A valet service damaged the plaintiff’s 2018 Lamborghini Huracan (a 2017-model example of which appears in the graphic). The Fifth Court affirmed a small award for loss of use, noting the trial court’s consideration of evidence about other vehicles available to the plaintiff and the effects of the COVID-19 pandemic. It rejected the plaintff’s request for damages for dimunition of value, noting:

Jones failed to provide any factual basis on which his valuation opinions rested. While Jones testified about how much he paid for the car seven months before the accident, he provided no factual basis to support his speculation about the value of the car at the time of the accident or after it was repaired. The basis for Jones’s opinions were conversations with people who sell “these cars” and “internet sites for all those cars out there.”

Jones v. Mr. Valet, No. 05-23-00355-CV (March 20, 2024) (mem. op.).

The plaintiff in Ramirez v. Bam! Pizza Management, Inc. obtained a default judgment on a claim for personal injury. The Fifth Court rejected his argument that a new trial should have been granted because of excessively low damages for pain and suffering, noting: [T]he trial judge may have disbelieved Ramirez’s affidavit testimony and that it was within his role as fact-finder to do so and to award no damages to Ramirez for his pain and suffering or physical impairment.” A concurrence would have resolved the appeal against Ramirez because his affidavit was conclusory. No. 05-23-00311-CV (Feb. 22, 2024) (mem. op.).

The Fifth Court reversed an award of “loss-of-use” damages, involving the right to move a billboard, in Remington Sherman Automotive, LLC v. FMG North Texas, LLC:

FMG’s conversion claim is premised on Remington wrongfully refusing to allow FMG to remove and relocate its billboard after the lease’s termination. Thus, to recover damages for loss of the billboard’s use resulting from Remington’s conversion, FMG had to establish the profits it could have earned if Remington had not prevented it from removing and relocating the billboard. Instead, over Remington’s objection, FMG presented evidence only of the amount of revenue FMG could have earned if Remington had allowed it to keep using the billboard on Remington’s property—a measure inconsistent with the legal and factual basis of FMG’s conversion claim. Absent any vidence showing the profits FMG could have earned at another location if allowed to remove and relocate the billboard, which FMG acknowledges it did not provide, the evidence is legally insufficient to support any loss-of-use damages.

No. 05-22-01366-CV (Dec. 27, 2023) (mem. op.) (emphasis added).

Huffman Asset Management, LLC v. Colter, No. 05-22-00779-CV (Nov. 7, 2023) (mem. op.), a default-judgment case that I recently discussed for its analysis of substituted service, also provided two useful reminders about legal-sufficiency challenges to damages awarded in a default judgment:

• Insufficient proof = no damage. “While those statements provide some evidence of the Colters’ belief they suffered mental anguish, the testimony does not show the nature, duration, and severity of the mental anguish, a substantial interruption in the Colters’ daily routine, or a high degree of mental pain and distress that is greater than mere worry, anxiety, vexation, embarrassment, or anger. The affidavits also include no evidence to justify the amount awarded.  We, therefore, … sustain HAM and Prairie Capital’s fifth issue in part by reversing the mental anguish damages awarded to the Colters.”
• Insufficient proof = remand, not rendition. “We do not, however, render a take nothing judgment against the Colters as to the mental anguish damages. ‘[W]hen an appellate court sustains a no evidence point after an uncontested hearing on unliquidated damages following a no-answer default judgment, the appropriate disposition is a remand for a new trial on the issue of unliquidated damages.’ …
  in a no-answer default judgment, remand is necessary only as to the categories of
  damages for which the evidence presented was insufficient.”

In a case about allegedly defective ceiling work, the defendants complained about double recovery, arguing that the judgment for the plaintiffs let them “receive [both] the
smooth ceiling bargained for and a refund for that work.”

The Fifth Court disagreed. Accepting the legal principle that “[u]nder any of the theories of liability involved, the value of any goods and services provided by [defendants] factors into the measure of damages,” the defendants’ argument had a factual problem: “[T]he evidence at trial supports a finding that [defendants’] work provided no value to the Heflins. That evidence included the testimony of the Heflins and photographs showing the shoddy and incomplete work and additional damage caused by that work.”

Hizar v. Heflin, No. 05-21-0036-CV (July 10, 2023) (mem. op.).

In Gregory v. Chohan, reversing the en banc Fifth Court, the Texas Supreme Court reversed an award of mental-anguish damages:

“To guard against arbitrary outcomes and to ensure that damages awards are genuinely compensatory, the plaintiff in a wrongful death case should be required to demonstrate a rational connection, grounded in the evidence, between the injuries suffered and the dollar amount awarded.” 

No. 21-0017 (Tex. June 16, 2023).

Lisle v. Do-Mo Joint Venture arose from a dispute among neighbors about the care of the land between and around their respective properties. The case went to trial. The key damages question began:

and after some instructions, concluded:

Despite the benefit of the property-owner rule, an owner’s testimony was insufficient to support those figures when, inter alia, “the jury was asked to make separate awards for the damage caused by flooding and by trespassing trucks. However, Crandall made no effort to provide damages calculations resulting from these two categories; instead, Crandall provided a blanket, unsupported figure of $200,000 to fix the parking lot.” No. 05-22-00236-CV (May 10, 2023) (mem. op.).

As a companion to the Fifth Court’s recent opinion in Aflalo v. Harris, which addressed a home seller’s damages when the contract price exceeded the market price, the Texas Supreme Court recently decided MSW Corpus Christi Landfill, Ltd. v. Gulley-Hurst, LLC, which involved the opposite situation:

“When the property’s market value at the time of breach exceeds the contract price, the correct measure of benefit of the bargan damages is the difference between the promised contract price and what the seller received.

No. 21-1021 (Tex. March 24, 2023) (per curiam) (emphasis in original).

Aflalo v. Harris arose from a contract to sell a house. The question was (generally) how to calculate the value of the house at the contractually specified sales time, and (specifically) when a later resale of a home can be probative of that value. The Fifth Court reviewed the specific facts of this resale to determine that it was probative, discussing and distinguishing Barry v. Jackson,  309 S.W.3d 135 (Tex. App.–Austin 2010, no pet.) (LPHS represented the successful appellant in this case.)

On a second appeal after an earlier remand from the Texas Supreme Court, the once-successful plaintiff in Credit Suisse AG v. Claymore Holdings LLC sought judgment for “an additional $25,235,910.61 for secondary market purchases in addition to the $40 million in damages for fraudulent inducement.” The Fifth Court noted:

• “[t]he jury was not asked to determine liability as to the secondary market purchases; therefore, the record contains no liability or causation finding” to support such damages;
• “Claymore did not object to the absence” of a question on those matters, and did not try to submit one either;
• in the trial court’s findings of fact and conclusions of law, on matters tried to the bench, “[t]here is not a separate section for fraudulent inducement of secondary market purchases”;
• The trial court’s conclusion of law that awarded such damages did not make “an implicit finding and conclusion” about liability and causation;
• The supreme court did not address this topic in its prior opinion, and because “[t]he jury made no liability finding on the secondary market purchases … there was nothing for Credit Suisse to appeal at that stage in the proceedings.”

No. 05-21-00649-CV (Feb. 14, 2023) (mem. op.).

A contentious easement dispute led to, among other matters, a damages judgment for the defendant’s alleged barricading of an access road. The damages included delay costs incurred when a contractor charged an extra fee after a TRO stopped the process of paving the road. Applying DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990), the Fifth Court found that those damages were not recoverable on this claim:

“The trial court’s temporary restraining order cannot be [defendant’s] breach. And to the extent [Plaintiff] argues the order was wrongful, she did not allege either of two possible actions for wrongful injunction, nor prove the elements of malicious prosecution.”

MQ Prosper North LLC v. Coulter, No. 05-20-00880-CV (Dec. 12, 2022) (mem. op.).

Grisaffi v. Rocky Mountain High presents an unusual situation involving the “one-satisfaction rule” (and the choice it requires between recovery of stock and damages for the loss of the same stock), the “mandate rule” requiring an election pursuant to that rule, and the effect of another proceeding arguably implicating the subject matter of this case. The majority affirmed, finding a faithful application of the mandate rule; a dissent had a different view about the import of the other action. No. 05-20-00538-CV (Oct. 18, 2022) (mem. op.).

The plaintiff’s summary-judgment testimony about reliance went as follows (with a key phrase emphasized):

Had I known that Defendants were planning to leave my company and go out on their own I would not have entered into the second agreement on January 5, 2018. By doing so I allowed Defendants to pull more loads, earn greater revenue, and gain greater access to my clients and my business information. In fact, I would have taken actions to hire other drive[r]s and secure additional trucks as necessary. I would also have reduced and ultimately eliminated the work I was providing to Defendants.

Unfortunately, this testimony “failed to link [plaintiff’s] purported reliance to the only misrepresentation it identified—Mr. Woods’s failure to reveal he had changed the name of his entity from Woods Transportation to 1st Class Fuels.” L.D. McLoud Transp., LLC v. 1st Class Fuels, LLC, No. 05-20-00796-CV (June 3, 2022) (mem. op.) (emphasis added).

“In a legal sufficiency analysis, we cannot ignore conflicts in the evidence, even where the conflict is within a party’s own exhibits. Here, there is a conflict between Exhibit 88 and Exhibit 7, the draw receipts. During closing argument, appellants argued: ‘Every time money was drawn [Bresnahan] got Mr. Kidwell to sign another little receipt-type note. So if you look at Exhibit 7, I think there’s 43 of them. So ever[y] draw he got him to sign.’ The problem is that there are forty-seven such draws listed in Exhibit 88 but only thirty eight draw receipts in Exhibit 7. The missing draw receipts, including interest and fees, and the “other deficient notes” together accounted for $569,344 on Exhibit 88.” Haddington Fund, LP v. Kidwell, No. 05-19-01202 (Jan. 12, 2022) (mem. op.) (citations omitted). h

• “Payment is an affirmative defense which the defendant has the burden to plead and prove. Payments pled by the defendant which are not admitted in the plaintiff’s petition must be specifically alleged.”
• What about trial by consent? “‘The doctrine of trial by consent does not apply when the evidence of an unpleaded matter is relevant to the pleaded issues because it would not be calculated to elicit an objection.’ Milbourn’s testimony was relevant to the Kidwell’s claim for breach of fiduciary duty … that Bresnahan breached his fiduciary duty by failing to disclose his conflicts of interest and by unilaterally increasing his own wages. … Because the Kidwells’ evidence of payment [a spreadsheet] was also relevant to their pleaded claim for breach of fiduciary duty, we conclude payment was not tried by consent.”

Haddington Fund, LP v. Kidwell, No. 05-19-01202 (Jan. 11, 2022) (mem. op.) (citations omitted).

In Hadley v. Baxendale, 8 Exch. 341, 156 Eng. Rep. 145 (1854), the Court of Exchequer held that a miller’s lost profits, arising from the late delivery of a replacement shaft for a steam engine in the mill, were not recoverable as consequential damages in a suit for breach of contract: “But it is obvious that, in the great multitude of cases of millers sending off broken shafts to third persons by a carrier under ordinary circumstances, such consequences would not, in all probability, have occurred, and these special circumstances were here never communicated by the plaintiffs to the defendants. It follows, therefore, that the loss of profits here cannot reasonably be considered such a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract.” 

The long shadow of that broken shaft was most recently seen in Signature Indus. Services, LLC v. Int’l Paper Co., which held: “The law does not charge contracting parties with a duty to understand how their actions will affect the counterparty’s market valuation. …  As a general rule, neither the counterparty’s market value nor the impact of breach on that value will be reasonably foreseeable at the time of contracting. SIS … attempted to show that IP was intimately familiar with SIS’s business because of the companies’ close relationship. But again, knowledge of a business is not the same as knowledge of the market for buying and selling that business.” No. 20-0396 (Jan. 14, 2022).

(This is a crosspost from 600Hemphill.) The Energizer Bunny, famously, keeps on going. Not so, the contract between Pura-Flo and Donald Clanton, under which Pura-Flo committed to pay Clanton a monthly fee for the use of fifty water coolers. The supreme court reversed and rendered as to an award of future damages in a lawsuit between them, observing:

“Here, no evidence indicated the contract would endure for any length of time, let alone five years after trial. Perhaps, as the court of appeals suggested, the jury sought to award Clanton either the amount Vanderzyden originally paid Pura-Flo to buy the water coolers in 1994 or the amount Pura-Flo’s investment proposal claimed the company would pay to repurchase the water coolers after sixty months. But neither suggested rationale can be the basis for an award of future damages, which, as evidenced by its name, is an award for damages that Clanton was reasonably certain to incur in the future. Without evidence that the contract would continue in the future, the jury’s $50,000 future-damages award has no reasonable basis in evidence and therefore was not reasonably certain as required by law.”

Pura-Flo Corp. v. Clanton, No. 20-0964 (Nov. 19, 2021) (per curiam) (citations omitted, emphasis added).

The allegedly overlapping fraud and contract claims in Benge General Contracting v. Hertz Electric were as follows:

• “Appellees’ breach-of-contract counterclaim was based on ‘enforceable agreements’ under which appellees agreed to provide ‘electrical contracting and painting services at several jobsites in North Texas’ in exchange for BGC’s promise to compensate appellees for the services.”
• “Their fraud counterclaim, as stated in appellees’ fourth amended counterclaims, was based on Dennie’s reliance [on] Benge’s allegedly false representation that he would pay for work performed by appellees ‘in exchange for the signing of lien releases.’ Appellees alleged that appellants knew the representations were false when made and omitted facts regarding Benge’s misappropriation of project funds otherwise intended to compensate appellees for work performed.”

The Fifth Court concluded: “Appellants characterize this counterclaim as fraud by omission and argue there is no evidence a special relationship to support such a claim. … The gravamen of appellees’ fraud counterclaim, however, was not that Benge fraudulently omitted information but that he fraudulently induced Dennie to sign lien waivers to obtain a payment he never intended to make; indeed, a payment already owed under the contracts. Thus, appellees stated a claim for fraudulent inducement.” No. 05-19-01506-CV (Sept. 7, 2021) (mem. op.) (later modified slightly on rehearing).

Ziehl’s car was hit by a Tornado bus, driven by Luviano. Ziehl and his passengers sued Tornado and Luviano. The jury found that Ziehl and Luviano were negligent, and that Tornado and Ziehl’s employer (SCR Construction Co.) were not. In response to the next question the jury found:From there, the court found that Luviano was entitled to contribution from Ziehl for 35% of all plaintiffs’ damages, and also reduced Ziehl’s damages by 35%.

The Fifth Court agreed with Ziehl that this adjustment was improper, noting: “Using the word ‘shall’ three times in [CPRC] section 33.016(c), the Legislature specifically and clearly imposed an obligation on the trier of fact to make a separate finding of the percentage of responsibility for each contribution defendant. The finding must be solely for the purpose of [CPRC] section 33.016 and cannot be part of the percentage of responsibility determined pursuant to section 33.003.” The Court reversed “[b]ecause the statute makes the question mandatory and the question was neither requested nor given ….” Ziehl v. Tornado Bus, No. 05-19-00901-CV (April 22, 2021).

Among other issues in Barcus v. Scharbauer, the Fifth Court affirmed the appellee’s testimony about the fair market value of certain artwork: “Appellants challenge the legal sufficiency of proof of commercially reasonableness of sales as proving market value and proving market value at a time over a year before the sales. … However, appellants do not dispute Mohle’s testimony that the sales were commercially reasonable or point to any evidence in the record that the sales were ‘out of the ordinary in some way.’ … A reasonable factfinder could decide Mohle’s testimony about the reasonably commercial sales conformed to the legal definition and theory of fair market value established by willing sellers and buyers under no compulsion.  A reasonable factfinder could credit Mohle’s testimony regarding the sufficient stability of the art market to conclude the sales in 2018 established fair market value a little more than a year earlier in 2016.”  No. 05-19-01121-CV (April 15, 2021) (mem. op.) (citations omitted). (My LPHS colleagues Eric Pinker and Paulette Miniter represented the successful appellee in this case.)

Damages were not established in In the Interest of MGG, No. 05-19-00777-CV (Aug. 10, 2020) (mem. op.), when:

“Ms. Gatewood does not dispute that Mr. Gustafson and his employer paid the withheld amounts to the IRS to cover the taxes from the transactions. Nor does she dispute that, if Mr. Gustafson instead paid her 100% of the gross proceeds, she would have to pay those taxes. The only theory of harm Ms. Gatewood advanced in the trial is that, by withholding and paying taxes based on his own tax rate instead of hers, Mr. Gustafson forced her to pay taxes at a higher rate. The proper measure of damages for that harm, however, is the difference between the taxes she would have paid at her purportedly lower tax rate and the amount Mr. Gustafson paid the IRS. To prove Mr. Gustafson harmed her in that manner, Ms. Gatewood had to prove there was a disparity between their tax rates.

Ms. Gatewood refused to turn over her tax records during discovery and chose not to present evidence establishing her tax rate at the trial. The only record evidence directly touching upon Ms. Gatewood’s tax rate is her affirmative response to a hypothetical question asking whether she was ‘at least hopeful’ her tax rate would be lower if she received the money Mr. Gustafson paid the IRS. That conclusory response, premised on Ms. Gatewood’s hope or belief, is insufficient to show Ms. Gatewood’s tax rate would have been lower.” (emphasis added).

This is a crosspost from 600Hemphill, which follows business litigation in the Texas Supreme Court. 

In Pike v. Texas EMC Mangagment LLC, ”‘Value’ was defined in the jury charge as ‘”Market Value,”’ the amount that would be paid in cash by a willing buyer who desires to buy, but is not required to buy, to a willing seller who desires to sell, but is under no necessity of selling.’”

Expert testimony sought to establish a $4.1 million value for the relevant plant and equipment, which the Texas Supreme Court rejected for three reasons:

“First, … [e]vidence of the purchase price of the Partnership’s property is insufficient under that measure because it does not establish the fair market value of the property at a different time.”

“Second, …[c]ourts employing an actual-value measure have held that ‘[f]rom that starting point, adjustments are made for wear and tear, depreciation, and other pertinent factors.’ Having examined the record, we disagree with the plaintiffs that [the expert] took anything other than purchase price—and a 20% escalation factor—into account in opining about the value of the plant and equipment.”

“Third, [the expert] did not attempt to tie the value of the plant to the market value of the
Partnership, which was the only measure of damages in the jury charge. He did not address whether any debt encumbered the plant, for example, or otherwise testify regarding how loss of the plant and equipment impacted the value of the Partnership as a whole.” (emphasis added, citations omitted)

The Court also rejected efforts to corroborate the expert’s testimony with lay-opinion testimony by an owner, because that testimony was based on book rather than actual value. Foreclosure-sale price was similarly irrelevant. No. 17-0557 (June 19, 2020).

In Grisaffi v. Rocky Mountain High Brands, the Fifth Court reversed and remanded a default judgment after identifying an impermissible double recovery on the key issue: “Although Grisaffi committed numerous wrongful acts against Rocky Mountain, the default judgment awards Rocky Mountain $3.5 million as compensation for ‘funds obtained through fraud, breach of fiduciary duty and conversion with respect to Series A Preferred Stock . . . .’ The default judgment further awards Rocky Mountain declaratory relief to void the issuance of that Series A Preferred Stock. Thus, both the monetary and declaratory relief awarded to Rocky Mountain compensate it for the single injury of the wrongful issuance of Series A Preferred Stock caused by Grisaffi.” No. 05-18-01020-CV (Feb. 27, 2020) (mem. op.)

Tex. R. Civ. P. 301 says: “The judgment of the court shall conform to the pleadings, the nature of the case proved and the verdict, if any, and shall be so framed as to give the party all the relief to which he may be entitled either in law or equity.” Guillory v. Dietrich applied that rule, observing that “a judgment for money damages in excess of the amount pleaded cannot be supported,” and held: “Dietrich specifically pled that appellants had been unjustly enriched in the amount of ‘approximately $24,280.00’” representing Dottie’s share of federal income taxes that Dietrich paid. Although he pled for other damages as well, he did not plead unjust enrichment as a basis for recovering them. We conclude that the trial court erred by awarding Dietrich more than $24,280 as unjust enrichment damages.” No. 05-18-00504-CV  (Jan. 6, 2020) (emphasis added).

A valet’s ill-advised joyride in a customer’s limited-edition Mazda Miata led to the case of Parking Co. of Am. Valet, Inc. v. Fellman. Among other holdings, the Fifth Court noted:

• Publicly-available sales price data. An expert’s use of asking prices from websites like cars.com was acceptable when: “This case does not involve natural gas, real estate, or other market where the sales price of comparable property is readily determinable.”
• Relevance of later sale. “[T]he car was not in the same condition when it was sold as it was before the accident; the evidence showed it was in better condition. Between the accident and the sale, Fellman spent about $1,000 upgrading the
  car’s brakes, and he put new tires on the car shortly before he sold it.”

05-17-01277-CV (July 31, 2019) (mem. op.)

The Mian Devel. Corp. v. State of Texas involved an epic “battle of the experts” arising from the condemnation of some parking for the Sterling Hotel, a large hotel complex on I-35 near downtown Dallas. The hotel’s owners offered experts calculating compensation of $13,600,101 or $19,100,000; the State offered experts calculating compensation at $1,027,927 or $764,970, and also called an expert who said the Sterling was an unviable business. The jury awarded damages of $1,186,350 and the owner appealed. The Fifth Court affirmed in a detailed review of these experts’ testimony, discussing, inter alia: (1) the line between unreliable methodology (admissibility) and material for cross-examination (weight) (pages 10-11); (2) the concept and legal definition of fair market value (page 13); (3) five evidentiary issues about objecting to discussion of material relied upon by an expert (pages 18-19); and (4) throughout, the accepted methodologies and data resources used in this area of law. No. 05-17-01385-CV (July 18, 2019) (mem. op.).

“Edes asserts there is sufficient lay evidence of causation and directs us to testimony by himself and a co-worker that he developed symptoms immediately after the accident that he did not have before the accident. But evidence of an event followed closely by manifestation of or treatment for conditions which did not appear before the event raises only suspicion that the event at issue caused the conditions and is not legally sufficient to support a finding of legal causation.” Edes v. Arriaga, No. 05-17-01278-CV (May 24, 2019) (mem. op.) (applying Guevara v. Ferrer, 247 S.W.2d 662, 668 (Tex. 2007) (emphasis added)).

The flip side to the “controlling rule [that] forecloses resort to injunctive relief simply to sequester a source of funds to satisfy a future judgment” is that an “asset freeze” temporary injunction can issue on a proper showing. Here: “Comerica Bank presented evidence that in October 2017, after RWI Construction and RWI
Acquisition defaulted on their loan, RWI Construction collected $800,000 in settlement of a receivable owed by Oxy. Those funds were collateral for the loan at issue in this case. Rather than pay those funds over to Comerica Bank as required upon their receipt, RWI Construction transferred them to Lone Star. Accordingly, the evidence presented by Comerica Bank traced collateral for the loan to Lone Star, and those funds are both logically and justifiably connected to Comerica Bank’s breach of contract claim and the relief it seeks in this case.”

In the same vein, the Court noted that while a showing of insolvency can establish irreparable injury in such a context, it is not always necessary: “To a district court exercising discretion over an injunction decision, unwillingness to pay is just as significant, and perhaps more so, as an inability to pay.” RWI Construction Co v. Comerica Bank, No. 05-18-00265-CV (April 12, 2019).

In Agar Corp. v. Electro Circuits Int’l LLC, the Texas Supreme Court settled a persistent question about the statute of limitations for civil conspiracy, holding: “Because civil conspiracy is a derivative tort that ‘depends on participation in some underlying tort,’ . . . the applicable statute of limitations must coincide with that of the ‘underlying tort for which the plaintiff seeks to hold at least one of the named defendants liable.'” No. 17-0630 (April 5, 2019).

The opinion does not appear to directly address two other recurring questions about civil conspiracy law in Texas today; namely, (1) the interaction between civil conspiracy and the Texas comparative-fault statute, and (2) whether a proper jury charge on civil conspiracy requires an instruction (or finding )about injury flowing from the conspiracy itself, as opposed to the damages attributable to the underlying tort. However, the Court’s thorough review of conspiracy law may offer indirect insight about those issues with further review.

An issue in the Texas Supreme Court’s analysis of Bombadier Aerospace v. SPEP Aircraft Holdings, No. 17-0578 (Feb. 1, 2019), was whether an appraisal expert’s testimony created a legally sufficient foundation for the damages awarded. The Court found that it was: “Fogg did not attach specific dollar figures or percentage deductions to each of these issues to show exactly how he arrived at his 10% deduction. Nor did he examine a specific comparable aircraft; rather he conducted a general market examination for Challenger 300s. Indulging every reasonable inference in support of the verdict, we conclude that although Fogg’s reasoning for his valuation could have been more substantive, he sufficiently linked his conclusions about the Challenger 300’s value to available facts about its issues and the marketplace.” 

Notably, the expert explained credibly why certain valuation techniques were not used:  “[F]inding comparable values in the marketplace tends to be difficult for aircraft, and Fogg explained that the depreciation in value of an aircraft is a ‘variable number.’ And finding comparable values for aircraft with certain damage or issues may be impossible. Fogg made it clear that this particular Challenger 300 had unique issues and that the lack of documentation of all of these issues made the value uncertain . . . We note that Fogg’s experience with aircraft alone may be a sufficient basis for his valuation, and coupled with the engines’ issues, we conclude that he provided sufficient bases for his valuation opinion.”

In an important opinion for several basic commercial-law concepts, the Fifth Court’s opinion was affirmed in part and reversed in part by the Texas Supreme Court in Bombadier Aerospace v. SPEP Aircraft Holdings. More to follow, but the supreme court’s review of Dallas precedent on these topics is of substantial interest for area litigators. In particular, the supreme court enforced a waiver of exemplary damages: “We must respect and enforce terms of a contract that parties have freely and voluntarily entered…. Bombardier and the purchasing parties—sophisticated entities represented by attorneys in an arms-length transaction—bargained for the limitation-of-liability clauses to bar punitive damages.”

A union won a lawsuit about DART’s handling of employee grievances; the Fifth Court largely affirmed but reversed an award of damages for harm to reputation. Applying principles from lost-profits cases, the Court observed: “Day provided no factual support for his opinion that an additional twenty percent of DART’s employees would have joined ATU 1338 if it had been more successful in obtaining hearings before the Trial Board, did not identify any DART employees who would have joined ATU 1338 if it had more success in obtaining hearings before the Trial Board, and made no attempt to trace any damages specifically to DART’s or Johnson’s actions relating to the March 3rd grievance.” DART v. Amalgamated Transit Union, No. 05-17-01051-CV (Nov. 27, 2018).

Nunez successfully sued Avelar for personal injuries, arising from a fall while installing a new window in a home owned by Avelar. The Fifth Court affirmed except as to damages for disfigurement, which Nunez had not pleaded for, but which the trial court found had been tried by consent. Specifically, the Court found that this examination did not establish trial by consent:

Q. What parts of your body were in pain?

A. In the arm.

Q. Do you also have a scar from the operation to your arm today?

A. Yes, of course.

Q. Can you show the Court the scarring of the arm?

A. It’s right here (indicating).

The Court: On the inside of the elbow? Can you see?

Defense counsel: I can see it, Your Honor, thank you.

Q. How long did it take for the elbow and the hand, the bones anyway, to heal?

A. More than half a year.

Q. Okay. And were you in pain during that time period?

A. Yes, of course.

The court saw this testimony as also relevant to elements of damage which had been pleaded; thus: “. This is, at best, a doubtful case for applying trial by consent, and trial by consent should not be inferred in doubtful cases.” Avelar v. Nunez, No. 05-17-00631-CV (Nov. 20, 2018) (mem. op.)

A good summary of a basic principle about a jury’s damages award appeared in David Hoppenstein Family, Ltd. v. Zargaran: “The fact-finder has discretion to award damages within the range of evidence presented at trial. See Mays v. Pierce, 203 S.W.3d 564, 578 n. 20 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) (court of appeals described how trial court could have arrived at damage award, but stated appellate court need not recreate the fact-finder’s calculations in order to determine whether amount of actual damages awarded was within range of evidence presented at trial); see also Howell Crude Oil Co. v. Donna Refinery Partners, Ltd., 928 S.W.2d 100, 108 (Tex. App.—Houston [14th Dist.] 1996, writ denied) (concluding damage award was not outside range of evidence presented at trial, even where it was not clear how trier of fact arrived at figure).” No. 05-16-01376-CV (June 8, 2018

A clean illustration of the concept of “less than a scintilla of evidence” appears in Gaytan v. DART. Gaytan won a jury verdict for $45,000 in future medical expenses resulting from an incident on a DART bus. He argued that “the jury’s award of $45,000 in future medical expenses could be supported by multiplying an annual cost of $7,000 for two emergency room visits for six and one half years” Unfortunately for Gaytan: “There was no evidence, however, to show a reasonable probability Gaytan would visit the emergency room in the future, let alone twice yearly, in connection with the injuries he sustained in 2012. The only emergency room visits he made after 2012 were as a result of other accidents.” No. 05-17-00116-CV (June 1, 2018) (mem. op.)

The Fifth Court reversed and rendered default judgment for the plaintiff in a case about an allegedly stolen 2007 Bentley. As for liability, the opinion recites a useful set of deemed admissions for such a case, that could readily be adapted to other conversion-type claims. As for damages, while the plaintiff’s affidavit was found to be conclusory: “[E]videnc of the price paid may be offered as proof of the property’s fair market value. The undisputed evidence established that Swarovski paid Enger $75,500 for the Bentley on September 21, 2013, only three months before Enger took the car. [And i]n deemed admissions, Enger admitted he accepted Swarovski’s $75,500 check as full payment for the Bentley and deposited the check into his account. Thus, the undisputed evidence established that Swarovski’s damages resulting from the theft totaled $79,249.70, which includes the cost of the [car’s] rims and insurance payments.” Swarovski v. Enger, No. 05-17-00398-CV (March 16, 2018) (mem. op.)

At trial, Claymore Holdings won its fraud claim against Credit Suisse, establishing the loss of a $250 million investment as a result of a flawed appraisal. The Fifth Court affirmed, focusing on two bedrock principles of modern businesss litigation.

1. “Specific provisions concerning an issue are controlling over general provisions.” Legally and factually, Claymore showed that Credit Suisse’s disclaimers of reliance did not foreclose liability for the specific issues about the appraisal raised by Claymore.
2.  “[T]he trial court was not limited to the jury’s award of damages on Claymore’s fraudulent inducement claim in determining appropriate equitable relief on the claims for which the parties waived their right to jury trial.” On the facts of this case, “[h]aving obtained favorable findings from the jury on the fraud claim and from the trial court on the contract claim, Claymore could elect rescission as its remedy.”

Credit Suisse AG v. Claymore Holdings LLC, No. 05-15-01463-CV (Feb. 20, 2018) (mem. op.)

Pappas testified about his 50% interest in a car wash business, using an undisputed sale price for the business, undisputed evidence about the face amount of a relevant note, and corrobrating his calculation with a recent property appraisal that was admitted without objection. This foundation was sufficient to satisfy “the presumption that an owner is familiar with his property and its value,” which requires that “the owner must provide the factual basis on which his opinion rests, although this burden is not particularly onerous in light of the resources available today.”  Wash Technologies v. Pappas, No. 05-16-00633-CV (Feb. 6, 2018) (applying Natural Gas Pipeline Co. v. Justiss, 397 S.W.3d 150, 157 (Tex. 2012)).

The economic loss rule, and the related debate about the proper handling of “con-tort” claims, can raise difficult and close questions. Hames v. JP Morgan Chase, however, presents a relatively clean example. Hames alleged mishandling of her bank account, and argued that her negligence claim could proceed independently of her breach-of-contract claim, as the bank’s duties arose from Article 4 of the UCC.The Court disagreed, finding that “[t]he duties that Chase allegedly breached were dependent on its contact with Hames,” and noting authority that “[t]he relationship of a bank to a general depositor is conrractual, that of debtor-creditor arising from the depository contract.”  Additionallly, “the account funds that Hames seeks to recover relate to the subject matter of the contract . . . ” No. 05-16-00472-CV (Jan. 22, 2018) (mem. op.)

While from the Fifth Circuit rather than the Dallas Court of Appeals, a recent case notes a fundamental principle in business litigation under Texas law. In it, that Court affirmed a JNOV motion on damages, under Texas law, when the plaintiff proved gross profits rather than net profits. “Its expert witness testified that he used ThermoTek’s gross profit margin—gross sales, less the cost of those goods sold, divided by gross sales—to calculate lost profits. He then stated that he reached his lost-profit totals for the VascuTherm units and wraps by (1) multiplying the average sales ThermoTek made to Wilford each month by the unit sales price and relevant time period, and (2) deducting the cost of the goods sold. But that is the very definition of gross profits. See Black’s Law Dictionary, supra (defining gross profits as “[t]otal sales revenue less the cost of the goods sold, no adjustment being made for additional expenses and taxes”). Motion Medical Technologies v. Thermotek, No. 16-11381 (Nov. 14, 2017).

In Nu-Build & Assocs. v. Sooners Group, LP, the Fifth Court drove home a recent holding about damages for cost of completion: “We agree because (i) a party seeking completion cost damages in tort and contract cases must prove that those costs are reasonable; and (ii) proof of amounts charged and paid, alone, is no evidence the payment was reasonable. Because Sooners adduced no evidence that the $3.6 million it paid to complete project was reasonable, we sustain Nu-Build’s fourth issue and [reverse and render].Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 200–01 (Tex. 2004) (per curiam); 701 Katy Bldg., L.P. v. John Wheat Gibson, P.C., No. 05-16-00193-CV, 2017 WL 3634335, at *9 (Tex. App.—Dallas Aug. 24, 2017, no pet. h.) (mem. op.).

The Texas exemplary damages statute (specifically, TCPRC § 41.008(b)) imposes the following cap: “Exemplary damages awarded against a defendant may not exceed an amount equal to the greater of: (1) (A) two times the amount of economic damges; plus (B) an amount equal to any noneconomic damages found by the jury, not to exceed $750,000 . . . ” It further defines “economic damages” as “compensatory damages intended to compensate a claimant for actual economic or pecuniary loss; the term does not include exemplary damages or noneconomic damages.”

The panel majority in Goodyear Tire & Rubber Co. v. Rogers concluded that “economic damages in this statute are existing in fact, real monetary losses like lost wages, the cost to obtain services that another previously provided for free or at a lower cost, or that the defendant’s misconduct compelled the claimant to seek out.” A dissent objected to the application of this standard to testimony about loss resulting from a relative’s death, noting: “These pecuniary losses are not subject to precise mathemetical calculation, but . . . ‘the inherent uncertianty in measuring these losses does not make them “non-economic in nature.”‘ Nor does this inherent uncertainty mean the loss is not an actual pecuniary loss. No. 05-15-00001-CV (Aug. 31, 2017).

A law firm and its landlord sued one another; the landlord sought unpaid rent, while the firm sought recovery of moving expenses after air conditioning problems with the building became intolerable. The firm won, and as a result defeated the rent claim, but its damages were set aside by the Fifth Court because the firm did not establish their reasonableness: “In sum, there is no evidence that the cost to procure the new office space (such as the deposit) or to equip it (such as the new telephone system) was reasonable. There is no evidence that the direct moving expenses were reasonable. There is no evidence that the miscellaneous expenses, such as the payments for meals, gasoline, and recycling fees, were reasonable. The only evidence about the expenses is the bare fact that they were paid.” 701 Katy Building, LP v. John Wheat Gibson, P.C., No. 05-16-00193-CV (Aug. 24, 2017) (mem. op.)

Twice in one week, the Fifth Court affirmed substantial awards of exemplary damages. I anticipate posts in the days ahead about the details of these cases, but for now, simply note these important holdings:

• Bombardier Aerospace Corp. v. SPEP Aircraft Holdings LLC, No. 05-16-00086-CV (June 22, 2017) (mem. op.), a case about the condition of an expensive private jet, affirmed “a verdict in appellees’ favor on both claims and awarded $2,694,160 in actual damages and $5,388,320 in exemplary damages,” and
• Wells Fargo Bank, N.A. v. Militello, No. 05-15-01252-CV (June 20, 2017) (mem. op.) affirmed (after a remittitur) an award of approximately $2.7 million  and roughly $1 million in actual damages.

The Fifth Court reversed an award of lost profits in Radiant Financial, Inc. v. Bagby, which allegedly arose from improper customer solicitation about an insurance product, noting, inter alia: “Radiant admits the five policies [the expert] used in his estimate were not available at the time Radiant released the fifty-nine investors. Radiant argues that it had sufficient policies availale, but none of the investors chose to invest in those poliicies, even though Radiant presented those policies to its investors.” The Court concluded: “[T]o conclude the nineteen investors would have invested with Radiant instead of Paladin, we would be required to stack assumption upon assumption, which we will not do.” No. 05-16-00268-CV (April 18, 2017) (mem. op.)

Plaintiffs won a lawsuit against their landlord about the handling of their security deposit. The Fifth Court affirmed, reversing only as to prejudgment interest. While the parties’ lease said that “[a]ny person who is a prevailing party in any legal proceeding brought under or related to the transaction described in this lease is entitled to recover prejudgment interest,” the plaintiffs recovered based on section 92.109(a) of the Property Code, which allows recovery of statutory penalties in the event of a landlord’s bad faith retention of the security deposit. Because “[p]rejudgment interest does not apply to statutory penalties imposed for wrongdoing,” and the underlying statute did not provide for recovery of prejudgment interest, the interest award could not stand. Frazin v. Sauty, No. 05-15-00879-CV (Nov. 6, 2016) (mem. op.)

In Cooper v. Campbell, the Fifth Court reviewed the key principles that govern “equitable remedies such as disgorgement and forfeiture to remedy a breach of fiduciary duty” —

• “The central purpose of forfeiture as an equitable remedy is not to compensate the injured principal, but to protect relationships of trust by discouraging disloyalty.
• “Disgorgement is compensatory in the same sense as attorney fees, interest, and costs, but it is not damages. . . . In fact, a claimant need not prove actual damages to succeed on a claim for forfeiture because they address different wrongs. In addition to serving as a deterrent, forfeiture can serve as restitution to a principal who did not receive the benefit of the bargain due to his agent’s breach of fiduciary duty. . . .”
• “The amount of disgorgement is based on the circumstances and is within the trial court’s discretion.”

The Court then remanded for more fulsome consideration of factors identifed in ERI Consulting Engineers v. Swinnea, 318 S.W.3d 867 (Tex. 2010). No. 05-15-00340-CV (Aug. 24, 2016) (mem. op.) On the general subject of disgorgement, other useful references from the Fifth Court are its recent opinion in Premier Pools Management Corp. v. Premier Pools Inc., and McCullough v. Scarbrough, Medlin & Associates, 435 S.W.3d 871, 904 (Tex. App.-Dallas 2014, pet. denied).

In Premier Pools Management Corp. v. Premier Pools Inc., the Fifth Court found that a successful trademark plaintiff had established sufficient evidence of secondary meaning for the phrase “Premier Pools,” noting — in particular — the plaintiff’s proof about its advertising about and long use of the name, as well as the testimony of nine impartial witnesses about the issue of confusion. Similar evidence supported the findings for liability, damages, and disgorgement. The Court reversed the related declaratory judgment (and with it, the attorney’s fees award), finding that the “claim added nothing and provided access to no remedy that was not otherwise available . . . ” No. 05-14-01388-CV (Aug. 12, 2016) (mem. op.)

The Hales sued their homebuilder for fraud and violation of the DTPA, alleging serious problems with the foundation of their Rockwall home (right).  They substantially succeeded at trial, and the Dallas Court of Appeals affirmed in large part in Bishop Abbey Homes, Ltd. v. Hale, No. 05-14-00137-CV (Dec. 16, 2015) (mem. op.)  In particular, the Court affirmed as to limitations – a significant issue in this long-simmering dispute – noting that “each time the Hales raised a concern about the foundation, they were assured by one of appellants’ experts that the foundation was not the cause of the problems the Hales observed.”  The court also affirmed as to sufficiency challenges to liability, several claims of improper closing argument, and a challenge to the the basis of the exemplary damages award based on constitutional and Kraus factors. The court requested a remittitur as to (a) mental anguish damages (for sufficiency reasons) above $208,856 per plaintiff; and (b) a portion of the additional/exemplary damages award, based on the applicable cap and the conclusion that the total award “exceeds the guidelines set forth in [Bennett v. Reynolds, 315 S.W.3d 867 (Tex. 2010)] and [Tony Gullo Motors I, LP v. Chapa, 212 S.W.3d 299 (Tex. 2006)] for the type of harm suffered by the Hales as a result of appellants’ conduct.”

Sylvester Davis sued TexPro Construction Group after the contractor failed to complete a backyard construction project. When TexPro failed to file an answer, Davis sought and obtained a partial default judgment on liability. TexPro then answered, but Davis moved forward with a hearing to establish damages. TexPro did not appear at the hearing, and the trial court awarded judgment for $117,230 in compensatory damages, treble damages under the DTPA and $350,000 in exemplary damages. After blowing through the deadlines for an ordinary appeal, TexPro hired new counsel and filed a restricted appeal. The Court of Appeals held that there was no error on the face of the record just because TexPro’s registered agent had been served at a location different from the address listed on the citation. The Court also held that there was no error in the trial court’s decision to move forward with the damages hearing, since the filing of TexPro’s answer did not negate the previously-signed default judgment on liability. However, Davis’ testimony on damages was the full amount of the money paid to TexPro, without accounting for the value of the work that TexPro had actually performed. Because his affidavit testimony was conclusory in alleging that the work done was valueless, the Court of Appeals reversed and remanded for a new trial on damages.

TexPro Constr. Group, LLC v. Davis, No. 05-14-00050-CV

Bruce Bernstein wrecked his Porsche, then sued his insurer for violations of the Insurance Code and DTPA. An appraiser valued the car at $4900, and Safeco had tendered a check for $5287.50. The trial court granted summary judgment for Safeco, and the Court of Appeals affirmed. Bernstein could not recover under the prompt payment provisions of the Insurance Code because Safeco had timely paid the appraisal award, nor could he recover for bad faith because he did not appeal the adverse judgment on his breach of contract claim. Bernstein also could not recover on his fraud claim because he could not identify any misrepresentation by Safeco that would have led him to believe the insurer would cover “the true value of the car,” which he apparently claimed to be “the investment he made to the Porsche beyond the basic value of the car.”

Bernstein v. Safeco Ins. Co. of Ill., No. 05-13-01533-CV

G.C. Buildings hired RGS Contractors to build an apartment complex in Oklahoma, funded by a $7 million loan insured by the Department of Housing and Urban Development. The contract provided that the date of final completion was the date that the HUD’s representative signed its final “Trip Report,” which turned out not to be signed until 161 days after the completion of work date called for in the contract. The construction contract contained a liquidated damages clause providing for a daily deduction from the contract price for each day past the construction deadline, but G.C. did not make any such deductions, instead paying the contractor in full. More than two years later, G.C. sued RGS in an attempt to recover either actual or liquidated damages. After a bench trial, the trial court ruled in favor of the contractor, finding that G.C. had not established a proper measure of damages for breach of contract.

G.C. argued that the interest payments it made during the period of the construction delays constituted its damages, but the Court of Appeals rejected that claim because G.C. was obligated to make those payments regardless of when or whether the construction on the apartment complex was completed. As to liquidated damages, the Court held that such damages could not be recovered because G.C. had not followed the procedures of the contract to determine whether a flat $2,101.68 charge or the actual cost of interest, taxes, and other fees should have been deducted from its payments to the contractor. Thus, the trial court’s findings were supported by legally and factually sufficient evidence, and the judgment was affirmed.

G.C. Buildings, Inc. v. RGS Contractors, Inc., No. 05-13-00151-CV

In this legal malpractice case, the Court rejected the plaintiff’s expert opinion as based on invalid assumptions.  The expert opined that the value of sale of an interest in certain oil and gas wells would have been $960,000 greater in April 2008, when the interest should have sold but for a law firm’s malpractice.  Among other faulty assumptions, the Court noted that the expert wrongly assumed that (1) the later sale, in September 2008, was a simple asset sale, when, in fact, it involved a partial settlement of a lawsuit; (2) the projections of actual drilling costs, as opposed to actual results, were the proper measure of costs; and (3) that wells would have been drilled at a certain specified rate.

Thompson & Knight v. Patriot Exploration LLC

In this restricted appeal, the defendant argued that the trial court erred in entering a default judgment against it in the absence of evidence establishing mental anguish damages.  Because the trial court received testimony of the plaintiffs physical injuries form a slip and fall, and no testimony on mental anguish, and because there was no way to distinguish between the award of mental anguish damages and those awarded for past physical pain, the judge’s award of $20,000 constitutes error on the face of the record.

Center Operating Co. v. Duncan

An employer sued its former employee for misappropriating funds from the company, alleging multiple causes of action, including breach of contract, fraud, and breach of fiduciary duty.  The jury returned a verdict in favor of the employer on all counts and awarded economic and punitive damages.  The trial court also awarded the employer attorneys’ fees based on its breach of contract claim.

On appeal, among other things, the employee argued that the trial court’s damages award violated the one-satisfaction rule, which limits a plaintiff who suffers a single injury to damages based on only one cause of action.  The Court of Appeals agreed, noting that “when a defendant’s acts result in a single injury and the jury returns favorable findings on two or more theories of liability, the plaintiff has the right to a judgment on the theory entitling him to the greatest or most favorable relief.”  Consequently, the Court set aside the attorneys’ fees and statutory damages awarded by the trial court, and awarded the employer economic and exemplary damages under its breach of fiduciary duty claim (which does not provide for the recovery of attorneys’ fees) because that result gave the employer its largest recovery.

McCullough v. Scarbrough, Medlin & Assocs.

A franchise agreement between Applebee’s and Gator Apple (a Florida franchisee) prohibits the franchisee from soliciting or hiring anybody from another franchisee who was employed by that other franchisee within the previous six months, states that other franchisees are third party beneficiaries of the franchise agreement, and provides for liquidated damages equal to three times the employee’s annual salary. A Texas franchisee, Apple Texas, sued Gator Apple under that provision after Gator Apple hired five of Apple Texas’ current or former employees and executives. The trial court granted summary judgment for Apple Texas, awarding it liquidated damages in excess of $1.2 million. The Court of Appeals affirmed. After determining that the franchise agreement was governed by Kansas law due to its choice of law provision, the Court upheld the award of liquidated damages under Kansas law. The Court also rejected Gator Apple’s argument that a fact issue existed on its affirmative defense of waiver, as none of the waivers it relied on authorized Gator Apple (as opposed to other franchisees or Applebee’s corporate) to solicit Apple Texas’ employees.

Gator Apple, LLC v. Apple Texas Restaurants, Inc., No. 05-12-01369-CV

Mark Palla filed suit against a group of defendants for breach of contract and tortious interference arising out of the breach of a sales commission agreement. The jury returned a verdict for $278,718 on the contract claim against Bio-One, Inc., and exactly $100,000 for tortious interference against Aydemir Arapoglu and Transtrade LLC. Palla argued that the tortious interference damages should have been the same as the breach of contract award and that each of the defendants should be jointly and severally liable for the entire amount. The trial court disagreed, entering judgment against Bio-One for $178,718 and against all three of the defendants, jointly and severally, for an additional $100,000. Palla appealed, but the Court of Appeals affirmed. Although generally the measure of damages for tortious interference is the same as the measure of damages for the breach of the contract, a tortious interference defendant is only liable for damages that are proximately caused by the interference. Thus, the question on appeal was whether there was any evidence that the defendants’ interference had only caused a portion of Palla’s damages. But Palla had not brought forward any record of the trial proceedings, due to the belief that he was entitled to the full amount of contract damages as a matter of law. Since the Court of Appeals could not determine whether the evidence supported only a partial damage award for tortious interference, Palla could not demonstrate that the trial court had erred by refusing to disregard the jury’s finding.

Palla v. Bio-One, Inc., No. 05-12-01657-CV

The Court of Appeals has issued a lengthy opinion in a breach of contract case. Defendant Richard Berryman and his company, Berryman South Fork, claimed that J. Baxter Brinkmann International Corp. had constructively terminated the contract and owed them $160,000 in unreimbursed expenses. JBBI got to the courthouse first, however, and claimed that Berryman had breached the contract by failing to continue his performance. The trial court granted summary judgment in favor of JBBI and awarded it more than $500,000 in damages, attorney fees, and interest.

Among many other issues, the Court of Appeals held that JBBI could not recover approximately $290,000 in breach of contract damages for payments it made to Berryman during the months following his attempted repudiation of the contract. That holding flows from the 88-year-old case of Osage Oil & Ref. Co. v. Lee Farm Oil Co., 230 S.W.2d 518 (Tex. Civ. App.–Amarillo 1921, writ ref’d). In that case, the court held that when a party is served with notice that the other party is repudiating their contract, the first party cannot continue to perform it and thereby increase the damages to which it would otherwise be entitled. However, that principle apparently does not extend beyond the breach of contract claim, as the Court’s opinion affirmed JBBI’s award of even greater damages for money had and received. The opinion also includes multiple discussions regarding the preservation of issues for appeal, including through pleadings, evidentiary objections, and briefing on appeal.

Berryman’s South Fork, Inc. v. J. Baxter Brinkmann Int’l Corp., No. 05-12-00492-CV

Among other claims, the Olmsteads sued the Goldmans for breach of contract to purchase residential real estate.   The trial court rendered judgment in favor of the Olmsteads and awarded them damages and attorney fees; the Goldmans appealed.  The Court of Appeals partially reversed, holding that the Olmsteads take nothing on their claims and remanded the issue of attorneys’ fees.  The Court found that the trial court erred by awarding the Olmsteads damages based on the carrying costs of the house after the Goldmans breached the contract until the house was sold.  The proper measure of damages was the difference between the contract price and the market value of the house on the date the Goldmans breached the contract, which was zero.  The court reasoned that non-breaching sellers should not be awarded the post breach costs of ownership because it could “incent the seller to hold the property indefinitely while waiting for market conditions to change, or for a purchaser willing to pay a specific price.”

Goldman v. Olmstead

Plaintiff Shabaz Din was born in Pakistan, where he became a doctor and specialized in ophthalmology. After emigrating to the United States in the 1990s, Din took a job training medical assistants with ATI Career Training Center. When the position of Medical Assistants Program Director came open, Din applied for it. ATI chose to go with a doctor of osteopathy instead. That doctor was soon replaced by a different candidate with only a vocational degree, followed by yet another new hire who had not graudated from college. Din filed a complaint with the EEOC, and ATI fired him shortly thereafter. Din sued for national origin discrimination and retaliation, and the jury awarded him damages for back pay, emotional pain and suffering, and punitives.

The Court of Appeals took up several issues in its determination of the case. First, it dismissed Din’s cause of action for retaliation because he had not raised that issue in the underlying administrative proceeding as required by Chapter 21 of the Texas Labor Code (formerly, the Texas Commission on Human Rights Act). As to the damages, the Court held that there was no evidence that Din had suffered any compensible emotional pain and suffering due to the failure to promote, and it therefore vacated that portion of the judgment. The Court did find that there was evidence of back-pay damages, but nowhere near enough to sustain the jury’s award of $83,000, leading to a remand for additional proceedings on both liability and damages for the back-pay issue. Finally, the Court of Appeals reviewed the evidence supporting the jury’s finding of malice or reckless indifference and found it was legally insufficient to support an award of punitive damages. Although there was evidence that the ATI manager had intended to cause Dim “some harm” in denying his promotion, that evidence did not show an intent to cause “substantial injury or harm” because the promotion would have resulted in only a small raise in Dim’s hourly salary.

ATI Enters., Inc. v. Din, No. 05-11-01522-CV

Appellant Danny Katave and two other individuals solicited Israeli investors to develop commercial real estate. The negotiations took place in Israel, and were conducted in Hebrew. The discussions resulted in two written contracts, one in Hebrew and one in English. The Hebrew document provided for a 10% success fee to Katave, but the English document included a 20% success fee. Naturally, Katave claimed the 20% fee when the property was sold. In the resulting litigation, the jury sided with the investors, finding that Katave had committed fraud by failing to disclose that the English document did not contain the same terms as the Hebrew contract.

The Court of Appeals confirmed the adequacy of the evidence supporting the finding of fraud by omission, holding that Katave had a duty to make a full disclosure in order to correct the false impression conveyed by his partial disclosure that the terms of the documents were consistent. The Court also affirmed the trial court’s finding of $466,226 in out-of-pocket damages, rejecting Katave’s contention that his agreement to submit the issue of “damages” to the trial court did not include the measure of damages to be applied. However, the Court of Appeals reversed the trial court’s award of attorney fees in favor of the investors, holding that the investors had plead and prevailed in the case as a fraud claim, not a claim for breach of contract. Because attorney fees are not recoverable on the basis of fraud, the investors could only recover their out of pocket damages.

K.A. West, LLC v. GK Investments, Inc., No. 05-11-00617-CV

The Weavers hired attorney Holliday to pursue claims relating to a car accident.  The Weavers later sued Holliday for breach of fiduciary duty, professional negligence, fraud, and violation of the DTPA, alleging that Holliday settled an insurance claim without the Weavers’ consent and converted the money for personal use.  The trial court found in favor of the Weavers on all four claims, and the Weavers elected to recover on the DTPA claim.  The Court of Appeals reversed the trial court’s judgment on the DTPA claim, and rendered judgment for the Weavers on the breach of fiduciary duty claim.  The Court of Appeals noted that there was “no evidence that [Holliday’s] acceptance of the settlement payments…or his attorney’s fees, constituted a pecuniary loss to the Weavers that was caused by Holliday’s DTPA violations as opposed to the other claimed wrongful conduct.”  Thus, the evidence was legally insufficient to support the award of damages under the DTPA because there was no evidence that the DTPA violations were a producing cause of the Weavers’ claimed pecuniary loss.

Holliday v. Weaver, No. 05-10-01614-CV

A landlord-tenant dispute illustrates the limits of a jury’s ability to select an amount to award as damages. After the tenant abandoned the leasehold, the landlord sued for breach of the lease agreement. The jury found for the plaintiff and awarded $200,000 in damages. On appeal, the tenant challenged the evidence of causation between the breach of the lease and the damages awarded by the jury. The Court of Appeals agreed, holding that while there was some evidence of damages caused by the breach, the evidence overall failed to establish that the specific expenses claimed by the landlord were actually made necessary by the tenant’s termination of the lease. While a jury may award damages anywhere within the range permitted by the evidence, it cannot “arbitrarily assess an amount not authorized or supported by evidence at trial.” The Court therefore remanded the case for a new trial on both liability and damages.

Curtis v. AGF Spring Creek/Coit II, Ltd., No. 05-12-00429-CV

Except perhaps for emotional distress, lost profits continue to be one of the most difficult measures of damages to sustain on appeal. In this instance, Timothy Barton and two other individuals formed a corporation, JMJ Development, to develop resort properties in the Riviera Maya of Mexico. The company entered into non-binding letters of intent with both property owners and the owners of the W Hotel and St. Regis Hotel brands. Before those deals were completed, however, Barton formed a new corporation, JMJ Hospitality, and the record included evidence that he instructed the landowners to deal with the new company instead of JMJ Development. The jilted business associates sued for breach of fiduciary duty, breach of their shareholder agreement, tortious interference, and conspiracy. The jury returned a verdict of $7 million for past lost profits on the fiduciary duty claim and $3 million in future lost profits on the breach of contract claim.

The Court of Appeals reversed and rendered, concluding that there was insufficient evidence the original company ever had the ability to develop the properties in the first place. Although they had multiple letters of intent, the evidence showed those letters had expired of their own terms, and there had never been any binding contracts for the purchase or development of the properties. The meant there was no causation for the lost profits claimed by Barton’s former business owners. The plaintiffs also failed to account for subsequent events — namely, the economic recession that started after Barton formed his new company — and that failure rendered their lost profits model speculative and not reasonably certain. The plaintiffs also confused projected items of income as profits, without properly accounting for associated expenses. Without any reliable, non-speculative evidence of the plaintiffs’ lost damages, the Court of Appeals reversed the jury’s verdict and the trial court’s judgment.

Barton v. Resort Dev. Latin Am., Inc., No 05-11-00769-CV

In 2009, Andres Diaz paid $85,000 for his “dream car,” a 2010 Mercedes C63 AMG. Two weeks later, Caroline Culwell rear-ended him at a stop light, costing Diaz over $9,000 for repairs. At trial, Culwell stipulated to liability, leaving only the question of damages to be decided by the jury. Among other items, Diaz sought to recover $15,671 for the post-accident diminution in value of the car. That claim was supported by the testimony of Diaz’s appraisal expert, but the jury awarded $0.00 for diminished value. Diaz sought judgment notwithstanding that portion of the verdict, and the trial court awarded him the full amount of the claim. The court of appeals reversed, holding that it was within the province of the jury to disbelieve the appraisal expert’s testimony. Even uncontroverted expert testimony does not bind the jury unless the subject matter is one for experts alone. The court of appeals concluded that determining the value of a car for diminution of value damages is not so complicated that an expert’s testimony is required for the jury to understand the issue. Accordingly, the court of appeals reinstated the jury’s refusal to award Diaz any damages for diminution of value.

Culwell v. Diaz, No. 05-12-00093-CV

Michael Malone, Jr. worked for Nationwide Recovery Systems, a commercial debt collector, but resigned and began working for a competitor named HHT Limited Company. Malone also convinced two of Nationwide’s other employees to move over to HHT. Nationwide sued HHT and Malone for tortious interference with existing contract and related claims, and the jury sided with Nationwide. On appeal, the defendants argued that the trial court had erred by admitting several summaries of Nationwide’s claimed damages. The court of appeals concluded that HHT had failed to explain how the summaries were based on improper accounting methods or were otherwise inadmissible. The court also rejected the defendants’ legal sufficiency challenge to the damages. Lost profits do not need to be susceptible of exact calculation, and the testimony of Nationwide’s president was based on years of experience and an established profit margin of 20 percent. That testimony was sufficient basis for the jury’s award of damages, and the court of appeals therefore affirmed the judgment.

HHT Ltd. Co. v. Nationwide Recovery Sys., Ltd., No. 05-11-01058-CV

Among other issues, appellants argued that the trial court erred in the amounts awarded in pre-judgment interest and by denying a motion for recusal.  The amount of pre-judgment interest could have been increased to include the time between when appellants submitted their proposed final judgment, which delineated the exact amount of prejudgment interest, and when that judgment was signed.  However, the court of appeals found that appellants waived this argument by not excepting to the judgment or bringing the complaint to the trial court’s attention.  The court affirmed the pre-judgment interest award, noting that the “invited error doctrine” precludes appellants from complaining when the trial court enters the appellants’ requested judgment.  The court of appeals also affirmed the denial of appellants’ motion for recusal, finding that a single comment by the Judge, and the reversal and remand of the Judge’s prior judgment did not evidence bias.

David L. Assocs. v. Stealth Detection, Inc., No. 05-12-00073-CV

Challenger Gaming Solutions made a loan to Mr. Earp.  Shortly after the loan was made, the Earps settled an unrelated lawsuit for $1.1 million, with an initial payment to the Earps of $200,000.  A few months later, Mr. Earp defaulted on his loan from Challenger, and the Earps divorced.  Under the divorce decree, Mrs. Earp was awarded all the community assets, including the settlement proceeds, and Mr. Earp was ordered to assume all the couple’s debts.  Challenger sued Mrs. Earp under the UFTA, contending that the transfer of settlement funds to Mrs. Earp constituted a fraudulent transfer.  Mr. Earp was designated a responsible third party in Challenger’s suit.  The jury found in favor of Challenger, but apportioned damages between the Earps.  Challenger appealed.

The court of appeals held that the proportionate responsibility statute does not apply to UFTA claims because they do not lend themselves to a fault-allocation scheme.  The focus of UFTA claims is to ensure the satisfaction of a creditor’s claim when the elements of a fraudulent transfer are proven.  The UFTA allows recovery against the debtor, the transferee, or the person for whose benefit the transfer was made, but does not distinguish the forms of relief based on culpability. The court concluded that the proportionate responsibility statute conflicts with the liability scheme in the UFTA and cannot be reconciled.  The court made Mrs. Earp liable for the entire award and affirmed the remainder of the trial court’s judgment.

Challenger Gaming Solutions, Inc. v. Earp, No. 05-11-01366-CV

In 1989, the Texas Legislature passed the Residential Construction Liability Act, which preempts or modifies many types of claims for damages arising from any “construction defect.” In this case, the court of appeals applied the RCLA to bar a homeowner’s claim for lost rental value of his condominium during the long delay occasioned by the remodeling contractor before the contract was finally terminated. Under the statute, a “construction defect” is defined broadly to include any matter “concerning the design, construction, or repair of a new residence, of an alteration of or repair or addition to an existing residence, or of an appurtenance to a residence, on which a person has a complaint against a contractor.” Tex. Prop. Code § 27.001(4). Because the contractor’s delay was one such matter, the court held that the RCLA governed the claim for damages caused by the delay. The plaintiff’s claim could not succeed under the RCLA for two reasons. First, the homeowner had failed to give the contractor notice of the claim, as required by the statute. Second, the plaintiff was seeking to recover the rental value of his own home during the time that completion of the remodeling was delayed, while the RCLA would only allow the homeowner to recover the cost of substitute housing. Id. § 27.004(g)(4). The court of appeals therefore rendered judgment that the plaintiff take nothinig and remanded the case to the trial court to determine the amount of attorney fees the defendant was entitled to under an agreement of the parties.

Timmerman v. Dale, No. 05-11-01690-CV

Almost nine years ago, the 68th District Court granted judgment notwithstanding the verdict against plaintiff Basic Capital Management and several related entities, wiping out a jury verdict in their favor for tens of millions of dollars in lost profits. The underlying dispute involved the failure of Dynex to fund an alleged $160 million loan commitment for Basic’s “Single-Asset, Bankruptcy Remote Entities” to make real estate investments. In 2008, the Dallas Court of Appeals affirmed that ruling, holding that the SABRE entities were not intended, third-party beneficiaries of the loan agreement, and that the lost profits from the contemplated real estate transactions were not foreseeable. In 2011, the Texas Supreme Court reversed that decision and remanded the case for consideration of Dynex’s argument that the damages were not supported by legally sufficient evidence. Now, in 2013, the court of appeals has held that, with one exception, there was legally sufficient evidence to support the jury’s original award of damages. The court went through a detailed analysis of the testimony of Basic’s damages expert, concluding that his testimony was sufficient to sustain the jury’s award of damages for the lost real estate investments Basic had envisioned. However, the court of appeals sustained the trial court’s grant of JNOV as to one item of damages — $252,577 awarded by the jury for “lost opportunity” on an investment that Basic had actually completed.

The saga of Basic v. Dynex is not over yet. In addition to the possibility of further appeal to the Supreme Court, the court of appeals also remanded to the district court for further consideration of Basic’s claim for attorney fees, as well as pre- and post-judgment interest. We’ll keep you posted if the case results in any further opinions on appeal.

Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., No. 05-04-01358-CV

HCBeck was hired to build a hall for a church. It subcontracted the foundation work to another company, B&R Development. After the building was completed, the hall began to have foundation problems, which cost HCBeck $68,976 to repair. HCBeck sued B&R for negligence and breach of contract, and obtained a no-answer default judgment. The company proved up the amount of its damages with an affidavit and supporting documentation, but the trial court did not hold an evidentiary hearing. On restricted appeal, the court of appeals reversed and remanded, holding that an evidentiary hearing was necessary because the damages sought by HCBeck were unliquidated. HCBeck’s affidavit was also inadequate to prove the claimed damages because the supporting documents totaled approximately $87,000, not the $68,976 that HCBeck sought for the default judgment. However, the court of appeals denied B&R’s request for a new trial on the merits because the company had never filed a motion for new trial in the district court. Accordingly, the remand was limited to the issue of HCBeck’s damages.

B&R Development , Inc. v. HCBeck, Ltd., No. 05-11-01150-CV

The court reversed and remanded for a new trial a judgment for the plaintiff on its fraudulent transfer claims. MacArthur Ranch sued the owners of a nail salon for missed rent payments under their commercial lease. Just before summary judgment, the owners conveyed two assets to the two Hos, a parent and brother of the owners. MacArthur Ranch then filed a fraudulent transfer suit against the Hos under the Texas Uniform Fraudulent Transfer Act. The trial court found that the transfers were fraudulent and awarded damages and ordered execution on the transferred assets.

On appeal, the Hos argued that the evidence was factually and legally insufficient to support the finding of fraudulent transfers. But the court held that there was sufficient evidence that the transfers were intended to “hinder, delay, or defraud” MacArthur Ranch because they were made to insiders, without consideration, and before a substantial judgment, and thus were fraudulent. The court held, however, that the amount of MacArthur Ranch’s damages was not supported by the evidence because the expert testimony of MacArthur Ranch’s property manager was conclusory as to the fair market value of the assets. The manager provided no testimony as to how she reached those values, merely answering “yes” to counsels leading questions regarding those values. Because the record showed that the value of the assets was undetermined, but greater than zero, and liability was contested, the court remanded for a new trial.

Ho v. MacArthur Ranch, LLC, No. 05-11-00967-CV

This appeal arises from a jury verdict in favor of three brothers who were hit by a tractor-trailer while they were changing a flat tire on the side of the freeway. Among other things, the jury awarded damages for lost wages and loss of earning capacity.

On appeal, the central issue was whether federal law preempts the ability of undocumented workers, like the plaintiffs, to recover lost wages. The defendants argued that the federal Immigration Reform and Control Act preempts the lost wages jury award because the U.S. Supreme Court has determined that the “IRCA has preempted the field of regulation of employment of illegal aliens.” Arizona v. United States, 132 S.Ct. 2492 (2012). The court, however, rejected this argument, holding instead that “Congress’s power to regulate immigration cannot imply that every state law that might impact or touch on an undocumented alien is necessarily preempted.” It further held that nothing in the IRCA indicates that Congress intended this statute to supersede state law on this issue.

Grocers Supply, Inc. v. Cabello, No. 05-10-00843-CV

The court of appeals has issued a lengthy opinion in an employment non-disclosure case, partially affirming a jury verdict in favor of the former employer.  In this instance, both the plaintiff and the corporate defendant were in the business of providing in-home pediatric nursing services.  After the defendant company hired away three of the plaintiff’s employees, eleven of the plaintiff’s most profitable accounts moved over to the new company.  The court of appeals started by noting that the defendants did not challenge the jury’s finding that they had entered into a conspiracy to damage the plaintiff.  That led the court to conclude that each of the defendants was jointly and severally liable for the other defendants’ breaches of their non-disclosure agreements, which were themselves established by sufficient evidence at trial.  The court of appeals upheld the jury’s award of $250,000 in lost profits attributable to the eleven patients lost by the plaintiff, but reversed and rendered amounts that had been awarded for profits that would have been earned after the plaintiff went bankrupt and sold off its business.  According to the court, there was no evidence that he plaintiff would have had the right to continue receiving profits from customers after the business was sold, so there was no evidentiary basis for the recovery of those post-sale profits.  Finally, the court of appeals affirmed the trial court’s grant of JNOV against the plaintiff on its claim for attorney fees, holding that fees were not recoverable because the plaintiff had not offered any proof of presentment to the defendants.

Helping Hands Home Care, Inc. v. Home Health of Tarrant County, Inc., No. 05-08-01657-CV

The court reversed a judgment awarding an law firm lost profits in an action against a litigation services company. Elrod, a litigation law firm, hired A-Legal to perform support services related to E-Discovery. Two days later, Elrod pulled the job when A-Legal doubled the price it previously quoted. Both parties sued each other for breach of contract. Elrod claimed damages from lost revenue and lost business opportunities due to the time its attorney’s and staff lost dealing with A-Legal’s breach. Elrod presented evidence of lost revenue, which it valued at $20,000, but the only specific evidence relating to a worker’s time lost dealing with the breach came from one attorney, Nassar. Nassar testified that her hourly rate is $325 and that she spent about eighty hours in total “dealing with the situation.” Elrod made no attempt to establish what expenses would have been attributable to Nassar’s billable hours or whether the firm lost any specific business or billing during that time. The trial court entered a judgment awarding $20,000 lost profits plus attorney’s fees.

On appeal, the court noted that the only calculation that can be made from Elrod’s evidence is potential gross revenue brought in by Nassar, not net profits, because Elrod presented no evidence to show any expenses related to that revenue or that she actually billed less time because of the breach than she would have otherwise. Thus, the evidence was legally insufficient to show lost profits, the only measure of damages presented, and the court reversed and rendered a take nothing judgment.

A-Delta Overnight Legal Reproduction Services Corp. v. David W. Elrod, PLLC, No. 05-11-00708-CV

R.J. Suarez Enterprises owned a sandwich shop, which was operated out of a leased location owned by PNYX.  After notifying PNYX that it would not renew the lease, Suarez vacated the premises, but claimed that it was entitled to take the walk-in cooler, walk-in freezer, sandwich unit, beverage cooler, and ice machine. PNYX disagreed. Suarez sued for conversion, and won.  The trial court, however, awarded no damages because Suarez failed to present evidence of the property’s fair market value.

The Court of Appeals sustained the decision, finding that “even when there is evidence supporting a finding of conversion, there must be evidence of fair market value of the converted property to support a damages award.”  Suarez, it held, did not present any evidence of the property’s fair market value, and instead only offered as damages evidence of the property’s replacement cost.  This was insufficient, as replacement value and fair market value are not interchangeable.

R.J. Suarez Enterprises, Inc. v. PNYX LP, et al., No. 05-11-00934

In a memorandum opinion the court reversed as insufficient a summary judgment award to a neighborhood association against a delinquent property owner. Gashaye’s property is subject to a covenant to pay assessments to Candlewood, which Gashaye failed to do. Candlewood sought foreclosure of the lien securing Gashaye’s obligation and attorney’s fees, presenting evidence proving $1545 in unpaid assessments and late fees and $2500 in attorney’s fees. The trial court awarded Candlewood $50. The court reversed, holding that the award of $50 under these circumstances was so contrary to the overwhelming weight of the evidence that it was clearly wrong and unjust. The court noted that attorney’s fees are recoverable on a breach of a homeowner’s association covenant, but remanded for the determination of a proper damages and attorney’s fees award.

Candlewood Creek Neighborhood Association, Inc.v. Gashaye, No. 05-11-00380-CV