University General Hospital LP and Ascension Physician Solutions, LLC v. Prexus Health Consultants, LLC and Prexus Health, LLC
403 S.W.3d 547
Tex. App.2013Background
- Prexus Health (Plaintiff) entered two three-year service contracts on March 2, 2009: a Professional Services Agreement (PSA) with University General Hospital and a Consulting Services Agreement (CSA) with Ascension Physician Solutions; both were terminated on September 8, 2009.
- Prexus sued for unpaid invoices and lost profits covering the remaining contract terms (about 2.5 years).
- A jury awarded Prexus unpaid invoices plus lost profits: $900,000 (PSA) and $1,200,000 (CSA); trial court entered judgment including those awards.
- Appellants (University General and Ascension) appealed, challenging legal sufficiency of the lost-profits evidence.
- Trial testimony on lost profits was limited to two fact witnesses (Prexus CEO Dr. Ajay Mangal and CFO Mike Griffin); no expert lost-profit calculation or objective documentation tying revenue, expenses, or profit margins specifically to the PSA/CSA was produced.
- The court concluded Prexus failed to present a single complete calculation of lost profits (revenue minus attributable expenses) with reasonable certainty and therefore deleted the lost‑profit awards, affirming the remainder of the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evidence legally supports lost‑profit awards for breach of PSA and CSA | Prexus: Mangal’s testimony, pro forma projections (including a 32% profit margin tied to a potential Humble Hospital project), and Griffin’s involvement suffice to show lost profits. | Appellants: No competent, single complete calculation of lost profits; testimony was speculative, untethered to the actual contracts, and lacked evidence of expenses saved. | Held: Evidence legally insufficient; lost‑profit awards vacated and removed from judgment. |
Key Cases Cited
- Price Pfister, Inc. v. Moore & Kimmey, 48 S.W.3d 341 (Tex. App.—Houston [14th Dist.] 2001) (legal‑sufficiency standard when appellant did not bear burden below)
- 2900 Smith, Ltd. v. Constellation NewEnergy, Inc., 301 S.W.3d 741 (Tex. App.—Houston [14th Dist.] 2009) (standard for reviewing legal sufficiency of evidence)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (framework for legal sufficiency review)
- Miga v. Jensen, 96 S.W.3d 207 (Tex. 2002) (lost profits defined as net income loss)
- Kellmann v. Workstation Integrations, Inc., 332 S.W.3d 679 (Tex. App.—Houston [14th Dist.] 2010) (requirement of single complete calculation of lost profits based on net profits)
- ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867 (Tex. 2010) (damages estimates must be based on objective facts, figures, or data)
- Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80 (Tex. 1992) (conclusory lost‑profit testimony insufficient)
- Szczepanik v. First S. Trust Co., 883 S.W.2d 648 (Tex. 1994) (insufficient record showing how lost‑profits were determined)
- Glattly v. Air Starter Components, Inc., 332 S.W.3d 620 (Tex. App.—Houston [1st Dist.] 2011) (lost profits must be based on objective facts)
- Romero v. KPH Consol., Inc., 166 S.W.3d 212 (Tex. 2005) (measure sufficiency against the jury charge submitted)
- Osterberg v. Peca, 12 S.W.3d 31 (Tex. 2000) (same)
- Wiese v. Pro Am Serv., Inc., 317 S.W.3d 857 (Tex. App.—Houston [14th Dist.] 2010) (problems where plaintiff failed to present segregated, complete lost‑profit calculation)
- Exel Transp. Servs., Inc. v. Aim High Logistics Servs., LLC, 323 S.W.3d 224 (Tex. App.—Dallas 2010) (lost‑profit proof must be linked to the profits actually lost)
- Vista Chevrolet, Inc. v. Lewis, 709 S.W.2d 176 (Tex. 1986) (general remedy for legal insufficiency is rendition)
- Minn. Mining & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733 (Tex. 1997) (remand required where unsegregated award may include recovery by those not entitled)