Examination Management Services, Inc. v. Kersh Risk Management, Inc.
367 S.W.3d 835
Tex. App.2012Background
- EMSI provided biometric testing for corporate wellness programs and charged per cassette; cassettes have limited shelf life and EMSI billed for all ordered cassettes regardless of use.
- Kersh contracted with Bemis for wellness testing and engaged EMSI fall 2005; two Bemis contracts differed in terms and pricing structure.
- Kersh alleged EMSI failed to show up, failed to provide adequate equipment/training, and overcharged for cassettes; EMSI counterclaimed for breach of contract.
- Kersh billed EMSI $390,586.60 for September 2005–April 2006; partial payments were made in 2006 totaling $145,000; dispute led to suit filed April 5, 2007.
- Trial: jury found both parties breached, EMSI breached first, and Kersh lost profits of $156,996.05; jury did not answer damages for unpaid invoices due to conditioning; trial court awarded Kersh attorney’s fees.
- This Court reversed the lost profits award, rendering take-nothing for Kersh on that claim; no attorney’s fees award remains since no prevailing lost profits claim; remaining issues not addressed.]
- Issues are discussed and analyzed below; final disposition is take-nothing on lost profits and related fee implications, with remaining issues not reached.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Lost profits were not proven with reasonable certainty | Kersh lacked expert proof and objective data | EMSI argues no reliable evidence of lost profits | legally insufficient evidence for lost profits |
| EMSI materially breached the contract | Kersh failed to prove EMSI breaches were material | Kersh showed EMSI breached materially | legally and factually sufficient evidence of material breach by EMSI |
| EMSI first to breach a material obligation | Kersh breached first; EMSI not first | Jury could find EMSI first | legally and factually sufficient that EMSI breached first |
| Damages for unpaid invoices were conditioned on finding EMSI first breached | EMSI entitled to damages for unpaid invoices if Kersh breached later | Damages conditioned; no recovery given jury found EMSI first breached | Not recoverable due to conditioning language in charge |
| Attorney’s fees | Kersh entitled to $124,809.80 | Fees should be reduced to $80,000 by trial court | Court did not reach on fees; since lost profits reversed, no fee award to Kersh |
Key Cases Cited
- Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80 (Tex. 1992) (lost profits must be supported by competent evidence with reasonable certainty)
- Helena Chem. Co. v. Wilkins, 47 S.W.3d 486 (Tex. 2001) (reasonably certain evidence required for lost profits; not mere speculation)
- Texaco, Inc. v. Phan, 137 S.W.3d 763 (Tex.App.-Houston 2004) (lost profits must be based on net profits and reliable data)
- Exel Transp. Servs., Inc. v. Aim High Logistics Servs., LLC, 323 S.W.3d 224 (Tex.App.-Dallas 2010) (standard for reviewing sufficiency of evidence; scintilla vs. reasonable certainty)
- Rusty’s Weigh Scales and Serv., Inc. v. North Texas Scales, Inc., 314 S.W.3d 105 (Tex.App.-El Paso 2010) (evaluates sufficiency of lost profits evidence; non-speculative proof required)
- Allied Bank West Loop, N.A. v. C.B.D. & Assocs., Inc., 728 S.W.2d 49 (Tex.App.-Houston [1st Dist.] 1987) (damages must be supported by profitability history or future contracts with reasonable certainty)