Opinion issued August 30, 2016




                                       In The

                               Court of Appeals
                                      For The

                           First District of Texas
                             ————————————
                               NO. 01-15-00621-CV
                            ———————————
SUPPLY PRO, INC. AND HARMON K. FINE, INDIVIDUALLY, Appellants
                                         V.
 ECOSORB INTERNATIONAL, INC. D/B/A BIOCEL TECHNOLOGIES,
                        Appellee


                     On Appeal from the 11th District Court
                             Harris County, Texas
                       Trial Court Case No. 2012-24524


                        MEMORANDUM OPINION

      Appellants Supply Pro, Inc. and Harmon K. Fine appeal a final judgment

rendered on a jury verdict in favor of appellee Ecosorb International, Inc. d/b/a

Biocel Technologies in a breach of contract and fraud case. In five issues, appellants
argue that: (1) there is legally insufficient evidence to support the jury’s finding that

the parties agreed to include a clawback provision1 as part of a workout agreement

entered into by the parties; (2) alternatively, the trial court erred by refusing to submit

appellants’ requested jury charge question on fraudulent inducement/equitable

estoppel; (3) the evidence is legally insufficient to support the damage awards for

storage charges, the clawback provision, and the take-or-pay term; (4) the evidence

is legally insufficient to support the awards of punitive damages; and, (5) the trial

court erred by not incorporating Biocel’s remitittur on prejudgment interest into the

judgment.

       We modify the trial court’s judgment, and affirm, as modified.

                                      Background

       Harmon Fine is the President and owner of Supply Pro, Inc. (Supply Pro).

Supply Pro manufactures absorbent floating boom that is used to contain and cleanup

offshore oil spills.

       After British Petroleum’s (BP) Deepwater Horizon oil rig exploded in April

2010, causing a massive oil spill in the Gulf of Mexico, scrap polypropylene, Supply

Pro’s regular boom-fill material, was in short supply after the spill. As a result,




1
       Biocel refers to this provision as the “participation clause.” For ease of reference,
       however, we will adopt appellants’ terminology.

                                             2
Supply Pro and other boom manufacturers had to look for a competitively priced

alternative.

       Ecosorb International, Inc. d/b/a Biocel Technologies (Biocel), and its parent

company, International Cellulose Corporation (ICC), manufacture and sell one such

alternative—K-Sorb, a cellulose fiber product that has been chemically treated to

make it water repellent. Steve Kempe is the owner of ICC, which manufactures

K-Sorb and the other goods that Biocel sells. After the Deepwater Horizon spill,

Biocel’s product was in demand by companies which manufactured oil containment

booms. In May 2010, Supply Pro began purchasing K-Sorb from Biocel to use as a

filler in its booms.

       In mid-June 2010, BP (through Supply Pro’s distributor, Pacific

Environmental) requested Supply Pro to produce ten truckloads of boom per day. To

achieve that level of production, Supply Pro invested heavily in expanding its

facilities and equipment and increased its employees from 50 to 350. By June 29,

Supply Pro was expecting to produce and ship five truckloads of boom per day in

early July, then ten per day by the middle of July.

       On July 11, Biocel emailed Supply Pro that it had “many new customers that

are booking more than their needs” and that “due to the extreme production demands

created by the oil containment crisis in the Gulf of Mexico, all orders for our




                                          3
hydrophobic materials” would, among other things, be “non-cancellable, ‘take or

pay.’” Supply Pro did not reply to this email.

      On July 13, 2010, Supply Pro submitted blanket purchase order no. 41724 (the

July 13 PO) for 31,680 bags (twenty-eight truckloads) of K-Sorb. This PO did not

include any terms and conditions besides the product, quantity, price, and net

thirty-day payment terms.

      On July 16, 2010, Biocel issued order acknowledgment No. 5301 (the July 16

OA) for the July 13 PO which confirmed a purchase price of $14,572.80 for only

1,056 bags (one truckload) of K-Sorb.

      BP capped the leaking well on July 15, 2010. Then, on July 23-25, Tropical

Storm Bonnie dispersed the remaining oil from the spill. In the late afternoon on July

27, BP instructed Supply Pro to reduce its production from ten truckloads of boom

per day to three, but cautioned that circumstances could change quickly as the oil

moved or reached land areas.

      On July 29, Supply Pro submitted PO no. 41778 (the July 29 PO) to Biocel

for the 29,568 bags (twenty-eight truckloads) of K-Sorb that would be needed to

meet BP’s three-truckload production level. On July 29, Biocel issued an OA (the

July 29 OA) for Supply Pro’s July 13 PO. This OA also included Biocel’s

non-cancellation take-or-pay term.




                                          4
         On July 30, BP instructed Supply Pro to stop all boom production, but

acknowledged that production could resume at a later time.

         On or about August 4, 2010, Supply Pro sent a notice to Biocel stating that it

was canceling the remainder of its July 13 PO and all of its July 29 PO. As of that

date, Biocel had already produced 6,912 bags of K-Sorb pursuant to these purchase

orders.

         Fine and Kempe met for lunch on August 11, 2010. Kempe testified in detail

about the workout agreement that he and Fine reached at that meeting. According to

Kempe, he sent an email to Fine on August 13, 2010 that reflected the terms of their

deal.

         In his August 13, 2010 email to Fine, Kempe stated: “I am certain we can

work together to craft a mutually agreeable resolution.” Kempe further stated:

“Based on our discussions and some subsequent thinking, we propose the

following.” He then set forth the terms of the workout which was organized into two

parts.

         The first part of the email applied if Supply Pro was not compensated by

Pacific or BP for its cancelled orders. This part contained three sections providing:

(1) Supply Pro and Biocel would try to sell the 6,912 bags of K-Sorb over a 6-month

period (until February 1, 2011), at which time Supply Pro would purchase any

remaining bags; (2) Supply Pro was given the option of (i) paying $12,750



                                            5
restocking fee in order to immediately return the raw chemical feedstock that Biocel

had on hand to Biocel’s suppliers or (ii) having Biocel use the feedstock to produce

K-Sorb that could be sold or used later, in which case Supply Pro would be invoiced

for any bags of K-Sorb remaining as of January 2011; and (3) Biocel would waive

remaining purchase requirements under open orders.

      The second part, which appellants refer to as the “clawback provision,”

applied if Supply Pro was compensated by Pacific or BP. It contained five sections,

which provided, among other things, that: Biocel would be compensated by Supply

Pro in the same proportion Supply Pro was compensated for cancelled orders (“less

the restocking fee outlined above if the raw material return option is elected by

Supply Pro”); “other than the offset for the 12[,]750 restocking fee should Supply

Pro elect that option there will be no other offsets to compensate or quantities

delivered;” and Supply Pro would notify Biocel in a timely manner in the event of

receipt of payments from BP.

      After setting forth these alternative scenarios, Kempe stated: “Kindly confirm

your acceptance of the above. I also need to hear from you specifically regarding the

disposition of the unconverted raw material.” Kempe further stated that Biocel is

“reviewing several strategies” that Fine and Kempe discussed at lunch “regarding

ongoing natural fiber boom sales” and that Biocel will contact Fine the following

week to discuss Biocel’s ideas.



                                         6
      On August 16, Fine sent Kempe an email, replying to the August 13 email.

Fine’s email: (1) authorized Biocel to return the raw materials and charge Fine

$12,750; and (2) agreed to purchase the balance of the 6,912 bags of K-Sorb

remaining after six months. Fine’s email did not expressly refer to any of the other

proposed terms set forth in Kempe’s August 13th email. Kempe replied that same

day and informed Fine that the return process was underway.

      At trial, Kempe explained that subsections 1-2 of part one, and all of part two,

including the clawback provision, were agreed to at lunch. Kempe testified that Fine

acknowledged to Kempe during their meeting that Supply Pro was subject to

Biocel’s take-or-pay terms. Fine claimed “he [Supply Pro] was left holding the bag

with all the expenses and the cancellation of what he had in progress.” Fine said he

did not expect to be paid for cancelled orders. Fine and Kempe concluded the lunch

with a handshake:

      We [Fine and I] had an agreement and a handshake at Goode’s BBQ. I
      followed that up—not—I’m not an attorney. I did the best I could
      preparing that document, summarizing that agreement. There’s a lot of
      detail in that. I sent that to him in case I missed something. He
      responded to me with the two portions of the agreement that required
      me to do something, rejected none of the other elements as we had
      agreed at lunch and we moved on from there; that’s correct.

On August 27, Kempe emailed Fine that the raw material return had been completed.

      On September 4, after negotiations between BP and Pacific, Supply Pro

received a check for $1,592,448 from Pacific, which it contends was intended to



                                          7
compensate for some of the costs incurred expanding its production facility. Biocel

did not learn of this payment until September 2014—over two years after it filed suit

against appellants.

      On December 1, Fine advised Kempe that Supply Pro still had twenty-one

truckloads of boom in its warehouse and $1.7M of feedstock that would probably

never be used. None of the remaining 6,912 bags of K-Sorb in Biocel’s factory were

ever sold, and Supply Pro did not pay for them.

      Biocel filed suit against appellants in 2012, and the case was tried to a jury in

February 2015. The jury found in Biocel’s favor with regard to its breach of contract

and fraud claims against appellants. Specifically, the jury found that: (1) Supply Pro

and Biocel agreed that the clawback provision proposed in the August 13 email

would be part of the “workout agreement,” (2) Supply Pro failed to comply with the

workout agreement, (3) Biocel and Fine agreed that Fine would personally guaranty

the workout agreement, (4) Fine failed to comply with the personal guaranty, and

(5) Supply Pro and Fine each committed fraud against Biocel.2




2
      As it was submitted in the charge, Biocel’s fraud claim was based on the allegations
      that Fine and Supply Pro had fraudulently induced the workout agreement by: (1)
      entering into it without intending to perform; and (2) misrepresenting that Supply
      Pro was in a precarious financial position due to the sudden evaporation of its market
      for boom and that Supply Pro had no expectation of receiving compensation for the
      cancellation of its boom sales.


                                            8
      The jury also found breach of contract damages for: (a) the price of the 6,912

bales on February 1, 2011 that Biocel was unable to resell at a reasonable price

($95,385.60); (b) commercially reasonable and necessary charges for the custody

and care of the goods stored by Biocel ($303,815.65); and (c) Biocel’s proportionate

share of compensation received by Supply Pro from its distributor for the termination

of the boom deliveries ($385,517.00).

      With regard to Biocel’s fraud damages, the jury found that: (1) the price of

the 6,912 bales on February 1, 2011 that Biocel was unable to resell was $95,385.60,

(2) commercially reasonable and necessary charges for the custody and care of the

goods stored by Biocel were $303,815.65; (3) Biocel’s proportionate share of

compensation received by Supply Pro from its distributor for the termination of the

boom deliveries was $385,517.00, and (4) the unpaid amounts due under the July

POs was $480,902.60.

      Finally, the jury unanimously found that there was clear and convincing

evidence that Supply Pro’s and Fine’s fraud harmed Biocel, and assessed $800,000

in exemplary damages against Supply Pro and $1,000,000 in exemplary damages

against Fine.

      On April 21, 2015, pursuant to Biocel’s election not to take the contract

damages, the trial court entered judgment on the fraud and exemplary damage

findings. Specifically, the court rendered judgment in favor of Biocel for: (1)



                                         9
$783,421.05 in actual damages and $118,266.64 in prejudgment interest against

appellees, jointly and severally; (2) $800,000 in exemplary damages against Supply

Pro; and (3) $1,000,000 in exemplary damages against Fine. 3 The $783,421.05 in

actual damages awarded includes all of the fraud damages that the jury found, except

for the $480,902.60 the jury found was due under the July POs.

      Appellants filed various timely post-judgment motions. The trial court denied

appellants’ post-judgment motions on June 29, 2015, but did not rule on, or modify

the judgment to reflect, the remittitur that Biocel filed on June 29, 2105 to correct

the award of prejudgment interest. This appeal followed.

                                Clawback Provision

      In their first issue, appellants argue that there is legally insufficient evidence

supporting the jury’s liability findings relating to the clawback provision.

A.    Standard of Review

      When conducting a legal sufficiency challenge, we view the evidence in the

light most favorable to the verdict, crediting favorable evidence if reasonable jurors

could do so and disregarding contrary evidence unless reasonable jurors could not.

City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); see Tiller v. McLure, 121

S.W.3d 709, 713 (Tex. 2003) (holding that, in reviewing “no evidence” point, court



3
      The judgment also awarded Biocel $637,455 in attorney’s fees through trial and an
      additional $75,000 in contingent attorney’s fees.

                                          10
views evidence in light that tends to support finding of disputed fact and disregards

all evidence and inferences to contrary). To sustain a challenge to the legal

sufficiency of the evidence supporting a jury finding, the reviewing court must find

that (1) there is a complete lack of evidence of a vital fact; (2) the court is barred by

rules of law or of evidence from giving weight to the only evidence offered to prove

a vital fact; (3) there is no more than a mere scintilla of evidence to prove a vital

fact; or (4) the evidence conclusively established the opposite of a vital fact.

Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 903 (Tex. 2004). “[M]ore 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.’” Ford Motor Co.

v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (quoting Merrell Dow Pharm., Inc. v.

Havner, 953 S.W.2d 706, 711 (Tex. 1997)). Conversely, evidence that is “so weak

as to do no more than create a mere surmise or suspicion” is no more than a scintilla

and, thus, no evidence. Id. (quoting Kindred v. Con/Chem., Inc., 650 S.W.2d 61, 63

(Tex. 1983)).

B.    Applicable Law

      1.     Contract Interpretation

      In construing a written contract, our primary concern is to ascertain and give

effect to the parties’ intentions as expressed in the document. Italian Cowboy

Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011); Frost



                                           11
Nat’l Bank v. L&F Distribs., Ltd., 165 S.W.3d 310, 311–12 (Tex. 2005). Contract

terms will be given their plain, ordinary, and generally accepted meanings unless the

contract itself shows them to be used in a technical or different sense. Valence

Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). If, after applying the

pertinent contract construction rules, the contract can be given a certain or definite

legal meaning or interpretation, then it is not ambiguous, and we will construe the

contract as a matter of law. Frost Nat’l Bank, 165 S.W.3d at 312.

      If a contract is ambiguous, the court should accept parol evidence and can

empanel a jury to decide, as an issue of fact, the “true intent of the parties.” Coker v.

Coker, 650 S.W.2d 391, 394–95 (Tex. 1983); see also Pitts & Collard, L.L.P. v.

Schechter, 369 S.W.3d 301, 315 (Tex. App.—Houston [1st Dist.] 2011, no pet.).

While evidence of circumstances can be used to inform the contract text and render

it capable of one meaning, extrinsic evidence can only be considered to interpret an

ambiguous writing, not to create an ambiguity. See Kachina Pipeline Co., Inc. v.

Lillis, 471 S.W.3d 445, 450 (Tex. 2015) (citations omitted).

      2.     Contract Formation

      A plaintiff suing based on a contract must prove the essential elements of a

contract, including offer, acceptance, and a meeting of the minds. See Principal Life

Ins. Co. v. Revalen Dev., LLC, 358 S.W.3d 451, 454–55 (Tex. App.—Dallas 2012,

pet. denied). “[T]he offer must be reasonably definite in its terms and must



                                           12
sufficiently cover the essentials of the proposed transaction that, with an expression

of assent, there will be a complete and definite agreement on all essential details.”

Id. at 455; see also CRSS Inc. v. Runion, 992 S.W.2d 1, 4 (Tex. App.—Houston [1st

Dist.] 1995, writ denied) (“[A]n acceptance must be identical with the offer to make

a binding contract”). In other words, “[t]he parties must agree to the same thing, in

the same sense, at the same time.” Principal Life Ins. Co., 358 S.W.3d at 455.

“Whether the parties reached an agreement is a question of fact.” Parker Drilling

Co. v. Romfor Supply Co., 316 S.W.3d 68, 72 (Tex. App.—Houston [14th Dist.]

2010, pet. denied). “Whether an agreement is legally enforceable, however, is a

question of law.” Id.

      There are certain circumstances in which silence may operate as acceptance.

“When an offeree fails to reply to an offer, his silence and inaction operate as an

acceptance . . . . [w]here because of previous dealings or otherwise, it is reasonable

that the offeree should notify the offeror if he does not intend to accept.”

RESTATEMENT (SECOND) OF CONTRACTS § 69(1) (Am. Law Inst. 1981). Whether

silence is acceptance, however, is a question of fact. See Union Carbide Corp. v.

Jones, No. 01-14-00574-CV, 2016 WL 1237825, at *6 (Tex. App.—Houston [1st

Dist.] Mar. 29, 2016, no pet. h.) (mem. op.). An ambiguous acceptance also presents

a question of fact for the factfinder. See Amedisys, Inc. v. Kingwood Home Health




                                         13
Care, LLC, 437 S.W.3d 507, 517 (Tex. 2014) (citing Coleman v. Reich, 417 S.W.3d

488, 493–94 (Tex. App.—Houston [14th Dist.] 2013, no pet.)).

C.    Analysis

      Biocel argues that Fine’s September 10, 2013 deposition testimony and

Kempe’s trial testimony are some evidence that the parties accepted all of the terms

set forth in Kempe’s August 13 email, including the clawback provision. We can

consider extrinsic evidence as part of our sufficiency review if the workout

agreement is ambiguous. See Coker, 650 S.W.2d at 394–95; see also Kachina

Pipeline Co., Inc., 471 S.W.3d at 450 (noting that extrinsic evidence cannot be used

to create contractual ambiguity).

      Fine’s August 16 response expressly references only two parts of Kempe’s

proposed workout agreement: (1) Biocel’s offer of assistance in selling the 6,912

bags of K-Sorb, and (2) Biocel’s proposed plan to mitigate some of its losses by

returning any unused raw materials to its manufacturer. When he authorized Biocel

to return the raw materials, Fine also agreed to pay the associated $12,750 restocking

fee. Notably, this restocking fee provision is in both the first section of Kempe’s

email, and in the clawback provision. Fine’s August 16 response does not expressly

reject or accept the remaining provisions of the offer, nor does he suggest any

modifications to the offer.




                                         14
      After reviewing the plain language of the August 13 and August 16 emails,

we conclude that Fine’s silence in the written documents, with regard to the other

terms of Kempe’s offer, is susceptible to more than one reasonable interpretation.

See Union Carbide Corp., 2016 WL 1237825, at *6 (stating that party’s silence may

be interpreted as acceptance and if offeree’s silence is ambiguous, this creates

question of fact). If Fine’s silence was intended to indicate that he implicitly

accepted all of the terms of Kempe’s offer, then the clawback provision is part of the

workout agreement. If, however, Fine’s silence was intended to indicate that he

rejected those other terms, then Fine’s reply does not meet the requirements for an

acceptance because “an acceptance must be identical with the offer to make a

binding contract.” CRSS Inc., 992 S.W.2d at 4. We note that because Fine’s August

16 email did not attempt to modify the terms of Kempe’s offer, his response is not a

counteroffer. See Parker Drilling Co., 316 S.W.3d at 74 (stating that purported

acceptance that changes or qualifies offer’s material terms constitutes rejection and

counteroffer rather than acceptance).4

      Because Fine’s silence in the written record creates an ambiguity as to whether

he is accepting or rejecting the other terms of Kempe’s offer, including the clawback

provision, a question of fact is presented with regard to appellants’ intent. See


4
      We have not found—and the parties have not directed us to—any cases in which a
      party’s express acceptance of some parts of an offer, but silence as to others,
      constitutes an implicit modification of the offer.


                                         15
Amedisys, Inc., 437 S.W.3d at 517. In light of such ambiguity, the jury was free to

consider parol or extrinsic evidence when determining fact questions such as what

was the parties’ agreement about the clawback provision.

      Some of the parol or extrinsic evidence that Biocel relies upon is Fine’s

September 10, 2013 deposition testimony which seems to indicate that appellants

accepted all of the terms set forth in Kempe’s August 13 email, including the

clawback provision:

      Q.     Okay. And, so, your agreement—you accepted essentially the
             terms of the work-out deal as contained in the August 13th
             e-mail; is that fair?

      A.     Yes.

Appellants argue that Biocel’s reliance upon this statement is misplaced because

Fine’s testimony relates only to the first section of the workout agreement, and not

the clawback provision. While questioning Fine about his August 16 email to

Kempe, Fine was asked whether he accepted the terms of the workout agreement “as

contained in the August 13th e-mail.” It is undisputed that Kempe’s August 13th

email included the clawback provision. However, the question was not limited to a

specific section of the offer and applies to the entire offer, which includes the

clawback provision. Further, Fine, who did not testify at trial, did not qualify his

answer during his deposition or introduce any evidence that his response was limited

to the first half of the workout agreement.



                                         16
      In addition to Fine’s deposition testimony, Kempe testified at trial about

previous dealings with Fine that made it “reasonable that [Fine] should notify

[Kempe] if [Fine] d[id] not intend to accept.” RESTATEMENT (SECOND)                OF

CONTRACTS § 69(1). Kempe testified that, at a lunch meeting on August 11, he and

Fine discussed and agreed, at least in principle, to all of the terms of the workout

agreement set forth in Kempe’s August 13 email, including the clawback provision.

Kempe testified that, given this oral agreement, Kempe treated Fine’s August 16

email as a full acceptance and went forward with the deal by returning the feedstock.

Specifically, Kempe testified that Fine “responded to me with the two portions of

the agreement that required me to do something, rejected none of the other elements

of the agreement as we had agreed at lunch and we moved on from there.”

      Appellants argue that Kempe’s testimony should be excluded from our

sufficiency review because it is conclusory and barred by the parol evidence rule.

See City of Emory v. Lusk, 278 S.W.3d 77, 89 (Tex. App.—Tyler 2009, no pet.) (“A

conclusory and nonprobative opinion is legally insufficient to support a jury

verdict.”). Evidence is legally conclusory if it does nothing more than state a legal

conclusion, and it is factually conclusory if it does not provide the underlying facts

to support a conclusion. See Rizkallah v. Conner, 952 S.W.2d 580, 587–88 (Tex.

App.—Houston [1st Dist.] 1997, no writ). Kempe testified at length about each

provision of the agreement reached at the August 11 lunch and averred that he and



                                         17
Fine had discussed and agreed to the provisions. Therefore, Kempe’s testimony is

not conclusory and, as previously discussed, it was not barred by the parol evidence

rule.

        In light of Fine’s deposition testimony, Kempe’s trial testimony, and the

August 13 and August 16 emails, there is more than a scintilla of evidence to support

the jury’s finding that Biocel and Supply Pro agreed that the clawback provision

would be part of the workout agreement.

        We overrule appellants’ first issue.

                               Fraudulent Inducement

        In their second issue, appellants argue that if the take-or-pay term was part of

the parties’ original agreements on the July 13 and July 29 purchase orders, then it

was arguably induced by fraud and the evidence raised a material fact question on

this issue, and the trial court erred by refusing to submit appellants’ requested charge

question on fraudulent inducement/equitable estoppel. Biocel responds that the

workout agreement was a novation, and/or a compromise and settlement agreement,

and, therefore, it superseded any defenses to the original purchase agreements.

        Novation is the substitution of a new agreement between the same parties or

the substitution of a new party with respect to an existing agreement. New York Party

Shuttle, LLC v. Bilello, 414 S.W.3d 206, 214 (Tex. App.—Houston [1st Dist.] 2013,

pet. denied). When a novation occurs, only the new agreement can be enforced. Id.



                                           18
“A novation agreement need not be in writing or evidenced by express words of

agreement, and an express release is not necessary to effect a discharge of an original

obligation by novation.” Bank of N. Am. v. Bluewater Maint., Inc., 578 S.W.2d 841,

842 (Tex. Civ. App.—Houston [1st Dist.] 1979, writ ref’d n.r.e.). “The intent to

accept the new obligation in lieu and in discharge of the old one may be inferred

from the facts and circumstances surrounding the transaction [and] the conduct of

the parties.” Id.

       The parties do not dispute that the workout agreement is a novation of the

original July purchase agreements. Appellants argue, however, that the workout

agreement does not foreclose its claim for fraudulent inducement because the

workout agreement does not contain an express release of such claims or a disclaimer

of reliance. See, e.g., Italian Cowboy, 341 S.W.3d at 332 (stating that contract with

adequate disclaimer of reliance clause can negate fraudulent inducement claim as

matter of law) (citing Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 179

(Tex. 1997)). As this court has previously noted, however, “an express release is not

necessary to effect a discharge of an original obligation by novation.” Bank of N.

Am., 578 S.W.2d at 842.

       Appellants further contend that the workout agreement, like all other

contracts, is subject to avoidance on the ground of fraudulent inducement. The

opinions that appellants rely upon for this proposition, however, are distinguishable



                                          19
because in those cases the parties alleged that the settlement agreement itself, not the

previous agreement, was the product of fraudulent inducement. See generally Ford

Motor Co. v. Castillo, 444 S.W.3d 616 (Tex. 2014); Italian Cowboy, 341 S.W.3d at

331. On appeal, appellants argue that they were fraudulently induced to accept the

take-or-pay provision in the underlying agreements, i.e., the July purchase

agreements. They do not argue that they were fraudulently induced to accept the

workout agreement, i.e., the novation. We have not found—and appellants have not

cited—any Texas cases in which a settlement agreement or novation was set aside

because of a claim that the original, or an underlying agreement, was the product of

fraudulent inducement.

      Accordingly, we find appellants’ argument unpersuasive. We hold that

because the workout agreement constitutes a novation of the original purchase

agreements, it superseded all defenses to the original agreements, and therefore,

appellants’ fraudulent inducement claim is moot.5

      We overrule appellants’ second issue.




5
      Biocel further contends that even if appellants’ challenges to original purchase
      agreements were not moot, appellants would still not have been entitled to a jury
      question on their fraudulent inducement/equitable estoppel claim because they did
      not present any evidence at trial that anyone from Biocel made any false, material
      misrepresentations or that appellants actually relied upon these statements.


                                          20
                          Sufficiency of Damages Award

      In their third issue, appellants argue that the evidence is legally insufficient to

support the damage awards for the clawback provision, the take-or-pay term, and the

storage charges.

A.    Clawback Provision

      In answer to questions 6c, 7c, and 10, the jury found that Biocel’s damages

pertaining to the clawback provision were $385,517.00. Appellants argue that

because the clawback provision was not part of the workout agreement, it could not

have been fraudulently induced or breached, and therefore, the evidence is legally

insufficient to support the jury’s answers awarding recovery for this element of

damage. Because we have determined that there is legally sufficient evidence to

support the jury’s finding that the parties agreed to include the clawback provision

in the workout agreement, we find appellants’ argument unpersuasive.

B.    Take-or-Pay Term

      In answer to questions 7d and 11, the jury found that the unpaid amount due

under the July 13 and July 29 POs was $480,902.60. This represents the amount that

would have been due for all 34,848 bags that remained undelivered when Supply

Pro cancelled the POs. This amount is equal to the sum of the damages the jury found

in response to questions 7a ($95,385.60) and 7c ($385,517.00).




                                          21
      Appellants argue that Biocel could not recover the $480,902.60 due under the

July POs based on its fraud claim because Biocel alleged fraud only with regard to

the workout agreement, not the underlying POs, and that because of the way the jury

charge was organized, an award of damages based on 7d and 11 amounts to a double

recovery. The trial court’s award of $783,421.05 in actual damages, however, equals

the sum of the first three categories of fraud damages that the jury found: the price

of the 6,912 bags of K-Sorb ($95,385.60), plus storage ($303,815.65), plus Biocel’s

proportionate share of BP’s payment ($385,517.00), minus an agreed credit

($1,297.20). The record does not reflect that the trial court awarded Biocel any

damages based on the jury’s answers to questions 7d and 11.

C.    Storage Fees

      Appellants argue that the evidence is legally insufficient to support the award

of $303,815.65 in damages for storage charges because there is no evidence that: (1)

the 6,912 bags of K-Sorb should have been stored at all; (2) Biocel incurred any

out-of-pocket cost for storing that material; or (3) the storage rate charged by Biocel

was commercially reasonable.

      1.     Standard of Review

      We measure the sufficiency of the evidence against the submitted charge to

determine whether evidence supports both the existence of damages and the amount

awarded. See Regal Fin. Co. v. Tex Star Motors, Inc., 355 S.W.3d 595, 601 (Tex.



                                          22
2010). If the terms used in the charge are not defined for the jury, and no objection

is made on this issue, we measure sufficiency of the evidence against the commonly

understood meanings of such terms. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex.

2000).

      Evidence is legally insufficient when (a) evidence of a vital fact is completely

absent; (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; or (d) the evidence establishes conclusively

the opposite of the vital fact. City of Keller, 168 S.W.3d at 810. When conducting

our sufficiency review, we consider only the evidence and reasonable inferences

supporting the jury’s damages finding, and we must disregard any evidence to the

contrary, except when such evidence is conclusive. See id. at 817, 821.

      2.     Analysis

      Although the jury was asked to find the “commercially reasonable and

necessary charges for custody and care of the goods stored by Biocel,” the key terms,

i.e., “commercially reasonable” and “necessary,” were not defined in the charge.

Because no objection was made to the lack of definitions, we will review the

sufficiency of the evidence based on the charge that was given and give these

undefined terms their commonly understood meaning. See Osterberg, 12 S.W.3d at

55.



                                           23
      Black’s Law Dictionary defines “reasonable” as “[f]air, proper, or moderate

under the circumstances” and commerce as involving the exchange of goods and

services. BLACK’S LAW DICTIONARY 110, 523 (1996 pocket ed.). The common

meaning of “necessary” is “being essential, indispensable, or requisite.” Sw. Bell

Tel., L.P. v. Emmett, 459 S.W.3d 578, 584 (Tex. 2015) (citing to WEBSTER’S NEW

UNIVERSAL UNABRIDGED DICTIONARY 1161 (1996 ed.)). Thus, the phrase

“commercially reasonable and necessary charges” can be commonly understood to

refer to charges that are “[f]air, proper, or moderate” in the context of an exchange

of goods and services and are “essential, indispensable, or requisite.”

      The evidence establishes that on December 1, 2010, Kempe emailed Fine that,

pursuant to their workout agreement, any of the 6,912 bags of K-Sorb that remained

unsold by February 1, 2011, would be invoiced and shipped to Supply Pro. On

February 1, Kempe invoiced Supply Pro $95,385.60 for the 6,912 bags. That same

day, Fine and Kempe exchanged a series of contentious email messages regarding

the remaining materials. In particular, after reminding Fine that Biocel had already

“maintained this material on [appellants’] behalf for over 6 months,” Kempe stated

that any of the 6,912 bags of K-Sorb that were not delivered would accrue storage

charges of $0.15 per bag in March, $0.20 per bag in April, and $1.00 per bag

thereafter.




                                         24
      When asked at his deposition if he was trying to renege on the workout

agreement in early February 2011, Fine testified that he was not, and he claimed that,

at that time, he intended to “eventually take the . . . fiber,” he just could not take it

on February 1st, as the parties had originally agreed. Fine also testified that although

Biocel sent him monthly invoices for the storage fees, he never disputed the charges

or attempted to store the product elsewhere, or negotiate an alternative storage

arrangement with Biocel. Because Fine never paid for or took delivery of the K-Sorb,

or directed Biocel to discard or store the product elsewhere, Biocel continued to store

the bags in its production plant until the time of trial. The jury awarded Biocel

$303,815.65 in damages, which is the full amount of the accumulated storage

charges from March 1, 2011 until the time of trial.

      In support of the award of storage fees, Kempe testified that Biocel stored

Fine’s K-Sorb in its manufacturing plant because the company does not have a

designated storage facility. According to Kempe, the stored material took up

between 3,000-3,500 square feet of space in the plant that would otherwise have

been used for productive purposes. Kempe also testified that Biocel had to adjust the

manner in which it conducted business in order to accommodate the large volume of

K-Sorb being stored in its production facility.

      Kempe explained that “the purpose of imposing a storage charge” was “[t]o

compensate [Biocel] for the burden of storing and maintaining the material.” When



                                           25
asked if it “cost [Biocel] money to have to take up floor space or truck space to store

material for somebody,” Kempe responded, “Sure. There’s an inconvenience and

kind of a non-discrete financial burden on dealing with that issue.” Kempe further

testified that Fine “didn’t have to take delivery [of the K-Sorb]. He could have asked

me to store it, which is what he in effect did. I’m storing product that by contract

and by our agreement belonged to him as of February 1st, 2011.” When asked why

the cost of storage increased over time, Kempe explained that it was “[b]ecause of

the ongoing burden of us having to manage, handle, store and to try to maintain that

in as good of condition as possible.”

      There is some evidence that appellants agreed to purchase the K-Sorb that

Biocel had in its possession on February 1, 2011, and that appellants, not Biocel,

owned the bags of K-Sorb as of that date. There is also some evidence that Biocel

told appellants that they would be charged a storage fee for any bags still in Biocel’s

possession beginning on March 1, 2011. There is also evidence that Biocel sent

appellants monthly invoices for the accruing storage fees and that appellants never

disputed the storage charges or attempted to work out alternative storage

arrangements with Biocel.

      The jury could reasonably infer from Kempe’s testimony that the amount of

storage fees charged by Biocel was fair under the circumstances in order to

compensate Biocel for the financial burden associated with its management and



                                          26
storage of appellants’ product. The jury could also infer that, given their contractual

obligation, and Fine’s expressed intent to “eventually take the . . . fiber,” it was

necessary for Biocel to continue to store the K-Sorb until Supply Pro took possession

of the product, or instructed Biocel to destroy it or store it elsewhere.

      Therefore, although Kempe did not specifically testify that the storage charges

were “necessary” or “reasonable,” the jury was nevertheless provided sufficient

evidence from which it could conclude that the storage charges were essential in

order to compensate Biocel for the financial burden of storing appellants’ product,

unless and until appellants took possession of the product or instructed Biocel how

to proceed with their property, e.g., store it elsewhere or discard it. See generally

Ron Craft Chevrolet, Inc. v. Davis, 836 S.W.2d 672, 677 (Tex. App.—El Paso 1992,

writ denied) (stating that witness does not have to speak “magic words,” such as

“reasonable” and “necessary,” to support jury’s damages award).

      Appellants also argue that the evidence is legally insufficient because there is

no evidence that Biocel incurred any out-of-pocket cost for storing the K-Sorb. The

jury, however, did not have to find that Biocel incurred any out-of-pocket costs or

expenses in order to award storage damages in this case. The jury was simply asked

to find the amount of “commercially reasonable and necessary charges for custody

and care of the goods stored by Biocel.” Business and Commerce Code section 2.710

permits recovery of incidental damages in UCC cases, e.g., “commercially



                                           27
reasonable charges . . . incurred in . . . care and custody of goods after the buyer’s

breach.” TEX. BUS. & COM. CODE ANN. § 2.710 (West 2009). Although the UCC

governs the parties’ original purchase agreements, it does not apply to the workout

agreement, which is not a contract for the sale of goods—it is a settlement agreement

and a novation of the original agreements. See Adams v. Petrade Int’l, Inc., 754

S.W.2d 696, 715 (Tex. App.—Houston [1st Dist.] 1988, writ denied). Because the

UCC is inapplicable to the workout agreement, the trial court did not err by refusing

to include the word “incurred” in this portion of the charge and the UCC cases that

appellants rely upon are similarly distinguishable. See, e.g., Malone v. Carl Kisabeth

Co., Inc., 726 S.W.2d 188, 191–92 (Tex. App.—Fort Worth 1987, writ ref’d n.r.e.)

(reversing and rendering take-nothing judgment in UCC case).

      After reviewing the evidence presented to the jury, including Fine’s and

Kempe’s testimony, we hold that there is more than a scintilla of evidence to support

the jury’s award of damages based on storage fees.

      We overrule appellants’ third issue.

                             Punitive Damages Award

      In their fourth issue, appellants argue that the evidence is legally insufficient

to support the awards of punitive damages against Supply Pro ($800,000) and Fine

($1,000,000) and that the combined award of $1,800,000 exceeds the statutory

damages cap and violates due process. The crux of appellants’ arguments is that they



                                          28
must be treated separately for purposes of assessing liability for fraud (i.e., that

Fine’s conduct should not be imputed to Supply Pro), but, since Fine is the

corporation’s lone shareholder, he and the corporation are effectively the same

entity, and, therefore, they must be treated as one, solitary defendant for purposes of

assessing exemplary damages that are based on the same conduct.

A.     Standards of Review

       When reviewing the legal sufficiency of the evidence to support an award of

punitive damages, i.e., exemplary damages, an appellate court must be mindful of

the burden of proof governing the determinations of the factfinder. See Finley v.

P.G., 428 S.W.3d 229, 238 (Tex. App.—Houston [1st Dist.] 2014, no pet.). An

elevated burden of proof at trial requires a higher standard of review on appeal. City

of Keller, 168 S.W.3d at 817 (citation omitted). An award of exemplary damages

under Texas law requires the claimant to meet an elevated burden of proof, i.e., clear

and convincing evidence. See Finley, 428 S.W.3d at 238. Clear and convincing

evidence means the “measure or degree of proof that will produce in the mind of the

trier of fact a firm belief or conviction as to the truth of the allegations.” In re J.F.C.,

96 S.W.3d 256, 264 (Tex. 2002). The constitutionality of exemplary damages is a

legal question, which we review de novo. Tony Gullo, 212 S.W.3d at 307.




                                            29
B.    Applicable Law

      Under Chapter 41 of the Texas Civil Practice and Remedies Code, a claimant

may be awarded exemplary damages if it can prove by clear and convincing evidence

that it was harmed as a result of the other party’s fraud. TEX. CIV. PRAC. & REM.

CODE ANN. § 41.003(a)(1), (b) (West 2015). In addition to authorizing awards of

exemplary damages in suits for fraud, Chapter 41 also sets forth the factors that

courts must consider when assessing such damages and it limits the amount and

scope of an individual defendant’s liability for exemplary damages.

      Specifically, in assessing exemplary damages, the factfinder must consider:

(1) the nature of the wrong; (2) the character of the conduct at issue; (3) “the degree

of culpability of the wrongdoer”; (4) the situation and the parties’ sensibilities; (5)

the extent to which such conduct offends a public sense of justice and propriety; and

(6) the defendant’s net worth. Id. § 41.011(a) (West 2015). In multi-defendant cases,

“an award of exemplary damages must be specific to a defendant, and each

defendant is liable only for the amount of the award made against that defendant.”

Id. § 41.006 (West 2015).

      Chapter 41 also caps the maximum amount of damages that may be awarded

against an individual defendant in a given case. See TEX. CIV. PRAC. & REM. CODE

ANN. § 41.002(b) (West 2015). Pursuant to section 41.008:

      Exemplary damages awarded against a defendant may not exceed an
      amount equal to the greater of:


                                          30
      (1)(A) two times the amount of economic damages; plus
      (B) an amount equal to any noneconomic damages found by the jury,
      not to exceed $750,000; or
      (2) $200,000.

TEX. CIV. PRAC. & REM. CODE § 41.008(b) (West 2015). The parties do not dispute

that the exemplary damages cap applies in this case.

      In addition to this statutory cap, there are also due process limits against

grossly excessive or arbitrary exemplary damage awards. State Farm Mut. Auto. Ins.

Co. v. Campbell, 538 U.S. 408, 417–18, 123 S. Ct. 1513, 1520–21 (2003). The

prevailing principle is that a “grossly excessive” award of exemplary damages

offends due process because it “furthers no legitimate purpose and constitutes an

arbitrary deprivation of property.” Id. at 417, 123 S. Ct. at 1520. In conducting a due

process review, courts must consider: (1) the degree of reprehensibility of the

defendant’s conduct; (2) the ratio between actual and exemplary damages; and (3)

the size of civil penalties in similar cases. Id. at 418, 123 S. Ct. at 1520. Although

there are no bright-line rules, there is a long history of penalties in the double, treble,

and quadruple range, and awards in the single-digit range are more likely to comport

with due process. Id. at 425–26, 123 S. Ct. at 1524.

C.    Sufficiency of the Evidence

      Appellants argue that the evidence is legally insufficient to support the jury’s

award of exemplary damages against Supply Pro based on fraud because the



                                            31
evidence is legally insufficient to prove that Supply Pro committed fraud

independently from Fine. Biocel responds that the evidence is sufficient to support

the jury’s award against Supply Pro because the evidence conclusively establishes

that Fine is a vice principal of Supply Pro, and therefore, Fine’s tortious conduct can

be imputed to Supply Pro as a matter of law. See Bennett v. Reynolds, 315 S.W.3d

867, 884 (Tex. 2010).

      In its live pleading at trial, Biocel alleged that appellants engaged in fraud

when Supply Pro entered into the workout agreement with no intention to perform

under the contact, and when Supply Pro misrepresented to Biocel that Supply Pro

was in a precarious financial position after the spill and had no hope of receiving

compensation for BP’s cancelled orders.

      Question 5 asked the jury: “Did Supply Pro or Harmon Fine commit fraud

against Biocel?” The jury answered, “yes,” to both Supply Pro and Fine. When asked

whether there was clear and convincing evidence that Biocel was harmed by the

fraud of Supply Pro or Fine in Question 8, the jury unanimously answered “yes,” to

both Supply Pro and Fine. Notably, the jury was never asked whether Supply Pro

committed fraud against Biocel independently from Fine.6 Appellants did not object


6
      The jury was also never instructed that Supply Pro was responsible for Fine’s acts
      and omissions, or that Fine’s fraud could be attributed to Supply Pro, but only if the
      jury found that Fine was Supply Pro’s vice-principal. See generally GTE Sw., Inc.
      v. Bruce, 998 S.W.2d 605, 618 (Tex. 1999) (holding corporation may be liable for
      torts of its vice-principals and stating that individual’s “status as a vice-principal of

                                             32
to the charge on this basis and they are not challenging the charge on appeal.

Accordingly, we will assess the sufficiency of the evidence based on the charge that

was actually submitted to the jury. See Osterberg, 12 S.W.3d at 55.

      It is well established that corporations, like Supply Pro, can “only act through

individuals.” Tri v. J.T.T., 162 S.W.3d 552, 562 (Tex. 2005). A vice-principal is an

individual who represents the corporation in its corporate capacity, and “‘includes

persons who have authority to employ, direct, and discharge servants of the master,

and those to whom a master has confided the management of the whole or a

department or division of his business.’” See Bennett, 315 S.W.3d at 884 (quoting

GTE Sw., Inc. v. Bruce, 998 S.W.2d 605, 618 (Tex. 1999)). The acts of a

vice-principal are deemed to be acts of the corporation for purposes of exemplary

damages because the vice-principal “represents the corporation in its corporate

capacity.” Bennett, 315 S.W.3d at 883 (quoting Hammerly Oaks, Inc. v. Edwards,

958 S.W.2d 387, 391–92 (Tex. 1997)). A corporation’s officers are considered

corporate vice-principals. See Bennett, 315 S.W.3d at 884.

      Further, a corporation and its corporate officer can both be liable for

exemplary damages based on the same misconduct. See Bennett, 315 S.W.3d at 884–




      the corporation is sufficient to impute liability to [the corporation] with regard to
      his actions taken in the workplace”); cf. Steel v. Wheeler, 993 S.W.2d 376, 381 (Tex.
      App.—Tyler 1999, pet. denied) (holding failure to submit question and instruction
      harmless because evidence on point was conclusive).

                                           33
85. In Bennett, the Texas Supreme Court held that both the corporation and its

president were subject to exemplary damages based on the president’s stealing of

cattle, because the president, Bennett, was a corporate vice-principal who was acting

in his corporate capacity when he stole the cattle. Id. Specifically, the court stated

that based on Bennett’s status as the corporation’s “highest corporate officer, the

president,” and Bennett’s testimony that he “[runs] the ranch” and made the

decisions for the corporation, “not only was Bennett indisputably a vice-principal of

[the c]orporation, he was most likely the only vice-principal and the only person

whose conduct and decisions could subject the corporation to exemplary damages.”

Id. at 884.

      Appellants argue that Bennett is distinguishable because section 41.008’s cap

did not apply in that case. See TEX. CIV. PRAC. & REM. CODE § 41.008(c)(13) (West

2015) (setting forth felony theft exception to statutory cap). The applicability of the

damages cap, however, has no bearing with respect to whether a corporation and its

corporate officer can both be liable for exemplary damages based on the same

misconduct.

      Appellants further note that in addressing whether the corporation (as well as

its president, Bennett) could be independently liable for punitive damages, the court

did not confine its analysis to the fact that Bennett was a vice-principal of the

corporation. See Bennett, 315 S.W.3d at 884–85. The court also focused on whether



                                          34
Bennett had used his corporate authority over corporate employees, on corporate

land, to convert cattle using corporate equipment. See id. at 884–85. Those facts,

however, go to whether Bennett was acting in his capacity as a corporate

vice-principal and are not independent grounds for imputing a corporate officer’s

conduct to its corporation. See GTE Sw., Inc., 998 S.W.2d at 618 (defining corporate

vice-principals to include “persons who have authority to employ, direct, and

discharge servants of the master, and those to whom a master has confided the

management of the whole or a department or division of his business”).

      In this case, the evidence conclusively establishes that Fine, Supply Pro’s

owner and President, is a corporate officer of Supply Pro, and, therefore, a

vice-principal of the corporation.7 See Bennett, 315 S.W.3d at 884 (defining

vice-principals as, inter alia, corporate officers) (citation omitted). As Supply Pro’s

vice-principal, Fine’s actions are “deemed to be the acts of the corporation itself.”

GTE Sw., Inc., 998 S.W.2d at 618. Notably, appellants are not challenging the

sufficiency of the evidence supporting the jury’s finding that Fine committed fraud

against Biocel. Because the evidence conclusively establishes that Fine is Supply


7
      A corporation, however, cannot be liable for its vice-principal’s actions “if the vice-
      principal’s misconduct occurred while he was acting in a personal capacity
      unrelated to his authority as a corporate vice-principal.” Bennett v. Reynolds, 315
      S.W.3d 867, 884–85 (Tex. 2010). There is ample evidence that Fine was acting in
      his corporate capacity when he negotiated and entered into the workout agreement
      on behalf of Supply Pro after he canceled the purchase orders that Supply Pro had
      previously placed with Biocel.

                                            35
Pro’s corporate vice-principal, and therefore, his conduct can be imputed to Supply

Pro as a matter of law, we hold that there is legally sufficient evidence that Supply

Pro committed fraud against Biocel. See Bennett, 315 S.W.3d at 883–84.

D.    Statutory Cap and Excessiveness of Exemplary Damages Award

      Appellants also argue that Fine and Supply Pro must be treated as one

defendant for purposes of assessing exemplary damages because Fine and Supply

Pro are effectively the same entity, and that the combined $1.8 million award of

exemplary damages, based solely on the conduct of Fine, exceeds section 41.008’s

cap on the amount of exemplary damages that may be awarded based on the conduct

of one defendant. Appellants further contend that the combined award of $1.8

million in exemplary damages is excessive in light of the fact that the alleged fraud

did not cause physical harm, threaten safety, or cause or threaten financial ruin. See

State Farm, 538 U.S. at 419, 123 S. Ct. at 1521 (identifying factors courts consider

when assessing reprehensibility of defendant’s conduct for purposes of evaluating

constitutionality of exemplary damages award) (citation omitted).

      Specifically, appellants argue that refusing to treat them as a single defendant

for purposes of assessing exemplary damages “defeats the purpose of Chapter 41 to

limit, rather than increase, damages.” The plain language of Chapter 41, however,

indicates that it is intended to limit the amount of damages recoverable against an

individual defendant in a given legal proceeding, not a group of defendants. See TEX.



                                         36
CIV. PRAC. & REM. CODE §§ 41.006 (prohibiting joint and several liability for

exemplary damages and stating that “each defendant is liable only for the amount of

the award made against that defendant”), 41.008(b) (limiting amount of exemplary

damages recoverable from “a defendant”), and 41.011(a)(3), (6) (stating that

factfinder must consider, inter alia, “the degree of culpability of the wrongdoer” and

“the net worth of the defendant” when determining amount of exemplary damages

to award). Supply Pro and Fine, its owner, president, and corporate vice-principal,

are both named defendants in the underlying suit.

      Appellants also suggest that it is a violation of due process when the

vice-principal doctrine allows a corporation and a vice-principal like Fine who is

also the corporation’s sole shareholder, to both be subject to exemplary damages for

the same conduct. Citing to Owens-Corning Fiberglas Corp., appellants argue that

the award of punitive damages against Supply Pro and Fine “amounts to a multiple

award of punitive damages for the same conduct by a single person.” See

Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 48 (Tex. 1998). In that

case, the court recognized that “repeatedly imposing punitive damages on the same

defendant for the same course of wrongful conduct may implicate substantive due

process constraints.” 972 S.W.2d at 50 (emphasis added). Owens-Corning Fiberglas

Corp., however, is distinguishable on its facts because, unlike here, that case

involved one defendant who was being subjected to multiple punitive damage



                                         37
awards in different legal proceedings that were brought by different plaintiffs based

on the defendant’s exact same conduct, i.e., manufacturing and distributing

asbestos-containing products. The exemplary damages awarded in this case were

awarded against different defendants, Supply Pro and Fine.

      We have not found any authority requiring courts to treat a corporation and

its vice-principal as a single defendant. It is well established that a corporation is a

separate legal entity from its shareholders, officers, and directors. Singh v. Duane

Morris, L.L.P., 338 S.W.3d 176, 181–82 (Tex. App.—Houston [14th Dist.] 2011,

pet. denied) (citing Sparks v. Booth, 232 S.W.3d 853, 868 (Tex. App.—Dallas 2007,

no pet.)). “A bedrock principle of corporate law is that an individual can incorporate

a business and thereby normally shield himself from personal liability for the

corporation’s contractual obligations.” Singh, 338 S.W.3d at 182 (citing Sparks, 232

S.W.3d at 868). An entity’s corporate status, however, cannot be used as both a

sword and a shield, i.e., used when it benefits the shareholders, only to be

disregarded when it is advantageous for the shareholders or corporate organizers to

do so. See Singh, 338 S.W.3d at 182 (citations omitted). That is essentially what

appellants are asking this court to do—to disregard Supply Pro’s corporate status in

order to limit the total amount of exemplary damages recoverable in this case from

the two named defendants.




                                          38
      Accordingly, we find appellants’ argument that they should be treated as one

defendant for purposes of assessing exemplary damages to be unpersuasive.

      In light of our resolution of this issue, we need not address appellants’

argument that the combined award of $1.8 million in exemplary damages against

one defendant violates due process.

      We overrule appellants’ fourth issue.

                        Remitittur on Prejudgment Interest

      In their fifth issue, appellants argue that the trial court erred by not

incorporating Biocel’s remitittur on prejudgment interest into the judgment.

Although Biocel filed a remittitur with the trial court reflecting that prejudgment

interest should have been $116,779.82 rather than the $118,266.64, the trial court’s

judgment awarded Biocel $118,266.64 in prejudgment interest. Biocel does not

dispute on appeal that $116,779.82 is the amount of prejudgment interest that should

have been awarded in this case. Accordingly, we sustain appellants’ fifth issue and

modify the judgment to award Biocel $116,779.82 in prejudgment interest. See TEX.

R. APP. 43.2(b).8




8
      In light of our resolution of this case, we need not consider Biocel’s counter-issue.


                                            39
                                   Conclusion

      We modify the trial court’s judgment, and affirm, as modified.




                                             Russell Lloyd
                                             Justice

Panel consists of Chief Justice Radack and Justices Jennings, and Lloyd.




                                        40
