Opinion issued June 30, 2015




                                     In The

                              Court of Appeals
                                    For The

                         First District of Texas
                            ————————————
                             NO. 01-14-00013-CV
                           ———————————
 MARCUS BRENT PATTERSON, INDIVIDUALLY, AS INDEPENDENT
ADMINISTRATOR OF THE ESTATE OF DIANE PATTERSON, AND AS
 NEXT FRIEND OF DANIEL PATTERSON AND DANAE PATTERSON,
AND DANAE PATTERSON AND DANIEL PATTERSON (NOW 18 YEARS
                    OF AGE), Appellants
                                       V.
                     BREWER LEASING, INC., Appellee


                   On Appeal from the 334th District Court
                            Harris County, Texas
                      Trial Court Case No. 2011-64488


                                 OPINION

      This is a bill of review proceeding. We reverse and remand the trial court’s

judgment on appellants’ fraud claim. We affirm the remainder of the judgment.
                                 BACKGROUND

      Diane Patterson was killed on June 15, 2006 when her stationary vehicle was

struck by an 18-wheeler truck driven by Charles Hitchens.        Traffic had been

stopped on Interstate Highway 10 by police officers escorting an oversized load

onto the freeway. Witnesses testified, and the physical evidence confirmed, that

Hitchens did not slow down from his 55-mile-per-hour speed before plowing into

Diane’s stopped car, and hitting several other vehicles.

                            THE 2006 LITIGATION

      In Cause No. 2006-76647, the Patterson family sued Hitchens, Brewer

Leasing, Inc., Texas Stretch, Inc., Ray Bellew & Sons, Inc., and Williams Brothers

Construction Co., Inc. for wrongful death. It alleged that Texas Stretch was the

company that hired Hitchens and that related-company Brewer Leasing owned or

leased the tractor-trailer combination that Hitchens was driving. Texas Stretch had

its TxDOT number, corporate logo, US DOT number, and ICC numbers on both

sides of the tractor. A sign on both sides of the cab of the tractor also contained

Brewer Leasing’s TxDOT number and corporate logo, and it stated “Leased to

Brewer Leasing, Inc.”

      The Patterson family further alleged that defendants Ray Bellew & Sons and

Williams were negligent in their oversight and moving of the large bridge beams

onto the freeway that caused the freeway traffic to stop at the location of the


                                          2
accident. According to the Patterson family, that location was not a safe entrance

ramp to bring such equipment on the freeway, and there should have been

additional motorcycle police escorts used.

      On March 6, 2009, Brewer Leasing, Texas Stretch, and Hitchens filed a pre-

trial Joint Motion of Defendants to Exclude Evidence that Hitchens tested positive

for cocaine after the accident. They represented in that motion that the amount of

cocaine in Hitchens’s system had not been quantified and that there was no other

evidence indicating that he was impaired. Because evidence of a drug or alcohol

consumption is generally not admissible in an automobile-accident case unless

there is also evidence of impairment that causes the accident, defendants argued

that the positive drug test evidence should be excluded as highly prejudicial. On

March 27, 2009, the trial court granted the motion to exclude this evidence.

      Williams Brothers and Ray Bellew & Sons each reached settlements with

the Patterson family and were released. Two days before the April 6, 2009 trial

setting, the Patterson family also reached a settlement with Texas Stretch requiring

money be paid to the Patterson family by or on behalf of Texas Stretch, Sagamore

Insurance Company (Texas Stretch’s insurer), and Mr. A.B. Brewer (100% owner

of Texas Stretch and Brewer Leasing). The terms of that agreement included:

      A. Texas Stretch would pay the Patterson family $470,000 as follows:
         (1) $400,000 by Sagamore Insurance, (2) $25,000 by Texas
         Stretch, and (3) $45,000 over time by Texas Stretch, personally
         guaranteed by Mr. Brewer;
                                         3
      B. Texas Stretch was released;

      C. Brewer Leasing would hire Mr. Herzog (the Patterson family’s
         attorney) to pursue Stowers and other claims against Home State
         (Brewer Leasing’s insurer); and

      D. Brewer Leasing would later assign its claims against Home State to
         the Patterson family.

      Claims against Brewer Leasing were not released as part of this settlement.

Also as part of the settlement terms, Mr. Brewer was released from personal

liability for future payments (his personal guarantee of some of Texas Stretch’s

obligation excepted) and, thus, Brewer Leasing received a Covenant to Not

Execute (even though Brewer Leasing was not a party to the settlement or a

released party).

      By agreement of the parties, the jury was then dismissed and the trial court

heard the evidence against Brewer Leasing and Hitchens. A post-answer default

judgment was taken against Brewer Leasing, and Hitchens presented evidence.

The trial court’s findings of fact and conclusions of law included the findings that

(1) Hitchens’s negligence was the sole cause of the accident, (2) Hitchens was

employed by Texas Stretch, and (3) “both Brewer Leasing and Texas Stretch were,

at the time of the events in question, the statutory employer of Charles Hitchens

under the theory of logo liability.” On June 2, 2009, the trial court signed a final

judgment (“2009 Judgment”) memorializing the resolution of all the parties and

claims, applying various settlement credits, and then rendering judgment of

                                         4
approximately $8,000,000 in actual damages in favor of the Patterson family and

against Brewer Leasing and Hitchens, jointly and severally.

      After the 2009 Judgment was entered, Mr. Herzog sent a statutory demand

notice to Home State, on behalf of Brewer Leasing, based on his understanding

that, under the parties’ settlement agreement, he was being hired by Brewer

Leasing to represent it in a Stowers suit. A dispute then arose over Mr. Herzog’s

proposed fees, and Brewer Leasing ultimately refused to hire him. Later, the

Patterson family received an oral assignment of Brewer Leasing’s claims against

Home State, and Mr. Herzog’s filed suit against Home State on behalf of the

Patterson family as assignees of Brewer Leasing. In October 2010, the Patterson

family received a written assignment.

         THE UNDERLYING BILL-OF-REVIEW PROCEEDINGS

      In 2011, the Patterson family sued Brewer Leasing, alleging fraud in the

2006 litigation. Specifically, the Patterson family alleged that Brewer Leasing had

concealed evidence about the large amount of cocaine in Hitchens’s system at the

time of the accident. According to the Patterson family, this deception induced the

trial court in the 2006 litigation to exclude the evidence that Hitchens tested

positive for cocaine two hours after the accident, and induced the Patterson family

to accept settlement terms that they otherwise would not have accepted.

      Their bill-of-review petition alleged:


                                          5
8.     Plaintiffs obtained a favorable judgment [in Cause No. 2006-
76647 against Brewer Leasing], but were prevented from making a
meritorious claim for punitive damages and obtaining a full recovery
of actual damages by the extrinsic fraud of Defendant. Defendant
fraudulently concealed knowledge of the massive level of cocaine in
Charles Hitchens’s system at the time the tragic auto collision
occurred. Brewer Leasing referred to “an allegedly positive drug test.”
Brewer Leasing hid the massive level (43,444 nanograms) from all
plaintiffs and from some former defendants, then falsely claimed in
writing to this Court just before the trial that there was “no evidence
that Hitchens was impaired.” Knowing the urine test administered two
hours after the wreck revealed a precise and massive level of 43,444
nanograms, Brewer Leasing falsely wrote that the positive drug test
“contained no quantification as to amount of cocaine found, if any.”
Brewer Leasing falsely concluded, “since there is no evidence that
Hitchens was impaired . . .” Brewer Leasing’s fraudulent
misrepresentations constituted extrinsic fraud and a wrongful act.

9.    The extent of the concealment is further revealed by Exhibit E
to Brewer Leasing’s Motion to Exclude the positive drug test. In
Exhibit E Assistant District Attorney Warren Diepram recounts how
neither the Houston Police Department nor the Harris County District
Attorney had been able to obtain the truth a year later, on June 21,
2007. “It is unknown whether the private lab . . .quantified the
amount. As of today, this information has not been obtained . . .” (See
Exhibits 1, 2, 3, 4, and 5).

10. Brewer Leasing knew that 43,444 nanograms was a huge level
of cocaine. Case law researched by Brewer Leasing’s counsel
revealed toxicologist testimony that the following levels proved
impairment: 756, 1194, 1363, over 2000, and 6206 nanograms.
Nanograms of 12,500 were a “considerably high value,” and 26,720
nanograms were “an immense concentration.” At 43,444 nanograms
Charles Hitchens was massively impaired, Brewer Leasing knew it,
and Brewer Leasing chose to conceal this truth and misrepresent the
truth.

11. Plaintiffs were not at fault and were not negligent in failing to
discover the truth. Plaintiffs, along with other plaintiffs and a
defendant in the original proceeding, sent several discovery requests
to obtain information about the level of cocaine in Charles Hitchens’s
                                  6
      system. Brewer Leasing made positive assertions to Plaintiffs and this
      Court that there was no evidence of the level of cocaine in Charles
      Hitchens’s system or impairment at the time of the collision. Brewer
      Leasing fooled the Houston Police Department, the Harris County
      District Attorney, all plaintiffs, two defendants, and Judge McCally.
      ....

      13. Plaintiffs have exercised due diligence. Due to Defendant’s
      fraudulent concealment and fraudulent misrepresentations, Plaintiffs
      were not aware that Defendant had knowledge of Charles Hitchens’s
      extraordinary cocaine level until concealed documents were
      reluctantly produced in Cause Number 2010-35479, a subsequent
      Stowers case based on the original proceeding. In the Stowers action,
      Plaintiffs gained access in late October and early November 2010 to
      information on the cocaine level that was previously concealed and
      that conclusively proved fraudulent misrepresentation. This
      information was not discovered until well after the deadlines for a
      motion for new trial and an appeal had passed in 2006-76647. Now
      that Plaintiffs have discovered the fraud against them and this Court,
      Plaintiffs are seeking this Bill of Review to correct the injustice
      inflicted by the conscious acts of Defendant.

      A. Patterson Family’s Theory of Liability against Brewer Leasing

      The Patterson family’s petition for bill of review set forth the following in a

section entitled “Liability of Brewer Leasing” explaining their theory of liability:

       20. On July 26, 2005 Texas Stretch, Inc. was the Lessor of a 2002
      Peterbilt Class 8 motor vehicle, YIN 1 XPSDB9X220528915,
      commonly called “a tractor” or “a power unit.” (Exhibit 302). Brewer
      Leasing, Inc. was the Lessee. Federal law, Texas law, and paragraph 8
      of the Lease make Brewer Leasing liable for any injury caused from
      operation of the vehicle. Paragraph 2 required Brewer Leasing, as
      Lessee, to place signs on the vehicle showing it as leased to Brewer
      Leasing, Inc.: Brewer Leasing complied. Paragraph 5 specified that
      all drivers would be employees of Texas Stretch, Inc.: Brewer Leasing
      complied.


                                          7
21. In April 2006 Texas Stretch hired Charles Hitchens as a driver.
On Thursday, June 15, 2006, as an employee of Texas Stretch, driving
with the permission of Texas Stretch and only Texas Stretch, under
the dispatch of Texas Stretch, hauling a load for Texas Stretch,
Charles Hitchens operated the 79,940 pound fully loaded leased
vehicle while impaired by and under the influence of a massive
amount of cocaine (43,444 nanograms or more of cocaine metabolite
were in his system).

22. On June 15, 2006 Officer Stan Jolly stopped traffic on 1-10 just
west of Highway 6. Visibility was perfect and the road was dry.
Officer Jolly was in uniform and operating his motorcycle with his
hazard flashers/emergency lights on. Eight vehicles stopped, blocking
all three lanes of traffic. A ninth vehicle, operated by Jimmy
Bimmage, began to enter I-10. Mr. Bimmage was operating with an
oversize load permit. His oversized vehicle had approximately 50
wheels, measured about 160 feet long, and weighed about 198,000
pounds. Officer Robert Norris, also in uniform with his motorcycle
hazard flashers/emergency lights on, was in the back of the eight
stopped vehicles.
23. Sitting high up in the driver’s seat of his Class 8 motor vehicle,
impaired by massive quantities of cocaine, Mr. Hitchens failed to see
a 160 foot long 50 wheeled vehicle approaching from his right, eight
stopped vehicles in front of him, or Officer Norris’ flashers-lights and
hand signal. Driving at highway speed, without braking, in full view
of numerous eyewitnesses who watched in horror, Mr. Hitchens
slammed into the rear of Diane Patterson’s stationary Ford Expedition
and then careened down the highway.

24. Over the course of the next few minutes Diane Patterson died,
nine individuals were hurt, at least five vehicles were destroyed, and
three more vehicles sustained damage.

25. Mr. Hitchens was negligent, and grossly negligent, in his
operation of the vehicle leased by Brewer Leasing that displayed the
Brewer Leasing logo. That negligence was a proximate cause of the
collision and the death of Diane Patterson. Brewer Leasing is liable
for all actual damages plus punitive damages of at most 400% of all
actual damages. These actual damages include Diane Patterson’s pain
and mental anguish before her death, funeral and burial expenses, and
                                   8
then for Marcus Patterson, Daniel Patterson and Danae Patterson all
of the following in the past and in the future:

      A.    Pecuniary loss,

      B.    Loss of companionship and society, and

      C.    Mental anguish.
Marcus Patterson is also entitled to recover the fair market value of
the Expedition destroyed in the collision.
26. Brewer Leasing is liable for Mr. Hitchens’ negligent driving
behavior for these reasons:

      A.    The lease’s existence;

      B.    The specific provisions of the lease;
      C.    The Brewer Leasing logo on both the driver and
            passenger’s side fuel tanks; and
      D.    Mr. Hitchens’ provision of a Brewer Leasing cab card to
            the police who investigated the collision.

27. Brewer Leasing is liable for Charles Hitchens’ gross negligence
because Brewer Leasing ratified Charles Hitchens’ conduct. Brewer
Leasing did or knew all of the following:
      A.    Knew a woman was killed in the collision;

      B.    Knew Charles Hitchens admitted fault at the scene;
      C.    Knew Charles Hitchens was drug tested about two hours
            after the collision;

      D.    Knew Charles Hitchens admitted to a private investigator
            the day after the collision to recent cocaine use;

      E.    Knew the vehicles driven by Charles Hitchens on June
            15, 2006 were not scheduled vehicles (tractor or trailer)
            on the Texas Stretch insurance policy with Sagamore
            Insurance Company;

                                     9
      F.     Knew the vehicles driven by Charles Hitchens on June
             15, 2006 were scheduled vehicles on the Brewer Leasing
             policy with Home State County Mutual Insurance
             Company; and

      G.     Knew Charles Hitchens was an employee of Texas
             Stretch and never of Brewer Leasing.

Armed with these facts and the resulting fear of no insurance
coverage, or inadequate coverage, Brewer Leasing took the following
actions ratifying Mr. Hitchens’ conduct:

      H.     Falsely claimed in a recorded call with a Sagamore
             adjuster that Charles Hitchens was a Brewer Leasing
             employee;

      I.     Produced Charles Hitchens’ employee file, thereby subtly
             implying Charles Hitchens was their employee;
      J.     Implemented a plan to fraudulently misrepresent and
             conceal the level of cocaine revealed by Charles
             Hitchens’ drug test;

      K.     Implemented a plan to lie and distort the truth to defraud
             the injured parties, this Court, and the Harris County
             District Attorney’s office, so that their ratification of
             Charles Hitchens’s conduct would have no financial
             impact or a lesser financial impact on Brewer Leasing
             and their insurance company; and

      L.     Conceal their fraud and their cover-up by destroying
             some of the files relating to Charles Hitchens in
             conjunction with others and concealing the rest of the
             damaging evidence.

28. Brewer Leasing’s actual, constructive, and extrinsic fraud, and
wrongful acts (including all acts listed in paragraph 27) also
proximately caused damages to the Patterson family, including but not
limited to expenses incurred that would not have been incurred had
the fraud not occurred. In addition to obtaining relief in their Bill of
Review, in accordance with Texas case law the Patterson family seeks
a recovery of these actual damages.
                                  10
      B. Relief Sought against Brewer Leasing
      As relief, the Patterson family sought an order (1) voiding the Covenant not

to Execute previously executed in favor of Brewer Leasing as part of the 2009

settlement, (2) voiding the assignment of claims against Home State from Brewer

Leasing to the Patterson family, and (3) voiding the June 2, 2009 Judgment as it

relates to Brewer Leasing. The Patterson family also sought a new judgment

against Brewer Leasing for negligence, gross negligence, and fraud.

      C. The Agreed Partial Judgment

      On July 2, 2012, the trial court signed an Agreed Partial Judgment granting

the Patterson family some of their requested relief and setting a trial date to try

their claims against Brewer Leasing:

            Defendant BREWER LEASING, INC., without admitting or
      denying Plaintiffs’ allegations in Plaintiffs’ Original Petition . . . ha[s]
      agreed that judgment should be entered herein in favor of Plaintiffs . .
      . and against BREWER LEASING, INC. (hereinafter “Defendant”),
      with respect to three issues. It is accordingly
             ORDERED, ADJUDGED AND DECREED by the Court that
      the Judgment signed June 2, 2009 in Cause No. 2006-76647 styled
      Marcus Brent Patterson, Individually, as Independent Executor of the
      Estate of Diane Patterson and as Next Friend of Daniel Patterson and
      Danae Patterson is hereby set aside, null and void ab initio, and of no
      legal effect for any purpose. It is further

             ORDERED, ADJUDGED, and DECREED that the Covenant to
      Not Execute and all prior oral and written assignments of causes of
      action by Brewer Leasing, Inc. to the Pattersons are hereby set aside,
      null and void ab initio, and of no legal effect for any purpose


                                          11
            Plaintiff shall be GRANTED the right to fully retry their claims
      against BREWER LEASING, INC. and the case is set for trial on the
      two week docket beginning the 15th day of October, 2012.

      D. The Trial

      A week-long trial was held. Hitchens pleaded the Fifth Amendment, but his

stipulation admitting that his negligence caused the accident was admitted at trial.

The Patterson family’s theory of the case was that Brewer Leasing was primarily

responsible for Hitchens’s negligence as lessee of the truck he was driving and,

additionally, that Brewer Leasing ratified Hitchens’s actions. Brewer Leasing’s

position was that it was not responsible, as it was only the owner, not the lessee, of

the truck1; it instead argued that Texas Stretch (as Hitchens’s employer and the

truck operator), Hitchens (as the driver), and Ray Bellow & Sons (as the company

that caused the slow-down on the freeway) were responsible. Accordingly, the

bulk of the trial testimony and evidence centered on (1) who owned or leased the

truck on June 15, 2006—the day of the accident, and (2) damages suffered by the

Patterson family. Relevant to the ownership/leasing question:

      Lonnie Box – Box testified that he is General Manager of both Texas

Stretch, Inc. and Brewer Leasing, Inc. He started work at both companies in July

2006, shortly after the accident. He is considered the “number two guy” in charge

at both companies, with the owner, Mr. Brewer, being President and the number

1
      This was apparently a change in position, as Brewer Leasing had previously
      contended that it was the lessee of the truck.
                                         12
one in charge of both. Box testified that, to his knowledge, Mr. Brewer owned

100% of both Texas Stretch and Brewer Leasing.

      Box testified that Brewer Leasing had its logo and TxDOT number painted

on the side of the truck Hitchens was driving the day of the accident.            Box

acknowledged a written July 26, 2005 lease agreement under which Texas Stretch

leased the tractor to Brewer Leasing. Box explained that leases of tractors have to

be in writing under federal law. The lease contains no expiration date, and states

that it “shall be in full force and effect until terminated by either party hereto, but

not less than 30 days by written notice delivered by either party . . . ” Box testified

that he had never seen a written notice terminating the lease, and that neither Texas

Stretch nor Brewer Leasing had produced one in this litigation.

      Box also explained that the Federal Motor Carriers Safety Act requires

owners, lessors, and lessees to put their name and logo on the side of rigs to

“identify equipment and who the operating company is.” He further testified that,

based on the signage on the truck Hitchens was driving, both Texas Stretch and

Brewer Leasing would be responsible for Hitchens’s actions:

           Q.    And they also paint their specific unique identifying
      number with the agencies, correct?
             A.     That’s correct.
             Q.     The tractor involved in this collision had Texas DOT
      numbers and U.S. DOT numbers on both the driver and passenger
      side of the vehicle, true?
             A.     To my knowledge, yes.
                                          13
             Q.     And what effect do you understand that has by putting
      your name, your logo and your identifying federal and state
      registration numbers on the side of the vehicle? What effect does that
      have if the vehicle is in a wreck?
          A.     That is the operating company that is responsible for the
      movements of that vehicle.
            Q.    And, therefore, responsible for any injuries caused by the
      negligent operation of the vehicle, correct?
            A.      Correct.
            Q.    Can we agree that if Mr. Hitchens did anything wrong on
      June 15, 2006 in his operation of the motor vehicle, Texas Stretch and
      Brewer Leasing are both responsible for his actions?
            A.      Yes.
      Brewer Leasing also played clips from Box’s deposition, during which Box

testified that Texas Stretch was Hitchens’s employer at the time of the accident.

He also testified that Texas Stretch sold the truck to Brewer Leasing in 2005 and

then Texas Stretch leased the truck from Brewer Leasing.

      A.B. Brewer – Mr. Brewer testified that he has always been the 100% owner

and President of both Texas Stretch and Brewer Leasing. He testified that Brewer

Leasing owned the truck that Hitchens was driving and that—despite the lease

reflecting otherwise—it was leased from Brewer Leasing to Texas Stretch, not the

other way around:

            Q.     You heard Mr. Box testify that based on his
      understanding of the facts as your general manager, if Mr. Hitchens
      driving behavior was inappropriate, both Texas Stretch and Brewer
      Leasing are responsible for Mr. Hitchens. Do you agree with Mr. Box
      on that point?
            A.      Yes.
                                       14
            Q.    Okay. So will you now accept responsibility on behalf of
      the Brewer Leasing for the death of Diane Patterson?
            A.     Well, the only thing about it, Brewer Leasing was not
      operating the truck. Texas Stretch was.
            Q.     Yes, sir.
            A.     And Brewer Leasing just leased the truck to Texas
      Stretch.
            Q.    And do you have a written lease from Brewer Leasing to
      Texas Stretch?
            A.   That I’m pretty sure we do. But I didn’t do none of that
      work. Doug Shelby and my brother supposed to took care of all that.
            Q.    Okay. In the seven years this case has been pending since
      Diane died, have you ever produced a written lease from Brewer
      Leasing to Texas Stretch?
            A.     I don’t know.
            ....
      Mr. Brewer also testified that, in 2006, Texas Stretch and Brewer Leasing

operated out of the same office with the same officers serving each company,

although he denied that Texas Stretch ever did business as Brewer Leasing. When

asked about defense exhibits indicating that Texas Stretch, not Brewer Leasing,

owned the truck in on February 16, 2005, Brewer stated “It says here it did, but I

don’t know how they did it.” When asked about the logos on the side of the truck

indicating that the truck was leased to Brewer Leasing on the day of the accident

(almost nine months after Mr. Brewer claimed Brewer Leasing became the owner),

Mr. Brewer responded: “I can’t tell you.”




                                        15
         Exhibits – Relevant to the issue of who owned or leased the truck, the

following exhibits were admitted:

         February 16, 2005 Texas Department of Transportation “License Cab Card”
                           identifying Texas Stretch as both “registrant” and
                           “owner” of truck;
         July 26, 2005    lease agreement between Texas Stretch as “owner” and
                          Brewer Leasing as “lessee” of truck;

         Sept. 28, 2005   State of Texas Certificate of Title identifying Texas
                          Stretch as “previous owner,” and Brewer Leasing, as
                          “owner” of truck;

         January 20, 2006 State of Oklahoma Certificate of Title for Heil trailer
                          identifying Brewer Leasing as “owner”;
         June 15, 2006    photo of truck from accident scene showing “Texas
                          Stretch” logo on side of the truck, along with a sign
                          reading “leased to Brewer Leasing”;

         June 15, 2006    “Texas Peace Officers Crash Report” identifying “Texas
                          Stretch” as owner of truck; and
         June 15, 2006    “Houston Police Department Truck Enforcement Unit”
                          citation and “Out of Service Notice” identifying Brewer
                          Leasing as “owner” of truck and Texas Stretch Inc. as
                          “lessee/mc.”

         E. The Verdict

         The jury found that Diane’s death was caused 100% by Hitchens’s gross

negligence, and awarded to the Patterson family actual and punitive damages. The

jury answered the only two questions about Brewer Leasing in Brewer Leasing’s

favor:




                                        16
                                  Question No. 1

            Was the tractor driven by Charles Hitchens on June 15, 2006
      leased to Brewer Leasing, Inc.?

             Answer:            No

                                  Question No. 8

            Do you find my clear and convincing evidence that Brewer
      Leasing, Inc. ratified or approved the gross negligence of Charles
      Hitchens?

             Answer:            No

      F. The Judgment

      Post-trial, the Patterson family took the position that because the jury found

Brewer Leasing was not the lessee of the truck on June 15, 2006, Brewer Leasing

should be held responsible as the owner of the truck. Specifically, it filed a Motion

for Entry of Judgment, arguing that Brewer Leasing is vicariously liable for

Charles Hitchens’ negligence because (1) the evidence conclusively proved that

Brewer Leasing owned the Heil trailer Hitchens was pulling and that trailer

qualified as a commercial motor vehicle, and (2) Brewer Leasing is judicially

estopped to deny ownership of the tractor negligently operated at the time of the

collision.

      Brewer Leasing also filed a motion requesting that the trial court enter a

take-nothing judgment on the jury’s verdict in favor of the defendants.



                                         17
      The Patterson family then filed a motion to amend their pleadings, to add

two theories against Brewer Leasing, i.e. (1) “Brewer Leasing owned the Heil

trailer, a commercial motor vehicle operated negligently at the time of the collision

while not leased by or insured by Texas Stretch;” and (2) “Brewer Leasing is

judicially estopped to deny ownership of the Peterbilt tractor negligently operated

at the time of the collision while not leased by or insured by Texas Stretch.” That

motion argued that the Patterson family’s pleading gave fair notice that they sought

to hold Brewer Leasing vicariously liable for Hitchens’s actions.

      On September 19, 2013, the trial court denied the Patterson family’s motion

to amend their pleadings, and entered a take-nothing Final Judgment.

      The Patterson family filed a Motion to Correct Judgment, Modify Judgment,

Judgment JOV, or New Trial.2 That motion argued that there “are five legal issues

that this Court needs to resolve”:

      A. Brewer Leasing’s liability as owner of the Peterbilt tractor,

      B. Brewer Leasing’s liability as owner of the Heil trailer,
      C. Brewer Leasing’s liability if they were the lessee of the Peterbilt
         tractor (and not the owner),
      D. The Court’s failure to try the fraud claim, and

      E. The reversal of the issues correctly resolved in the agreed
         interlocutory order.



2
      This motion was heard by a different judge than had tried the case.
                                           18
       The Patterson family argued that the trial court should grant JNOV on the

jury’s finding that Brewer Leasing was not the lessee of the tractor on the day of

the accident. Alternatively, it contended that it had adequately pleaded that Brewer

Leasing was liable as the owner of the tractor and that, in any event, the trial court

had abused its discretion by denying their motion to amend their pleadings to

allege such liability.

       The Patterson family also argued that the trial court erred in granting a final

judgment without resolving their pleaded fraud claim against Brewer Leasing.

They point to discussion at the pre-trial conference during which the trial court

refused to admit several exhibits in support of their fraud claim because the trial

would be limited to the wrongful death claims.

       The Patterson family further contended that the final judgment erroneously

reversed the terms of the parties’ Agreed Interlocutory Order, and that the

judgment conflicts with portions of the 2009 judgment. Their motion summarized

their position and relief sought as follows:

             This is a Bill of Review case. Portions of the underlying 2009
       judgment have never been attacked. The final judgment in this case
       needs clarity on which portions of the underlying judgment survive
       and which portions are reversed. Today there are two judgments: one
       says Brewer Leasing owes $8.8 million, one says Brewer Leasing
       owes nothing but leaves the first judgment intact, and both are wrong.
       Brewer Leasing was the lessee of the tractor on June 15, 2006 as a
       matter of law, therefore a judgment non obstante veredicto is a proper
       procedural remedy. In the alternative, if Brewer Leasing wants to be


                                          19
the owner, then with no written lease to anyone Brewer Leasing is
liable as the owner and the judgment can be corrected.
      Brewer Leasing is liable as the owner of the trailer with no
written lease to anyone and thus the judgment can be corrected.
        Although no trial amendment is necessary, the Patterson family
is entitled to one and their motion can still be granted.
       The relief granted in the Agreed Interlocutory Order needs to be
carried forward into a final judgment.
This Court has the plenary power to remedy all of these errors.
       If the judgment is reversed and judgment is entered for the
Patterson family, the Patterson family will formally non-suit the fraud
cause of action (with the consent of Brewer Leasing and this Court). If
not, the Patterson family retains their right to try their fraud claim
separately and the judgment should be revised to reflect its
interlocutory nature.
       As a last resort, if the Court desires, a new trial may be given
on either the limited issue of Brewer Leasing’s liability for 100%
driver negligence, ratification of gross negligence and fraud, or a new
trial may be ordered on all issues.
      WHEREFORE, the Patterson family prays that this Court do
one of the following:
   1.    A. Reverse the current judgment,
         B. Grant leave for a trial amendment, and
         C. Enter a judgment that:
                1. Holds Brewer Leasing liable,
                2. Clarifies which portions of the 2009 judgment are
                   set aside and which portions are undisturbed, and
                3. Finalizes the relief granted in the Agreed
                   Interlocutory Order; or
   2.    A. Reverse the current judgment,
         B. Enter a judgment that:
                1. Holds Brewer Leasing liable,



                                  20
                         2. Clarifies which portions of the 2009 judgment are
                            set aside and which portions are undisturbed, and
                         3. Finalizes the relief granted in the Agreed
                            Interlocutory Order; or
           3.      Grant a new trial on the limited issues of Brewer Leasing’s
                   liability for 100% driver negligence, ratification of gross
                   negligence, and fraud; or
           4. Grant a new trial on all issues.
      The Patterson family’s motion was overruled by operation of law, and they

timely appealed.

                                    THIS APPEAL

      The Patterson family raises two issues here:

      1.        “Is the owner of an unleased tractor and trailer liable when the
                driver is found negligent and 100% at fault?”

      2.        “May a trial court summarily enter judgment denying all relief
                for a properly plead fraud claim without a motion for summary
                judgment, evidence, or a trial on the issues?”
      Brewer Leasing’s appellee’s brief states, in its entirely,

      Pursuant to Texas Disciplinary Rule 2.02, Brewer Leasing and its new
      counsel of record notify this court that previous testimony of Mr.
      Brewer, Mr. Box and Mr. Yovanovic regarding stock ownership in
      Brewer Leasing was false. The true facts are herein disclosed.

      In chronological order, the false testimony was as follows:

            1.    March 2009 deposition by Mr. Box, in which he testified
      that Mr. Brewer owned 100% of the stock in Brewer Leasing (Page
      13, lines 11-14). Mr. Box was the general manager of Brewer
      Leasing.

           2.    March 2009 deposition by Mr. Yovanovic, the CPA for
      Brewer Leasing, in which he testified that Mr. Brewer owned 100% of
      Brewer Leasing (Page 14, lines 19-21).
                                            21
              3.    March 2009 deposition by Mr. A. B. Brewer in which he
      testified that he owned 100% of Brewer Leasing (Page 16, lines 17-
      19).

            4.     Trial testimony by Lonnie Box in which excerpts from
      his deposition were played in August, 2013 (Vol. 4 RR 141).
             5.    Trial testimony by Mr. A.B. Brewer in which he testified
      live that he owned 100% of Brewer Leasing in August, 2013 (Vol, 6
      RR70).

      Within the last 30 days the stock certificates of Brewer Leasing have
      been produced to the new counsel; they reflect that prior to January 1,
      2008 Mr. Brewer owned 100% of the stock in Brewer Leasing, but
      that on that date he conveyed all of his stock in Brewer Leasing to
      Texas Stretch, Inc. Relying on the record of the stock certificates of
      Brewer Leasing, the aforesaid testimony of Messers. Box, Brewer and
      Yovanovic was false.

      In light of the previous fraudulent concealment of the cocaine level of
      the driver, Mr. Charles Hitchens, at the time of the accident and now
      this false testimony about stock ownership of Brewer Leasing, Brewer
      Leasing stands on its previous briefing in this case as written by prior
      counsel as contained in the record.

                     LIABILITY OF BREWER LEASING
      In its first issue, the Patterson family asks us to find that Brewer Leasing is

vicariously liable for Hitchens’s negligence, despite the jury failing to find that

Brewer Leasing was lessee of the truck Hitchens was driving and failing to find

that Brewer Leasing had ratified Hitchens’s gross negligence.

      The Patterson family reasons that, based upon Brewer Leasing’s

representations and evidence at trial, Brewer Leasing owned the tractor and

trailer—both regulated vehicles—and that ownership creates liability. While it


                                         22
acknowledges that liability created by ownership can be shifted to a lessee through

a lease, the Patterson family points out that there was no lease produced in

discovery or introduced into evidence shifting liability to any other entity. Thus, it

contends, Brewer Leasing as “the tractor or trailer owner is vicariously liable as a

matter of law to the general public.”

      The Patterson family also emphasizes that Texas Stretch and Brewer

Leasing were owned by the same person, shared officers and employees, operated

out of the same office, and—for at least some purposes—operated as one

company. Specifically, it cites a Commercial Lines Insurance Policy Declarations

Page entered into evidence identifying, as the insured, “Texas Stretch, Inc. d/b/a

Brewer Leasing, Inc.”      According to the Patterson family, allowing Brewer

Leasing to escape liability in this circumstance would thwart the policy goals

behind trucking legislation designed to protect the public from accidents, prevent

public confusion, set responsibility when accidents occur, and provide for

financially responsible defendants. See 37 TEX. ADMIN. CODE § 4.11 (Tex. Dep’t

of Public Safety, Transportation Policy).

      The Patterson family further contends that its pleadings were adequate to

give Brewer Leasing fair notice that they sought to hold Brewer Leasing

vicariously responsible for Hitchens’s actions.        And it asserts that Brewer

Leasing’s liability as owner was tried by express or implied consent.


                                            23
Alternatively, it argues that, if the pleadings were inadequate, it was reversible

error for the trial court to refuse to grant a trial amendment post-verdict, but before

judgment was entered.

        The trial “court shall submit the questions, instructions and definitions in

[broad form] that are raised by the written pleadings and the evidence.” TEX. R.

CIV. P. 278. The party seeking to hold a third-party responsible under a respondeat

superior theory has the burden of securing a jury finding on that theory if not

conclusively established by the evidence. J&C Drilling Co. v. Salaiz, 866 S.W.2d

632 (Tex. App.—San Antonio 1993, no pet.) (“Because appellees did not submit

any questions necessarily referable to recovery under respondeat superior, and

because they did not conclusively establish or even raise a fact issue that Gonzales

was acting in the course and scope of his employment, the judgment against J & C

cannot rest on the theory of respondeat superior.”); Hooper v. Torres, 790 S.W.2d

757, 759 (Tex. App.—El Paso 1990, writ denied) (“It was incumbent upon the

party with the burden on the issue to request a correct issue which was raised by

the evidence and obtain a favorable answer in order to prevail upon that part of the

case . . . .”).

        “Upon appeal all independent grounds of recovery or of defense not

conclusively established under the evidence and no element of which is submitted

or requested are waived.” TEX. R. CIV. P. 279; Robertson v. Odom, 296 S.W.3d


                                          24
151, 159 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (“Robertson did not

submit a properly-worded question, and did not request a jury submission on

agency or respondeat superior, in support of his claim that Odom was vicariously

liable for Barnes’s misrepresentation[;] . . . . Therefore, he has waived any

complaint about the failure to submit Odom’s vicarious liability to the jury.”).

      The Patterson family’s brief argues:

      3. As owner, Brewer Leasing never leased either vehicle.
              There is no written lease from Brewer Leasing of the Heil
      trailer or Peterbilt tractor, either in discovery or in evidence. If either
      vehicle was leased, a written lease with precise and detailed
      provisions is required by both federal and state law. 49 USC 10927,
      11107, and 14102; 49 CFR 376.11, 1057; 37 Tx. Administrative Code
      4.11. If an owner rents the vehicle then the owner is not liable, but
      Brewer Leasing never availed itself of this relief. 49 USC 30106.

      4. Ownership without a lease equals liability.

            The only entity with any legal connection to the Peterbilt tractor
      or Heil trailer on the date of the collision is Brewer Leasing.
      Therefore Brewer Leasing is liable for the collision.

      This argument rests upon three premises, i.e., (1) the evidence conclusively

established that Brewer Leasing owned the tractor and trailer Hutchens was driving

(or, alternatively, that Brewer Leasing is estopped from arguing that it did not own

the tractor and trailer), (2) there was no written lease shifting liability for

Hutchens’s action to a third party, and (3) without a written lease transferring

control and liability to a third party, Brewer Leasing is vicariously liable for

Hitchens’s actions as a matter of law. Thus, according to the Patterson family, its
                                          25
failure to secure a jury finding that Brewer Leasing was the lessee is of no matter

because judgment should have entered against Brewer Leasing as the owner of the

unleased tractor and trailer.

      This argument erroneously assumes that, absent a valid written lease to

Texas Stretch in evidence, no lease agreement exists for purposes of shifting

liability away from Brewer Leasing as owner of the tractor and trailer.

      As the Patterson family acknowledges, under federal law, the owner of a

vehicle may shift liability to a lessee that operates the vehicle:

      § 30106. Rented or leased motor vehicle safety and responsibility

             (a) In general.—An owner of a motor vehicle that rents or
      leases the vehicle to a person (or an affiliate of the owner) shall not be
      liable under the law of any State or political subdivision thereof, by
      reason of being the owner of the vehicle (or an affiliate of the owner),
      for harm to persons or property that results or arises out of the use,
      operation, or possession of the vehicle during the period of the rental
      or lease, if–
             (1) the owner (or an affiliate of the owner) is engaged in the
      trade or business of renting or leasing motor vehicles; and
            (2) there is no negligence or criminal wrongdoing on the part of
      the owner (or an affiliate of the owner).

49 U.S.C. § 30106.

      But the Patterson family emphasizes that, by statute, a lease that shifts

liability from the owner of equipment to a carrier must be in writing and contain

certain information about parties’ responsibilities. 49 C.F.R. § 376.11 (“There

shall be a written lease . . . . ); Id. § 376.12 (setting forth requirements for lease);

                                           26
37 TEX. ADMIN. CODE §4.11(a) (incorporating, by reference, Title 49, Code of

Federal Regulations).    Thus, it insists, because there was no written lease in

evidence shifting liability away from Brewer Leasing, there was no lease as a

matter of law and liability stays with Brewer Leasing.

      However, several courts have considered and rejected the argument that

noncompliance with the regulation requiring that every lease be in writing renders

such lease ineffectual. For example, in Shimko v. Jeff Wagner Trucking, LLC, the

federal district court recognized that testimony about an oral lease agreement

created a fact issue about the existence of that lease, despite its violating the “in

writing” requirement of 49 C.F.R. § 376.11 (the same section relied upon by the

Patterson family):

      A more difficult, factual question is whether Shimko “leased” the
      equipment back to defendants under the regulations. Certainly, no
      formal, written lease existed in which Shimko granted use of the truck
      and trailer to defendants. However, “lease” is a term of art under the
      Truth–in–Leasing regulations and is defined as “[a] contract or
      arrangement in which the owner grants the use of equipment, with or
      without driver, for a specified period to an authorized carrier for use
      in the regulated transportation of property, in exchange for
      compensation.” 49 C.F.R. § 376.2(e) (emphasis added). The
      Bonkowski court held that an informal oral arrangement can,
      therefore, constitute a “lease” subject to the regulations. 2004 WL
      524723, at *3 (“The arrangement, as described and documented at
      trial, met [the definition of ‘lease.’] ... Because the agreement was
      entirely oral, it violated the regulations.”). In its previous opinion
      granting Shimko leave to amend his complaint, this court agreed. (See
      Mar. 10, 2014 Opinion & Order (dkt.# 29) 5–6.)



                                         27
      Defendants contend that there was no informal leaseback
      arrangement. . . . Of course, Shimko has offered his own sworn
      testimony that directly contradicts defendants’ on key facts, and the
      court must credit Shimko’s version at summary judgment, as well as
      draw all reasonable inferences in his favor. . . . Crediting Shimko’s
      testimony, a reasonable trier of fact could certainly find that the
      parties had “arranged” a de facto “leaseback” of the truck and trailer
      by Shimko to defendants for use in their motor carrier business.

No. 11-cv-831-wmc., 2014 WL 7366190, at *4 (W.D. Wisc. Dec. 24, 2014); see

also Luizzi v. Pro Transport, Inc., No. 02-CV-5388(CLP), 2013 WL 3968736, at

*20 (E.D.N.Y., July 31, 2013) (rejecting argument that noncompliance with §

376.12(b) renders lease unenforceable); Hunt v. Drielick, 852 N.W.2d 562, 569 n.8

(Mich. 2014) (“Specifically, 49 C.F.R. § 376.11 and 49 C.F.R. § 376.12 require

that if a semi-tractor owner leases its equipment to a carrier, a written lease

agreement must be executed[;] . . . . However, the fact that no written lease was

entered into in this case does not preclude the trial court on remand from

concluding that a lease was in fact entered into. See Wilson v. Riley Whittle, Inc.,

701 P.2d 575 (Ariz. Ct. App. 1984) (explaining that “the absence of a written trip

lease is legally irrelevant”)”).

      At trial, Mr. Brewer testified that Texas Stretch was operating the truck on

the day of the accident, under a lease from Brewer Leasing:

           “Brewer Leasing was not operating the truck. Texas Stretch
      was. And Brewer Leasing just leased the truck to Texas Stretch.”

            “Brewer Leasing was a leasing company, leased the equipment
      to Texas Stretch.”

                                        28
            ....

            Q.    Right. Your goal, as I understand it, was to put all assets
      into Brewer Leasing and have all equipment titled to Brewer Leasing,
      correct?

            A. Yes, sir.
            Q. On the date this accident occurred, who was the operator of
      the vehicle?
            A. Texas Stretch.

            Q. Who employed the driver?

            A. Texas Stretch.

            Q. Who did all the hiring for drivers?
            A. Texas Stretch.

            Q. Who dispatched?
            A. Texas Stretch.

            Q. So Mr. Hitchens would receive a dispatch from Texas
      Stretch to go pick up a load, correct?
            A. Yeah, he was dispatched, he was paid through Texas Stretch.

      Mr. Brewer testified at trial that he was “pretty sure” there was a written

lease under which Brewer Leasing leased the equipment to Texas Stretch.

      Who owned and operated the truck and trailer was a hotly disputed at trial,

and this testimony is some evidence that the equipment was leased from Brewer

Leasing to Texas Stretch. Because the lack of a written lease in evidence does not

conclusively negate the existence of a lease, the Patterson family did not

conclusively establish Brewer Leasing’s liability as the owner of unleased

                                        29
equipment. Accordingly, the theory that Brewer Leasing is vicariously liable for

Hitchens’s actions as an owner was waived by the Patterson family’s failure to

secure a jury submission about the existence or nonexistence of a lease. See, e.g.,

Jerry L. Starkey, TBDL, L.P. v. Graves, 448 S.W.3d 88, 102 (Tex. App.—Houston

[14th Dist.] 2014, no pet.) (theory not conclusively established was waived by

failure to request submission to the jury).

      We overrule the Patterson family’s first issue.

                                       FRAUD

      In its second issue, the Patterson family argues that the trial court erred by

entering judgment on its fraud claim. It notes that it “plead a claim for monetary

relief for fraud in addition to bill of review relief,” but was deprived of the

opportunity to try the fraud claim. We agree.

      The Patterson family’s petition sets forth the following fraud claim:

      Brewer Leasing’s actual, constructive, and extrinsic fraud, and
      wrongful acts (including all acts listed in paragraph 27) also
      proximately caused damages to the Patterson family, including but not
      limited to expenses incurred that would not have been incurred had
      the fraud not occurred. In addition to obtaining relief in their Bill of
      Review, in accordance with Texas case law the Patterson family seeks
      a recovery of these actual damages.

      At the pre-trial hearing, there was an extensive discussion about this claim.

The Patterson family argued that it needed to introduce exhibits to support its claim

while Brewer Leasing argued that the evidence did not support a fraud claim. The


                                          30
trial court expressed doubt that the Patterson family’s theory was valid as a fraud

claim and opined that the theory was more suited to a request for sanctions.

         Ultimately, the trial court ruled that the fraud case would be disposed of

separately:

               THE COURT: Well, it’s something else, but it is not a fraud
         claim. And, if you can convince me otherwise, then we’ll sever it, but
         we’re going to try the wreck in your 15 hours, I think.

         The trial court excluded any evidence that was related to just the fraud

claim. Later, Brewer Leasing’s attorney verified that the fraud case was not being

tried:

               [Brewer Leasing’s counsel]: Well, just for clarification, Judge,
         fraud is not going to be tried as a part of this automobile wreck and
         wrongful death case?

               THE COURT: Uh-huh. I think that’s right.

         At trial, Brewer Leasing continued to object to exhibits related only to the

Patterson family’s fraud claim, because they were “outside the scope of what this

trial is about.”

         The Final Judgment expressly disposes of all claims against Brewer Leasing,

                ORDERED, ADJUDGED AND DECREED that Plaintiffs shall
         Take Nothing from Defendant and Judgment shall be entered against
         the Plaintiffs as to all of their claims against Brewer Leasing, Inc. and
         Defendant, Brewer Leasing, Inc. is hereby dismissed, acquitted and
         fully discharged from all liability to the Plaintiffs.

         Generally, any independent claim not submitted to the jury is waived. Gulf

States Util. Co. v. Low, 79 S.W.3d 561, 571 (Tex. 2002); see also Ramos v. Frito-
                                            31
Lay, Inc., 784 S.W.2d 667, 668 (Tex. 1990) (“If an entire theory were omitted from

the charge it would be waived; and Frito–Lay would indeed have no duty to

object.”).

      The trial court has broad discretion to sever, see TEX. R. CIV. P. 41, or order

separate trials on certain claims. TEX. R. CIV. P. 174(b); Allstate Ins. Co. v. Hunter,

865 S.W.2d 189, 191 (Tex. App.—Corpus Christi 1993, no pet.). The trial court

expressed its intention to do so here, telling the parties at pretrial (as well as in

ruling on objection during trial) that it would not try the Patterson family’s fraud

claim with its wrongful death claim. And, while the court expressed skepticism

about whether the Patterson family had a cognizable fraud claim, the court did not

purport to dispose of this claim as a matter of law after affording the Patterson

family an opportunity to present evidence either in a summary-judgment

proceeding or trial.

      After the trial court entered a final, take nothing judgment, the Patterson

family filed a motion for JNOV and new trial, complaining that the trial court

should not have entered judgment on its fraud claim. Because the trial court’s final

judgment disposed of an unresolved claim, we sustain the Patterson family’s

second issue, reverse the trial court’s judgment and remand for consideration of its

fraud claim.




                                          32
                                CONCLUSION

      We reverse the trial court’s judgment on the Patterson family’s fraud claim

and remand that claim for further proceedings. We affirm the remainder of the

trial court’s judgment.




                                            Sherry Radack
                                            Chief Justice

Panel consists of Chief Justice Radack and Justices Brown and Lloyd.




                                       33
