Affirm and Opinion Filed July 31, 2013




                                                          S
                                                         In The
                                                   Court of Appeals
                                            Fifth District of Texas at Dallas

                                                      No. 05-12-00446-CV

         GENERAL CAPITAL GROUP BETELIGUNGSBERATUNG GMBH, Appellant
                                    V.
                               AT&T, Appellee

                                On Appeal from the 101st Judicial District Court
                                             Dallas County, Texas
                                     Trial Court Cause No. DC-11-12856

                                                       OPINION
                                         Before Justices Bridges and FitzGerald1
                                             Opinion by Justice FitzGerald


          This case arises from an alleged oral contract General Capital Group (“GC”) claims to

have had with AT&T (“ATT”). GC now appeals a summary judgment granted in favor of ATT.

In two issues, GC asserts the trial court erred in granting summary judgment on its fraud claim

and on its claim for quantum meruit. Concluding GC’s arguments are without merit, we affirm

the trial court’s judgment.

                                                        BACKGROUND

          GC is a German investment firm with extensive contacts and experience in the

telecommunications industry. The seeds for the dispute were sown when GC approached ATT


     1
       The Honorable Mary L. Murphy was on the panel and participated in the submission of this case. Due to her resignation from this Court
on June 7, 2013, she did not participate in the issuance of this Opinion.
asserting that it could broker the acquisition of T-Mobile (“TM”) by ATT. GC made this

proposal to ATT during a January 2009 telephone conference. GC claims that during this

conversation, ATT agreed to allow GC to broker the TM deal and promised to pay it $780

million (2% of the $39 billion deal) on a contingent, success-fee basis. Thus, GC was to receive

compensation only if ATT was successful in acquiring TM. There was no written agreement, or

even a follow up email.

       GC provided ATT with more written materials, and in May 2009, held a second

conference with ATT. ATT indicated it was not likely to proceed within the following months of

2009 and that it would contact GC when it was ready to proceed.

       From May 2009 to May 2011, there was no communication between ATT and GC. In

March 2011, ATT announced that it intended to acquire TM. When GC approached ATT, ATT

denied that they had any agreement. Shortly thereafter, GC sued ATT for breach of contract.

        In response to GC’s suit, ATT filed a plea to the jurisdiction, or alternatively, plea in

abatement, arguing GC’s claims were not ripe because they were contingent upon a successful

closing of the deal. The trial court abated the case for 120 days or until such time as the

transaction closed or was definitively abandoned.

       Later, ATT announced that it had abandoned its bid for TM due to opposition from the

Department of Justice and the FCC. The abatement of this case was lifted, and ATT filed a

traditional motion for summary judgment on GC’s claims. ATT asserted that GC had no right to

recover on any of its claims because ATT did not successfully acquire TM.

       After ATT filed its summary judgment motion, GC filed a fifth amended petition that

abandoned all claims except the claims for quantum meruit and fraud. In addition, since the TM

transaction did not successfully close, GC no longer argued that it was entitled to recover a $780

million success fee. Instead, it claimed it was entitled to recover “the reasonable value of its

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services” in the amount of $30 million. GC filed a response to the summary judgment, and then

ATT and GC both filed a reply and sur-reply, respectively. The trial court granted ATT’s motion

and entered a take-nothing judgment against GC. It is from this judgment that GC now appeals.

                                           ANALYSIS

Standard of Review

        ATT moved for a traditional summary judgment. See TEX. R. CIV. P. 166a(c). In a

traditional summary judgment, the party moving for summary judgment has the burden to

establish that there is no genuine issue of material fact and it is entitled to judgment as a matter

of law. TEX. R. CIV. P. 166a(c); Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 215–16

(Tex. 2003). If the movant satisfies its burden, the burden shifts to the nonmovant to preclude

summary judgment by presenting evidence that raises a genuine issue of material fact. Affordable

Motor Co., Inc. v. LNA, LLC, 351 S.W.3d 515, 519 (Tex. App.—Dallas 2011, pet. denied).

        We review the trial court’s summary judgment decision de novo. Valance Operating Co.

v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,

548 (Tex. 1985). In doing so, we take as true all evidence favorable to the nonmovant and

indulge every reasonable inference and resolve any doubts in favor of the nonmovant. Nixon, 690

S.W.2d at 548–49.

Fraud

        In its first issue, GC contends the trial court erred in granting summary judgment on its

claim against ATT for fraud. ATT responds that GC’s own pleadings affirmatively negate at

least one of the elements of its cause of action. We agree with ATT.

        The elements of common law fraud are “(1) that a material representation was made; (2)

the representation was false; (3) when the representation was made, the speaker knew it was false

or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the

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speaker made the representation with the intent that the other party should act upon it; (5) the

party acted in reliance on the representation; and (6) the party thereby suffered injury.”

Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009). Thus, recovery

for fraud requires proof that the defendant’s alleged false representation caused the plaintiff

injury. Formosa Plastics Corp., USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47

(Tex. 1998). Proof of causation includes proof that the defendant’s wrongful conduct was a

substantial factor “in bringing about an injury which would not otherwise have occurred.”

Prospect High Income Fund v. Grant Thornton, LLP, 203 S.W.3d 602, 618 (Tex. App. —Dallas

2006), rev’d in part on other grounds, 314 S.W.3d 913 (Tex. 2010). Proof that the conduct was a

substantial factor in bringing about the injury must be established “beyond mere conjecture,

guess, or speculation.” Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 781 (Tex.

App. —Houston [1st Dist.] 2009, pet. denied).

       GC contends ATT committed fraud by denying the existence of a contract. ATT denies

that there was ever a contract. Nonetheless, ATT argues that even if we assume (1) ATT told GC

it would pay it a 2% contingency fee if ATT acquired TM, and (2) ATT never intended to pay

GC when it made the promise to do so, GC still has not been damaged because it is in the same

position it would have been if the representation had been true. In other words, regardless of

whether ATT promised to pay a 2% success fee and GC expended $30 million working on behalf

of the acquisition, GC would still recover nothing because there was no “success” — ATT did

not acquire TM. Therefore, even if ATT’s representation was false, it did not cause any injury to

GC.

       GC’s pleadings and summary judgment evidence establish that its claimed losses could

not have been caused by ATT’s alleged representation. In the fifth amended petition, GC claims

it is entitled to recover out-of-pocket expenses for the work it performed to facilitate the TM

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acquisition. Specifically, GC states, “[b]ased upon [ATT’s] announcement and representation

that it is no longer pursuing any acquisition of T-Mobile, [GC] limits its actual damages claim to

its out-of-pocket or reliance damages.”

          In response to ATT’s motion for summary judgment, GC submitted affidavits of

company representatives Phillip Schoeller, Christoph Bulfon, Walter Raizner, and Ralph

Seraphim. While the affidavits state that GC engaged in substantial activity to assure that TM

would be available for an acquisition, they also all affirm that payment for GC’s services was to

be contingent upon a successful transaction.2 It is undisputed that the transaction was not

successful — ATT did not acquire TM.

          GC argues that its damages must be measured at the time the alleged fraud occurred, not

years later. According to GC, when ATT committed the alleged fraud in 2009, it caused GC to

expend $30 million in out-of-pocket damages. GC further contends that, measured at the time of

the fraud, GC’s interest had a real market value. In support of its argument, GC relies on Carlton

Energy Group v. Phillips, 369 S.W.3d 433, 454 (Tex. App.—Houston [1st Dist.] 2012, pet.

granted). Specifically, GC claims Carlton stands for the proposition that a contingent interest in a

transaction may have a market value, and the loss of that value is a compensable interest in tort.

We view Carlton, however, as distinguishable from the instant case.

          Carlton is a tortious interference case involving an investor in a natural gas project who

contracted with the project owner to provide financing in exchange for a 38% interest in the

project. Id. at 438. The owner of the project subsequently breached its contract with the investor

and entered into an agreement with a group of companies that had approached the owner in an

attempt to remove the investor from the project. Id. at 439–40. The companies were ultimately


     2
       The affidavits do not describe what constitutes “substantial activity.” Instead, the affidavits contain a conclusory statement that “the
reasonable value of the services provided . . . would have been at least $30 million . . . .”



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found liable for tortious interference with the investor’s contract, and a jury awarded $31.16

million in actual damages. Id. at 441.

       On appeal, the companies argued the evidence was insufficient to support the jury’s

determination that the fair market value of the investor’s interest was $31.16 million. Id. at 477.

Thus the focus was not whether the interest had value; rather, the argument pertained to how the

value was measured and whether the evidence was legally and factually sufficient to support the

jury’s damage award. In its examination of the sufficiency of the evidence, the court noted that

the loss of the investor’s 38% interest in the project was measured at the time of the tortious

interference, and the interest was an asset that had market value at the time it was taken. Id. at

454. The court further noted that one of the experts had testified that the project was “viable,”

and it is common for interests in ventures such as the gas project to be bought and sold before

there is any production. Id. After considering all of the evidence, the court concluded that the

investor was entitled to recover the fair market value of its interest at the time of the tortious

interference, and was not required to prove any “lost profits.” Id. at 454–55.

       Conversely, the instant case involves allegations of fraud, not tortious interference. And

the purchase of an interest in a gas project in exchange for financing differs significantly from a

contract in which payment is contingent upon the successful completion of an acquisition.

Moreover, in Carlton, the investor lost the value of the interest in the project because of the

interferers’ tortious conduct, not because the project never came to fruition. Indeed, there was no

evidence in Carlton that something prevented the owner from drilling in the gas fields or that the

gas fields were dry. Here, even if we characterize GC’s expenditures as an “interest” in the TM

deal, GC was only to recover the value of that interest if the acquisition actually occurred.

Carlton is also distinguishable because it involved benefit-of-the bargain damages rather than the




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out-of-pocket losses GC claims to have incurred in this case. In short, Carlton adds nothing to

our analysis.

         Because the evidence and GC’s pleadings establish that the alleged conduct of ATT did

not cause GC to suffer any damages, the trial court properly granted summary judgment in favor

of ATT on GC’s fraud claim. See Hartford, 287 S.W.3d at 781 (requiring proof that conduct was

substantial factor in causing injury). GC’s first issue is overruled.

Quantum Meruit

         In its second issue, GC argues the trial court erred in granting summary judgment for

ATT on GC’s claim for quantum meruit. ATT responds that GC’s own allegations defeat the

claim.

         Recovery in quantum meruit requires proof that services were performed under

circumstances reasonably notifying the defendant that the plaintiff expected to be paid. Vortt

Exploration Co., Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990). An essential

element of any claim for recovery in quantum meruit is that the plaintiff must expect to be

compensated for the services rendered. Id.; Smith v. Deneve, 285 S.W.3d 904, 915-16 (Tex.

App.—Dallas 2009, no pet.); Richter v. Wagner Oil Co., 90 S.W.3d 890, 895-96 (Tex. App.—

San Antonio 2002, no pet.); West Teleservices, Inc. v. Carney, 75 S.W.3d 455, 462 (Tex. App.—

San Antonio 2001, no pet.). The defendant must have the same expectation. Vortt Exploration,

787 S.W.2d at 944; Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992);

Myrex Indus., Inc. v. Ortolon, 126 S.W.3d 548, 551 (Tex. App.—Houston [14th Dist.] 2003, pet.

denied).

         As set forth previously, GC’s summary judgment evidence conclusively established that

it did not expect to be paid unless ATT acquired TM. For example, one of the affidavits GC

submitted as summary judgment evidence states, in pertinent part:

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               [GC] believed that a deal had been reached regarding compensation in the
               January 2009 teleconference . . . all parties were aware that [GC] was not
               being paid on an hourly basis for its work as it proceeded, but rather
               would be paid on a success fee basis for enabling an acquisition agreement
               of [TM] by [ATT] . . . [GC] demanded to be paid a success fee basis, but
               would have accepted to be paid on an on-going basis . . .[ATT] knew that
               if it would not commit to a success based fee then [GC] would have to be
               paid on an on-going basis. Had an agreement as to payment not been in
               place [GC] would have terminated all contact with ATT just as it had done
               with [others] . . . .

       GC insists there is no authority that the expectation of a contingent fee amounts to no

expectation of payment at all. In support of this argument, GC relies on Lamajak v. Frazin, 230

S.W.3d 786, 796 (Tex. App.—Dallas 2007, no pet.). GC’s reliance is misplaced because

Lamajak is distinguishable from the instant case.

       Lamajak involved an alleged oral agreement for the plaintiff to receive payment for

services if the defendant company’s profits for the year 1998 exceeded $6 million. The evidence

showed that the company made over $10 million in profits during the year in question, “thus

meeting the condition for payment.” Id. at 795. Therefore, quantum meruit was a viable claim.

The court also concluded that the company’s statute of limitations defense had no merit because

the claim for quantum meruit did not accrue until the contingency had been met. Id. at 796. Thus,

unlike this case, Lamajak involved a contingency that was actually fulfilled.

       The summary judgment evidence establishes that GC did not expect to be paid and ATT

did not expect to pay unless and until the acquisition of TM was actually consummated. The

transaction never occurred. Thus, there was no expectation of payment and therefore no basis for

GC to recover in quantum meruit. The trial court properly granted summary judgment in favor of

ATT on this claim. GC’s second issue is overruled.




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      Having resolved all of GC’s issues against it, we affirm the trial court’s judgment.



                                                    /Kerry P. FitzGerald/
                                                    KERRY P. FITZGERALD
120446F.P05                                         JUSTICE




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                                         S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

GENERAL CAPITAL GROUP                                On Appeal from the 101st Judicial District
BETELIGUNGSBERATUNG GMBH,                            Court, Dallas County, Texas
Appellant                                            Trial Court Cause No. DC-11-12856.
                                                     Opinion delivered by Justice FitzGerald.
No. 05-12-00446-CV         V.                        Justices Bridges and Murphy participating.

AT&T, Appellee

     In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
     It is ORDERED that appellee AT&T recover its costs of this appeal from appellant
GENERAL CAPITAL GROUP BETELIGUNGSBERATUNG GMBH.


Judgment entered July 31, 2013




                                                   /Kerry P. FitzGerald/
                                                   KERRY P. FITZGERALD
                                                   JUSTICE




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