Jerry L. Starkey, TBDL, L.P., and PBW Development Corporation v. Glen Graves
448 S.W.3d 88
Tex. App.2014Background
- Glen Graves owned the Peanut Butter Warehouse and entered into successive partnership agreements with Jerry Starkey and two entities Starkey controlled (PBW Development Corp. — the General Partner — and TBDL, L.P.). Dispute arose after additional capital calls and restructuring in 2008.
- Three partnership agreements (allegedly 2006, 2007, 2008) were at issue; only the 2007 and 2008 documents were produced. The jury found all three existed and were breached.
- Graves sued for breach of contract (each agreement), statutory fraud, common-law fraud, conspiracy, and breaches of duties of loyalty and care; he sought two identical categories of actual damages across theories: past loss of compensation ($173,000) and past out-of-pocket losses ($437,000).
- The jury found statutory fraud by Starkey and TBDL (later found ratified as to TBDL), common-law fraud by Starkey and the General Partner, and breaches of loyalty/care by Starkey and the General Partner; it allocated responsibility (Starkey ~50–60%, General Partner/TBDL remainder) and awarded attorney’s fees ($592,000) and punitive damages.
- On appeal the court (14th Ct. App.) held Graves had standing to pursue personal claims (lost compensation and out-of-pocket losses), but found no evidence supporting the statutory-fraud finding, reversed awards tied to statutory fraud (expert fees, deposition copy costs), found some charge errors that commingled theories, affirmed recovery under certain alternative theories (breach of 2006 contract and breach of duties), reversed and remanded attorney’s fees for recalculation, and gave Graves an election to accept modified judgment or retry claims.
Issues
| Issue | Plaintiff's Argument (Graves) | Defendant's Argument (Starkey parties) | Held |
|---|---|---|---|
| Standing to recover claimed damages | Graves argued damages sought were personal (unpaid salary and out-of-pocket losses) so he had standing | Defendants said losses were partnership injuries and thus Graves lacked individual standing | Held: Graves had standing to recover unpaid compensation; standing on out-of-pocket losses depends on the theory — not a jurisdictional bar; sufficiency addressed separately |
| Existence/terms of October 2006 agreement (and its enforceability) | Graves relied on jury finding that 2006 written agreement existed and provided $1,500/week compensation and other terms | Defendants argued Statute of Frauds, merger by later agreements, and that certain terms (parking) were not enforceable | Held: Jury finding of existence and terms incorporated into judgment; merger/ratification defenses waived or not conclusively proved; parking-term inclusion affirmed (but not enforced) |
| Statutory fraud and related recoverable costs (expert fees, deposition copies) | Graves asserted statutory fraud by Starkey induced him into 2006 agreement, entitling him to actual damages and statutory costs/fees | Defendants argued no evidence of a false representation of past/existing fact to induce contract | Held: Reversed — no evidence supports statutory-fraud finding as submitted; costs/fees tied to statutory fraud reversed (expert fees, deposition copy costs), and questions commingling statutory fraud with other theories required reversal for those items |
| Breach of duties of loyalty and care; recovery of damages (lost compensation and out-of-pocket) | Graves contended breaches of loyalty/care (fraud/gross negligence/willful misconduct) by Starkey and the General Partner caused both categories of damages; sought to recover under alternative theories | Defendants argued the partnership agreements disclaimed or limited fiduciary duties and that some damages were partnership losses; also attacked charge/predicate issues | Held: Court upheld recovery for past loss of compensation ($173,000) from General Partner and TBDL for breach of 2006 contract and from Starkey & General Partner for breach of duties (allocation: Starkey 60%/$103,800; GP 40%/$69,200). Court found no contract-based past out-of-pocket loss but found sufficient evidence that loss of 19% partnership interest (2008 amendment under coercion) produced past out-of-pocket loss recoverable for breach of duties; modified judgment to hold Starkey/GP jointly/severally liable for $437,000 (Starkey 60%) |
Key Cases Cited
- Boyce Iron Works, Inc. v. Sw. Bell Tel. Co., 747 S.W.2d 785 (Tex. 1988) (prevailing party may recover under alternate jury findings when judgment is reversed)
- Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (plaintiff’s election between alternative favorable theories after appeal)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency review standard)
- Romero v. KPH Consol., Inc., 166 S.W.3d 212 (Tex. 2005) (harm from submitting invalid liability theories in commingled jury questions/charge error)
- Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000) (submission of invalid theories in broad-form questions can be reversible when verdict may be based on invalid theories)
- Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1 (Tex. 1991) (one-satisfaction rule prevents multiple recoveries for the same injury)
- Barker v. Eckman, 213 S.W.3d 306 (Tex. 2006) (attorney-fee assessment may be affected when damages/causes supporting fees are reversed)