244 (Tex. 2000).
77
     Garza, ___ S.W.3d at ___, 48 Tex. Sup. J. 226.
78
     616 S.W.2d 911, 922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981).

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wife and daughter are bleeding to death in the back seat. 79 Reviewing courts assessing
evidence of conscious indifference cannot disregard part of what a party was conscious
of. 80

For the same reasons, the exclusive standard of review has proven problematic in
insurance bad-faith cases. Liability in [*818] such cases requires proof that the insurer
denied coverage after it became reasonably clear. 81 But that standard will always be met
if reviewing courts must disregard any evidence that coverage was unclear. 82
Subsequent cases show that reviewing courts are in fact looking at all the evidence to
determine whether coverage was reasonably clear. 83
     [**37]This problem arises in other contexts as well. In discrimination cases,
discharged employees will never have to prove that the reason given for termination was
a pretext if no-evidence review must disregard that reason. 84 Government officials will
never be entitled to immunity if we consider only evidence suggesting they should have
acted differently. 85 And limitations will never run under the discovery rule if reviewing
courts must disregard all evidence that claimants knew of their claims. 86
 [**38] This is not to say a reviewing court may credit a losing party’s explanations or
excuses if jurors could disregard them. For example, while an insurer’s reliance on an
79
      Id. at 926 (Greenhill, C.J., concurring).
80
      See Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 234-35, 47 Tex. Sup. Ct. J. 559 (Tex. 2004).
81
      Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 55-56, 40 Tex. Sup. Ct. J. 810 (Tex. 1997).
82
      See id. at 51 (noting same problem with previous test whether insurer had reasonable basis for denying claim).
83
     See Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d 253, 262-63, 45 Tex. Sup. Ct. J. 659 (Tex. 2002) (finding no evidence
of bad faith based in part on defendant’s correspondence showing misunderstanding regarding settlement terms); State Farm Fire & Cas.
Co. v. Simmons, 963 S.W.2d 42, 45, 41 Tex. Sup. Ct. J. 371 (Tex. 1998)(affirming bad-faith verdict after noting that insurer gave
contradictory reasons for not interviewing potential arsonists); Minn. Life Ins. Co. v. Vasquez, 133 S.W.3d 320, 330 (Tex. App.--Corpus
Christi 2004, pet. filed) (finding some evidence of bad faith because, though insurer showed hospital stymied its efforts to obtain records,
insurer failed to seek same information from other sources); Allstate Tex. Lloyds v. Mason, 123 S.W.3d 690, 704-06 (Tex. App.--Fort
Worth 2003, no pet.) (reversing bad-faith verdict for legal insufficiency because insurer reasonably relied on expert report); Allison v.
Fire Ins. Exch., 98 S.W.3d 227, 249-50 (Tex. App.--Austin 2002, pet. granted, judgm’t vacated w.r.m.) (affirming bad-faith verdict after
reviewing insurer’s reasons for delay and insured’s responsive evidence); Oram v. State Farm Lloyds, 977 S.W.2d 163, 167 (Tex.
App.--Austin 1998, no pet.) (reversing bad-faith verdict for legal insufficiency because insurer’s interpretation of exclusion was
reasonable though incorrect).
84
    Wal-Mart Stores, Inc. v. Canchola, 121 S.W.3d 735, 740, 46 Tex. Sup. Ct. J. 1116 (Tex. 2003) (per curiam) (noting liability may be
established by proof of discrimination plus proof employer’s reason was pretext); Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444,
452, 40 Tex. Sup. Ct. J. 172 (Tex. 1996) (same).
85
     See, e.g., Univ. of Houston v. Clark, 38 S.W.3d 578, 583 (Tex. 2000) (noting good-faith test considers all circumstances on which
official acted).
86
    See, e.g., PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 94, 47 Tex. Sup. Ct. J. 822 (Tex. 2004)
(holding no evidence supported jury verdict applying discovery rule based on contrary evidence that claimant’s predecessor knew 3,000
windows had failed).

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expert report may foreclose bad faith recovery, 87 it will not do so if the insurer had
some reason to doubt the report. 88 But a reviewing court cannot review whether jurors
could reasonably disregard a losing party’s explanations or excuses without considering
what they were.

III. Contrary Evidence That Must Be Disregarded
As trials normally focus on issues that jurors could decide either way, reviewing [*819]
courts must disregard [**39] evidence contrary to the verdict far more often than they
must consider it. Just as no-evidence review that starts by disregarding contrary
evidence often must end up considering considerably more, no-evidence review that
begins by considering all the evidence must usually end up considering considerably
less.

Again, we do not presume to categorize all circumstances in which contrary evidence
must be disregarded; a few examples serve to demonstrate that even under the inclusive
standard, viewing all the evidence in a light favorable to the verdict often requires that
much of it be disregarded.

A. Credibility Evidence
HN12 Jurors are the sole judges of the credibility of the witnesses and the weight to give
their testimony. 89 [**40] They may choose to believe one witness and disbelieve
another. 90 Reviewing courts cannot impose their own opinions to the contrary. 91
HN13 Most credibility questions are implicit rather than explicit in a jury’s verdict.
Thus, reviewing courts must assume jurors decided all of them in favor of the verdict
if reasonable human beings could do so. Courts reviewing all the evidence in a light


87
     See, e.g., Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 194-95, 42 Tex. Sup. Ct. J. 215, 42 Tex. Sup. Ct. J. 610 (Tex. 1998)
(finding no evidence insurer denied claim in bad faith due to conflicting medical evidence).
88
    See, e.g., State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448, 40 Tex. Sup. Ct. J. 794 (Tex. 1997) (holding some evidence showed
expert report was pretext and thus denial of claim had no reasonable basis).
89
    Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761, 46 Tex. Sup. Ct. J. 1133 (Tex. 2003); Jaffe Aircraft Corp. v. Carr, 867
S.W.2d 27, 28, 37 Tex. Sup. Ct. J. 268 (Tex. 1993); McGalliard v. Kuhlmann, 722 S.W.2d 694, 697, 30 Tex. Sup. Ct. J. 96 (Tex. 1986);
Edrington v. Kiger, 4 Tex. 89, 93 (1849).
90
     McGalliard, 722 S.W.2d at 697; Silcott v. Oglesby, 721 S.W.2d 290, 293, 30 Tex. Sup. Ct. J. 114 (Tex. 1986); Ford v. Panhandle
& Santa Fe Ry. Co., 151 Tex. 538, 252 S.W.2d 561, 563 (Tex. 1952) (holding it was up to jurors ″to resolve conflicts and inconsistencies
in the testimony of any one witness as well as in the testimony of different witnesses″); Houston, E. & W.T. Ry. Co. v. Runnels, 92 Tex.
305, 47 S.W. 971, 972 (Tex. 1898).
91
     Turner v. KTRK Television, Inc., 38 S.W.3d 103, 120, 44 Tex. Sup. Ct. J. 244 (Tex. 2000).

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favorable to the verdict thus assume that jurors credited testimony favorable to the
verdict and disbelieved testimony contrary to it. 92
 [**41] For example, viewing the evidence in the light favorable to the verdict means
that if both parties in a traffic accident testify they had the green light, an appellate court
must presume the prevailing party did and the losing party did not. If the parties to an
oral contract testify to conflicting terms, a reviewing court must presume the terms were
those asserted by the winner. When all the evidence is viewed in the light most favorable
to the jury verdict, some of it must be completely discounted. Though not disregarded
at the outset, the end result is the same.

This has always been our practice in cases using the inclusive scope of review. Thus, we
have concluded that a bailee sold cotton without the bailor’s consent, despite the
former’s denials, because the jury verdict favored the latter. 93 [**42] And we have
affirmed a gross negligence verdict based on testimony that the defendant’s speed was
80 miles per hour, without mentioning his own testimony to a speed half that. 94
Nor is it necessary to have testimony from both parties before jurors [*820] may
disbelieve either. HN14 Jurors may disregard even uncontradicted and unimpeached
testimony from disinterested witnesses. 95 Thus, an architect’s uncontradicted testimony
that he relied on a 20-year warranty was not binding on jurors when the bid
specifications he prepared included only much shorter warranties. [**43] 96 Nor was an
insured’s uncontradicted testimony about lost furnishings binding on jurors when the
fire scene contained several indications of arson but few of burnt furniture. 97 Even
uncontroverted expert testimony does not bind jurors unless the subject matter is one for
experts alone. 98


92
     Runnels, 47 S.W. at 972.
93
     Cochran v. Wool Growers Cent. Storage Co., 140 Tex. 184, 166 S.W.2d 904, 907 (Tex. 1942) (noting the Court ″read the entire
statement of facts″).
94
     Harbin v. Seale, 461 S.W.2d 591, 594, 14 Tex. Sup. Ct. J. 128 (Tex. 1970); compare Harbin v. Seale, 454 S.W.2d 271, 272 (Tex.
Civ. App.--Dallas 1970) (reporting defendant’s testimony that he was traveling only 40 miles per hour), rev’d, 461 S.W.2d 591, 14 Tex.
Sup. Ct. J. 128 (Tex. 1970).
95
    MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 653-54, 42 Tex. Sup. Ct. J. 656 (Tex. 1999) (holding evidence
allowed jurors to disbelieve defendant’s experts’ testimony even though plaintiff’s expert’s testimony was shown to be in error); Runnels,
47 S.W. at 972; Cheatham v. Riddle, 12 Tex. 112, 118 (1845).
96
     PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 100, 47 Tex. Sup. Ct. J. 822 (Tex. 2004).
97
     Anchor Cas. Co. v. Bowers, 393 S.W.2d 168, 169-70, 8 Tex. Sup. Ct. J. 544 (Tex. 1965).
98
   Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 338, 42 Tex. Sup. Ct. J. 43 (Tex. 1998); McGalliard v. Kuhlmann, 722
S.W.2d 694, 697, 30 Tex. Sup. Ct. J. 96 (Tex. 1986).

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Of course, HN15 ″the jury’s decisions regarding credibility must be reasonable.″ 99
  [**44]    Jurors cannot ignore undisputed testimony that is clear, positive, direct,
otherwise credible, free from contradictions and inconsistencies, and could have been
readily controverted. 100 And as noted above, they are not free to believe testimony that
is conclusively negated by undisputed facts. But whenever reasonable jurors could
decide what testimony to discard, a reviewing court must assume they did so in favor
of their verdict, and disregard it in the course of legal sufficiency review.

B. Conflicting Evidence
HN16 It is the province of the jury to resolve conflicts in the evidence. 101 [**45]
Accordingly, courts reviewing all the evidence in a light favorable to the verdict must
assume that jurors resolved all conflicts in accordance with that verdict. 102
Again, this has always been the case even in those cases using the inclusive scope of
review. For example, in such cases we have sometimes detailed only the evidence that
supported a jury’s fraud finding. 103 We have affirmed a bad-faith verdict for legal
sufficiency despite ″significant evidence″ that the insurer acted in [*821] good faith.
104
    We have found some evidence of lost profits, even though income tax returns
showed the contrary. [**46] 105 And we have affirmed a jury’s negligence finding
despite a defendant’s evidence asserting it could not have prevented the accident. 106
In none of these cases did we state that the scope of review required us to disregard
evidence contrary to the verdict; instead, we started by considering the entire record in
each. But in each case we either discounted or never mentioned conflicting evidence
contrary to the verdict because viewing the evidence in the light favorable to the verdict
required us to do so.
99
      Bentley v. Bunton, 94 S.W.3d 561, 599, 45 Tex. Sup. Ct. J. 1172 (Tex. 2002).
100
     See TEX. R. CIV. P. 166a(c); Wal-Mart Stores, Inc. v. Reece, 81 S.W.3d 812, 817, 45 Tex. Sup. Ct. J. 863 (Tex. 2002) (finding no
evidence that store knew of puddle based in part on uncontradicted testimony by only employee in the area); In re Doe 4, 19 S.W.3d
322, 325, 43 Tex. Sup. Ct. J. 537 (Tex. 2000); WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 574, 41 Tex. Sup. Ct. J. 1394 (Tex. 1998)
(holding reporter’s detailed explanation of foundation of report established lack of malice as matter of law).
101
     See, e.g., Dresser Indus., Inc. v. Lee, 880 S.W.2d 750, 754, 37 Tex. Sup. Ct. J. 67 (Tex. 1993); Lyons v. Millers Cas. Ins. Co., 866
S.W.2d 597, 601, 37 Tex. Sup. Ct. J. 241 (Tex. 1993); Biggers v. Cont’l Bus Sys., Inc., 157 Tex. 351, 303 S.W.2d 359, 365 (Tex. 1957);
Howard Oil Co. v. Davis, 76 Tex. 630, 13 S.W. 665, 667 (Tex. 1890) (holding reviewing court must uphold jury verdict despite strong
evidence to the contrary if evidence is conflicting).
102
     See, e.g., Gen. Motors Corp. v. Sanchez, 997 S.W.2d 584, 592, 42 Tex. Sup. Ct. J. 969 (Tex. 1999); Caller-Times Publ’g Co. v. Triad
Communications, Inc., 826 S.W.2d 576, 580, 35 Tex. Sup. Ct. J. 509 (Tex. 1992); Bendalin v. Delgado, 406 S.W.2d 897, 899, 10 Tex.
Sup. Ct. J. 18 (Tex. 1966).
103
      Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48-49, 41 Tex. Sup. Ct. J. 289 (Tex. 1998).
104
      Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 286, 41 Tex. Sup. Ct. J. 389 (Tex. 1998).
105
      White v. Southwestern Bell Tel. Co., 651 S.W.2d 260, 262-63, 26 Tex. Sup. Ct. J. 441 (Tex. 1983).
106
      Hall v. Med. Bldg. of Houston, 151 Tex. 425, 251 S.W.2d 497, 502 (Tex. 1952).

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Of course, it is not always clear whether evidence is conflicting. HN17 Evidence is not
conflicting just because the parties cannot agree to it. For example, evidence that a
hospital controlled a doctor’s rotation and patient assignments raises no material conflict
with evidence that a different entity controlled the details of medical treatment, as only
the latter is material in a malpractice case. 107 Similarly, evidence showing the terms of
one loan does not conflict with undisputed evidence that the parties never reached an
agreement [**47] regarding the terms of another. 108

But in every circumstance in which reasonable jurors could resolve conflicting evidence
either way, reviewing courts must presume they did so in favor of the prevailing party,
and disregard the conflicting evidence in their legal sufficiency review.

C. Conflicting Inferences
HN18 Even if evidence is undisputed, it is the province of the jury to draw from it
whatever inferences they wish, so long as more than one is possible and the jury must
not simply guess. Thus, in product liability cases jurors may find evidence of a defect
from subsequent modifications, even if there were plenty of other reasons for the
changes. 109 Even if a defendant admits approaching an intersection from the wrong way
on a one-way street, jurors may infer the plaintiff failed to keep a proper lookout,
 [**48] as that is one possible inference from the accident itself. 110 Similarly, jurors
may infer that relatives tore down posters of a missing child to assist the child’s father,
even though another inference was that the signs simply embarrassed them. 111

Accordingly, courts reviewing all the evidence in a light favorable to the verdict must
assume jurors made all inferences in favor of their verdict if reasonable minds could,
and disregard all other inferences in their legal sufficiency review.

IV. Reconciling the Standards

Having noted the dual lines of authority stating the scope of no-evidence review, and the
proper application and exceptions to each, [**49] we turn to the question of which one
is correct. For the reasons [*822] discussed below, we believe the answer is both.

A. Goals: The Standards Must Be The Same
107
      St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 542-43, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.).
108
      T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221, 36 Tex. Sup. Ct. J. 259 (Tex. 1992).
109
      Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 341-42, 42 Tex. Sup. Ct. J. 43 (Tex. 1998).
110
      De Winne v. Allen, 154 Tex. 316, 277 S.W.2d 95, 98-99 (Tex. 1955).
111
     Lozano v. Lozano, 52 S.W.3d 141, 144, 44 Tex. Sup. Ct. J. 499 (Tex. 2001) (per curiam); id. at 162-63 (Hecht, J., concurring and
dissenting).

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HN19 Whether a court begins by reviewing all the evidence or disregarding part in a
legal-sufficiency review, there can be no disagreement about where that review should
end. If the evidence at trial would enable reasonable and fair-minded people to differ in
their conclusions, then jurors must be allowed to do so. 112 [**50] A reviewing court
cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls
within this zone of reasonable disagreement. 113

Similarly, there is no disagreement about how a reviewing court should view evidence
in the process of that review. HN20 Whether a reviewing court starts with all or only
part of the record, the court must consider evidence in the light most favorable to the
verdict, and indulge every reasonable inference that would support it. 114 [**51] But if
the evidence allows of only one inference, neither jurors nor the reviewing court may
disregard it. 115

Given these premises, it is no coincidence that the two standards should reach the same
result -- indeed they must. Any scope of appellate review smaller than what reasonable
jurors could believe will reverse some verdicts that are perfectly reasonable; any scope
of review larger than what reasonable jurors could believe will affirm some verdicts that
are not.
Further, HN21 the two must coincide if this Court is to perform its constitutional duties.
Although factual sufficiency has been the sole domain of the intermediate appellate
courts in Texas since 1891, our jurisdiction has always included legal sufficiency, as

112
      See Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 552, 47 Tex. Sup. Ct. J. 707 (Tex. 2004); Coastal Transp. Co. v. Crown
Cent. Petroleum Corp., 136 S.W.3d 227, 234, 47 Tex. Sup. Ct. J. 559 (Tex. 2004); Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601,
47 Tex. Sup. Ct. J. 266 (Tex. 2004); Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 922, 41 Tex. Sup. Ct. J. 763 (Tex. 1998); Merrell Dow
Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499, 38 Tex. Sup. Ct. J.
848 (Tex. 1995); Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25, 37 Tex. Sup. Ct. J. 883 (Tex. 1994); Orozco v. Sander, 824 S.W.2d 555,
556, 35 Tex. Sup. Ct. J. 338 (Tex. 1992); Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63, 26 Tex. Sup. Ct. J. 383 (Tex. 1983); Corbin
v. Safeway Stores, Inc., 648 S.W.2d 292, 297, 26 Tex. Sup. Ct. J. 321 (Tex. 1983) (per curiam).
113
     See William Powers, Jr. & Jack Ratliff, Another Look at ″No Evidence″ & ″Insufficient Evidence,″ 69 TEX. L.R. 515, 517-20
(1991).
114
     Gragg, 151 S.W.3d at 552; St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 519, 46 Tex. Sup. Ct. J. 142 (Tex. 2002) (plurality op.);
Southwestern Bell Mobile Sys., Inc. v. Franco, 971 S.W.2d 52, 54, 41 Tex. Sup. Ct. J. 930 (Tex. 1998) (per curiam); Formosa Plastics
Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48, 41 Tex. Sup. Ct. J. 289 (Tex. 1998); Havner, 953 S.W.2d at 711;
Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 75, 40 Tex. Sup. Ct. J. 810 (Tex. 1997) (Hecht, J., concurring); Preferred Heating & Air
Conditioning Co. v. Shelby, 778 S.W.2d 67, 68, 33 Tex. Sup. Ct. J. 18 (Tex. 1989) (per curiam); Burk Royalty Co. v. Walls, 616 S.W.2d
911, 922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981); Harbin v. Seale, 461 S.W.2d 591, 592, 14 Tex. Sup. Ct. J. 128 (Tex. 1970); W. Tel. Corp.
v. McCann, 128 Tex. 582, 99 S.W.2d 895, 898 (Tex. 1937).
115
    See St. Joseph Hosp., 94 S.W.3d at 519-20 (Tex. 2002) (plurality op.); Giles, 950 S.W.2d at 51 n. 1 (citing Wininger v. Ft. Worth
& D.C. Ry. Co., 105 Tex. 56, 143 S.W. 1150, 1152 (Tex. 1912) and Tex. & N.O. Ry. Co. v. Rooks, 293 S.W. 554, 556-57 (Tex. Comm’n.
App. 1927)).

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that is a question of law, not of fact. 116 Construing either standard to require us to do
less would be just as unconstitutional as construing [**52] either to allow us to do more.

This is not to say judges and lawyers will always agree whether evidence is legally
 [*823] sufficient. As discussed more fully below, reasonable people may disagree about
what reasonable jurors could or must believe. But once those boundaries are settled, any
standard of review must coincide with those boundaries -- affirming jury verdicts based
on evidence within them and reversing jury verdicts based on evidence that is not. Any
standard that does otherwise is improperly applied.

B. Other Motions: The Standards Must Be The Same

Just as the scope of no-evidence review must coincide with its goals, the scope of review
should not depend upon the motion in which it is asserted. Judgment without or against
a jury verdict is proper [**53] at any course of the proceedings only when the law does
not allow reasonable jurors to decide otherwise. Accordingly, the test for legal
sufficiency should be the same for summary judgments, directed verdicts, judgments
notwithstanding the verdict, and appellate no-evidence review.

Our statements of the standard for reviewing a directed verdict present the same mixed
bag found with general no-evidence review. We have most often used the exclusive
standard, stating that courts reviewing directed verdicts must consider only evidence
supporting the nonmovant’s case and disregard all contrary evidence. 117 But we have
also stated that reviewing courts should use the inclusive standard, considering all the
evidence in a light contrary to the directed verdict. [**54] 118 And we have sometimes


116
      Southwestern Bell Tel. Co. v. Garza, ___ S.W.3d ___, ___, 48 Tex. Sup. J. 226 (Tex. 2004) (citing Choate v. San Antonio & A.P.
Ry., 91 Tex. 406, 44 S.W. 69, 69 (Tex. 1898); Muhle v. N.Y., T. & M. Ry., 86 Tex. 459, 25 S.W. 607, 608 (Tex. 1894)).
117
      Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 234, 47 Tex. Sup. Ct. J. 559 (Tex. 2004); Qantel Bus. Sys.,
Inc. v. Custom Controls Co., 761 S.W.2d 302, 303, 32 Tex. Sup. Ct. J. 115 (Tex. 1988); Hart v. Van Zandt, 399 S.W.2d 791, 793, 9 Tex.
Sup. Ct. J. 66 (Tex. 1965); Triangle Motors v. Richmond, 152 Tex. 354, 258 S.W.2d 60, 61 (Tex. 1953); Ford v. Panhandle & Santa Fe
Ry. Co., 151 Tex. 538, 252 S.W.2d 561, 562 (Tex. 1952); Anglin v. Cisco Mortgage Loan Co., 135 Tex. 188, 141 S.W.2d 935, 938 (Tex.
1940).
118
      Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, 684, 47 Tex. Sup. Ct. J. 649 (Tex. 2004); S.V. v. R.V., 933 S.W.2d
1, 8, 39 Tex. Sup. Ct. J. 386 (Tex. 1996); Colvin v. Red Steel Co., 682 S.W.2d 243, 245, 28 Tex. Sup. Ct. J. 153 (Tex. 1984); White v.
Southwestern Bell Tel. Co., 651 S.W.2d 260, 262, 26 Tex. Sup. Ct. J. 441 (Tex. 1983); Seideneck v. Cal Bayreuther Assocs., 451 S.W.2d
752, 753, 13 Tex. Sup. Ct. J. 227 (Tex. 1970); Dunagan v. Bushey, 152 Tex. 630, 263 S.W.2d 148, 153 (Tex. 1953); Fitz-Gerald v. Hull,
150 Tex. 39, 237 S.W.2d 256, 258 (Tex. 1951); Kelly v. McKay, 149 Tex. 343, 233 S.W.2d 121, 122 (Tex. 1950); White v. White, 141
Tex. 328, 172 S.W.2d 295, 296 (Tex. 1943); McAfee v. Travis Gas Corp., 137 Tex. 314, 153 S.W.2d 442, 445 (Tex. 1941); Wellington
Oil Co. v. Maffi, 136 Tex. 201, 150 S.W.2d 60, 61 (Tex. 1941); Chicago, R.I. & G. Ry. Co. v. Carter, 261 S.W. 135, 135 (Tex. Com. App.
1924, judgm’t adopted); Charles v. El Paso Elec. Ry. Co., 254 S.W. 1094, 1094-95 (Tex. Com. App. 1923, holding approved, judgm’t
adopted).

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stated both, requiring reviewing courts to consider all the evidence in a light contrary to
the directed verdict and then to disregard all conflicting evidence that supports it. 119
 [**55] By contrast, cases concerning judgments non obstante verdicto most often
utilize the inclusive scope of review. Beginning with the 1931 amendment authorizing
trial judges to grant them, 120 we have generally reviewed such orders by considering
all the evidence in a light favorable to the [*824] verdict that was set aside. 121 [**56]
In later years we have sometimes adopted the exclusive standard, 122 but our opinions
doing so usually cite to general no-evidence cases in which no judgment n.o.v. was
involved. 123

119
     Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649, 37 Tex. Sup. Ct. J. 860 (Tex. 1994) (per curiam); Vance v. My Apartment
Steak House of San Antonio, Inc., 677 S.W.2d 480, 483, 27 Tex. Sup. Ct. J. 388 (Tex. 1984); Corbin v. Safeway Stores, Inc., 648 S.W.2d
292, 295, 26 Tex. Sup. Ct. J. 321 (Tex. 1983); Jones v. Tarrant Util. Co., 638 S.W.2d 862, 865, 25 Tex. Sup. Ct. J. 416 (Tex. 1982);
Collora v. Navarro, 574 S.W.2d 65, 68, 22 Tex. Sup. Ct. J. 120 (Tex. 1978); Henderson v. Travelers Ins. Co., 544 S.W.2d 649, 650, 20
Tex. Sup. Ct. J. 84 (Tex. 1976); Jones v. Nafco Oil & Gas, Inc., 380 S.W.2d 570, 574, 7 Tex. Sup. Ct. J. 480 (Tex. 1964).
120
     Act of April 25, 1931, 42d Leg., R.S., ch. 77, § 1, 1931 Tex. Gen. Laws 119; Myers v. Crenshaw, 134 Tex. 500, 137 S.W.2d 7, 13
(Tex. 1940); Hines v. Parks, 128 Tex. 289, 96 S.W.2d 970, 971 (Tex. 1936). Cf. Deal v. Craven, 277 S.W. 1046, 1047 (Tex. Com. App.
1925, judgm’t adopted) (″It has long been settled in this state that the judgment must follow the verdict, and that the courts are without
power to enter a judgment notwithstanding a verdict upon a material issue.″).
121
      Brown v. Bank of Galveston, Nat’l Ass’n, 963 S.W.2d 511, 513, 41 Tex. Sup. Ct. J. 437 (Tex. 1998) (″We consider the evidence
in the light most favorable to the verdict and reasonable inferences that tend to support it.″); Trenholm v. Ratcliff, 646 S.W.2d 927, 931,
26 Tex. Sup. Ct. J. 239 (Tex. 1983) (″In acting on the motion [for judgment notwithstanding the verdict], all testimony must be viewed
in a light most favorable to the party against whom the motion is sought, and every reasonable intendment deducible from the evidence
is to be indulged in that party’s favor.″) (emphasis added); Dowling v. NADW Mktg., Inc., 631 S.W.2d 726, 728, 25 Tex. Sup. Ct. J. 266
(Tex. 1982) (same); Douglass v. Panama, Inc., 504 S.W.2d 776, 777, 17 Tex. Sup. Ct. J. 142 (Tex. 1974) (same); Leyva v. Pacheco, 163
Tex. 638, 358 S.W.2d 547, 550, 5 Tex. Sup. Ct. J. 475 (Tex. 1962) (same); Houston Fire & Cas. Ins. Co. v. Walker, 152 Tex. 503, 260
S.W.2d 600, 603-04 (Tex. 1953) (affirming trial court’s implied disregard of one jury answer based on ″consideration of the transcript
as a whole″); Burt v. Lochausen, 151 Tex. 289, 249 S.W.2d 194, 199 (Tex. 1952) (″We must consider all the testimony in the record from
the standpoint most favorable to the plaintiff.″) (emphasis added); Neyland v. Brown, 141 Tex. 253, 170 S.W.2d 207, 211 (Tex. 1943)
(considering judgment non obstante veredicto ″in the light of the record as a whole″); Le Master v. Fort Worth Transit Co., 138 Tex. 512,
160 S.W.2d 224, 225 (Tex. 1942) (″We must view LeMaster’s testimony, as well as all other testimony in the record, from a standpoint
most favorable to him.″) (emphasis added); McAfee v. Travis Gas Corp., 137 Tex. 314, 153 S.W.2d 442, 445 (Tex. 1941) (″We must
regard the evidence contained in this record in its most favorable light for McAfee . . . because of the instructed verdict and judgment
non obstante veredicto.″); see also Ballantyne v. Champion Builders, Inc., 144 S.W.3d 417, 424-29, 47 Tex. Sup. Ct. J. 852 (Tex. 2004)
(upholding judgment non obstante veredicto based on conclusive evidence contrary to verdict).
122
      See Tiller v. McLure, 121 S.W.3d 709, 713, 46 Tex. Sup. Ct. J. 632 (Tex. 2003) (per curiam); Wal-Mart Stores, Inc. v. Miller, 102
S.W.3d 706, 709, 46 Tex. Sup. Ct. J. 530 (Tex. 2003) (per curiam); Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227, 34 Tex. Sup. Ct.
J. 157 (Tex. 1990); Best v. Ryan Auto Group, Inc., 786 S.W.2d 670, 671, 33 Tex. Sup. Ct. J. 314 (Tex. 1990) (per curiam); Navarette
v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 309, 29 Tex. Sup. Ct. J. 282 (Tex. 1986); Tomlinson v. Jones, 677 S.W.2d 490, 492, 27 Tex.
Sup. Ct. J. 445 (Tex. 1984); Williams v. Bennett, 610 S.W.2d 144, 145, 24 Tex. Sup. Ct. J. 110 (Tex. 1980); Freeman v. Tex. Comp. Ins.
Co., 603 S.W.2d 186, 191, 23 Tex. Sup. Ct. J. 438 (Tex. 1980); Dodd v. Tex. Farm Prods. Co., 576 S.W.2d 812, 814-15, 22 Tex. Sup.
Ct. J. 210 (Tex. 1979); Campbell v. Northwestern Nat’l Life Ins. Co., 573 S.W.2d 496, 497, 22 Tex. Sup. Ct. J. 11 (Tex. 1978); Miller
v. Bock Laundry Mach. Co., 568 S.W.2d 648, 650, 21 Tex. Sup. Ct. J. 141 (Tex. 1977); Sobel v. Jenkins, 477 S.W.2d 863, 865, 15 Tex.
Sup. Ct. J. 241 (Tex. 1972); C. & R. Transp., Inc. v. Campbell, 406 S.W.2d 191, 193, 9 Tex. Sup. Ct. J. 532 (Tex. 1966).
123
     See Tiller, 121 S.W.3d at 713 (citing Bradford v. Vento, 48 S.W.3d 749, 754, 44 Tex. Sup. Ct. J. 655 (Tex. 2001)); Miller, 102 S.W.3d
at 709 (same); Best, 786 S.W.2d at 671 (citing King v. Bauer, 688 S.W.2d 845, 846, 28 Tex. Sup. Ct. J. 406 (Tex. 1985)); Tomlinson,
677 S.W.2d at 492 (citing Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401, 24 Tex. Sup. Ct. J. 482 (Tex. 1981)); Campbell, 573

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 [**57] The one exception in which both standards do not expressly appear is in the
scope of review for summary judgments. Here, there is only one standard -- a reviewing
court must examine the entire record in the light most favorable to the nonmovant,
indulging every reasonable inference and resolving any doubts against the motion. 124
Reviewing courts do not disregard the evidence supporting the motion; [*825] if they
did, all summary judgments would be reversed.

In practice, however, a different scope of review applies when a summary judgment
motion is filed without [**58] supporting evidence. 125 In such cases, evidence
supporting the motion is effectively disregarded because there is none; under the rule,
it is not allowed. Thus, although a reviewing court must consider all the summary
judgment evidence on file, in some cases that review will effectively be restricted to the
evidence contrary to the motion.

The standards for taking any case from the jury should be the same, no matter what
motion is used. If only one standard were proper, we would not expect both to appear
in cases reviewing directed verdicts, judgments notwithstanding the verdict, and
summary judgments. But both do.

C. Federal Courts: The Standards Are The Same

The federal courts have had a similar split of authority between the inclusive and
exclusive standards for scope of review. But no longer -- the United States Supreme
Court recently concluded in Reeves v. Sanderson Plumbing Products, Inc. that the two
tests are the same. 126 [**59]
Under Rule 50 of the federal rules of procedure, a court should render judgment as a
matter of law when ″there is no legally sufficient evidentiary basis for a reasonable jury
to find for that party on that issue.″ 127 In deciding whether all or only part of the
evidence should be considered, the Supreme Court stated:

      The Courts of Appeals have articulated differing formulations as to what evidence
      a court is to consider in ruling on a Rule 50 motion. Some decisions have stated
S.W.2d at 497 (citing Martinez v. Delta Brands, Inc., 515 S.W.2d 263, 265, 18 Tex. Sup. Ct. J. 51 (Tex. 1974)); Campbell, 406 S.W.2d
at 193 (citing Cartwright v. Canode, 106 Tex. 502, 171 S.W. 696, 697-98 (Tex. 1914)).
124
     IHS Cedars Treatment Ctr. of Desoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798, 47 Tex. Sup. Ct. J. 666 (Tex. 2004); Provident Life
& Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16, 47 Tex. Sup. Ct. J. 174 (Tex. 2003); Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d
502, 506, 46 Tex. Sup. Ct. J. 21 (Tex. 2002); Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734, 736, 33 Tex. Sup. Ct. J. 697 (Tex. 1990);
Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868, 27 Tex. Sup. Ct. J. 369 (Tex. 1984).
125
      See TEX. R. CIV. P. 166a(i).
126
      530 U.S. 133, 150, 147 L. Ed. 2d 105, 120 S. Ct. 2097 (2000).
127
      FED. R. CIV. P. 50(a)(1).

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      that review is limited to that evidence favorable to the nonmoving party, while
      most have held that review extends to the entire record, drawing all reasonable
      inferences in favor of the nonmovant.
      On closer examination, this conflict seems more semantic than real. Those
      decisions holding that review under Rule 50 should be limited to evidence
      favorable to the nonmovant appear to have their genesis in Wilkerson v. McCarthy
      128
         . In Wilkerson, we stated that ″in passing upon [**60] whether there is
      sufficient evidence to submit an issue to the jury we need look only to the
      evidence and reasonable inferences which tend to support the case of″ the
      nonmoving party. 129 But subsequent decisions have clarified that this passage
      was referring to the evidence to which the trial court should give credence, not the
      evidence that the court should review. In the analogous context of summary
      judgment under Rule 56, we have stated that the court must review the record
      ″taken as a whole.″ And the standard for granting summary judgment ″mirrors″
      the standard for judgment as a matter of law, such that ″the inquiry under each is
      the same.″ It therefore follows that, in entertaining a motion for judgment as a
       [*826] matter of law, the court should review all of the evidence in the record.
      130


 [**61] We address the Supreme Court’s conclusion as to the most appropriate standard
below; the relevant point here is its conclusion that differences between the inclusive
and exclusive standards are more semantic than real.

D. Objections: The Standards Are Not The Same

While we have used the two standards for the scope of review interchangeably for many
years in many different contexts, several arguments suggest they are not the same.

First, the courts of appeals often use the two standards in illustrations of the difference
between legal and factual sufficiency, with the exclusive standard tied to the former and
the inclusive standard to the latter:

      When [reviewing] legal sufficiency, we consider only the evidence and inferences
      that tend to support the award of damages and disregard all evidence and
      inferences to the contrary. . . . When we review factual sufficiency, we consider
      and weigh all of the evidence and will set aside the verdict only if it is so against
128
      336 U.S. 53, 93 L. Ed. 497, 69 S. Ct. 413 (1949).
129
      Id. at 57.
130
      Reeves, 530 U.S. at 149-50 (citations omitted).

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      the great weight and preponderance of the evidence that it is clearly wrong and
      unjust. 131
                                                                                                        132
 [**62] But there have always been exceptions to this distinction.         As demonstrated
in Parts II and III above, it is generally true that the result of legal-sufficiency review
is to disregard contrary evidence, but there are exceptions when a reviewing court
cannot. It is not surprising that in drawing the general distinction between legal and
factual sufficiency, courts have not complicated that distinction by listing the several
exceptions in which the scope of review -- though not the standard of review -- may
overlap.
Second, it has been argued that the exclusive standard ″is an important prophylactic″
against invasion of the jury’s province, as appellate judges are less likely to consider
contrary evidence when they should not if the exclusive standard is used. 133 But if that
 [**63] is true, the opposite should also be the case -- appellate courts are less likely
to consider contrary evidence when they must (as shown in Part II) if the exclusive
standard is used. No matter which standard is used, appellate courts must take care not
to consider or disregard too little or too much.
[*827] Conversely, several factors appear to favor application of the inclusive standard.
First, when we have said ″we must look only at that evidence which tends to support the
judgment,″ 134 we could not have been speaking literally; no glasses filter evidence, and
judges cannot abandon such judgments to law clerks or litigants. It is often hard to say
whether evidence does or does not support a verdict -- the same facts may support
different conclusions, 135 or may support one part of a verdict but not another. 136 Nor
can evidence [**64] supporting a verdict be identified by which party offered it --
131
      Carter v. Steverson & Co., 106 S.W.3d 161, 166 (Tex. App.--Houston [1st Dist.] 2003, pet. denied) (emphasis added) (citation
omitted); accord Long v. Long, 144 S.W.3d 64, 67 (Tex. App.--El Paso 2004, no pet.); Gore v. Scotland Golf, Inc., 136 S.W.3d 26, 29
(Tex. App.--San Antonio 2003, pet. denied); Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 438 (Tex. App.--Dallas 2002, pet. denied);
N. Am. Van Lines, Inc. v. Emmons, 50 S.W.3d 103, 113 n.3 (Tex. App.--Beaumont 2001, pet. denied); Molina v. Moore, 33 S.W.3d 323,
329 (Tex. App.--Amarillo 2000, no pet.); Wal-Mart Stores, Inc. v. Itz, 21 S.W.3d 456, 470 n.3 (Tex. App.--Austin 2000, pet. denied); see
also In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (Tex. 1951) (per curiam) (holding court of appeals erred in failing to
distinguish between legal and factual sufficiency review by not weighing all the evidence when conducting the latter).
132
     Burk Royalty Co. v. Walls, 616 S.W.2d 911, 922, 24 Tex. Sup. Ct. J. 429 (Tex. 1981) (noting that review of gross negligence finding
by considering all the evidence appeared to but did not conflict with traditional no-evidence test).
133
     Dorsaneo, supra note 10, at 1503; see also Hardberger, supra note 10, at 17 (arguing exclusive standard is ″designed to afford high
deference to jury verdicts″).
134
      State v. Biggar, 873 S.W.2d 11, 13, 37 Tex. Sup. Ct. J. 612 (Tex. 1994).
135
      See, e.g., CMH Homes, Inc. v. Daenen, 15 S.W.3d 97, 102, 43 Tex. Sup. Ct. J. 420 (Tex. 2000) (noting plaintiff argued defendant’s
frequent inspections of stairs showed knowledge of inherent danger, while court held it showed the opposite as inspections found
nothing); State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 45, 41 Tex. Sup. Ct. J. 371 (Tex. 1998) (affirming bad-faith verdict
after noting insurer’s reasons for denial were contradictory).
136
     See, e.g., Wal-Mart Stores, Inc. v. Alexander, 868 S.W.2d 322, 327, 37 Tex. Sup. Ct. J. 252 (Tex. 1993) (noting evidence of single
previous minor stumble supported negligence finding but not gross negligence).

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parties depend on admissions and cross-examination during their opponent’s case, and
minimize damaging evidence by presenting it during their own. As a practical matter, a
court cannot begin to say what evidence supports a verdict without reviewing it all.
[**65] Second, an appellate court that begins by disregarding one party’s evidence may
strike many citizens as extending something less than justice for all. Concerns about
open government and open courts suggest an appellate process that considers all the
evidence, though deferring to the jury’s verdict. While there is some dispute whether
Lady Justice should wear a blindfold, 137 the metaphor was surely never intended to
suggest that justice disregards the facts.
In sum, the exclusive standard is helpful in recognizing the distinctive roles of judge and
jury, intermediate and supreme court. By contrast, the inclusive standard is helpful in
recognizing what courts actually do, and must be seen to do. Both are important; we
should avoid choosing between them if we can.

E. Conclusion: The Standards Are The Same
As both [**66] the inclusive and exclusive standards for the scope of legal-sufficiency
review have a long history in Texas, as both have been used in other contexts to review
matter-of-law motions, as the federal courts have decided the differences between the
two are more semantic than real, and as both -- properly applied -- must arrive at the
same result, we see no compelling reason to choose among them.
The key qualifier, of course, is ″properly applied.″ HN22 The final test for legal
sufficiency must always be whether the evidence at trial would enable reasonable and
fair-minded people to reach the verdict under review. Whether a reviewing court begins
by considering all the evidence or only the evidence supporting the verdict,
legal-sufficiency review in the proper light must credit favorable evidence if reasonable
jurors could, and disregard contrary evidence unless reasonable jurors could not.
While judges and lawyers often disagree about legal sufficiency in particular cases,
 [*828] the disagreements are almost always about what evidence jurors can or must
credit and what inferences they can or must make. It is inevitable in human affairs that
reasonable people sometimes disagree; thus, it is also [**67] inevitable that they will
sometimes disagree about what reasonable people can disagree about. This is not a new
problem; Justice Calvert noted it almost fifty years ago:
      The rule as generally stated is that if reasonable minds cannot differ from the
      conclusion that the evidence lacks probative force it will be held to be the legal
137
     See Judith Resnik, Managerial Judges, 96 HARV. L.R. 374, 382-83 (1982) (noting that images of justice appeared blindfolded only
within the last four hundred years).

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      equivalent of no evidence. The application of the rule can lead to strange results.
      It is theoretically possible, and sometimes not far from actual fact, that five
      members of the Supreme Court will conclude that the evidence supporting a
      finding of a vital fact has no probative force, and in reaching the conclusion
      through application of the rule will thus hold, in effect, that the trial judge who
      overruled a motion for instructed verdict, the twelve jurors who found the
      existence of the vital fact, the three justices of the Court of Civil Appeals who
      overruled a ″no evidence″ point of error and four dissenting justices of the
      Supreme Court are not men 138 [**68] of ″reasonable minds.″ 139
It is not hubris that occasionally requires an appellate court to find a jury verdict has no
reasonable evidentiary basis. As Justice Frankfurter stated long ago:
      Only an incompetent or a wilful judge would take a case from the jury when the
      issue should be left to the jury. But since questions of negligence are questions of
      degree, often very nice differences of degree, judges of competence and
      conscience have in the past, and will in the future, disagree whether proof in a
      case is sufficient to demand submission to the jury. The fact that [one] thinks there
      was enough to leave the case to the jury does not indicate that the other [is]
      unmindful of the jury’s function. The easy but timid way out for a trial judge is
      to leave all cases tried to a jury for jury determination, but in so doing he fails in
      his duty to take a case from the jury when the evidence would not warrant a
      verdict by it. A timid judge, like a biased judge, is intrinsically a lawless judge.
      140



 [**69] V. Application to the Facts
It remains to apply the scope of review to the facts presented.
A majority of the court of appeals affirmed the verdict for the Wilsons, finding legally
sufficient evidence that the City knew increased flooding on the Wilsons’ property was
substantially certain to occur. 141 The majority pointed to the following proof. First, the


138
      Justice Calvert’s use of the masculine in 1960 may perhaps be forgiven, for although Hattie Hennenberg, Hortense Ward, and Ruth
Brazzil served temporarily on this Court in 1925, and Sarah T. Hughes was appointed as a state district judge ten years later, it was not
until 1954 that the Texas Constitution was amended to allow women to serve as jurors, and not until 1973 that Mary Lou Robinson
became the first women to serve as a state appellate judge. See James T. ″Jim″ Worthen, The Organizational & Structural Development
of Intermediate Appellate Courts in Texas, 46 S.TEX. L. REV. 33, 75 (2004); Robert L. Dabney, Jr. We Were There, HOUSTON B.J.
Nov.-Dec. 1999, at 42, 44.
139
      Calvert, supra note 12, at 364.
140
      Wilkerson v. McCarthy, 336 U.S. 53, 65, 93 L. Ed. 497, 69 S. Ct. 413 (1949) (Frankfurter, J., concurring).
141
      86 S.W.3d 693, 709.

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Wilsons’ expert testified that the revised plan was certain to [*829] create flooding. 142
Second, as the City admittedly knew that development would increase runoff and the
Sebastian ditch would channel it toward the Wilsons, so it knew ″with absolute
certainty″ that flooding would be the result. 143 Third, the City ″did not explain″ why
the Master Plan required a drainage ditch across the Wilsons’ property but the revised
plan did not, thus allowing jurors to infer that the City knew this omission would cause
flooding. 144
 [**70] Of course, the City did explain why it approved the new plan -- because three
sets of engineers said the omitted ditch was unnecessary -- but the court felt compelled
by the scope of review to disregard that evidence.
For several of the reasons stated earlier, we believe the court of appeals did not properly
apply the scope of review. The critical question in this case was the City’s state of mind
-- the Wilsons had to prove the City knew (not should have known) that flooding was
substantially certain. A reviewing court cannot evaluate what the City knew by
disregarding most of what it was told.
Moreover,HN23 when a case involves scientific or technical issues requiring expert
advice (as this one does), jurors cannot disregard a party’s reliance on experts hired for
that very purpose without some evidence supplying a reasonable basis for doing so. 145
Here, it was uncontroverted that three sets of engineers certified that the revised plans
met the City’s codes and regulations -- and thus would not increase downstream
flooding. The same firm that drew up the original Master Plan certified the revised one;
unless the City had some reason to know the first certification was true [**71] and the
second one was false (of which there was no evidence), there was only one logical
inference jurors could draw.
None of the evidence cited by the court of appeals showed the City knew more than it
was told by the engineers. The Wilsons’ expert testified that flooding was (in his
opinion) inevitable, but not that the City knew it was inevitable. The Wilsons’ expert
gave no opinion on the latter point.
Second, ending a ditch at a neighbor’s property line may be evidence that a defendant
was substantially [**72] certain of the result in some cases, but not in the context of this
142
      86 S.W.3d at 703, 705.
143
      86 S.W.3d at 705.
144
      86 S.W.3d at 704-05.
145
     Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 194-95, 42 Tex. Sup. Ct. J. 215, 42 Tex. Sup. Ct. J. 610 (Tex. 1998); see
also State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448, 40 Tex. Sup. Ct. J. 794 (Tex. 1997) (holding reliance on expert report did not
foreclose bad-faith claim because claimant ″presented evidence from which a fact-finder could logically infer that Haag’s reports were
not objectively prepared, that State Farm was aware of Haag’s lack of objectivity, and that State Farm’s reliance on the reports was
merely pretextual.″).

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one. City witnesses admitted knowing development would increase runoff at the head
of this drainage system, but not flooding at its foot. Calculating the effect of detention
ponds and absorption in a grassy drainage ditch forty-five feet wide and over two
hundred yards long required hydrological formulas, computer models, and mathematical
calculations. The omission of the ditch across the Wilsons’ property obviously raised
concerns that the City investigated, but was no evidence that the City knew the advice
it received in response was wrong.

The Wilsons also point to a letter Sebastian’s attorney wrote the City demanding
indemnity in case the new ditch flooded the Wilsons. But attorneys must protect a client
from potential liability whether it is real [*830] or imagined -- and justly so. In the
letter, the attorney never purports to be an expert in hydrology, or cite the opinions of
anyone who was. This letter may have required the City to investigate, but again is no
evidence it knew the advice it received was wrong. 146
  [**73]   Our concurring colleagues believe reasonable jurors could nevertheless
disregard what all the engineers certified because the City had a financial incentive to
believe them rather than pay the Wilsons. Of course, defendants have a financial
incentive to avoid paying damages in every case; if that incentive alone is some
evidence of liability, then plaintiffs create enough evidence to go to the jury every time
they file suit.
But more important, this ignores what the Wilsons had to prove -- not that the City might
have disbelieved the engineers’ reports, but that it did. This requires evidence of
″objective indicia of intent″ showing the City knew identifiable harm was occurring or
substantially certain to result. 147 Jurors’ doubts about the engineers’ reports or the
City’s motives could not supply them with objective indicia that the City knew flooding
would occur. Constitutional concerns about the roles of judge and jury do not allow
either to make such evidence up.
 [**74] We agree with the court of appeals that the Wilsons presented some evidence
that the City damaged their property, and that in drawing up and approving drainage
plans it was acting for a public purpose. The missing piece in the evidence here is proof
that the City knew the plans it approved were substantially certain to increase flooding
on the Wilsons’ properties. While the City certainly knew that fact after the flooding
started, the Wilsons never pleaded or submitted to the jury any takings theory other than
the City’s initial approval.
146
     Cf. Nissan Motor Co. Ltd. v. Armstrong, 145 S.W.3d 131, 140, 47 Tex. Sup. Ct. J. 955 (Tex. 2004) (holding complaint letters may
require manufacturer to investigate, but are not evidence complaints are true).
147
      Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 555, 47 Tex. Sup. Ct. J. 707 (Tex. 2004) (emphasis added).

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Crediting all favorable evidence that reasonable jurors could believe and disregarding
all contrary evidence except that which they could not ignore, we hold there was no
evidence the City’s approval of the revised drainage plan was an intentional taking.
Accordingly, we reverse the court of appeals’ judgment against the City under article I,
section 17 of the Texas Constitution. Because the court of appeals declined to address
the jury’s alternate verdict for the Wilsons on a claim under the Texas Water Code, we
remand the case to that court to determine that issue.
Scott Brister
Justice

Concur by: Harriet O’Neill

Concur

JUSTICE O’NEILL, joined by [**75] JUSTICE MEDINA, concurring.
The Court does an excellent job of explaining the appropriate scope of no-evidence
review: the reviewing court ″must view the evidence in the light favorable to the verdict,
crediting favorable evidence if reasonable jurors could, and disregarding contrary
evidence unless reasonable jurors could not.″ ___ S.W.3d at ___. I agree with this
standard and join Parts I through IV of the Court’s opinion. But I cannot join Part V,
because the Court misapplies the standard that it so carefully [*831] articulates by
crediting evidence the jury could reasonably disregard.
The City of Keller’s Master Drainage Plan required it in part to condemn a 2.8-acre
drainage easement on the Wilson property for construction of an earthen channel
forty-five feet wide and five feet deep that would funnel water from the adjoining
Sebastian property over the Wilson property into the Little Bear Creek Watershed. The
City chose not to proceed with this portion of the plan, though, claiming reliance on
engineers’ assurances that the developers’ installation of retention ponds on neighboring
land could prevent flooding. The drainage channel that was actually built ended at the
edge of the Sebastian [**76] property and funneled water directly onto the Wilsons’
land, destroying eight acres of farmland worth almost $ 300,000. The Court holds that
the jury was required to believe the City’s testimony that it relied on the engineers’
assurances and thus did not know flooding was substantially certain to occur, stating that
when a case requires expert testimony ″jurors cannot disregard a party’s reliance on
experts hired for that very purpose without some evidence supplying a reasonable basis
for doing so.″ ___ S.W.3d at ___. Even if this were an appropriate review standard--which
it hasn’t been until today--I believe the jury had a reasonable basis upon which to
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disregard the City’s professed reliance; the City had a financial incentive to disclaim
knowledge of the flooding, and the Wilsons presented some evidence that the City had
independent knowledge flooding was substantially certain to occur. In my view, the jury
was the proper body to weigh the witnesses’ credibility and resolve these disputed fact
issues. I nevertheless agree that the City cannot be liable for a taking in this case because
I believe that a city’s mere act of approving a private development plan cannot
constitute a [**77] taking for public use. Accordingly, I concur in the Court’s judgment
but not its reasoning.
I
Questions of intent are generally proved only by circumstantial evidence; as the court
of appeals in this case aptly noted, ″defendants will rarely admit knowing to a
substantial certainty that given results would follow from their actions,″ and therefore
the jury must be ″free to discredit defendants’ protestations that no harm was intended
and to draw inferences necessary to establish intent.″ 86 S.W.3d 693, 704. I agree with
the Court that the jury’s ability to disbelieve the City’s protestations is not itself
″evidence of liability.″ ___ S.W.3d at ___. Instead, the jury’s ability to weigh the
witnesses’ credibility means that the City’s testimony did not conclusively establish its
lack of liability. Because liability is not conclusively negated, we must examine the
record to see if there is legally sufficient evidence from which the jury could infer that
the City knew flooding was substantially certain to occur. I would hold that the evidence
of intent that was presented in this case allowed the jury to draw such an inference.
At trial, the Wilsons presented evidence [**78] that the City had independent sources
of knowledge that flooding was substantially certain to occur. First, they demonstrated
that the developers’ plan itself was flawed. Rather than incorporate a drainage ditch
running across the Wilson property, as the City’s Master Plan required, the developers’
plan ended the drainage ditch abruptly at the edge of the Wilson property. The Wilsons’
expert testified that the plan’s implementation would necessarily ″increase the volume
and flow of water across the Wilson property from the rate of fifty-five cubic feet per
second to ninety-three cubic feet per second.″ 86 S.W.3d at [*832] 703. Second, the
City was aware that water flowed across the Wilson property before the development
commenced, and, as the court of appeals pointed out, the City’s Director of Public
Works admitted that the City knew the development would increase the water’s flow
and velocity; specifically, he testified that ″the City knew the upstream water would be
absorbed less and would flow faster due to the removal of trees and vegetation from the
developments and from the forty-five-foot-wide earthen channel″ that ended at the
Wilson property’s edge. Id. at 705. [**79] Finally, there was evidence that the City
received a letter warning that the developers’ plan would subject the Wilson property to
flooding.
                                  Jamie Graham Page 36 of 41
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While I believe there is some evidence that the City knew flooding was substantially
certain to occur, there is also some evidence that it did not. City officials testified that
they relied on the representations of engineers who assured them retention ponds could
substitute for a drainage easement and the Wilson property would not be damaged. If the
jury accepted this evidence as true, I agree that the intent element would be negated,
which would preclude the City’s takings liability. But I do not agree that the jury was
bound to accept the City’s testimony as true. The Court itself notes that jurors ″may
choose to believe one witness and disbelieve another,″ and that ″courts reviewing all the
evidence in a light favorable to the verdict thus assume that jurors credited testimony
favorable to the verdict and disbelieved testimony contrary to it.″ ___ S.W.3d at ___.
This statement mirrors our prior jurisprudence, which has long provided that a jury ″has
several alternatives available when presented with conflicting evidence″ because it
″may believe [**80] one witness and disbelieve others,″ ″may resolve inconsistencies
in the testimony of any witness,″ and ″may accept lay testimony over that of experts.″
McGalliard v. Kuhlmann, 722 S.W.2d 694, 697, 30 Tex. Sup. Ct. J. 96 (Tex. 1986)
(citations omitted).
As the Court itself states, jurors are required to credit undisputed testimony only when
it is ″clear, positive, direct, otherwise credible, free from contradictions and
inconsistencies, and could have been readily controverted.″ ___ S.W.3d at ___. The
City’s testimony does not meet this standard. The City Manager did testify that the City
″would not have approved the developments unless [it was] assured that the developments
did not increase the velocity of water or the flow of water″ onto the neighboring
property. 86 S.W.3d at 706. But the Wilsons disputed whether the City’s protestations
were credible, pointing out that the City had a powerful incentive to profess a lack of
knowledge through reliance on the engineers’ assurances because it would then avoid
the considerable expense of compensating the Wilsons for the property that would
otherwise have been condemned under the Master Drainage Plan. See id. at 705. [**81]
Moreover, the Court’s conclusion that juries cannot disregard a party’s reliance on
expert opinions is not consistent with our jurisprudence. The Court cites two cases for
this proposition, but neither supports the Court’s analysis; instead, both cases support
the conclusion that the jury, as the finder of fact, should appropriately resolve factual
disputes regarding a party’s reliance on hired experts. Provident Am. Ins. Co. v.
Castaneda, 988 S.W.2d 189, 194-95, 42 Tex. Sup. Ct. J. 215, 42 Tex. Sup. Ct. J. 610 (Tex.
1998); State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448-50, 40 Tex. Sup. Ct. J. 794
(Tex. 1997).
In Castaneda, a bad-faith insurance case, there was no question that the insurer had
relied on an expert’s assurances and thus no dispute about whether the [*833] jury
could have disregarded that evidence. Castaneda, 988 S.W.2d at 194-95. In that case, we
                                  Jamie Graham Page 37 of 41
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performed a traditional legal sufficiency analysis and concluded there was no evidence
that the defendant acted in bad faith. Id. at 194. We did state that reliance on an expert’s
opinion will not preclude a finding of bad faith if the expert’s opinion was ″unreliable
and the insurer knew or should have known that to be the case. [**82] ″ Id. However,
we did not hold that the jury must credit a party’s testimony that it relied on an expert.
We reiterated this point in Nicolau, another bad-faith insurance case. There, the Court
noted ″we have never held that the mere fact that an insurer relies upon an expert’s
report to deny a claim automatically forecloses bad faith recovery as a matter of law,″
and again concluded that purported ″reliance upon an expert’s report, standing alone,
will not necessarily shield″ the defendant from liability. Nicolau, 951 S.W.2d at 448. The
Court conceded that ″were we the trier of fact in this case, we may well have concluded
that [the insurer] did not act in bad faith,″ but concluded that the ″determination is not
ours to make″ because ″the Constitution allocates that task to the jury and prohibits us
from reweighing the evidence.″ Id. at 450 (citing TEX. CONST. art. I, § 15, art. V, §§
6, 10).
The same is true in this case. The jury was not required to believe that the City did not
know flooding was substantially certain to occur because it relied on assurances to the
contrary; as a reviewing Court, we should ″assume that jurors credited [**83] testimony
favorable to the verdict and disbelieved testimony contrary to it.″ ___ S.W.3d at ___.
Such credibility determinations are uniquely suited and constitutionally committed to
the fact finder. See TEX. CONST. art. I, § 15, art. V, § 6; see also Nicolau, 951 S.W.2d
at 450.

II
Although I disagree with the Court’s conclusion that the jury was required to credit the
City’s testimony, I agree with its judgment in the City’s favor because, in my view, the
City’s mere approval of the private development plans did not result in a taking for
public use, as the constitutional standard requires for a compensable taking. TEX.
CONST. art. I, § 17. The City did not appropriate or even regulate the use of the
Wilsons’ land, nor did it design the drainage plan for the proposed subdivisions. Instead,
the City merely approved subdivision plans designed by private developers, and that
design included inadequate drainage capabilities. The City argues, and I agree, that its
mere approval of private plans did not transfer responsibility for the content of those
plans from the developers to the City. Municipalities review subdivision plats ″to ensure
that subdivisions [**84] are safely constructed and to promote the orderly development
of the community.″ City of Round Rock v. Smith, 687 S.W.2d 300, 302, 28 Tex. Sup. Ct.
J. 321 (Tex. 1985); see TEX. LOC. GOV’T CODE § 212.002. Such a review is intended
to protect the city’s residents; it is not intended to transfer responsibility for a flawed
                                  Jamie Graham Page 38 of 41
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subdivision design from the developers to the municipality. See, e.g., City of Round
Rock, 687 S.W.2d at 302; see also Cootey v. Sun Inv., Inc., 68 Haw. 480, 718 P.2d 1086,
1091 (Haw. 1986) (holding that ″the permit process by which the County approves or
disapproves the development of a proposed subdivision reflects an effort by government
to require the developer to meet his responsibilities under the subdivision rules,
regulations, and laws,″ and that ″the primary responsibility of providing an adequate and
safe development rests with . . . the developer, and not with the County″).
Because the primary responsibility for a development’s design rests with the developer,
 [*834] and because the plat-approval process does not transfer such responsibility to
the municipality, mere plat approval cannot be a basis [**85] upon which to predicate
takings liability. We have held that, to be liable for a taking, a governmental entity must
″perform certain acts in the exercise of its lawful authority . . . which resulted in the
taking or damaging of plaintiffs’ property, and which acts were the proximate cause of
the taking or damaging of such property.″ State v. Hale, 136 Tex. 29, 146 S.W.2d 731,
736 (Tex. 1941) (emphasis added). In this case, flooding resulted from the developers’
defective drainage design, not from the City’s approval of the plat; thus, the City’s
approval was not the proximate cause of the damage to the Wilson property.
Other courts, faced with similar facts, have also concluded that a governmental entity
cannot be liable for a taking when its only action is to approve a private development
plan. See Phillips v. King County, 136 Wn.2d 946, 968 P.2d 871, 879 (Wash. 1998); see
also Pepper v. J.J. Welcome Constr. Co., 73 Wn. App. 523, 871 P.2d 601, 606 (Wash. Ct.
App. 1994). In Phillips, the Washington Supreme Court observed that there is no public
aspect to a private development and concluded that ″if the county or city were [**86]
liable for the negligence of a private developer, based on approval under existing
regulations, then the municipalities, and ultimately the taxpayers, would become the
guarantors or insurers for the actions of private developers whose development damages
neighboring properties.″ Phillips, 968 P.2d at 878. The court in Pepper similarly
examined an inverse condemnation claim based upon a county’s approval of private
developments with defective drainage plans; it, too, concluded that the county’s
approval did not cause the resultant flooding and did not result in an unconstitutional
taking. Pepper, 871 P.2d at 606. The court noted that the flooding was ″not the result
of the County appropriating or regulating their use of the land,″ and held that ″the fact
that a county regulates development and requires compliance with road and drainage
restrictions does not transform a private development into a public project.″ Id. The
court concluded that because ″land use regulation of [the plaintiffs’] property did not
cause the damages, no inverse condemnation was involved.″ Id. I am persuaded by the
reasoning of the courts in Phillips and [**87] Pepper, and would similarly conclude
that the City’s plat approval in this case did not amount to an unconstitutional taking as
a matter of law.
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The court of appeals in this case advanced an alternative reason for affirming the trial
court’s judgment, suggesting that even if the City could not be liable for merely
approving a subdivision plat, it could nevertheless be held liable for failing to condemn
a drainage easement across the Wilson property. 86 S.W.3d at 707. The court of appeals
stated that ″the City chose not to condemn any of the Wilson property,″ but instead
″allowed the water flowing from the Sebastian easement to discharge, uncontrolled,
across the Wilson property.″ Id. As noted above, however, it was the developers’
plan--not the City’s actions--that allowed the water to flood the Wilson property.
Because the City’s action did not cause the flooding, I disagree that the City’s failure
to condemn an easement is relevant to takings liability. If the City were responsible for
the flooding but chose not to condemn the property, it might be subject to
inverse-condemnation liability. See Tarrant County Reg’l Water Dist. v. Gragg, 151
S.W.3d 546, 554, 47 Tex. Sup. Ct. J. 707 (Tex. 2004) [**88] (″When the government
takes private property without first paying for it, the owner may recover damages for
inverse condemnation.″). However, if a governmental entity’s actions are not the [*835]
″proximate cause of the taking or damaging″ of the property, then the entity cannot be
liable for a taking. Hale, 146 S.W.2d at 736. Accordingly, the entity need not condemn
property merely because a private entity is causing damage. This rule does not leave
owners of flooded property without a remedy; when a private development floods
neighboring land, the owner of the damaged property will ordinarily have recourse
against the private parties causing the damage. See TEX. WATER CODE § 11.086(a), (b)
(providing that ″no person may divert or impound the natural flow of surface waters in
this state . . . in a manner that damages the property of another by the overflow of the
water diverted or impounded″ and that ″[a] person whose property is injured by an
overflow of water caused by an unlawful diversion or impounding has remedies at law
and in equity and may recover damages occasioned by the overflow″). Because the
developers’ design of the plat--not [**89] the City’s approval--caused the flooding
damage in this case, I would hold that the City cannot be held liable for an
unconstitutional taking under Article I, Section 17 of the Texas Constitution.

III

Because I believe the Court fails to give due regard to the jury’s right to make credibility
determinations, I cannot join Part V of the Court’s opinion. But because I conclude that
the City’s mere act of approving a private development plan did not cause the Wilson
property to be ″taken, damaged or destroyed for or applied to public use,″ TEX. CONST.
art. I, § 17, I agree that the City cannot be held liable for a taking in this case.
Accordingly, I concur in the Court’s judgment.

Harriet O’Neill
                                  Jamie Graham Page 40 of 41
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Justice




                  Jamie Graham Page 41 of 41
|   | Caution
As of: December 4, 2014 12:15 PM EST

                              Ford Motor Co. v. Ridgway
                                Supreme Court of Texas
                September 10, 2003, Argued ; February 6, 2004, Delivered
                                     NO. 02-0552

Reporter
135 S.W.3d 598; 2004 Tex. LEXIS 74; 47 Tex. Sup. J. 266; CCH Prod. Liab. Rep. P16,878

FORD MOTOR COMPANY, PETITIONER, v. JACK RIDGWAY AND LINDA
RIDGWAY, RESPONDENTS

Subsequent History: [**1]
Rehearing denied by Ford Motor Co. v. Ridgway, 2004 Tex. LEXIS 560 (Tex., June 25,
2004)

Prior History: ON PETITION FOR REVIEW FROM THE COURT OF APPEALS
FOR THE FOURTH DISTRICT OF TEXAS.
Ridgway v. Ford Motor Co., 82 S.W.3d 26, 2002 Tex. App. LEXIS 625 (Tex. App. San
Antonio, 2002)

Disposition: Reversed the judgment of the court of appeals and rendered judgment that
the plaintiffs take nothing..

Core Terms

defective product, truck, product liability, inferred, Restatement, summary judgment,
repairs, manufacturing defect, circumstantial evidence, scintilla of evidence, genuine
issue of material fact, res ipsa loquitur, time of sale, causes, pickup

Case Summary

Procedural Posture
Plaintiffs, husband and wife, sued defendant automobile manufacturer for injuries the
husband sustained when his truck caught on fire. The trial court granted the
manufacturer’s summary judgment motion, and the Court of Appeals for the Fourth
District of Texas affirmed the motion on plaintiffs’ negligence claim, but reversed as to
the product liability claim. The manufacturer sought review.

Overview
                                      Jamie Graham
                            135 S.W.3d 598, *598; 2004 Tex. LEXIS 74, **1



The husband was injured when the truck that he was driving caught on fire. Plaintiffs
did not provide any direct evidence of the cause of the fire, and their circumstantial
evidence that a manufacturing defect existed in the truck when it left the manufacturer
did not exceed a ″scintilla of evidence.″ The best that plaintiffs’ expert could state was
that he suspected the electrical system caused the fire. However, because there was no
proof that identified a defect in the truck when it left the manufacturer, the expert’s
affidavit was not sufficient to raise a fact issue. Thus, the state supreme court reversed
the judgment of the court of appeals and rendered judgment that the plaintiffs take
nothing.

Outcome
The decision of the court of appeals was reversed, and the matter was remanded to
render judgment that plaintiffs take nothing.

LexisNexis® Headnotes

  Civil Procedure > Judgments > Summary Judgment > General Overview
  Civil Procedure > Appeals > Summary Judgment Review > General Overview
  Civil Procedure > ... > Summary Judgment > Burdens of Proof > General Overview
  Civil Procedure > ... > Summary Judgment > Opposing Materials > General Overview
  Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General
  Overview

HN1 An appellate court reviews the trial court’s summary judgment under the standards
of Tex. R. Civ. P. 166a(i). The non-movants must produce summary judgment evidence
raising a genuine issue of material fact to defeat the summary judgment under that
provision. Tex. R. Civ. P. 166a(i). A genuine issue of material fact exists if more than a
scintilla of evidence establishing the existence of the challenged element is produced. If
the plaintiffs fail to produce more than a scintilla of evidence under that burden, then
there is no need to analyze whether the moving party’s proof satisfied the Rule 166a(c)
burden.

  Real Property Law > Torts > Construction Defects
  Torts > Products Liability > Types of Defects > Manufacturing Defects
  Torts > Products Liability > Theories of Liability > Strict Liability

HN2 A manufacturing defect exists when a product deviates, in its construction or
quality, from the specifications or planned output in a manner that renders it
unreasonably dangerous. A plaintiff must prove that the product was defective when it
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left the hands of the manufacturer and that the defect was a producing cause of the
plaintiff’s injuries.

  Civil Procedure > ... > Summary Judgment > Evidentiary Considerations > Scintilla Rule
  Civil Procedure > Judgments > Summary Judgment > Evidentiary Considerations
  Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General
  Overview

HN3 When determining if more than a scintilla of evidence has been produced in
response to a Tex. R. Civ. P. 166a(i) motion for summary judgment, the evidence must
be viewed in the light most favorable to the non-movant. The Supreme Court of Texas
has repeatedly held that more than a scintilla of evidence exists if the evidence rises to
a level that would enable reasonable and fair-minded people to differ in their
conclusions. On the other hand, when the evidence offered to prove a vital fact is so
weak as to do no more than create a mere surmise or suspicion of its existence, the
evidence is no more than a scintilla and, in legal effect, is no evidence.

  Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General
  Overview
  Evidence > Types of Evidence > Circumstantial Evidence
  Evidence > Admissibility > Circumstantial & Direct Evidence

HN4 Both direct and circumstantial evidence may be used to establish any material fact.
To raise a genuine issue of material fact, however, the evidence must transcend mere
suspicion. Evidence that is so slight as to make any inference a guess is in legal effect
no evidence.

Judges: CHIEF JUSTICE PHILLIPS delivered the opinion of the Court. JUSTICE
HECHT filed a concurring opinion, in which JUSTICE OWEN joined.

Opinion by: Thomas R. Phillips

Opinion

[*599] We must decide whether the evidence offered by plaintiffs in response to the
defendant’s Rule 166a(i) summary judgment motion created a genuine issue of material
fact that a manufacturing defect in the defendant’s product caused the plaintiff’s
injuries. Because we hold that the court of appeals erred in holding that the evidence
was sufficient, we reverse the judgment of the court of appeals, 82 S.W.3d 26, and render
judgment that the plaintiffs take nothing.
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I
Jack Ridgway sustained serious injuries when his two-year-old Ford F-150 pick-up
truck caught fire while he was driving. Ridgway was the truck’s third owner. The first
owner drove the truck approximately 7,000 miles and installed a spotlight on the front
left ″A″ pillar, which is the front part of the door frame. The second owner drove the
truck approximately 47,000 more miles [**2] and had the truck repaired four times at
the Red McCombs Ford dealership in San Antonio (″Red McCombs″). Each repair
attempted to fix a clunking noise that occurred during hard turns. Three of the four
repairs also involved the fuel system and attempted to improve the truck’s poor gas
mileage. The Ridgways drove the truck for only one month before the fire, making no
repairs or modifications.

The fire occurred when Ridgway was driving home from work on a paved county road
in Bandera County. Driving at or below the speed limit, he looked into the [*600]
rear-view mirror and noticed flames curling up around the cab of the truck. Before he
could jump out of the truck, Ridgway sustained second-degree burns to 20 percent of his
body.
Ridgway and his wife Linda sued Red McCombs and Ford, alleging products liability,
breach of express and implied warranties, violations of the Texas Deceptive Trade
Practices Act, and negligence. After both defendants moved for summary judgment, the
Ridgways nonsuited Red McCombs, leaving only their negligence and strict products
liability claims against Ford. After adequate time for discovery, Ford moved for
summary judgment under Rule 166a(i) and alternatively [**3] under Rule 166a(c). The
trial court granted summary judgment without specifying on which provision it relied.
On appeal, a divided court of appeals affirmed the trial court’s judgment on plaintiffs’
negligence claim but reversed on products liability. We granted Ford’s petition for
review to determine whether the Ridgways presented more than a scintilla of evidence
in support of their claim.

II
HN1 We first review the trial court’s summary judgment under the standards of Rule
166a(i). The non-movants, here the plaintiffs, must produce summary judgment
evidence raising a genuine issue of material fact to defeat the summary judgment under
that provision. TEX. R. CIV. P. 166a(i). A genuine issue of material fact exists if more
than a scintilla of evidence establishing the existence of the challenged element is
produced. Morgan v. Anthony, 27 S.W.3d 928, 929, 43 Tex. Sup. Ct. J. 1172 (Tex. 2000).
If the plaintiffs fail to produce more than a scintilla of evidence under that burden, then
there is no need to analyze whether Ford’s proof satisfied the Rule 166a(c) burden.
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HN2 A manufacturing defect exists when a product deviates, in its construction or
quality, from the specifications or planned [**4] output in a manner that renders it
unreasonably dangerous. Torrington Co. v. Stutzman, 46 S.W.3d 829, 844, 44 Tex. Sup.
Ct. J. 225 (Tex. 2000); Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 434, 40 Tex. Sup.
Ct. J. 658 (Tex. 1997). A plaintiff must prove that the product was defective when it left
the hands of the manufacturer and that the defect was a producing cause of the plaintiff’s
injuries. Torrington Co., 46 S.W.3d at 844.
In an attempt to defeat Ford’s motion, the Ridgways presented affidavits from all three
of the truck’s owners and from Bill Greenlees, an expert who inspected the truck after
the accident. The owners explained when and where they purchased the truck, how
many miles they drove it, and any modifications or repairs they made. In addition,
Ridgway described when he first noticed the fire, how he reacted, and the injuries he
sustained. Greenlees explained that his expert opinion was based on his visual
inspection of the truck after the accident, a visual comparison of a similar but
undamaged truck, a review of Ford service manuals, and a review of the National
Highway Traffic Safety Administration’s database. Based on the areas of greatest
damage to the truck [**5] and an indication of a ″hot spot in the left center area of the
engine compartment,″ Greenlees concluded that the fire originated within the engine
compartment and opined that ″a malfunction of the electrical system in the engine
compartment is suspected of having caused this accident.″ Greenlees, however, declined
to eliminate all portions of the fuel system as a possible cause of the accident and
conceded that ″the actual cause of the fire has not been determine [sic] yet.″ Although
Greenlees suggested that further investigation might yield a more definitive conclusion,
particularly [*601] if the vehicle were disassembled, the Ridgways made no motion for
further testing and did not complain that the trial court failed to allow adequate time for
or sufficient scope of discovery. 1
HN3 When determining if more than a scintilla of evidence has been produced in
response to [**6] a Rule 166a(i) motion for summary judgment, the evidence must be
viewed in the light most favorable to the non-movant. Johnson v. Brewer & Pritchard,
P.C., 73 S.W.3d 193, 208, 45 Tex. Sup. Ct. J. 470 (Tex. 2002). We have repeatedly held
that more than a scintilla of evidence exists if the evidence ″rises to a level that would
enable reasonable and fair-minded people to differ in their conclusions.″ Merrell Dow
Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997); Burroughs Wellcome Co. v.
Crye, 907 S.W.2d 497, 499, 38 Tex. Sup. Ct. J. 848 (Tex. 1995); Transp. Ins. Co. v.
Moriel, 879 S.W.2d 10, 25, 37 Tex. Sup. Ct. J. 883 (Tex. 1994). On the other hand, ″when
the evidence offered to prove a vital fact is so weak as to do no more than create a mere
1
    Greenlees’ affidavit stated: ″The inspection of the subject Ford was a visual inspection only. No disassembly nor alterations have been
performed as of this time.″ In oral argument, the Ridgways’ attorney suggested that Greenlees could not perform destructive testing on
the vehicle because it was severely damaged.

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surmise or suspicion of its existence, the evidence is no more than a scintilla and, in
legal effect, is no evidence.″ Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63, 26 Tex. Sup.
Ct. J. 383 (Tex. 1983).
HN4 Both direct and circumstantial evidence may be used to establish any material fact.
Lozano v. Lozano, 52 S.W.3d 141, 149, 44 Tex. Sup. Ct. J. 499 (Tex. 2001);
Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928, 37 Tex. Sup. Ct. J. 118 (Tex. 1993).
To raise a genuine [**7] issue of material fact, however, the evidence must transcend
mere suspicion. Evidence that is so slight as to make any inference a guess is in legal
effect no evidence. Lozano, 52 S.W.3d at 148; Browning-Ferris, Inc., 865 S.W.2d at 928.

The Ridgways produced no direct evidence of the fire’s cause, and their circumstantial
evidence that a manufacturing defect existed in the Ford F-150 when it left the
manufacturer does not exceed a scintilla. Ridgway’s affidavit establishes only that a fire
occurred, and Greenlees could say no more than that he ″suspects″ the electrical system
caused the fire. Because Greenlees could not rule out part of the fuel system as a
possible cause and because there is no proof that identified a defect in the truck at the
time it left the manufacturer, Greenlees’ affidavit is not sufficient to raise a fact issue.
The Ridgways argue that this proof is nevertheless sufficient under section 3 of the Third
Restatement of Torts, which provides:

   It may be inferred that the harm sustained by the plaintiff was caused by a product
   defect existing at the time of sale or distribution, without proof of a specific
   defect, when the [**8] incident that harmed the plaintiff:
   (a) was of the kind that ordinarily occurs as a result of a product defect; and
   (b) was not, in the particular case, solely the result of causes other than the
   product defect existing at the time of sale or distribution.

RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 3 (1998). No Texas
court has ever cited this section, and we do not decide today whether it reflects the law
of this state. Even if section 3 were the law in Texas, it would generally apply only to
new or almost new products. Such products typically have not been modified or
repaired, therefore making a product defect the likely cause of an accident. The [*602]
drafters of the Restatement realized this limitation and noted: ″The inference of defect
may not be drawn . . . from the mere fact of a product-related accident. . . . Evidence
that the product may have been used improperly or was altered by repair people
weakens the inference [that there was a product defect].″ Id. at reporters’ notes to cmt.
d (citations omitted). The reporters’ notes also provide several examples to illustrate
when a product defect cannot be inferred without [**9] proof of a specific defect
                                  Jamie Graham Page 6 of 10
                                       135 S.W.3d 598, *602; 2004 Tex. LEXIS 74, **9



because of the product’s age or the presence of modifications or repairs. Compare
Woodin v. J.C. Penney Co., 427 Pa. Super. 488, 629 A.2d 974, 976-77 (Pa. Super. Ct.
1993) (recognizing that a product defect cannot be inferred in a freezer cord when it
functioned flawlessly for eight years before catching fire), and Walker v. Gen. Elec. Co.,
968 F.2d 116, 120 (1st Cir. 1992) (holding that the mere fact that a six-year-old toaster
oven caught fire does not support an inference that a manufacturing defect exists), with
Dietz v. Waller, 141 Ariz. 107, 685 P.2d 744, 748 (Ariz. 1984) (stating that a boat that
broke in half after only ten hours of use gives rise to an inference of a manufacturing
defect). When courts have cited section 3, they have also noted this limitation on the
Restatement’s operation. See Jarvis v. Ford Motor Co., 283 F.3d 33, 44 (2nd Cir. 2002)
(applying a New York law similar to section 3 to excuse a plaintiff from proving a
specific defect, instead inferring a defect from proof that a six-day-old vehicle did not
perform as intended); Myrlak v. Port Auth., 157 N.J. 84, 723 A.2d 45, 56 (N.J. 1999)
(adopting [**10] section 3 in a case involving a collapsed five-week-old chair).
Therefore, we reiterate that because section 3 is not applicable to the facts of this case,
we need not decide if it is an accurate statement of Texas law.

III
Under the circumstances of this case, the Ridgways’ summary judgment proof is no
more than a scintilla of evidence that a manufacturing defect was present when the truck
left the manufacturer. Therefore, the Ridgways have not met their burden of showing
that a genuine issue of material fact exists regarding a manufacturing defect. We
accordingly reverse the judgment of the court of appeals and render judgment that the
plaintiffs take nothing.
Thomas R. Phillips
Chief Justice

Concur by: Nathan L. Hecht

Concur

JUSTICE HECHT, joined by JUSTICE OWEN, concurring.

I join in the Court’s opinion and write only to explain that while Texas law would allow
proof of products liability by circumstantial evidence in certain cases, 1 the black-letter
1
   See, e.g., General Motors Corp. v. Hopkins, 548 S.W.2d 344, 20 Tex. Sup. Ct. J. 191 (Tex. 1977), overruled on other grounds by
Turner v. Gen. Motors Corp., 584 S.W.2d 844, 22 Tex. Sup. Ct. J. 409 (Tex. 1979) and Duncan v. Cessna Aircraft Co., 665 S.W.2d 414,
27 Tex. Sup. Ct. J. 213 (1984); Darryl v. Ford Motor Co., 440 S.W.2d 630, 12 Tex. Sup. Ct. J. 358 (Tex. 1969); see also Kindred v.
Con/Chem, Inc., 650 S.W.2d 61, 63, 26 Tex. Sup. Ct. J. 383 (Tex. 1983) (citing Hopkins, 548 S.W.2d 344, 20 Tex. Sup. Ct. J. 191).

                                                Jamie Graham Page 7 of 10
                                       135 S.W.3d 598, *602; 2004 Tex. LEXIS 74, **10



rule of section 3 of the Restatement (Third) of Torts: Products Liability does not
accurately restate Texas law.
    [**11] Section 3 states:

      Circumstantial Evidence Supporting Inference of Product Defect
      It may be inferred that the harm sustained by the plaintiff was caused by a product
      defect existing at the time of sale or distribution, without proof of a specific
      defect, when the incident that harmed the plaintiff:
      (a) was of a kind that ordinarily occurs as a result of product defect; and
      (b) was not, in the particular case, solely the result of causes other than [*603]
      product defect existing at the time of sale or distribution. 2

″It may be inferred″ cannot mean ″it is always proper to infer″, as the present case
demonstrates. Section 3(a) requires only that an injury-causing incident be the kind of
thing that ordinarily results from a product defect, not that the incident is the kind of
thing that ordinarily does not result unless there is a defect. A pickup suddenly bursting
into flame for no discernible reason is the kind of thing that ordinarily occurs as a result
of product defect in the sense that product defects do cause such things. Thus Ridgway
has satisfied section 3(a), even though it is also true that fires in vehicles ordinarily
occur for many reasons other than [**12] product defect. 3 As for section 3(b), although
Ridgway cannot conclusively negate that the fire was caused solely by something other
than a defect, Ford cannot point to anything as the sole cause of the fire. Therefore,
Ridgway argues, section 3 entitles him to an inference that his pickup was defective and
the further inference that the defect existed when Ford sold the pickup. The Court rejects
Ridgway’s argument, not because of the text of the rule, but because comment d to
section 3, the reporter’s notes, and cases allowing proof of products liability by
circumstantial evidence limit the stated rule. In other words, the section 3 rule means
much less than it appears to say.
    [**13] ″It may be inferred″ really means ″it is sometimes proper to infer″, but while
this reading makes the rule stated in section 3 accurate, it also makes the rule not very
helpful. Few would question the use of circumstantial evidence to prove products
liability in appropriate cases. The hard issue is not whether it can be done, but when and
how. The comments to section 3 and the cases cited in support of it illustrate the kinds
2
     RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 3 (1998).
3
    See U.S. FIRE ADMINISTRATION, HIGHWAY VEHICLE FIRES, 2 TOPICAL FIRE RESEARCH SERIES No. 4 (July 2001,
revised Mar. 2002) (reporting that highway vehicle fires are due 66% to mechanical or design problems 18% to incendiary or suspicious
origins, 8% to misuse, 4% to operational deficiency, and 3% to other design, construction, and installation deficiencies), available at
http://www.usfa.fema.gov/downloads/pdf/tfrs/v2i4.pdf (last visited Feb. 5, 2004).

                                                 Jamie Graham Page 8 of 10
                                        135 S.W.3d 598, *603; 2004 Tex. LEXIS 74, **13



of considerations courts have taken into account in deciding whether to allow an
inference of pre-sale defect in a product, but these considerations are not reflected the
in the black-letter rule itself. One looks to comments to explain the rule; one does not
look to comments to find the rule.
                                                                                                                            4
Section 3 is modeled on section 328D of the Restatement (Second) of Torts,                                                      [**15]
which states:

      Res Ipsa Loquitur
      (1) It may be inferred that harm suffered by the plaintiff is caused by negligence
      of the defendant when
      (a) the event is of a kind which ordinarily does not occur in the absence of
      negligence;
      (b) other responsible causes, including the conduct of the plaintiff and third
      persons, are sufficiently eliminated [**14] by evidence; and
      (c) the indicated negligence is within the scope of the defendant’s duty to the
      plaintiff. 5

    [*604] But the differences in the two provisions are such that section 3 is not an
analogue of section 328D but rather a kind of res ipsa -- lite! Sections 3(a) and (b) are
less strict than the parallel provisions in sections 328D(1)(a) and (b), at least in a case
like the present one. It cannot be said that fires in pickups do not ordinarily occur absent
a product defect; they ordinarily occur for all sorts of reasons. 6 Nor has Ridgway
″eliminated by evidence″ the existence of other responsible causes of the fire. The most
he can say is that Ford has offered no evidence of another cause. He has not shown that,
given the circumstances, another cause was impossible or even improbable. If section
3 were as strictly worded as section 328D, Ridgway’s claim would clearly fail.
Texas law of res ipsa loquitur is at least as strict as section 328D. We require the first
condition stated in section 328D(1)(a), and instead of the second condition stated in
section 328D(1)(b), we require that the instrumentality causing harm have been under
the defendant’s management and control. 7 We have explained that
4
    Proceedings at 72nd Annual Meeting: American Law Institute, 72 A.L.I. PROC. 179, 231 (1996) (remarks of James A. Henderson,
Reporter, introducing RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 3 (Tentative Draft No. 2, 1995)) (″Section 3
is derived quite faithfully from § 328D of the Restatement, Second, of Torts.″).
5
     RESTATEMENT (SECOND) OF TORTS § 328D (1965).
6
     See infra note 3.
7
    Haddock v. Arnspiger, 793 S.W.2d 948, 950, 33 Tex. Sup. Ct. J. 591 (Tex. 1990) (″Res ipsa loquitur is applicable only when two
factors are present: (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence; and (2) the

                                                   Jamie Graham Page 9 of 10
                                      135 S.W.3d 598, *604; 2004 Tex. LEXIS 74, **14



     the ″control″ requirement is not a rigid rule that the instrumentality must have
     always been in the defendant’s possession or even that it must have been in the
     defendant’s control at the time of the injury. It is sufficient if the defendant was
     in control at the time that the negligence inferable from the first factor probably
     occurred, so that the reasonable probabilities point to the defendant and support
     a reasonable inference that he was the negligent party. The possibility of other
     causes does not have to be completely eliminated, but their likelihood must be so
     reduced that the jury can reasonably find by a preponderance of the evidence that
     the negligence, if any, lies at the defendant’s door. 8

The rule of res [**16] ipsa loquitur allows an inference of negligence, absent direct
proof, only when injury would ordinarily not have occurred but for negligence, and
defendant’s negligence is probable.
There is no reason to allow an inference of products liability any more freely than an
inference of negligence. An inference of products liability is really two inferences: that
the product was defective, and that the defect existed at the time of sale. Applying the
principle underlying res ipsa loquitur, neither inference can be drawn without evidence
that the injury would not ordinarily [**17] have occurred absent a product defect and
that that defect probably existed when the product was sold. This is not what section 3
says.
Nathan L. Hecht
Justice




instrumentality causing the injury is shown to have been under the management and control of the defendant.″) (citing Mobil Chem. Co.
v. Bell, 517 S.W.2d 245, 251, 18 Tex. Sup. Ct. J. 113 (Tex. 1974) and Marathon Oil Co. v. Sterner, 632 S.W.2d 571, 573, 25 Tex. Sup.
Ct. J. 274 (Tex. 1982)).
8
    Mobil Chem. Co., 517 S.W.2d at 251 (citations omitted).

                                                Jamie Graham Page 10 of 10
|   | Caution
As of: December 4, 2014 12:19 PM EST

                                     Young v. Ward
                   Court of Appeals of Texas, Tenth District, Waco
                   March 6, 1996, delivered ; March 6, 1996, filed
                                   No. 10-95-001-CV

Reporter
917 S.W.2d 506; 1996 Tex. App. LEXIS 900

GEOFFREY YOUNG, Appellant v. TRAVIS WARD, Appellee

Prior History: [**1] From the 13th District Court. Navarro County, Texas. Trial Court
# 94-00-03917-CV.

Disposition: Reversed and remanded

Core Terms

one year, employment contract, parties, statute of frauds, retirement, indefinite duration,
no writ, terminate, fully performed, oral agreement, ten years, ref’d, summary judgment,
conceivably, duration, lifetime

Case Summary

Procedural Posture

Appellant sought review of the judgment from the 13 District Court, Navarro County
(Texas), which granted appellee’s motion for summary judgment in appellant’s suit
against appellee for enforcement of an oral contract.

Overview

Appellant sued appellee to enforce an oral contract under which appellee was to pay
appellant a monthly pension for the rest of appellant’s life. Summary judgment in
appellee’s favor was entered on the grounds that the oral contract was unenforceable
under Tex. Bus. & Comm. Code Ann. § 26.01(b)(6), because it could not be performed
within one year from the date of the agreement. Appellant sought the court’s review. The
court held that § 26.01(b)(6) referred to agreements which could not be performed
within one year of their making. But if the occurrence of some other contingent event
would terminate the agreement before it had been fully performed, then the possibility
                                       Jamie Graham
                        917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1



of that terminating event occurring within one year of the agreement’s making was
sufficient to make § 26.01(b)(6) inapplicable. Here, the contract required appellant to
work for a month and a half before becoming entitled to payments. That time period
then necessarily expired within one year of the agreement’s making. Further, the length
of time the payments were to occur could also have been fully performed within one
year. Accordingly, § 26.01(b)(6) was not applicable. Judgment reversed and remanded.

Outcome

Summary judgment in appellee’s favor reversed and remanded where the oral contract
between appellant and appellee was not required to be in writing to be enforceable
where performance of the contract was contingent upon an event which necessarily had
to occur within a year of the contract’s making, and where the time for performance
could have been fully performed within one year.

LexisNexis® Headnotes

  Civil Procedure > Appeals > Summary Judgment Review > General Overview
  Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General
  Overview
  Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > Genuine
  Disputes
  Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > Materiality of
  Facts

HN1 On appeal from the granting of summary judgment, the court must determine
whether the evidence establishes as a matter of law that there is no genuine issue of
material fact. In deciding whether a genuine issue of material fact exists, the evidence
must be viewed in favor of the nonmovant, resolving all doubts and indulging all
inferences in his favor. A defendant as a movant must either: 1) disprove at least one
element of each of the plaintiff’s theories of recovery; or 2) plead and conclusively
establish each essential element of an affirmative defense.

  Contracts Law > Procedural Matters > Statute of Frauds > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > Performance
  Labor & Employment Law > ... > Conditions & Terms > Duration of Employment > Fixed
  Term
                                  Jamie Graham Page 2 of 12
                        917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1



HN2 Tex. Bus. & Comm. Code Ann. § 26.01(b)(6) provides that, to be enforceable,
promises or agreements which are not to be performed within one year from the date of
making the agreement must be in writing. Agreements which demand performance at or
for a specified amount of time are easily determined by the court to fall or not fall under
the strictures of §26.01(b)(6). The court simply compares the date of the agreement to
the date when the performance under the agreement is to be completed and if there is
a year or more in between them then a writing is required to render the agreement
enforceable. Agreements where the time at or for performance is not specifically
provided but can be readily ascertained from the context of the agreement can also be
easily determined to be within or outside § 26.01(b)(6).

  Contracts Law > Procedural Matters > Statute of Frauds > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > Performance
  Labor & Employment Law > Employment Relationships > Employment Contracts > Statute
  of Frauds

HN3 Without knowing definitely when performance is to be completed, courts are
unable to determine with certainty whether the agreement is to be performed within one
year from the date of making the agreement. Tex. Bus. & Comm. Code Ann. §
26.01(b)(6). Courts, however, apparently in an effort to avoid the harsh consequences §
26.01(b)(6) can produce, generally hold that, in the absence of a known date when
performance will be completed, the statute of frauds as contained in § 26.01(b)(6) does
not apply if performance could conceivably be completed within one year of the
agreement’s making.

  Contracts Law > Procedural Matters > Statute of Frauds > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > Performance
  Labor & Employment Law > ... > Conditions & Terms > Duration of Employment > General
  Overview
  Labor & Employment Law > Employment Relationships > Employment Contracts > Statute
  of Frauds

HN4 Agreements requiring performance for an indefinite duration and which do not
depend upon any conditions for their perpetuation are generally held not to require a
writing under the statute of frauds, Tex. Bus. & Comm. Code Ann. § 26.01(b)(6), because
there is nothing in the agreement itself to show that the agreement could not be
performed within a year according to its tenor and the understanding of the parties.
                                  Jamie Graham Page 3 of 12
                       917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1



  Contracts Law > Procedural Matters > Statute of Frauds > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > General Overview
  Contracts Law > ... > Statute of Frauds > Requirements > Performance

HN5 Agreements which are to last during the life of one of the parties do not require
a writing because the party upon whose life the duration of the contract is measured
could die within a year of the agreement’s making.

  Contracts Law > Procedural Matters > Statute of Frauds > General Overview
  Labor & Employment Law > ... > Employment Contracts > Conditions & Terms > General
  Overview
  Labor & Employment Law > Wrongful Termination > Breach of Contract > General
  Overview
  Labor & Employment Law > Wrongful Termination > Breach of Contract > Express
  Contracts

HN6 The mere possibility of an agreement terminating within one year of its making
does not, in and of itself, ensure that a writing is not required. If this conceivable
possibility of performance is dependent upon some merely fortuitous event, a writing
will still be required to enforce the agreement.

  Contracts Law > Procedural Matters > Statute of Frauds > General Overview

HN7 If an agreement can be fully performed within one year of its making, Tex. Bus.
& Comm. Code Ann. § 26.01(b)(6) does not apply. But if the occurrence of some other
contingent event, even if expressly contemplated in the agreement, would simply
terminate the agreement before the agreement had been fully performed, then the
possibility of that terminating event occurring within one year of the agreement’s
making is insufficient to take the agreement outside of § 26.01(b)(6). The event that
could conceivably occur within one year of the agreement must be one intended by the
parties to result in the full performance of the agreement.

Counsel: William B. Short, Jr. & Mark Frels, SHORT, HOW, LOZANO, FRELS &
TREDOUX, L.L.P., Dallas, TX.

Frederick M. Loeber, Jr., Dallas. TX.

Judges: BOBBY L. CUMMINGS, Justice, BILL VANCE, Justice - concurring

Opinion by: BOBBY L. CUMMINGS
                                 Jamie Graham Page 4 of 12
                       917 S.W.2d 506, *506; 1996 Tex. App. LEXIS 900, **1



Opinion

[*506] OPINION
This is a breach of contract case. At trial, appellant Geoffrey Young sought to enforce
an oral contract between him and appellee Travis Ward whereby Ward, Young’s former
employer, had allegedly agreed to pay Young a pension of $ 2000 per month for the rest
of [*507] Young’s life. Ward moved for summary judgment on the grounds that the
alleged oral contract was unenforceable under the statute of frauds. TEX. BUS. &
COMM. CODE ANN. § 26.01 (Vernon 1987). The trial court granted the motion,
prompting Young to bring this appeal. We reverse and remand.
The two parties differ widely in their versions of the events which led to this lawsuit.
According to Young, beginning in 1956 and continuing until the end of October 1985,
Young worked for Ward as an office manager and bookkeeper. Starting [**2] in or about
1969, he began to feel concerned that Ward had not yet established some provision for
his retirement income. He, therefore, brought the subject up to Ward, who assured
Young that he had no need to be concerned about a lack of a retirement income and that
Ward would provide one for Young when the time came. Nevertheless, despite repeated
protests from Young, Ward never attempted to finalize a formal agreement with Young
until either late September or early October of 1985 when Young was only a few weeks
from his last day of employment. At that time, again according to Young, Ward offered
to pay Young $ 2000 per month for the rest of Young’s life. Young argues that the
consideration for the agreement was that Young would continue to work for Ward until
the end of October. The negotiations were oral and the agreement was never reduced to
writing.
Ward agrees that Young worked for him from 1956 until the end of October 1985 as an
office manager and bookkeeper, but this essentially is where the similarity between his
story and Young’s ends. According to Ward, his decision to offer Young a pension arose
from an effort to keep Young in his employment when Ward was relocating [**3] his
offices from Corsicana to Dallas sometime between 1971 and 1973, not from concerns
expressed by Young about a lack of a retirement plan. Young did not want to move to
Dallas and was reluctant to commute; accordingly, in an effort to persuade him to
continue in his employment, Ward offered to provide Young a company car and gas so
that Young could make the commute from Corsicana without any financial expense.
Furthermore, as an added incentive, Ward decided to offer Young a retirement plan.
Ward consulted an insurance agent, Gara Stark, who analyzed certain figures and
offered certain suggestions to Ward on what might be feasible Options for him and
Young. Ward decided not to accept any of the suggestions from Stark; instead, he orally
offered to pay Young $ 2000 per month for eight years once Young retired. According
to Ward, Young orally accepted this offer in 1973, but it was never reduced to writing.
                                 Jamie Graham Page 5 of 12
                        917 S.W.2d 506, *507; 1996 Tex. App. LEXIS 900, **3



The parties agree that Young retired at the end of October 1985 and that Ward paid
Young $ 2000 per month for eight years following Young’s retirement. Young brought
his lawsuit when Ward informed him in or about October 1993 that he would cease
making payments to Young the following [**4] month.
In his motion for summary judgment, Ward contended the oral agreement between him
and Young was unenforceable because it was not to be performed within one year from
the date of the making of the agreement, as provided in our state’s statute of frauds.
TEX. BUS. & COMM. CODE ANN. § 26.01(b)(6). Ward raised two arguments in
support of his theory: first, he contended that any contract for lifetime is, per se, barred
by the statute of frauds; second, he argued that, since the date of the contract’s making
was in 1973, more than one year would necessarily have had to elapse before the
contract could be performed because Young was not due to retire until twelve years later
in 1985. The trial court granted summary judgment solely on the former argument;
consequently, we can only consider it and not the latter. State Farm Fire & Cas. Co. v.
S.S., 858 S.W.2d 374, 380 (1993); McDuff v. Chambers, 895 S.W.2d 492, 497 (Tex.
App.--Waco 1995, writ denied).
HN1 On appeal from the granting of summary judgment, we must determine whether
the evidence establishes as a matter of law that there is no genuine issue of material fact.
Rodriguez v. Naylor, 763 S.W.2d 411, 413 (Tex. [**5] 1989); Hamlin v. Gutermuth, 909
S.W.2d 114, 116 (Tex. App.--Houston [14th Dist.] 1995, writ denied). In deciding
whether a genuine issue of material fact exists, the evidence must be viewed in [*508]
favor of the nonmovant, resolving all doubts and indulging all inferences in his favor.
Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). A defendant
as a movant must either: 1) disprove at least one element of each of the plaintiff’s
theories of recovery; or 2) plead and conclusively establish each essential element of an
affirmative defense. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679
(Tex. 1979). Ward in his summary judgment motion raised the affirmative defense of the
statute of frauds. The question before us, then, is whether oral lifetime contracts are
unenforceable under the statute of frauds. We conclude that they are not.
Construing the facts in the light most favorable to Young, we find that in late September
or early October 1985 Ward offered to pay Young $ 2000 per month for the rest of
Young’s life if Young would continue to work for Ward until the end of October 1985.
Young accepted the offer, but the agreement [**6] was never reduced to writing.
HN2 Section 26.01(b)(6) of the Business and Commerce Code provides that, to be
enforceable, promises or agreements ″which [are] not to be performed within one year
from the date of making the agreement″ must be in writing. TEX. BUS. & COMM.
CODE ANN. § 26.01(b)(6). Agreements which demand performance at or for a specified
                                  Jamie Graham Page 6 of 12
                        917 S.W.2d 506, *508; 1996 Tex. App. LEXIS 900, **6



amount of time are easily determined by the court to fall or not fall under the strictures
of section 26.01(b)(6). Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795, 796 (1961)
(question of whether an agreement falls within the statute of frauds is one of law). The
court simply compares the date of the agreement to the date when the performance
under the agreement is to be completed and if there is a year or more in between them
then a writing is required to render the agreement enforceable. Gilliam v. Kouchoucos,
161 Tex. 299, 340 S.W.2d 27, 28-29 (1960) (employment contract for ten years within
statute); Chevalier v. Lane’s, Inc., 147 Tex. 106, 213 S.W.2d 530, 533 (Tex. 1948)
(employment contract for term of one year and several weeks within statute); Paschall
v. Anderson, 127 Tex. 251, 91 S.W.2d 1050, 1051 (1936) [**7] (same); Shaheen v.
Motion Indus., Inc., 880 S.W.2d 88, 91 (Tex. App.--Corpus Christi 1994, writ denied)
(employment contract for nine months not within statute); International Piping Sys.,
Ltd. v. M.M. White & Assoc., Inc., 831 S.W.2d 444, 451 (Tex. App.--Houston [14th Dist.]
1992, writ denied) (employment contract for one year performable within one year and
therefore not within statute); Wiley v. Bertelsen, 770 S.W.2d 878, 881-82 (Tex.
App.--Texarkana 1989, no writ) (employment agreement for approximately ten years
within statute); M.R.S. Datascope Inc. v. Exchange Data Corp., Inc., 745 S.W.2d 542,
544 (Tex. App.--Houston [1st Dist.] 1988, no writ) (covenant not to compete for three
years within statute); Levine v. Loma Corp., 661 S.W.2d 779, 781-82 (Tex. App.--Fort
Worth 1983, no writ) (agreement to employ employee for over one year and then pay
him $ 1000 per month for life thereafter within statute).
Agreements where the time at or for performance is not specifically provided but can
be readily ascertained from the context of the agreement can also be easily determined
to be within or outside section 26.01(b)(6). Schroeder v. Texas Iron Works, [**8] Inc.,
813 S.W.2d 483 (Tex. 1991) (employment contract until retirement, which was eight to
ten years from date of agreement’s making, was within statute); Niday v. Niday, 643
S.W.2d 919, 920 (Tex. 1982) (agreement fell within statute where performance under
agreement would take at least two years); Hall v. Hall, 158 Tex. 95, 308 S.W.2d 12, 15
(1957) (employment contract with no specified duration was within statute where the
parties intended it to last for a reasonable time and where the jury determined the parties
at the time the agreement was made intended it to be about three years); Leon Ltd. v.
Albuquerque Commons Partnership, 862 S.W.2d 693, 702 (Tex. App.--El Paso 1993, no
writ) (writing was required where performance under agency agreement, although for an
unspecified term, could not possibly be completed within three years from date of
agreement); Winograd v. Willis, 789 S.W.2d 307, 310-11 (Tex. App.--Houston [14th Dist.
1990, writ denied) (employment contract of unspecified duration determined to be for
one year and therefore not within statute where the terms of the agreement indicated that
employee [*509] was to receive an annual salary); [**9] Benoit v. Polysar Gulf Coast,
Inc., 728 S.W.2d 403, 406-07 (Tex. App.--Beaumont 1987, writ ref’d n.r.e.) (employment
                                  Jamie Graham Page 7 of 12
                        917 S.W.2d 506, *509; 1996 Tex. App. LEXIS 900, **9



contract until retirement for employee several years younger than retirement age within
statute); Gano v. Jamail, 678 S.W.2d 152, 154 (Tex. App.--Houston [14th Dist.] 1984,
no writ) (indefinite duration agreement between plaintiff lawyers to share profits from
personal injury cases required a writing because the work on the cases could not
reasonably be completed within one year from the date the cases were taken); Molder
v. Southwestern Bell Tel. Co., 665 S.W.2d 175, 177 (Tex. App.--Houston [1st Dist.] 1983,
writ ref’d n.r.e.) (employment contract until retirement for eighteen year-old employee
within statute).
Agreements which fail to specify a definite time when performance is to be completed
and agreements from which the time at or for performance cannot be readily ascertained
present a different and more difficult problem. HN3 Without knowing definitely when
performance is to be completed, courts are unable to determine with certainty whether
the agreement was ″to be performed within one year from the date of making the
agreement.″ TEX. BUS. & COMM. [**10] CODE ANN. § 26.01(b)(6). Texas courts,
however, apparently in an effort to avoid the harsh consequences section 26.01(b)(6) can
produce, have generally held that, in the absence of a known date when performance
will be completed, the statute of frauds does not apply if performance could conceivably
be completed within one year of the agreement’s making. Miller v. Riata Cadillac Co.,
517 S.W.2d 773, 776 (Tex. 1974) (where contract to pay employee a bonus after
approximately one year could theoretically be performed before the year expired, statute
of frauds did not apply); Young v. Fontenot, 888 S.W.2d 238, 241 (Tex. App.--El Paso
1994, writ denied) (agreement to transfer stocks at an unspecified date in the future was
performable within one year and therefore not within statute); Gerstacker v. Blum
Consulting Engineers, Inc., 884 S.W.2d 845, 851 (Tex. App--Dallas 1994, writ denied)
(employment contract for no specified duration but for as long as the employee’s
performance was satisfactory could be performed within one year because performance
could conceivably become unsatisfactory within one year); Prowse v. Schellhase, 838
S.W.2d 787, 790 (Tex. App.--Corpus [**11] Christi 1992, no writ) (agreement to find a
buyer for mineral leases was performable within one year and therefore not within
statute); Goodyear Tire & Rubber Co. v. Portilla, 836 S.W.2d 664, 670-71 (Tex.
App.--Corpus Christi 1992) (employment contract for as long as employee performed
work satisfactorily not within statute), aff’d, 879 S.W.2d 47 (Tex. 1994); Day &
Zimmermann, Inc. v. Hatridge, 831 S.W.2d 65, 68-69 (Tex. App.--Texarkana 1992, writ
denied) (same); Kennedy v. Hyde, 666 S.W.2d 325, 328 (Tex. App.--Fort Worth) (oral
agreement to repay a note for a ten-year period not within statute because parties
intended for alternative performance by possible early payment within one year of the
agreement), rev’d on other grounds, 682 S.W.2d 525 (Tex. 1984); JOHN D. CALAMARI
AND JOSEPH M. PERILLO, CONTRACTS, § 19-18 (2nd ed. 1977); contra Wal-Mart
Stores, Inc. v. Coward, 829 S.W.2d 340, 342-43 (Tex. App.--Beaumont 1992, writ
                                  Jamie Graham Page 8 of 12
                       917 S.W.2d 506, *509; 1996 Tex. App. LEXIS 900, **11



denied) (employment contract for as long as employee wanted it and made a ″good
hand″ required a writing).
Furthermore, under similar reasoning, HN4 agreements requiring performance for an
indefinite duration and which do not depend upon [**12] any conditions for their
perpetuation are generally held not to require a writing under the statute of frauds
because ″there is nothing in the agreement itself to show that [the agreement could not]
be performed within a year according to its tenor and the understanding of the parties[.]″
Bratcher, 346 S.W.2d at 796 (quoting 49 AM. JUR. Statute of Frauds § 27 (1943)).
Again, the agreements could conceivably be performed within a year of their making;
therefore, a writing is not required to enforce them. Id. (statute of frauds did not apply
to employment contract of indefinite duration); Beckstrom v. Gilmore, 886 S.W.2d 845,
846-47 (Tex. App.--Eastland 1994, writ denied) (agreement of indefinite duration by
attorney to send demand letters for medical doctor performable within one year and
therefore not within statute); Morgan v. Jack Brown Cleaners, Inc., 764 S.W.2d 825, 827
(Tex. [*510] App.--Austin 1989, writ denied) (on rehearing) (employment contract of
indefinite duration not within statute); Kelley v. Apache Products, Inc., 709 S.W.2d 772,
774 (Tex. App.--Beaumont 1986, writ ref’d n.r.e.) (same); Robertson v. Pohorelsky, 583
S.W.2d 956, [**13] 958 (Tex. Civ. App.--Waco 1979, writ ref’d n.r.e.) (employment
contract of indefinite duration did not require writing because nothing in agreement
indicated parties intended employee to work more than one year); RESTATEMENT
(SECOND) OF CONTRACTS § 130 cmt. a (1981).
Accordingly, HN5 agreements to last during the life of one of the parties would also not
require a writing because the party upon whose life the duration of the contract is
measured could die within a year of the agreement’s making. In Wright v. Donaubauer,
137 Tex. 473, 154 S.W.2d 637 (1941), the Supreme Court considered whether an oral
agreement providing for an alternative means of performing on a ten-year note was
within the statute of frauds. The parties orally agreed that the debtor could pay off his
$ 2100 debt, payable on the note by $ 100 every six months for ten years, by performing
yard work either for the life of the creditor or for the duration of the note, whichever
should occur first. 154 S.W.2d at 638. The parties intended that the note, under either
scenario, would be paid in full. See id. It is important to distinguish the two agreements
at issue in the Wright case. The first is the written [**14] agreement represented in the
ten-year note. The second is the oral agreement between the parties providing for an
alternative means of paying off the note other than the tendering of $ 100 every six
months for ten years. Under the oral agreement, the parties intended for two alternative
means of performance. The first required ten years of yard work by the debtor; the
second required the performance of yard work by the debtor until the death of the
creditor. The Supreme Court held that, because the second means of performance could
have occurred within one year of the agreement’s making, the statute of frauds did not
                                  Jamie Graham Page 9 of 12
                        917 S.W.2d 506, *510; 1996 Tex. App. LEXIS 900, **14



apply and a writing was not required to enforce it. 154 S.W.2d at 639; see Gilliam, 340
S.W.2d at 28. This rule of law has since been followed in Texas and in virtually every
other jurisdiction in the United States. Lieber v. Mercantile Nat’l Bank at Dallas, 331
S.W.2d 463, 474 (Tex. Civ. App.--Dallas 1960, writ ref’d n.r.e.) (oral prenuptial
agreement that husband would will certain monies to his wife not within statute because
husband could have died within one year of the agreement’s making); Central Nat’l
Bank of San Angelo v. Cox, 96 S.W.2d 746, 748 [**15] (Tex. Civ. App.--Austin 1936,
writ dism’d) (employment contract until employee should die or become incapacitated
performable within one year and therefore not within statute); accord Doherty v.
Doherty Ins. Agency, Inc., 878 F.2d 546, 551-52 (1st Cir. 1989) (applying Massachusetts
law); Rath v. Selection Research, Inc., 246 Neb. 340, 519 N.W.2d 503, 506 (Neb. 1994);
Boothby v. Texon, Inc., 414 Mass. 468, 608 N.E.2d 1028, 1035-36 (Mass. 1993); Falls
v. Virginia State Bar, 240 Va. 416, 397 S.E.2d 671, 672 (Va. 1990); Kestenbaum v.
Pennzoil Co., 108 N.M. 20, 766 P.2d 280, 283-84 (N.M. 1988), cert. denied, 490 U.S.
1109, 109 S. Ct. 3163, 104 L. Ed. 2d 1026 (1989); Bergquist-Walker Real Estate, Inc.
v. William Clairmont, Inc., 333 N.W.2d 414, 418 (N.D. 1983); Kitsos v. Mobile Gas Serv.
Corp., 404 So. 2d 40, 42 (Ala. 1981); Kiyose v. Trustees of Indiana Univ., 166 Ind. App.
34, 333 N.E.2d 886, 889 (Ind. 1975); Price v. Mercury Supply Co., Inc., 682 S.W.2d 924,
933 (Tenn. App. 1984); contra Massey v. Houston Baptist Univ., 902 S.W.2d 81, 84 (Tex.
App.--Houston [1st Dist.] 1995, writ denied) (promise of lifetime employment, without
  [**16] reference to retirement, required a writing); Benoit, 728 S.W.2d at 407
(employment contracts for ″lifetime employment″ require a writing); Zimmerman v.
H.E. Butt Grocery Co., 932 F.2d 469, 472-73 (5th Cir.) (under Texas law agreements for
″lifetime employment″ require a writing), cert. denied, 502 U.S. 984, 112 S. Ct. 591, 116
L. Ed. 2d 615 (1991); Quinn v. Workforce 2000, Inc., 887 F. Supp. 131, 136 (E.D. Tex.
1995) (same); Rayburn v. Equitable Life Assurance Soc. of the United States, 805 F.
Supp. 1401, 1405-06 (S.D. Tex. 1992) (same).
However, HN6 the mere possibility of the agreement terminating within one year of its
making does not, in and of itself, ensure that a writing is not required. If this conceivable
possibility of performance is dependent upon [*511] some merely fortuitous event, a
writing will still be required to enforce the agreement. Gilliam, 340 S.W.2d at 28
(ten-year employment contract required writing notwithstanding express provision in
the oral agreement that such would terminate upon employee’s death); Chevalier, 213
S.W.2d at 533 (mere possibility of death did not eliminate requirement of a writing to
enforce an [**17] employment contract of one year and several weeks); Collins v. Allied
Pharmacy Management, Inc., 871 S.W.2d 929, 934 (Tex. App.--Houston [14th Dist.]
1994, no writ) (employment contract for three years within statute even though under
agreement employee could be terminated at any time for cause); Mann v. NCNB Texas
Nat’l Bank, 854 S.W.2d 664, 668 (Tex. App.--Dallas 1992, no writ) (loan agreement with
                                  Jamie Graham Page 10 of 12
                       917 S.W.2d 506, *511; 1996 Tex. App. LEXIS 900, **17



a three-year repayment term was within Statute notwithstanding remote possibility that
debtor would repay the loan within a year from its making); Webber v. M. W. Kellogg
Co., 720 S.W.2d 124, 128 (Tex. App.--Houston [14th Dist.] 1986, writ ref’d n.r.e.)
(employment contract until retirement required a writing notwithstanding employer’s
contractual right to discharge employee at will within first three months of employment).
This seemingly technical distinction is one between termination of the contract and
performance under the contract. Gilliam, 340 S.W.2d at 28-9; Chevalier, 213 S.W.2d at
532. Section 26.01(b)(6) refers to agreements which cannot be ″performed″ within one
year of their making. TEX. BUS. & COMM. CODE ANN. § 26.01(b)(6). Accordingly,
HN7 if an [**18] agreement could be fully ″performed″ within one year of its making,
section 26.01(b)(6) does not apply. Bratcher, 346 S.W.2d at 796; Gilliam, 340 S.W.2d at
28-9; Chevalier, 213 S.W.2d at 532; Gerstacker, 884 S.W.2d at 851 (employment
contract for as long as the employee’s performance was satisfactory would be fully
completed when employee’s performance became unsatisfactory); Portilla, 836 S.W.2d
at 670-71 (same). But if the occurrence of some other contingent event, even if
expressly contemplated in the agreement, would simply terminate the agreement before
the agreement had been fully performed, then the possibility of that terminating event
occurring within one year of the agreement’s making is insufficient to take the
agreement outside of section 26.01(b)(6). The event that could conceivably occur within
one year of the agreement must be one intended by the parties to result in the full
performance of the agreement. In the words of the Fifth Circuit, ″If an oral . . .
agreement can cease upon some contingency, other than by some fortuitous event or the
death of one of the parties, the agreement may be performed within one year, and the
statute of frauds does [**19] not apply.″ Pruitt v. Levi Strauss & Co., 932 F.2d 458,
463-64 (5th Cir. 1991); see Gilliam, 340 S.W.2d at 29-30; Chevalier, 213 S.W.2d at 532;
Collins, 871 S.W.2d at 934; M.R.S. Datascope, 745 S.W.2d at 544. We will now apply
the facts to the above-stated principles of law.
Here, the summary judgment evidence indicates that the parties agreed in late
September or early October 1985 that Ward would pay Young $ 2000 per month for the
rest of Young’s life if Young would work for Ward until the end of October 1985. We
note that there are two stages of performance under this agreement. The first is the
month and a half of work Young would have to complete in order to be entitled to
payment from Ward. The parties identified a specific and definite period of time by
which performance under this first stage would be completed; i.e., no more than a month
and a half. This month and a half would necessarily expire within one year of the
agreement’s making; therefore, the writing requirement of section 26.01(b)(6) is not
invoked by this stage.
The second stage of performance is the period of time Ward was required to make
payments to Young. This period was one of an [**20] indefinite duration; i.e., until
                                 Jamie Graham Page 11 of 12
                       917 S.W.2d 506, *511; 1996 Tex. App. LEXIS 900, **20



Young dies. As an agreement of indefinite duration, we must ask whether it could have
been fully performed within one year of its making. Obviously, it could have been.
Young could have died at any time after he ceased working for Ward.
We must also ask, however, whether Young’s death would have resulted in the
agreement being fully performed or fortuitously terminated. The language of the [*512]
agreement reveals the parties’ intention that the contract would be fully performed once
Young died, assuming he successfully performed under the first stage of the agreement,
which we note was less than one year. Young’s death within a year of the agreement’s
making would not have simply resulted in the fortuitous termination of the agreement:
Young’s death was intended by the parties to be the defining event which would
determine when the agreement was fully performed. Therefore, because both stages of
the agreement, taken together, could have been fully performed within one year of the
agreement’s making, we conclude that section 26.01(b)(6) is not applicable. We,
accordingly, sustain Young’s first point of error. Due to our disposition of his first
 [**21] point of error, we need not consider his remaining points. The cause is reversed
and remanded for a trial on the merits.
BOBBY L. CUMMINGS
Justice
Before Justice Cummings, and
Justice Vance
Reversed and remanded
Opinion delivered and filed March 6, 1996




                                 Jamie Graham Page 12 of 12
|   | Caution
As of: February 20, 2015 11:43 AM EST

                                 Pitman v. Lightfoot
                Court of Appeals of Texas, Fourth District, San Antonio
                  August 7, 1996, Delivered ; August 7, 1996, Filed
                             Appeal No. 04-93-00480-CV

Reporter
937 S.W.2d 496; 1996 Tex. App. LEXIS 3531
B.F. PITMAN III; Kim I. MANNING; J.           limitations, notice, contractual damages,
Brian O’CONNOR; Michael H. BERTINO,           limitations period, no writ
M.D.; Fred L. BAKER; Lawrence F.
HAASS; Rodolfo DAVILA, Trustee of             Case Summary
The Rodolfo L. Davila Estate Trust; and
Frank DAVILA II, Appellants, v. O.            Procedural Posture
Waymond LIGHTFOOT, Jr.; William R.
                                              Appellant investors of bank holding
FIELDS, Jr. and His Estate in Bankruptcy
                                              company stock challenged a judgment from
through Intervenor John Patrick LOWE,
                                              the 285th District Court of Bexar County
Trustee, Appellees.
                                              (Texas), in favor of appellee sellers of the
Subsequent History: [**1] Released for        stock, in appellees’ action for breach of
Publication December 6, 1996.                 contract, related tort theories, and
                                              violations of the Texas Securities Act, Tex.
Prior History: Appeal from the 285th          Rev. Civ. Stat. Ann. art. 581-33, concerning
District Court of Bexar County. Trial Court   a purported agreement with appellants to
No. 91-CI-16926. Honorable Michael P.         purchase stock from appellees for which
Peden, Judge Presiding.                       payment was not made.

Disposition: AFFIRMED IN PART; Overview
REVERSED AND RENDERED IN PART.
                                               The parties had entered into a stock
Core Terms                                     repurchase agreement, an agreement for
                                               funding repurchases of shares, and
appellees’, control group, stock, trial court, repurchase agreement for the a bank’s
damages, questions, shares, appellants’, capital stock. Payment was not made. The
Savings, parties, issues, ratification, trial court granted judgment in favor of
financing, ambiguous, loans, Securities, appellee sellers in an action against
attorneys’, breach of contract, pleadings, appellant investors for breach of contract,
ratified, securities fraud, discovery rule, breach of trustees’ and directors’ fiduciary
conditioned, individually, voting trust, duties, and violations of the Texas
                                      Jamie Graham
                        937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1



Securities Act, Tex. Rev. Civ. Stat. Ann. art.    the evidence supporting the jury’s finding,
581-33. On appeal, the court affirmed the         ignoring all evidence to the contrary. If
part of the judgment based upon breach of         there is no evidence to support the finding,
contract because the ″discovery rule″ tolled      then the entire record must be examined to
the four-year statute of limitations. The         see if the contrary proposition is established
evidence was both legally and factually           as a matter of law. Only when the contrary
sufficient to support a finding that              proposition is conclusively established by
appellants promised, though their agent, to       the evidence does the court sustain the
buy appellees’ stock. The court, however,         point.
reversed the judgment regarding the breach
of duty and art. 581-33 claims. As to one            Civil Procedure > ... > Defenses, Demurrers
appellant, no evidence showed that any               & Objections > Affirmative Defenses >
                                                     General Overview
untrue statements or omissions were made
regarding the stock itself. Regarding the            Civil Procedure > ... > Statute of
other appellant, article 581-33(H) clearly           Limitations > Tolling of Statute of
provided an optimum limitations period of            Limitations > Discovery Rule
five years, which was not observed. The              Civil Procedure > Discovery & Disclosure >
breach of duty claim thus failed as well.             General Overview
                                                     Governments > Legislation > Statute of
Outcome
                                                     Limitations > General Overview
The court affirmed only that portion of the
                                                     Governments > Legislation > Statute of
trial court’s judgment that awarded liability
                                                     Limitations > Time Limitations
and damages for breach of contract to
appellee sellers of bank holding company             Torts > Procedural Matters > Statute of
stock against appellant investors. The court         Limitations > General Overview
reversed those parts of the trial court’s         HN2 The discovery rule is a plea in
judgment that awarded liability and               confession and avoidance. A plea in
damages for breach of trustees’ and               confession and avoidance is one which
directors’ fiduciary duties, and for              avows and confesses the truth in the
violations of the Texas Securities Act, and       averments of fact in the petition, either
rendered that appellees take nothing.             expressly or by implication, but then
                                                  proceeds to allege new matter which tends
LexisNexis® Headnotes                             to deprive the facts admitted of their
                                                  ordinary legal effect, or to obviate,
  Civil Procedure > Appeals > Standards of
                                                  neutralize, or avoid them. This most closely
  Review
                                                  describes the function of the discovery
HN1 When reviewing ″matter of law″                rule, which asserts that while the statute of
points, an appellate court employs a              limitation may appear to have run, giving
two-prong test. The court will first examine      rise to that appearance should not control.
                                   Jamie Graham Page 2 of 79
                        937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1



  Civil Procedure > ... > Defenses, Demurrers        Torts > Procedural Matters > Statute of
  & Objections > Affirmative Defenses >              Limitations > General Overview
  General Overview
                                                  HN4 The discovery rule does not excuse a
  Civil Procedure > ... > Affirmative party from exercising reasonable diligence
  Defenses > Statute of Limitations > Waiver
                                                  in protecting its own interests. The rule
  Civil Procedure > ... > Statute of expressly mandates the exercise of
  Limitations > Tolling of Statute of reasonable diligence to discover facts of
  Limitations > Discovery Rule           negligence or omission. Moreover, the
  Governments > Legislation > Statute of burden is on the party seeking the benefit
  Limitations > General Overview         of the discovery rule to establish its
  Governments > Legislation > Statute of applicability. Whether reasonable diligence
  Limitations > Pleadings & Proof        was used is generally a question of fact
                                                  unless the evidence is such that reasonable
  Torts > Procedural Matters > Statute of
                                          minds could not differ as to its effect; only
  Limitations > General Overview
                                                  then does it become a question of law.
HN3 A party seeking to avail itself of the
discovery rule must plead the rule, either           Civil Procedure > ... > Defenses, Demurrers
                                                     & Objections > Affirmative Defenses >
in its original petition or in an amended or
                                                     General Overview
supplemental petition in response to
defendant’s assertion of the defense as a            Civil Procedure > ... > Statute of
matter of avoidance. A defendant who has             Limitations > Tolling of Statute of
established that the suit is barred cannot be        Limitations > Discovery Rule
expected to anticipate the plaintiff’s               Civil Procedure > Discovery & Disclosure >
defenses to that bar. A matter in avoidance           General Overview
of the statute of limitations that is not            Contracts Law > Breach > Breach of
raised affirmatively by the pleadings will,          Contract Actions > General Overview
therefore, be waived. The party seeking to
                                                     Contracts Law > Breach > General
benefit from the discovery rule must also
                                                     Overview
bear the burden of proving and securing
favorable findings thereon. The party                Contracts Law > Defenses > Affirmative
asserting the discovery rule should bear             Defenses > Statute of Limitations
this burden, as it will generally have greater       Governments > Legislation > Statute of
access to the facts necessary to establish           Limitations > General Overview
that it falls within the rule.                       Governments > Legislation > Statute of
                                                     Limitations > Time Limitations
  Civil Procedure > ... > Defenses, Demurrers
  & Objections > Affirmative Defenses > HN5 A breach of contract action is
  General Overview                            governed by a four-year statute of
  Civil Procedure > Discovery & Disclosure > limitations. Tex. Civ. Prac. & Rem. Code
   General Overview                          Ann. § 16.004 (1986). In applying this
                                   Jamie Graham Page 3 of 79
                        937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1



four-year limitations period, a cause of          to the pleader. The court will look to the
action is generally said to accrue when the       pleader’s intendment and the pleading will
wrongful act effects an injury, regardless        be upheld even if some element of a cause
of when the plaintiff learned of such injury.     of action has not been specifically alleged.
An exception to the general rule is known         Every fact will be supplied that can
as the discovery rule and this rule is used       reasonably be inferred from what is
to determine when the cause of action             specifically stated.
accrued. The discovery rule tolls the
running of the limitations period until the          Civil Procedure > ... > Defenses, Demurrers
time the injured party discovers or through          & Objections > Affirmative Defenses >
the use of reasonable care and diligence             General Overview
should have discovered the injury. In a
                                                     Civil Procedure > ... > Jury Trials > Jury
breach of contract action, limitations begin
                                                     Instructions > General Overview
to run from the time of the breach, or from
the time the plaintiff knew or should have           Civil Procedure > ... > Standards of
known of the breach, whichever is the                Review > Substantial Evidence >
later.                                               Sufficiency of Evidence
                                                Torts > Procedural Matters > Statute of
  Civil Procedure > ... > Defenses, Demurrers
                                                Limitations > General Overview
  & Objections > Affirmative Defenses >
   General Overview                           HN8 Reasonably diligent discovery is
  Civil Procedure > ... > Statute of generally a matter for the jury. This is
  Limitations > Tolling of Statute of especially true in a case where the material
  Limitations > Discovery Rule                facts are far from undisputed.
  Civil Procedure > Discovery & Disclosure >
                                                     Civil Procedure > ... > Defenses, Demurrers
   General Overview
                                                     & Objections > Affirmative Defenses >
  Governments > Legislation > Statute of             General Overview
  Limitations > General Overview
                                                     Civil Procedure > ... > Statute of
  Torts > Procedural Matters > Statute of            Limitations > Tolling of Statute of
  Limitations > General Overview                     Limitations > Discovery Rule
HN6 For a court to apply the discovery               Contracts Law > Breach > Breach of
rule, the party asserting it must also               Contract Actions > General Overview
affirmatively plead the rule.                        Contracts Law > Breach > General
  Civil Procedure > Pleading & Practice >            Overview
     Pleadings > Rule Application &                  Torts > Procedural Matters > Statute of
  Interpretation                                     Limitations > General Overview

HN7 The general rule is that pleadings HN9 Without application of the discovery
will be construed as favorably as possible rule, a contract cause of action normally
                                   Jamie Graham Page 4 of 79
                        937 S.W.2d 496, *496; 1996 Tex. App. LEXIS 3531, **1



accrues when the contract is breached, not matter of right from the date of the injury
when it was made.                          or loss.

  Evidence > ... > Exemptions > Statements           Civil Procedure > Judgments > Preclusion
  by Party Opponents > General Overview              of Judgments > General Overview
  Evidence > Types of Evidence > Judicial            Civil Procedure > Judgments > Preclusion
  Admissions > General Overview                      of Judgments > Law of the Case
  Evidence > Types of Evidence > Judicial HN13 The ″law of the case″ doctrine has
  Admissions > Pleadings
                                                  been defined by the Texas Supreme Court
HN10 A party’s testimonial declarations           as that principle under which questions of
which are contrary to his position are            law decided on appeal to a court of last
quasi-admissions. They are merely some            resort will govern the case throughout its
evidence, and they are not conclusive upon        subsequent stages. By narrowing the issues
the admitter. These are to be distinguished       in successive stages of the litigation, the
from the true judicial admission which is a       law of the case doctrine attempts to achieve
formal waiver of proof usually found in           uniformity of decision as well as judicial
pleadings or the stipulations of the parties.     economy and efficiency.
A judicial admission is conclusive upon
the party making it, and it relieves the             Civil Procedure > Appeals > Summary
opposing party’s burden of proving the               Judgment Review > General Overview
admitted fact, and bars the admitting party          Civil Procedure > Judgments > Preclusion
from disputing it. The requirements for              of Judgments > Law of the Case
treating      a      party’s     testimonial
quasi-admission as a conclusive judicial    HN14 The doctrine of the law of the case
admission include that the statement be     only applies to questions of law and not to
deliberate, clear, and unequivocal and that questions of fact. Furthermore, the doctrine
the hypothesis of mere mistake or slip of   does not necessarily apply when either the
the tongue must be eliminated.              issues or the facts presented at successive
                                            appeals are not substantially the same as
  Torts > ... > Types of Damages > Judgment those involved in the first trial.
  Interest > General Overview
                                                     Civil Procedure > Judgments > Summary
HN11 See Tex. Rev. Civ. Stat. Ann. art.              Judgment > General Overview
5069-1.03 (1987).
                                                     Civil Procedure > Appeals > Summary
  Torts > ... > Types of Damages > Judgment          Judgment Review > General Overview
  Interest > General Overview                        Civil Procedure > ... >        Summary
HN12 Where damages are definitely                    Judgment > Motions for         Summary
determinable, interest is recoverable as a           Judgment > General Overview

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  Civil Procedure > ... > Summary                    Criminal Law & Procedure > ... > Jury
  Judgment > Opposing Materials > General            Instructions > Particular Instructions >
  Overview                                            Elements of Offense
  Civil Procedure > ... > Summary HN17 A proper broad form jury question
  Judgment > Entitlement as Matter of Law > asks an ultimate issue and instructs the
   General Overview                         jury about the elements of the ground of
                                                  recovery or defense that the jury must find
HN15 On review of summary judgments,
                                                  before giving a ″yes″ answer to the issue.
the appellate courts are limited in their
considerations of issues and facts. In such          Contracts Law > Contract Interpretation >
a proceeding, the movant is not required to          Parol Evidence > General Overview
assert every theory upon which he may                Contracts Law > Defenses > Ambiguities &
recover or defend. Thus, when a case                 Mistakes > General Overview
comes up for a trial on the merits, the              Evidence > Types of Evidence >
parties may be different, the pleadings may           Documentary Evidence > Parol Evidence
be different, and other causes of action
may have been consolidated. Other                 HN18 The parol evidence rule is a rule of
distinctions may be drawn; for instance, in       substantive law which provides that in the
reviewing the evidence to determine               absence of fraud, accident, or mistake,
whether there are any fact issues in dispute,     extrinsic evidence is not admissible to
the appellate court must review the               vary, add to, or contradict the terms of a
evidence in the light most favorable to the       written instrument that is facially complete
party opposing the motion for summary             and unambiguous.
judgment. Thus, the context of a summary             Contracts Law > Contract Interpretation >
judgment proceeding is distinguishable               Parol Evidence > General Overview
from a full trial on the merits.
                                                     Evidence > Types of Evidence >
  Civil Procedure > Appeals > Reviewability           Documentary Evidence > Parol Evidence
  of Lower Court Decisions > Preservation HN19 A party may not introduce parol
  for Review                                evidence to vary the terms of an
HN16 Proposed questions must be              unambiguous contract. When a writing is
submitted to the jury in ″substantially      intended as a completed legal transaction,
correct wording.″ Tex. R. Civ. P. 278. If thethe parol evidence rule excludes other
request is not in substantially correct      evidence of any prior or contemporaneous
wording, it does not preserve error. Tex. R. expressions of the parties relating to the
Civ. P. 279.                                 transaction. Only if the intention of the
                                             parties as expressed on the face of the
  Civil Procedure > ... > Jury Trials > Jury document is doubtful may the court resort
  Instructions > General Overview            to parol evidence to resolve the doubt.
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  Contracts Law > Contract Interpretation > during trial that at least one of the parties is
  Parol Evidence > General Overview         claiming ambiguity, supported by adequate
  Contracts Law > Defenses > Ambiguities & pleadings, to examine the provisions in
  Mistakes > General Overview              question and determine at that time whether
                                                  or not the contract is or is not ambiguous.
  Evidence > Types of Evidence >
   Documentary Evidence > Parol Evidence This is necessary, among other reasons, so
                                                  that the court can properly rule on
  Evidence > Admissibility > Statements as evidentiary objections and submit a
  Evidence > Parol Evidence                substantially correct charge.
HN20 When there is no ambiguity, parol
                                                     Contracts Law > Contract Interpretation >
evidence is not admissible to create one.
                                                      Ambiguities & Contra Proferentem >
When a contract, on its face, can be given           General Overview
a definite, legal meaning, parol evidence is
not admissible to render it ambiguous.               Contracts Law > Defenses > Ambiguities &
Only after the trial judge determines that           Mistakes > General Overview
the contract is ambiguous does parol              HN22 If neither party alleges a contract is
evidence become admissible, and then only         ambiguous, or if the issue is raised for the
to assist the fact finder in determining the      first time on appeal, construction of the
subjective intent of the parties at the time      agreement is a question of law for the
they entered into the agreement.                  appellate court.
  Civil Procedure > Judicial Officers >              Contracts Law > Contract Interpretation >
  Judges > General Overview                           Ambiguities & Contra Proferentem >
  Contracts Law > Contract Interpretation >          General Overview
   Ambiguities & Contra Proferentem >                Contracts Law > Defenses > Ambiguities &
  General Overview                                   Mistakes > General Overview
  Contracts Law > Defenses > Ambiguities &
  Mistakes > General Overview
                                           HN23 Only when a contract contains an
                                                  ambiguity does its interpretation become a
  Contracts Law > Formation of Contracts > question of fact for the jury.
   Mistake > General Overview
                                             Contracts Law > Contract Interpretation >
HN21 Even in the absence of appropriate       Ambiguities & Contra Proferentem >
pleading by either party, a trial judge may  General Overview
conclude a contract is ambiguous. Indeed,
                                                     Contracts Law > Defenses > Ambiguities &
he must do so before the issue can be
                                                     Mistakes > General Overview
submitted to the jury: If the trial court has
not made a determination on the question          HN24 In construing a contract, the court
of whether a contract is ambiguous before         must give effect to the objective intent of
a jury trial commences, it is incumbent on        the parties as expressed or apparent in the
the judge when it first becomes apparent          writing, in light of the surrounding
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circumstances. A contract is not ambiguous        evidence unless the appellant can
if, after applying the rules of construction,     demonstrate that the whole case turns on
the provision in question can be given a          the particular evidence that was admitted
certain or definite legal meaning or              or excluded. The exclusion of evidence is
interpretation. On the other hand, the            harmless if it is cumulative of other
contract is ambiguous when its meaning is         evidence that was admitted on the same
uncertain and doubtful or it is reasonably        issue.
susceptible to more than one meaning. The
court recognizes that an instrument is not           Civil Procedure > ... > Jury Trials > Jury
ambiguous simply because the parties                 Instructions > General Overview
disagree over its interpretation.                    Civil Procedure > ... > Jury Trials > Jury
                                                     Instructions > Requests for Instructions
  Contracts Law > Contract Interpretation >
  Parol Evidence > General Overview                  Civil Procedure > Appeals > Reviewability
                                                     of Lower Court Decisions > Preservation
  Contracts Law > Defenses > Ambiguities &           for Review
  Mistakes > General Overview
  Evidence > Types of Evidence > HN27 All parties are entitled to have
   Documentary Evidence > Parol Evidence controlling issues, raised by the pleadings
                                                  and evidence, submitted to the jury. A
HN25 Parol evidence is admissible                 controlling issue is one which requires a
regarding the intentions of the parties when      factual determination to render judgment
the writing contained in the document is          in the case. The issue must also be disputed.
ambiguous. Moreover, it is admissible to          Appellants must also show they preserved
show the agreement was not to become              error to prevail on these points. Several
effective save upon certain conditions or         procedural steps are required to preserve
contingencies.                                    error. First, the complaining party must
  Civil Procedure > Appeals > Reviewability       request a question on the issue. The request
  of Lower Court Decisions > Preservation         must be in writing, separated from other
  for Review                                      requested jury charges, and must be
                                                  tendered in ″substantially correct″ form.
  Civil Procedure > Appeals > Standards of
  Review > Reversible Errors                      Tex. R. Civ. P. 278, 279. The requested
                                                  question must also be presented and filed
HN26 The admission or exclusion of                before the charge is read to the jury.
evidence rests within the sound discretion        Finally, the complaining party must obtain
of the trial court. In other words, the trial     a ruling on the request.
court commits error only when it acts in an
unreasonable and arbitrary manner, or acts           Civil Procedure > ... > Jury Trials > Jury
without reference to any guiding principles.         Instructions > General Overview
Reversible error does not usually occur in           Civil Procedure > Appeals > Standards of
connection with rulings on questions of              Review > Abuse of Discretion
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HN28 The court reviews a trial court’s               Civil Procedure > ... > Jury Trials > Jury
submission of a theory of recovery or                Instructions > General Overview
defense by questions or instructions under           Civil Procedure > Appeals > Reviewability
an abuse of discretion standard, recognizing         of Lower Court Decisions > Preservation
there is a presumption in favor of the               for Review
broad-form submission of questions. Tex.          HN30 Any complaint concerning the
R. Civ. P. 277. Rule 277 mandates broad           submission of an instruction is waived
form submission whenever feasible, that           unless specifically included in the
is, in any and every instance in which it is      objections. Tex. R. Civ. P. 274.
capable of being accomplished. The test
for an abuse of discretion is whether the            Civil Procedure > ... > Standards of
trial court’s action in refusing to submit           Review > Substantial Evidence > General
                                                     Overview
the requested definition and instruction
was arbitrary or unreasonable. This means       HN31 When both legal and factual
the trial court has wide discretion in          sufficiency points are raised, the court
submitting explanatory instructions and         must first examine the legal sufficiency of
definitions, or in determining what             the evidence. In considering a ″no
constitutes necessary and proper issues.        evidence″ or legal sufficiency point, the
                                                court considers only the evidence or
  Civil Procedure > Trials > Jury Trials > Jury inferences from the evidence favorable to
  Deliberations                                 the decision of the trier of fact and
  Civil Procedure > ... > Jury Trials > Jury disregards all evidence and inferences to
  Instructions > General Overview               the contrary. If there is any evidence, more
                                                than a scintilla, to support the finding, the
  Criminal Law & Procedure > Appeals >
                                                no evidence challenge will fail.
  Reversible Error > Juries & Jurors
                                                     Civil Procedure > ... > Standards of
HN29 Instructions and definitions are
                                                     Review > Substantial Evidence > General
proper when they are raised by the written
                                                     Overview
pleadings, supported by the evidence, and
aid the jury in answering the questions in        HN32 In considering a factual sufficiency
the charge. Tex. R. Civ. P. 277, 278. But, a      point, the court may not substitute our
judgment should not be reversed because           judgment for that of the trier of fact, but
of a failure to submit other and various          must assess all the evidence and reverse
phases or different shades of the same            for a new trial only if the challenged
question. Moreover, a trial court errs if it      finding shocks the conscience, clearly
refuses to submit a properly formed               demonstrates bias, or is so against the great
question with appropriate instructions, and       weight and preponderance of the evidence
instead submits separate, granulated issues       as to be manifestly unjust. Under this
to the jury.                                      analysis, the members of the court are not
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the fact finders and do not pass upon the         binding, he thereby affirms the contract
credibility of witnesses or substitute their      and waives his right to a rescission. An
judgment for that of the trier of fact, even      express ratification is not necessary; any
if there is conflicting evidence upon which       act based upon a recognition of the contract
a different conclusion could be supported.        as existing or any conduct inconsistent
In other words, the court is not free to          with an intention of avoiding it has the
substitute its judgment for the jury’s simply     effect of waiving the right of rescission.
because the court may disagree with the
verdict.                                             Business & Corporate Law > Agency
                                                     Relationships > General Overview
  Business & Corporate Law > ... > Duties &          Business & Corporate Law > ... > Duties &
  Liabilities > Unlawful Acts of Agents >            Liabilities > Causes of Action & Remedies >
   Fraud & Misrepresentation                          Burdens of Proof
  Business & Corporate Law > Agency                  Business & Corporate Law > ... > Duties &
  Relationships > Ratification > General             Liabilities > Unlawful Acts of Agents >
  Overview                                            Fraud & Misrepresentation
  Business & Corporate Law > Agency                  Business & Corporate Law > Agency
  Relationships > Ratification > Avoidance           Relationships > Ratification > General
  Business & Corporate Law > Agency                  Overview
  Relationships > Ratification > Express &           Business & Corporate Law > Agency
  Implied Ratification                               Relationships > Ratification > Illegal Acts
  Business & Corporate Law > Agency                  Business & Corporate Law > Agency
  Relationships > Ratification > Illegal Acts        Relationships > Ratification > Proof
  Contracts Law > ... > Affirmative       Contracts Law > Remedies > Ratification
  Defenses > Fraud & Misrepresentation >
  General Overview                       HN34 The critical factor in determining
                                                  whether a principal has ratified an
  Contracts Law > Remedies > Ratification
                                                  unauthorized act by his agent is the
HN33 Ratification occurs when a principal,        principal’s knowledge of the facts of the
though he had no knowledge originally of          prior transaction and his actions in light of
an unauthorized act of his agent, retains         such knowledge. Ratification can occur if
the benefits of the transaction after             the party, at the time of his allegedly
acquiring full knowledge. Stated simply, if       ratifying acts, has knowledge of all material
a person who has fraudulently been made a         facts pertaining to the prior fraudulent
party to a contract continues to receive the      transaction. The question of ratification of
benefits of the contract after he becomes         a contract is usually a mixed question of
aware of the fraud, or if he otherwise            law and fact. Although ratification may be
conducts himself in such a manner as to           determined as a matter of law if the
recognize the contract as existing and            evidence        is    uncontroverted       or
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uncontrovertible, when the act or acts of         actual damages. This is not a departure
ratification are controverted, the question       from the general rule of contract damages,
of ratification must be left to the trier of      but only recognition of an element of
fact.                                             damages if proven. Actual damages for
                                                  loss of credit or injury to credit reputation
  Business & Corporate Law > Agency
  Relationships > Ratification > General          in an action for breach of contract may be
  Overview                                        recovered when there is evidence that loss
                                                  of credit was a natural, probable, and
HN35 It is fundamental that the critical          foreseeable consequence of the defendant’s
factors in determining ratification are 1)        breach.
the principal’s subsequent knowledge of
the transaction and 2) his actions thereafter,       Business & Corporate Law > General
and implied ratification may be proven by            Partnerships > Formation > General
silence in the face of knowledge.                    Overview

  Contracts Law > Remedies > General                 Business   &    Corporate       Law     >
  Overview                                           Unincorporated Associations

HN36 The only way that a defendant can            HN38 An unincorporated association is a
successfully attack a multi-element               voluntary group of persons, without a
damages award on appeal is to address             character, formed by mutual consent for
each and every element and show that not          the purpose of promoting a common
a single element is supported by sufficient       enterprise or prosecuting a common
evidence. If there is just one element that is    objective.
supported by the evidence, the damages
award will be affirmed if it is supported by         Business & Corporate Law > Agency
the evidence.                                        Relationships > Establishment > General
                                                     Overview
  Contracts Law > Breach > General                   Contracts Law > Remedies > Ratification
  Overview
  Contracts Law > Remedies > General HN39 Any collective group of individuals
  Overview                           may act through a common agent.
  Contracts Law > ... > Types of Damages >           Business & Corporate Law > Agency
    Compensatory Damages > General                   Relationships > General Overview
  Overview
                                                     Business & Corporate Law > General
HN37 To recover for loss of credit, as with          Partnerships > Formation > General
any element of contract damage, it must be           Overview
proved that the injury was the natural,              Business & Corporate Law > General
probable, and foreseeable consequence of             Partnerships > Management Duties &
the breach of contract or there are no               Liabilities > General Overview
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  Business   &    Corporate         Law       >      Contracts Law > Third Parties > Joint &
  Unincorporated Associations                        Several Contracts
  Contracts Law > ... > Affirmative
                                         HN42 In the law of contracts, joint and
  Defenses > Fraud & Misrepresentation >
  General Overview
                                         several liability usually arises when two or
                                                  more promisors in the same contract
HN40 It may be supposed that an                   promise the same or different performances
arrangement is entirely inoperative if it         to the same promisee. Texas law is no
purports to be made by a partnership or           different, obligations of multiple parties to
other unincorporated association with a           a contract are usually ″joint and several.″
member of such association. There is no
reason why such an agreement should not              Civil Procedure > Discovery & Disclosure >
operate as a valid and enforceable contract           General Overview
between the individual member and the
                                                     Governments > Legislation > Statute of
other members of the association that
                                                     Limitations > Time Limitations
purports to make the agreement. For the
purpose of giving a judicial remedy and              Securities Law > ... > Civil Liability > Blue
for other practical purposes, there is nothing       Sky Fraud > General Overview
to prevent a court from treating the                 Securities Law > Blue Sky Laws > Civil
association of individuals as if it were an          Liability > General Overview
independent unit. It may well be that an
                                                     Securities Law > Blue Sky Laws > Offers &
agreement made in this way should be
                                                     Sales
subjected to severe scrutiny in the search
for fraud and illegality. Yet the mere fact          Torts > Procedural Matters > Statute of
that the agreement purports to be made               Limitations > General Overview
between the unincorporated association and
                                                  HN43 The limitations period for claims
one of its members does not in itself prove
fraud or illegality.                              under the Texas Securities Act is found in
                                                  Tex. Rev. Civ. Stat. Ann. art. 581-33(H)
  Business & Corporate Law > Agency               (1996), which provides that suit cannot be
  Relationships > General Overview                brought: (1) more than three years after
  Business & Corporate Law > ... > Authority      discovery of the untruth or omission, or
  to Act > Contracts & Conveyances >              after discovery should have been made by
   General Overview                               the exercise of reasonable diligence; or (2)
  Business & Corporate Law > Agency               more than five years after the purchase; or
  Relationships > Duties & Liabilities >          (3) more than one year after rejecting a
  General Overview                                rescission offer. However, a claim under
                                                  the Texas Securities Act may ″in no event″
HN41 An agent’s promise necessarily
                                                  be made more than five years after the
binds his principals to the promised
undertaking.                                      sale.

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  Contracts Law > Contract Interpretation > the time of the initial pleading, at least for
  Parol Evidence > General Overview         limitations purposes.
  Contracts Law > Defenses > Ambiguities &
  Mistakes > General Overview                        Securities Law > Blue Sky Laws > Civil
                                                     Liability > General Overview
  Evidence > Types of Evidence >
   Documentary Evidence > Parol Evidence HN46 See Tex. Rev. Civ. Stat. Ann. art.
                                                  581-33(B) (1986).
HN44 The ″merger doctrine″ is a corollary
to the parol evidence rule in contract cases.        Securities Law > Blue Sky Laws > Civil
Merger refers to the extinguishment of one           Liability > General Overview
contract by its absorption into another
                                           HN47 Tex. Rev. Civ. Stat. Ann. art. 581-33
subsequent contract and is largely a matter
                                           (1986) provides remedies of both rescission
of intention of the parties. Merger occurs
                                           and damages. Article 581-33(D) provides
when the same parties to a prior agreement
                                           that on rescission, a plaintiff who was a
subsequently enter into a written integrated
                                           defrauded seller is to recover the security,
agreement covering the same subject
                                           or a security of the same class and series,
matter. The question of whether a merger
                                           upon tender of the consideration the seller
has occurred, or whether an agreement is
                                           received for the security plus interest
merely additional to and not contradictory
                                           thereon at the legal rate from the date the
of a written contract, is determined from
                                           seller received the consideration, less the
the intent of the parties. Absent pleading
                                           amount of any income the buyer received
and proof of ambiguity, fraud, or accident,
                                           on the security. A plaintiff who was a
a written instrument presumes that all prior
                                           defrauded seller may recover the value of
agreements of the parties relating to the
                                           the security at the time of the sale plus the
transaction have been merged into the
                                           amount of any income the buyer received
written instrument.
                                           on the security, less the consideration paid
   Civil Procedure > ... > Pleadings > the seller for the security, plus interest on
   Amendment of Pleadings > Relation Back these sums at the legal rate from the date of
                                           payment of the seller. Article 581-33(D)(4).
HN45 Although an amended pleading
normally supersedes and supplants the        Securities Law > Blue Sky Laws > Civil
original, an original pleading tolls the     Liability > General Overview
limitations period for claims asserted in
                                             Securities Law > Blue Sky Laws > Offers &
subsequent, amended pleadings as long as
                                             Sales
the amended pleading does not allege a
wholly new, distinct, or different HN48 Tex. Rev. Civ. Stat. Ann. art.
transaction or occurrence. See Tex. Civ. 581-33(B) cmt. (Supp. 1996) states that
Prac. & Rem. Code Ann. § 16.068 (1986). art. 581-33(B) is to be construed similarly
The subsequent pleading ″relates back″ to, to art. 33(A), which provides remedies for
and is considered as having been filed at defrauded buyers of securities. Turning to
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the statutory definitions, they define ″sale,″     introduce evidence that the untrue
″offer for sale″ or ″sell″ to ″include every       statements relate to the security purchased
disposition, or attempt to dispose of a            and induced the purchase thereof. Thus
security for value.″ Tex. Rev. Civ. Stat.          untrue statements made about a security by
Ann. art. 581-4(E). Moreover, one who              a seller to the buyer thereof at a time when
″offers or sells″ a security is not limited to     the buyer has already purchased the
those who pass title. Article 581-4(E)             security are not the ″means″ by which the
further defines ″sell″ as any act by which a       security was sold. It follows, then, that if a
sale is made, including a solicitation to          buyer was not induced to purchase a
sell, an offer to sell, or an attempt to sell,     security by an untrue statement made after
either directly or by an agent or salesman.        the purchase, he could not have been
By analogy, the terms ″offer to buy″ or            misled thereby, and no further statements
″buy″ should therefore include every               respecting such security are required to
acquisition of, or attempt to acquire, a           explain the original statement so made
security for value.                                under the provisions of the above statute.

  Securities Law > Blue Sky Laws > Civil              Civil Procedure > Judgments > Entry of
  Liability > General Overview                        Judgments > Multiple Claims & Parties

  Securities Law > Blue Sky Laws > Offers & HN51 The single recovery, or one
  Sales                                     satisfaction rule, is a rule of general
                                                   acceptance that an injured party is entitled
HN49 Like Tex. Rev. Civ. Stat. Ann. art.           to one satisfaction for sustained injuries. A
581-33(B) (1986), art. 581-33(A)(2)                party who seeks redress under two or more
renders a seller liable only if he sells or        theories of recovery for a single wrong
offers to sell a security by means of an           must elect, before the judgment is rendered,
untrue statement or omission.                      under which remedy he wishes the court to
                                                   enter a judgment. An election is not
  Energy & Utilities Law > Oil, Gas &              necessary until after the verdict. But where
  Mineral Interests > Conveyances > General
                                                   the prevailing party fails to make that
  Overview
                                                   election, the trial court should use the
  Securities Law > ... > Civil Liability > Blue    findings affording the greater recovery and
  Sky Fraud > General Overview                     render judgment accordingly. If the trial
  Securities Law > Blue Sky Laws > Civil           court fails to do so, the appellate court will
  Liability > General Overview                     reform the trial court’s judgment to effect
  Securities Law > Blue Sky Laws > Offers &        such an election.
  Sales
                                                      Civil Procedure > Remedies > Damages >
HN50 Under Tex. Rev. Civ. Stat. Ann. art.             Punitive Damages
581-33(A)(2) (1986), in order for the                 Contracts Law > Breach > General
plaintiff or buyer to prevail, he must                Overview
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  Contracts Law > Contract Interpretation > did cause rendition of an improper
  Fiduciary Responsibilities                judgment in the case. Tex. R. App. P.
  Contracts Law > Remedies > General 81(b)(1).
  Overview
                                              Civil Procedure > ... > Standards of
  Contracts Law > ... > Damages > Types of
                                              Review > Plain Error > General Overview
  Damages > Punitive Damages
  Estate, Gift & Trust Law > ... > Private HN55 While some errors are not
  Trusts Characteristics > Trustees > General considered reversible, all errors considered
  Overview                                    together could present cumulative error
  Governments > Fiduciaries                   requiring reversal. To determine if a
  Torts > Remedies > Damages > General cumulation of errors denied the appellants
  Overview                             their right to a fair trial and due process of
                                                  law, all errors in the case will be considered
HN52 Punitive damages are not                     along with the record as a whole to
recoverable for a breach of contract absent       determine if the errors collectively were
an independent tort with accompanying             calculated to cause and probably did cause
actual damages.                                   the rendition of an improper judgment.
  Civil Procedure > Appeals > Reviewability
                                                  Tex. R. App. P. 81(b)(1). Before the court
  of Lower Court Decisions > Preservation         may reverse a judgment and order a new
  for Review                                      trial based on cumulative error, however, it
                                                  must determine whether the error
HN53 It is well-settled that to preserve          committed by the trial court was reasonably
error in a charge, a party must make              calculated to cause and probably did cause
objections to the court’s charge or submit        the rendition of an improper judgment.
requests for additional questions,                Tex. R. App. P. 81(b)(1). Appellants must
instructions, or definitions. The test is         therefore show that, based on the record as
whether the party made the trial court            a whole, but for the alleged errors, the jury
aware of the complaint, timely and plainly,       would have rendered a verdict favorable to
and obtained a ruling.
                                                  them.
  Civil Procedure > Appeals > Standards of
                                           Counsel:           FOR APPELLANT: Bruce
  Review > Abuse of Discretion
                                                  Robertson, Jr., LAW OFFICES OF BRUCE
HN54 Generally, the granting or denying           ROBERTSON, JR., San Antonio, TX.
of a motion for mistrial is reviewed under        Walter C. Wolff, Jr., Ruth Lown, WOLFF
an abuse of discretion standard. In addition      & WOLFF, San Antonio, TX. Kim I.
to showing an abuse of discretion,                Manning, San Antonio, TX. Paul M. Green,
appellants must also show that the trial          LANG, LADON, GREEN, COGHLAN &
court’s error, if indeed there was error, was     FISHER, P.C., San Antonio, TX. Jerry N.
reasonably calculated to cause and probably       Dennard, San Antonio, TX.
                                  Jamie Graham Page 15 of 79
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FOR APPELLEE: Stewart J. Alexander,                             points of error. We affirm the trial court’s
San Antonio, TX. Robert D. Reed, LAW                            judgment in part, and reverse and render in
OFFICES OF ROBERT D. REED, P.C.,                                part.
San Antonio, TX. Robert W. Wachsmuth,
THE KLEBERG LAW FIRM, San                                       BACKGROUND
Antonio, TX. Thomas H. Crofts, Jr.,             Appellants, appellees, and other individuals
CROFTS, CALLAWAY & JEFFERSON,                   were investors in Crown Bancshares, Inc.,
P.C., San Antonio, TX. Ron A. Sprague,
                                                a bank holding company (Crown
GENDRY & SPRAGUE, P.C., San
                                                Bancshares). Incorporated in June of 1985,
Antonio, TX.
                                                Crown Bancshares owned all the stock of
Judges: Opinion by: Alma L. Lopez, Crown Bank, N.A. (Crown Bank). The
Justice. Sitting: Alma L. Lopez, Justice, incorporating officers and directors [**3]
Catherine Stone, Justice, Shirley W. Butts, were Bernard Austin and appellants, Frank
Justice. 1                                      Davila II, Lawrence F. Haass, and Brian
                                                O’Connor. The Federal Reserve approved
Opinion by: ALMA [**2] L. LOPEZ                 Crown Bank’s application in August of
                                                1985, and capital stock in Crown
Opinion                                         Bancshares was privately offered beginning
                                                in October of 1985.
 [*500] Appellees, William R. Fields, Jr.
and O. Waymond Lightfoot, Jr., filed suit [*501] Beginning in February of 1986, the
against appellants, Fred L. Baker, Frank bank was capitalized through a series of
Davila II, Rodolfo Davila, Trustee of the loans to 28 purchasers of Crown
Rodolfo Davila Estate Trust (together, the Bancshares stock, including appellants and
Davilas), Lawrence F. Haass, J. Brian appellees, in the aggregate amount of $
O’Connor, Kim I. Manning, J. Pat 5,066,310.00, from First State Savings
O’Connell, Brian O’Connor, B.F. Pitman Association (First State). Fields purchased
III, and others, for breach of contract and 10,000 shares of Crown Bancshares stock
other related tort theories. Fields’ trustee in (at $ 10 per share), with $ 5,000.00 in cash
bankruptcy, John Patrick Lowe, intervened and $ 95,000.00 borrowed from First State.
in the case. Appellees’ theories of recovery With a two percent origination fee, Fields’
concern a purported agreement with the loan was in the amount of $ 96,900.00.
appellants to purchase bank holding Lightfoot purchased 30,000 shares of
company stock from the appellees for Crown Bancshares stock (at $ 10 per
which payment was not made. After a jury share), with $ 15,000.00 in cash and $
verdict, the trial court granted a judgment 285,000.00 borrowed from First State. With
in favor of the appellees, from which the two percent origination fee, Lightfoot’s
appellants now bring an appeal raising 104 note to First State was for $ 290,700.00.
1
    Justice Shirley W. Butts not participating.

                                                  Jamie Graham Page 16 of 79
                                937 S.W.2d 496, *501; 1996 Tex. App. LEXIS 3531, **3



The purchasers pledged their Crown                             elect the directors of Crown Bancshares
Bancshares stock to First State as security                    which, in turn, owned and controlled
for the loans. These agreements also                           Crown Bank. The stated purpose of the
contained cross-default provisions -- a                        voting trust agreement was to ″secure
default by one borrower equaled a default                      continuity and stability of policy in
by all [**4] borrowers. 2 In the event of a                    management, and to establish constructive
default, First State could ″declare the entire                 administration of the business of the
unpaid balance of principal and all earned                     Company . . . .″ The voting trust agreement
interest on the Indebtedness immediately                       signed by the parties referred to them as
due and payable.″ Each of the borrowers,                       ″subscribers,″ but the parties often used
except Lightfoot and Dr. Richard Rouse,                        the term ″Control Group″ to describe
also signed personal guaranty agreements.                      themselves. All of the appellants (except
                                                               Rodolfo Davila, individually) and appellees
A series of agreements were concluded: a
                                                               were members of the Control Group.
voting trust agreement, a stock repurchase
                                                               Although it was originally intended that
agreement, an agreement for funding
                                                               the trustee under the voting trust agreement
repurchases of Crown Bancshares, a
                                                               was to have all the stock of Crown
repurchase agreement concerning the
                                                               Bancshares issued in his name as trustee,
capital stock of Crown Bancshares, and an
                                                               with the trustee [**6] then issuing voting
amendment to the voting trust agreement.
                                                               trust certificates to the various shareholders
Although these agreements were prepared
                                                               to evidence their stock ownership, the
in 1985 -- 1985 is typed on various pages
                                                               stock of the holding company was not
-- they were all apparently signed in
                                                               issued that way. No stock was tendered
February of 1986. These agreements were
                                                               into the voting trust. Instead it was issued
signed by both the appellants and appellees.
                                                               separately in the name of each subscriber.
The purpose [**5] of the voting trust                          First State required that all such stock,
agreement was to maintain Crown                                upon the closing of the loan to purchase,
Bancshares as a closely-held corporation.                      be physically pledged to First State and
The organizers of the bank had determined                      that each subscriber sign an ″irrevocable
that a voting trust agreement should be                        stock power″ as to the stock and deliver it
signed so that a majority of the subscribers                   to First State at the time they signed the
of Crown Bancshares stock could maintain                       other loan documents. The voting trust
control over the direction and operation of                    agreement was signed only by members of
the bank. Through the voting trust                             the Control Group; neither Crown
agreement, a majority of the shareholders                      Bancshares nor First State were parties to
subscribing to the agreement would control                     the agreement. The subscribers to the
the vote at the shareholders’ meeting and                      voting trust agreement appointed Dwight
2
   Defendants’ Exhibit 13, Fred L. Baker’s Pledge and Security Agreement, defines ″default″ as ″the failure of DEBTOR or any
individual Shareholder of CROWN BANCSHARES, INC. to pay the Indebtedness of any part thereof as it becomes due . . . .″

                                             Jamie Graham Page 17 of 79
                       937 S.W.2d 496, *501; 1996 Tex. App. LEXIS 3531, **6



L. Lieb -- the largest Crown Bancshares              agents, and in such connection, to
stockholder -- as the voting trustee.                execute and deliver Powers of
                                                     Attorney designating any person or
The voting trust agreement defined the
                                                     group of persons to act in his full
powers and duties of the voting trustee.
                                                     place and stead, to have and perform
The agreement contained a ″Grant of
                                                     any and all powers, duties, acts and
Irrevocable Proxy and Power of Attorney,″
                                                     discretions as set forth in such
which reads as follows:
                                                     written Power of Attorney to the
   In addition to all other rights and               fullest extent permitted by applicable
   powers      granted     under     this            law. Any person dealing with said
   Agreement, during the term hereof                 Trustee shall be entitled to rely upon
   each Subscriber by execution of this              such Power of Attorney as fully
   Agreement irrevocably names,                      authorizing the exercise of such
   constitutes [**7]       [*502]    and              [**8] powers, acts and discretions
   appoints Trustee (or successor                    as therein set forth.
   Trustee) his true and lawful attorney
   and agent with full power of                  (Emphasis added).
   substitution, to vote all shares of           The Control Group comprised nearly 75
   stock deposited with Trustee by such          percent ownership of Crown Bancshares.
   Subscriber,     subject     to     the        The voting trust subscribers selected the
   requirements of Section 4 hereof, at          board of directors of Crown Bancshares.
   any and all regular and special               The directors of the holding company then
   meetings of the Company’s                     elected the directors of Crown Bank who,
   shareholders whenever and wherever            in turn, selected a slate of officers for the
   held during the term of this                  bank. Most, if not all, of these individuals
   Agreement, or at any adjournment              were members of the Control Group.
   thereof, and hereby ratifies and     Sometime after agreeing to participate in
   confirms all that the said Attorney  the bank’s formation, appellees decided to
   might do. DURING THE TERM            withdraw from the enterprise. During the
   HEREOF, THE PARTIES HERETO           trial of this case, Lightfoot testified that he
   AGREE THAT THE PROXY                 first decided to sell his Crown Bancshares
   HEREBY           GRANTED            IS
                                        stock in the latter part of 1985 or early
   COUPLED WITH AN INTEREST             1986. According to Lightfoot’s testimony,
   AND IS IRREVOCABLE.                  he approached the president of Crown
                                        Bancshares, Brian O’Connor, and told him
An amendment to the agreement further
                                        that, due to personal and business
provided:
                                        difficulties, he could no longer bear the
   Any Trustee then serving shall have  financial cost of purchasing and paying for
   the power and authority to designate 30,000 shares of stock. O’Connor asked
                                 Jamie Graham Page 18 of 79
                        937 S.W.2d 496, *502; 1996 Tex. App. LEXIS 3531, **8



Lightfoot to wait because a sale by an                 [**10] of 1987, Fields indicated to
incorporating bank director might impede              Lieb that he was prepared to sell his
final regulatory approval of the bank.                stock in Crown Bancshares for $ 10
When Lightfoot again raised the question              a share. The first written indication
of a stock repurchase, Lieb, the voting               of an agreement to purchase Fields’
agreement [**9] trustee, said he would call           shares is found in a April 27, 1987
a meeting of the board of directors of                letter from Fields to Lieb. Fields’
Crown Bancshares and convey Lightfoot’s               letter reads in part as follows:
need to sell the shares. The first indication             This letter confirms our
of an agreement to repurchase Lightfoot’s                 agreement whereby you, or
stock is found in the minutes of a June 9,                your assignee, purchased
1986 Crown Bancshares Board of Directors                  9,000 Crown Bancshares from
meeting, which read in part as follows:                   me on Monday, April 27,
                                                          1987, at $ 10.00 per share. As
   Mr. [J. Brian] O’Connor informed
                                                          mentioned to you, $ 87,210
   the Board that Director O. Waymond
                                                          principal is outstanding
   Lightfoot has offered 25,000 shares
                                                            [*503]     on the shares
   of Crown Bancshares stock for sale
                                                          purchased by you; interest has
   to the holding company as prescribed
                                                          been paid through March 31,
   by the repurchase agreement. The
                                                          1987.
   Board waived the corporation’s right
   to purchase the stock and determined               Lieb apparently apprised First State
   that it was in the best interest of the            of the Control Group’s purchase of
   holding company to offer the stock                 Lightfoot’s stock on January 15,
   to      outside      investors.      A             1987. Handwritten notes from a
   recommendation was made to the                     meeting with Randy Cadwallader, a
   signatories of the Crown Bancshares,               First State loan officer, show that
   Inc. stock repurchase plan to waive                ″Lightfoot’s Crown Bank stock [is]
   their right to purchase the stock and              to be transferred over to the Control
   make it available to new investors.                Group.″
   On June 27th the Board met again.                  On May 19, 1987, Lieb wrote to the
   The minutes of the board meeting                   Control Group about the agreement
   state that ″O’Connor updated the                   to purchase Fields’ and Lightfoot’s
   board on the status of the proposed                shares. According to Lieb’s letter, in
   stock sale of O. Waymond Lightfoot.                June of 1986 the Control Group had
   He indicated the shares would soon                 agreed to purchase 83.3 percent of
   be ready to be offered for sale.″                  Lightfoot’s shares and in April 1987,
   Fields also decided that he wanted                 to purchase 90 percent of Field’s
   to sell his stock. During March                    shares:
                                  Jamie Graham Page 19 of 79
                                937 S.W.2d 496, *503; 1996 Tex. App. LEXIS 3531, **10



        Dear Control [**11] Group                                   me at Crown Bank.″ Lightfoot said
        Member:                                                     this letter accurately represented the
        The Control Group has                                       agreement [**12] he thought he had
        purchased certain shares from                               with the Control Group.
        Waymond Lightfoot and Ray
                                                                    Lightfoot recalled that he was to be
        Fields, 25,000 shares and
        9,000 shares, respectively. The                             paid by the Control Group, but that
        agreement with Mr. Lightfoot                                it made no difference to him whether
        was made in September, 1986,                                appellants performed the agreement
        and with Mr. Fields in April,                               either by paying cash or by assuming
        1987. An explanation of each                                the indebtedness to First State. He
        transaction     is    enclosed                              assumed, however, that appellants
        herewith, together with an                                  had chosen to pursue payment by
        analysis of the amount owed                                 assuming his indebtedness with First
        by each Control Group                                       State. Lightfoot continued to serve
        member.                                                     as a director of Crown Bancshares
    Lieb’s accompanying explanation                                 and Crown Bank, and continued to
    stated that ″the principal balance                              attend board meetings. He said he
    outstanding on Mr. Lightfoot’s stock                            was aware of the purchase of Fields’
    on 10/01/86 amounted to $                                       stock when he received Lieb’s May
    290,700.00. On that date, the Control                           19 letter. 3 Appellants recalled these
    Group repurchased 25,000 shares of                              events differently. Baker, for
    stock from Mr. Lightfoot at $ 10/sh.″                           example, denied -- and continues to
    As for Fields, the explanation further                          deny -- that he ever gave Lieb
    stated: ″The principal balance                                  authority to buy Fields’ or
    outstanding on Mr. Field’s note on                              Lightfoot’s stock under the terms of
    4/20/87 amounted to $ 96,900.00.                                the agreement described in Lieb’s
    On that date, the Control Group                                 May 19, 1987 letter. Baker, like all
    repurchased 9,000 shares of stock                               of the other appellants, testified that
    from Mr. Fields at $ 10 per share.″                             in order to buy Fields’ or Lightfoot’s
    Both Lightfoot and Fields testified                             stock, it would have been necessary
    that these statements accurately                                to have the stock purchase financed
    described their agreements with the                             by First State Savings, using the
    Control Group. The letter concluded:                            stock as security. But, First State
    ″Please make your check payable to                              never agreed to refinance Fields’
    Dwight L. Lieb, Trustee for the                                 and Lightfoot’s stock. Nor did Baker
    Control Group, and forward same to                              recall ever giving Lieb authority to
3
   The jury found the May 19, 1987 document ″constituted an agreement whereby the Control Group bought 25,000 of Lightfoot’s
shares of Crown Bancshares Stock″ and 9,000 shares of Fields’ Crown Bancshares stock.

                                             Jamie Graham Page 20 of 79
                   937 S.W.2d 496, *503; 1996 Tex. App. LEXIS 3531, **12



purchase Fields’ or Lightfoot’s                   Group in regards to the purchasing
 [**13] stock.                                    of approximately 83% of your crown
On April 27, 1987, Fields wrote to                banc stock. The fact remains,
Lieb confirming what he called,                   however, that your loan is delinquent
                                                  and you are responsible for this
    ″our agreement whereby you,
                                                  obligation.″ Lightfoot recalled
    or your assignee, purchased
                                                  asking the Control Group on several
    9,000 Crown Bancshares from
                                                  occasions why he was receiving
    me on Monday, April 20,
                                                  these notices and, more specifically,
    1987, at $ 10.00 per share. As
                                                  about the progress of the transaction;
    mentioned to you, $ 87,210
                                                  he testified that he was assured each
    principal is outstanding on the
                                                  time that it was just a matter of
    shares purchased by you;
                                                  ″paperwork,″ that it was being
    interest has been paid through
                                                  ″handled,″ and that they were in
    March 31, 1987.
                                                  control of the situation.
    A check for $ 2,790.00, less
    the interest owed to April 20,                Like Fields, Lightfoot testified that
    1987, should be forwarded to                  he paid only the interest attributable
    me . . .″                                     to his retained shares after the
                                                  alleged purchase. A handwritten
On August 6, 1987, the Control
                                                  letter received by Lieb in March of
Group issued a check to Fields for $
                                                  1987 states that ″these are the
2,700. Fields claimed this figure
                                                  payments I have made against the
represented his equity in the 9,000
                                                  stock. The sale was originally
shares he had sold to the Control
                                                  proposed for June of 1986. The
Group. Each Control Group member
                                                  transfer was for $ 250,000 but I am
sent Lieb his prorata contribution
                                                  willing to transfer all [**15] of it.
for 90 percent of the principal and
                                                  My financial commitments have
interest due on Fields’ note to First
                                                  increased dramatically due to other
State.
                                                  insurance related activities.″
 [*504]       [**14]    Meanwhile,
                                                  The letter is signed ″Waymond″ and
Lightfoot continued to receive
                                                  is written on Waymond Lightfoot’s
past-due notices from First State. On
                                                  personal stationary. Accompanying
June 10, 1987, he received a letter
                                                  the letter are four checks from the
from Pam Pilgrim, a loan processor
                                                  Harris and Lightfoot Insurance
with First State, which informed
                                                  Agency.
him that his loan had been in default
since December 20, 1986. The letter               Lightfoot and Fields both testified
added: ″I have been informed that                 that they were repeatedly assured
you are working with the Control                  payments were being made on their
                              Jamie Graham Page 21 of 79
                                  937 S.W.2d 496, *504; 1996 Tex. App. LEXIS 3531, **15



    loans.      The     record     contains                                   check by return mail, payable
    photocopies of several checks from                                        to Dwight L. Lieb, Trustee for
    Lieb, the voting trustee, to First                                        Control Group, sent to the
    State for principal and interest due                                      bank will be appreciated.
    on their loans to First State. On                                    At an October 1987 meeting, the
    September 28, 1987, the Control                                      Control Group 4 discussed the status
    Group issued a check to First State                                  of this matter as well as delinquent
    for $ 6,923.18. This figure                                          loans of minority (non-Control
    represented 90 percent of the                                        Group) stockholders. The minutes
    principal and interest due on Fields’                                also indicate that ″First State had
    note as of September, 1987. Fields                                   never prepared documents necessary
    testified that he paid -- and continued                              to refinance the shares of Waymond
    to pay -- the remaining 10 percent,                                  Lightfoot and Ray Fields which the
    having retained 1,000 of his original                                members of the Control Group
    10,000 shares. Although the Control                                  agreed to purchase in 1986.″ The
    Group never paid Lightfoot’s equity,                                 Control Group directed that a $
    it issued -- through Lieb as Trustee                                 50,000.00 letter of credit be obtained
    -- a check to First State for $                                      and provided to First State to cover
    7,267.21. This amount represented                                    delinquent principal and interest on
    83 percent of the principal and                                      all notes held by First State and to
    interest due on Lightfoot’s note in                                  bring cash contributions of all
    September of 1987. Lightfoot stated                                  Control Group members current.
    that he was never informed the                                        [**17]
    Control Group [**16] had stopped
    making payments to First State.                                      On October 27, 1987, the Control
    On October 20, 1987, Lieb again                                      Group’s attorney, Neil Boldrick, Jr.,
    wrote to the Control Group:                                          wrote to First State that several
        Enclosed please find a                                           ″adjustments″ to the original $ 5.2
        statement for your prorata                                       million notes were necessary, e.g.,
        share of the interest payable                                    ″restructuring of the Lightfoot and
        to First State for the shares                                    Fields Notes and complete financing
        purchased by the Control                                         for new investors of the Gamboa,
        Group       from      Waymond                                    Flume, Japhet and O’Connor Notes.″
        Lightfoot and Ray Fields. First                                  In December of 1987, Dennis Jones,
        State is very anxious to                                         an assistant vice president with First
        receive payment by Friday,                                       State, advised Neil Boldrick that ″as
        October 23, 1987, and your                                       all parties are well aware, certain of
4
  According to the minutes of the meeting, the following shareholders were present: Dwight Lieb, Frank Davila II, B.F. Pitman III, Kim
Manning, Michael Bertino, Richard Rouse, J. Brian O’Connor.

                                                Jamie Graham Page 22 of 79
                    937 S.W.2d 496, *504; 1996 Tex. App. LEXIS 3531, **17



the loans are presently in default,                On February 22, 1988, the Control
and have been in default for a [*505]              Group met at the home of Frank
period of time beyond thirty (30)                  Davila II. The apparent subject of
days . . . .″ Jones also advised                   the meeting was a memorandum
Boldrick that ″First State Savings is              written by Frank Davila II and
willing to accommodate your                        addressed to the ″File″ which
clients.″ Jones’ letter added that ″if,            questioned whether the Control
after reasonable efforts on the part               Group had ever agreed to purchase
of your clients, they are unable to                Fields’ and Lightfoot’s stock. Davila
bring the loan current, then, upon                 observed that ″an effective
transfer of the stock or a letter                  transaction concerning the sale or
instructing us to transfer the stock to            transfer of the stock would involve,
Dwight Lieb, Trustee, and payment                  among other things, the approval of
of all past-due interest, we will                  First State Savings to finance the
reinstate the applicable loan.″ The                purchase of the said stock″; and that
letter further advised Boldrick that               ″Dennis Jones of First State Savings
First State held a letter of credit and            told Fred Baker and myself that at
certificates of deposit that could be              no time had there been [**19] an
used to pay past due interest if the               agreement by First State Savings to
Control Group so desired. Jones later              finance such a purchase.″ Davila
  [**18]    testified that First State             concluded by noting that:
never provided financing for loans                     The ultimate disposition of
to purchase Fields’ or Lightfoot’s                     said shares of stock will
stock and that his letter to Boldrick                  probably result in any case in
never specifically addressed the                       the fact that the Control Group
question. Rather, it addressed the                     and its members are going to
problem of the Control Groups’                         be saddled with obligations
delinquent loans and what was                          which were not fully foreseen
necessary to reinstate them.                           at the time that the written
On February 12, 1988, Lightfoot                        documents were executed. I
received another letter from First                     feel very strongly, however,
State informing him that the note for                  that there should not be
$ 290,700.00 ″executed by O.                           ratification of a transaction
Waymond Lightfoot and payable to                       which has not in fact occurred,
First State Savings″ was now in                        and that the legal owners of
default. The letter demanded                           the shares of stock in question
payment for $ 28,534.28 in past due                    should be the persons
interest on or before February 25,                     involved in the foreclosure
1988.                                                  and/or other proceedings
                               Jamie Graham Page 23 of 79
                    937 S.W.2d 496, *505; 1996 Tex. App. LEXIS 3531, **19



   which have or might be                          as ten percent of the current interest
   initiated by First State                        payment due. The letters further
   Savings.                                        noted that the interest on the balance
                                                   of the note ″should be paid by the
   This is my opinion, and
                                                   Control Group pursuant to their
   perhaps I am the only person
                                                   purchase of my stock in April, 1987.″
   holding to this opinion, but I
                                                   Baker testified that he did not recall
   believe that each member
                                                   Lightfoot ever writing letters about
   present should take a yes or
                                                   either his stock or his down payment.
   no position as to whether the
                                                   As before, Fields asked for a copy of
   transaction took place, and
                                                   the minutes of the March, 1988
   whether the Control Group
                                                   Control Group meeting and
   and     its    non-delinquent
                                                   reminded Baker the account with
   members should be involved
                                                   First State was past-due:
   in any of the steps preceding
   the actual takeover of the                          I am again requesting a copy
   stock by First State Savings.                       of the minutes of this years
                                                       [sic] meeting wherein [**21]
Fields testified that Lieb interrupted                 it was again confirmed that
a heated discussion between Frank                      the Control [*506] Group
Davila II and Fields by reassuring                     purchased, in April 1987,
Fields that the Control Group had                      9,000 of my 10,000 shares of
indeed [**20] purchased Fields’                        stock in Crown Bank.
stock. Although Fields said he took                    Please note on the enclosed
that as a reassurance he was going to                  statement of account from
get paid, he continued to get notices                  First State Savings that the
from First State Savings reflecting                    Control Group still owes the
100 percent liability on the loan, as                  amount shown as delinquent
though he still owned 10,000 and                       on the statement of account. I
not 1,000 shares. As before, however,                  have been current on my share
Fields continued to pay 10 percent                     of the account since my
of the outstanding loan balance.                       purchase of the stock.
Fields recalled writing two separate                   It is again requested that the
checks for 10 percent of the interest                  records at First State Savings
due -- one in June and another in                      be brought up to date
September. He sent them directly to                    accordingly and that I be
Fred Baker. Both payments were                         notified that this action has
accompanied by a letter to Baker.                      been taken.
Both letters specified the amount                  Fields said he never received a copy
tendered and identified that amount                of those minutes, taken by Pitman,
                               Jamie Graham Page 24 of 79
                                   937 S.W.2d 496, *506; 1996 Tex. App. LEXIS 3531, **21



     until he saw them in discovery prior                              with Don Krause in the
     to the trial of this case.                                        attempt to restructure the
     During February of 1988, Don                                      indebtedness at First State
     Krause, an attorney for the Control                               Savings. The motion passed
     Group, began negotiations with First                              unanimously.
     State to refinance the $ 5.2 million                          The check for $ 24,266.44, along
     capitalization loan. Refinancing was                          with additional cash contributions
     discussed during a March 7, 1988                              from other Control Group members,
     meeting of the Control Group, which                           was supposed to bring the delinquent
     also confirmed Lieb’s resignation as                          or defaulted loans current, thereby
     trustee. He was replaced by Fred L.                           inducing First State to restructure
     Baker and Frank Davila II as                                  the loans on better terms. First State
     co-trustees. 5 The Control Group                              had made clear it would not do
     also voted to renegotiate the entire                          anything [**23] until the delinquent
     First State $ 5.2 million loan on                             loans were made current -- hence,
     better terms. The minutes state that:                         the contributions. Baker continued
      [**22]                                                       to hold this money until February of
          Dwight Lieb delivered to Fred                            1990, at which point he said it
          Baker a check in the amount                              became clear a restructuring of the
          of $ 24,266.44, such check                               loans could not be accomplished.
          representing the interest due                            The Control Group never succeeded
          on his loan to First State                               in restructuring their loans with First
          Savings,     such      interest                          State. Don Krause testified that he
          calculated through 2-29-88.                              tried his best to induce First State to
          This payment is to be used                               restructure the loans but they never
          only if the other members of                             agreed to do so. Baker testified that
          the Control Group pay their                              in addition to Krause’s efforts, he
          pro-rata share of the amounts                            repeatedly talked to representatives
          that are delinquent at First                             of First State to try not only to get
          State    Savings,     and     a                          them to restructure all the loans on
          restructuring of the debt at                             better terms, but also to make loans
          First State Savings is                                   to finance the purchase of Fields’
          accomplished.                                            and Lightfoot’s stock. Again,
          Upon a motion made by B.F.                               however, First State never did so.
          Pitman and seconded by Ray                               Baker, like Lieb, and Dennis Jones,
          Fields, Frank Davila and Fred                            a vice president in charge of
          Baker were appointed to work                             regulatory compliance with First
5
    Lieb filed for bankruptcy in April of 1989.

                                                  Jamie Graham Page 25 of 79
                                   937 S.W.2d 496, *506; 1996 Tex. App. LEXIS 3531, **23



    State      Savings,     considered                                    On March 16, 1988, the Control
    refinancing the loans and financing                                   Group met again and with Fields,
    the purchase of appellees’ stock as                                   Lightfoot, Frank Davila II and
    separate issues.                                                      O’Connell abstaining, voted to
                                                                            [*507] confirm and ratify the
    Whether First State representatives                                   purchase of Fields’ and Lightfoot’s
    ever intended to finance a stock                                      stock. The handwritten minutes from
    purchase, the evidence certainly                                      the March 16, 1988 meeting -- taken
    shows that Control Group members,                                     by Pitman -- record that a ″motion to
    including Baker, believed that First                                  confirm that the stock purchase is a
    State was going to finance the                                        valued transaction″ was made,
    purchase of appellees’ stock. This                                    seconded and passed. 6 There is no
    belief [**24] was apparently based,                                   mention of any financing conditions.
    at least in part, on statements made                                   [**25]
    by representatives of First State who                                 On March 25, 1988, Crown
    were in management when the                                           Bancshares filed its ″Annual Report
    original purchase money loans were                                    of Bank Holding Companies″ for
    made, but who were no longer with                                     the 1987 fiscal year -- the ″FR Y-6″
    First State when discussions were                                     form -- with the Federal Reserve.
    later held to renegotiate the total                                   The FR Y-6 contained a list of the
    indebtedness and finance the                                          members of the Control Group and
    appellees’ purchase.                                                  their individual percentages of
    There is also evidence that First                                     ownership in Crown Bancshares.
    State Savings was having financial                                    The report stated that Fields owned
    problems long before the Federal                                      1,000 shares and Lightfoot owned
    Deposit Insurance Corporation                                         5,250 shares. The report mentions
    (FDIC) took control of it in March                                    no stock sale or financing conditions.
    of 1989. Beginning in April of 1987,                                  The FDIC [**26] took control of
    First State was under on-site                                         First State Savings on March 2,
    supervision of state, and later federal,                              1989. On June 26, 1989, Fields
    banking regulators; there is                                          received his first official delinquency
    testimony to the effect that their                                    notice       from         the      now
    approval would have been required                                     federally-controlled First State
    for any restructuring of loans or                                     Savings. In July, the FDIC again
    stock purchase financing.                                             demanded payment from Fields for
6
   Although Control Group meetings were, in theory, closely structured, with set, ordered agendas, Fred Baker recalled that Control
Group meetings often involved free-wheeling discussions and ″were very difficult to chair and manage.″ Baker said he did not recall
whether there was an affirmative vote to confirm the purchase of Fields’ and Lightfoot’s shares; however, he also admitted that he never
asked to amend the minutes. Baker denied ever voting for a resolution confirming the purchase of Fields’ and Lightfoot’s stock in
accordance with the terms of Lieb’s letter.

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his full share of the initial                      Control Group members to turn all
capitalization       loan,       which             of the money over to either Fields or
represented 10,000 shares of Crown                 Lightfoot to pay for the stock
Bancshares stock.                                  purchase.
In August of that year, Baker met                  After receiving the letter and check,
with Donald Backer of the FDIC, in                 Fields, on February 10, 1990, wrote
a final attempt to either restructure              to Baker expressing his concern ″that
the notes with First State or refinance            nothing has been accomplished to
Fields’ and Lightfoot’s notes.                     date regarding the transfer of the
Backer, however, maintained that he                9,000 shares of Crown Bancshares
intended to deal with the Control                  common stock purchased from me
Group borrowers on an individual                   by Control Group members in April,
basis. Baker reminded him that ″if                 1987.″
he was going to do that, then the
transaction between the members of                 In October of 1990, Crown
the Control Group and Mr. Fields                   Bancshares’ board of directors voted
and Mr. Lightfoot needed to be taken               to liquidate and dissolve the bank.
into consideration as he dealt with                The resolution appointed Bernard
each individual.″ No agreement to                  Austin as the Liquidating Director
refinance was reached.                             and Trustee and provided that Crown
                                                   Bancshares would distribute the
On February 6, 1990, Co-Trustees
                                                   remainder of its bank account to its
Baker and Frank Davila II wrote to
                                                   shareholders on a prorata basis.
the Control Group that ″it has
                                                   Fields     recalled     receiving    a
become obvious that each of us will
                                                   liquidation distribution based on only
end up dealing with First State on an
                                                   1,000 shares of stock.
individual basis.″ With this letter,
Baker and Frank Davila II returned                 In November of 1990, Austin sent
money the Control Group had                        the shareholders [**28] of Crown
contributed to the [**27] Trust in                 Bancshares, Inc. their purported
March of 1988 for renegotiation of                 prorata shares of the liquidation
their delinquent loans with First                  distribution -- approximately $
State. Fields received $ 451.97;                   0.1254013 for each share held. On
Lightfoot received $ 2,410.28. Both                November 25, 1990, Austin wrote to
Fields and Lightfoot recalled                      Neil Boldrick that in connection with
accepting and cashing their checks.                the liquidation, he was enclosing
Baker later testified that he returned             two cashier’s checks for the firm’s
″dollar-for-dollar″ what had been                  escrow account. One of the checks,
contributed. He said he did not think              registered in Fields’ name, was for $
he had the authority from the other                1,128.61 and represented 9,000
                               Jamie Graham Page 27 of 79
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     shares of stock. The other check,                                     against Crown Bancshares, Inc., F.
     registered in Lightfoot’s name, was                                   Bernard Austin, Fred L. Baker,
     in the amount of $ 3,135.03 and                                       Michael H. Bertino, M.D., Frank
     represented 25,000 shares. The letter                                 Cross, Frank Davila II, Rodolfo
     added that ″the [*508] 9,000 shares                                   Davila, Israel Fogiel, Lawrence F.
     and 25,000 shares listed above                                        Haass, Roger Maley, Kim I.
     represent      shares     apparently                                  Manning, J. Pat O’Connell, J. Brian
     purchased from Mr. Fields and Mr.                                     O’Connor, B.F. Pitman III, and
     Lightfoot by the Crown Bancshares,                                    Richard G. Rouse, M.D. The
     Inc. Voting Trust (’Control Group’)                                   plaintiffs originally asserted causes
     but which shares have never been                                      of action for breach of contract,
     presented to the corporation for                                      misrepresentation, fraud, breach of
     registration.″                                                        fiduciary duty (both as to the
                                                                           directors and trustees of Crown
     On June 26, 1991, Fields filed a
                                                                           Bancshares), negligence, tortious
     voluntary petition under Chapter
                                                                           interference with contract, and
     Seven of the U.S. Bankruptcy Code.
                                                                           violations of article 581-33(B) of
     Both Fields and Lightfoot were
                                                                           the Texas Securities Act. The
     subsequently sued by the RTC for
                                                                           appellees’ second amended petition
     the full amounts of their First State
                                                                           (filed on December 14, 1992)
     notes.
                                                                           dropped claims against F. Bernard
     Lightfoot testified that he realized                                  Austin but added the Rodolfo L.
     for the first time that he would not                                  Davila Estate Trust 7 as a defendant.
     be paid for his stock on October 10,                                  The amended petition also dropped
     1991. On that day he attended a                                       claims for tortious interference
     meeting with Fields, his lawyers,                                       [**30] with contract, but added
      [**29] and various members of the                                    negligent misrepresentation and
     Control Group. Lightfoot recalled                                     several additional theories of liability
     there were ″some extremely heated                                     against the trustees and directors of
     discussions and denials as to any                                     Crown Bancshares. The appellees
     responsibility for the debt and/or the                                claimed that the directors, liquidating
     purchase of Ray Fields’ stock.″                                       director, trustee, and co-trustees of
     Fields said that until February 6,                                    Crown Bancshares failed to establish
     1990, he believed the appellants                                      a ″trust fund″ for the benefit of
     were in the process of performing                                     Fields, Lightfoot and other creditors.
     the agreement.                                                        They argued that the corporate entity
     Fields and Lightfoot filed this                                       of Crown Bancshares should be
     lawsuit on November 25, 1991                                          disregarded because it was the ″alter
7
    Rodolfo Davila testified that the Rodolfo Davila Estate Trust was set up by his father to oversee the estate after his death.

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ego″ of the Control Group and                      the problem is the fact that appellants
because it was used as a ″sham to                  have brought 104 points of error
perpetrate a fraud.″ The appellees                 scattered among four separate briefs.
further argued that the defendants’                Fred Baker, for example, raises 35
breach of contract resulted in a                   points of error. B. F. Pitman, J. Brian
″loss of credit and/or injury to credit            O’Connor, Michael H. Bertino, and
reputation of Fields and Lightfoot.″               Kim I. Manning (hereafter Pitman)
At the conclusion of the evidence,                 raise 29 points of error. Rodolfo
the trial court submitted four of the              Davila, Trustee of the Rodolfo L.
appellees’ causes of action to the                 Davila Estate [**32] Trust, and
jury: (1) breach of contract; (2)                  Frank Davila II, his brother (together,
breach of trustees’ (Fred L. Baker                 the Davilas), raise 23 points of error.
and Frank Davila II) fiduciary duties;             Lawrence F. Haass raises 17 points
(3) breach of directors’ (Fred L.                  of error. Each appellant’s brief, in
Baker, Michael H. Bertino, Frank                   turn, [*509] adopts the points of
                                                   error and arguments contained in the
Davila II, Lawrence F. Haass, Kim I.
                                                   other three. In addressing these
Manning, J. Pat O’Connell, J. Pat
                                                   arguments we have tried, whenever
O’Connor, B.F. Pitman) fiduciary
                                                   possible, to combine the relevant
duties; and (4) violations of the
                                                   points of error and address them
Texas Securities Act. After the jury
                                                   collectively. Whenever possible, we
found for the appellees on these                   have also avoided addressing the
issues, [**31] the trial court                     appellants’ points by their individual
rendered judgment against the                      number, discussing them instead
appellants on April 12, 1993. A                    according to the issues they raise.
default judgment was entered against
Crown Bancshares. Defendant,                       DISCUSSION
Richard G. Rouse, received a                       Statute of Limitations
summary judgment prior to trial.                   All of the appellants raise ″matter of
The case against him was severed,                  law″ points attacking the trial court’s
resulting in a separate appeal. In                 decision to submit the discovery
Fields and Lightfoot v. Rouse, No.                 rule in questions 20 and 21 of the
04-93-00067-CV (Tex. App.--San                     jury charge. In answering questions
Antonio, December 15, 1993, writ                   20 and 21, the jury found that Fields
denied) (unpublished), we affirmed                 and Lightfoot either discovered or,
the summary judgment in Dr.                        in the exercise of reasonable
Rouse’s favor.                                     diligence, should have discovered
The trial of this case lasted nearly               on February 6, 1990 that appellants
three weeks and leaves a substantial               would not perform the agreement.
record in its wake. Compounding                    Appellants argue that the trial court
                               Jamie Graham Page 29 of 79
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erred in awarding judgment for                     -it is barred by limitations. Fields
Fields and Lightfoot under a breach                and Lightfoot therefore offer [**34]
of contract theory because, as a                   three arguments designed to avoid
matter of law, the cause of action is              the limitations period: (1) their
barred by the four-year statute [**33]             claims against the appellants did not
of limitations. We disagree.                       accrue until the appellants had a
This lawsuit was filed on November                 ″reasonable time″ to pay the money
25, 1991. The original petition                    they owed; (2) the appellants
named as defendants all of the                     acknowledged the debt; and (3) the
appellants except the Rodolfo L.                   ″discovery      rule″     tolled   the
Davila Estate Trust, which was                     limitations period. This last argument
joined as a defendant when the                     will be the focus of our discussion.
appellees filed their second amended
                                                   HN1 When reviewing ″matter of
petition on December 14, 1992. As
                                                   law″ points, an appellate court
we have already noted, however,
                                                   employs a two-prong test. The court
Lieb’s letter to the Control Group
                                                   will first examine the evidence
regarding the Control Group’s
                                                   supporting the jury’s finding,
repurchase of the appellees’ stock is
                                                   ignoring all evidence to the contrary.
dated May 19, 1987. Lieb’s letter
also references two earlier dates:                 Sterner v. Marathon Oil Co., 767
September of 1986 for Lightfoot                    S.W.2d 686, 690 (Tex. 1989); see
and April, 1987 for Fields. The                    also W. Wendell Hall, Revisiting
appellees’ second amended petition                 Standards of Review in Civil
claims that under the alleged stock                Appeals, 24 ST. MARY’S L.J. 1135
purchase agreement, the effective                  (1993). If there is no evidence to
date of the transfer, for purposes of              support the finding, then the entire
calculating principal, interest, and               record must be examined to see if
equity, was October 1, 1986 for                    the    contrary     proposition     is
Lightfoot and April 20, 1987, for                  established as a matter of law.
Fields. However, all of these dates                Sterner, 767 S.W.2d at 690. Only
are well beyond the four-year                      when the contrary proposition is
limitations period for breach of                   conclusively established by the
contract claims. See TEX. CIV.                     evidence do we sustain the point.
PRAC. & REM. CODE ANN. §                           Meyerland Community Improvement
16.004 (Vernon 1986). Unless the                   Ass’n v. Temple, 700 S.W.2d 263,
appellees’ breach of contract claim                267 (Tex. App.--Houston [1st Dist.]
somehow accrued or was tolled                      1985, writ ref’d n.r.e.).
beyond November 25, 1987 -- four                   In Woods v. William Mercer, Inc.,
years before this lawsuit was filed                769 S.W.2d [**35] 515 (Tex. 1988),
                               Jamie Graham Page 30 of 79
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the court explained the nature and                    affirmatively by the pleadings
origin of the discovery rule:                         will, therefore, be waived.
   HN2 We hold that the                               The party seeking [**36] to
   discovery rule is a plea in                        benefit from the discovery rule
   confession and avoidance. A                        must also bear the burden of
   plea in confession and                             proving       and      securing
   avoidance is one which avows                       favorable findings thereon.
   and confesses the truth in the                     The party asserting the
   averments of fact in the
                                                      discovery rule should bear this
   petition, either expressly or
                                                      burden, as it will generally
   by implication, but then
   proceeds to allege new matter                      have greater access to the facts
   which tends to deprive the                         necessary to establish that it
   facts admitted of their                            falls within the rule.
   ordinary legal effect, or to                   Id. at 517-18 (citations omitted).
   obviate, neutralize, or avoid                  HN4 The discovery rule does not
   them. This most closely                        excuse a party from exercising
   describes the function of the                  reasonable diligence in protecting
   discovery rule, which asserts                  its own interests. Johnson v. Abbey,
   that while the statute of                      737      S.W.2d      68,    70     (Tex.
   limitation may appear to have                  App.--Houston [14th Dist.] 1987, no
   run, giving rise to that                       writ). The rule expressly mandates
   appearance should not control.                 the exercise of reasonable diligence
  HN3 A party seeking to avail                    to discover facts of negligence or
  itself of the discovery rule                    omission. Black v. Wills, 758 S.W.2d
  must therefore plead the rule,                  809, 815 (Tex. App.--Dallas 1988,
  either in its original petition                 no writ). Moreover, the burden is on
  or in an amended or                             the party seeking the benefit of the
  supplemental petition in                        discovery rule to establish its
  response to defendant’s                         applicability. Woods, 769 S.W.2d at
  assertion of the defense                        518. Whether reasonable diligence
     [*510]    as a matter of                     was used is generally a question of
  avoidance. A defendant who                      fact unless the evidence is such that
  has established that the suit is                reasonable minds could not differ as
  barred cannot be expected to                    to its effect; only then does it become
  anticipate the plaintiff’s                      a question of law. Enterprise-Laredo
  defenses to that bar. A matter                  Associates v. Hachar’s, Inc., 839
  in avoidance of the statute of                  S.W.2d 822, 837 (Tex. App.--San
  limitations that is not raised                  Antonio 1992), writ denied per
                              Jamie Graham Page 31 of 79
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curiam, 843 [**37]      S.W.2d 476                Thurman & Co., 786 S.W.2d at 20
(Tex. 1992).                                      (cause of action for breach [**38] of
HN5 A breach of contract action is                contact ″commences to run from the
governed by a four-year statute of                time of the breach of contract, or
limitations. TEX. CIV. PRAC. &                    from the time when the plaintiff had
REM. CODE ANN. § 16.004 (Vernon                   knowledge of the breach, whichever
1986). In applying this four-year                 is the later, unless his lack of
limitations period,                               knowledge resulted from his lack of
                                                  diligence or from negligence″).
   a cause of action is generally
   said to accrue ″when the                       HN6 For a court to apply the
   wrongful act effects an injury,                discovery rule, the party asserting it
   regardless of when the                         must also affirmatively plead the
   plaintiff learned of such                      rule. Woods, 769 S.W.2d at 517-18.
   injury.″ Moreno v. Sterling                    Appellants argue that the discovery
   Drug, Inc., 787 S.W.2d 348,                    rule does not toll the statute of
   351 (Tex. 1990). An exception                  limitations in this case because
   to the general rule is known                   Fields and Lightfoot failed to plead
   as the discovery rule and this                 the discovery rule. After reviewing
   rule is used to determine when                 the appellees’ amended and original
   the cause of action accrued.                   pleadings, however, we believe
   The discovery rule tolls the                   Fields and Lightfoot pled sufficient
   running of the limitations                     facts to make the discovery rule an
   period until the time the                      issue in this case.
   injured party discovers or                     Although appellees’ original and
   through the use of reasonable                  amended       pleadings     do    not
   care and diligence should have                 specifically mention discovery or
   discovered the injury. In a                    concealment, their second amended
   breach of contract action,                     petition alleges that Lightfoot made
   limitations begin to run from                  no earlier demand for payment for
   the time of the breach, or from                the purchase of his shares because
   the time the plaintiff knew or                 ″he did not know and could not have
   should have known of the                       known that the Control Group would
   breach, whichever is the later.                not perform the agreement.″ As for
   El Paso Associates, Ltd. v.                    Fields, the clear import of the
   J.R. Thurman & Co., 786                        appellees’ pleadings is that he did
   S.W.2d 17, 20 (Tex. App.--El                   not know and could not have known
   Paso 1990, no writ).                           the Control Group’s intent until
Id. at 837 (emphasis added); see                  Baker [**39] and Frank Davila II
also El Paso Associates, Ltd. v. J.R.             returned the third-call contributions
                              Jamie Graham Page 32 of 79
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and wrote that ″it has become                       Having determined that the
obvious that each of us will end up                 discovery rule applies in this case,
dealing with FIRST STATE on an                      the issue then becomes whether there
individual basis.″ Also, the appellees              is sufficient evidence to support the
specifically pled that they ″justifiably            jury’s finding. As we have already
relied″ on the Control Group’s                      noted, both Fields and Lightfoot
representation that the appellants                  testified that appellants could
″would consummate the purchase of                   perform the agreement by paying
their respective shares of stock.″                  cash or by assuming their
                                                    indebtedness with First State
HN7 The general rule is that                        Savings. Thereafter, Lightfoot paid
pleadings will be construed as                      the interest attributable to his
favorably as possible to the pleader.               retained shares; appellants paid the
Gonzalez v. City of Harlingen, 814                  interest attributable to the sold
S.W.2d 109, 112 [*511] (Tex.                        shares. The trustees assured
App.--Corpus Christi 1991, writ                     Lightfoot on several occasions that
denied). ″The court will look to the                completion of the assumption was
pleader’s intendment and the                        merely a matter of paperwork.
pleading will be upheld even if some                Lightfoot said he believed that the
element of a cause of action has not                appellants were attempting in good
been specifically alleged. Every fact               faith to work out the assumption, but
will be supplied that can reasonably                that nobody at First State apprised
be inferred from what is specifically               him of any problem. Against this
stated.″ Gulf, Colorado & Santa Fe                  background, Lightfoot testified that
Ry. Co. v. Bliss, 368 S.W.2d 594, 599               he realized appellants were not going
(Tex. 1963). Having reviewed the                    to perform the agreement after a
appellees’ pleadings and the record,                meeting with Fields and his counsel
we believe Fields and Lightfoot pled                on October 10, 1991.
sufficient facts to make the discovery              Fields likewise testified that First
rule an issue in this case. We also                 State accepted his interest payments
note that appellants failed to file any             attributed [**41] to the retained
special exceptions to the appellees’                shares and that appellants’ ongoing
original or amended pleadings;                      assumption effort ″was exactly what
hence, they [**40] waived any                       they said they would do.″ Until
pleading defects. See J.K. & Susie L.               February 6, 1990, Fields said he
Wadley Research Inst. v. Beeson,                    believed, by virtue of the parties’
835 S.W.2d 689, 695 (Tex.                           reallocated contributions toward the
App.--Dallas 1992, writ denied); see                First State loan and appellants’
also TEX. R. APP. P. 90.                            ongoing assumption efforts, that
                                Jamie Graham Page 33 of 79
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    appellants were in the process of                                  they would have been barred by
    performing the agreement.                                          limitations. Appellants are correct in
    The jury found that appellees, in the                              noting that Fields and Lightfoot
    exercise of reasonable diligence,                                  repeatedly testified they were
    should have discovered on February                                 entitled to payment beginning in
    6, 1990 that appellants would not                                  April of 1987 with respect to Fields,
    perform the agreement. 8 The jury                                  and in September or October of
    charged Lightfoot with notice on                                   1986 as to Lightfoot. But, while
    that date despite his testimony as to                              Fields and Lightfoot both testified
    a later date. HN8 Even so,                                         they were entitled to payment at the
    reasonably diligent discovery is                                   time of the contract, they also
    generally a matter for the jury.                                   pinpointed the date when they
    Enterprise-Laredo, 839 S.W.2d at                                   realized the appellants were not
    838. This is especially true in a case                             going to perform the agreement.
    like this one, where the material                                  Lightfoot testified that he realized
    facts are far from undisputed. Giving                              this for the first time [**43] on
    due deference to the jury’s role in                                October 10, 1991; Fields testified
    determining the weight and                                         that he reached this conclusion on
    credibility of the witnesses’                                      February 6, 1990. We have already
    testimony, we believe there is                                     noted that the limitations period on a
    sufficient evidence to support the                                 claim for breach of contract begins
    jury’s finding that February 6, 1990                               to run ″from the time of the breach,
    was the date Fields and Lightfoot                                  or from the time the plaintiff knew
    either discovered or should have                                   or should have known [*512] of the
    discovered that the Control Group                                  breach, whichever is the later.″
    would not perform the agreement.                                   Enterprise-Laredo, 839 S.W.2d at
    Since there is sufficient evidence                                 837. HN9 Without application of
     [**42] supporting the jury’s finding,                             the discovery rule, a contract cause
    we need not consider the second                                    of action normally accrues when the
    element of Sterner. 767 S.W.2d at                                  contract is breached, not when it
    690.                                                               was made. Tel-Phonic Services, Inc.
                                                                       v. TBS Int’l, Inc., 975 F.2d 1134,
    Judicial Admission                                                 1143 (5th Cir. 1992).
    We reach this conclusion despite the                               The most that can be said of Fields’
    appellants’ argument that both Fields                              and Lightfoot’s testimony regarding
    and Lightfoot judicially admitted                                  their entitlement to payment is that
    their actions accrued at a time when                               it raises a question as to when they
8
   February 6, 1990 was the day co-trustees Baker and Frank Davila II served notice to the other members of the Control Group that
″each of us will end up dealing with First State on an individual basis.″

                                               Jamie Graham Page 34 of 79
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really knew matters had gone awry.                  Hennigan v. I.P. Petroleum Co., Inc.,
One could argue that if the appellees               858 S.W.2d 371, 372 (Tex. 1993)
knew they were entitled to their                    (quoting Mendoza v. Fidelity &
money beginning in late 1986 or                     Guar. Ins. Underwriters, Inc., 606
early 1987, they must have known                    S.W.2d 692, 694 (Tex. 1980)). ″The
long before February of 1990 that                   requirements for treating a party’s
the appellants were not going to                    testimonial quasi-admission as a
honor the agreement. This is,                       conclusive      judicial     admission
                                                    include that the statement be
however, an evidentiary issue for
                                                    ’deliberate, clear, and unequivocal’
the trier of fact, not a question of
                                                    and that ’the hypothesis of mere
law for an appellate court; it was for              mistake or slip of the tongue must
the jury to determine the date                      be eliminated.’″ Id. at 372 (quoting
appellees knew or should have                       Griffin v. Superior [**45] Ins. Co.,
known that the [**44] appellants                    161 Tex. 195, 338 S.W.2d 415, 419
were not going to honor their                       (1960)). Given the record in this
agreement. Moreover, the appellees’                 case, we cannot say either Fields or
testimonial declarations more closely               Lightfoot judicially admitted that
resemble ″quasi-admissions,″ not                    their claims for breach of contract
conclusive judicial admissions:                     were barred by limitations.
   HN10 A party’s testimonial                       Nor do we attribute any significance
   declarations       which      are                to the fact that the plaintiffs’ second
   contrary to his position are                     amended petition pleads for a
   quasi-admissions. They are                       recovery of prejudgment interest
   merely some evidence, and                        beginning on October 1, 1986 for
                                                    Lightfoot and April 20, 1987 for
   they are not conclusive upon
                                                    Fields. Article 5069-1.03 provides
   the admitter . . . . These are to
                                                    in part:
   be distinguished from the true
   judicial admission which is a                        HN11 When no specific rate
   formal waiver of proof usually                       of interest is agreed upon by
   found in pleadings or the                            the parties, interest at the
   stipulations of the parties. A                       rate of six percent per annum
   judicial      admission        is                    shall be allowed on all
   conclusive upon the party                            accounts      and    contracts
   making it, and it relieves the                       ascertaining the sum payable,
   opposing party’s burden of                           commencing on the thirtieth
   proving the admitted fact, and                       (30th) day from and after the
   bars the admitting party from                        time when the sum is due and
   disputing it . . . .                                 payable.
                                Jamie Graham Page 35 of 79
                   937 S.W.2d 496, *512; 1996 Tex. App. LEXIS 3531, **45



TEX. REV. CIV. STAT. ANN. art.                    HN13 The ″law of the case″ doctrine
5069-1.03 (Vernon 1987). HN12 The                 has been defined by the Texas
Texas Supreme Court has stated that               Supreme Court as ″that principle
″where damages are definitely                     under which questions of law
determinable, interest is recoverable             decided on appeal to a court of last
as a matter of right from the date of             resort will govern the case
the injury or loss.″ Imperial Sugar               throughout its subsequent [*513]
Co., Inc. v. Torrans, 604 S.W.2d 73,              stages.″ Hudson v. Wakefield, 711
74 (Tex. 1980) (per curiam). We                   S.W.2d 628, 630 (Tex. 1986). By
therefore agree with appellees that               narrowing the issues in successive
there is nothing inconsistent about               stages of the litigation, [**47] the
pleading for the commencement of                  law of the case doctrine attempts to
                                                  achieve uniformity of decision as
interest, [**46] on the one hand,
                                                  well as judicial economy and
and a reasonable post-contract period
                                                  efficiency.       Dessommes           v.
of time in which appellants could
                                                  Dessommes, 543 S.W.2d 165, 169
timely perform the agreement, on
                                                  (Tex. Civ. App.--Texarkana 1976,
the other.
                                                  writ ref’d n.r.e.). The doctrine is
Law of the Case                                   based on public policy and is aimed
Nor are we persuaded by the                       at putting an end to litigation. See
appellants’ argument that our prior               Barrows v. Ezer, 624 S.W.2d 613,
opinion in Fields and Lightfoot v.                617 (Tex. App.--Houston [14th Dist.]
Rouse, No. 04-93-00067-CV (Tex.                   1981, no writ); Elliott v. Moffett, 165
App.--San Antonio, December 15,                   S.W.2d       911       (Tex.        Civ.
1993, writ denied) (unpublished),                 App.--Texarkana 1942, writ ref’d
controls the outcome of this appeal.              w.o.m.).
In our prior decision, which affirmed             HN14 The doctrine of the law of the
a summary judgment in favor of Dr.                case only applies to questions of law
Richard G. Rouse, we held that all                and not to questions of fact. Hudson,
of the appellees’ claims against Dr.              711 S.W.2d at 630. Furthermore, the
Rouse were barred by the four-year                doctrine does not necessarily apply
statute of limitations for breach of              when either the issues or the facts
contract claims. Appellants argue                 presented at successive appeals are
that our prior decision in Fields and             not substantially the same as those
Lightfoot v. Rouse controls the                   involved in the first trial. Barrows,
outcome of this case insofar as                   624 S.W.2d at 617. In Hudson, the
appellees’ breach of contract claim               court also drew a distinction between
is concerned. Again, however, we                  a summary judgment and an appeal
disagree.                                         following a full trial on the merits:
                              Jamie Graham Page 36 of 79
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  A critical factor in our                       283 (Tex. App.--Austin 1993, writ
  determination of this case is                  denied). The court in Pannill also
  that in the first appeal we                    recognized that an ″appeal after a
  reviewed       a      summary                  full and lengthy trial on the merits
  judgment. HN15 On review                       with a jury acting as the finder of
  of summary judgments, the                      facts, differs in a very material sense
  appellate courts are limited in                from a prior limited appeal″
  their considerations of issues                 following a summary judgment.
  and facts. [**48] In such a                    Pannill, [**49] 659 S.W.2d at 681.
  proceeding, the movant is not                  The distinction recognized in
  required to assert every theory                Hudson and Pannill also applies
  upon which he may recover                      here, since our prior opinion was
  or defend. Thus, when a case                   issued on review of a summary
  comes up for a trial on the                    judgment in favor of Dr. Rouse. The
  merits, the parties may be                     present appeal followed a jury trial
  different, the pleadings may                   which lasted nearly three weeks and
  be different, and other causes                 leaves behind a voluminous record.
  of action may have been                        As a result, the facts were developed
  consolidated. See Governing
                                                 to a point far beyond the summary
  Bd. v. Pannill, 659 S.W.2d
                                                 judgment record that we reviewed in
  670,                    680-81
                                                 Rouse. And as we have already
  (Tex.App.--Beaumont 1983,
                                                 noted, the jury found that Fields and
  writ ref’d n.r.e.). Other
                                                 Lightfoot either discovered or should
  distinctions may be drawn;
  for instance, in reviewing the                 have discovered on February 6, 1990
  evidence to determine whether                  that the appellants would not perform
  there are any fact issues in                   the agreement. Were we sitting as
  dispute, the appellate court                   the jurors in this case we might well
  must review the evidence in                    have resolved the issue differently.
  the light most favorable to the                However, it was for the jury, not this
  party opposing the motion for                  court, to weigh the evidence and
  summary judgment. Gaines v.                    determine the weight and credibility
  Hamman, 163 Tex. 618, 358                      of the witnesses’ testimony. There is
  S.W.2d 557, 562 (1962). Thus,                  certainly sufficient evidence to
  the context of a summary                       support the jury’s answer. Given the
  judgment proceeding is                         present circumstances, we simply
  distinguishable from a full                    cannot agree that our opinion in
  trial on the merits.                           Rouse should control the legal issues
Id. at 630-31. See also Med Center               in this appeal.
Bank v. Fleetwood, 854 S.W.2d 278,               Requested Limitations Issues
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Appellants also argue that the trial              known, that [**51] the Control
court erred when it refused to submit             Group would not perform the
their requested limitations issues.               agreement is ″irrelevant.″ Again, we
 [**50] They claim the jury should                disagree.
have been asked when payment was                  HN16 Proposed questions must be
due, not when Fields and Lightfoot                submitted to the jury in ″substantially
″knew or should have known″ that                  correct wording.″ TEX. R. CIV. P.
the appellants would not perform                  278. If the request is not in
the agreement. Once again, we                     substantially correct wording, it does
disagree.                                         not preserve error. TEX. R. CIV. P.
There were four proposed limitations              279; Keetch v. Kroger Co., 845
issues which were refused by the                  S.W.2d 262, 266 (Tex. 1992). In this
trial court. Two of these issues were             case, the appellants’ proposed
submitted by the Davilas; the other               limitations questions were not
two by Baker. As to Fields and                    tendered in ″substantially correct″
Lightfoot, however, they were                     wording. For example, their tendered
identical: (1) ″On what date was the              questions assumed that the contract
indebtedness claimed by O.                        specified when payment would be
Waymond Lightfoot, Jr. due to him                 due -- it did not. Appellants
under the terms of the agreement, if              apparently presume that the
any?″; and (2) ″On what date was                  limitations period for breach of
 [*514] the indebtedness claimed by               contract claims is measured only
William R. Fields, Jr. due to him                 from the time payment is due -- it is
under the terms of the agreement, if              not. Nor can appellees’ testimony
any?″                                             regarding when they were entitled to
Appellants also argue that the trial              their money be transformed into
court erred in submitting questions               conclusive judicial admissions, given
20 and 21 because they are not                    the strict standards which govern
″ultimate issues.″ Building on their              judicial admissions. To be within the
previous argument, appellants again               realm of substantial correctness, the
claim the appellees’ causes of action             appellants’ tendered limitations
began to run at the time when they                questions should have included a
were entitled to their money. Given               reasonable time inquiry -- once
the appellees’ testimony, this would              again, they did not. Since the
have been on October 1, 1986 for                  appellants failed to comply with Rule
Lightfoot and April 20, 1987 for                  279, their limitations points
Fields. According to appellants, it               concerning the charge [**52] are
follows that a question regarding the             not subject to appellate review. There
date appellees knew, or should have               was no abuse of discretion.
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As to whether questions 20 and 21                      consider what the parties said
raised ″ultimate issues,″ we note                      and did in light of the
that the trial court has broad                         surrounding circumstances,
discretion when constructing the jury                  including any earlier course
charge. HN17 ″A proper broad form                      of dealing. You may not
jury question asks an ultimate issue                   consider     the      parties’
and instructs the jury about the                       unexpressed thoughts or
elements of the ground of recovery                     intentions.
or defense that the jury must find                 In addition to arguing that the
before giving a ’yes’ answer to the                appellees’ contract claim is barred
issue.″ Rampel v. Wascher, 845                     by limitations, appellants assail the
S.W.2d 918, 924 (Tex. App.--San                    breach of contract theory on a
Antonio 1992, writ denied). We hold                number of other grounds: (1) the
that the charge in this case aided the             trial court should have admitted
jury and did not misstate the law.                 evidence that the agreement was
Appellants’ points are overruled.                  conditioned on First State ″actually
Breach of Contract                                 funding″ the stock purchase; (2) the
Fields and Lightfoot pleaded that                  trial court should have asked the
Lieb’s May 19, 1987 letter evidenced               jury whether the agreement was
a contract binding on the appellants               ″conditioned″ on financing; (3) the
for the purchase of the appellees’                 jury’s finding that the Control Group
stock. This claim was submitted to                 ratified its purchase of the appellees’
the jury in questions one and two of               stock is not supported by legally or
the court’s charge. In answering                   factually sufficient evidence; (4) the
these questions, the jury agreed that              trial court should have asked the
Lieb’s May 19, 1987 ″writings″                     jury whether each of the appellants
″constituted an agreement whereby                  individually ratified the agreement;
                                                   (5) the appellees’ contractual
the Control Group″ purchased
                                                   damages are not supported by legally
Fields’ and Lightfoot’s stock. The
                                                   or factually sufficient evidence; (6)
questions were preceded by an
                                                   the trial court should have submitted
″Instruction on Agreement,″ which
                                                   questions asking the jury [**54]
charged the jury as follows:
                                                   whether each member of the Control
   In deciding whether [**53]                      Group individually agreed to
   the parties agreed that                         purchase the appellees’ stock and
   Lightfoot and Fields would                      whether the agreement [*515] was
   not be paid unless First State                  based upon prorata liability; and (7)
   Savings actually funded and                     the trial court should not have held
   restructured the Control                        them jointly and severally liable for
   Group’s loans, you may                          the appellees’ contractual damages.
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Exclusion of Evidence                                   memoranda, letters and
                                                        records of Crown and the
Prominent       among       appellants’
                                                        Control Group, because such
complaints is their contention the
                                                        writings constitute the written
trial court erred in not submitting to
                                                        agreements between the
the jury their theory concerning the
                                                        parties; and Appellants cannot
non-occurrence of an alleged
                                                        vary the terms by parol
condition precedent, i.e., the
                                                        evidence and have no
agreement was conditioned on First
                                                        pleadings       to      support
State ″actually funding″ the stock
                                                        introduction       of      such
purchase. This argument takes two
                                                        testimony.
forms: (1) that the trial court erred in
failing to admit evidence that the                  Appellants introduced evidence
agreement was conditioned on First                  through a bill of exception pertaining
State     actually      funding       or            to the alleged condition precedent.
restructuring the Control Group’s                   Baker and Frank Davila II testified
loans; and (2) that the trial court                 by bill of exception that the
should have submitted a separate                    agreement made by the members of
question regarding conditional                      the Control Group was subject to the
purchase in the court’s charge. We                  condition that First State Savings
will begin with the first argument,                 would provide refinancing. The
which concerns the parol evidence                   appellants’ bill included excerpts
rule and the trial court’s ruling on                from the depositions of Frank Cross
the appellees’ motion in limine.                    and Dwight Lieb, both of whom
                                                    similarly testified that refinancing
On February 22, 1993, shortly before                by First State Savings was part of
trial, the appellees filed a motion in              the agreement.
limine. Although there is no written
                                                    The bill also included testimony
order, the record [**55] indicates
                                                    from Frank Davila II regarding
that the trial court sustained
                                                    plaintiffs’ exhibits 16 [**56] and 59.
paragraph eight of the motion, which
                                                    Exhibit 16 was the notice from Frank
asked the court to prohibit the
                                                    Davila II to members of the Control
appellants or their counsel from
                                                    Group informing them of a meeting
suggesting to the jury,
                                                    to be held on June 16, 1986 to
   that there were conditions,                      consider repurchase of the appellees’
   conditions precedent or terms                    stock. Exhibit 59 was Frank Davila
   of their agreement to purchase                   II’s February 22, 1988 memorandum
   Appellees’ shares of Crown                       which questioned the validity of the
   Bancshares stock which are                       sale and reiterated that any purchase
   not expressed in the written                     was based on financing from First
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State. Both documents had been                     included a copy of Lightfoot’s
admitted at the beginning of trial                 original petition, which the trial court
without limitation, but during Frank               had excluded from evidence.
Davila II’s direct examination, the                HN18 The parol evidence rule is a
trial judge would not permit him to                rule of substantive law which
read aloud the first paragraph of                  provides that in the absence of fraud,
exhibit 59, which stated that ″an                  accident, or mistake, extrinsic
effective transaction concerning the               evidence is not admissible to vary,
sale or transfer of the stock would                add to, or contradict the terms of a
involve, among other things, the                   written instrument [*516] that is
approval of First State Savings to                 facially complete and unambiguous.
finance the purchase of said stock.″               Martin v. Ford, 853 S.W.2d 680, 681
This was presumably in keeping                     (Tex. App.--Texarkana 1993, writ
with the court’s ruling on the motion              denied); see also JOHN D.
in limine. During the bill of                      CALAMARI AND JOSEPH M.
exception, Frank Davila II read from               PERILLO, CONTRACTS § 3-2, at
both the excluded portion of exhibit               135-36 (3rd ed. 1987) (″The parol
59 and the first paragraph of exhibit              evidence rule has been stated in
16, which stated ″the control group                many ways but the basic notion is
purchase would be conditioned on                   that a writing intended by the parties
the approval of First State Savings                to be a final [**58] embodiment of
to finance the purchase.″                          their agreement may not be
Lightfoot testified under direct                   contradicted by certain kinds of
examination during the appellants’                 evidence.″).
bill [**57] of exception that the                  HN19 A party may not introduce
original proposal presented to the                 parol evidence to vary the terms of
Control Group was that he would be                 an unambiguous contract. Murphy v.
paid $ 10 per share for 25,000 shares;             Dilworth, 137 Tex. 32, 151 S.W.2d
that the Control Group agreed to                   1004, 1005 (1941); Markert v.
purchase his shares at that price                  Williams, 874 S.W.2d 353, 355 (Tex.
based upon the ″approval″ or                       App.--Houston [1st Dist.] 1994, writ
″permission″ of First State Savings                denied). When a writing is intended
to refinance the debt. Lightfoot also              as a completed legal transaction, the
admitted that his original petition                parol evidence rule excludes other
contained the statement that ″the                  evidence of any prior or
purchase [of Lightfoot’s shares] was               contemporaneous expressions of the
conditioned on the Control Group’s                 parties relating to the transaction.
acquisition of financing from FIRST                Markert, 874 S.W.2d at 355; Massey
STATE.″ The appellants’ record                     v. Massey, 807 S.W.2d 391, 405
                               Jamie Graham Page 41 of 79
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(Tex. App.--Houston [1st Dist.]                        question of whether a contract
1991), writ denied, 867 S.W.2d 766                     is ambiguous before a jury
(Tex. 1993). Only if the intention of                  trial commences, it is
the parties as expressed on the face                   incumbent on the judge when
of the document is doubtful may the                    it first becomes apparent
court resort to parol evidence to                      during trial that at least one of
resolve the doubt. Markert, 874                        the parties is claiming
S.W.2d at 355.                                         ambiguity, supported by
HN20 When there is no ambiguity,                       adequate       pleadings,      to
parol evidence is not admissible to                    examine the provisions in
create one. Markert, 874 S.W.2d at                     question and determine at that
355; Entzminger v. Provident Life &                    time whether or not the
Accident Ins. Co., 652 S.W.2d 533,                     contract is or is not
537 (Tex. App.--Houston [1st Dist.]                    ambiguous. This is necessary,
1983, no writ); see also Sun Oil Co.
                                                       among other reasons, so that
(Delaware) v. Madeley, 626 S.W.2d
                                                       the court can properly rule on
726, 731 (Tex. [**59] 1981) (When
a contract, on its face, can be given                  evidentiary [**60] objections
a definite, legal meaning, parol                       and submit a substantially
evidence is not admissible to render                   correct charge.
it ambiguous). Only after the trial                West Texas Gathering Co. v. Exxon
judge determines that the contract is              Corp., 837 S.W.2d 764, 770 (Tex.
ambiguous does parol evidence                      App.--El Paso 1992), rev’d on other
become admissible, and then only to                grounds, 868 S.W.2d 299 (Tex. 1993).
assist the fact finder in determining              HN22 If neither party alleges a
the subjective intent of the parties at            contract is ambiguous, or if the issue
the time they entered into the
                                                   is raised for the first time on appeal,
agreement. Coker v. Coker, 650
                                                   construction of the agreement is a
S.W.2d 391, 394 (Tex. 1983).
                                                   question of law for the appellate
HN21 Even in the absence of                        court. See Praeger v. Wilson, 721
appropriate pleading by either party,              S.W.2d 597, 600 (Tex. App.--Fort
a trial judge may conclude a contract              Worth 1986, writ ref’d n.r.e.); see
is ambiguous. Sage Street Associates               also Community Dev. Serv. v.
v. Northdale Const. Co., 863 S.W.2d                Replacement Parts Mfg., Inc., 679
438, 445 (Tex. 1993). Indeed, he                   S.W.2d 721, 724 (Tex. App.--Houston
must do so before the issue can be                 [1st Dist.] 1984, no writ); Sale v.
submitted to the jury:                             Contran Corp., 486 S.W.2d 161, 165
   If the trial court has not made                 (Tex. Civ. App.--Dallas 1972, writ
   a determination on the                          ref’d n.r.e.).
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Although never using the word                      appellants’ condition evidence. In
″ambiguity″ in their pleadings, the                constructing the jury charge,
appellants and appellees obviously                 however, the trial judge asked the
disagreed over whether there was a                 jury questions designed to ascertain
contract, and if so, whether it was                whether there was an agreement,
subject to certain conditions. Baker               i.e., whether Lieb’s May 19, 1987
and the Davilas alleged in their                   ″writings″ ″constituted an agreement
amended answers that ″there was no                 whereby the Control Group″
valid agreement between Appellants                 purchased Fields’ and Lightfoot’s
and/or the Control Group and                       stock. If the document was indeed
Appellees because there was no                       [**62]     unambiguous, the court
meeting of the minds of the parties                should never have submitted such
as to such agreement.″ Pitman,                     issues to the jury. HN23 Only when
Bertino, O’Connor, and Manning all                 a contract contains an ambiguity
                                                   does its interpretation become a
 [**61] denied that Lieb, Baker or
                                                   question of fact for the jury. Reilly v.
Frank Davila II -- the voting trustees
                                                   Rangers Management, Inc., 727
-- ever had the authority to negotiate
                                                   S.W.2d 527, 529 (Tex. 1987). While
an agreement with the appellees, or
                                                   the trial judge never expressly found
that they ratified such an agreement,
                                                   the agreement was ambiguous, such
but added that if there were an
                                                   a determination was necessary before
agreement, it was subject to certain               it could submit questions one and
conditions precedent, e.g., First State            two. See Exxon Corp. v. West Texas
Savings agreeing to the proposed                   Gathering Co., 868 S.W.2d 299, 302
transfer of stock, allowing a prorata              (Tex. 1993) (″If the court had not
assumption of the appellees’ debts,                considered the contract ambiguous,
and, in turn, releasing the appellees              the court could only have interpreted
from their indebtedness. Haass                     it as a matter of law.″); see also
adopted the amended answers filed                  Neece v. A.A.A. Realty Co., 159 Tex.
by Fred Baker [*517] and the                       403, 322 S.W.2d 597, 599 (1959)
Davilas, which contained these same                (By submitting issues to the jury
allegations.                                       designed to ascertain the parties’
There is no indication in the record               agreement, ″the trial judge evidently
that the trial court ever expressly                considered      that    the     written
found the contract was ambiguous,                  instrument was ambiguous.″). As a
and apparently, none of the parties                result, the issue is whether the trial
ever asked him to do so. The trial                 court erred in concluding the
judge must have concluded, at least                document was ambiguous, and if
initially, that Lieb’s letter was                  not, whether the appellants’ parol
unambiguous, since it excluded the                 evidence should have been admitted.
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HN24 In construing a contract, the                 upon certain conditions [**64] or
court must give effect to the                      contingencies. Baker v. Baker, 143
objective intent of the parties as                 Tex. 191, 183 S.W.2d 724, 728 (Tex.
expressed or apparent in the writing,              1944); Litton v. Hanley, 823 S.W.2d
in light of the surrounding [**63]                 428, 430 (Tex. App.--Texarkana
circumstances. Praeger, 721 S.W.2d                 1992, no writ). Since the trial court
at 600-01. A contract is not                       concluded the agreement was
ambiguous if, after applying the rules             ambiguous, and since our review of
of construction, the provision in                  the record and the law requires no
question can be given a certain or                 contrary     determination,       the
definite     legal    meaning       or             appellants’ parol evidence should
interpretation. Coker, 650 S.W.2d at               have been admitted to aid the jury in
393; Universal C.I.T. Credit Corp. v.              determining the intentions of the
Daniel, 150 Tex. 513, 243 S.W.2d                   parties.
154, 158 (1951). On the other hand,                Our analysis, however, does not end
the contract is ambiguous when its                 there. We must also conduct a harm
meaning is uncertain and doubtful                  analysis to determine if this error
or it is reasonably susceptible to                 requires reversal. See TEX. R. APP.
more than one meaning. Coker, 650                  P. 81(b)(1). In addition to showing
S.W.2d at 393. We recognize that an                that the trial court committed error,
instrument is not ambiguous simply                 appellants must also show that the
because the parties disagree over its              error was reasonably calculated to
interpretation. Markert, 874 S.W.2d                cause and probably did cause the
at 355; Praeger, 721 S.W.2d at 600.                rendition of an improper verdict.
After carefully reviewing the record,              Gee v. Liberty Mut. Fire Ins. Co.,
we do not believe the trial judge                  765 S.W.2d 394, 396 (Tex. 1989);
erred in concluding the agreement                  Bridges v. City of Richardson, 163
was ambiguous or in submitting the                 Tex. 292, 354 S.W.2d 366, 368 (Tex.
issue to the jury.                                 1962); New Braunfels Factory Outlet
Turning to the second issue, we note               Center, Inc. v. IHOP Realty Corp.,
that HN25 parol evidence is                        872 S.W.2d 303, 310 (Tex.
admissible regarding the intentions                App.--Austin 1994, no writ); see also
of the parties when the writing                    TEX. R. APP. P. 81(b). HN26 The
contained in the document is                       admission or exclusion of evidence
ambiguous. Trinity Univ. Ins. Co. v.               rests within the sound discretion of
Ponsford Bros., 423 S.W.2d 571,                    the trial [**65] court. Center, Inc.,
574-75 (Tex. 1968). Moreover, it is                872 S.W.2d at 310; Tracy v. Annie’s
admissible to show the agreement                   Attic, Inc., 840 S.W.2d 527, 531
was not to become effective save                   (Tex. App.--Tyler 1992, writ denied);
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Luvual v. Henke & Pillot, 366                       documentary evidence, or argue to
S.W.2d 831, 838 (Tex. Civ.                          the jury what the terms of the
App.--Houston [1st Dist.] 1963, writ                agreement were, and consequently,
ref’d n.r.e.). In other words, the trial            explain why they did not follow
court [*518] commits error only                     through with the deal, appellants
when it acts in an unreasonable and                 claim their case was hopelessly
arbitrary manner, or acts without                   prejudiced by the trial court’s
reference to any guiding principles.                decision to exclude their condition
Downer v. Aquamarine Operators,                     precedent testimony. We disagree.
Inc., 701 S.W.2d 238, 241-42 (Tex.                  Our review of the record shows that
1985), cert. denied, 476 U.S. 1159,                 various Control Group members
90 L. Ed. 2d 721, 106 S. Ct. 2279                   testified without objection that it
(1986). Reversible error does not                   was their intention to purchase the
usually occur in connection with                    appellees’ stock only if First State
rulings on questions of evidence                    would finance the purchase.
unless the appellant can demonstrate                Although never using the word
that the whole case turns on the                    ″condition,″ Baker, Lieb, Pitman,
particular evidence that was admitted               O’Connor, Bertino, Manning, and
or excluded. Litton v. Hanley, 823                  Haass all testified before the jury
S.W.2d 428, 430 (Tex. App.--Houston                 that they were prepared to buy their
[1st Dist.] 1992, no writ). The                     prorata shares of Fields’ and
exclusion of evidence is harmless if                Lightfoot’s stock if First State agreed
it is cumulative of other evidence                  to refinance the purchase. Moreover,
that was admitted on the same issue.                the issue of financing conditions
See Gee, 765 S.W.2d at 396 (″The                    was raised during closing arguments.
erroneous admission of testimony                    Counsel for Baker and the Davilas
that is merely cumulative of properly               urged the jury to answer ″no″ [**67]
admitted testimony is harmless                      to questions one and two because
error.″); see also TEX. R. CIV.                     the financing condition had not been
EVID. 403.                                          satisfied. Thus, not only did the jury
Appellants [**66]          argue that               hear a wealth of evidence on the
exclusion of their condition evidence               appellants’ condition theory, but the
was harmful error, because it was                   issue was included in the court’s
material not only to the issue of                   preliminary       ″Instruction       on
whether there was an agreement, but                 Agreement″ and argued to the jury.
to all of the appellees’ tort claims as             Appellants never objected to this
well as their actual and exemplary                  instruction. As for plaintiffs’ exhibits
damages. Unable to elicit testimony                 16 and 59, the Frank Davila II
from         witnesses,        produce              memoranda, although appellants
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claim they were never offered to the               744 S.W.2d 940, 944 (Tex. 1988)
jury ″in their entirety,″ the record               (op. on reh’g). The issue must also
shows both documents were                          be disputed. Id.
admitted without reservation at the                Appellants must also show they
beginning of trial, and were in the                preserved error to prevail on these
jury room during deliberations. The                points. Several procedural steps are
fact Frank Davila II was not                       required to preserve error. First, the
permitted to read from or testify                  complaining party must request a
regarding specific paragraphs is not               question on the issue. Lyles v. Texas
cause for concern, when one                        Employers’ Ins. Ass’n, 405 S.W.2d
considers the other condition
                                                   725, 727 (Tex. Civ. App.--Waco 1966,
evidence that was before the jury.
                                                   writ ref’d n.r.e.). The request must
Because other evidence admitted
                                                   be in writing, separated from other
throughout the trial and emphasized
                                                   requested jury charges, and must be
during closing arguments conveyed
                                                   tendered in ″substantially correct″
substantially the same information
to the jury that was found in                      form. TEX. R. CIV. P. 278, 279;
appellants’ bill of exception, even if             Woods v. Crane Carrier Co., Inc.,
the trial court erred in excluding this            693 S.W.2d 377, 379 [*519] (Tex.
testimony, the error was harmless.                 1985). The requested question must
The appellants’ points are overruled.               [**69] also be presented and filed
                                                   before the charge is read to the jury.
Conditional Purchase                               M.L.C. Loan Corp. v. P.K. Foods,
Appellants also argue that [**68]                  Inc., 541 S.W.2d 902, 905 (Tex. Civ.
the trial court erred in refusing to               App.--Beaumont 1976, no writ).
ask the jury whether the agreement                 Finally, the complaining party must
was conditioned on financing by                    obtain a ruling on the request. TEX.
First State. To prevail on these                   R. CIV. P. 276; Greenstein, Logan &
points, however, appellants must                   Co. v. Burgess Mktg., 744 S.W.2d
show they were entitled to a jury                  170, 181 (Tex. App.--Waco 1987,
question on the issue. HN27 All                    writ denied).
parties are entitled to have                       Counsel for Baker, Haass, Bertino,
controlling issues, raised by the                  Pitman, O’Connor and the Davilas
pleadings and evidence, submitted                  all objected to questions one and
to the jury. Brown v. Goldstein, 685               two, but only the Davilas tendered
S.W.2d 640, 641 (Tex. 1985). A                     ″condition″ questions. The Davilas’
controlling issue is one which                     first question asked whether there
requires a factual determination to                ″was any authority given to Lieb by
render judgment in the case.                       the Davila Defendants to purchase
Employers Casualty Co. v. Block,                   Fields’ stock limited to purchasing
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such stock on condition of First                   mandates broad form submission
State actually accomplishing the                   ’whenever feasible,’ that is, in any
financing?″ The second question                    and every instance in which it is
asked: ″Did the Davila Defendants                  capable of being accomplished.″
agree to by [sic] Fields’ stock                    E.B., 802 S.W.2d at 649. The test for
without a condition of First State                 an abuse of discretion is whether the
actually      accomplishing        the             trial court’s action in refusing to
financing?″ The third asked: ″Did                  submit the requested definition and
the Davilas agree to buy Crown                     instruction was arbitrary or
Bancshares, Inc. from Lightfoot                    unreasonable. Downer, 701 S.W.2d
without a condition of First State                 at 241-42. This means the trial court
actually      accomplishing        the             has wide discretion [**71]          in
financing?″ All three questions were               submitting explanatory instructions
refused by the trial court. The record             and definitions, Wisenbarger v.
shows that appellants filed written                Gonzales        Warm          Springs
requests for a special [**70] charge               Rehabilitational Hosp., Inc., 789
on the issue of condition, separated               S.W.2d 688, 692 (Tex. App.--Corpus
from their other requested questions,              Christi 1990, writ denied), or in
definitions, and instructions, before              determining      what      constitutes
the charge was submitted to the jury.              necessary and proper issues. Scott v.
Therefore, they complied with the                  Ingle Bros. Pacific, Inc., 489 S.W.2d
first procedural step in error                     554, 557 (Tex. 1972).
preservation. Because the trial judge              HN29 Instructions and definitions
endorsed these requests ″refused″                  are proper when they are raised by
and signed his name officially,                    the written pleadings, supported by
appellants fulfilled this final error              the evidence, and aid the jury in
preservation requirement.                          answering the questions in the
HN28 We review a trial court’s                     charge. See TEX. R. CIV. P. 277,
submission of a theory of recovery                 278; see also Elbaor v. Smith, 845
or defense by questions or                         S.W.2d 240, 243 (Tex. 1992); Texas
instructions under an abuse of                     Dep’t of Transp. v. Ramming, 861
discretion standard, recognizing                   S.W.2d 460, 463 (Tex. App.--Houston
there is a presumption in favor of                 [14th Dist.] 1993, writ denied) (trial
the broad-form submission of                       court’s discretion ″is subject to the
questions. TEX. R. CIV. P. 277; Texas              requirement that the questions
Dept. of Human Services v. E.B.,                   submitted must control the
802 S.W.2d 647, 649 (Tex. 1990);                   disposition of the case, be raised by
Mobil Chem. Co. v. Bell, 517 S.W.2d                the pleadings and evidence, and
245, 256 (Tex. 1974). ″Rule 277                    properly submit the disputed issues
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for the jury’s deliberation.″). But,               Court further held, and Rule 277
″[a] judgment should not be reversed               specifically provides, that the trial
because of a failure to submit other               court should [**73]           submit
and various phases or different                    appropriate          accompanying
shades of the same question.″                      instructions to enable the jury to
Sheldon L. Pollack Corp. v. Falcon                 render a verdict. Id. See also
Industries, Inc., 794 S.W.2d 380,                  Glendon Investments, Inc. v. Brooks,
383 (Tex. App.--Corpus [**72]                      748 S.W.2d 465, 469 (Tex.
Christi 1990, writ denied). Moreover,              App.--Houston [1st Dist.] 1988, writ
a trial court errs if it refuses to                denied); American Cyanamid Co. v.
submit a properly formed question                  Frankson, 732 S.W.2d 648, 658 (Tex.
with appropriate instructions, and                 App.--Corpus Christi 1987, writ ref’d
instead submits separate, granulated               n.r.e.).
issues to the jury. H.E. Butt Grocery              In the present case, as in Island,
Co. v. Warner, 845 S.W.2d 258, 260                 Fields’ and Lightfoot’s contractual
(Tex. 1992).                                       claim was submitted to the jury in
In Island Recreational Development                 broad form. Although appellants
Corp. v. Republic of Texas Savings                 claim the trial court should have
Association, 710 S.W.2d 551 (Tex.                  submitted        several     additional
1986), the developer and owner of a                questions inquiring about specific
condominium brought a lawsuit                      aspects of the contract -- whether
against a bank alleging breach of                  the agreement was conditioned;
contract for failure to permanently                whether the appellants individually
fund first mortgages of condominium                ratified it -- the controlling issue in
units under the terms of a                         the case, and the one which
commitment letter. Id. at 553. The                 authorized recovery for the
trial court submitted a broad-form                 appellees, was whether Lieb’s May
issue to the jury asking whether they              19, 1987 letter constituted an
found the ″plaintiffs performed their              agreement whereby the Control
obligations under the commitment                   Group bought certain shares of
letter in question.″ Id. at 554. There             Fields’ and Lightfoot’s stock. This
were no instructions accompanying                  was the issue the trial court
this issue, nor did the parties ask for            submitted to the jury; the remaining
them. [*520] Id. The Texas Supreme                 issues,      e.g.,   condition      and
Court held that trial courts are                   ratification, were addressed in the
permitted, and even urged, to submit               court’s accompanying instructions
the controlling issues of a case in                and, therefore, were encompassed
broad terms so as to simplify the                  within the broad-form question. We
jury’s chore. Id. at 555. The Island               therefore hold that the trial court did
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 [**74] not abuse its discretion in                    the party sought to be charged
refusing     appellants’     tendered                  with responsibility for the
questions and in choosing to submit                    conduct [**75] of another
the contractual claims in broad form.                  may be considered in
Accordingly, appellants’ points of                     determining whether apparent
error are overruled.                                   authority exists.
Agency                                             During closing arguments, appellants
In connection with the liability                   urged the jury to absolve them of
issues, the court gave the jury an                 liability because they gave Lieb no
″Instruction on Authority″ which                   authority to purchase the appellees’
preceded all of the liability                      stock. In resolving the liability issues
questions:                                         against the appellants, however, the
                                                   jury impliedly found the requisite
   A party’s conduct includes the
                                                   agency connection.
   conduct of another who acts
   with the party’s authority or                   Appellants raised no trial objection
   apparent authority.                             to the court’s agency instruction,
   Authority for another to act                    and their briefs scarcely even
   for a party must arise from the                 mention the issue. In a reply brief,
   party’s agreement that the                      Baker argues the trial court should
   other act on behalf and for the                 not have rendered judgment based
   benefit of the party. If a party                upon a theory of agency because the
   so authorizes another person                    trial court’s rulings construing Lieb’s
   to perform an act, that other                   May 19, 1987 letter as the written
   party is also authorized to do                  memorial of the agreement between
   whatever else is proper, usual                  the parties and its prohibition of the
   and necessary to perform the                    appellants’ condition evidence
   act expressly authorized.                       harmed appellants. Moreover, Baker
                                                   again claims the trial court erred in
   Apparent authority exists if a
                                                   refusing the appellants’ condition
   party (1) knowingly permits
                                                   evidence because this evidence
   another to hold himself out as
                                                   would have explained ″Lieb’s
   having authority or, (2)
                                                   restricted authority.″
   through lack of ordinary care,
   bestows on another such                         Conspicuously absent from the
   indications of authority that                   appellants’ argument is any
   lead a reasonably prudent                       indication of whether, or how, they
   person to rely on the apparent                  preserved error on this point. HN30
   existence of such authority to                  Any complaint concerning the
   his detriment. Only the acts of                 submission of an instruction is
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    waived unless specifically included                                  Civ. App.--Dallas 1969, writ ref’d).
     [**76] in the objections. See TEX.                                  An agency relationship becomes a
    R. CIV. P. 274. This appellants failed                               question of law only when the facts
    to do. Although they tendered several                                are agreed or undisputed. Ross v.
    proposed instructions on agency,                                     Texas One Partnership, 796 S.W.2d
    appellants never once challenged the                                 206, 209 (Tex. App.--Dallas 1990),
    court’s agency instruction, [*521]                                   writ denied per curiam, 806 S.W.2d
    nor do they raise the issue now. 9 By                                222 (Tex. 1991). This is certainly not
    failing to even raise the issue in their                             such a case.
    appellate briefs, appellants waived                                  The Voting Trust Agreement
    any complaint on appeal regarding
    an implied finding of agency. [**77]                                 Perhaps the most compelling
                                                                         evidence of an agency relationship
    But even if error was preserved, we                                  between Lieb and [**78]           the
    believe there is sufficient evidence                                 members of the Control Group is the
    for the jury to have reasonably                                      voting trust agreement. In entering
    inferred the existence of an actual or                               this agreement, the appellants agreed
    apparent      agency      relationship                               among themselves, in the interest of
    between Trustee Lieb and the other                                   ″continuity and stability of policy,″
    members of the Control Group                                         to unite their vote in Trustee Lieb
    regarding the purchase of Fields’                                    and to be bound by their own vote
    and Lightfoot’s stock. Whether an                                    regarding matters entrusted to him.
    agency relationship exists is usually                                This agreement constitutes evidence,
    a question of fact, and circumstantial                               albeit circumstantial, from which the
    evidence may be used to establish                                    jury could have found a broader
    the agency and the extent of the                                     agency relationship between Lieb
    agent’s authority. St. Paul Surplus                                  and the other members of the Control
    Lines Ins. Co., Inc. v. Dal-Worth                                    Group.
    Tank Co., Inc., 917 S.W.2d 29, 48
    (Tex. App.--Amarillo 1995, n.w.h.);                                  Other Circumstantial Evidence
    Bhalli v. Methodist Hosp., 896                                       There is also evidence of an actual
    S.W.2d 207, 210 (Tex. App.--Houston                                  or apparent agency relationship
    [1st Dist.] 1995, writ denied);                                      through the Control Group’s official
    Foundation Reserve Ins. Co. v.                                       vote and the appellants’ subsequent
    Wesson, 447 S.W.2d 436, 438 (Tex.                                    conduct. Among the relevant
9
   Counsel for the Davilas alluded to the issue of agency when he was objecting to questions one and two of the court’s charge. After
reminding the trial judge that questions one and two asked the jury to determine whether Lieb was an agent for the Control Group,
counsel added: ″We have submitted requested instructions on the -- on agency, and this is a necessary element of whether Mr. Lieb was
an agent and could enter into the agreement. And we have submitted an instruction on that agency theory which we’ve raised by the
pleadings and has been shown by the evidence or raised by the evidence, and the court has denied that.″ On appeal, however, appellants
do not challenge the trial court’s denial of their agency instructions.

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     circumstances the jury could have                            Appellants [*522] raise two related
     considered is the fact that, after                           arguments regarding the court’s
     receipt of Lieb’s May 19, 1987 letter,                       ratification instruction and the jury’s
     each appellant appears to have                               findings: (1) they claim the court’s
     conducted himself in accordance                              submission of the issue was
     with the described transaction. There                        erroneous because appellants were
     is evidence in this record from which                        entitled to separate questions as to
     the jury could have found that each                          whether each of them, individually,
     appellant had knowledge of the                               ratified the Lieb agreement; and (2)
     transaction, recognized its existence,                       they argue that even if the ratification
     and retained the beneficial right to                         issue was properly submitted, the
     increase his holdings commensurate                           evidence is both legally and factually
     with the purchase. Not only did the                           [**80] insufficient to support the
     Control Group vote its explicit                              jury’s response. After reviewing the
     ratification,    [**79]      but each                        record, however, we disagree.
     appellant contributed several times                          Do you find the Control Group
     to the Control Group’s fund for                              ratified their purchase of Fields’
     paying the First State debt that                             stock?
     corresponded to the stock purchase.
     Given these circumstances, we                                [Answer ″Yes″ or ″No″]
     believe there is sufficient evidence                         ANSWER: Yes
     to support the jury’s implied finding
                                                                  Question four provided:
     that Lieb was the agent of the
     Control Group. See City of San                               Do you find the Control Group
     Antonio v. Aguilar, 670 S.W.2d 681,                          ratified their purchase of Lightfoot’s
     683 (Tex. App.--San Antonio 1984,                            stock?
     writ dism’d) (implied authority exists                       [Answer ″Yes″ or ″No″]
     when appearances indicate that ″in
     some manner the agent was                                    ANSWER: Yes
     authorized to do what he did″).                              These questions were preceded by
     Ratification                                                 an instruction on ratification:

     In addition to the agency instruction,                       A party’s conduct includes conduct
     the court also charged the jury on                           of others that the party has ratified.
     ratification. In answering this                              Ratification may be express or
     question, the jury found that the                            implied.
     Control Group ratified their purchase                        Implied ratification occurs when a
     of Fields’ and Lightfoot’s stock. 10                         party, though he may have been
10
     Question three reads as follows:

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unaware of unauthorized conduct                     demonstrates bias, or is so against
taken on his behalf at the time it                  the great weight and preponderance
occurred, retains the benefits of the               of the evidence as to be manifestly
transaction        involving         the            unjust. Pool v. Ford Motor Co., 715
unauthorized conduct after he                       S.W.2d 629, 635 (Tex. 1986); [**82]
acquired full knowledge of the                      Cain v. Bain, 709 S.W.2d 175, 176
unauthorized conduct. Implied                       (Tex. 1986). Under this analysis, we
ratification results in the ratification            are not the fact finders and we do
of the entire transaction.                          not pass upon the credibility of
HN31 When, as in [**81] this case,                  witnesses or substitute our judgment
both legal and factual sufficiency                  for that of the trier of fact, even if
points are raised, we must first                    there is conflicting evidence upon
examine the legal sufficiency of the                which a different conclusion could
evidence. Glover v. Texas Gen.                      be supported. Clancy v. Zale Corp.,
Indem. Co., 619 S.W.2d 400, 401                     705 S.W.2d 820, 826 (Tex.
(Tex. 1981). In considering a ″no                   App.--Dallas 1986, writ ref’d n.r.e.).
evidence″ or legal sufficiency point,               In other words, we are not free to
we consider only the evidence or                    substitute our judgment for the jury’s
inferences from the evidence                        simply because we may disagree
favorable to the decision of the trier              with the verdict. Herbert v. Herbert,
of fact and disregard all evidence                  754 S.W.2d 141, 142 (Tex. 1988).
and inferences to the contrary.                     HN33 Ratification occurs when a
Sherman v. First Nat’l. Bank, 760                   principal, though he had no
S.W.2d 240, 242 (Tex. 1988); Garza                  knowledge originally of an
v. Alviar, 395 S.W.2d 821, 823 (Tex.                unauthorized act of his agent, retains
1965). If there is any evidence --                  the benefits of the transaction after
more than a scintilla -- to support                 acquiring full knowledge. Land Title
the finding, the no evidence                        Co. of Dallas v. F. M. Stigler, Inc.,
challenge will fail. Stafford v.                    609 S.W.2d 754, 757 (Tex. 1980).
Stafford, 726 S.W.2d 14, 16 (Tex.                   Stated simply, if a person who has
1987); In re King’s Estate, 150 Tex.                fraudulently been made a party to a
662, 224 S.W.2d 660, 661 (1951).                    contract continues to receive the
HN32 In considering a factual                       benefits of the contract after he
sufficiency point, we may not                       becomes aware of the fraud, or if he
substitute our judgment for that of                 otherwise conducts himself in such
the trier of fact, but must assess all              a manner as to recognize the contract
the evidence and reverse for a new                  as existing and binding, he thereby
trial only if the challenged finding                affirms the contract and waives his
shocks the conscience, clearly                      right to a rescission. Daniel [**83]
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v. Goesl, 161 Tex. 490, 341 S.W.2d                 the question of ratification must be
892, 895 (1960); Rosenbaum v. Texas                left to the trier of fact. Id.
Bldg. & Mortgage Co., 140 Tex.                     Appellants argue that Plaintiff’s
325, 167 S.W.2d 506, 508 (1943);                   Exhibit 66 -- the handwritten minutes
Spangler v. Jones, 797 S.W.2d 125,                 of the Control Group’s March 16,
131 (Tex. App.--Dallas 1990, writ                  1988 meeting -- do not show who
denied). An express ratification is                voted for the resolution to confirm
not necessary; any act based upon a                the purchase of Fields’ and
recognition of the contract as                     Lightfoot’s stock. Rather, these
existing or any conduct inconsistent               minutes, which were kept by Pitman,
with an intention of avoiding it has
                                                   merely indicate that the ″motion to
the effect of waiving the right of
                                                   confirm that the stock purchase is a
rescission. Rosenbaum, 167 S.W.2d
                                                   valid transaction made 2nded & [sic]
at 508. HN34 The critical factor in
                                                   passed.″ Baker, like the other
determining whether a principal has
                                                   appellants, testified that if the
ratified an unauthorized act by his
agent is the principal’s knowledge                 minutes meant the agreement was
of the facts of the prior transaction              being ratified without any condition,
and his actions in light of such                   he did not vote for it. And Baker,
knowledge. Land Title Co. v. F. M.                 like the other appellants, testified by
Stigler, Inc., 609 S.W.2d 754, 756                 bill of exception that the agreement
(Tex. 1975). Ratification can occur if             was always conditioned on First
the party, at the time of his allegedly            State accomplishing financing.
ratifying acts, has knowledge of all               Be that as it may, however, the
material facts pertaining to the prior             record is replete with evidence from
fraudulent transaction. Rourke v.                  which the jury could have concluded
Garza, 530 S.W.2d 794, 805 (Tex.                   the Control Group ratified the
1975); Vessels v. Anschutz Corp.,                  purchase of Fields’ and Lightfoot’s
823 S.W.2d 762, 764 [*523] (Tex.                   shares. HN35 ″It [**85]               is
App.--Texarkana 1992, writ denied).                fundamental that the critical factors
The question of ratification of a                  in determining ratification are 1) the
contract is usually a mixed question               principal’s subsequent knowledge of
of law and fact. Sawyer v. Pierce                  the transaction and 2) his actions
 [**84] , 580 S.W.2d 117, 123 (Tex.                thereafter, and implied ratification
Civ. App.--Corpus Christi 1979, writ               may be proven by silence in the face
ref’d n.r.e.). Although ratification               of knowledge.″ See Banc Texas Allen
may be determined as a matter of                   Parkway v. Allied American Bank,
law if the evidence is uncontroverted              694 S.W.2d 179, 182 (Tex.
or uncontrovertible, when the act or               App.--Houston [14th Dist.] 1985,
acts of ratification are controverted,             writ ref’d n.r.e.) (emphasis added);
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     see also Spangler, 797 S.W.2d at                             could not have answered as it did
     131 (conduct recognizing agreement                           without a finding applicable to every
     as binding is sufficient). There is                          member of the Control Group. Thus,
     evidence that each appellant had                             even if Lieb did not have the
     knowledge of the transaction,                                authority to negotiate a stock
     conducted himself in recognition of                          purchase agreement with the
     its existence, and retained the                              appellees, the jury’s finding that the
     beneficial right to increase his                             Control Group ratified the purchase
     holdings commensurate with a stock                           of the appellees’ shares supports the
     purchase. Indeed, not only did the                           trial court’s judgment. We therefore
     Control Group vote its explicit                              hold that the trial court did not err in
     ratification of the stock purchase,                          refusing to submit separate
     but each appellant contributed                               ratification questions, and the jury’s
     several times to the Control Group’s                         finding that the Control Group
     fund to pay the First State debt that                        ratified the purchase of the appellees’
     corresponded to the purchase. Given                          shares is supported by legally and
     this record, there is simply no merit                        factually sufficient evidence.
     to the appellants’ contentions that
                                                                  Damages for Breach of Contract
     the trial court erred when it refused
     to submit separate authority and                             Appellants also attack the legal and
     ratification questions for each                              factual sufficiency of [**87] the
     defendant. In entering the voting                            evidence supporting the appellees’
     trust agreement, the appellants                              contractual damages -- questions five
     agreed [**86] among themselves, in                           and six of the court’s charge. 11
     the interest of ″continuity and                              Urging [*524] an evidentiary
     stability of policy,″ to unite their                         sufficiency challenge as to various
     vote in Trustee Lieb and to be bound                         elements of Fields’ and Lightfoot’s
     by their own vote in matters                                 contractual damages, appellants
     entrusted to him. Moreover, each                             argue the entire answer should be
     appellant’s contribution to partial                          disregarded. The Davilas, for
     performance is additional evidence                           example, claim two elements of
     from which the jury could have                               Fields’ contractual damages lack any
     concluded they acknowledged Lieb’s                           support in the evidence: (b)
     authority and ratified the stock                             reasonable and necessary costs
     purchase agreement with Fields and                           incurred by Fields, and (e) the value
     Lightfoot. Finally, the trial court’s                        of any property, income or business
     Control Group questions are                                  interests lost as a natural, probable
     all-or-nothing propositions; the jury                        and foreseeable consequence of the
11
     The questions and the jury’s answers are as follows:

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Control Group’s failure to comply.                 Answer in dollars and cents for
Baker argues that ″there is no                     damages, if any, that --
evidence that as a natural, probable               Were sustained in the past:
and foreseeable consequence of
group’s [sic] purported failure to                 ANSWER: $ 253,000
comply with the agreement that                     In reasonable probability will be
Fields lost the value of any property,             sustained in the future:
income or business interests,″ an
                                                   ANSWER: $ 0
apparent reference to element (e) of
question number six. As for                        A similar question was posed with
Lightfoot, appellants claim there is               respect to Fields:
no evidence of damage to Lightfoot’s               What sum of money, if any, if paid
credit reputation and the ″reasonable              in cash, would fairly and reasonably
and necessary costs incurred.″                     compensate Fields for his damages,
What sum of money, if any, if paid                 if any, that resulted from the Control
in cash, would fairly and reasonably               Group’s failure to comply with their
compensate Lightfoot for his                       agreement to purchase 9,000 of his
damages, if any, that resulted from                shares?
the Control Group’s failure to                     Consider the following elements of
comply with their agreement to                     damages, if any, and none other:
purchase 25,000 of his shares?
                                                   a. The agreed purchase price;
Consider the following elements of
                                                   b. The reasonable and necessary
damages, if any, and none other:
                                                   costs incurred by Lightfoot;
a. The agreed purchase price;                      c. Reasonable and necessary
b. The reasonable and necessary                    expenses incurred in defense of the
costs incurred by Lightfoot;                       suit brought on Lightfoot’s loan at
                                                   First State Savings;
c. Reasonable and necessary
expenses incurred in defense of the                d. Damage to credit reputation that
suit brought on Lightfoot’s loan at                was a natural, probable and
First State Savings;                               foreseeable consequence of the
                                                   Control Group’s failure to comply.
d. Damage to credit reputation that
was a natural, probable and                        Do not include any amount for
foreseeable consequence of the                     interest on past damages, if any.
Control Group’s failure to comply.                 Answer in dollars and cents for
Do not include any amount for                      damages, if any, that --
interest on past damages, if any.                  Were sustained in the past:
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     ANSWER: $ 290,000                                                        damages award on appeal is
     In reasonable probability will be                                        to address each and every
     sustained in the future:                                                 element and show that not a
                                                                              single element is supported
     ANSWER: $ 0                                                              by sufficient evidence. If there
     These questions were preceded by                                         is just one element that is
     the following instruction:                                               supported by the evidence, the
     You are instructed that if you answer                                    damages award will be
     questions about damages, answer                                          affirmed if it is supported by
     each question separately. Do not                                         the evidence.
     increase or reduce the amount in one                                Id. Appellants have clearly failed to
     answer because of your answer to                                    meet this burden.
     any other question about damages.
     Do not speculate about what any                                     Appellants cannot defeat a damages
     party’s ultimate recovery may or                                    question that is submitted in
     may not be. Any recovery will be                                    broad-form by attacking only
     determined by the Court when it                                     individual elements. We note, for
     applies the law to your answers at                                  example, that the Davilas fail to
     the time of judgment.                                               challenge three elements of Fields’
                                                                         damages: (a) the agreed purchase
      [**88] Our review of the appellees’                                price; (c) reasonable and necessary
     contractual damages is complicated                                  costs incurred in defense [**89] of
     by the fact that the issues were                                    the suit brought on Fields’ loan at
     submitted to the jury in broad form,                                First State Savings; and, more
     i.e., called for a one-sum answer                                   importantly, (d) damage to credit
     after consideration of several                                      reputation that was a natural and
     different elements. ″When a damages                                 probable       and      foreseeable
     issue is submitted in broad-form, an                                consequence of the Control Group’s
     appellate court cannot ascertain what                               failure to comply. Baker fails to
     amount of the damages award is                                      challenge the evidence in support of
     attributable to each element.″                                      element (d) -- damage to Fields’
     Greater Houston Transp. Co., Inc. v.                                credit reputation. 12       [*525]
     Zrubeck, 850 S.W.2d 579, 589, n. 11                                 Appellants also overlook several
     (Tex. App.--Corpus Christi 1993,                                    elements of Lightfoot’s damages:
     writ denied).                                                       agreed purchase price, reasonable
          HN36 The only way that a                                       and necessary costs, reasonable and
          defendant can successfully                                     necessary legal expenses. By
          attack   a   multi-element                                     challenging some elements of Fields’
12
     The brief filed by Pitman adopts the arguments contained in Baker’s brief, and Haass does not raise the issue.

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and Lightfoot’s contractual damages                transactions. Although the corporate
but not others, appellants run the                 structure changed several times, at
risk of losing their sufficiency                   the core of these transactions were
challenge if there is at least one                 two companies called Rehabtex, Inc.
element of Fields’ and Lightfoot’s                 and Rehabtex Services, Inc., which
contractual damages that is                        were formed to develop a series of
supported by legally and factually                 outpatient physical rehabilitation
sufficient evidence. See Zrubeck, 850              centers in Texas. Rehabtex and
S.W.2d at 589.                                     Rehabtex Services [**91] sold a
                                                   series of limited partnerships
Fields’ Damages                                    concerning outpatient physical
In addition to testimony concerning                therapy rehabilitation to individuals
the unpaid [**90] balance on the                   in the medical field. Rehabtex was
agreement with Lieb to sell his                    supposed to be the general partner;
shares of stock in Crown Bank,                     the limited partners would be
Fields also testified that he has been             referring physicians. Rehabtex
sued by the RTC for the full amount                Services would provide the billing,
of the unpaid principal on his                     collection, budgeting, accounting,
promissory note to First State, or $               and administrative support. Rehabtex
93,993.00, with $ 42,551.59 in                     and Rehabtex Services were, in turn,
accrued interest as of April 3, 1992,              owned by several other corporate
together with interest accrued since               entities, among them Orion Medical
                                                   Group (OMG) and Rehabco, Inc., a
that date, for a total amount due
                                                   Pennsylvania corporation owned by
under the guarantee agreement of $
                                                   an investor named Rick Actman.
193,800.00. The RTC’s petition also
                                                   Like Dr. Bertino, Fields owned a
included a demand for $ 2,500.00 in
                                                   percentage of the Orion Medical
attorneys’ fees, and an additional $
                                                   Group, Rehabtex, and several other
5,000.00 for each appellate level to
                                                   closely related corporate entities.
which an appeal is taken.
                                                   Fields, however, said he was forced
Much of Fields’ damages testimony                  to sell his interest in all of these
concerned ″lost investment″ or ″lost               outside ventures by August of 1989,
income″ opportunities, and damage                  because he could not come up with
to his credit reputation. He testified             his share of a $ 15,000.00 tax debt --
that, beginning in 1985, he became                 $ 6,400.00 -- that Orion Medical
involved with several other investors              Group owed the IRS. Fields stated
including another member of the                    that he had tried to borrow $
Control Group, Dr. Bertino, in a                   2,500.00 from a San Antonio bank
series     of    highly     complex                to meet his share of the obligation,
medically-related           business               but was unable to do so. In any
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event, the minutes of the August 9,                  [**93]     over $ 400,000.00 in
1989 meeting of the board of                       revenues by April of 1988 as a result
directors of the Orion Medical Group               of physician referrals. Fields, a stock
(O.M.G.) -- Michael H. Bertino,                    broker by training, estimated these
  [**92] William R. Fields, and                    outside business interests would have
Charles V. Heath -- show that Dr.                  been worth approximately $
Bertino agreed to pay the tax                      590,800.00 by the time of the trial
obligation. In return, Fields sold his             had he not been forced to sell them.
OMG stock to Dr. Bertino, receiving                More specifically, he claimed his net
$ 17,000.00 for his equity in the                  interest in Rehabtex would have been
company. Fields resigned from OMG                  worth approximately $ 200,000.00
and all affiliated companies and                   by the time of trial, had he not been
corporations; he remained on the                   forced to sell it. To arrive at the
board of directors of Rehabtex, Inc.,              larger figure, however, Fields
but retained no voting rights. Fields              essentially claimed that if this sum
claimed he had no ownership interest               had been invested in a series of
in any of these ventures after the                 other ventures, for example, a
August, 1989 board meeting.                        company called Sunport Medical, it
Fields blamed his financial losses on              would have run the $ 200,000.00
a poor credit rating, claiming his                 into $ 590,000.00.
continuing indebtedness with First                 Dr. Carl Hubbard, the appellees’
State, which was listed on his credit              expert witness on damages,
report, hampered his ability to                    estimated that if Fields had still
borrow money. Fields introduced a                  owned these outside business
copy of his credit report, dated July              interests at the time of trial -- three
of 1989, which showed that he owed                 years after their sale -they would
First State Savings $ 94,000.00 with               have been worth $ 204,481.70.
a delinquency of $ 14,000.00.                      Hubbard testified at length regarding
Fields also testified regarding the                these highly complex business
future profitability of his outside                transactions. However, Hubbard’s
interests. He testified that Orion                 testimony concerned only Fields’
Medical Group was the general                      resulting or consequential damages;
partner in a limited partnership                   the damages that resulted from the
which had an interest in the San                   sale of Fields’ stock and the failure
Antonio Imaging Center -- including                of the appellants to pay the alleged
the right to 50 percent of the net                 purchase price. He [**94] said he
profits and 20 percent of the                      was not asked to make such
radiology fees. According to Fields,               calculations regarding the sale of
this center was [*526] generating                  Lightfoot’s stock.
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In Mead v. Johnson Group, Inc., 615                     [**95]      of the defendant’s
S.W.2d 685 (Tex. 1981), the Texas                      breach.
Supreme Court explained:                           Id. at 368 (emphasis added). Given
   The 1980 Supplement to                          the broad form submission of Fields’
   Corbin on Contracts states                      contractual damages and the
   ″there is no good reason why                    uncontested evidence regarding lost
   damage to credit rating should                  income and damage to his credit
   not be compensable in                           reputation, we hold that the evidence
   contract.″ 2 Corbin, Contracts                  is legally and factually sufficient to
   § 1007 (Kaufman Supp.                           support Fields’ damages award.
   1980). Recognition that loss
                                                   Lightfoot’s Damages
   of credit may be a foreseeable
                                                   Although there is no testimony
   result of breach of contract is
                                                   regarding damage to Lightfoot’s
   in line with the realities of
                                                   credit reputation, he claimed he had
   today’s economy. HN37 To
                                                   been sued by the RTC for over $
   recover for loss of credit, as
                                                   436,000.00, and that he had paid an
   with any element of contract
                                                   attorney $ 3,000.00 to defend him in
   damage, it must be proved
                                                   that lawsuit. In addition, there was
   that the injury was the natural,
                                                   testimony concerning the agreement
   probable, and foreseeable
                                                   with Lieb to sell his shares of stock
   consequence of the breach of
                                                   in Crown Bank. This is only $
   contract or there are no actual
                                                   3,000.00 less than the amount which
   damages. See Hadley v.
                                                   the jury awarded Lightfoot -- $
   Baxendale, supra, at 354;
                                                   253,000.00. Lightfoot’s testimony as
   Restatement (Second) of
                                                   to the $ 3,000.00 in attorneys’ fees
   Contracts § 365 (Tent. Draft
                                                   supports the remainder of the jury’s
   1979). This is not a departure
                                                   award. We therefore hold there is
   from the general rule of
                                                   both legally and factually sufficient
   contract damages, but only
                                                   evidence in this record to support
   recognition of an element of
                                                   the jury’s award of $ 253,000.00 in
   damages if proven. We hold
                                                   contractual damages for Lightfoot.
   that actual damages for loss
                                                   Appellants’ points are overruled.
   of credit or injury to credit
   reputation in an action for                     Individual Purchase
   breach of contract may be                       Appellants argue the trial court
   recovered when there is                         should have submitted a question to
   evidence that loss of credit                    the [**96] jury asking whether each
   was a natural, probable, and                    member of the Control Group
   foreseeable       consequence                   individually agreed to purchase the
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     appellees’ stock. The questions                                     become liable on a contract made in
     tendered by Baker and the Davilas                                   their name if they assent to or ratify
     would have asked the jury whether                                   it. Id.
     ″Dwight Lieb, as agent for each of                                  As we have already noted, the
     the following named control group                                   appellees’ case against the Control
     members and with each member’s                                      Group was based on a theory of
     authority to do so, agreed to purchase                              agency and ratification -- even if
     O. Waymond Lightfoot Jr.’s 25,000                                   Lieb did not have the authority to
     shares of Crown Bancshares stock?″                                  negotiate a stock repurchase
     The jury would have been asked to                                   agreement with Fields and Lightfoot,
     answer yes or no for each member                                    the Control Group ratified the
     of the Control Group, including                                     agreement. Since appellants waived
     Fields. The trial court refused these                               any complaint regarding the jury’s
     questions as well as identical                                      agency findings, and the agency and
     questions pertaining to Fields.                                     ratification findings are supported
       [*527]     Appellants base their                                  by legally and factually sufficient
     argument on the contention that the                                 evidence, whether the Control Group
     Control Group is an unincorporated                                  is a legal entity is immaterial. HN39
     association. They cite the general                                  Any collective [**98] group of
     rule that unincorporated associations                               individuals may act through a
     13
        are not liable on their contracts,                               common agent. See RESTATEMENT
     which are regarded as the liability of                              (SECOND) OF AGENCY § 20
     the individuals who sign them.                                      Comment f. (″A number of persons .
     Hutchins v. Grace Tabernacle United                                 . . may act jointly in the authorization
     Pentecostal Church, 804 S.W.2d 598,                                 of an agent. In such case, the agent
     599 (Tex. App.--Houston [1st Dist.]                                 may have power to subject them to
     1991, no writ); see also Cox v. Thee                                joint liability to third persons . . .″).
     Evergreen Church, 836 S.W.2d 167,                                   The fact that Fields and Lightfoot
     169 (Tex. 1992). In Hutchins, the                                   were both members of the Control
     only case cited by appellants on this                               Group       makes       the    resulting
     issue, the court noted that the                                     contractual arrangement somewhat
     members of an unincorporated                                        unusual, but it does not invalidate
      [**97] association were not bound                                  the agreement.
     by unauthorized acts or unratified                                       HN40 It may be supposed,
     representations of an individual                                         for   example,       that     an
     member. Id. However, the court also                                      arrangement       is   entirely
     noted that members of an association                                     inoperative if it purports to be
13
    HN38 ″An unincorporated association is a voluntary group of persons, without a character, formed by mutual consent for the purpose
of promoting a common enterprise or prosecuting a common objective.″ BLACK’S LAW DICTIONARY, 1531-32 (6th ed. 1990).

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   made by a partnership or other                   agent’s promise necessarily binds
   unincorporated association                       his principals to the promised
   with a member of such                            undertaking. See Ames v. Great
   association. There is no reason                  Southern Bank, 672 S.W.2d 447, 450
   why such an agreement should                     (Tex. 1984). Through their agent,
   not operate as a valid and                       Lieb, all of the appellants made the
   enforceable contract between                     same promise to the appellees. See
   the individual member and the                    RESTATEMENT (SECOND) OF
   other members of the                             CONTRACTS § 288 Comment c (″It
   association that purports to                     has been said that when two or more
   make the agreement. For the                      persons undertake a contractual
   purpose of giving a judicial                     obligation they are presumed to
   remedy and for other practical                   undertake it jointly and that ’words
   purposes, there is nothing to                    of severance’ are necessary to
   prevent a court from treating                    overcome the presumption.″). We
   the association of individuals                   therefore hold the trial court did not
   as if it were an independent                     err in refusing to ask the jury whether
   unit. . . . It may well be that an               appellants individually agreed to
   agreement made in this way                       purchase the appellees’ stock.
   should be subjected to severe                    Appellants’ points are overruled.
   scrutiny in the search for fraud                 Prorata [**100] Liability
   and illegality. Yet the [**99]
   mere fact that the agreement                     Appellants also claim the trial court
   purports to be made between                      should have asked the jury whether
   the unincorporated association                   the agreement, and, consequently,
   and one of its members does                      the Control Group’s purchase, was
   not in itself prove fraud or                     based on prorata liability. Baker and
   illegality.                                      the Davilas submitted proposed
                                                    questions, which were refused by
1 CORBIN ON CONTRACTS § 3.1
                                                    the trial court, asking whether the
(Rev. ed. 1993). In fact, since
                                                    agreement to buy Fields’ and
appellants jointly appointed Lieb,
                                                    Lightfoot’s shares was ″limited
his only real authority was to act for
                                                     [*528] to buying such control group
their     joint     account.      See
                                                    member’s pro rata portion of such
RESTATEMENT (SECOND) OF
                                                    stock.″
AGENCY § 41(1) (″Unless
otherwise indicated, authority given                Citing no authority or discussing
by two or more principals jointly                   any law to support their contentions,
includes only authority to act for                  appellants claim that Lieb’s letter
their joint account.″). HN41 An                     and its attachments ″unequivocally″
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show that the responsibility of the                 the jury found the Control Group
Control Group members was based                     agreed to purchase the appellees’
on their individual stock ownership                 stock. Appellants do not challenge
in Crown Bancshares. They also                      the legal or factual sufficiency of the
refer us to evidence, including                     evidence supporting these findings.
testimony from the appellees, which                 They raised the issue of limitations,
indicates the stock purchases were                  which we have already overruled.
based       on      the     appellants’             Since there is legally and factually
proportionate ownership in the bank.                sufficient evidence that the Control
Appellants argue that if this evidence              Group promised, though their agent,
did not establish their prorata                     Lieb, to buy the appellees’ stock, it
liability as a matter of law, it required           makes no difference whether their
the trial court to submit the issue to              duty was ″joint and several.″
the jury. Again, however, we                        Consequently, the trial court did not
disagree.                                           err in refusing to ask the jury [**102]
                                                    whether the agreement was based on
HN42 In the law of contracts, joint                 prorata liability. The appellants’
and several liability usually arises                points are overruled.
when two or more promisors in the
                                                    Joint and Several Liability
same contract promise [**101] the
same or different performances to                   Appellants also claim the trial court
the      same       promisee.       See             erred in awarding contractual
RESTATEMENT (SECOND) OF                             damages jointly and severally.
CONTRACTS §§ 288, 289 (1981);                       Building on their previous argument,
see       also      CORBIN          ON              appellants claim the trial judge erred
CONTRACTS § 928 (West Pub.                          in awarding appellees the full
Co. 1951) (″Each Joint Promisor is                  amount of the contractual damages
Bound For the Whole Performance                     found by the jury because, as a
Promised.″). Texas law is no                        matter of law, appellants were liable
different -- obligations of multiple                for only their prorata share. Once
parties to a contract are usually ″joint            again, however, appellants cite no
and several.″ See Marynick v.                       authority or discuss any law to
Bockelmann, 773 S.W.2d 665, 668                     support their contentions. We have
(Tex. App.--Dallas 1989), rev’d on                  already explained that the trial court
other grounds, 788 S.W.2d 569 (Tex.                 did not err in refusing to ask the jury
1990); Guynn v. Corpus Christi Bank                 whether the agreement was based on
& Trust, 620 S.W.2d 188, 190 (Tex.                  prorata liability, and we need not
Civ. App.--Corpus Christi 1981, writ                discuss the issue again. Appellants’
ref’d n.r.e.). In answering questions               points are overruled.
one and two of the court’s charge,                  Texas Securities Act
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As for the appellees’ claims under                 The question then becomes whether,
TEX. REV. CIV. STAT. ANN. art.                     for purposes of limitations, we
581-33 (Vernon Supp. 1996), the                    consider the sale [*529] of Fields’
Texas Securities Act, appellants raise             and Lightfoot’s stock to have
two arguments: (1) they argue the                  occurred on May 19, 1987, the date
claim itself is barred under the                   of Lieb’s letter to the Control Group,
limitations period contained in article            or the earlier dates referenced in
581-33(H)(2); and (2) they claim the               Lieb’s letter and accompanying
evidence is both legally and factually             writing -October [**104] 1, 1986
insufficient to support the jury’s                 for Lightfoot; April 20, 1987 for
answers [**103] to questions 15 and                Fields. Given that the appellees’
16 of the court’s charge, which                    original petition was filed on
concerned liability and damages for                November 25, 1991, if we calculate
securities fraud. Both of these                    the five-year limitations period from
arguments have merit.                              September or October of 1986,
                                                   Lightfoot’s securities fraud claims
Statute of Limitations                             are barred. Fields’ claim, however,
HN43 The limitations period for                    would not be barred if we used the
claims under the Texas Securities                  April, 1987 date referenced in Lieb’s
Act is found in article 581-33(H),                 letter to the Control Group.
which provides that suit cannot be                 Furthermore, if we consider the sale
brought: (1) ″more than three years                to have occurred on May 19, 1987,
after discovery of the untruth or                  the date of Lieb’s letter, neither
omission,″ or after discovery should               claim is barred by limitations. Not
have been made by the exercise of                  surprisingly, appellees therefore
reasonable diligence; or (2) ″more                 argue that under the law of merger,
than five years after the purchase;″               May 19, 1987 becomes the effective
or (3) more than one year after                    date of the sale, rather than the
rejecting a rescission offer. TEX.                 earlier oral agreements referenced in
REV. CIV. STAT. ANN. art.                          Lieb’s letter.
581-33(H)(2) (Vernon Supp. 1996).                  HN44 The ″merger doctrine″ is a
However, a claim under the Texas                   corollary to the parol evidence rule
Securities Act may ″in no event″ be                in contract cases. Merger refers to
made more than five years after the                the extinguishment of one contract
sale. Williams v. Khalaf, 802 S.W.2d               by its absorption into another
651, 655 n. 3 (Tex. 1990); see also                subsequent contract and is largely a
TEX. REV. CIV. STAT. ANN. art.                     matter of intention of the parties.
581-33(H) cmt. (Vernon Supp.                       Leon, Ltd. v. Albuquerque Commons
1996).                                             Partnership, 862 S.W.2d 693, 701
                               Jamie Graham Page 63 of 79
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     (Tex. App.--El Paso 1993, no writ);                                to the jury. Insofar as the parol
     Smith v. Smith, 794 S.W.2d 823, 827                                evidence rule and the doctrine of
     (Tex. App.--Dallas 1990, no writ).                                 merger are concerned, this means
     Merger occurs when the same parties                                 [**106]     we cannot disregard the
     to a prior agreement [**105]                                       earlier dates referenced in Lieb’s
     subsequently enter into a written                                  letter. Second, and more importantly,
     integrated agreement covering the                                  article 581-33(H) clearly provides
     same subject matter. Leon, Ltd., 862                               an optimum limitations period of
     S.W.2d at 700; Boy Scouts of                                       five years for securities fraud claims,
     America v. Responsive Terminal                                     and this limitations period is
     Systems, Inc., 790 S.W.2d 738, 744                                 measured from the date of the
     (Tex. App.--Dallas 1990, writ                                      ″purchase or sale,″ not the date of
     denied). The question of whether a                                 the agreement. See Williams v.
     merger has occurred, or whether an                                 Khalaf, 802 S.W.2d at 655 n. 3; see
     agreement is merely additional to                                  also TEX. REV. CIV. STAT. ANN.
                                                                        art. 581-33(H) cmt. (Vernon Supp.
     and not contradictory of a written
                                                                        1996). In this case, Lieb’s letter and
     contract, is determined from the
                                                                        the accompanying documents
     intent of the parties. See Smith, 794
                                                                        pinpoint the dates of the sale:
     S.W.2d at 827-28; Smith v. U.S.
                                                                        October 1, 1986 for Lightfoot, and
     Nat’l Bank of Galveston, 767 S.W.2d
                                                                        April 20, 1987 for Fields.
     820, 823 (Tex. App.--Texarkana                                     Furthermore, this is consistent with
     1989, writ denied). Absent pleading                                the appellees’ own testimony: Fields
     and proof of ambiguity, fraud, or                                  and Lightfoot repeatedly testified
     accident, a written instrument                                     they were entitled to payment for
     presumes that all prior agreements                                 their stock beginning in April of
     of the parties relating to the                                     1987 with respect to Fields, and in
     transaction have been merged into                                  September or October of 1986 as to
     the written instrument. Boy Scouts                                 Lightfoot. Since the appellees’
     of America, 790 S.W.2d at 745.                                     original petition was not filed until
     Appellants’ argument overlooks two                                 November of 1991, Lightfoot’s
     important points. First, we have                                   claims under the Texas Securities
     already held that the issue of                                     Act are barred by the five-year
     ambiguity was raised in the                                        limitations period. 14 We therefore
     appellants’ pleadings, and the trial                               sustain the appellants’ applicable
     judge did not err in concluding the                                points of error insofar as they pertain
     May 19, 1987 document was                                          to Lightfoot’s securities fraud claim;
     ambiguous or in submitting the issue                               we overrule them as to Fields’
14
    There is a discrepancy between Lieb’s letter and the accompanying documents regarding the date when Lightfoot’s stock was sold.
The letter states that the sale occurred in September of 1986, while the accompanying documents indicate that the stock sale occurred

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                              15
      [**107] claim.    We will address                                 subsequent pleading ″relates back″
     appellants’ remaining arguments                                    to, and is considered as having been
     only as they apply to Fields.                                      filed at the time of the initial
     One final question concerns the                                    pleading, at least for limitations
                                                                        purposes.      See    Stevenson      v.
     status of appellant, Rodolfo Davila,
                                                                        Koutzarov, 795 S.W.2d 313, 319
     as trustee of [*530] his deceased
                                                                        (Tex. App.--Houston [1st Dist.] 1990,
     father’s estate. The appellees’
                                                                        writ denied); Meisler v. Republic of
     original petition named only Frank
                                                                        Texas Savings Ass’n, 758 S.W.2d
     Davila II and Rodolfo Davila,                                      878, 881-882 (Tex. App.--Houston
     individually, as appellants. The                                   [1st Dist.] 1988, no writ). This rule
     ″Rodolfo L. Davila Estate Trust″                                   applies to claims under the Texas
     was not joined as a defendant until                                Securities Act. See Nicholas v.
     December 14, 1992, when the                                        Crocker, 687 S.W.2d 365, 368 (Tex.
     appellees [**108] filed their second                                 [**109] App.--Tyler 1984, writ
     amended petition. The Davilas                                      ref’d n.r.e.) (Appellees’ first
     therefore argue that the trustee and                               amended petition under Texas
     the trust cannot be liable to either                               Securities Act was not subject to
     appellee under the five-year                                       plea of limitations, where original
     limitations period contained in the                                petition, based on fraud, was not
     securities statute, because they were                              subject to plea of limitations and
     joined as appellants more than five                                amended petition was not based on
     years after Lieb’s letter to the                                   new, distinct or different transaction
     Control Group. Again, however, we                                  or occurrence). A review of the
     disagree.                                                          appellees’ original petition and their
     HN45 Although an amended                                           subsequent amended petitions,
     pleading normally supersedes and                                   leaves no doubt that the same
     supplants the original, an original                                evidence supports all of their causes
     pleading tolls the limitations period                              of action, the measure of damages is
     for claims asserted in subsequent,                                 the same, and that the allegations are
     amended pleadings as long as the                                   subject to the same defenses. We
     amended pleading does not allege a                                 therefore conclude that Fields’
     wholly ″new, distinct, or different                                securities fraud claims against the
     transaction or occurrence.″ See TEX.                               ″Rodolfo L. Davila Estate Trust″ are
     CIV. PRAC. & REM. CODE ANN. §                                      not barred by limitations.
     16.068 (Vernon 1986). The                                          Liability          and        Damages             for
on October 1, 1986. In either event, however, Lightfoot’s claims are barred by the five-year limitations period contained in article
581-33(H).
15
    These points include Baker’s twenty-eighth, twenty ninth, and thirtieth points of error; the Davilas’ eighth point; Pitman’s
twenty-third point; and Haass’ third point.

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Securities Fraud                                        or for damages if the buyer no
                                                        longer owns the security.
Appellants raise three arguments
regarding appellees’ securities fraud                   However, a person is not liable
claims: (1) the appellees cannot                        if he sustains the burden of
recover damages under the Texas                         proof that either (a) the seller
Securities Act, but may only obtain                     knew of the untruth or
rescission since they still own the                     omission, or (b) he (the offeror
securities; (2) there is neither legally                or buyer) did not know, and in
nor factually sufficient evidence that                  the exercise of reasonable care
any member of the Control Group                         could not have known, of the
made untrue statements or omissions                     untruth or omission.
regarding the securities purchased;
                                                    (Emphasis added).
and (3) the trial court should have
submitted [**110] each individual’s                 HN47 The statute provides remedies
liability separately. The second issue              of both rescission and damages. Part
is what concerns us here.                           D of article [**111] 581-33 provides
                                                    that on rescission, a plaintiff who
Fields and Lightfoot sought damages
                                                    was a defrauded seller is to recover
for misrepresentations pursuant to
                                                    the security (or a security of the
the Texas Securities Act. TEX. REV.
CIV. STAT. ANN. art. 581-1, et seq.                 same class and series) upon tender
(Vernon 1964 & Supp. 1996). Article                 of the consideration the seller
581-33(B) of the Act provides:                      received for the security plus interest
                                                    thereon at the legal rate from the
   HN46 A person who offers to                      date the seller received the
   buy or buys a security                           consideration, less the amount of
   (whether or not the security or
                                                    any income the buyer received on
   transaction is exempt under
                                                    the security. Id. at 581-33(D)(2). A
   Section 5 or 6 of this Act) by
                                                    plaintiff who was a defrauded seller
   means of an untrue statement
                                                    may recover the value of the security
   of a material fact or an
                                                    at the time of the sale [*531] plus
   omission to state a material
                                                    the amount of any income the buyer
   fact necessary in order to
   make the statements made, in                     received on the security, less the
   the light of the circumstances                   consideration paid the seller for the
   under which they were made,                      security, plus interest on these sums
   not misleading, is liable to the                 at the legal rate from the date of
   person selling the security to
   him, who may sue either at
   law or in equity for rescission
                                Jamie Graham Page 66 of 79
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     payment of the seller. Id. at                                           value. This would include the
     581-33(D)(4). 16 [**112]                                                 [**113] transaction in the present
     The act does not define ″offers to                                      case.
     buy or buys.″ HN48 However, the                                         HN49 Like article 33(B), article
     commentary to article 33(B) states                                      33(A)(2) renders a seller liable only
     that the provision is to be construed                                   if he sells or offers to sell a security
     similarly to article 33(A), which                                       by means of an untrue statement or
     provides remedies for defrauded                                         omission. One court of appeals has
     buyers of securities. See TEX. REV.                                     held that the wording of subsection
     CIV. STAT. ANN. art. 581-33(B) cmt.                                     (A)(2) requires the defrauded buyer
     (Vernon Supp. 1996) (″The phrase                                        to prove that the untrue statements
     ’offers to buy or buys’ is to be                                        related to the security and induced
     construed like the corresponding                                        the purchase. In other words, the
     phrase for sales in §§ 33(A)(1) and                                     plaintiff must show the untrue
     33(A)(2).″). Turning to the statutory                                   statements were made before the
     definitions, we note that they define                                   sale occurred. See Nicholas, 687
     ″sale,″ ″offer for sale″ or ″sell″ to                                   S.W.2d at 368. In Nicholas, the court
     ″include every disposition, or                                          held that a buyer of an interest in oil
     attempt to dispose of a security for                                    and gas wells failed to establish a
     value.″ Id. at 581-4(E). Moreover,                                      violation of article 581-33(A)(2)
     one who ″offers or sells″ a security                                    because he did not show the seller’s
     is not limited to those who pass title.                                 representations were made before
     See Pinter v. Dahl, 486 U.S. 622,                                       the sale. HN50 The court construed
     108 S. Ct. 2063, 100 L. Ed. 2d 658                                      the article 581-33(A)(2),
     (1988). The act further defines ″sell″                                        to mean that in order for the
     as any act by which a sale is made,                                           plaintiff/buyer to prevail, he
     including a solicitation to sell, an                                          must introduce evidence that
     offer to sell, or an attempt to sell,                                         the untrue statements relate to
     either directly or by an agent or                                             the security purchased and
     salesman. TEX. REV. CIV. STAT.                                                induced the purchase thereof.
     ANN. art. 581-4(E) (Vernon Supp.                                              Thus untrue statements made
     1996). By analogy, the terms ″offer                                           about a security by a seller to
     to buy″ or ″buy″ should therefore                                             the buyer thereof at a time
     include every acquisition of, or                                              when the buyer has already
     attempt to acquire, a security for                                            purchased the security are not
16
     Two other provisions are worth noting. Part F imposes joint and several liability on anyone who ″directly or indirectly controls a
seller, buyer, or issuer of a security″ and on anyone who ″directly or indirectly with intent to deceive or defraud or with reckless disregard
for the truth or the law materially aids a seller, buyer, or issuer of a security.″ Id. at 531-33(F)(1)(2). Part M provides that ″the rights
and remedies provided by this Act are in addition to any other rights (including exemplary or punitive damages) or remedies that may
exist at law or in equity.″ Id. at 581-33(M).

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   the ″means″ by which the                        paragraph ten of the appellees’
   security was sold. It follows,                  amended petition: [**115]
   then, that if a buyer was not                         [*532]  The Control Group
   induced [**114] to purchase a                       agreed      (and     if     not,
   security by an untrue                               fraudulently offered and
   statement made after the                            misrepresented to FIELDS
   purchase, he could not have                         and      LIGHTFOOT)           to
   been misled thereby, and no                         purchase       Fields’      and
   further statements respecting                       Lightfoot’s shares of CROWN
   such security are required to                       stock for Ten Dollars ($ 10.00)
   explain the original statement                      per share. FIELDS and
   so made under the provisions                        LIGHTFOOT relied on that
   of the above statute.                               agreement and representation.
                                                       Each member of the Control
Id. at 368. See also Calpetco 1981 v.                  Group, CROWN, and each
Marshall Exploration, Inc., 989 F.2d                   Trustee, directly or indirectly,
1408, 1418 (5th Cir. 1993) (Citing                     with intent to deceive or
Nicholas v. Crocker, and noting that                   disregard or reckless disregard
″Article 581-33A(2) has been                           for the truth, aided in the
construed to mean that the alleged                     misrepresentations regarding
misrepresentation must relate to the                   the     purchase.       Further,
security and ’induce the purchase                      CROWN and each Trustee
thereof.’″). Given the statutory                       who directly or indirectly
directive that article 33(B) and 33(A)                 controlled the Control Group,
″are intended to be construed                          were aware of the agreements
similarly,″ see TEX. REV. CIV. STAT.                   to purchase, and failed to
ANN. art. 33(B) cmt. (Vernon Supp.                     ensure that the purchase price
1996), these rules apply equally well                  be paid. Because the purchase
to our analysis of Fields’ and                         was not consummated as
Lightfoot’s claims. We therefore                       represented, the acts and
conclude, like the Nicholas court,                     failures to act by CROWN,
that under article 33(B) of the Texas                  the Control Group, and the
Securities Act, the alleged untruth or                 Trustees      directly      and
material omission must have related                    proximately caused damages
to the security and ″induced the                       to FIELDS and LIGHTFOOT.
purchase thereof.″
                                                   Appellees claim there is more than
In the present case, the only                      enough evidence to support the
allegations regarding statutory                    jury’s findings. They argue, for
securities fraud are found in                      example, there is evidence from
                               Jamie Graham Page 68 of 79
                                 937 S.W.2d 496, *532; 1996 Tex. App. LEXIS 3531, **115



     which the jury could have concluded,                              not evidence of an untrue statement
     or at least inferred, that the Control                            or material omission relating to the
     Group failed to disclose their intent                             stock itself at the time of purchase.
     not to pay Fields and Lightfoot                                   Simply offering to purchase [**117]
     unless they could secure an overall                               stock and then failing to pay for it
     restructuring [**116] of the entire $                             does amount to an untruth or material
     5.2 million loan for their own                                    omission, nor can omissions which
     benefit. Unfortunately, however, they                             occur only after the sale be the
     provide no citations to the record in                             ″means″ by which a purchaser
     support of these assertions.                                      ″offers to buy or buys″ the security.
     In this case, there is simply no                                  To hold otherwise would transform
     evidence there were any untrue                                    every breach of contract involving
     statements or omissions regarding                                 a sale of securities into a statutory
     the stock itself. We recognize that a                             violation, a result certainly not
     person who offers to buy or buys a                                intended by the Texas Legislature
     security by means of any untrue                                   when it drafted article 33(B). We
     statement of a material fact may be                               therefore hold, as a matter of law,
     liable to the person selling the                                  that Fields has not established a
     security who does not know of the                                 violation of article 33(B) of the
     untruth. Similarly, liability may be                              Texas Securities Act. Accordingly,
     imposed on a buyer who fails to                                   we sustain the appellants’ relevant
     state a material fact that is necessary                           points of error insofar as they attack
     to prevent other statements from                                  the legal sufficiency of the jury’s
     being misleading in light of the                                  answers to questions fifteen and
     circumstances under which they                                    sixteen of the court’s charge --
     were made. See WILLIAM V.                                         liability and damages for statutory
     DORSANEO              III,      TEXAS                             securities fraud. 17 We reverse that
     LITIGATION             GUIDE          §                           portion of the court’s judgment and
     171.03[1][d] (1995). In the present                               render judgment that Fields take
     case, however, the evidence does                                  nothing. [**118]
     not show a violation of the Texas
                                                                       Rescission
     Securities Act, but simply a breach
     of contract. The evidence alluded to                              Since we have already determined
     by the appellees concerns how they                                that Lightfoot’s securities fraud
     were to be paid for the stock and the                             claims are barred by limitations, and
     fact they were continually told after                             that Fields’ cause of action fails as a
     the sale that it would go through --                              matter of law, we need not address
17
   These include Baker’s twenty-third through twenty-sixth points; the Davilas’ seventeenth point; Pitman’s seventeenth point; and
Haass’ fifteenth point.

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     the rescission argument raised by                                   thirteen, sixteen and then awarding
     the appellants.                                                     the total sum to the appellees.
     Damages                                                             The trial court rendered judgment
     Appellants raise several arguments                                  against appellants on April 12, 1993.
     regarding the damages awarded by                                    Unless otherwise indicated, the
     the trial court. Prominent among                                    following awards were against all of
     these complaints is their contention                                the appellants, jointly and severally,
     that the trial court erred in                                       except Rodolfo Davila individually:
     cumulating the jury’s actual damages
     findings in questions five, six, ten,                           [*533]
                                                                       LIGHTFOOT                        FIELDS

       Breach of Contract                                               $ 253,000.00                   $290,000.00
                                                 18
                  Prejudgment interest (10%)                            $ 131,698.63                   $150,958.90

 [**119]
          Attorneys’ fees                                                              $ 153,879.45          $176,383.56

                                                 19
          Trustees’ Breach of Fiduciary Duties                                         -0-                   $200,000.00
          Prejudgment interest (10%)                                                   -0-                   $104,109.58
          Attorneys’ fees                                                              -0-                   $121,643.00
                                                   20
           Directors’ Breach of Fiduciary Duties                               $ 3,000.00                   $ 42,551.59
           Prejudgment interest (10%)                                                   -0-                 $ 22,150.15
           Attorneys’ fees                                                     $1,200.00                    $ 22,880.70
               Exemplary Damages for Directors
               Breach of Fiduciary Duties

               Fred L. Baker                                                                  -0-        $ 1,750.00
               Michael H. Bertino                                                             -0-        $ 1,500.00
               Frank Davila II                                                                -0-         $    5.00
               Lawrence F. Haass                                                              -0-        $ 250.00
               Kim I. Manning                                                                 -0-        $ 250.00
               J. Pat O’Connell                                                               -0-        $ 1,000.00
               J. Brain O’Connor                                                              -0-        $ 500.00
               B.F. Pitman III                                                                -0-        $ 1,750.00

               Texas Securities Act                                               $253,000.00          $ 332,551.59
               Prejudgment interest (10%)                                         $131,698.63          $ 173,109.04
               Attorneys’ fees                                                     153,879.45          $ 202,264.25

 [**120] Appellants raised the issue of motions for new trial and for judgment
double recovery of damages in their notwithstanding the verdict. Both then and

18
     The awards of prejudgment simple interest were calculated from January 20, 1988 until the date of judgment.
19
     This award is against defendants Fred L. Baker and Frank Davila II, jointly and severally.
20
   This award is against defendants, Fred L. Baker, Michael H. Bertino, Frank Davila II, Lawrence F. Haass, Kim I. Manning, J. Pat
O’Connell, J. Brian O’Connor, and B.F. Pitman III, jointly and severally.

                                                   Jamie Graham Page 70 of 79
                                 937 S.W.2d 496, *533; 1996 Tex. App. LEXIS 3531, **120



now, they base their arguments on two                              prevailing party fails to make that election,
closely related principles of law: (1) that                        the trial court should use the findings
an injured party is entitled to only one                           affording the [*534] greater recovery and
satisfaction for his loss, Stewart Title Guar.                     render judgment accordingly. Birchfield v.
Co. v. Sterling, 822 S.W.2d 1 (Tex. 1991);                         Texarkana Memorial Hosp., 747 S.W.2d
and (2) when an injury consists only of                            361, 367 (Tex. 1987); see also Southern
economic loss to the subject of a contract,                        County Mutual Ins. Co. v. First Bank &
the action sounds in contract alone. Jim                           Trust of Groves, 750 S.W.2d 170, 173-74
Walter Homes, Inc. v. Reed, 711 S.W.2d                             (Tex. 1988) (noting that bank’s pleadings
617, 618 (Tex. 1986). It is the first rule                         set forth alternative grounds of recovery,
which we address here.                                             and that appeals court reversibly erred in
                                                                   rendering a judgment based on both
Cumulation             of      Damages;             Double
                                                                   grounds of recovery pled). If the trial court
Recovery
                                                                   fails to do so, the appellate court will
HN51 The single recovery, or one                                   reform the trial court’s judgment to effect
satisfaction rule, is a rule of general                            such an election. Star Houston, 886 S.W.2d
acceptance that an injured party is entitled                       at 422; Koutzarov, 795 S.W.2d at 322;
to one satisfaction for sustained injuries.                        American Baler Co., 748 S.W.2d at [**122]
Stewart Title, 822 S.W.2d at 7. A party who                        246, 250.
seeks redress under two or more theories
                                                                   In support of their argument that they
of recovery for a single wrong must elect,
before the judgment is rendered, under                             should recover for all theories under which
which remedy he wishes the court to enter                          the jury awarded damages, appellees cite
a judgment. Star Houston, Inc. v. Shevack,                         Birchfield v. Texarkana Memorial Hospital,
886 S.W.2d 414, 422 (Tex. App.--Houston                            747 S.W.2d 361 (Tex. 1987). In Birchfield,
[1st Dist.] 1994), writ denied per curiam,                         the plaintiffs sued a hospital alleging gross
907 S.W.2d 452 (1995); [**121] American                            negligence and DTPA 21 violations.
Baler Co. v. SRS Systems, Inc., 748 S.W.2d                         Although the jury was asked only a single
243, 246 (Tex. App.--Houston [1st Dist.]                           question on actual damages, it awarded
1988, writ denied); Thate v. Texas & Pacific                       both exemplary damages under the gross
Ry. Co., 595 S.W.2d 591, 595 (Tex. Civ.                            negligence claim and treble damages under
App.--Dallas 1980, writ dism’d). An                                the DTPA claim. Id. at 367. The court held
election is not necessary until after the                          that ″in the absence of separate and distinct
verdict. International Piping Systems, Ltd.                        findings of actual damages on both the acts
v. M.M. White & Assoc., Inc., 831 S.W.2d                           of negligence and the deceptive acts or
444, 452 (Tex. App.--Houston [14th Dist.]                          practices, an award of exemplary damages
1992, writ denied). But where the                                  and statutory damages would be necessarily
21
    Damages under the DTPA are cumulative, and simultaneous recovery with another legal theory is generally allowed. Murphy v.
Seabarge, Ltd., 868 S.W.2d 929, 937 (Tex. App.--Houston [14th Dist.] 1994, writ denied). But, to obtain such a cumulative recovery,
separate findings of actual damages for each act complained of are required. Birchfield, 747 S.W.2d at 361, 367.

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predicated upon the same finding of actual        The damages for the trustees’ and directors’
damages and would amount to a double              breach of fiduciary duties are strikingly
recovery of punitive damages.″ Id. Fields         similar to the contractual damages. The
and Lightfoot argue that because they             trustees’ breach of fiduciary damages were
obtained separate jury findings of actual         zero for Lightfoot and $ 200,000.00 for
damages on each cause of action, they             Fields. Coincidentally, however, this $
were entitled to recover on each cause of         200,000.00 figure is exactly what Fields
action. Birchfield, however, simply does          testified to as the damages for loss of his
not support this conclusion. The case             outside business interests. The damages
addresses only the issue of when statutory        for the directors’ breach of fiduciary duties
and exemplary damages are both available          were $ 3,000.00 for Lightfoot and $
in DTPA cases. [**123] It does not hold           42,551.59 for Fields. As we have already
that jury findings on multiple theories of        noted, however, Lightfoot testified that he
recovery automatically support duplicate          paid $ 3,000.00 in attorneys’ fees to defend
awards of actual damages. As we have              the lawsuit brought by the RTC. Similarly,
already noted, although a party may assert        Fields testified that the interest calculated
any and all causes of action it may have          by the RTC in the original purchase of his
against another, it is limited to only one        stock was $ 42,551.59.
recovery of damages. See Jones v. Rainey,
168 S.W.2d 507, 509-10 (Tex. Civ.                   [**125]    The jury’s answers to the
App.--Texarkana 1942, writ ref’d n.r.e.).         securities fraud questions are even more
                                                  intriguing. Lightfoot’s damages, $
A review of the jury’s findings leaves no         253,000.00, correspond precisely to the
doubt that the damages awarded by the             contractual damages that he received in the
trial court were cumulative. Beginning with       jury’s answer to question number five. If
the contractual damages awarded to Fields         one adds Fields’ contractual damages, $
in question six, $ 290,000.00, we note            290,000.00, and his damages for the
again that the only evidence which could          directors’ breach of fiduciary duties, $
support [**124] this finding is the unpaid        42,551.49, the total is $ 332,551.59. This is
balance on his First State note, $ 90,000.00,     precisely what the jury awarded him in its
plus $ 200,000.00 for the loss of outside         answer [*535] to question number six for
business interests, as calculated by his          statutory securities fraud.
expert witness, Dr. Hubbard. As for
Lightfoot, the only support in the record         A review of the appellees’ pleadings only
for the $ 253,000.00 which the jury               reinforces our conclusion that their
awarded him in question number five is            damages are based on the same acts or
the unpaid balance on his First State note,       omissions. The appellees’ second amended
$ 250,000.00, plus $ 3,000.00 which he            petition prefaces Fields’ and Lightfoot’s
paid as attorneys’ fees to defend the lawsuit     actual damages with the statement they are
brought by the RTC.                               based on ″the acts of breach of contract,
                                  Jamie Graham Page 72 of 79
                                   937 S.W.2d 496, *535; 1996 Tex. App. LEXIS 3531, **125



misrepresentation,                          entitled to recover only the damages for
                                    negligent
misrepresentation, fraud, breach of         breach of contract. Thus, we reverse that
fiduciary     duty,     negligence,         portion of the trial court’s judgment which
                                        gross
negligence, and securities fraud.″ What     awarded Fields and Lightfoot actual and
follows, however, is a discussion that looksexemplary damages for breach of fiduciary
suspiciously contractual in nature --       duty, and render judgment that [**127]
purchase price of the stock; principal and  Fields and Lightfoot take nothing for this
                                            claim. Our application of the double
interest due; and, in the case of Fields, loss
of business interests because of the        recovery rule also eliminates the exemplary
appellants’ failure to discharge his note atdamages which the jury awarded Fields in
First State. [**126] Except for the punitiveits answer to the second part of question
damages, which the jury awarded only in     fourteen. HN52 Punitive damages are not
small amounts, there are no damages         recoverable for a breach of contract absent
peculiar to tort claims of any kind. Indeed,an independent tort with accompanying
                                            actual damages. Texas Nat’l Bank v.
each element mentioned is of a type one
                                            Karnes, 717 S.W.2d 901, 903 (Tex. 1986)
would normally expect to see in a lawsuit
                                            (per curiam). Because of our holding, we
for breach of contract. The essence of all
                                            do not address the appellants’ points
these claims is the failure of the appellants
                                            regarding either breach of trustees’ or
to pay for Fields’ and Lightfoot’s stock
                                            directors’ fiduciary duties -- questions
under the contract.
                                            seven through fourteen of the court’s
                                                     23
Our review of the pleadings and the record charge. These points are denied as moot.
leaves no doubt that the appellees’ claims
                                             [**128] Attorneys’ Fees
for breach of contract, breach of trustees’
and directors’ fiduciary duties, and Appellants also argue that the trial court
statutory securities fraud are all based on erred in awarding judgment to the appellees
the same acts or omissions. We therefore for attorneys fees because, as a matter of
sustain the appellants’ points of error law, attorneys’ fees are not recoverable for
regarding cumulation of actual damages. any of the appellees’ causes of action
22
   Because we have already concluded that except breach of contract. We have already
the appellees’ securities fraud claims fail concluded that the appellees’ claims for
as a matter of law, and as between the breach of fiduciary duty and securities
remaining claims, the damages awarded by fraud cannot stand close scrutiny. This
the jury for the breach of contract are leaves only the attorneys’ fees for breach
clearly greater, we hold that appellees are of contract, which the appellants argue
22
     This includes Baker’s thirty-second and thirty-third points; the Davilas’ ninth point of error, Pitman’s twenty-sixth point; and Haass’
sixth point.
23
    This includes points ten through twenty-two, twenty-eight through thirty, in Baker’s brief; points five through seven, fourteen
through sixteen, in the brief filed by the Davilas; points ten and eleven, thirteen through sixteen, and twenty-four, in the brief filed by
Pitman; and point fourteen in Haass’ brief.

                                                   Jamie Graham Page 73 of 79
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should have been awarded on a prorata             Appellant, Lawrence Haass, claims the
basis rather than imposed jointly and             trial court erred in awarding prejudgment
severally. Appellants, however, failed to         interest to appellees ″on any of the theories
object to questions eighteen and nineteen         of recovery advanced.″ Our resolution of
of the court’s charge, which asked the jury       the appellees’ breach of fiduciary duty and
to assess a ″reasonable fee for the necessary     securities fraud claims leaves prejudgment
services″ of the appellees’ attorneys, stated     interest for breach of contract as the only
as a percentage of recovery.″ The jury’s          remaining issue.
answer, forty percent, therefore stands           In his appellate brief, Haass’ point is
unless there is some indication in the            grouped with three other points of error
record that appellants preserved the issue        which attack attorneys’ fees, exemplary
by objection.                                       [**130] damages, and the trial court’s
                                                  decision to cumulate damages -- issues we
Our review of the record finds they made          have already discussed. There is no
no such objection. The only objection to          argument or authority regarding attorneys’
questions eighteen and nineteen was as            fees, save for the cryptic statement that
follows: ″On the attorney’s fees, there is        ″appellees were awarded pre-judgment
no evidence that the fee charged for the          interest and attorneys’ fees on each
necessary services was reasonable. [**129]        respective theory,″ an apparent reference
Counsel did not give any testimony on             to cumulation of damages. Haass’ brief
whether that was a [*536] reasonable fee          purports to adopt pages 21 - 28 of the brief
or not . . .″ There was no mention of             filed by the Davilas, and pages 47 and 48
prorating attorneys’ fees, nor did appellants     of Baker’s brief. However, the Davilas do
submit a question or instruction in that          not discuss prejudgment interest for breach
regard. HN53 It is well-settled that to           of contract, except to remind us the breach
preserve error in the charge, a party must        of contract claim is barred by limitations
make objections to the court’s charge or          -- an issue we have already resolved.
submit requests for additional questions,         Baker says only that prejudgment interest,
instructions, or definitions. The test is         like attorneys’ fees, should have been
whether the party made the trial court            prorated. Once again, however, he fails to
″aware of the complaint, timely and               tell us how or why it should have been
plainly,″ and obtained a ruling. State Dept.      prorated, and his brief offers no argument
of Highways & Public Transp. v. Payne,            or authority on the subject. If in fact, the
838 S.W.2d 235, 241 (Tex. 1992). Because          trial court erred in awarding prejudgment
appellants failed to do this, we overrule         interest for breach of contract, appellees’
their points of error. We now address their       only remaining claim, appellants have not
remaining arguments.                              even told us how the trial court erred,
                                                  much less whether the error ″was
Prejudgment Interest                              reasonably calculated to cause and probably
                                  Jamie Graham Page 74 of 79
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did cause rendition of an improper The list also contained handwritten
judgment in the case.″ [**131] TEX. R. comments in the margins which indicated
APP. P. 81(b)(1). Their points, therefore, whether the exhibits had been admitted or
are overruled.                                denied, and a series of initials which seem
                                              to indicate during whose testimony they
Default Judgment Against Crown were admitted, e.g., ″LF,″ ″RF,″ or ″FB.″
Bancshares
Appellants also argue that the trial court The trial judge granted the jury’s request.
erred in awarding a default judgment The appellees prepared a revised exhibit
against Crown Bancshares, the holding list which contained only the exhibits which
company. After the close of the evidence, had been admitted at trial, along with a
the appellees’ counsel moved for a brief description of each item. The
judgment by default or, in the alternative, appellees submitted their list to the bailiff
an instructed verdict against Crown the following morning. The appellants had
Bancshares. Crown Bancshares had filed apparently             [*537]      been given an
an answer in the case but made no opportunity to submit their own exhibit
appearance in the trial. The court reserved list, but were late in doing so.
ruling until after the verdict, at which time
it granted the default. We note, however, The bailiff provided the appellees’ exhibit
that Crown Bancshares, Inc. has not list to the jury upon receipt. The appellants
perfected an appeal from the trial court’s telephoned the court clerk and advised the
judgment, only individual members of the court they would be late in submitting their
Control Group have done so. Therefore, exhibit list. At that time, they were
their points are overruled.                   informed that the appellees’ list had already
                                              been given to the jury. The trial judge, who
Jury Deliberations; Motion for Mistrial was not in chambers, was contacted and
Appellants also argue that the trial court instructed the bailiff [**133] to withdraw
erred in overruling their motions for the appellees’ exhibit list.
mistrial based on improper jury
communication. Shortly after the jury The appellants moved for mistrial. The
received the court’s exhibits, the charge, bailiff testified that he thought he had
and retired to deliberate, it asked the trial complied with the court’s instruction and
court whether there was an exhibit list that that the appellees’ exhibit list was in the
could be used as a reference to locate jury room for approximately fifteen
certain exhibits. The only [**132] exhibit minutes before it was removed. The
list in existence was appellees’ exhibit appellants argued that the appellees’
number 128, a list which contained all of descriptions of the exhibits contained
the appellees’ exhibits that were offered at editorial comments about the exhibits and
trial, along with a description of each item. their evidentiary significance which harmed
                                  Jamie Graham Page 75 of 79
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the appellants’ case. 24 They noted that the                            cause and probably did cause rendition of
appellees’ list omitted exhibit sixteen, the                            an improper judgment in the case.″ [**135]
letter where Frank Davila II had given                                  See TEX. R. APP. P. 81(b)(1). In this case,
notice of the June, 1986 Control Group                                  however, neither showing has been made.
meeting, a document which was admitted                                  The points are overruled.
into evidence. The trial court denied the
motion for mistrial.                                                    Cumulative Error
                                                                        In one of their final points, appellants
 [**134] Appellants argue that the exhibit
                                                                        argue that the combined or cumulative
list harmed their case because it ″contained
                                                                        effect of the trial court’s alleged errors
editorial comments concerning appellees’
                                                                        deprived them of a fair trial and due
opinions as to the effect of the exhibits,″
                                                                        process of law. HN55 While some errors
and because the appellants were never
                                                                        are not considered reversible, all errors
given an opportunity to inspect the list
                                                                        considered together could present
before it was given the jury. Appellees
                                                                        cumulative error requiring reversal.
maintain the trial court did not abuse its
                                                                        Fibreboard Corp. v. Pool, 813 S.W.2d at
discretion in denying the appellants’ motion
                                                                        695; Klein v. Sporting Goods, Inc., 772
for mistrial because there is no evidence of
                                                                        S.W.2d 173, 179 (Tex. App.--Houston [14th
an improper jury communication, or that
the brief presence of the exhibit list in the                           Dist.] 1989, no writ). ″To determine if a
                                                                        cumulation of errors denied the appellants
jury room was ″reasonably calculated to
                                                                        their right to a fair trial and due process of
cause and probably did cause rendition of
                                                                        law, all errors in the case will be considered
an improper″ verdict. We agree.
                                                                        along with the record as a whole to
HN54 Generally, the granting or denying                                 determine if the errors collectively were
of a motion for mistrial is reviewed under                              calculated to cause and probably did cause
an abuse of discretion standard. See Ussery                             the rendition of an improper judgment.″
v. Gray, 804 S.W.2d 232, 237 (Tex.                                      Fibreboard, 813 S.W.2d at 696; TEX. R.
App.--Fort Worth 1991, no writ)                                         APP. P. 81(b)(1). Before we may reverse a
(disqualification of attorney); Mendoza v.                              judgment and order a new trial based on
Ranger Ins. Co., 753 S.W.2d 779, 781 (Tex.                              cumulative error, however, we must
App.--Fort Worth 1988, writ denied) (jury                               determine whether the error committed by
selection). In addition to showing an abuse                             the trial court was reasonably calculated to
of discretion, appellants must also show                                cause and probably did cause [**136] the
that the trial court’s error, if indeed there                           rendition of an improper judgment.
was error, ″was reasonably calculated to                                Fibreboard, 813 S.W.2d at 695-96; TEX.
24
     For example, they took issue with the title: ″Fields and Lightfoot v. Crown Bank Control Group.″ They also complained of the
appellees’ descriptions of exhibits 17 (″O’Connor correspondence to Crown Board of Directors re: Lightfoot shares will soon be ready
for sale″), 27 (″Lieb informs Control Group of purchase of Lightfoot and Fields shares″), 45 (″First State Savings (Dennis Jones) letter
to Boldrick offers to restructure loans upon: 1) transfer of the stock or a letter instructing First State Savings to transfer stock to Lieb;
and 2) payment of all past due interest″), and 84 (″Bertino takes over Fields’ stock in Orion Medical Group″).

                                                   Jamie Graham Page 76 of 79
                        937 S.W.2d 496, *537; 1996 Tex. App. LEXIS 3531, **136



R. APP. P. 81(b)(1). Appellants must               The purpose of § 115.015 is to assure trust
therefore show that, based on the record as        beneficiaries that ″their interest will be
a whole, but for the alleged errors, the jury      protected, [and] that a potential conflict of
would have rendered a verdict favorable to         interest will not threaten the adequacy of
them. [*538] See Fibreboard, 813 S.W.2d            their interests’ representation.″ Nacol v.
at 695. This they cannot do.                       McNutt, 797 S.W.2d 153, 154 (Tex.
                                                   App.--Houston [14th Dist.] 1990, writ
Although appellants attack specific rulings        denied). ″The trustee is required to provide
of the trial court, e.g., the motion in limine,    a list of beneficiaries within eleven days of
they do not assert that, but for the               the request for such list. A plaintiff satisfies
cumulative effect of these errors, the jury        the notice requirements of this section
would probably have rendered a verdict in          when he notifies those persons on the list
their favor. Nor do we believe appellants          provided by the trustee within the time
have met their burden in this regard. We           prescribed by the statute.″ Corum
have considered all their allegations of           Management Co., Inc. v. Aguayo
error and we specifically find that the            Enterprises, Inc., 755 S.W.2d 895, 900-901
errors committed by the trial court do not         (Tex. App.--San Antonio 1988, writ denied).
constitute cumulative error. As another
court noted, albeit under different                The appellees’ original petition and first
circumstances: ″there are few errorless            amended [**138] petition named only
trials, especially those of the length of this     ″Rudy″ Davila and Frank Davila II,
proceeding.″ Id. at 696. We have carefully         individually, as appellants, but the second
reviewed the record and each of appellants’        amended original petition, filed on
104 points of error, and we do not find            December 14, 1992, added the Rodolfo L.
cumulative error that would have probably          Davila Estate Trust as a defendant. This
caused the jury to render a verdict in favor       amended petition announced that,
of the appellants. Because we do not find
                                                       notice is hereby given that the
any cumulative error [**137] that probably
                                                       Trustee, Rodolfo Davila, provide
caused the jury to render an improper
                                                       Appellees a list of all beneficiaries
verdict, appellants’ points are overruled.
                                                       and their addresses within (10) days
Notice Under the Texas Trust Code                      of the receipt of this AMENDED
                                                       PETITION. However, to the extent
The Davilas also argue that the trial court            that the Trustee’s production of a list
erred in rendering judgment against the                of beneficiaries is not forthcoming
Rodolfo L. Davila Estate Trust because                 or is not timely provided to
there is neither factually nor legally                 Appellees; Appellees request that
sufficient evidence that appellees gave                the Court enter an order setting a
notice to the beneficiaries of the trust               deadline, which is more than (30)
under § 115.015 of the Texas Trust Code.               days prior to the date of judgment,
                                   Jamie Graham Page 77 of 79
                       937 S.W.2d 496, *538; 1996 Tex. App. LEXIS 3531, **138



   by which notice must be given to the           Cross Claims and Counterclaims for
   beneficiaries.                                 Contribution and Indemnity
There is no indication in the record whether      The Davilas also argue that [**140] the
the trial court ever entered such an order.       trial court erred because it failed to grant
The Davilas’ answer informed the trial            judgment for them based on their
court that ″the appellees have failed to give     cross-claims and counterclaims for
proper notice to the beneficiaries of the         indemnity and contribution. Again, we
Rodolfo L. Davila Estate Trust as is              disagree.
required under the Texas Trust Code.″ In
an amended motion for new trial and/or to    The Davilas, like the other appellants, filed
″modify, correct and reform the judgment″    cross-claims against their fellow appellants
the Davilas again claimed ″there was no      and counterclaims against the appellees.
evidence that the [**139] appellees and/or   The basis for the Davilas’ cross-claim was
intervenor [trustee of Fields’ bankruptcy    that if any defendant was adjudged liable
estate] gave notice to the beneficiaries of  to the appellees on the contract claim
the Rodolfo L. Davila Estate Trust that is   and/or the tort claims, they would be
required by the Texas Trust Code.″           entitled to contribution from those
                                             co-defendants who were also held
Apart from these tantalizing bits of
                                             responsible.
information, however, we have no further
indication from the parties whether notice The basis for the counterclaims filed by
to the trust beneficiaries was required, the Davilas and the other appellants
ordered, or even given. There is no mention apparently concerns the appellees’ status
of the evidence, arguments, or authorities as members of the Control Group. As
that were presented to the trial court Control Group members, the appellees
regarding the judgment that was rendered. were responsible, albeit at reduced
We also note that although appellees claim ownership, for the purchase of each other’s
they ″provided notice to the beneficiaries stock. Since they have not paid their
identified by the trustee by certified mail, respective shares of the purchase price for
which was received by all identified each other’s stock, they are, according to
beneficiaries,″ their brief provides no appellants, liable along with them.
citations to the record that would support
this assertion. Even so, the burden is on As a practical matter, however, the
appellants, not the appellees, to show error appellees did not sell the stock to
that ″was reasonably calculated to cause themselves and should not, therefore, be
and probably did cause rendition of an liable to themselves for any part of the
improper judgment in the case.″ See TEX. appellants’ liability. More to the point, no
R. APP. P. 81(b)(1). The Davilas have appellant introduced [**141] evidence or
failed to [*539] meet this burden. Their requested jury questions on contribution or
point, therefore, is overruled.              indemnity issues. No appellant argued at
                                  Jamie Graham Page 78 of 79
                      937 S.W.2d 496, *539; 1996 Tex. App. LEXIS 3531, **141



trial that the appellees’ damages should be      the double recovery rule, we deny these
reduced or in some way impacted by               points of error as moot.
indemnity or contribution. It was the
appellants’ burden to request jury issues in     Conclusion
substantially correct wording and to secure      In summary, we affirm only that portion of
a ruling on them by the trial court. TEX. R.
                                                 the trial court’s judgment which awards
CIV. P. 278, 279; General Resources
                                                 liability and damages for breach of
Organization, Inc. v. Deadman, 907 S.W.2d
                                                 contract. Lightfoot is therefore entitled to
22, 33 (Tex. App.--San Antonio 1995), writ
                                                 $ 253,000.00 damages for breach of
denied, No. 95-973- CV, 1996 WL 242513
                                                 contract, $ 131,698.63 for prejudgment
(1996). They failed to do either. As a
result, any counterclaims or cross-claims        interest, and $ 153,879.45 in attorneys’
for contribution and indemnity, whatever         fees, together with 10 percent postjudgment
their basis, were waived. The points are         interest. Fields will receive $ 290,000.00
overruled.                                       damages for breach of contract, $
                                                 150,958.90 for prejudgment interest, and $
Haass’ Motion for Directed Verdict &             176,383.56 for attorneys’ fees, plus ten
Judgment NOV                                     percent postjudgment interest. These sums
                                                 are recoverable against all of the appellants,
Haass also argues that the trial court erred
                                                 jointly and severally, except Rodolfo Davila
in denying his motion for directed verdict
                                                 individually. However, we reverse those
and for a judgment notwithstanding the
                                                 parts of the trial court’s judgment which
verdict. His appellate brief attacks the
                                                 award liability and damages for breach of
legal and factual basis for three of the
                                                 trustees’ and directors’ fiduciary duties,
appellees’ claims -- breach of fiduciary
                                                 and for violations of the Texas Securities
duty, breach of contract, and statutory
                                                 Act. We render judgment that Fields and
securities fraud. However, since we have
                                                 Lightfoot take nothing for these claims.
already examined the appellees’ claims for
breach of contract and securities fraud, Alma L. Lopez,
and since a discussion of the [**142]
breach of fiduciary duty claim is Justice
unnecessary in view of our application of




                                 Jamie Graham Page 79 of 79
|   | Positive
As of: February 19, 2015 10:58 AM EST

                     SBC Operations, Inc. v. Business Equation, Inc.
                  Court of Appeals of Texas, Fourth District, San Antonio
                 December 19, 2001, Delivered ; December 19, 2001, Filed
                                   No. 04-00-00698-CV

Reporter
75 S.W.3d 462; 2001 Tex. App. LEXIS 8358
SBC     OPERATIONS,       INC.   f/k/a        rates, awarding damages, one year,
Southwestern Bell Communications, Inc.        admissibility, econometric
and Southwestern Bell Telephone
Company, Appellants v. THE BUSINESS           Case Summary
EQUATION,       INC.,   A   California
Corporation, Appellee                         Procedural Posture

                                              Plaintiff advertising company sued
Subsequent History: [**1] Petition for
                                              defendants, telephone companies, for fraud
Review Granted June 13, 2002. Petition
                                              and breach of contract. Following a jury
for Review Denied November 21, 2002.          trial in the 131st Judicial District Court,
Petition for review denied by, 08/29/2002     Bexar County, Texas, judgment was entered
Motion for rehearing on petition for review   in favor of the advertising company. The
denied by, 11/21/2002                         telephone companies appealed.
Prior History: From the 131st Judicial Overview
District Court, Bexar County, Texas. Trial
Court No. 98-CI-13442. Honorable John The jury found that the telephone
D. Gabriel, Judge Presiding.                companies breached an oral agreement
                                            with the advertiser, and awarded damages.
Disposition: Reversed and rendered.         On appeal, the telephone companies argued
                                            that the statute of frauds barred such a
Core Terms                                  recovery, and the court of appeals agreed.
                                            The advertiser agreed to take over the
launch,     lost    profits,    customers, certain functions for the full launch of a
telemarketing, calculations, assumptions, discount program. In the November 1997
marketing, projections, mailing, terminal, business strategy presentation, the full
reliable, services, estimates, royalties, launch of the program would begin in
vendors, unreliable, trial court, damages, April of 1998 and continue through the
expenses, statute of frauds, business plan, end of 1999, a period in excess of one year.
no evidence, three year, enrollment, costs, Consequently, the contract fell with the
                                       Jamie Graham
                        75 S.W.3d 462, *462; 2001 Tex. App. LEXIS 8358, **1



statute of frauds and, absent a sufficient        its making must be in writing to be
writing was unenforceable. The telephone          enforceable. Id. If a contract explicitly
companies contended there was legally             calls for performance over a period longer
and factually insufficient evidence to            than one year, the mere theoretical
support the jury’s award of lost profits and      possibility of termination of the contract
terminal value. The court of appeals agreed       within one year because of death or another
and concluded that the no-evidence                fortuitous event does not take the contract
challenge was dispositive of all remaining        out of the statute of frauds.
issues on appeal. The expert evidence
offered was not sufficient to show lost             Civil Procedure > ... > Standards of
profits either because of flaws in the              Review > Substantial Evidence > General
experts’ assumptions, misuse of actual data         Overview
from a test program or lack of facts,
figures, and data from historical          HN3 In reviewing a no-evidence challenge,
profitability.                             the appellate court considers only the
                                           evidence in the light most favorable to the
Outcome                                    finding, and disregards all evidence and
The court of appeals reversed the decision inferences to the contrary. If there is a
of the trial court and rendered judgment scintilla of evidence to support the finding,
for the telephone companies.               the finding will be upheld.

LexisNexis® Headnotes                               Contracts Law > ... > Types of Damages >
                                                      Compensatory Damages > General
  Contracts Law > Procedural Matters >              Overview
  Statute of Frauds > General Overview
                                                  HN4 Loss of profits damages need only be
HN1 The statute of frauds provides that           proven with reasonable certainty, and the
certain promises and agreements are not           rule regarding such proof is intended to be
enforceable unless they are in writing. Tex.      flexible so as to accommodate the various
Bus. & Com. Code Ann. § 26.01(a) (Vernon          circumstances in which claims for lost
1987).                                            profits arise. What constitutes reasonably
                                                  certain evidence of lost profits is a fact
  Contracts Law > Procedural Matters >            intensive determination. At a minimum,
  Statute of Frauds > General Overview
                                                  opinions or estimates of lost profits must
  Contracts Law > ... > Statute of Frauds >       be based on objective facts, figures, or data
  Requirements > General Overview                 from which the amount of lost profits may
  Contracts Law > ... > Statute of Frauds >       be ascertained.
  Requirements > Performance
                                                    Contracts Law > ... > Measurement of
HN2 An agreement that is not to be                  Damages > Foreseeable Damages > General
performed within one year from the date of          Overview
                                  Jamie Graham Page 2 of 14
                        75 S.W.3d 462, *462; 2001 Tex. App. LEXIS 8358, **1



HN5 The ″reasonable certainty″ test to            Judges: Opinion by: Tom Rickhoff, Justice.
determine lost profits has clear parameters.      Dissenting opinion by: Phil Hardberger,
Profits that are largely speculative, as from     Chief Justice. Sitting: Phil Hardberger,
an activity dependent on uncertain or             Chief Justice, Tom Rickhoff, Justice, Sarah
changing market conditions, or on chancy          B. Duncan, Justice.
business opportunities, or on promotion of
untested products or entry into unknown or        Opinion by: Tom Rickhoff
unviable markets, or on the success of a
new and unproven enterprise, cannot be            Opinion
recovered. Factors like these and others
that make a business venture risky in              [*464] SBC Operations, Inc. (″SBC″) and
prospect preclude recovery of lost profits        Southwestern Bell Telephone Company
in retrospect.                                    (″SBTC″) appeal a judgment rendered on a
                                                  jury verdict. The jury found SBC liable to
  Contracts Law > ... > Measurement of            The Business Equation, Inc. (″BEI″) for
  Damages > Foreseeable Damages > General         fraud and breach of contract. SBC and
  Overview                                        SBTC present twelve issues challenging
HN6 Where estimates are based on                  the jury’s liability and damage findings.
objective facts or data and there are firm        We conclude the evidence is legally
reasons to expect a business to yield a           insufficient to support the award of lost
profit, recovery is not prohibited simply         profits and terminal value, and the oral
because the enterprise is new. It is the          contract between the parties is barred by
activity that is the enterprise, and if the       the statute of frauds. Therefore, we reverse
activity is well-established, the fact that a     the judgment and render a take-nothing
newly formed entity is engaging in the            judgment in favor of SBC and SBTC.
activity will not preclude recovery.          BACKGROUND
Counsel: FOR APPELLANT: Daniel W. In January 1997, John Allshouse presented
Lanfear, Hubert W. Green, The Kleberg the idea of a member services program to
Law Firm, P.C. San Antonio, TX. SBC. Allshouse and his partner Clark
Jacqueline N. Strch, Sharon E. Callaway, ″Dub″ Doyal ultimately formed A&D
Crofts & Callaway, P.C. San Antonio, TX. Alliance Resources, Inc. (″ADAR″). The
                                              member services program was [**2]
FOR APPELLEE: Renee Fortnach designed to offer discounts on various
McElhaney, Rosemarie Kanusky, W. goods and services from participating
Wendell Hall, Fulbright & Jaworski, L.L.P., vendors to SBC small and medium size
San Antonio, TX. Paul Bartlett, Jr., Law business customers. The program was later
Office of Paul N. Bartlett, Jr., San Antonio, given the name BizLink.
TX. Richard J. Karam, Law Offices of As ADAR worked to locate vendors to join
Richard J. Karam, San Antonio, TX.            the program, ADAR discovered that BEI
                                  Jamie Graham Page 3 of 14
                        75 S.W.3d 462, *464; 2001 Tex. App. LEXIS 8358, **2



was engaged in a similar program on a             ADAR - 20%; and BEI - 20%. The goal of
much smaller scale. Judy Wallace and              the BizLink program was customer
Joyce Axtell were the primary officers of         retention; however, the financial projections
BEI. BEI had contracts in place with              showed that BizLink would break-even in
vendors that ADAR thought would be                1999 based on an early 1997 beginning
good vendors to include in BizLink. On            date.
April 10, 1997, ADAR and BEI entered
                                              A formal Member Services Agreement
into a [*465] letter agreement ″to authorize
                                              (″MSA″) was entered into between SBC
[ADAR] to use agreed upon contracts with
                                              and ADAR on August 28, 1997. Although
vendors/partners to provide these services
                                              BEI had wanted to be a party to the MSA,
for a member services program for [a]
                                              it was not made a party to the final
client of [ADAR].″ On April 15, 1997, BEI
                                              agreement. An appendix of the MSA
entered into a non-disclosure agreement
                                              describes the services ADAR agreed to
with SBC. At that time, BEI first learned
                                              provide. ADAR is defined as the Seller in
that the program was to be offered to
                                              the MSA. The appendix states that BEI
SBC’s customers. The non-disclosure did
                                              was approved as a subcontractor. On
not commit either party to a specific
                                              September 15, 1997, ADAR and BEI
arrangement but was intended to facilitate
                                              entered into a separate contract, [**4]
the free-flow of information during the
                                              setting forth their agreement with respect
planning and negotiating phases.
                                              to the services each was to provide with
As the parties were working on business respect to the BizLink program. The MSA
plans for BizLink, SBC was undertaking to was incorporated by reference into the
acquire Pacific Bell (″PacBell″). In July agreement between ADAR and BEI.
1997, SBC discussed BizLink [**3] with In November 1997, a meeting was held to
PacBell’s marketing team to determine if alleviate the vendors’ concerns regarding
BizLink should be offered to PacBell the delay in beginning the program. A
business customers. On July 10, 1997, the revised business plan was discussed with a
parties met with several of the participating test launch followed by a full launch of
vendors to discuss BizLink.                   BizLink to all SBC/PacBell customers.
                                              The plans included a goal of a 10%
The planning documents envisioned that a
                                              enrollment rate; i.e., if the direct mailing
direct mailing advertising BizLink would
                                              was sent to 100,000, the goal was that
be sent to all the small and medium size
                                              1,000 customers would enroll. In 1998, the
business customers of SBC and PacBell.
                                              goals of BizLink were changed, and SBC
The customers would not be charged to
                                              management wanted the program to break-
join BizLink. The vendors would pay
                                              even in 1998.
royalties based on the amount of sales to
SBC and PacBell customers. The royalties The launch of BizLink involved a three-city
would be divided as follows: SBC - 60%; mailing in February 1998: 40,000 mailings
                                  Jamie Graham Page 4 of 14
                                  75 S.W.3d 462, *465; 2001 Tex. App. LEXIS 8358, **6



in Houston, Texas; 14,934 mailings in                            [**6] LIABILITY FOR BREACH OF
Wichita, Kansas; and 25,481 mailings in                         THE  ORAL                     CALL            CENTER
Austin, Texas. As the responses were being                      CONTRACT
measured, it appeared that the 10% goal
would not be met. As a result, additional                       In April of 1998, SBC and BEI were
marketing efforts were undertaken,                              modifying the BizLink business plans to
                                                                find ways to cut expenses and to break-even
including a reminder post-card to the same
                                                                quicker. At a meeting, BEI orally agreed to
80,415 customers, another 8,900 mailings
                                                                take over the inbound call center for $
to new business customers in a five-state
                                                                10,000, plus an additional $ 10,500 per
area, inbound telemarketing by SBC
                                                                month. BEI operated the call center from
(offering BizLink [**5] to customers
                                                                April 1998 through August 1999.
calling for different reasons), outbound
telemarketing by SBC (calling and offering                      The jury found that SBC breached its oral
BizLink to customers), an advertisement in                      agreement with BEI, and awarded $ 94,000
a magazine SBC provided to customers,                           in damages. On appeal, SBC and SBTC
and bill inserts. On March 20, 1998, the                        argue that the statute of frauds bars such a
company SBC paid to perform the direct                          recovery, and we agree.
mailing, RMG, stopped measuring the
                                                                HN1 The statute of frauds provides that
response level. Based on the responses
                                                                certain promises and agreements are not
they measured, only 2.12% of the
                                                                enforceable unless they are in writing.
customers receiving the direct mail enrolled
                                                                TEX. BUS. & COM. CODE ANN. §
in BizLink.
                                                                26.01(a) (Vernon 1987). HN2 An
                                                                agreement that is not to be performed
SBC sent ADAR a formal letter terminating
                                                                within one year from the date of its making
the MSA on May 6, 1998. BEI [*466]
                                                                must be in writing to be enforceable. Id. If
sued SBC for breach of contract and fraud.                      a contract explicitly calls for performance
A jury found SBC liable and awarded BEI                         over a period longer than one year, the
$ 3.6 million for breach of the MSA, $                          mere theoretical possibility of termination
94,000 for breach of an oral call center                        of the contract within one year because of
agreement, $ 4.6 million for fraud, $ 4.75                      death or another fortuitous event does not
million in exemplary damages, 1 and $                           take the contract out of the statute of
1.02 million in attorneys’ fees, with                           frauds. Young v. Ward, 917 S.W.2d 506, 511
additional attorneys’ fees contingent on                         [**7] (Tex. App.--Waco 1996, no writ).
appeal. BEI elected to recover the damages
for the fraud claim. SBC and SBTC timely In this case, BEI agreed to take over the
filed this appeal.                         call center functions for the full launch of
                                           BizLink. In the November 1997 business
1
    The jury awarded BEI $ 2.85 million in exemplary damages against SBC and $ 1.9 million in exemplary damages against SBTC.

                                              Jamie Graham Page 5 of 14
                          75 S.W.3d 462, *466; 2001 Tex. App. LEXIS 8358, **7



strategy presentation, the full launch would   1996, writ denied). What constitutes
begin in April of 1998 and continue through    reasonably certain evidence of lost profits
the end of 1999, a period in excess of one     is a fact intensive determination.
year. The possibility that SBC could           Szczepanik, 883 S.W.2d at 649; Samaras,
terminate BizLink within one year does         929 S.W.2d at 629. At a minimum, opinions
not take the contract out of the statute of    or estimates of lost profits must be based
frauds. Id.                                    on objective facts, figures, or data from
                                               which the amount of lost profits may be
SUFFICIENCY OF THE EVIDENCE - ascertained. Szczepanik, 883 S.W.2d at 649.
LOST PROFITS AND TERMINAL
VALUE                                          HN5 The ″reasonable certainty″ test has
SBC and SBTC contend there is legally clear parameters. Texas Instruments, Inc. v.
and factually insufficient evidence to Teletron Energy Mgmt., Inc., 877 S.W.2d
support the jury’s award of lost profits and 276, 279 (Tex. 1994). Profits that are
terminal value. We conclude that the largely speculative, as from an activity
no-evidence challenge is dispositive of all dependent on uncertain or changing market
remaining issues on appeal. HN3 In conditions, or on chancy business
reviewing the no-evidence challenge, we opportunities, or on promotion of untested
consider only the evidence in the light products or entry into unknown or unviable
most favorable to the finding on lost profits markets, or on the [**9] success of a new
and terminal value, and we disregard all and unproven enterprise, cannot be
evidence and inferences to the contrary. recovered. Id. Factors like these and others
See Vickery v. Vickery, 999 S.W.2d 342, that make a business venture risky in
375-76 (Tex. 1999). If there is a scintilla of prospect preclude recovery of lost profits
evidence to support the finding, the finding in retrospect. Id.
will be upheld. See id.                             HN6 Where estimates are based on
                                                    objective facts or data and there are firm
A. The Lost        Profits       ″Reasonable
                                                    reasons to expect a business to yield a
Certainty″ Test
                                                    profit, recovery is not prohibited simply
HN4 Loss of profits damages [**8] need              because the enterprise is new Samaras,
only be proven with reasonable certainty,           929 S.W.2d at 629. It is the activity that is
and the rule regarding such proof is                the enterprise, and if the activity is
intended to be flexible so as to                    well-established, the fact that a newly
accommodate the various circumstances in            formed entity is engaging in the activity
which claims for lost profits arise.                will not preclude recovery. Samaras, 929
Szczepanik v. First S. Trust Co., 883 S.W.2d        S.W.2d at 629.
648, 649 (Tex. 1994); America’s Favorite            BEI called three experts to the stand.
Chicken Co. v. Samaras, 929 S.W.2d 617,             James Perdiew testified regarding the
629 (Tex. App.-- [*467] San Antonio                 anticipated revenues and expenses for the
                                    Jamie Graham Page 6 of 14
                        75 S.W.3d 462, *467; 2001 Tex. App. LEXIS 8358, **9



BizLink program during the three-year             to ADAR or BEI for year one, because he
term of the MSA; Dr. Harvey Sundel was            understood SBC would bear that cost in
retained to project the revenues and costs        the first year. In years two and three, he
associated with the BizLink program over          attributed 100% of the marketing cost to
three years; and David Marshall testified         ADAR and BEI, because SBC would not
regarding the terminal value of the BizLink       sponsor [**11] the program after year one.
program.                                          He did not deduct general and
                                                  administrative expenses for the three-year
B. PERDIEW’S EXPERT OPINION                       projection. He did not apportion 60% of
Perdiew created an econometric model of           the royalties due SBC in the first year or
BizLink to determine the profits BizLink          divide the royalties between ADAR and
would have earned had SBC completed the           BEI in any of the three years for which he
full incremental [**10] launch. The model         gave estimates.
contains variables based upon SBC’s               Perdiew opined that the net value of the
representations, including a complete             BizLink program for the full three years
launch to two million SBC and PacBell              [*468] would be $ 14,153,470, based on
customers, outbound and inbound                   $ 3,862,945 in year one; $ 3,642,031 in
telemarketing, and a three-year term.             year two; and $ 6,648,494 in year three.
Among Perdiew’s variables were the
response and purchase rates, based on his   Although Perdiew has vast experience in
experience or vendor information.           direct marketing, we conclude that his
                                            testimony was not reliable because he did
Perdiew’s model has twenty ″drivers″ or not factor in actual data from the test
assumptions that underlie his calculations, launch; thus, his testimony provides no
including: (1) a 10% response rate; (2) an evidence of lost profits.
estimated cost of $ 800 per thousand direct
mail pieces that was only charged to the C. SUNDEL’S EXPERT OPINION
program in years two and three because
                                            Sundel was retained to project the revenues
SBC bore the cost in year one; (3) a 15%
                                            and costs associated with BizLink over
downward adjustment for the loss of SBC
                                            three years. Sundel explained his testimony
as the program sponsor after year one; (4)
                                            differed from Perdiew’s because Perdiew’s
a 20% upward adjustment in year two and
                                            assumptions included projections based on
three due to improvements made in the
                                            Perdiew’s experience while his projections
marketing effort through experience; and
                                            were based on the information obtained
(5) a separate response and activation rate
                                            through the test launch of BizLink. Sundel
for each vendor based on Perdiew’s
                                            was critical of the results reported from the
experience and SBC’s estimates.
                                            test launch because the results were only
Perdiew’s model also included cost measured for forty-eight days. He [**12]
variables. He attributed no marketing costs used the number of activators and the
                                  Jamie Graham Page 7 of 14
                       75 S.W.3d 462, *468; 2001 Tex. App. LEXIS 8358, **12



average royalty per purchase reported from       dollar amount of the royalties for the same
the test launch. Sundel applied these            period.
numbers to a full roll-out of the program to
                                                 Sundel testified that the information
all SBC and PacBell customers, with the
                                                 regarding operating expenses was provided
timing based on the launch strategy
                                                 by BEI and ADAR and certain items he
described in the business plan. He
                                                 provided based on his experience. Sundel
explained that he adjusted some of the           included general and administrative
figures for use in later mailings because of     expenses and an expense to inform
the number of non-deliverables and               customers that SBC would no longer be
subsequent mailing lists would not include       associated with BizLink after the full
those non-deliverables. Sundel did not           launch. He also included a cost for
adjust his results for any anticipated           purchasing new business lists.
growth, although he expected growth.
Sundel included telemarketing because            Based on the $ 6.61 royalty, Sundel
telemarketing was undertaken in the test         calculated that the present day value of the
launch and the modified business plan            total net profit over the three year period
included telemarketing. Based on Sundel’s        was $ 22,971,315. Based on the $ 3.50
experience in telemarketing, he estimated        royalty, Sundel calculated that the present
the enrollment rate that would be achieved       day value of the total net profit over the
by using telemarketing to new connects or        three year period was $ 9,546,445.
new customers. He explained that the cost        Despite the mathematical precision with
of the direct mailing was charged to SBC,        which Sundel calculated BEI’s lost profits,
while the cost of the telemarketing was          we conclude there is little, if any, factual
charged to BEI and ADAR. Sundel                  basis for the assumptions underlying many
included an attrition rate percentage in his     of [**14] his figures. Sundel’s estimates
calculations. Sundel testified that he based     were not based on the realities of how
the purchase rate percentage each month          well-or how poorly-the program performed
on SBC’s projected 65%, but he reduced           during the media test but rather on
the estimated percentage to a more               assumptions, based on his experience,
conservative [**13] 50% based on his             about the success of the program’s potential
experience.                                      expansion.
Sundel provided two calculations. One              [*469]  Sundel’s projection of future
calculation included a $ 3.50 royalty that       revenue and expenses was based on
was based on SBC’s forecast after the            assumptions that the program would
media test. The second calculation included      continue to attract new enrollees, who
a $ 6.61 royalty that was computed by            would make increased purchases under the
dividing the dollar amount of the actual         program. Unfortunately, these assumptions
purchases following the test launch by the       had no basis in fact. Certainly the
                                  Jamie Graham Page 8 of 14
                       75 S.W.3d 462, *469; 2001 Tex. App. LEXIS 8358, **14



approximately eight thousand enrollees           The jury found that SBC breached the
from a mailing of close to 160,000 did not       MSA and committed fraud against BEI,
justify these assumptions. Further, only         and awarded damages. On appeal, SBC
203 purchases resulted from all the              and SBTC challenge both the liability
mailings and additional contacts through         findings and the damage award.
the service centers. Although the purchase
rate was 2.50%, Sundel’s assumptions             The jury was instructed to consider only
included a 50% purchase rate, based on his       lost profits and terminal value in their
experience.                                      calculation of the amount of damages owed
                                                 for breach of the MSA and fraud. Having
Although the concept of an affinity              found no evidence to support BEI’s lost
program such as BizLink is not new and           profits or BizLinks’ terminal value, we
the possibility of BizLink’s success was         need not detail the lack of evidentiary
ably demonstrated by Sundel, the fact of         support for the amount of damages awarded
its success, based on the media test, was        by the jury, [**16] and we do not address
very much in doubt. Because Sundel’s             SBC and SBTC’s challenge to the liability
conclusions about BEI’s lost profits were        findings.
based on his assumptions, there is no
evidence of objective facts, figures, and CONCLUSION
 [**15] data from historical profitability;
thus, Sundel’s testimony provides no We reverse the judgment in favor of BEI
evidence of lost profits.                    and render a take-nothing judgment in
                                             favor of SBC and SBTC.
D. Terminal Value
                                             Tom Rickhoff, Justice
David Marshall testified regarding the
terminal value of the BizLink program. Dissent by: PHIL HARDBERGER
Marshall took Sundel’s lost profits
projection for the third year of the BizLink Dissent
program, less taxes, multiplied this number
by three, and arrived at his value of DISSENTING OPINION
BizLink’s future income. Because we have
determined that Sundel’s projections This case tests the abuse of discretion
constitute no evidence of lost profits, we standard for the trial court acting as the
conclude that Marshall’s testimony is not ″gatekeeper″ for expert testimony. The
sufficiently reliable for purposes of trial court took all the appropriate steps
admissibility. Thus, there is no evidence of that a ″gatekeeper″ is supposed to take
BizLink’s terminal value.                    and, in my opinion, decided the
                                             admissibility question with ample evidence
FRAUD AND BREACH OF MSA to make the court’s decision a reasonable
CLAIMS                                       one. I do not think there was an abuse of
                                  Jamie Graham Page 9 of 14
                        75 S.W.3d 462, *469; 2001 Tex. App. LEXIS 8358, **16



discretion, but my learned colleagues             requirements. Id. The trial court has broad
disagree, so I must respectfully dissent. I       discretion to determine admissibility, and
dissent to all of the majority opinion with       we will reverse only if there is an abuse of
the sole exception of the majority’s              that discretion. Id.
conclusion that the oral call center contract
was barred by the statute of frauds. I agree      In E.I. du Pont de Nemours and Co., Inc. v.
it was.                                           Robinson, six nonexclusive factors were
                                                  identified to determine whether an expert’s
The majority concludes that the evidence          testimony is [**18] reliable. 923 S.W.2d
is legally insufficient to support the jury’s     549, 557 (Tex. 1995). However, the Texas
damage award. The basis of the majority’s         Supreme Court has recognized that the
conclusion is the majority’s determination        Robinson factors will not apply to all
that the testimony of James Perdiew and           experts’ testimony. See Gammill v. Jack
Dr. Harvey Sundel was unreliable. [*470]          Williams Chevrolet, Inc., 972 S.W.2d 713,
Perdiew and Dr. Sundel testified regarding        726-27 (Tex. 1998). In those instances,
the projected [**17] net profit of the            there still must be some basis for the
BizLink program had it been fully launched        opinion offered to show its reliability, and,
as represented by SBC. Because a third            ultimately, the trial court must determine
expert, David Marshall, used the net profit       how to assess reliability. Helena, 47 S.W.3d
projections provided by Dr. Sundel in             at 499.
calculating the terminal value of the             B. James Perdiew
BizLink program, the majority also rejects
                                                  James Perdiew was called as an expert to
Marshall’s testimony as unreliable. I
                                                  testify regarding the anticipated revenues
respectfully dissent because the trial court
                                                  and expenses for the BizLink program
did not abuse its discretion in determining
                                                  during the three-year term of the MSA.
that the testimony of Perdiew and Dr.
                                                  Perdiew testified that he has been involved
Sundel was sufficiently reliable and,
                                                  in direct marketing for thirty years. For six
therefore, was admissible.
                                                  years, Perdiew had worked in market
A. Standard of Review                             planning and analysis, advertising and sales
                                                  promotion at a large department store chain.
A two-part test governs whether expert            Perdiew then worked eleven years as a
testimony is admissible: (1) the expert           national account executive for a company
must be qualified; and (2) the testimony          that provided consultative direct marketing
must be relevant and be based on a reliable       services for a variety of direct marketing
foundation. Helena Chemical Co. v.                firms around the United States. In 1982,
Wilkins, 47 S.W.3d 486, 499 (Tex. 2001).          Perdiew started his own firm that provides
The trial court makes the initial                 consultative direct marketing services to
determination about whether the expert            various clients. [**19] Perdiew had
and the proffered testimony meet these            worked on programs offering a package of
                                  Jamie Graham Page 10 of 14
                        75 S.W.3d 462, *470; 2001 Tex. App. LEXIS 8358, **19



benefits or services to small businesses          was due to the early cut-off of results.
similar to the BizLink program. As part of        Perdiew explained that the results were
his services, Perdiew worked to develop           only counted for forty-eight days; therefore,
projections by building econometric               the actual reported response rate was not a
models, which are ″mathematical                   proper measure.
depictions of a business″ that ″try to take
                                                  (3) Perdiew used higher response rates for
into account all of the key things that affect
                                                  certain vendors based on his experience,
a business so that from a mathematical and
                                                  and Perdiew’s estimation of enrollment
financial point of view, [we] can evaluate
                                                  rate and growth rate were unreliable.
the affect [sic] of changes and so we can
project what happens over time.″ Perdiew          The higher response rates were based both
stated that he uses a 90 percent level of         on Perdiew’s experience and SBC’s
confidence in his calculations. Perdiew           estimates. Just as ″observations of enough
testified that his methodology is called          bees in various circumstances to show a
″standard procedures″ in the direct               pattern would be enough to support [a
marketing business.                               beekeeper’s] opinion,″ Gammill, 972
                                                  S.W.2d 713, the measuring of response
SBC and SBTC assert numerous specific
                                                  rates to various vendors in numerous direct
reasons to support their contention that
                                                  marketing programs provides a basis for
Perdiew’s opinion was unreliable. The
                                                  Perdiew to use his experience in providing
following summarizes the assertions and
                                                  a response rate taking into consideration
the reason I believe the record does not
                                                  SBC’s estimates. Furthermore, Perdiew’s
support the assertions.
                                                  estimation of enrollment rate and growth
(1) Perdiew is a marketing expert and,            rate were based on his vast experience in
therefore, is not qualified to testify as a       direct marketing programs.
damages expert.                             (4) Perdiew should not have included
The evidence showed that Perdiew has          [**21]     telemarketing efforts in his
thirty years of direct marketing experience calculation.
and routinely develops econometric models         Perdiew stated that telemarketing was used
in the course of his business. Accordingly,       in reality, telemarketing was included in
Perdiew was qualified [**20] to give his          the business plan, and ″part of [Perdiew’s]
testimony.                                        role [was] to project how the BizLink
 [*471] (2) Perdiew used response rates           business would have performed if allowed
that were based on predictions as opposed         to go forward using the best practices in
to actual results.                                direct marketing. That would have included
                                                  telemarketing.″ This is a sufficient
Perdiew explained that the reason he did          explanation of Perdiew’s reason for
not use the response rate reported by RMG         including telemarketing.
                                  Jamie Graham Page 11 of 14
                       75 S.W.3d 462, *471; 2001 Tex. App. LEXIS 8358, **21



(5) Perdiew failed to allocate the lost          taught marketing and been involved in
profits between SBC, BEI, and ADAR,              marketing research for over 30 years. Dr.
failed to include general and administrative     Sundel has his own consulting firm which
costs, and failed to consider the financial      does market research. Dr. Sundel has
condition of BEI and ADAR.                       performed services for numerous industries
                                                 including telecommunications. Dr. Sundel’s
Perdiew explained that the allocation of         telecommunications clients include [*472]
the lost profits was not within the scope of
                                                 AT&T, U.S. West, Nextel Communications,
his assignment. Perdiew was assigned to
                                                 and Southwestern Bell. Dr. Sundel’s firm
evaluate the BizLink program. Perdiew did
                                                 performs approximately 200 projects a
not evaluate ADAR, BEI or SBC. If BEI or
                                                 year. Approximately 20% of the projects
ADAR had a negative net worth, Perdiew
                                                 Sundel performs require projections.
explained that ″it would have no bearing
on the vitality of the BizLink program’s         SBC and SBTC assert numerous [**23]
royalties.″ Finally, Perdiew explained that      specific criticisms of Dr. Sundel’s
″G&A is allocated to specific programs,″         testimony. The following summarizes the
and ″the allocations are arbitrary and           assertions and the reason I believe the
judgmental within each individual                record does not support the assertions.
corporation. The direct costs involved with      (1) Dr. Sundel has no qualifications in
operating a program or a part of a [**22]        either cost accounting or in performing a
business are necessary to evaluate the           damage calculation.
feasibility of the business.″
                                                 The evidence showed that Dr. Sundel has
Considering Perdiew’s testimony as a             marketing degrees and wide experience in
whole, the trial court did not abuse its         conducting marketing research, including
discretion in admitting Perdiew’s testimony      making projections regarding a project’s
because it was sufficiently reliable.            revenues and expenses.
Perdiew’s econometric model requires
                                                 (2) Dr. Sundel’s calculations included rates
certain assumptions to be made. Perdiew
                                                 that ″bore no resemblance to actual
explained those assumptions and the basis
                                                 experience.″
for them. In those instances in which the
assumptions differed from actual results, Dr. Sundel explained the basis for each
Perdiew explained why the data from the   figure included in the calculation. The
test launch was unreliable.               figures were based on either actual results
                                          adjusted for information learned in the test
C. Dr. Harvey H. Sundel                   launch that would be applied in the full
Dr. Harvey Sundel has a bachelor’s and roll-out or Dr. Sundel’s experience applied
master’s degree in marketing. He also has to SBC’s planned projections.
a Ph.D in business administration with an (3) Dr. Sundel included telemarketing after
emphasis in marketing. Dr. Sundel has SBC was out of the program.
                                 Jamie Graham Page 12 of 14
                       75 S.W.3d 462, *472; 2001 Tex. App. LEXIS 8358, **23



Dr. Sundel stated that telemarketing was         data from the test launch,″ and the
used during the test launch and BEI              majority’s primary criticism of Dr. Sundel
informed him BEI intended to continue            is that his conclusions ″were based on his
telemarketing efforts.                           assumptions″ which had ″no basis in fact.″
                                                 However, Perdiew explained his ″standard
(4) Dr. Sundel did not include an                procedures″ methodology [**25] which is
adjustment for the advent of the internet.
                                                 used in the direct marketing business, and
Nothing in the record would support the          he further explained the concept of the
need for including such an adjustment.           econometric model he used. In addition,
                                                 Dr. Sundel explained that he used the data
[**24] (5) Dr. Sundel accepted the expense       from the media test that was reliable. Both
amounts provided by BEI.                         Perdiew and Dr. Sundel only made
SBC and SBTC provide no record citations         assumptions when the media test data was
to evidence indicating that those numbers        unreliable because SBC cut off the
are unreliable.                                  collection of data before the data could
                                                 reliably measure the response to the
(6) Dr. Sundel’s model did not divide the        BizLink program. In view of the prior
royalties between SBC, BEI, and ADAR.            focus group study demonstrating that
                                                 customers needed time in order to be
Dr. Sundel was reviewing the revenues and
                                                 convinced that the BizLink program did
costs for the BizLink Program, not
                                                 not come with a ″catch,″ SBC was aware
determining what each of the participating
                                                 that the data would not reliably measure
companies would receive as a result.
                                                 the response to the BizLink program if the
Considering Dr. Sundel’s testimony as a          results were prematurely cut [*473] off.
whole, the trial court did not abuse its         Therefore, Perdiew and Dr. Sundel properly
discretion in admitting Dr. Sundel’s             refused to base their calculations on SBC’s
testimony because it was sufficiently            reported data because opinions drawn from
reliable. Although Dr. Sundel’s calculations     unreliable foundational data are likewise
required certain assumptions to be made,         unreliable. See Helena, 47 S.W.3d at 499.
Dr. Sundel explained those assumptions           Both Perdiew and Dr. Sundel demonstrated
and the basis for them. In those instances       that their opinions comported with
in which the assumptions differed from           applicable professional standards and had
actual results, Dr. Sundel explained why         a reliable basis in the knowledge and
the data from the test launch was unreliable     experience of their marketing discipline.
or adjusted.                                     See id.
                                             Because the trial court did not abuse its
D. Conclusion
                                             discretion [**26] in admitting the testimony
The majority’s primary criticism of of Perdiew and Dr. Sundel, their testimony
Perdiew is that he ″did not factor in actual was more than a scintilla of evidence to
                                 Jamie Graham Page 13 of 14
                   75 S.W.3d 462, *473; 2001 Tex. App. LEXIS 8358, **26



support the jury’s damage award. I would PHIL HARDBERGER,
affirm the jury’s verdict with the exception
of the damages awarded for the breach of CHIEF JUSTICE
the oral call center contract.




                             Jamie Graham Page 14 of 14
|   | Positive
As of: February 20, 2015 2:17 PM EST

                 Berryman’s South Fork, Inc. v. J. Baxter Brinkmann Int’l Corp.
                         Court of Appeals of Texas, Fifth District, Dallas
                               November 20, 2013, Opinion Filed
                                      No. 05-12-00492-CV

Reporter
418 S.W.3d 172; 2013 Tex. App. LEXIS 14226; 2013 WL 6097965
BERRYMAN’S SOUTH FORK, INC.                       Case Summary
AND       RICHARD       BERRYMAN,
Appellants v. J. BAXTER BRINKMANN                 Overview
INTERNATIONAL         CORPORATION,
THE BRINKMANN CORPORATION                         HOLDINGS: [1]-Appellees did not meet
AND J. BAXTER BRINKMANN,                          their summary judgment burden as to their
Appellees                                         breach of contract claim, for purposes of
                                                  Tex. R. Civ. P. 166a(c); [2]-The court has
Subsequent History: Petition for review
                                                  found no authority for the position that a
denied by Berryman’s S. Fork v. J. Baxter
                                                  modification not capable of being
Brinkmann Int’l Corp., 2014 Tex. LEXIS
                                                  performed within one year falls outside the
333 (Tex., Apr. 25, 2014)
                                                  statute of frauds if it constitutes an
Prior History: [**1] On Appeal from the           immaterial change to the original contract,
192nd Judicial District Court, Dallas             for purposes of Tex. Bus. & Com. Code
County, Texas. Trial Court Cause No.              Ann. § 26.01(b)(6); [3]-The court thus
08-05771.                                         could not agree that the materiality of a
                                                  modification had any bearing on the
Core Terms                                        application of the statute of frauds in this
                                                  case; [4]-Appellants’ argument as to part
appellees, trial court, appellants’, damages,     performance contained no other analysis
attorneys’, statute of frauds, summary            and they did not meet their burden to raise
judgment, expenses, termination, pet,             a fact issue as to partial performance, and
reimburse,       declaration,     declaratory     thus the requirements of the statute of
judgment, costs, Oil, plaintiffs’, parties,       frauds applied to the alleged agreement to
one year, appellant contention, appellants        reimburse expenses.
assert, record shows, summary judgment
motion, breach of contract, modification, Outcome
breach of contract claim, defendants’,
segregated, renewal, trial court’s judgment, Judgment reversed in part, rendered in
granting summary judgment                     part, and otherwise affirmed.
                                           Jamie Graham
                       418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1



LexisNexis® Headnotes                               Civil Procedure > ... > Summary
                                                    Judgment > Burdens of Proof > Movant
  Civil Procedure > Appeals > Summary               Persuasion & Proof
  Judgment Review > Appealability                   Civil Procedure > ... > Summary
  Civil Procedure > Appeals > Summary               Judgment > Burdens of Proof > Nonmovant
  Judgment Review > Standards of Review             Persuasion & Proof
                                                    Civil Procedure > ... > Summary
HN1 The appellate court reviews a                   Judgment > Evidentiary Considerations >
summary judgment de novo to determine                Scintilla Rule
whether a party’s right to prevail is               Civil Procedure > ... > Summary
established as a matter of law. The appellate       Judgment > Entitlement as Matter of Law >
court reviews the evidence presented by              Genuine Disputes
the motion and response in the light most
favorable to the party against whom the           HN2 A party seeking a no-evidence motion
                                                  for summary judgment must assert that no
summary judgment was rendered, crediting
                                                  evidence exists as to one or more of the
evidence favorable to that party if
                                                  essential elements of the nonmovant’s
reasonable jurors could, and disregarding         claim on which the nonmovant would have
contrary evidence unless reasonable jurors        the burden of proof. Tex. R. Civ. P. 166a(i).
could not. The appellate court must take          The burden then shifts to the nonmovant to
evidence favorable to the nonmovant as            produce more than a scintilla of summary
true and indulge every reasonable inference       judgment evidence that raises a genuine
and resolve any doubts in favor of the            issue of material fact as to each essential
nonmovant. When summary judgment is               element identified in the motion. Tex. R.
sought and granted on multiple grounds,           Civ. P. 166a(i). More than a scintilla of
the appellate court will affirm if any of the     evidence exists if the evidence would allow
grounds is meritorious. Further, with the         reasonable and fair-minded people to reach
exception of an attack on the legal               the verdict under review.
sufficiency of the grounds expressly raised
                                                    Civil Procedure > ... > Defenses, Demurrers
by the movant in his motion for summary             & Objections > Affirmative Defenses >
judgment, issues not expressly presented            General Overview
to the trial court by written motion, answer,
                                                    Civil Procedure > Appeals > Summary
or other response shall not be considered           Judgment Review > Standards of Review
on appeal as grounds for reversal. Tex. R.
Civ. P. 166a(c).                                    Civil Procedure > ... > Summary
                                                    Judgment > Burdens of Proof > Movant
  Civil Procedure > ... > Summary                   Persuasion & Proof
  Judgment > Evidentiary Considerations >           Civil Procedure > ... > Summary
   Absence of Essential Element                     Judgment > Burdens of Proof > Nonmovant
                                                    Persuasion & Proof
                                  Jamie Graham Page 2 of 40
                       418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1



  Civil Procedure > ... > Summary and (4) damages sustained by the plaintiff
  Judgment > Entitlement as Matter of Law > as a result of the breach. Where damages
   General Overview                         evidence does not relate to the amount of
HN3 In a traditional summary judgment,            damages sustained under the proper
the party moving for summary judgment             measure of damages, that evidence is both
has the burden to establish that there is no      irrelevant and legally insufficient to support
genuine issue of material fact and it is          a judgment.
entitled to judgment as a matter of law.
                                                    Civil Procedure > Appeals > Summary
Tex. R. Civ. P. 166a(c). When reviewing a
                                                    Judgment Review > Appealability
traditional summary judgment granted in
favor of the defendant, the appellate court         Civil Procedure > ... > Standards of
determines whether the defendant                    Review > Substantial Evidence >
conclusively disproved at least one element         Sufficiency of Evidence
of the plaintiff’s claim or conclusively            Evidence > ... > Procedural Matters >
proved every element of an affirmative              Objections & Offers of Proof > Objections
defense. A matter is conclusively
                                         HN5 A party may challenge the legal
established if ordinary minds cannot differ
as to the conclusion to be drawn from thesufficiency of the evidence even in the
                                         absence of any objection to its
evidence. If the movant satisfies its burden,
the burden shifts to the nonmovant to    admissibility. Further, an attack on the
preclude summary judgment by presenting  legal sufficiency of the grounds expressly
evidence that raises a genuine issue of  raised by the movant in his motion for
material fact.                           summary judgment is an exception to the
                                         general rule that issues not expressly
  Civil Procedure > Remedies > Damages > presented to the trial court by written
  General Overview                       motion, answer, or other response shall not
  Civil Procedure > ... > Standards of be considered on appeal as grounds for
  Review > Substantial Evidence > reversal. Tex. R. Civ. P. 166a(c).
   Sufficiency of Evidence
  Contracts Law > Breach > Breach of                Contracts Law > Remedies > Specific
  Contract Actions > Elements of Contract           Performance
  Claims                                            Contracts Law > Types of Contracts >
  Evidence > Relevance > Relevant Evidence          Personal Service Agreements

HN4 A successful breach of contract claim HN6 A contract for personal services is
requires proof of the following elements: not specifically enforceable.
(1) a valid contract; (2) performance or
                                            Contracts     Law    >    Standards of
tendered performance by the plaintiff; (3)
                                            Performance > General Overview
breach of the contract by the defendant;
                                  Jamie Graham Page 3 of 40
                       418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1



  Contracts Law > ... > Types of Damages >          Evidence > ... > Exemptions > Statements
    Compensatory Damages > General                  by Party Opponents > General Overview
  Overview
                                                  HN10 Tex. R. Evid. 801(e)(2)(D) provides
  Contracts Law > Remedies > Specific             a hearsay exception for a statement by a
  Performance                                     party’s agent or servant concerning a matter
                                                  within the scope of agency or employment
HN7 Except in cases where specific
                                                  made during the existence of the
performance is proper, a non-repudiating
                                                  relationship. Rule 801(e)(2)(D) provides a
party cannot afterwards go on, and thereby        hearsay exception for certain statements
increase the damages, and then recover            by a party’s agent or servant.
such damages from the other party.
                                                    Contracts Law > ... > Statute of Frauds >
  Contracts Law > ... > Estoppel > Equitable        Requirements > Signatures
  Estoppel > General Overview
                                                    Contracts Law > ... > Statute of Frauds >
  Contracts Law > Defenses > Volunteers             Requirements > Writings

HN8 The court has found no authority to       Evidence > Burdens of Proof > Allocation
support the assertion that the voluntary HN11 Under the statute of frauds, certain
payment rule is a sub-defense of a general contracts are not enforceable unless they
equitable estoppel defense.                are in writing and signed by the person
                                           against whom enforcement of the contract
  Civil Procedure > Appeals > Summary
                                           is sought. Tex. Bus. & Com. Code Ann. §
  Judgment Review > Appealability
                                           26.01(a) (2009). The party pleading the
  Civil Procedure > Appeals > Summary statute of frauds bears the burden of
  Judgment Review > Standards of Review establishing its applicability.
  Civil Procedure > Judgments > Summary
                                                    Contracts Law > ... > Statute of Frauds >
  Judgment > Evidentiary Considerations
                                                    Exceptions > General Overview
HN9 The appellate court reviews a trial             Contracts Law > ... > Statute of Frauds >
court’s ruling that sustains an objection to        Requirements > Signatures
summary judgment evidence for an abuse
                                                    Contracts Law > ... > Statute of Frauds >
of discretion. When an appellee urges
                                                    Requirements > Writings
several objections to a particular piece of
evidence and, on appeal, the appellant            HN12 The statute of frauds applies to an
complains of its exclusion on only one of         agreement which is not to be performed
those bases, the appellant has waived that        within one year from the date of the
issue for appeal because he has not               making of the agreement. Tex. Bus. &
challenged all possible grounds for the           Com. Code Ann. § 26.01(b)(6). When a
trial court’s ruling that sustained the           promise or agreement, either by its terms
objection.                                        or by the nature of the required acts,
                                  Jamie Graham Page 4 of 40
                       418 S.W.3d 172, *172; 2013 Tex. App. LEXIS 14226, **1



cannot be completed within one year, it     HN14 Under the partial performance
falls within the statute of frauds and is   exception to the statute of frauds, contracts
unenforceable unless it is in writing and   that have been partly performed, but do not
signed by the person to be charged. Tex.    meet the requirements of the statute of
Bus. & Com. Code Ann. § 26.01(a), (b)(6).   frauds, may be enforced in equity if denial
If the agreement is capable of being        of enforcement would amount to a virtual
performed within one year, it is not within fraud. The partial performance must be
the statute of frauds. The question of      unequivocally referable to the agreement
whether an agreement falls within the       and corroborative of the fact that a contract
statute of frauds is one of law. However,   actually was made. The performance a
whether the circumstances of a particular   party relies on to remove a parol agreement
case fall within an exception to the statutefrom the statute of frauds must be such as
of frauds is generally a question of fact.  could have been done with no other design
                                            than to fulfill the particular agreement
  Contracts Law > ... > Statute of Frauds > sought to be enforced. Without such
  Exceptions > General Overview
                                            precision, the acts of performance do not
  Contracts Law > ... > Statute of Frauds > tend to prove the existence of the parol
  Requirements > Writings                   agreement sought to be enforced.
HN13 In deciding whether an agreement is            Contracts Law > ... > Statute of Frauds >
capable of being performed within one               Exceptions > General Overview
year, the court compares the date of the
agreement to the date when the                    HN15 The court has found no authority to
performance under the agreement is to be          support the position that a modification not
completed. If there is a year or more             capable of being performed within one
between those two reference points, a             year falls outside the statute of frauds if it
writing is required to render the agreement       constitutes an immaterial change to the
enforceable. When the date performance            original contract. Tex. Bus. & Com. Code
will be completed cannot be readily               Ann. § 26.01(b)(6).
ascertained, the law provides that if
                                                    Civil Procedure > Judgments > Summary
performance could conceivably be
                                                    Judgment > Evidentiary Considerations
completed within one year of the
agreement’s making, a writing is not              HN16 A party submitting summary
required to enforce it. If a contract can,        judgment evidence must specifically
from the terms of the agreement, be               identify the supporting proof on file that it
performed within one year it is not within        seeks to have considered by the trial court.
the Statute of Frauds.
                                                    Civil Procedure > ... > Declaratory
  Contracts Law > ... > Statute of Frauds >         Judgments > State Declaratory Judgments >
  Exceptions > Partial Performance                   Scope of Declaratory Judgments
                                  Jamie Graham Page 5 of 40
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HN17 See Tex. Civ. Prac. & Rem. Code as are equitable and just. Tex. Civ. Prac. &
Ann. § 37.004(a).                    Rem. Code Ann. § 37.009.
  Civil Procedure > ... > Declaratory                Civil Procedure > ... > Costs & Attorney
  Judgments > State Declaratory Judgments >          Fees > Attorney Fees & Expenses > General
   Appellate Review                                  Overview
HN18 The appellate court reviews                     Evidence > Burdens of Proof > Allocation
declaratory judgments under the same
standards as other judgments. Tex. Civ.            HN20 If any attorneys’ fees relate solely
Prac. & Rem. Code Ann. § 37.010. The               to a claim for which such fees are
appellate court looks to the procedure used        unrecoverable, a claimant must segregate
to resolve the issue at trial to determine the     recoverable from unrecoverable fees. It is
standard of review on appeal.                      only when discrete legal services advance
                                                   both a recoverable and unrecoverable claim
  Civil Procedure > ... > Declaratory              that they are so intertwined that they need
  Judgments > State Declaratory Judgments >
                                                   not be segregated. This standard does not
   Scope of Declaratory Judgments
                                                   require more precise proof for attorneys’
  Civil Procedure > ... > Attorney Fees &          fees than for any other claims or expense.
  Expenses > Basis of Recovery > Statutory
                                                   To meet a party’s burden to segregate its
  Awards
                                                   attorneys’ fees, it is sufficient to submit to
  Contracts Law > Breach > Breach of               the fact-finder testimony from a party’s
  Contract Actions > General Overview
                                                   attorney concerning the percentage of hours
  Contracts Law > Contract Conditions &            that related solely to a claim for which fees
  Provisions > General Overview                    are not recoverable.
HN19 Texas law does not allow recovery
                                                     Civil Procedure > ... > Costs & Attorney
of attorneys’ fees unless authorized by
                                                     Fees > Attorney Fees & Expenses > General
statute or contract. A person may recover
                                                     Overview
reasonable attorneys’ fees from an
individual or corporation, in addition to the        Civil Procedure > Appeals > Reviewability
amount of a valid claim and costs, if the            of Lower Court Decisions > Preservation
claim is for an oral or written contract. Tex.       for Review
Civ. Prac. & Rem. Code Ann. § 38.001(8).             Evidence > ... > Procedural Matters >
To qualify for fees under § 38.001(8), a             Objections & Offers of Proof > Objections
litigant must prevail on a breach of contract
claim and recover damages. Additionally,           HN21 If no one objects to the fact that the
under Tex. Civ. Prac. & Rem. Code Ann. §           attorney’s fees are not segregated as to
37.009, the trial court in a declaratory           specific claims, then the objection is
judgment      proceeding       may     award       waived.
reasonable and necessary attorney’s fees
                                   Jamie Graham Page 6 of 40
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  Civil Procedure > ... > Declaratory              Civil Procedure > Pleading & Practice >
  Judgments > State Declaratory Judgments >        Pleadings > General Overview
   Appellate Review                                Civil Procedure > Judgments > Entry of
  Civil Procedure > ... > Attorney Fees &          Judgments > General Overview
  Expenses > Basis of Recovery > Statutory
  Awards                                   HN24 Tex. R. Civ. P. 301 provides that a
                                                 judgment of trial court shall conform to the
  Civil Procedure > Appeals > Remands
                                                 pleadings.
HN22 After a declaratory judgment is
reversed on appeal, an award of attorneys’       Counsel: For Appellants: F. Leighton
fees may no longer be equitable and just.        Durham, Dallas, TX; Kirk L. Pittard,
Therefore, when the appellate court              Dallas, TX; Christy Denison Wollin, Dallas,
reverses a declaratory judgment and the          TX; Peter M. Kelly, Dallas, TX; Sean
trial court awarded attorneys’ fees to the       Reed Cox, Dallas, TX; Barbara Thompson
party who prevailed at trial, the appellate      Hale, Dallas, TX; Thad D. Spalding, Kelly,
court may remand the attorneys’ fee award        Durham & Pittard, LLP, Dallas, TX.
for reconsideration in light of our
disposition on appeal. The appellate court       For Appellees: Michael G. Brown, Figari
is not required to do so, however.               Davenport, LLP, Dallas, TX; Amber Grand,
                                                 Figari & Davenport, LLP, Dallas, TX.
  Civil Procedure > ... > Costs & Attorney
  Fees > Costs > General Overview          Judges: Before Justices FitzGerald, Lang,
  Civil Procedure > Remedies > Judgment and Myers. DOUGLAS S. LANG.
  Interest > Postjudgment Interest
                                                 Opinion by: DOUGLAS S. LANG
HN23 Under Tex. R. Civ. P. 559, the
successful party in the suit shall recover       Opinion
his costs, except in cases where it is
otherwise expressly provided. Tex. R. Civ.        [*178] This case arises from a written
P. 559. Further, Tex. Fin. Code Ann. §           contract (the ″Agreement″) under which
304.003(a) (2006) provides in part that a        appellee J. Baxter Brinkmann International
money judgment of a court of this state,         Corporation (″JBBI″) employed appellant
including court costs awarded in the             Berryman’s South Fork, Inc. (″BSF″) for
judgment and prejudgment interest, if any,       the purpose of ″engaging the full-time
earns postjudgment interest at the rate          services″ of appellant Richard Berryman
determined under this section. Tex. Fin.         (″Berryman″) as a ″sales and marketing
Code Ann. § 304.003(a) (2006).                   representative.″ Appellees JBBI and The
Postjudgment interest accrues on entire          Brinkmann Corporation (″TBC″) filed this
amount of final judgment, including court        lawsuit against appellants asserting claims
costs and prejudgment interest, from date        for, in part, declaratory judgment, breach
of judgment until paid.                          of contract, and money had and received.
                                 Jamie Graham Page 7 of 40
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Appellants (1) counterclaimed against JBBI                           Berryman’s affidavit constituted an abuse
for, in part, breach of an alleged contract to                       of discretion.
pay Berryman’s expenses and (2) asserted
claims against J. Baxter Brinkmann,                                  For the reasons below, on this voluminous
individually, (″Brinkmann″) as a third party                         summary judgment record, we reverse the
defendant.1 Appellees filed a motion for                             trial court’s [**3] judgment in part, render
(1) traditional summary judgment in their                            judgment in part, and otherwise affirm the
favor on the claims asserted by JBBI and                             trial court’s judgment.
TBC and appellants’ counterclaims and (2)
no-evidence summary judgment in their                                I. FACTUAL AND PROCEDURAL
favor on appellants’ counterclaims. The                              BACKGROUND
trial court signed a final judgment in which                         The Agreement was executed on July 2,
 [**2] it (1) sustained appellees’ objections                         [*179] 2001.2 It stated in part that JBBI
to an affidavit of Berryman filed by                                 ″desires to employ the services of
appellants as summary judgment evidence,                             [Berryman], through [BSF], for the benefit
(2) granted appellees’ motion for summary
                                                                     of [JBBI] and its affiliated companies.″
judgment, (3) made declarations respecting
                                                                     Additionally, the Agreement provided in
the Agreement, and (4) awarded appellees
                                                                     part
damages, attorneys’ fees, interest, and costs
of court.                                                                 2. Compensation
In eleven issues on appeal, appellants                                    In exchange for the services to be
contend the trial court erred because (1)                                 rendered hereunder by [Berryman],
the evidence raises fact issues as to the                                 [JBBI] shall pay, or cause to be paid,
parties’ claims; (2) the declaratory relief                               the sum of one million dollars per
requested by JBBI and TBC was                                             year in equal monthly installments. .
″redundant with″ their breach of contract                                 ..
claim and therefore was ″barred as a matter
                                                                          3. Term
of law″; (3) appellees ″failed to
conclusively prove the reasonableness and                                 This Agreement is for a term of five
necessity of the claimed [attorneys’] fees                                years starting August 1, 2001 and is
by not segregating fees″; (4) Brinkmann,                                  to be renewed annually thereafter
individually, did not recover on any cause                                unless either parties [sic] gives notice
of action and therefore should not have                                   in writing 90 days prior to the end of
been awarded damages, attorneys’ fees,                                    any          anniversary           date.
interest, or costs of court; and (5) the                                  Notwithstanding the five year fixed
sustaining of appellees’ objections to                                    term, [JBBI] may terminate this
1
    In this opinion, unless otherwise specified, ″appellees″ refers to, collectively, JBBI, TBC, and Brinkmann.
2
   As described above, the parties to the Agreement were JBBI and BSF. Additionally, Berryman, individually, [**4] guaranteed the
obligations of BSF.

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   Agreement and have no further               their required duties under the terms of the
   payment obligation if [Berryman] is         [Agreement]″; (2) that plaintiffs have not
   unable to perform full-time services        violated the terms of their ″agreements or
   due to death or disability or has           obligations, if any,″ to defendants; and (3)
   failed to carry out the duties of a         ″other declaratory relief as necessary to
   senior    sales     and   marketing         terminate the controversy and remove
   representative in accord with general       uncertainty relating to the [plaintiffs’]
   industry standards.                         alleged remaining rights and obligations to
                                               [d]efendants, if any.″ Further, plaintiffs
Approximately seven years after the requested ″reasonable and necessary
Agreement was executed, an attorney for attorneys’ fees incurred herein and on any
appellants sent JBBI a letter dated May 20, appeal.″
2008. In that letter, appellants’ attorney
stated that as a result of actions taken by In a letter to defendants dated August 29,
JBBI, ″including, but not limited to, making 2008, counsel for JBBI stated (1)
defamatory statements″ to JBBI employees defendants had failed to perform as
and others, JBBI had ″substantially obligated under the Agreement ″for some
undermined [Berryman’s] ability to months now″ and (2) JBBI ″hereby
perform his job duties and responsibilities″ terminates the Agreement as permitted in
and therefore had ″constructively Section 3 and as otherwise allowed by
terminated [Berryman] and breached the law.″ Subsequent to that letter, plaintiffs
implied covenant of good faith and fair filed supplements to their original petition
dealing with respect to the Agreement.″ in which they added claims for breach of
Further, appellants’ attorney (1) stated JBBI contract      and     ″money      had    and
had ″failed and refused″ to reimburse received/unjust [*180] enrichment.″ In
Berryman for approximately $160,000 in their breach of contract claim, plaintiffs
expenses that JBBI was ″obligated to pay″ alleged in part that defendants ″failed and
pursuant to ″Mr. Berryman’s contract″ with refused and continue to fail and refuse to
JBBI and (2) requested that JBBI contact fulfill their obligations under the
him to ″negotiate a fair and equitable [Agreement],″ thus entitling plaintiffs to
severance for Mr. Berryman.″                   damages and attorneys’ fees. In their claim
                                                [**6] for ″money had and received/unjust
On May 23, 2008, JBBI and TBC enrichment,″ plaintiffs asserted in part that
(″plaintiffs″) filed this lawsuit against BSF ″during the May 2008 through August
and Berryman (″defendants″). In their 2008 time period,″ defendants ″received
original petition, plaintiffs asserted a claim monies they were not entitled to keep and
for ″declaratory judgment relief.″ to which they have been unjustly enriched.″
Specifically, plaintiffs requested in part Pursuant to that claim, plaintiffs sought to
that the trial court declare (1) ″whether recover approximately $334,000 received
[d]efendants [**5] have carried on its or by defendants during that time period,
                                  Jamie Graham Page 9 of 40
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including (1) ″$291,666.66 paid during a                                contract, money had and received, and
time period [defendants] performed no                                   declaratory      judgment     claims     and
work for [plaintiffs]″ and (2) approximately                            defendants’ counterclaims and (2)
$42,000 in ″Airplane Allowance payments″                                no-evidence summary judgment on
made to defendants pursuant to a ″separate                              defendants’ counterclaims. In their motion,
verbal agreement″ that plaintiffs would                                 plaintiffs stated in part (1) ″[b]ased on
″provide [d]efendants an upfront allowance                              [d]efendants’ breach of contract, [p]laintiffs
for expenses (up to $12,000 per month)                                  are entitled to elect as their remedy the
[d]efendants incurred related to the                                    recovery of the largest damage amount
operation of an aircraft to be used to assist                           suffered due to [d]efendants’ breach, such
[d]efendants in performing their duties                                 amount being the $291,666,67 paid from
owed to [p]laintiffs″ (the ″Airplane                                    May through August 2008, plus attorney’s
Allowance″).                                                            fees totaling $160,948.00″; (2) to ″prevent
                                                                        unjust enrichment,″ defendants must return
Defendants filed a general denial answer                                to     plaintiffs    ″overpayments″         of
and asserted several affirmative defenses,                              ″$291.666.67 for work not performed″3
including       ″equitable       estoppel.″                             and ″$41,999.96 in Airplane Allowance
Additionally, defendants asserted (1) a                                  [**8] payments″; (3) defendants ″ceased
counterclaim against JBBI for ″breach of                                performing under the Agreement in at least
contract relating to reimbursement of                                   May of 2008, and thereby materially
expenses,″ in which defendants contended                                breached same″; (4) ″[t]he Agreement was
they were owed $157,600.83 in ″expenses                                 terminable from [May of 2008] forward by
not paid″ by JBBI; [**7] and (2) claims for                             [p]laintiffs, and no further obligations are
business disparagement, defamation, and                                 due under the Agreement following its
exemplary damages against Brinkmann as                                  lawful termination in August 2008″; (5)
a third-party defendant.                                                ″[n]otwithstanding [p]laintiffs’ proper
JBBI and Brinkmann filed separate general                               termination of Agreement for cause, the
denial      answers        to     defendants’                           Agreement actually expired on August 1,
counterclaims. Additionally, JBBI asserted                              2008″; and (6) JBBI did not breach the
several affirmative defenses, including the                             Agreement or ″any ancillary agreement to
statute of frauds. Further, in Brinkmann’s                              pay business expenses.″
prayer for relief in his answer, he requested,                          The appendix filed in support of the
in part, that he recover costs of court.                                summary judgment motion included, in
                                                                        part (1) excerpts from depositions of
On December 12, 2011, plaintiffs and                                    Berryman and Brinkmann; (2) an affidavit
Brinkmann filed a motion for (1) traditional                            of Brinkmann; (3) copies of the Agreement
summary judgment on plaintiffs’ breach of                               and correspondence described above; and
3
   Plaintiffs stated in their brief in support of their motion for summary judgment that they ″will only be entitled to collect and will only
seek the $291,666.67 once.″

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(4) an affidavit of plaintiffs’ counsel [**10] to receive and accept checks from
respecting attorneys’ fees.             Brinkmann.

Berryman stated in part in his deposition         Brinkmann testified in part in his deposition
that (1) his job responsibilities pursuant to     and affidavit (1) although reimbursement
the Agreement included preparing for and          of Berryman’s expenses was not part of
attending meetings with retailers’ [*181]         ″the deal,″ he reimbursed Berryman for
representatives to solicit [**9] orders for       various expenses starting in 2001 and
                                                  continuing until at least 2006; (2)
JBBI’s products, communicating ″almost
                                                  defendants ceased performing their
on a daily basis″ with Brinkmann, and
                                                  required duties under the Agreement ″as
participating in the ″finalization″ process
                                                  early as the first half of May 2008″; (3)
respecting retailers’ orders; (2) during two
                                                  after defendants ceased performing under
separate meetings in 2006 and 2008,
                                                  the Agreement, JBBI ″hoped [d]efendants
Brinkmann complained in front of retailers’
                                                  would resume performance″ and paid BSF
representatives that Berryman ″didn’t             $41,999.96 in airplane allowance payments
work″ and buyers did not want to do               and an additional sum of more than
business with Berryman; (3) Berryman              $291,666.67; and (4) BSF and Berryman
was still able to perform his duties after        have not returned those amounts to
Brinkmann’s negative comments were                plaintiffs.
made; (4) in approximately April 2008,
JBBI hired Mike Bush; (5) at the time             Finally, counsel for plaintiffs testified in
Bush was hired, Bush told Berryman that           part in his affidavit (1) at least 85%, or
Berryman was ″being replaced″ by Bush;            $127,073, of the attorneys’ fees and
(6) Berryman was not replaced by Bush;            paralegal fees incurred by plaintiffs so far
(7) there is no written agreement for             ″are recoverable against the [d]efendants
reimbursement of expenses; (8) at                 in this lawsuit″; (2) ″it is reasonable to
approximately the same time the                   conclude that [plaintiffs’] counsel’s
Agreement was executed in 2001,                   activities cannot all be segregated by task
Berryman and Brinkmann entered into an            and as such are dependent on the same or
oral agreement that Berryman’s business           similar sets of facts and circumstances, are
expenses would be reimbursed by JBBI;             part of many of the same tasks, and are
(9) after May 20, 2008, Berryman did not          therefore so intertwined that they cannot
return Brinkmann’s calls, with one                be so separated [**11] or segregated″; (3)
exception in which he told Brinkmann his          a fair estimate of additional attorneys’ fees
attorney had advised him not to speak with        likely be incurred by plaintiffs through the
Brinkmann; did not participate in                 hearing on plaintiffs’ motion for summary
″finalization″ negotiations; and did not          judgment to advance plaintiffs’ ″affirmative
attend any meetings; and (10) from May            claims″ against defendants is at least
2008 to August 2008, Berryman continued           $33,875; and (4) in the event of appeal of
                                  Jamie Graham Page 11 of 40
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plaintiffs’ ″affirmative claims,″ plaintiffs       ″outstanding″ expenses incurred              by
will likely incur at least an additional           Berryman from 2006 to 2008.
$35,000 in fees in defense of an appeal to
                                                   Plaintiffs filed (1) ″objections to and
the Dallas Court of Appeals, $20,000 in
                                                   motion to strike defendants’ ’evidence’ in
fees in briefing an appeal to the Texas
                                                   support of their amended response″ and (2)
Supreme Court, and $15,000 in fees if the
                                                   supplemental objections to defendants’
Texas Supreme Court grants a hearing on
                                                   summary judgment evidence. Therein,
such appeal.
                                                   plaintiffs contended Berryman’s affidavit
In their amended response to plaintiff’s           (1) contains irrelevant testimony; (2) lacks
motion for summary judgment, defendants            necessary attachments; (3) is a ″sham
argued in part (1) the agreement to pay            affidavit″ as to specified statements of
expenses was an enforceable ″oral                  Berryman in paragraphs 9, 12, 15, 16, 19,
modification″ and/or ″implied in fact              22, 24, and 28; (4) ″fails to set forth actual
modification″ of the ″original contract″           facts based upon Berryman’s personal
entered into between the parties on July 2,        knowledge″; and (5) ″cites Berryman’s
2001; (2) Berryman was justified in                 [**13] conclusory personal beliefs based
discontinuing performance under ″the               upon conjecture and hearsay.″ Specifically,
written contract and oral modification of          in an objection to Berryman’s affidavit ″as
the contract″ in May 2008 because he was           a whole,″ plaintiffs stated in part
relieved of performance by plaintiffs’
″material     breach,″      i.e.   plaintiffs’         Berryman amended his [affidavit] to
″slanderous statements,″ hiring of Bush,               assert that he possessed personal
and failure to pay Berryman’s expenses;                knowledge of all of ″the facts set
(3) equitable relief is not [**12] warranted           forth″ in the [affidavit], based upon
because Berryman received and accepted                 (1)    his     conversations      with
the sums paid to him as part of the damages            [Brinkmann], (2) conversations with
he is entitled to receive as a [*182] result           unidentified employees of JBBI, (3)
of plaintiffs’ ″material breach″ of the                the unattached ″business records″ of
″contract between the parties″; and (4) the            JBBI . . . and (4) the unattached
statute of frauds does not apply to the oral           ″business records″ of [BSF].
agreement to reimburse expenses because                Berryman cannot rely on hearsay to
″each of the claims was capable of being               demonstrate        his       ″personal
performed within one year″ and,                        knowledge.″
alternatively, ″part performance by the
                                                   (citation to record omitted).
parties″ takes the oral agreement outside
the statute of frauds. Attachments to              Additionally, plaintiffs filed a reply to
defendants’ response included an affidavit         defendants’ response to the motion for
of Berryman and an ″Expense Report                 summary judgment. Plaintiffs asserted in
Tracking Log″ that showed $157,600.83 in           part (1) defendants’ election to continue
                                   Jamie Graham Page 12 of 40
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performance after plaintiffs’ alleged                                 severally,″ (1) ″actual damages in the
nonpayment of expenses starting in 2006                               amount of $333,666.63,″ which ″includes
precluded any excuse for defendants’                                  $291,666.67 for contract payments made
terminating performance; (2) defendants’                              by Plaintiffs to Defendants when work was
response did not raise a legal claim or fact                          not being performed by Defendants, and
issue respecting defendants’ contentions                              $41,999.96 in Airplane Allowance
that plaintiffs ″prevented [d]efendants from                          payments made by Plaintiffs to [*183]
being able to perform under the                                       Defendants when work was not being
[Agreement]″         or     ″’constructively                          performed by Defendants″; (2) ″their
terminated’ [d]efendants″; (3) defendants                             reasonable [**15] and necessary attorneys’
have no damages for breach because                                    fees as a result of the above-mentioned
plaintiffs [**14] ″paid the entire value″ of                          breach of contract and declaratory
the Agreement; (4) the oral agreement                                 judgment claims in the amount of
alleged by defendants respecting payment                              $160,948.00″; (3) ″$49,117.95 in
of expenses was not performable within
                                                                      pre-judgment interest on the aforesaid
one year and therefore is precluded by the
                                                                      amount (excluding attorney’s fees)″; (4)
statute of frauds and, alternatively, ″lacks
                                                                      additional attorneys’ fees in the event of
definitive contract terms″; and (5) while
                                                                      appeal ″as set forth in the Movants’
defendants’ response ″appears to argue″
                                                                      uncontested attorneys’ fees affidavit″; and
that application of the statute of frauds is
precluded by ″partial performance,″                                   (5) ″all costs of court incurred and filed
defendants provide ″only a footnote citation                          with the Court in this action.″ Additionally,
without analysis″ respecting that argument.                           the trial court ordered that ″the total amount
                                                                      of this Judgment, $543,732.58, plus costs
In the final judgment described above,4 the                           of court, will bear post-judgment interest
trial court (1) defined ″movants″ as JBBI,                            at the rate of 5%, compounded annually.″
TBC, and Brinkmann, collectively, and (2)                             Finally, the trial court made declarations
ordered that ″summary judgment is granted                             respecting plaintiffs’ declaratory judgment
in favor of Movants on their breach of                                claim.5
contract, money had and received, and
declaratory judgment claims.″ Further, the Defendants filed a timely motion for new
trial court ordered therein that ″Movants trial, which was overruled by operation of
shall recover from Defendants, jointly and law. This appeal timely followed.
4
   The record shows a hearing on appellees’ motion for summary judgment was scheduled. However, the record contains no reporter’s
record of such hearing.
5
    Specifically, the trial court stated in the final judgment

       [T]he court holds the following as a matter of undisputed fact and law as it related to Movants’ declaratory judgment claim:

       a. Defendants ceased performing under the Agreement in, at least, May of 2008 when Berryman refused to fulfill his duties
       and obligations for [**16] Plaintiffs. This constituted a material breach of the Agreement. The Agreement was
       at a minimum terminable from that point forward by Plaintiffs, and after making every reasonable effort to

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II. SUMMARY JUDGMENT                                               2009, no pet.). ″When summary judgment
                                                                   is sought and granted on multiple grounds,
A. Standard of Review                                              we will affirm if any of the grounds is
HN1 We [**17] review a summary                                     meritorious.″ Zimmerhanzel v. Green, 346
judgment de novo to determine whether a                            S.W.3d 721, 724 (Tex. App.—El Paso 2011,
party’s right to prevail is established as a                       pet. denied). [**18] Further, with the
matter of law. Mann Frankfort Stein &                              exception of an attack on the legal
Lipp Advisors, Inc. v. Fielding, 289 S.W.3d                        sufficiency of the grounds expressly raised
844, 848 (Tex. 2009); Valence Operating                            by the movant in his motion for summary
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.                          judgment, [*184] ″[i]ssues not expressly
2005); Nixon v. Mr. Prop. Mgmt. Co., 690                           presented to the trial court by written
S.W.2d 546, 548 (Tex. 1985). We review                             motion, answer, or other response shall not
the evidence presented by the motion and                           be considered on appeal as grounds for
response in the light most favorable to the                        reversal.″ TEX. R. CIV. P. 166a(c); see
party against whom the summary judgment                            McConnell v. Southside Indep. Sch. Dist.,
was rendered, crediting evidence favorable                         858 S.W.2d 337, 343 (Tex. 1993); City of
to that party if reasonable jurors could, and                      Houston v. Clear Creek Basin Auth., 589
disregarding contrary evidence unless                              S.W.2d 671, 676-77 (Tex. 1979).
reasonable jurors could not. Timpte Indus.,                        HN2 A party seeking a no-evidence motion
Inc. v. Gish, 286 S.W.3d 306, 310 (Tex.                            for summary judgment must assert that no
2009). We must take evidence favorable to                          evidence exists as to one or more of the
the nonmovant as true and indulge every                            essential elements of the nonmovant’s
reasonable inference and resolve any                               claim on which the nonmovant would have
doubts in favor of the nonmovant. City of                          the burden of proof. See TEX. R. CIV. P.
Keller v. Wilson, 168 S.W.3d 802, 824 (Tex.                        166a(i). The burden then shifts to the
2005); Sysco Food Servs., Inc. v. Trapnell,                        nonmovant to produce more than a scintilla
890 S.W.2d 796, 800 (Tex. 1994); Nixon,                            of summary judgment evidence that raises
690 S.W.2d at 549; In re Estate of Berry,                          a genuine issue of material fact as to each
280 S.W.3d 478, 480 (Tex. App.—Dallas                              essential element identified in the motion.
    communicate with Berryman, Plaintiffs lawfully terminated the Agreement in August 2008. Thus, no further
    obligations are owed or due to Defendants under the Agreement.

    b. Notwithstanding Plaintiffs’ lawful termination of the Agreement, the Agreement expired on August 1, 2008. The
    Agreement provides for automatic renewal upon the anniversary date of the contract only if neither party provides written
    notice to the other party to the contrary. Here, Defendants’ Agreement Termination Letter was received by Plaintiffs in May
    of 2008, and the Agreement expired by its own terms on August 1, 2008 as a result.

    c. The Agreement is defined by the four comers of the document, and the alleged oral contracts for expense reimbursement
    and Airplane allowance are not a part of the Agreement.

    d. JBBI did not, constructively or otherwise, breach the Agreement.




                                               Jamie Graham Page 14 of 40
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Id.; Timpte Indus., Inc., 286 S.W.3d at 310.      We begin with appellants’ second issue, in
More than a scintilla of evidence exists if       which they [**20] contend ″the trial court
the evidence would allow reasonable and           erred in granting summary judgment on
fair-minded people to reach the verdict           [a]ppellees’ claim for breach of contract
under review. See City of Keller, 168             because it applied an incorrect measure of
S.W.3d at 827.                                    damages and there was no evidence of
                                                  recoverable damages.″ According to
HN3 In a traditional summary judgment,            appellants, ″the evidence of damages was
the party [**19] moving for summary               legally insufficient because the evidence
judgment has the burden to establish that         represented overpayments that occurred
there is no genuine issue of material fact        for approximately three months after the
and it is entitled to judgment as a matter of     alleged breach and thus caused the trial
law. TEX. R. CIV. P. 166a(c); Provident Life      court to utilize an improper measure of
& Accident Ins. Co. v. Knott, 128 S.W.3d          damages (an incorrect time period).″
211, 215-16 (Tex. 2003); Nixon, 690 S.W.2d        Additionally, appellants assert in their reply
at 548-49. When reviewing a traditional           brief in this Court that ″[appellees’] only
summary judgment granted in favor of the          damage evidence relates to amounts that
defendant, we determine whether the               are not recoverable, rendering their
defendant conclusively disproved at least         evidence legally insufficient.″
one element of the plaintiff’s claim or
conclusively proved every element of an           Appellees respond (1) appellants ″failed to
affirmative defense. Kalmus v. Oliver, 390        object or otherwise raise to the trial court
S.W.3d 586, 588 (Tex. App.—Dallas 2012,           any allegation that the measure of damages
no pet.) (citing Am. Tobacco Co. v.               provided by [a]ppellees was somehow
Grinnell, 951 S.W.2d 420, 425 (Tex. 1997)).       improper″ and therefore waived the alleged
A matter is conclusively established if           error, (2) appellants ″ignore [a]ppellees’
ordinary minds cannot differ as to the            right to elect to continue to perform under
conclusion to be drawn from the evidence.         the Agreement″ and ″sue for damages as
Id. at 588-89. If the movant satisfies its        they accrue when the time for performance
burden, the burden shifts to the nonmovant        under the contract is due,″ and (3)
to preclude summary judgment by                   ″[a]ppellants’ arguments that [a]ppellees
presenting evidence that raises a genuine         could not ’create or increase’ their damages
issue of material fact. See Affordable Motor        [**21] are actually arguing a failure to
Co., Inc. v. LNA, LLC, 351 S.W.3d 515,            mitigate,″ an affirmative defense that
519 (Tex. App.—Dallas 2011, pet. denied).         appellants did not plead.

B. Analysis                                       HN4 ″A successful breach of
                                                    [*185]
                                        contract claim requires proof of the
1. Breach of Contract Claim Asserted by following elements: (1) a valid contract;
JBBI and TBC                            (2) performance or tendered performance
                                  Jamie Graham Page 15 of 40
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by the plaintiff; (3) breach of the contract       In support of their assertion that the proper
by the defendant; and (4) damages                  measure of damages was applied in this
sustained by the plaintiff as a result of the      case, appellees state ″when one party
breach.″ Petras v. Criswell, 248 S.W.3d            repudiates a contract, the other party may
471, 477 (Tex. App.—Dallas 2008, no                then elect to ’treat the repudiation as
pet.); see Barnett v. Coppell N. Tex. Court,       inoperative and sue for damages as they
Ltd., 123 S.W.3d 804, 815 (Tex.                    accrue when the time for performance
App.—Dallas 2003, pet. denied). ″Where             under the contract is due.’″ (quoting
damages evidence does not relate to the            America’s Favorite Chicken Co. v.
amount of damages sustained under the              Samaras, 929 S.W.2d 617, 626 (Tex.
proper measure of damages, that evidence           App.—San Antonio 1996, writ denied)).
is both irrelevant and legally insufficient to     Appellees contend they (1) ″elected to
support a judgment.″ De Escabedo v.                continue the Agreement in force in an
Haygood, 283 S.W.3d 3, 6 (Tex. App.—Tyler          effort to have [a]ppellants resume
2009), aff’d sub nom., 356 S.W.3d 390              performance and therefore continued to
(Tex. 2011).                                       make payments″ and (2) ″are entitled to
The record does not show appellants                recover [**23] the $291,666.67 paid during
objected to the evidence respecting the            the time of [a]ppellants’ non-performance
measure of damages or otherwise raised             under the Agreement.″
that issue in the trial court. However, HN5        Appellants cite the following statement of
″a party may challenge the legal sufficiency       law in support of their position: ″A party,
of the evidence even in the absence of any         while in the performance of a contract,
objection to its admissibility.″ Coastal           when served with notice of its repudiation
Transp. Co., Inc. v. Crown Cent. Petroleum         by the other party, cannot proceed with the
Corp., 136 S.W.3d 227, 233 (Tex. 2004).            performance of the contract except it be
  [**22] Further, an attack on the legal           one of which specific performance may be
sufficiency of the grounds expressly raised        enforced and increase the damages to which
by the movant in his motion for summary            he would otherwise be entitled.″ Osage Oil
judgment is an exception to the general            & Ref. Co. v. Lee Farm Oil Co., 230 S.W.
rule that ″[i]ssues not expressly presented        518, 522 (Tex. Civ. App.—Amarillo 1921,
to the trial court by written motion, answer,      writ ref’d). According to appellants, (1) the
or other response shall not be considered          Agreement was a contract for services and
on appeal as grounds for reversal.″ TEX. R.        therefore was not subject to specific
CIV. P. 166a(c); see McConnell, 858 S.W.2d         performance and (2) appellees were not
at 343; Clear Creek Basin Auth., 589               entitled to recover ″overpayments that
S.W.2d at 676-77. Therefore, we conclude           occurred for approximately three months
appellants did not waive error pertaining to       after the alleged breach.″
the legal sufficiency of the evidence              During oral argument before this Court,
respecting breach of contract damages.             appellees contended (1) the rule quoted
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above from Osage Oil ″has not been                asserting HOPCO was liable to C.K. in tort
followed by a single court″ and (2) current       for refusing to accept C.K.’s breach of the
case law allows a non-repudiating party to        contract. [**25] Id. The trial court granted
choose to treat the contract as continuing        a motion by C.K. for partial summary
regardless of whether specific performance        judgment denying specific performance
is available. In support of those arguments,      and the remaining issues were tried before
appellees cited three cases. See Bumb v.          a jury. Id. The jury found in favor of
Intercomp Tech., L.L.C., 64 S.W.3d 123            HOPCO and awarded HOPCO damages
(Tex. App.—Houston [14th Dist.] 2001, no          that included its expenses incurred in
pet.); [**24] Avasthi & Assocs., Inc. v.          operating the leases after the date of the
 [*186] Dronamraju, No. 01-11-00786-CV,           purported termination. Id. On appeal, C.K.
2012 Tex. App. LEXIS 10511, 2012 WL               argued in part that pursuant to the rule
6644873 (Tex. App.—Houston [1st Dist.]            stated in Osage Oil, HOPCO was (1)
Dec. 20, 2012, pet. denied) (mem. op.);           required to accept C.K.’s repudiation and
C.K. Oil Props., Inc. v. Hrubetz Operating        (2) not entitled to recover any damages for
Co., No. 11-99-00066-CV, 2002 WL                  expenses incurred in operating the lease
32344609 (Tex. App.—Eastland Apr. 25,             after the date of the purported termination.
2002, no pet.) (not designated for                Id. at *8, *14. The Eleventh District Court
publication).                                     of Appeals in Eastland disagreed with C.K.
                                                  Id. The court stated that the ″damage rule″
In C.K. Oil, Hrubetz Operating Company            announced in Osage Oil ″does not apply to
(″HOPCO″) contracted to operate certain           affirmative claims for relief which a
gas and oil leases. C.K. Oil, 2002 WL             repudiating party asserts against the
32344609, at *1. Subsequently, a working          non-breaching party for failing to accept
interest in the leases was conveyed to C.K.       the breach.″ Id. at *8. Therefore, the court
Oil Properties, Inc. (″C.K.″). Id. C.K.           concluded, HOPCO was ″not required to
informed HOPCO that HOPCO was                     accept C.K.’s repudiation.″ Id. Further, in
terminated as operator and advised HOPCO          considering HOPCO’s claim for damages,
that C.K. would not reimburse HOPCO for           the court stated in part, ″For the same
any operating expenses incurred after             reasons that we have rejected the ruling in
November 10, 1997. Id. HOPCO continued            Osage Oil as serving as a basis for [C.K.’s]
to operate the leases. Id. Additionally,          counterclaims sounding in [**26] tort, we
HOPCO filed suit against C.K. to                  do not find Osage Oil to be controlling on
specifically enforce the terms of its contract    the issue of HOPCO’s damages.″ Id. at
and sought damages from C.K. as a result          *14. The court concluded, ″Because the
of the attempted termination. Id. at *2.          ruling in Osage Oil directly conflicts with
Those damages included expenses for               the non-breaching party’s option of treating
operating the leases from the date of the         the repudiation as inoperative, we decline
purported termination through the date of         to apply Osage Oil to the facts of this
trial. Id. C.K. counterclaimed for trespass,      case.″ Id.
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Unlike the case before us, C.K. Oil involved     failing to pay his salary and expenses on
not only a non-repudiating party claiming        October 1, 1995. Id. The trial court granted
damages, but also a repudiating party            InterComp’s motion for summary
seeking to use the rule in Osage Oil to          judgment. Id. at 125. The Fourteenth
profit from its own breach. See id. at *8.       District Court of Appeals in Houston
We cannot agree with appellees that the          affirmed, stating ″an anticipatory
C.K. Oil court’s conclusion that Osage Oil       repudiation gives the nonrepudiating party
was not controlling on the facts of that         the option to treat the repudiation as a
case supports appellees’ position that           breach, or ignore it and await the agreed
Osage Oil is inapplicable in the case before     upon time of performance.″ Id. The court
us.                                              reasoned that ″by waiting to sue until after
                                                 InterComp’s performance was due, Bumb
Bumb involved an employee, John W.               was obligated to continue performing under
Bumb, whose employment contract                  the contract, and any breach on his own
provided that either he or his employer,         part prior to the November 3, 1995
InterComp        Technologies,       L.L.C.      termination [**28] date excused InterComp
(″InterComp″), could terminate their             from further performance.″ Id. Therefore,
relationship at will by giving ninety days’      the court concluded, Bumb’s October 12,
notice. Bumb, 64 S.W.3d at 124. On August        1995 breach barred his suit for any breaches
4, 1995, InterComp notified Bumb that his        by InterComp thereafter. Id. As to breaches
employment was terminated effective              by InterComp prior to October 12, 1995,
November 3, 1995. Id. On September 25,           the court observed that the contract
1995, InterComp allegedly told Bumb that         provided Bumb’s monthly salary was
it would no longer pay his salary or             payable ″in arrears.″ Id. Thus, payment for
reimburse him [**27] for expenses. Id.           Bumb’s services during October was not
However, Bumb continued [*187] to                due until November 1, 1995, a date after
perform his duties until November 3, 1995.       Bumb’s October 12, 1995 breach of
Id. On October 12, 1995, Bumb                    contract. Id. Further, as to Bumb’s claim
downloaded copies of InterComp software          for expenses, the court observed that the
in violation of his employment contract.         contract required ″appropriate support″
Id. Almost four years later, Bumb filed suit     before expenses would be reimbursed. Id.
against InterComp for unpaid salary and          The court stated there was no proof the
expenses. Id. Intercomp moved for                required support had been provided to
summary judgment, alleging it was excused        Intercomp until a date after Bumb’s
from further performance under the               October 12, 1995 breach. Id.
contract when Bumb breached the contract
by downloading software. Id. In response,        Appellees assert Bumb demonstrates that
Bumb claimed InterComp breached the              the rule of Osage Oil is not currently the
contract first by orally repudiating the         law in cases involving contracts for
contract on September 25, 1995, and by           services. However, the court in Bumb did
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not specifically address the issue of            material breach of the same contract, i.e.
whether, when a contract is repudiated, the      the failure to timely bill. 2012 Tex. App.
non-repudiating party can ″increase the          LEXIS 10511, [WL] at *6. [**30] The First
damages to which he would otherwise be           District Court of Appeals in Houston
entitled″ by continuing to perform. See          disagreed. 2012 Tex. App. LEXIS 10511,
Osage Oil, 230 S.W. at 522. We cannot            [WL] at *7. The court concluded that by
agree with appellees that Bumb                   seeking to continue [*188] benefiting
 [**29] supports their position that Osage       from the contract by requesting Dronamraju
Oil is inapplicable to the case before us.       continue performing work, ″A & A waived
Finally, in Avasthi, Sharma Dronamraju           its ability to treat Dronamraju’s breach as a
contracted with a petroleum consulting           justification for non-performance.″ 2012
company, Avasthi & Associates, Inc. (″A &        Tex. App. LEXIS 10511, [WL] at *8. Unlike
A″), to provide geological services for a        the case before us, Avasthi did not involve
specific project. Avasthi, 2012 Tex. App.        a non-repudiating party seeking to recover
LEXIS 10511, 2012 WL 6644873 at *1.              damages for breach of contract after
The contract contained detailed reporting        continuing performance. See id. Therefore,
and billing requirements. Id. It was             that case is inapposite as to whether Osage
undisputed that Dronamraju ″never timely         Oil applies to such a fact situation.
complied″ with those requirements during         As described above, the Agreement stated
the ten-month time period that he worked         JBBI was employing BSF ″for the purpose
for A & A. 2012 Tex. App. LEXIS 10511,           of engaging the full-time services of
[WL] at *2. Despite such noncompliance,          [Berryman].″ HN6 A contract for personal
A & A paid Dronamraju on numerous                services is not specifically enforceable.
occasions and continued to request him to        See Gage v. Wimberley, 476 S.W.2d 724,
perform work on the project. 2012 Tex.           731 (Tex. Civ. App.—Tyler 1972, writ ref’d
App. LEXIS 10511, [WL] at *3-4. After the        n.r.e.); Chain v. Pye, 429 S.W.2d 630, 635
project was completed, A & A informed            (Tex. Civ. App.—Beaumont 1968, writ ref’d
Dronamraju that certain bills for his time       n.r.e.). Further, appellees assert in their
″had been submitted too late″ and would          brief on appeal that ″[a]s early as the first
not be paid by A & A. 2012 Tex. App.             half of May of 2008, [a]ppellants altogether
LEXIS 10511, [WL] at *3. Dronamraju              ceased performance under the Agreement.″
filed suit against A & A for breach of           The record shows that at that point, the
contract, seeking payment of his unpaid          $291,666.67 claimed by appellees as breach
bills. Id. The jury found in favor of            of contract damages [**31] had not been
Dronamraju. 2012 Tex. App. LEXIS 10511,          paid to appellants. Appellees assert they
[WL] at *4. On appeal, A & A argued that         continued to pay appellants in May, June,
as a matter of law, it was excused from          July, and August of 2008, even though
performing under the contract, i.e. paying       appellants ″never resumed performance
Dronamraju, because of Dronamraju’s prior        under the Agreement.″ Thus, the record
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shows that absent the continuation of                                 fails because appellants did not plead
payments by appellees, they would not                                 voluntary payment as an affirmative
″otherwise be entitled″ to the $291,666.67                            defense and ″did not cite evidence to or
they claim as breach of contract damages.                             raise the issue of voluntary payment″ in
See Osage Oil, 230 S.W. at 522. On this                               their summary judgment response in the
record, we conclude those sums are not                                trial court. In their reply brief in this Court,
recoverable as breach of contract damages.                            appellants assert in part (1) ″[t]he voluntary
See id.; see also Tower Contracting Co.,                              payment doctrine is an equitable
Inc. v. Flores, 294 S.W.2d 266, 273 (Tex.                             estoppel-based defense,″ (2) appellants
Civ. App.—Galveston 1956), aff’d as                                   ″pled equitable estoppel″ in their answer,
modified, 157 Tex. 297, 302 S.W.2d 396                                and (3) ″[b]ecause [**33] [plaintiffs] failed
(Tex. 1957) HN7 (except in cases where                                to specially except to [defendants’]
specific     performance      is    proper,                           affirmative defenses, asserting a general
non-repudiating party ″cannot afterwards                              equitable estoppel defense was sufficient
go on, and thereby increase the damages,                              to plead the sub-defense of voluntary
and then recover such damages from the                                payment.″
other party″). The record shows no                                      [*189]    ″Money had and received is a
evidence of other breach of contract                                  category of general assumpsit to restore
damages       claimed     by     appellees.                           money where equity and good conscience
Consequently, we conclude appellees did                               require refund.″ MGA Ins. Co. v. Charles
not meet their summary judgment burden                                R. Chesnutt, P.C., 358 S.W.3d 808, 813
as to their breach of contract claim. See                             (Tex. App.—Dallas 2012, no pet.); accord
Petras, 248 S.W.3d at 477; Barnett, 123                               Edwards v. Mid-Continent Office Distribs.,
S.W.3d at 815; see also TEX. R. CIV. P.                               L.P., 252 S.W.3d 833, 837 (Tex.
166a(c).                                                              App.—Dallas 2008, pet. denied). ″A cause
                                                                      of action for money had and received is not
We decide in favor of appellants on their
                                                                      premised on wrongdoing, but ’looks only
second issue.6
                                                                      to the justice of the case and inquires
2. Money Had and Received                                             whether the defendant has received money
                                                                      which rightfully belongs to another.’″ MGA
In their third issue, appellants contend ″the                         Ins. Co., 358 S.W.3d at 813 (quoting Amoco
trial court erred in granting summary                                 Prod. Co. v. Smith, 946 S.W.2d 162, 164
judgment on [a]ppellees’ claims for money                             (Tex. App.—El Paso 1997, no writ)). ″In
had and received because recovery is barred                           short, it is an equitable doctrine applied to
by the voluntary payment doctrine.″                                   prevent unjust enrichment.″ Id. ″To prove
Appellees respond in part that this argument                          a claim for money had and received, a
6
    In their [**32] first issue, appellants contend ″the trial court erred in granting summary judgment on [a]ppellees’ claim for breach
of contract because [a]ppellees failed to conclusively prove causation.″ In light of our disposition of appellants’ second issue, we need
not reach appellants’ first issue. See TEX. R. APP. P. 47.1.

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plaintiff must show that a defendant holds 515-16 (Tex. 1998) (″[T]he doctrine
money which in equity and good [**35] of equitable estoppel requires: (1) a
conscience belongs to him.″ Id.              false representation or concealment of
Under the voluntary payment rule, material facts; (2) made with knowledge,
″’[m]oney voluntarily paid on a claim of actual or constructive, of those facts; (3)
right, with full knowledge of [**34] all the with the intention that it should be acted
facts, in the absence of fraud, deception, on; (4) to a party without knowledge or
duress, or compulsion, cannot be recovered means of obtaining knowledge of the facts;
back merely because the party at the time (5) who detrimentally relies on the
of payment was ignorant of or mistook the representations.″). We conclude appellants’
law as to his liability.’″ BMG Direct Mktg., third issue presents nothing for this Court’s
Inc. v. Peake, 178 S.W.3d 763, 768 (Tex. review. See TEX. R. CIV. P. 166a(c).
2005) (quoting Pennell v. United Ins. Co.,                          We decide against appellants on their third
150 Tex. 541, 243 S.W.2d 572, 576 (Tex.                             issue.7
1951)). ″The rule is a defense to claims
asserting unjust enrichment; that is, when a                        3. Objections to Berryman’s Affidavit
plaintiff sues for restitution claiming a
payment constitutes unjust enrichment, a     Next, we address appellants’ ninth issue,
defendant may respond with the               in which they assert the trial court ″erred in
voluntary-payment rule as a defense.″ Id.;   sustaining [a]ppellees’ objections to
see Miga v. Jensen, 299 S.W.3d 98, 103       [a]ppellants’ summary judgment evidence.″
(Tex. 2009) (voluntary payment rule is ″a    Specifically, appellants assert the trial court
defense to a restitution claim″).            abused its discretion by [**36] sustaining
                                             appellees’ objections to Berryman’s
The record shows appellants did not assert
                                             affidavit respecting ″improper conclusions
the voluntary payment rule as a defense or
                                             and opinions,″ irrelevant testimony, hearsay
address voluntary payment in their
                                             testimony, and lack of required attachments.
summary judgment response. See BMG
Direct Mktg., Inc., 178 S.W.3d at 768; [*190] Appellees respond in part that
TEX. R. CIV. P. 166a(c). Further, appellants ″[a]ppellants waived any alleged error by
cite no authority, and HN8 we have found failing to address independent and
none, to support their assertion that the alternative grounds to exclude evidence.″
voluntary payment rule is a ″sub-defense″ Specifically, appellees assert in part that
of a ″general equitable estoppel defense.″ appellants ″nowhere address″ appellees’
Cf. Johnson & Higgins of Tex., Inc. v. (1) supplemental objection ″to the entirety
Kenneco Energy, Inc., 962 S.W.2d 507, of Berryman’s affidavit for failing to be
7
    The record shows that in their motion for summary judgment, appellees requested damages of $333,666.63 in connection with
plaintiffs’ claim for money had and received. Further, the trial court’s judgment does not show the damages awarded therein are based
on a particular claim. Therefore, the record shows plaintiffs’ claim for money had and received, alone, supports the full amount of
damages awarded in the judgment.

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based on personal knowledge″ and (2)             As to appellees’ objection ″to the entirety
″objections to paragraphs 9, 12, 15, 16, 19,     of Berryman’s affidavit for failing to be
22, 24, and 28 of Berryman’s affidavit as        based on personal knowledge,″ appellants
being a sham affidavit that directly             contend in their reply brief in this Court
contradicted his deposition testimony.″          that they ″properly addressed [appellees’]
                                                 personal knowledge arguments, and
HN9 We review a trial court’s ruling that        therefore, did not waive their right to argue
sustains an objection to summary judgment        against them on appeal.″ According to
evidence for an abuse of discretion. Cantu       appellants, in their initial appellate brief,
v. Horany, 195 S.W.3d 867, 871 (Tex.             they (1) ″cite to [Berryman’s] testimony
App.—Dallas 2006, no pet.); Bradford             that he was present [**38] during his
Partners II, L.P. v. Fahning, 231 S.W.3d         conversations with [Brinkmann] and certain
513, 521 (Tex. App.—Dallas 2007, no              JBBI      employees,       and     therefore
pet.). ″[W]hen an appellee urges several         demonstrated he had the personal
objections to a particular piece of evidence     knowledge regarding what statements were
and, on appeal, the appellant complains of       made during those conversations″; (2)
its exclusion on only one of those bases,        ″dedicated an entire section of their brief
the appellant has waived that issue for          to explaining how the statements of
appeal because he          [**37] has not        Brinkmann and his employees were not
challenged all possible grounds for the          hearsay because the statements constitute
trial court’s ruling that sustained the          admissions by a party opponent″; and (3)
objection.″ Cantu, 195 S.W.3d at 871; see        explained ″how [appellees’] own internal
Bradford Partners, 231 S.W.3d at 521;            business records were the source of
Goodenberger v. Ellis, 343 S.W.3d 536,           [Berryman’s] personal knowledge.″
540 (Tex. App.—Dallas 2011, pet. denied). First, appellants’ citations in their initial
                                               appellate brief that purportedly show
As described above, appellants filed an
                                               Berryman’s ″personal knowledge″ as to
initial brief and a reply brief in this Court.
                                               his conversations with Brinkmann and
In those briefs, appellants do not address
                                               JBBI employees appear in a section of
appellees’ objections that portions of
                                               appellants’ brief addressing objections to
Berryman’s affidavit constituted a ″sham ″conclusory statements″ of Berryman. The
affidavit.″ Therefore, we conclude issue of whether Berryman’s ″personal
appellants have presented no challenge in knowledge″ was based on hearsay was not
this Court to the trial court’s sustaining of addressed with respect to those statements.
appellees’ ″sham affidavit″ objections
respecting paragraphs 9, 12, 15, 16, 19, 22, Second, in the portion of appellants’ initial
24, and 28 of Berryman’s affidavit. See appellate brief addressing appellees’
Cantu, 195 S.W.3d at 871; Bradford hearsay objections, appellants assert
Partners, 231 S.W.3d at 521.                   appellees are ″incorrect″ that Berryman’s
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affidavit contained hearsay. Then,                                 show testimony fits within exception).
appellants contend, ″For one, contrary to                          Appellants do not otherwise cite any
[appellees’] arguments, the statements of                          ″statements of Brinkmann and his
people in [**39] [appellees’] accounting                           employees″ that they contend ″constitute
department that certain submitted                                  admissions by a party opponent.″
reimbursements had been approved (CR at
                                                                   Finally, in the third portion of appellants’
712) fall under the hearsay exception for
                                                                   initial brief to which they direct this Court,
admissions [*191] of a party opponent.″
                                                                   appellants specifically address appellees’
In support of that contention, appellants
                                                                   objection that Berryman’s affidavit should
cite Texas Rule of Evidence 801(e)(2)(D).
See HN10 TEX. R. EVID. 801(e)(2)(D)                                be struck because Berryman did not attach
(providing hearsay exception for statement                         required documents pursuant to Texas Rule
by party’s agent or servant concerning                             of Civil Procedure 166a(f). See TEX. R. CIV.
matter within scope of agency or                                   P. 166a(f) (providing in part that ″[s]worn
employment made during existence of                                or certified copies of all papers or parts
relationship). The page of the record                              thereof referred to in an affidavit shall be
specifically cited by appellants, page 712,                        attached thereto″). Appellants cite the
is a page of Berryman’s affidavit that                             following statement of Berryman in his
contains paragraphs 26 and 27 and portions                         affidavit:
of paragraphs 25 and 28. The only                                      I am personally aware of my own
statement on that page pertaining to                                   actions [**41] since 2001, and the
appellees’ ″accounting department″ reads                               damages claimed by [d]efendants in
as follows: ″Part of my claim for breach of                            this action. In addition, I have
contract based on unreimbursed expenses                                personal knowledge of the facts set
occurred in 2006 and 2007 as well as 2008.                             forth below based on my direct
I was assured that these reimbursements                                conversations with [Brinkmann];
had been approved by the accounting                                    employees of [JBBI]; the business
department and would be forwarded to                                   records of [JBBI] . . . ; and the
me.″ While rule 801(e)(2)(D) provides a                                business records of [BSF].
hearsay exception for certain statements
by a ″party’s agent or servant,″ the page of                       Then, appellants argue that because
Berryman’s affidavit cited by appellants                           Berryman ″simply identified a source from
does not state who ″assured″ Berryman the                          which his personal knowledge was
reimbursements in question had been                                developed″ and ″does not refer to
 [**40] approved.8 See Volkswagen of Am.,                          documents in this paragraph,″ he ″was not
Inc. v. Ramirez, 159 S.W.3d 897, 908 (Tex.                         required to attach documents.″ Appellants
2004) (proponent of hearsay has burden to                          do not address hearsay in that argument.
8
    The record shows paragraph 24 of Berryman’s affidavit also addressed approval of reimbursements. However, (1) appellants do not
cite to paragraph 24 in their appellate argument respecting hearsay and (2) Berryman’s statements in paragraph 24 were among those
objected to pursuant to the ″sham affidavit″ objections described above.

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Because the trial court could have granted        performance does not bar application of
appellees’ objections to Berryman’s               the statute of frauds in this case because
affidavit on grounds not challenged by            appellants waived that defense.
appellants, we conclude appellants have
                                          HN11 Under the statute of frauds, certain
waived their complaint that the trial court
                                          contracts are not enforceable unless they
erred by sustaining appellees’ objections
                                          are in writing and signed by the person
to their summary judgment evidence. See
                                          against whom enforcement of the contract
Goodenberger, 343 S.W.3d at 540 (citing   is sought. See TEX. BUS. & COM. CODE ANN.
Cantu, 195 S.W.3d at 871).                § 26.01(a) (West 2009); S & I Mgmt., Inc.
We decide appellants’ ninth issue against v. Sungju Choi, 331 S.W.3d 849, 854 (Tex.
them.                                     App.—Dallas 2011, no pet.). The party
                                          pleading the statute of [**43] frauds bears
4. Appellants’ Breach of Contract the burden of establishing its applicability.
Counterclaim                              See Kalmus, 390 S.W.3d at 589.
Now, we address together appellants’ tenth        HN12 The statute of frauds applies to,
and eleventh issues, in which they assert         inter alia, ″an agreement which is not to be
error by the trial court in granting summary      performed within one year from the date of
judgment on their counterclaim for ″breach        the making of the agreement.″ TEX. BUS. &
of the agreement to reimburse expenses.″          COM. CODE ANN. § 26.01(b)(6). When a
 [**42] Specifically, in their tenth issue,       promise or agreement, either by its terms
  [*192] appellants assert the evidence           or by the nature of the required acts,
″raises material questions of fact as to the      cannot be completed within one year, it
existence, terms, and breach″ of the              falls within the statute of frauds and is
agreement to reimburse expenses. In their         unenforceable unless it is in writing and
eleventh issue, appellants contend in part        signed by the person to be charged. See id.
that material fact questions exist pertaining     § 26.01(a), (b)(6); Kalmus, 390 S.W.3d at
to the applicability of the statute of frauds,    589. If the agreement is capable of being
including whether the agreement to                performed within one year, it is not within
reimburse expenses (1) was an immaterial          the statute of frauds. Kalmus, 390 S.W.3d
                                                  at 589 (citing Gerstacker v. Blum
change to the Agreement, (2) ″modified
                                                  Consulting Eng’rs., Inc., 884 S.W.2d 845,
only the one year renewals of the
                                                  849 (Tex. App.—Dallas 1994, writ denied)).
Agreement,″ (3) ″was independent of the
                                                  The question of whether an agreement
Agreement,″ and (4) is enforceable under
                                                  falls within the statute of frauds is one of
the doctrine of partial performance.
                                                  law. See Bratcher v. Dozier, 162 Tex. 319,
Appellees respond that ″the statute of            346 S.W.2d 795, 796 (Tex. 1961); Biko v.
frauds   bars    appellants’    expense           Siemens Corp., 246 S.W.3d 148, 159 (Tex.
reimbursement breach of contract claim.″          App.—Dallas 2007, pet. denied). However,
Further,   appellees    argue     partial         whether the circumstances of a particular
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case fall within an exception to the statute       Dekkers, 380 S.W.3d 315, 324 (Tex.
of frauds is generally a question of fact.         App.—Dallas 2012, no pet.). The
See Kalmus, 390 S.W.3d at 589;                     performance a party relies on to remove a
 [**44] Adams v. Petrade Int’l, Inc., 754          parol agreement from the statute of frauds
S.W.2d 696, 705 (Tex. App.—Houston [1st            ″must be such as could have been done
Dist.] 1988, writ denied).                         with no other design than to fulfill the
                                                   particular agreement sought to be
HN13 In deciding whether an agreement is
capable of being performed within one              enforced.″ Breezevale, 82 S.W.3d at 439-40.
year, we compare the date of the agreement         Without such precision, the acts of
to the date when the performance under             performance do not tend to prove the
the agreement is to be completed. Kalmus,          existence of the parol agreement sought to
390 S.W.3d at 590. If there is a year or           be enforced. Id. at 440.
more between those two reference points,           First, we address appellants’ argument in
a writing is required to render the                their eleventh issue that the alleged
agreement enforceable. Id. When the date           agreement to reimburse expenses ″modified
performance will be completed cannot be            only the one year renewals of the
readily ascertained, the law provides that if      Agreement″ and therefore was not barred
performance could conceivably be                   by the statute of frauds. Appellants contend
completed within one year of the                   ″[e]ven if the statute of frauds initially
agreement’s making, a writing is not               applied to the expense reimbursement
required to enforce it. Id.; see also Miller v.    agreement as a modification of the 2001
Riata Cadillac Co., 517 S.W.2d 773, 775            Agreement, an agreement to reimburse
(Tex. 1974) (″If a contract can, from the          expenses can be implied regarding the one
terms of the agreement, be performed               year renewals of the 2001 Agreement that
within one year it is not within the Statute       would not be barred by the statute of
of Frauds.″).                                      frauds.″ According to appellants, (1)
HN14 Under the partial performance                 ″[o]nce the initial term of the 2001
exception to the statute of frauds, contracts      Agreement        [**46] expired, and it
that have been partly performed, but do not        automatically renewed on an annual basis,
meet the requirements of the statute of            it was no longer covered by the statute of
frauds, may be enforced in equity if denial        frauds because it was capable of being
of enforcement would amount to a virtual           performed within a year″ and (2)
fraud. Exxon Corp. v. Breezevale Ltd., 82          ″[l]ikewise, the modification of the 2001
S.W.3d 429, 439 (Tex. App.— [*193] Dallas          Agreement to allow for expense
2002, pet. denied). [**45] The partial             reimbursement would not be covered by
performance must be unequivocally                  the Statute of Frauds.″ In support of their
referable to the agreement and                     argument, appellants cite Garcia v. Karam,
corroborative of the fact that a contract          154 Tex. 240, 276 S.W.2d 255, 257 (Tex.
actually was made. Id.; Holloway v.                1955), for the statement that ″[i]f neither
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the portion of the written contract affected      convey without an inventory, the Statute of
by the subsequent modification nor the            Frauds would have been wholly
matter encompassed by the modification            inapplicable.″ Id. at 257. The court stated
itself is required by the Statute of Frauds to    that the oral modification did not change
be in writing, then the oral modification         the ″subject matter of the contract,″ but
will not render the contract unenforceable.″      ″only the method of performing it.″ Id.
Additionally, appellants cite Miller for the      Therefore, the court concluded, the
statement that ″contracts that can be             subsequent oral modification of the written
performed within one year are not within          contract was valid. Id.
the Statute of Frauds.″ Miller, 517 S.W.2d
at 775.                                           In Miller, [**48] Kenneth F. Miller was
                                                  employed by Riata Cadillac Co. as a used
Garcia involved a purchaser’s action for a        car manager pursuant to an oral contract.
seller’s alleged breach of a written contract      [*194] Miller, 517 S.W.2d at 774. Miller
for the sale of realty. Garcia, 276 S.W.2d at     was terminated after approximately three
256; see also TEX. BUS. & COM. CODE ANN.          and one-half years and filed suit against
§ 26.01 (b)(4) (providing contract for sale       Riata to enforce the alleged terms of the
of real estate is within statute of frauds).      oral contract. Id. Riata argued the contract
The contract provided that $20,000 of the         was an unenforceable contract within the
purchase price was to [**47] be paid by           statute of frauds. Id. On appeal, the supreme
merchandise. Garcia, 276 S.W.2d at 256.           court concluded in part that because it was
Subsequent to executing the written               undisputed that the contract was an
contract, the parties orally agreed that the      ″indefinite term employment contract,″ it
seller would accept the merchandise               was considered performable in one year
without the necessity of taking inventory.        and therefore was not within the statute of
Id. The purchaser later filed and prevailed       frauds. Id. at 776.
in a suit to enforce the contract as modified     Unlike the case before us, neither Garcia
by the oral agreement. Id. On appeal to the       nor Miller involved a contract with an
supreme court, the seller contended the           initial term longer than one year followed
oral modification of the contract was             by automatic annual renewals. Further,
prohibited by the statute of frauds because       neither case discussed application of the
it amounted to a ″complete change″ of the         statute of frauds to such a contract.
terms of the contract between the parties         Therefore, we do not find those cases
and was an attempt to ″substitute an entirely     instructive. Appellants cite no other
new consideration″ for the one required by        authority, and we have found none, to
the writing. Id. The supreme court                support their position that ″[o]nce the initial
reasoned, ″Had the [plaintiff] contracted in      term of the 2001 Agreement expired, . . . it
writing for the sale of his merchandise for       was no longer covered by the statute of
’$20,000.00, at invoice’, and subsequently        frauds because it was capable of being
agreed orally with the [defendant] to             performed within a year.″ Cf. Hampton v.
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Lum, 544 S.W.2d 839, 841 (Tex. Civ.               position, appellants cite a case involving
App.—Texarkana       1976,     no    writ)        an oral modification to reduce a real estate
 [**49] (construing lease as ″demise for          brokerage commission in a contract to sell
twenty-four months″ where lease provided          real estate. See Am. Garment Props., Inc. v.
for one-year period that automatically            CB Richard Ellis-El Paso, L.L.C., 155
renewed for another year in the absence of        S.W.3d 431, 437 (Tex. App.—El Paso 2004,
notice).                                          no pet.). However, we concluded above
                                                  that the alleged modification of the 2001
As described above, the record shows the          Agreement to allow for expense
Agreement stated it was for ″a term of five       reimbursement was not capable of being
years starting August 1, 2001 and is to be        performed within one year. Appellants cite
renewed annually thereafter unless either         no authority, and HN15 we have found
parties [sic] gives notice in writing 90 days     none, to support the position that a
prior to the end of any anniversary date.″        modification not capable of being
Additionally, the record shows (1)                performed within one year falls outside the
Berryman testified in part in his deposition      statute of frauds if it constitutes an
that at approximately the same time the           ″immaterial change″ to the original
Agreement was executed in 2001, he and            contract. See TEX. BUS. & COM. CODE ANN. §
JBBI entered into an oral agreement that          26.01(b)(6). We cannot agree with
Berryman’s business expenses would be             appellants that the materiality of the
reimbursed by JBBI and (2) Brinkmann              modification in question has any bearing
testified JBBI reimbursed Berryman for            on the application of the statute of frauds
various expenses starting in 2001 and             in this case.
continuing until at least 2006. We cannot
agree with appellants that there is evidence      Third, appellants contend in their eleventh
in the record that the alleged modification       issue that ″[e]ven if the statute of frauds
of the 2001 Agreement to allow for expense        applies to modifications [**51] of the
reimbursement was capable of being                2001      Agreement,        the    expense
performed within one year.                        reimbursement agreement alternatively
                                                  should be viewed [*195] not as a direct
Second, we address appellants’ assertion          modification of the 2001 Agreement, but
in their eleventh issue that the statute of       rather as independent of the 2001
frauds does not bar the modification in           Agreement.″ According to appellants,
question because it was ″an immaterial            because there is no time period fixed for
change        to     the       Agreement.″        performing the ″independent″ expense
 [**50] According to appellants, the statute      reimbursement agreement, ″it must be
of frauds is applicable to the modification       treated as capable of being performed
in this case only if ″the modification            within a year.″ Therefore, appellants assert,
materially effects the obligations of the         ″if the expense reimbursement agreement
underlying agreement.″ In support of that         is independent of the 2001 Agreement, the
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statute of frauds would not bar its takes the Agreement outside the statute of
enforcement.″                                 frauds.″ In a footnote to that statement,
                                              appellants cited the portion of Breezevale
Appellees contend appellants pleaded and that states the law described above
argued in the trial court that ″there was an respecting partial performance. See 82
oral modification of the written S.W.3d at 439. Appellants’ argument as to
Agreement.″         (emphasis      original). ″part performance″ in the trial court
According to appellees, appellants did not contained no other statements, analysis, or
assert in the trial court that ″the expense citations to authority or to the record.
reimbursement agreement was a stand
alone agreement″ and therefore appellants HN16 ″[A] party submitting summary
cannot make that contention for the first judgment evidence ’must specifically
time on appeal. Further, appellees argue, identify the supporting proof on file that it
″even if such an agreement existed, it seeks [**53] to have considered by the
could not have been performed within one trial court.’″ Bich Ngoc Nguyen v. Allstate
year because it would necessarily correlate Ins. Co., 404 S.W.3d 770, 776 (Tex.
to the five (5) year term of the Agreement.″ App.—Dallas 2013, pet. denied) (quoting
                                              Arredondo v. Rodriguez, 198 S.W.3d 236,
The record shows appellants asserted in 238 (Tex. App.—San Antonio 2006, no
their amended response to the motion for pet.)). On this record, we conclude the trial
summary        [**52] judgment that the court did not err by concluding appellants
agreement to pay expenses was an ″oral did not satisfy their burden to raise a fact
modification″ of the Agreement and/or an issue as to partial performance. See id. at
″implied in fact modification.″ Appellants 777; see also MGA Ins. Co., 358 S.W.3d at
did not argue in the trial court that ″the 815; TEX. R. CIV. P. 166a(i).
expense reimbursement agreement is
                                              Based on the preceding analysis, we
independent of the 2001 Agreement.″
                                              conclude the trial court did not err by
Consequently, that argument presents
                                              concluding the requirements of the statute
nothing for this Court’s review. See TEX. R.
                                              of frauds apply to the alleged agreement to
CIV. P. 166a(c); McConnell, 858 S.W.2d at
                                              reimburse expenses. TEX. BUS. & COM.
343; Clear Creek Basin Auth., 589 S.W.2d
                                              CODE ANN. § 26.01(a), (b)(6). We decide
at 676-77.
                                              against appellants on their eleventh issue.
Fourth, we address appellants’ argument          In their tenth issue, appellants assert that
that the partial performance exception to        even if the trial court properly excluded
the statute of frauds applies in this case.      Berryman’s affidavit, the remaining
The record shows that in their amended           evidence in the record ″raises material
response to appellees’ motion for summary        questions of fact as to the existence, terms,
judgment in the trial court, appellants          and breach″ of the agreement to reimburse
asserted ″part performance by the parties        expenses. In a footnote to their appellate
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argument on this issue, appellants contend       Id. § 37.004(a).
appellees ″err in assuming that the expense
reimbursement agreement must have been           HN18 We review [**55] declaratory
in writing.″ However, we concluded               judgments under the same standards as
 [**54] above that the trial court did not
                                                 other judgments. Id. § 37.010; Lidawi v.
  [*196] err by concluding the expense           Progressive Cnty. Mut. Ins. Co., 112 S.W.3d
reimbursement agreement was within the           725, 730 (Tex. App.—Houston [14th Dist.]
statute of frauds. See id. Because the           2003, no pet.). We look to the procedure
record does not show the expense                 used to resolve the issue at trial to
reimbursement agreement was in writing           determine the standard of review on appeal.
and signed by the party to be charged, that      Lidawi, 112 S.W.3d at 730. Thus, in the
agreement       is    unenforceable.    Id.      case before us, we review the propriety of
Consequently, the evidence described by          the trial court’s declaratory judgment under
appellants has no bearing on whether the         the same standards we apply to a summary
trial court erred in granting summary            judgment. Id.
judgment respecting the agreement to             a. Redundancy
reimburse expenses.
                                           In their fourth issue, appellants assert ″the
We decide appellants’ tenth issue against trial court erred in granting summary
them.                                      judgment on [a]ppellees’ declaratory
5. Declaratory Judgment                    judgment claim because declaratory relief
                                           was redundant with [a]ppellees’ breach of
Chapter 37 of the Texas Civil Practice and contract claim and therefore barred as a
Remedies Code is titled ″Declaratory matter of law.″ Appellees respond in part
Judgments.″ See TEX. CIV. PRAC. & REM. that ″[a]ppellants did not object or
CODE ANN. §§ 37.001-37.011 (West 2008). otherwise argue to the trial court that
Section 37.004 of that chapter provides in declaratory relief was ’merely redundant
part                                       or duplicative’ of [a]ppellees’ other claims″
   HN17 A person interested under a        and ″cannot do so for the first time on
   deed, will, written contract, or other  appeal.″ Appellants argue in their reply
   writings constituting a contract or     brief in this Court that their complaint
   whose rights, status, or other legal    respecting the redundancy of the
   relations are affected by a statute,    declaratory judgment claim was not
   municipal ordinance, contract, or       ″waived″ by their failure to object at the
   franchise may have determined any       trial level because (1) [**56] ″[a] failure to
   question of construction or validity    object is not waiver when error is apparent
   arising under the instrument, statute,  from the face of the record″ and (2) ″it is
   ordinance, contract, or franchise and   apparent from the face of the record that
   obtain a declaration of rights, status, [plaintiffs’] breach of contract and
   or other legal relations thereunder.    declaratory judgment claims involve the
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same issues and resolution of one adds                                to consider complaint that declaratory
nothing to the other.″                                                judgment claim was ″duplicative″ as
In support of their argument that their                               grounds for reversal of summary judgment
failure to object did not constitute ″waiver,″                        because such issue was not raised in trial
appellants cite Coastal Transport Co., Inc.                           court).
See 136 S.W.3d at 233. However, unlike
                                                                      We decide against appellants on their fourth
the case before us, that case involved a
                                                                      issue.
no-evidence challenge asserted for the first
time on appeal. The supreme court                                     b. Fact Questions Respecting Trial Court’s
concluded in that case that when such a                               Declarations
challenge is ″restricted to the face of the
record (for example, when expert testimony                            In their fifth and sixth issues, appellants
is speculative or conclusory on its face),″ a                         contend the trial court erred in granting
party ″may challenge the legal sufficiency                            summary judgment on appellees’
of the evidence even in the absence of any                            declaratory judgment claim because fact
objection to its admissibility.″ In the case                          questions exist (1) ″as to the trial court’s
before us, appellants do not explain, and                             declarations″ and (2) ″concerning whether
the record does not show, how their                                   [a]ppellees’ conduct excused further
complaint respecting redundancy is a                                  performance by [a]ppellants.″9
challenge to the legal sufficiency of the
                                                                      First, we consider appellants’ assertion in
evidence.
                                                                      their sixth issue that ″any breach by
    [*197]  On this record, we conclude                               [appellants] was excused by [appellees’]
appellants’ fourth issue presents nothing                             conduct.″ In support of their argument,
for this Court’s review. See TEX. R. CIV. P.                          appellants cite the general rule that
166a(c); cf. Narisi v. Legend Diversified                             ″performance is excused when a party to a
Inv., 715 S.W.2d 49, 51-52 (Tex.                                      contract prevents the other from
App.—Dallas 1986, writ ref’d n.r.e.)                                  performing.″ See O’Shea v. Int’l Bus. Mach.
 [**57] (rejecting argument that declaratory                          Corp., 578 S.W.2d 844, 846 (Tex. Civ.
judgment counterclaim was redundant                                   App.—Houston [1st Dist.] 1979, writ ref’d
where issue was not raised until after                                n.r.e.). Appellants contend that ″[u]nder
judgment was signed); City of Dallas/DISD                             this general rule, actions of [appellees] that
v. US W. Fin. Servs., Inc., No.                                       undermined or interfered with [appellants’]
05-92-01106-CV, 1993 WL 147262, at *5                                 ability to sell or market products excused
(Tex. App.—Dallas Apr. 27, 1993, no writ)                             any alleged breach of such duties because
(not designated for publication) (declining                           such actions prevented performance.″
9
   Additionally, appellants assert in part in their sixth issue that summary judgment on appellees’ breach of contract claim was precluded
by fact issues respecting whether appellants’ performance was excused. However, we concluded in our analysis pertaining to issue two
above that the trial court erred by granting [**58] summary judgment in favor of appellees on their breach of contract claim. Therefore,
we need not address the portion of appellants’ sixth issue pertaining to appellees’ breach of contract claim.

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Additionally, appellants cite O’Shea in          excerpts from Berryman’s deposition cited
support of their position that ″[a]ny            by appellants include Berryman’s
question of fact as to whether [appellees]       testimony that (1) during two separate
interfered with [appellants’] performance        meetings in 2006 and 2008, Brinkmann
would preclude summary judgment.″                stated in front of retailers’ representatives
                                                 that Berryman ″didn’t work″ and buyers
Appellees respond in part that appellants        did not want to do business with Berryman;
″cite [**59] no authority for the proposition    (2) in approximately April 2008, JBBI
that ’undermining’ or ’interfering’ are the      hired Mike Bush; and (3) at the time Bush
equivalent of preventing performance.″           was hired, Bush told Berryman that
Further, appellees argue the trial court         Berryman was ″being replaced″ by Bush.
″properly disposed of appellants’ attempt        Additionally, appellants cite deposition
to excuse their breach as a matter of law″       testimony of Brinkmann respecting the
because ″[a]ppellees presented to the trial      hiring of Bush.
court undisputed evidence that [a]ppellants
                                              The record shows Berryman testified in his
were at all times able to perform despite
                                              deposition that he was still able to perform
the actions [a]ppellants want to complain
                                              his duties under the Agreement after the
about.″
                                              negative comments made by Brinkmann in
The court in O’Shea did not address the 2006 and 2008. Therefore, we cannot
question of whether evidence that a party conclude those comments prevented
″interfered″ with performance constitutes Berryman’s performance. In their reply
evidence that performance was prevented. brief in this Court, appellants assert that
See 578 S.W.2d at 846. Appellants cite no even if the ″defamatory statements″ of
other authority, and we have found none, Brinkmann did not prevent performance,
in support of their position that ″[a]ny appellees ″wholly frustrated [appellants’]
question of fact as to whether [appellees] ability to perform″ because they
interfered with [appellants’] performance ″effectively eliminated [Berryman’s]
would preclude summary judgment.″ In position″ by hiring Bush and ″wresting
support of their argument that the evidence away [Berryman’s] authority to act on his
raises a fact question as to whether accounts.″ However, the deposition
appellants’ performance of the Agreement [**61] testimony cited by appellants does
was ″prevented,″ appellants cite portions not show Berryman’s performance was
of (1) Berryman’s affidavit and (2) the prevented by the hiring of Bush. Further,
depositions of Berryman and [*198] Berryman testified in his deposition that he
Brinkmann. We concluded above that the was not replaced by Bush. On this record,
trial court did not err by sustaining we cannot conclude the evidence raises a
appellees’ objection to Berryman’s fact question as to whether appellants’
affidavit. Therefore, we [**60] do not performance of the Agreement was
consider that affidavit in our analysis. The ″excused.″
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We decide against appellants on their sixth                                 notice to the other party to the
issue.                                                                      contrary.    Here,     Defendants’
                                                                            Agreement Termination Letter was
As to the trial court’s four declarations in                                received by Plaintiffs in May of
the judgment, all are challenged by                                         2008, and the Agreement expired by
appellants. However, in light of our                                        its own terms on August 1, 2008 as
conclusions above, appellants’ arguments                                    a result.
respecting the trial court’s declaration ″c″
need not be addressed.10 Consequently, we                                   ....
address only appellants’ challenges                                              [*199]   d. JBBI did not,
respecting the following declarations:                                      constructively or otherwise, breach
                                                                            the Agreement.
     a. Defendants ceased performing
     under the Agreement in, at least,                                 With respect to declaration ″a,″ appellants
     May of 2008 when Berryman                                         argue they ″presented evidence that the
     refused to fulfill his duties and                                 2001 Agreement had [**63] already been
     obligations for Plaintiffs. This                                  constructively terminated by [appellees’]
     constituted a material breach of the                              conduct that undermined and interfered
     Agreement. The Agreement was at a                                 with [appellants’] performance of the
     minimum terminable from that point                                contract.″ According to appellants, ″[t]his
     forward by Plaintiffs, and after                                  evidence raised a fact question as to
     making every reasonable effort to                                 whether [appellees] breached the
     communicate with Berryman,                                        agreement, which should have prevented
     Plaintiffs lawfully terminated the                                the trial court from entering summary
     Agreement in August 2008. Thus,                                   judgment and making the above
     no further obligations are owed or                                declaration.″
     due to Defendants under the                                       Appellees respond in part that appellants’
     Agreement.                                                        argument       respecting      ″constructive
     b. Notwithstanding [**62] Plaintiffs’                             termination″ is waived because appellants
     lawful termination of the Agreement,                              ″do not cite or analyze any cases in alleged
     the Agreement expired on August 1,                                support of their contention that constructive
     2008. The Agreement provides for                                  termination       principles     apply     in
     automatic renewal upon the                                        non-employment contract cases or, if such
     anniversary date of the contract only                             did apply, connecting evidence to elements
     if neither party provides written                                 of constructive termination to demonstrate
10
    Specifically, appellants contend the trial court’s declaration ″c″ was issued in error because ″[t]he existence of fact questions
surrounding the partial performance doctrine and the modification of the 2001 Agreement’s one year extensions prevented [appellees]
from conclusively proving that the oral agreements [to reimburse expenses] were not part of the 2001 Agreement.″ We concluded in the
analysis above pertaining to issue eleven that the trial court did not err by concluding no fact questions existed as to partial performance
and ″modification of the 2001 Agreement’s one year extensions.″

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the existence of a fact issue.″ Additionally,                       [appellees’] contention that ’constructive
appellees contend ″[t]he evidence is                                termination’ is a concept limited to
uncontroverted that working conditions did                          application in the employment context.″
not force [a]ppellants to stop performing,                          According to appellants, ″constructive
and that [a]ppellants did not ’resign’ or                             [**65] termination is a concept that is
stop performance when the alleged                                   recognized in many types of relationships.″
offending incidents occurred, such being                            In support of that assertion, appellants cite
requirements of a constructive discharge                            cases that purportedly relate to constructive
claim in the employment context.″                                   termination in the contexts of franchise
In their reply brief in this Court, appellants                      agreements, licensing agreements, and
contend appellees’ allegations of ″waiver″                          leases. However, appellants do not address
fail for two [**64] reasons. First, appellants                      the elements of constructive termination in
assert appellees ″misunderstand the point″                          their briefs in this Court or explain how
of appellants’ argument. Specifically,                              appellees’ alleged conduct in question
appellants assert ″[t]he ’constructive                              constituted constructive termination.
termination’ language was loosely used to                           Consequently, we conclude appellants’
argue that [appellees] breached before                              argument        respecting      constructive
[appellants’] alleged breach, and therefore,                        termination presents nothing for this
the further performance by [appellants]                             Court’s review.11 See TEX. R. APP. P. 38.1(i).
was excused.″ Appellants contend they                               As to declaration ″d,″ appellants contend
″presented summary judgment evidence                                that declaration was issued in error because
that [appellees] breached before [May                               appellants ″presented evidence that raised
2008] by engaging in conduct that                                   a fact question as to [appellees’] breach of
undermined        and      interfered    with                       the 2001 Agreement by undermining and
[appellants’] performance of the contract.″                         interfering with [appellants’] performance.″
In support of that assertion, appellants cite                       In support of that argument, appellants cite
the same evidence cited by them in their                            to their analysis pertaining [*200] to their
argument pertaining to prevention of                                sixth issue and the evidence cited therein.
performance in their sixth issue above. To                          However, again, to the extent appellants
the extent appellants assert an argument                            assert an argument distinct [**66] from
distinct from their argument pertaining to                          their argument pertaining to their sixth
their sixth issue, appellants do not provide                        issue, appellants do not provide analysis or
analysis or authority for such argument.                            authority for such argument and therefore
Therefore, such argument presents nothing                           present nothing for this Court’s review.
for this Court’s review. See TEX. R. APP. P.                        See TEX. R. APP. P. 38.1(i).
38.1(i). Second, appellants assert in their                         As to the trial court’s declaration ″b,″
reply brief that ″there is no merit to                              appellants contend they presented evidence
11
    In oral argument before this Court, counsel for appellants asserted the Agreement was terminated according to its terms on August
29, 2008.

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that raises fact questions as to the contract provisions and cessation of
termination of the Agreement. Specifically, performance due to breach. See Long Trusts
appellants assert                            v. Griffin, 222 S.W.3d 412, 415-16 (Tex.
                                             2006); Guzman v. Ugly Duckling Car Sales
    [T]he evidence shows that the            of Tex., L.L.P., 63 S.W.3d 522, 528 (Tex.
    termination provision requires 90        App.—San Antonio 2001, pet. denied);
    days’ notice for any termination.        Roma Indep. Sch. Dist. v. Ewing Constr.
    Otherwise the 2001 Agreement             Co., No. 04-12-00035-CV, 2012 Tex. App.
    automatically     renews.     It   is    LEXIS 5968, 2012 WL 3025927, at *2
    undisputed that 90 days’ notice was      (Tex. App.—San Antonio July 25, 2012, no
    not provided by either party. Thus,      pet.) (mem. op.); Atkinson v. Saddlewood
    under the express terms of the 2001      Partners, I, Ltd., No. 04-98-00681-CV,
    Agreement no termination occurred.       1999 Tex. App. LEXIS 4284, 1999 WL
    At the very least, a fact question       371285, at *4 (Tex. App.—San Antonio
    exists that should have prevented        June 9, 1999, pet. denied) (not designated
    the trial court from making this         for publication).
    declaration.
                                             In their reply brief in this Court, appellants
(citations to record omitted).               contend in part that ″[n]o case law is
                                             necessary″ to resolve this issue in their
Appellees respond in part that because
                                             favor because ″it is apparent on the face of
appellants ″cite and analyze no cases for
                                             the record that no evidence supports
their position that the Agreement did not
                                              [**68] the trial court’s declaration that ’the
expire in August 2008 as determined,″ that
                                             Agreement expired by its own terms on
argument is waived. Additionally, appellees
                                             August 1, 2008.’″
assert (1) ″[a]ppellants’ Termination Letter
sent 72 days prior to renewal when coupled Because appellants’ argument is based on
with [a]ppellants’ failure to resume the language of the Agreement, we cannot
performance of the Agreement precluded agree with appellees that appellants waived
 [**67] automatic renewal as [a]ppellees this argument by not citing case law.
under such circumstances are not obligated Further, the cases cited by appellees in
to require [a]ppellants to comply with the support of their argument do not involve
Agreement’s notice provision″; (2) compliance with a contract provision
[a]ppellants’ breach precluded the respecting notice that precludes automatic
Agreement’s renewal″; and (3) ″[n]o fact renewal of the contract. Therefore, we do
questions could exist on this point in any not find those cases instructive.
event″ because ″[t]he meaning of contract
language is a question of law for the The record shows paragraph three of the
court.″ In support of their argument, Agreement stated in part, ″This Agreement
appellees cite cases pertaining to waiver of is for a term of five years starting August
                                  Jamie Graham Page 34 of 40
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1, 2001 and is to be renewed annually                                6. Attorneys’ Fees
thereafter unless either parties [sic] gives
                                                                     In their seventh issue, appellants assert in
notice in writing 90 days prior to the end of
                                                                     part ″the trial court erred in awarding
any anniversary date.″ Berryman’s letter
                                                                     [a]ppellees attorneys’ fees when [a]ppellees
alleging he had been ″constructively
                                                                     failed to conclusively prove the
terminated″ was dated May 20, 2008,
                                                                     reasonableness and necessity of the claimed
which the parties do not dispute is less
                                                                     fees by not segregating fees incurred for
than ninety days prior to August 1, 2008.
                                                                     work on causes of action for which such
Thus, while the trial court’s statement that
                                                                     fees are permitted, from causes of action
″Defendants’ Agreement Termination
                                                                     for which such fees [**70] are barred.″12
Letter was received by [*201] Plaintiffs in
                                                                     According to appellants, (1) ″because
May of 2008″ is not incorrect, we cannot                             [appellees’] cause of action for breach of
agree that ″the Agreement expired by its                             contract fails, the trial court’s award of
own terms on August 1, 2008 as a result.″                            attorneys’ fees cannot be based on that
We conclude [**69] no evidence supports                              action,″ (2) ″[i]t is undisputed that
the trial court’s declaration ″b.″                                   [appellees] presented no evidence
We decide in favor of appellants on the                              segregating the fees incurred in pursuing
portion of their fifth issue respecting the                          their claims,″ and (3) no attempt was made
trial court’s declaration ″b.″ Appellants’                           to segregate attorneys’ fees incurred in
fifth issue is otherwise decided against                             pursuing third-party claims asserted by
them. We reverse declaration ″b″ of the                              Brinkmann, individually, that were later
trial court’s judgment and render judgment                           nonsuited.
denying summary judgment as to that
                                                                     Appellees contend appellants ″waived any
declaration.
                                                                     complaint″ respecting segregation of
However, the record shows (1) the                                    attorneys’ fees because they ″did not object
summary judgment in question was sought                              to [a]ppellees’ attorneys’ fees evidence or
and granted on multiple grounds and (2)                              provide controverting evidence.″ Further,
declaration ″b″ is immaterial to summary                             appellees argue, counsel for appellees
judgment as prayed for by appellees on the                           testified to the trial court ″in great detail″
ground of money had and received and                                 in his affidavit, ″including segregating 15
declarations ″a,″ ″c,″ and ″d.″ Therefore,                           percent of the attorney’s fees incurred.″
the trial court’s error respecting declaration
″b″ does not necessitate reversal of the                             HN19 Texas law does not [**71] allow
entirety of the trial court’s summary                                recovery of attorneys’ fees unless
judgment. See Zimmerhanzel, 346 S.W.3d                               authorized by statute or contract. See, e.g.,
at 724; see also TEX. R. APP. P. 44.1.                               Tony Gullo Motors I, L.P. v. Chapa, 212
12
    Additionally, appellants contend in their seventh issue that ″[a]ppellees’ redundant declaratory judgment action was used simply to
pave a way to attorney fees.″ As described above, appellants’ arguments respecting the redundancy of the declaratory judgment action
were not raised below and present nothing for this Court’s review.

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S.W.3d 299, 310 (Tex. 2006). A person may          Co., L.P. v. Strategic Energy, L.L.C., 348
recover reasonable attorneys’ fees from an         S.W.3d 444, 453 (Tex. App.—Dallas 2011,
individual or corporation, in addition to the      no pet.); see CA Partners v. Spears, 274
amount of a valid claim and costs, if the          S.W.3d 51, 82 (Tex. App.—Houston [14th
claim is for an oral or written contract. TEX.     Dist.] 2008, pet. denied).
CIV. PRAC. & REM. CODE ANN. § 38.001(8);
see Ashford Partners, Ltd. v. ECO Res.,            We concluded above that the trial court
Inc., 401 S.W.3d 35, 40 (Tex. 2012) (″[T]o         erred by granting summary judgment on
qualify for fees under [section 38.001(8)],        plaintiffs’ breach of contract claim.
a litigant must prevail on a breach of             Therefore, attorneys’ fees based on that
contract claim and recover damages.″).             cause of action cannot be recovered. See
Additionally, under section 37.009 of the          TEX. CIV. PRAC. & REM. CODE ANN. §
civil practice and remedies code, the trial        38.001(8). However, as described above,
court in a declaratory judgment proceeding         appellants’ issues pertaining to declarations
may award ″reasonable and necessary                ″a,″ ″c,″ and ″d″ in the final judgment are
attorney’s fees as are equitable and just.″        decided against them in this appeal.
TEX. CIV. PRAC. & REM. CODE ANN. § 37.009;         Therefore, a basis for recovery of attorneys’
see also Jarvis v. Rocanville Corp., 298           fees remains. See TEX. CIV. PRAC. &REM.
S.W.3d 305, 317 (Tex. App.—Dallas 2009,            CODE ANN. § 37.009.
pet. denied).
                                                   The record shows that [**73] in an affidavit
HN20 If any attorneys’ fees relate solely          in the appendix to appellees’ motion for
to a claim for which such fees are                 summary judgment, counsel for appellees
unrecoverable, a claimant must segregate           testified in part (1) at least 85%, or
recoverable from unrecoverable fees.               $127,073, of the attorneys’ fees and
 [*202] Tony Gullo Motors, 212 S.W.3d at           paralegal fees incurred by plaintiffs so far
313. ″[I]t is only when discrete legal             ″are recoverable against the [d]efendants
services advance both a recoverable and            in this lawsuit″; (2) ″it is reasonable to
 [**72] unrecoverable claim that they are          conclude that [plaintiffs’] counsel’s
so intertwined that they need not be               activities cannot all be segregated by task
segregated.″ Id. at 313-14. This standard          and as such are dependent on the same or
does not require more precise proof for            similar sets of facts and circumstances, are
attorneys’ fees than for any other claims or       part of many of the same tasks, and are
expense. Id. at 314. ″[T]o meet a party’s          therefore so intertwined that they cannot
burden to segregate its attorneys’ fees, it is     be so separated or segregated″ (3) a fair
sufficient to submit to the fact-finder            estimate of additional attorneys’ fees likely
testimony from a party’s attorney                  be incurred by plaintiffs through the hearing
concerning the percentage of hours that            on plaintiffs’ motion for summary
related solely to a claim for which fees are       judgment to advance plaintiffs’ ″affirmative
not recoverable.″ RM Crowe Prop. Servs.            claims″ against defendants is at least
                                   Jamie Graham Page 36 of 40
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$33,875; and (4) in the event of appeal                                any cause of action.″ Appellants assert that
respecting plaintiffs’ ″affirmative claims,″                           at the time the final judgment was entered,
plaintiffs will likely incur at least an                               Brinkmann ″was not a party to the
additional $35,000 in fees in defense of an                            affirmative causes of action on which
appeal to the Dallas Court of Appeals,                                 judgment was entered.″ According to
$20,000 in fees in briefing an appeal to the                           appellants, ″[t]he trial court’s judgment
Texas Supreme Court, and $15,000 in fees                               must be reversed because it awarded
if the Texas Supreme Court grants a hearing                            damages, attorneys’ fees, costs and interest
on such appeal. Appellants did not object                              to an individual who was not a party to any
to this evidence        [**74] or provide                              cause of action on which those amounts
controverting      evidence       respecting                           were awarded.″
segregation of attorneys’ fees. On this
                                                                       Appellees ″agree that the final judgment
record, we conclude appellees met their
                                                                        [**76] should be modified so Brinkmann
burden as to segregation of attorneys’ fees.
                                                                       individually is removed from the award of
See Tony Gullo Motors, 212 S.W.3d at
                                                                       damages or fees because he never requested
313-14; RM Crowe Prop. Servs. Co., L.P.,
                                                                       that relief.″ Specifically, appellees contend
348 S.W.3d at 453; see also Green Int’l,
                                                                       in a footnote in their appellate brief
Inc. v. Solis, 951 S.W.2d 384, 389 (Tex.
1997) HN21 (″if no one objects to the fact                                  The Final Judgment provides for
that the attorney’s fees are not segregated                                 recovery of damages and fees to
as to specific claims, then the objection is                                ″Movants″ collectively, which was a
waived″).                                                                   defined term that included both
                                                                            Plaintiffs/Appellees as well as Third
We decide against appellants on their                                       Party         Defendant/Brinkmann
seventh issue.13                                                            individually. Brinkmann was not a
          7. Damages, Attorneys’ Fees,
     [*203]                                                                 party to the Agreement, or any
Costs, and Interest Awarded to Brinkmann                                    alleged oral agreements with
                                                                            Appellants and did not assert breach
Lastly, in their eighth issue, appellants                                   of Agreement or declaratory
contend ″the trial court erred in entering                                  judgment claims in any pleading or
judgment in favor of [Brinkmann],                                           as a part of Appellees’ and
individually, when he did not recover on                                    Brinkmann’s summary judgment
13
     This Court has stated that HN22 ″after a declaratory judgment is reversed on appeal, an award of attorneys’ fees may no longer be
equitable and just.″ SAVA Gumarska in Kemijska Industria D.D. v. Advanced Polymer Sciences, Inc., 128 S.W.3d 304, 324 (Tex.
App.—Dallas 2004, no pet.). ″Therefore, when we reverse a declaratory judgment and the trial court awarded attorneys’ fees to the party
who prevailed at trial, we may remand the attorneys’ fee award for reconsideration in light of our disposition on appeal.″ Id. ″We are
not required to do so, however.″ Id.; see City of Temple v. Taylor, 268 S.W.3d 852, 858 (Tex. App.—Austin 2008, pet. denied). In the
case before us, the outcome [**75] in the trial court as to the declaratory judgment is not substantially affected by our conclusions above.
Therefore, we conclude reconsideration of attorneys’ fees is not warranted in this case. See Advanced Polymer Sciences, Inc., 128 S.W.3d
at 324; Taylor, 268 S.W.3d at 858; cf. Funes v. Villatoro, 352 S.W.3d 200, 217 (Tex. App.—Houston [14th Dist.] 2011, pet. denied)
(where reversal of portion of declaratory relief ″substantially affects″ trial court’s judgment, remand as to attorneys’ fees is warranted).

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     motion. Appellants’ third party                                    (postjudgment interest accrues on entire
     claims of defamation and business                                  amount of final judgment, including court
     disparagement asserted against                                     costs and prejudgment interest, from date
     Appellees and Brinkmann were                                       of judgment until paid).
     dismissed by the trial court and not
                                                                        The record shows that at the time the final
     raised on appeal. Brinkmann
     non-suited his affirmative claims                                  judgment in this case [**78] was signed,
     against Appellants.                                                Brinkmann was a third-party defendant as
                                                                        to appellants’ claims for business
(citations to record omitted).14 However,                               disparagement, [*204] defamation, and
appellees assert, ″[a]ppellants’ desire to                              exemplary damages and had requested
reverse the entire judgment due to this                                 costs of court respecting those claims in
correctable inadvertent drafting error is not                           his answer in the trial court. The trial court
authorized or required.″ According to                                   granted summary judgment against
appellees, ″[a]ppellants’ request beyond                                appellants on those claims and those claims
deleting the award of damages and fees to                               were dismissed and not raised on appeal.
Brinkmann individually [**77] should be                                 However, the record also shows (1)
denied.″                                                                Brinkmann was not a party to the
                                                                        affirmative causes of action on which
HN23 Under rule 559 of the Texas Rules of
                                                                        judgment was rendered, i.e. breach of
Civil Procedure, ″[t]he successful party in
                                                                        contract, money had and received, and
the suit shall recover his costs, except in
                                                                        declaratory judgment and (2) the trial
cases where it is otherwise expressly
                                                                        court’s awards of damages, attorneys’ fees,
provided.″ See TEX. R. CIV. P. 559. Further,
                                                                        and prejudgment interest pertain to those
section 304.003(a) of the Texas Finance
                                                                        claims. Accordingly, we conclude all
Code provides in part that ″[a] money
                                                                        recoveries in favor of Brinkmann except
judgment of a court of this state . . . ,
                                                                        costs of court and interest on such costs
including court costs awarded in the
                                                                        cannot stand.15 See HN24 TEX. R. CIV. P.
judgment and prejudgment interest, if any,
                                                                        301 (judgment of trial court shall conform
earns postjudgment interest at the rate
                                                                        to pleadings).
determined under this section.″ TEX. FIN.
CODE ANN. § 304.003(a) (West 2006); see                                 We reverse the portions of the trial court’s
Dallas Cnty., Tex. v. Crestview Corners                                 judgment (1) granting summary judgment
Car Wash, 370 S.W.3d 25, 50 (Tex.                                       in favor of Brinkmann on the claims
App.—Dallas       2012,     pet.    denied)                             asserted by JBBI and TBC for breach of
14
     With respect to the ″affirmative claims″ of Brinkmann described by appellees, the record shows that after Brinkmann was named
as a third-party defendant, he asserted several claims not relevant to this appeal against appellants in the trial court, then nonsuited those
claims prior to the time the trial court’s judgment was rendered.
15
      The trial court’s judgment provided in part that ″Movants shall recover from Defendants, jointly and severally, all costs of court
incurred and filed with the Court in this action.″ The record does not show the parties raised or addressed apportionment of costs in the
trial court, nor is apportionment of costs raised [**79] or addressed on appeal.

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contract, money had and received, and              judgment as to declaration ″b″ and the
declaratory judgment and (2) awarding              breach of contract claim asserted by JBBI
Brinkmann damages, attorneys’ fees,                and TBC and (2) modifying the judgment
prejudgment interest, and postjudgment             to omit Brinkmann from the parties granted
interest on items other than costs of court.       summary judgment on the affirmative
Additionally, we render judgment omitting          claims asserted by JBBI and TBC and
Brinkmann from (1) the portion of the              from the trial court’s award of damages,
summary judgment respecting the claims             attorneys’ fees, prejudgment interest, and
asserted by JBBI and TBC for breach of             postjudgment interest on items other than
contract, money had and received, and              costs of court. The trial court’s judgment is
declaratory judgment and (2) the award of          otherwise affirmed.
damages, attorneys’ fees, prejudgment
interest, and postjudgment interest on items       /s/ Douglas Lang
other than costs of court. See TEX. R. APP. P.     DOUGLAS S. LANG
43.2(c) (providing appellate court may
reverse trial court’s judgment in part and         JUSTICE
render judgment trial court should have
rendered). Appellants’ eighth issue is             JUDGMENT
otherwise decided against them.                    In accordance with this Court’s opinion of
                                                   this date, we REVERSE the trial court’s
III. CONCLUSION
                                                   judgment, in part, as to (1) declaration ″b″;
We decide in favor of appellants on their          (2) summary judgment on the breach of
second issue and portions of their fifth and       contract claim asserted by appellees J.
eighth issues. We need not reach appellants’       Baxter       Brinkmann         International
first issue. Appellants’ remaining issues          Corporation      and     The     Brinkmann
are decided against them.                          Corporation; (3) summary judgment in
                                                     [**81] favor of appellee J. Baxter
We reverse the trial court’s judgment, in          Brinkmann on the claims asserted by J.
part, [**80] as to (1) declaration ″b″; (2)        Baxter       Brinkmann         International
summary judgment on the breach of                  Corporation      and     The     Brinkmann
contract claim asserted by JBBI and TBC;           Corporation for money had and received
(3) summary judgment in favor of                   and declaratory judgment; and (4) the
Brinkmann on the claims asserted by JBBI           award to J. Baxter Brinkmann of damages,
and TBC for money had and received and             attorneys’ fees, prejudgment interest, and
declaratory judgment; and (4) the award to         postjudgment interest on items other than
Brinkmann of damages, attorneys’ fees,             costs of court. We RENDER judgment (1)
prejudgment interest, and postjudgment             denying summary judgment as to
interest on items other than costs of court.       declaration ″b″ and the breach of contract
We render judgment (1) denying summary             claim asserted by J. Baxter Brinkmann
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International Corporation and The                which they [**82] are entitled under the
Brinkmann Corporation and (2) modifying          trial court’s judgment from appellants
the judgment to omit J. Baxter Brinkmann         Berryman’s South Fork, Inc. and Richard
from the parties granted summary judgment        Berryman and from any supersedeas bond
on the affirmative claims asserted by J.         or cash deposit in lieu of supersedeas
Baxter        Brinkmann       International      bond. After the judgment and appellants’
Corporation      and     The    Brinkmann        costs of this appeal have been paid, the
Corporation and from the trial court’s           clerk of the trial court is DIRECTED to
award of damages, attorneys’ fees,               release the balance, if any, of any cash
prejudgment interest, and postjudgment           deposit in lieu of supersedeas bond to the
interest on items other than costs of court.     person who made the deposit.
In all other respects, the trial court’s
judgment is AFFIRMED.                            Judgment entered this 20th day of
                                                 November, 2013.
It is ORDERED that each party bear their
own costs of this appeal. Further, it is /Douglas S. Lang/
ORDERED that appellees J. Baxter DOUGLAS S. LANG
Brinkmann International Corporation, The
Brinkmann Corporation, and J. Baxter JUSTICE
Brinkmann recover the full amounts to




                                 Jamie Graham Page 40 of 40
