479 S.W.3d 306
Tex. App.2015Background
- Darlene Argumaniz (individually and on behalf of ARGMIL, Inc.) sued Russell D. Miller and Juliet Investments after an alleged oral agreement that Miller would finance and convey warehouse property to ARGMIL; Miller instead purchased the note and foreclosed.
- ARGMIL was formed to acquire the property; Darlene and Russell were officers, directors, and sole shareholders.
- Jury found Miller committed common-law fraud and breached a fiduciary duty to ARGMIL; awarded Darlene $378,200 (past economic damages) and $400,000 (past mental anguish), and awarded ARGMIL $378,200 (past lost profits) and $50,000 (future lost profits).
- Trial court entered judgment for those awards and awarded Darlene attorneys’ fees; Miller appealed raising statute-of-frauds, sufficiency, double-recovery, fiduciary-duty, and attorneys’-fees issues.
- Court of Appeals held Miller waived a statute-of-frauds defense to the fraud and fiduciary-duty claims, reversed lost-profits awards (insufficient evidence), reversed mental-anguish and attorney-fee awards (insufficient/legal error), and affirmed the past economic damages award for fraud.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether statute of frauds bars claims | Darlene: statute not asserted against fraud/fiduciary claims | Miller: oral property-transfer agreement barred by statute of frauds | Waived by Miller—he pled it only against breach-of-contract; summary-judgment filings don't preserve the defense for other claims |
| Sufficiency of lost-profits awards (ARGMIL) | Darlene: property would generate profits; rents support lost-profits | Miller: ARGMIL had no profit history or plans; rents insufficient to show net profits | Reversed and rendered for Miller—evidence legally insufficient to prove lost profits |
| Sufficiency of past economic damages for fraud (Darlene) | Darlene: property value loss (~$375,000) is compensable economic loss | Miller: no proof of market value or extent of her ownership/equity | Affirmed—Darlene’s lay valuation (based on appraisal) provided legally sufficient evidence of economic loss; ownership-extent affects amount, not existence, and excessiveness not preserved |
| Sufficiency of past mental anguish award | Darlene: testified to depression, crying, sleep/concentration problems | Miller: testimony was generalized and did not show substantial disruption | Reversed—testimony insufficient to show substantial disruption required for mental-anguish damages |
| Recoverability of attorneys’ fees | Darlene: alleged statutory fraud under Tex. Bus. & Com. Code §27.01 (fees available) | Miller: jury was instructed on common-law fraud only, and fees are not recoverable for common-law fraud | Reversed—trial charged common-law fraud (not §27.01 statutory fraud), so attorney-fee award was improper |
Key Cases Cited
- Phillips v. Phillips, 820 S.W.2d 785 (Tex. 1991) (statute-of-frauds is an affirmative defense and may be waived if not pled)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency review framework)
- Ford Motor Co. v. Ridgway, 135 S.W.3d 598 (Tex. 2004) (more-than-a-scintilla standard)
- Texas Instruments, Inc. v. Teletron Energy Management, Inc., 877 S.W.2d 276 (Tex. 1994) (lost profits recoverable for breach of fiduciary duty when natural and probable consequence)
- Formosa Plastics Corp. USA v. Presidio Engineers and Contractors, Inc., 960 S.W.2d 41 (Tex. 1998) (reasonable certainty requirement for lost-profits awards)
- Holt Atherton Industries, Inc. v. Heine, 835 S.W.2d 80 (Tex. 1992) (lost-profits opinion must be based on objective facts/data)
- Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150 (Tex. 2012) (property-owner lay valuation may be based on hearsay such as prior appraisals)
- Parkway Co. v. Woodruff, 901 S.W.2d 434 (Tex. 1995) (mental-anguish damages require evidence of nature, duration, severity and substantial disruption of daily routine)
- Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (attorney fees generally not recoverable for common-law fraud)