Case Information
*0 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 11/18/2015 5:32:08 PM JEFFREY D. KYLE Clerk No. 03-15-00447-CV THIRD COURT OF APPEALS 11/18/2015 5:32:08 PM JEFFREY D. KYLE AUSTIN, TEXAS 03-15-00447-CV *1 ACCEPTED [7895484] CLERK I N THE T HIRD C OURT OF A PPEALS A USTIN , T EXAS
Austin Capital Collision, LLC, Appellant, v.
Barbara Pampalone, Appellee.
On Appeal from D-1-GN-14-003207, in the 419 th Judicial District Court, Travis County
Honorable Todd Wong, Presiding BRIEF OF APPELLANT AUSTIN CAPITAL COLLISION, LLC L AW O FFICE OF M ICHAEL S. T RUESDALE , PLLC Michael S. Truesdale State Bar No. 00791825 801 West Avenue, Suite 201 Austin, TX 78701 512-482-8671 866-847-8719 (fax) mike@truesdalelaw.com COUNSEL FOR APPELLANT AUSTIN CAPITAL COLLSION, LLC ORAL ARGUMENT NOT REQUESTED *2 IDENTITY OF PARTIES AND COUNSEL Appellant Austin Capital Collision, LLC
Appellant’s Trial Counsel S LATER P UGH L TD ., LLP
Adam Pugh
apugh@slaterpugh.com SBN 24044341
8400 N. Mopac Expressway, Suite 100 Austin, TX 78759
512-474-2431
512-472-0432 (fax)
Appellant’s Appellate L AW O FFICE OF M ICHAEL S. T RUESDALE , PLLC
Counsel Michael S. Truesdale
mike@truesdalelaw.com SBN 00791825
801 West Avenue, Suite 201 Austin, TX 78701
512-482-8671
866-847-8719 (fax)
Appellee Barbara Pampalone
Appellee’s Counsel M C G INNISS L OCHRIDGE
Joe Lea
jlea@mcginnislaw.com SBN12080200
Nelia J. Robbi
nrobbi@mcginnislaw.com SBN 24052296
600 Congress Avenue, Suite 2100 Austin, TX 78701
512-485-6065
512-495-6093 (fax)
i *3 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL ............................................................ i
TABLE OF CONTENTS ......................................................................................... ii
INDEX OF AUTHORITIES ................................................................................... iv
STATEMENT OF CASE ......................................................................................... v
STATEMENT REGARDING ORAL ARGUMENT .............................................. v
ISSUES PRESENTED ............................................................................................ vi
INTRODUCTION .................................................................................................... 1
STATEMENT OF FACTS....................................................................................... 3
SUMMARY OF ARGUMENT................................................................................ 9
ARGUMENTS AND AUTHORITIES .................................................................. 11
I. Standard of Review .......................................................................................11
II. The absence of a written agreement setting forth the terms of
the loans at issue and signed by a purported debtor renders any alleged contract unenforceable......................................................................14 A. Plaintiff produced no writing sufficient to satisfy the statute of frauds in connection with the purported agreement she sought to enforce against the “owners” of Capital Collision .................................................................................14 B. Plaintiff failed to demonstrate the applicability of any exception to the statute of frauds sufficient to establish an enforceable obligation owed by the “owners” of Capital Collision, G.P......................................................................................14 III. Plaintiff failed to satisfy its burden of demonstrating how
Austin Capital Collision, LLC could be liable in any event .........................16 A. It is conceded that Barbara Pampalone has no writing confirming that Austin Capital Collision LLC assumed the unwritten debt she claims to be owed by the “owners” (including her son) of Capital Collision, G.P......................................17 B. Plaintiff failed to establish any exception to the statute of frauds that would support a judgment against Austin Capital Collision LLC for a debt purportedly undertaken by a different entity .............................................................................18 IV. The award of attorney’s fees must be vacated ..............................................19
PRAYER FOR RELIEF ......................................................................................... 20
ii *4 CERTIFICATE OF SERVICE............................................................................... 21
CERTIFICATE OF COMPLIANCE...................................................................... 21
APPENDIX ............................................................................................................ 22
iii *5 INDEX OF AUTHORITIES Cases
BACM 2001-San Felipe Road Ltd. Partnership v. Trafalgar Holdings
I, Ltd. , 218 S.W.3d 137 (Tex. App.—Houston [14 th Dist.] 2007, pet. denied) ......................................................................................... 11 Barbara Pampalone v. Eric Hinojosa and Austin Capital Collision,
LLC , No. D-1-GN-14-003297, in the 419 th District Court, Travis County, Texas...................................................................................... iv Choi v. McKenzie ,
975 S.W.2d 740 (Tex. App. – Corpus Christi 1998, pet. denied) ...... 12 Chubb Lloyds Ins. v. Andrew's Restoration ,
323 S.W.3d 564 (Tex. App. – Dallas 2010, pet. denied) ................... 18 Cruz v. Andrews Restoration , Inc. ,
364 S.W.3d 817 (Tex. 2012) .............................................................. 18 Dynegy, Inc. v. Yates ,
422 S.W.3d 638 (Tex. 2013) .............................................................. 14 Exxon Corp. v. Breezevale Ltd. ,
82 S.W.3d 429 (Tex. App.—Dallas 2002, pet. denied) ........... 9, 13, 19 Hartford Fire Ins. v. C. Springs 300, Ltd. ,
287 S.W.3d 771 (Tex. App. – Houston [1st Dist.] 2009, pet. denied) ............................................................................... 18 Taxel v. Bishop ,
201 S.W.3d 290 (Tex. App. – Dallas 2006, no pet.) .......................... 12 Statutes
Tex. Bus. & Comm. Code § 26.01(a)........................................................... 14
Tex. Bus. & Comm. Code § 26.01(b)(2) ...................................................... 18
Tex. Bus. & Comm. Code § 26.01(b)(6) ...................................................... 14
iv *6 STATEMENT OF CASE Nature of the case Barbara Pampalone sued Austin Collision Center,
LLC and Eric Hinojosa, its proprietor, seeking to collect amounts she claimed remained due under an unwritten $80,000 loan she purportedly made to the owners (including her son) of a different entity called Capital Collision, G.P. Barbara Pampalone v. Eric Hinojosa and Austin Capital Collision, LLC , No. D-1-GN-14-003297, in the 419 th District Court, Travis County, Texas.
Course of The trial court conducted a one-day bench trial.
proceedings
Trial court’s The trial court rendered final judgment in favor of
disposition Pampalone and against Austin Capital Collision,
LLC, awarding breach of contract damages in the amount of $56,758.68, trial court attorney’s fees in the amount of $43,241.32, and conditional appellate attorney’s fees. CR 50-51. The trial court entered findings of fact and conclusions of law in support of its judgment. CR at 53. Austin Collision Center, LLC timely filed a notice of appeal. CR 67.
STATEMENT REGARDING ORAL ARGUMENT Pursuant to Texas Rule of Appellate Procedure 38.1(e), Appellant submits that oral argument will not assist this Court with the resolution of
this appeal. The theories raised on appeal are straight-forward, the
disposition of which will not be materially aided by oral argument.
v
ISSUES PRESENTED I. The judgment against Austin Capital Collision, LLC constitutes error
because it violates the statute of frauds:
The underlying debt
• The statute of frauds bars Plaintiff’s claim seeking to enforce an unwritten, twenty-year loan contract that was never signed by any variation of entities against whom Plaintiff seeks to enforce the obligation (either the underlying general partnership, or the two corporations that owned that partnership, or the two individuals (including Plaintiff’s son) who owned those corporate entities).
• The record does not support a “partial performance” exception to the statute of frauds to render enforceable such a loan because no evidence demonstrated that any purported performance was solely referable to the alleged oral contract.
The assumption of the underlying debt and judgment against another entity
• The statute of frauds bars Plaintiff’s claim seeking to enforce an unwritten, twenty-year, loan purportedly entered into with a now- dissolved partnership or its now dissolved corporate partners, or the two individuals who owned those corporations (including Plaintiff’s son), against a subsequently created entity, in the absence of a writing showing that any such obligation had been assumed by the new entity.
• The record does not support a “partial performance” exception to the statute of frauds that will allow the entry of judgment against Austin Capital Collision, LLC for a debt of another because no evidence demonstrated that any purported performance was solely referable to its assumption of any alleged oral contract undertaken by another entity.
II. The judgment awarding attorney’s fees must be reversed in the absence
of any theory for awarding actual damages
vi *8 TO THE HONORABLE COURT OF APPEALS:
Appellant Austin Capital Collision, LLC files this Brief of Appellant, and in support states as follows:
INTRODUCTION
This case involves a claim seeking to enforce a purported loan contract that
was never put into writing, against a party not created until years after-the-
fact, and in the absence of any writing showing that entity assumed any
obligation of the alleged underlying debtor. Barbara Pampalone asserted
below that in 2005 she lent $80,000 to the “owners” of Capital Collision,
G.P., a partnership owned by two corporate entities, which in turn were
owned 50-50% by her son Erik Pampalone and Eric Hinojosa. But
Pampalone produced no documentation demonstrating the existence of the
“loan” or its terms, or rates. Barbara Pampalone conceded that all
conversations she had about the purported loan were made with her son Erik,
and the parties even stipulated that no written promissory note existed to
substantiate the terms of any such loan. Pampalone’s claim is necessarily
unenforceable under the statute of frauds, as she presented no writing, signed
by the party against whom enforcement was sought, substantiating the
existence of a loan with a twenty-year pay off.
Making matters worse, Barbara Pampalone did not even sue the purported
borrower to the alleged undocumented loan transaction. Instead, she sued
what she asserted to be a successor company, Austin Capital Collision, LLC.
The defect in this theory is that she again admitted no writing existed
demonstrating that Austin Capital Collision, LLC assumed any obligations
generally (unwritten or otherwise) of any earlier entity with whom she
allegedly contracted. More importantly, the record did not establish that
payments made by Austin Capital Collision LLC (the exception to the
statute of frauds relied upon by the trial court) were solely referable to the
assumption of a contract allegedly between Barbara Pampalone and the
“owners” of Capital Collision, G.P. In fact, the record demonstrates that
Erik Pampalone had previously asserted, in a separate lawsuit, that the
unwritten transaction was not really a loan between his mother Barbara and
the entities he jointly owed with Hinojosa, but was instead an unwritten
personal loan from Erik Pampalone to Eric Hinojosa and that payments were
due to him. The existence of that lawsuit necessarily defeats the strict
“solely referable” element of the partial performance exception to the statute
of frauds.
In the absence of (1) a writing establishing the existence of a “loan” with an initial entity, (2) evidence sufficient to invoke the partial
performance exception to the statute of frauds to render such an unwritten
agreement enforceable, (3) a writing establishing that a successor entity
assumed any obligation, and (4) evidence sufficient to invoke the partial
performance exception to the statute of frauds to render such an unwritten
agreement enforceable, the judgment twice runs afoul of the statute of frauds
and must be reversed.
STATEMENT OF FACTS Erik Pampalone (Plaintiff’s son) and Eric Hinojosa had been friends since childhood. 2RR 53-54. The two also became business partners, with
each becoming the owner of 50% of entities that in turn owned Capital
Collision, G.P., 1 which operated pursuant to an assumed name certificate
filed by Hinojosa using the name “Capital Collision”. 2RR 172. When Erik
Pampalone joined, he did not make a cash contribution, but he contributed
access to his credit. 2 Hinojosa was the president, and Pampalone became
vice president, and though he continued to live in California, Pampalone
undertook responsibilities for the company’s finances. 2RR 103. While he
was not involved in the day-to-day operations at the shop, he had access to
the bank accounts to set up automatic payments to pay bills. 2RR 104-05.
*11 Barbara Pampalone testified that in 2005, her son Erik told her Capital Collision was having difficult times financially, and approached her about a
loan. 2RR 56. She did not know how the entities were organized nor did she
know about the structure of the business relationships between Eric Hinojosa
and her son. 2RR 55. Hinojosa was never a party to any loan-related talks
with Barbara Pampalone, and any discussions she had remained between
mother and son. 2RR 82, 84-85. Barbara Pampalone testified that she lent
$80,000 to the owners of “Capital Collision” (which directly would
presumably be Capital Collision, GP, in turn owned by the Texas and
Nevada Hinojosa Auto Body & Paint, Inc. companies, which in turn were
owned by Eric Hinojosa and Barbara Pampalone’s son Erik). She testified
that she made the loan in two phases – an initial $50,000 payment followed
by a $30,000 payment. 2RR 58. But she also testified, and all stipulated,
that what she asserted to be the loan to the company was not documented by
any written promissory note, and that no writing existed to demonstrate the
identity of the purported lender, the identity of the purported borrower, the
amount of principal, the rate of interest or the duration of the loan. 2RR 61.
When asked about the terms of the loan she testified she just had her son
Erik set it up. 2RR 60. She recognized she could not produce any checks
substantiating that she distributed any loan proceeds to a Capital Collision
entity. Instead, she wrote a $50,000 check to her son, 2RR 58, 84, and then
wrote a check to another bank for the remaining $30,000. She had no
documents showing how or when any money went to Capital Collision. 2RR
58-59. And she testified everything went through her son. R 85.
Bank accounts in the name of Capital Collision/Eric Hinojosa from 2005 listed a deposit in the amount of $50,000 from an entity called
Metavante Corp. made on March 24, 2005. 3RR 8 (PX 1) Erik Pampalone
testified that Metavante was affiliated with Quicken, and that the entry
reflected a deposit he made of the loan proceeds he had received from his
mother. 2RR 109, Ex. 1. Exhibit 2 also showed a $30,000 “Counter Credit”
on April 13, 2005, but the bank statement gives no indication of the source
of those funds. As Vice President with responsibility for accounting
matters, Pampalone set up the accounts of Capital Collision so it would
automatically make payments to his mother of approximately $675 per
month from that same bank account.
In 2007, Erik Pampalone resigned as vice president and left Capital Collision, G.P. Eric Hinojosa testified that Erik Pampalone left because the
business was in several lawsuits in which he wanted to have no involvement.
2RR 232. When he severed his ties with Capital Collision, Erik Pampalone
left in place the automatic payments set up to be made from the Capital
Collision bank account, and those payments continued. He testified that
upon his departure he assumed responsibility for repaying a different
$45,000 loan made earlier by his mother to Capital Collision, G.P., but that
the obligation to repay the $80,000 loan remained with Capital Collision,
G.P. Even so, Barbara Pampalone testified she received nothing in writing
from Capital Collision telling her it would pay any loan, and admitted Eric
Hinojosa never told her he was committing to pay her back $80,000. 2RR
86-87. Hinojosa did testify that upon Pampalone’s departure, Hinojosa
personally took care of over $200,000 of then-existing debts belonging to
the entities that Pampalone was leaving. 2 RR 233.
In 2009, Eric Hinojosa created a new entity called Austin Capital Collision, LLC , and then in 2010, he dissolved Capital Collision, G.P. and
the two corporations that had owned it. Austin Capital Collision, LLC
continued to make monthly payments to Barbara Pampalone via the auto-
pay function that Erik Pampalone had created while serving as vice
president. Eric Hinojosa testified that it continued to make the payments to
help his childhood friend. 2RR 238-40. In April, 2013, Austin Capital
Collision, LLC made its last monthly payment, and in October 2013 made a
final payment of $6,000. Barbara Pampalone admitted that she was aware of
no written agreement by which Austin Capital Collision, LLC assumed any
debt sued upon and that she was not a party to any such agreement. 2RR 98.
Ultimately, Barbara Pampalone and Erik Pampalone hired a lawyer in California. That lawyer filed a lawsuit in the name of Erik Pampalone
against Eric Hinojosa, claiming that the $80,000 had really been a loan from
Erik Pampalone (not Barbara Pampalone) apparently to Eric Hinojosa
personally (and not to Capital Collision, G.P., or its owners, the “HABP
Entities,” or Erik Pampalone or Eric Hinojosa, the owners of HABP owners)
2RR 92; 3RR 998 (DX1). Erik Pampalone thus initiated a lawsuit claiming
he was the maker of a loan (instead of being one of the borrowers). As with
his mother’s later lawsuit, Erik’ lawsuit relied upon an unwritten agreement,
but claimed that the $675 monthly payments had been due to him rather than
to his mother. Id . That case was ultimately nonsuited early on, after which
Barbara Pampalone brought suit in Texas against Austin Capital Collision,
LLC and Eric Hinojosa. CR 7.
After a one-day bench trial during which Barbara Pampalone, Erik Pampalone and Eric Hinojosa testified, the trial court rendered judgment
against Austin Capital Collision, LLC. CR 50. It found that Barbara
Pampalone had made a loan to the “owners” of Capital Collision, G.P., that
the statute of frauds did not bar the claim even in the absence of a signed
promissory note, and that the loan could be enforced against Austin Capital
Collision because it had partially performed. The trial court rendered
judgment in favor of Barbara Pampalone in the amount of $56,758.68, as
well as $43,241 in attorney’s fees and an award of conditional appellate
attorney’s fees. CR 49-50.
In support of the judgment, the trial court entered findings of fact and conclusions of law. CR 53. Among other things, it found:
• In 2005, Eric Hinojosa was president and 50% shareholder of Hinojosa Auto Body & Paint, Inc. (Texas) and Hinojosa Auto Body & Paint, Inc. (Nevada) (the “HABP Entities”), and Erik Pampalone was the vice president and other 50% shareholder, with the two entities serving as general partners of Capital Collision, GP. Capital Collision, GP operated as “Capital Collision” pursuant to an assumed name filed by Eric Hinojosa. CR 54.
• In approximately March 2005, Plaintiff loaned $80,000 “to the owners of the Capital Collision business which, at the time were the HABP Entities as general partners of “Capital Collision, G.P” CR 54-55.
• There was no signed promissory note for the loan but the terms of the loan were evidenced by yearly amortization schedules. CR 56.
• The statute of frauds did not bar enforcement of the loan even though not in writing because Plaintiff performed and Defendant Austin Capital Collision, LLC partially performed. CR 56. • In July 2009, Eric Hinojosa formed Austin Capital Collision, LLC, and serves as its sole managing member and 99% owner. CR 54.
• The HABP Entities and Capital Collision, G.P. were terminated in July 2010. CR 54.
• Following its formation, Austin Capital Collision, LLC assumed the loan to Plaintiff from the HABP Entities by continuing to make payments, partially performed on those obligations, and defaulted. CR 61-62.
SUMMARY OF ARGUMENT The trial court’s liability judgment fails for two reasons.
First, any finding of an enforceable contract for a loan between Plaintiff and the owners of “Capital Collision” as defined by the court, runs
afoul of the statute of frauds. There is no question that the purported loan
transactions is subject to the statute of frauds – the agreement sued upon
constitutes a purported loan obligation with a twenty-year term. The
purported loan invokes the statute of frauds because the agreement sought to
be enforced is not in writing and is not signed by the party against whom
enforcement is sought. As the parties stipulated that no promissory note
supported the purported loan transaction, it is unenforceable pursuant to the
statute of frauds.
Plaintiff’s claims are not saved by the defense of “partial performance”. That theory is unavailable in the absence of evidence that
any performance cited by Plaintiff “unequivocally referred” to the purported
agreement and corroborated its existence, and that the performance “could
have no other purpose” than to fulfill the agreement. Exxon Corp. v.
Breezevale Ltd. , 82 S.W.3d 429, 439 (Tex. App.—Dallas 2002, pet. denied).
The record defeats the application of that theory – whether it shows a history
of payments, the record does not contain evidence from the party allegedly
making a contract that unequivocally refers to the purported agreement and
corroborates its existence. Indeed, Erik Pampalone’s California lawsuit
against Eric Hinojosa calls into question whether Plaintiff even viewed the
sued-upon loan as a contract existing between Barbara Pampalone and
“Capital Collision.” Under such circumstances, the doctrine of partial
performance cannot save the transaction.
Second, assuming a finding about the existence of a loan between Plaintiff and the “owners” of “Capital Collision, G.P.”, the judgment against
the corporate entity Austin Capital Collision, LLC separately violates the
statute of frauds. It is undisputed that Austin Capital Collision, LLC was not
a party to the underlying agreement Plaintiff seeks to enforce (and did not
even come into existence until years after that transaction purportedly
occurred). While Austin Capital Collision, LLC uses the “Capital Collision”
assumed name, nothing demonstrates that it acted as a surety for or adopted
any debts of any predecessor entities. In fact, Barbara Pampalone admitted
that no such writing established as much or that she was a party to any
contract by which Austin Capital Collision, LLC agreed to pay any
obligation owed by any other entity. Moreover, the record contains no
evidence that payments made by Austin Capital Collision were
solely referable to the purported contract. In the absence of such evidence,
the partial performance theory on which the judgment against Austin
Collision Center, LLC is based fails as a matter of law.
Finally, in the absence of any theory by which contractual claims could be sustained against Austin Collision Center, LLC, the award of
attorney’s fees necessarily must be rejected as well. In short the judgment
against Austin Collision Center should be reversed in its entirety and
judgment rendered in its favor on all claims.
ARGUMENTS AND AUTHORITIES
I. Standard of Review
The judgment below is predicated on the trial court’s conclusion that the loan asserted by Pampalone satisfied the statute of frauds despite the
conceded absence of a writing signed by “Capital Collision’s” owners and
despite the absence of a writing demonstrating that any such debt was
assumed by Austin Capital Collision, LLC. See CR 56, ¶ 17; 61, ¶51; 61-62,
¶¶ 54-55. Accordingly, the judgment is based on a conclusion of law,
subject to de novo review. See BACM 2001-San Felipe Road Ltd.
Partnership v. Trafalgar Holdings I, Ltd. , 218 S.W.3d 137, 143 (Tex. App. –
Houston [14 th Dist.] 2007, pet. denied) (judgment from a bench trial
predicated on a conclusion of law that an agreement satisfied statute of
frauds held to be subject to de novo review). In conducting such review, the
Court exercises its own judgment and re-determines each issue. Id .
Given the applicability of the statute of frauds as facially rendering unenforceable the underlying loan claim as well as the claim that any such
loan was assumed by Austin Capital Collision, LLC, Plaintiff assumed the
burden of proving the applicability of exceptions. See Choi v. McKenzie ,
975 S.W.2d 740, 743 (Tex. App. – Corpus Christi 1998, pet. denied). Thus,
given the stipulations of the parties and the evidence at trial, the focus of this
appeal is not on whether the statute of fraud renders unenforceable any
purported loan agreement between Plaintiff and “Capital Collision” or any
assertion that such a loan had been assumed by Austin Capital Collision,
LLC. Barring any applicable exceptions substantiated by the record, the
answer to those questions are settled – any of the agreements on which the
judgment below rely are unenforceable by operation of the statute of frauds.
Taxel v. Bishop , 201 S.W.3d 290, 300 (Tex. App.—Dallas 2006, no pet.).
To support a judgment against Austin Capital Collision, LLC, Barbara Pampalone assumed the burden to establish two exceptions – first, a “partial
performance” exception that would transform the unwritten purported loan
agreement with unidentified parties into an enforceable contract, and second,
a partial performance exception that would allow liability under that
unwritten agreement to be imposed upon Austin Capital Collision, LLC.
The “partial performance” exception imposes an evidentiary burden of
proving that the performance relied upon to allow invocation of the
exception was “unequivocally referable” to the alleged agreement sued upon
and corroborative of the fact a contract was actually made. Breezevale , 82
S.W.3d at 430. Moreover, the evidence must establish that the acts of
performance relied upon could have been undertaken with no desire other
than to fulfill the purported agreement sought to be enforced. Id .
In the absence of evidence that the actions relied upon by Barbara Pampalone were unequivocally referable, the invocation of the partial
performance test fails under a legal sufficiency challenge. During the no
evidence review the question is not whether there is evidence that the
performance could have been referable to the contract, but whether the
evidence that the performance was solely referable. Id . As the record
conirms the absence of any evidence establishing the performance was
solely referable to the contract, the judgment fails as a matter of law, and
must be reversed in its entirety.
II. The absence of a written agreement setting forth the terms of the
loans at issue and signed by a purported debtor renders any alleged contract unenforceable
A. Plaintiff produced no writing sufficient to satisfy the statute of frauds in connection with the purported agreement she sought to enforce against the “owners” of Capital Collision The statute of frauds provides that certain types of agreements are unenforceable unless in writing and signed by the person to be charged with
the agreement or a legally authorized representative. See Tex. Bus. &
Comm. Code § 26.01(a); see also Dynegy, Inc. v. Yates , 422 S.W.3d 638,
641 (Tex. 2013) (statute of frauds renders contract voidable and
unenforceable against an objecting party). It is not disputed that the
purported loan on which this lawsuit is based was never reduced to writing
generally and in particular was never reflected by a writing signed by the
purported debtors, the owners of Capital Collision, G.P. See 2RR 58; Tex.
Bus. Comm. Code §§ 26.01(a), 26.01(b)(6). Thus, the purported agreement
is unenforceable barring any evidence establishing an exception to the
statute of frauds.
B. Plaintiff failed to demonstrate the applicability of any exception to the statute of frauds sufficient to establish an enforceable obligation owed by the “owners” of Capital Collision, G.P.
As noted, all concede that the purported loan was not documented by a writing that would satisfy the statute of frauds. And the record does not
*22 support the invocation of the partial performance exception as found by the
trial court that would allow the contract to be enforced despite the statute of
frauds. CR 61 (FOF 51).
Here, the trial court found that the statute of frauds did not bar a finding of an agreement between Barbara Pampalone and “Capital
Collision” (as defined), because “Austin Capital Collision, LLC, d/b/a
Capital Collision partially performed.” CR 61 (FOF 54). Setting aside that
this finding collapses the two ‘partial performance’ questions, 3 there is no
evidence to support the application of the partial performance exception to
establish the existence of an underlying loan agreement between Barbara
Pampalone and the owners of Capital Collision, G.P.
Barbara Pampalone relies on the existence of numerous payments made over the years as constituting evidence of partial performance. But as
noted, the question on appeal is not whether there is evidence that acts
asserted to constitute partial performance could be referable to a contract.
Instead, she must present proof that any performance was solely referable to
the purported contract. Breezevale , 82 S.W.3d at 440. Here, the record
*23 contains no such evidence. The very fact that Erik Pampalone sued Eric
Hinojosa claiming the existence of an $80,000 loan and entitlement to
monthly payments of $675 defeats any conceivable argument that the
evidence establishes the payments referenced by Barbara were solely
referable to the unwritten agreement she seeks to enforce. Under
Breezevale , her claim necessarily falls because no evidence supports her
attempt to invoke the partial performance exception to the statute of frauds.
III. Plaintiff failed to satisfy its burden of demonstrating how Austin
Capital Collision, LLC could be liable in any event As noted, Barbara Pampalone failed at trial to establish a theory by which it could have held Capital Collision, G.P. liable for the asserted loan
in the absence of a writing satisfying the statute of frauds because she
produced no evidence demonstrating that any partial performance by Capital
Collision was solely undertaken in connection with the purported contract.
The same defects defeat her efforts to enforce any purported loan obligations
against Austin Capital Collision, LLC.
Barbara Pampalone stipulated she had no writing demonstrating that Austin Capital Collision, LLC assumed any obligation that she asserted
previously belonged to the “owners of Capital Collision” (or to anyone else
for that matter). That admission invokes the statute of frauds bar to
enforcing the assumption of a debut onto Austin Capital Collision, LLC.
And in the absence of any such writing she cannot rely on a partial
performance exception to render any assumption enforceable because she
failed to present evidence demonstrating that the performance she cites was
solely referable to the assumption by Austin Capital Collision, LLC of a
contractual obligation owed by Capital Collision to Pampalone.
A. It is conceded that Barbara Pampalone has no writing confirming that Austin Capital Collision LLC assumed the unwritten debt she claims to be owed by the “owners” (including her son) of Capital Collision, G.P.
It is undisputed that Barbara Pampalone can point to no writing by which Austin Capital Collision, LLC agreed to assume any obligations
purportedly owed to her under an unwritten loan agreement made to the
owners of Capital Collision, G.P., including her son. In fact, she stipulated
that no such document exists and that she was not the subject to any such
agreement with Eric Hinojosa on behalf of Austin Capital Collision, LLC.
2R 88. That fact demonstrates that, barring an exception, the statute of
frauds bars any theory by which Barbara Pampalone could seek to impose
liability on Austin Capital Collision, LLC for any purported loan between
Barbara Pampalone and the “owners” of “Capital Collision, G.P.”
*25 B. Plaintiff failed to establish any exception to the statute of frauds that would support a judgment against Austin Capital Collision LLC for a debt purportedly undertaken by a different entity
Nor does the record support the trial court’s conclusion that Austin Collision Center, LLC can be liable under a partial performance theory. In
the face of the stipulation that no writing or contract exists demonstrating
Austin Capital Collision, LLC assumed any loan from the “owners” of
Capital Collision, G.P., 4 the trial court relied on two intertwined theories to
hold it liable, but both fail. The conclusion that Austin Capital Center, LLC
made an unwritten assumption of obligations of Capital Center, GP depends
upon the “partial performance” exception to avoid the statute of frauds
because no agreement demonstrating any assumption appears in writing.
See CR 61 (COL 54) (“Austin Capital Collision, LLC d/b/a/ Capital
Collision assumed the loan from the HAPB Entities though [sic] its conduct
and course of performance, including by continuing to make payments on the
loan in accordance with the terms of the agreement. ”). (emphasis added).
*26 The partial performance theory fails as a matter of law because the record contains no evidence that any payments referred to were solely
referable to the loan in question. As noted, to the extent even Erik
Pampalone asserted that the historical payments were in satisfaction of a
debt owed to him by Eric Hinojosa, there is no evidence that the payments
were instead solely referable to the assumption of a debt by Austin Capital
Collision, LLC, previously owed by the owners of Capital Collision, GP
(including Erik Pampalone), to Barbara Pampalone).
Indeed, the record further confirms that Austin Capital Collision, LLC did not undertake to make payment, and in fact never made a payment to,
Barbara Pampalone, as every payment referenced was made from an account
in the name of Eric Hinojosa and Capital Collision, G.P., and not Austin
Capital Collisionn, LLC. See 3RR 19-21 (Ex. 3). The absence of evidence
of performance by Austin Capital Collision thus independently undermines
any attempt to defeat the statute of frauds and hold Austin Capital Collision,
LLC liable for an unwritten loan to the owners of Capital Collision, G.P.
See Breezevale , 82 S.W.3d at 439.
IV. The award of attorney’s fees must be vacated
Finally, to the extent the preceding arguments defeat Pampalone’s claims against Austin Capital Collision, LLC, the award of attorney’s fees
must also be vacated. In the absence of a liability claim decided in her
favor, Pampalone is not entitled to an award of attorney’s fees. Accordingly,
Austin Collision Center, LLC requests that those fees be vacated as well.
PRAYER FOR RELIEF Austin Collision Center, LLC respectfully prays that this Court reverse the judgment below, and render judgment that Barbara Pampalone
take nothing by her claims, that costs be taxes against Pampalone, and for
whatever additional relief to which Austin Collision Center may be entitled.
Respectfully submitted, / S / Michael S. Truesdale Michael S. Truesdale L AW O FFICE OF M ICHAEL S. T RUESDALE , PLLC State Bar No. 00791825 801 West Avenue, Suite 201 Austin, TX 78701
512-482-8671
866-847-8719 (fax)
mike@truesdalelaw.com COUNSEL FOR APPELLANT *28 CERTIFICATE OF SERVICE On November 18, 2015, the undersigned certifies that he served a copy of this Brief of Appellants on the following in the manner listed below,
in compliance with Texas Rules of Appellate Procedure 9.5 and 25.1(e):
M C G INNISS L OCHRIDGE
Nelia J. Robbi
nrobbi@mcginnislaw.com
SBN 24052296
600 Congress Avenue, Suite 2100
Austin, TX 78701
512-485-6065
512-495-6093 (fax)
Counsel for Barbara Pampalone
Via e-service
/s/ Michael S. Truesdale Michael S. Truesdale SBN 00791825 CERTIFICATE OF COMPLIANCE The undersigned certifies that this brief complies with the word limitation contained in Texas Rule of Appellate Procedure 9.4(i)(2)(E) in
that the brief contains a total of 4,404 words, excluding parts of the brief
exempted by Tex. R. App. P. 9.4(i)(1), as calculated by the word count tool
of Microsoft Word (2008) for Mac.
/s/ Michael S. Truesdale Michael S. Truesdale
APPENDIX
Tab 1 Final Judgment (CR 50-52)
Tab 2 Findings of Fact and Conclusions of Law (CR 53-63)
Tab 3 Exxon Corp. v Breezevale, Ltd. , 82 S.W.3d 429 (Tex.
App—Dallas 2002, pet denied)
Tab 1 *31 DC BK15175 PG1 024 Filed in The District Court of Travis County, Texas JUN I 8 2015 Cf) 0(,' 4-l!J '£:M. At Velva L. Prier., District &rk NO. D-1-GN-14-003207 BARBARA P AMP ALONE, § IN THE DISTRICT COURT
§
Plaintiff, § §
v. § TRAVIS COUNTY, TEXAS
§
ERIC IUNOJOSA AND AUSTIN §
CAPITAL COLLISION, LLC, §
§ Defendants. § 419rn JUDICIAL DISTRICT FINAL JUDGMENT
On June 8, 2015, this case was called for trial. Plaintiff Barbara Pampa! one appeared in person and announced ready for trial. Defendant Eric Hinojosa appeared in person and
announced ready for triaL Defendant Austin Capital Collision, LLC, appeared through its
representative, Eric Hinojosa, and announced ready for trial.
All matters in controversy, legal and factual, were submitted to the Court for its determination. The Court heard the evidence and arguments of counsel and announced its
decision for Plaintiff Barbara Pampalone.
The Court orally RENDERED judgment for Plaintiff Barbara Pampalone and against Defendant Austin Capital Collision, LLC, on June 8, 2015, and this written judgment
memorializes that rendition.
IT lS THEREFORE ORDERED that Plaintiff recover the following from Defendant Austin Capital Collision, LLC:
1. Actual damages in the amount of$56,758.68; 2. Plus reasonable and necessary attorneys' fees in the amount of$43,241.32; plus 3. Post-judgment interest at the rate of 5.0%, compounded annually from the date this judgment is entered until all amounts are paid in full.
I \IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII Ill\ Ill\ 50
DC BK15175 PG1 025 It is further ORDERED that Defendants take nothing.
It is ftnther ORDERED that if Defendant Austin Capital Collision, LLC, unsuccessfully appeals this judgment to an intermediate court of appeals, Plaintiff Barbara Pampalone will
additionally recover from Defendant Austin Capital Collision, LLC, the amount of $20,000.00,
representing the anticipated reasonable and necessary fees and expenses that would be incurred by
Plaintiff in defending the appeal.
It is further ORDERED that if Defendant Austin Capital Collision, LLC, unsuccessfully appeals this judgment to the Texas Supreme Court, Plaintiff Barbara Pampalone will additionally
recover fiom Def(mdant Austin Capital Collision, LLC, the amount of $20,000.00, representing the
anticipated reasonable and necessary fees and expenses that would be incurred by Plaintiff in
defending the appeal.
It is fmther ORDERED that Plaintiff may have all writs, orders and executions necessary for collection of this judgment, which may issue immediately.
It is further ORDERED that except as specifically provided herein, all relief not expressly granted is hereby DENIED.
This judgment finally disposes of all patties and all claims and is appealable.
SIGNED this~~ day of June, 2015.
51
Tab 2 *34 Filfdr in !he District Court o rav1s County -r , 'exas JUL - 7 2015 r--1__ 0 ,3,· i..j U At_ NO. D-1-GN-14-003207 0 M. Velva L p · · nee, District clerk BARBARA PAMPALONE, § IN THE DISTRICT COURT
§
Plaintiff, § §
v. TRAVIS COUNTY, TEXAS §
§
ERIC HINOJOSA AND AUSTIN §
CAPITAL COLLISION, LLC, §
§
Defendants. § 419TH JUDICIAL DISTRICT
FINDINGS OF FACT AND CONCLUSIONS OF LAW
I. Introduction
On June 8, 2015, this case was called for trial, and all matters in controversy, legal and factual, were submitted to the Court for its determination. In addition to all other findings
necessary to support the Judgment rendered in favor of Plaintiff and against Defendant Austin
Capital Collision, LLC, in this cause, the Court hereby makes and files the following specific
findings of fact and conclusions of law. Any finding of fact that should be construed as
conclusion of law is hereby adopted as such. Any conclusion of law that should be construed as
a finding of fact is hereby adopted as such.
II. Findings of Fact
A. Procedural History.
1. Plaintiff Barbara Pampalone ("Plaintiff') filed her original petition on August 26, 2014,
alleging causes of action for breach of contract against Defendant Eric Hinojosa and Defendant
Austin Capital Collision, LLC.
2. This is an expedited action under Texas Rule of Civil Procedure 169.
3. This case was called for bench trial on June 8, 2015, and the parties appeared and
announced ready for trial. At the close of trial, judgment was rendered in favor of Plaintiff and
1111111111111111111111111111111111111111111111111111111 53 *35 against Defendant Austin Capital Collision, LLC. Judgment was signed on June 18, 2015.
4. Defendants requested findings offact and conclusions oflaw on June 18,2015.
B. The Parties and Associated Persons/Entities.
5. Defendant Eric Hinojosa is a resident of Texas. Eric Hinojosa previously lived m
California where he and Plaintiffs son, Erik Pampalone, became friends.
6. Plaintiff is a semi-retired dentist who resides in Chatsworth, California.
7. In 2005, when the loan at issue in this lawsuit was made, Eric Hinojosa was the president
and a 50% shareholder of Hinojosa Auto Body & Paint, Inc. (Texas), and Hinojosa Auto Body &
Paint, Inc. (Nevada), (collectively, the "HABP Entities"). Plaintiffs son, Erik Pampalone, was
the vice president and other 50% shareholder of the HABP Entities. The HABP Entities were the
general partners of Capital Collision, G.P., and the business-auto body repair shop--operated
under the assumed name filed by Eric Hinojosa of Capital Collision [Exh. P-19]. The HABP
Entities were terminated in July of 2010 and, accordingly, the general partnership of Capital
Collision, G.P. was also terminated.
8. Prior to the termination of the HABP Entities in 2010, Eric Hinojosa formed Defendant
Austin Capital Collision, LLC, in June of2009. Eric Hinojosa is the sole managing member and
99% owner of Austin Capital Collision, LLC, which is also engaged in auto body repair. On the
same day that Austin Capital Collision, LLC, was formed, Defendant Eric Hinojosa filed an
assumed name certificate on behalf of Austin Capital Collision, LLC, for the name "Capital
Collision." Austin Capital Collision, LLC, continues to conduct business today as Capital
Collision.
C. The Loan Agreement.
9. Around March of2005, Plaintiff loaned the principal sum of$80,000.00 to the owners of
54
the Capital Collision business which, at the time, were the HABP Entities as general partners of
Capital Collision, G .P. The owners of the Capital Collision business are referred to herein as
"Capital Collision."
10. At the time, Capital Collision had an option to purchase the land it was renting but lacked
the necessary funds. Erik Pampalone and Eric Hinojosa, as corporate officers/directors,
discussed the issue, and Erik Pampalone suggested to Eric Hinojosa that he could ask his mother,
Plaintiff, to loan the funds to Capital Collision. Eric Hinojosa agreed that Erik Pampalone
should ask Plaintiff to loan funds to Capital Collision.
11. Erik Pampalone, in his capacity as Vice-President of Capital Collision, approached
Plaintiff and proposed that Plaintiff loan Capital Collision the sum of $80,000.00 and, in
exchange, Capital Collision would repay the $80,000.00 over a twenty year period, plus annual
interest at the rate of 7%.
12. Plaintiff understood, and Capital Collision agreed, that the loaned funds would be used
for business purposes, including the possible purchase of land.
13. Plaintiff had previously loaned funds to Capital Collision for business purposes in 2003
and, at the time of the loan at issue in this lawsuit, was being repaid by Capital Collision as
agreed.
14. Plaintiff agreed to loan $80,000.00 to Capital Collision. Plaintiff performed under the
terms of the agreement and paid the funds to Capital Collision in two installments: $50,000.00
on or about March 24, 2005, and the remaining $30,000.00 on or about April 13, 2005. [Exhs. P-
1, P-2].
15. The loaned funds were deposited into Capital Collision's bank account, a Bank of
America account held in the names of"Capital Collision" and "Eric Hinojosa."
55
16. The parties have stipulated that there is no signed promissory note for the loan. However,
the terms of the loan were evidenced in yearly loan amortization schedules generated by Erik
Pampalone and sent to Defendants and their representatives. [Exhs. P-5, P-7, P-9, P-12, P-12A,
P-13, P-15, P-16, P-17].
17. The statute of frauds does not bar the agreement, even though it is not in writing, because
Plaintiff fully performed under the agreement, and Defendant Austin Capital Collision, LLC,
partially performed.
D. Payments on the Loan.
18. Thereafter, beginning on or about May 20, 2005, Capital Collision began performing
under the agreement by making monthly payments on the loan pursuant to the agreed upon terms.
Payments were made by electronic bill payment from Capital Collision's Bank of America
account held in the names of "Eric Hinojosa" and "Capital Collision" into Plaintiffs bank
account.
19. The parties stipulated that from May 2005 through April 2013, Plaintiff received 94
monthly payments on the loan. [Exhs. P-3, P-3A].
20. The 94 monthly payments were made by Capital Collision to Plaintiff as repayment on
the loan.
21. During this time period, there was email correspondence among the parties and persons
acting on their behalf acknowledging the existence of the loan and Defendants' indebtedness to
Plaintiffthereunder. [Exhs. P-5, P-7, P-8, P-9, P-10, P-11, P-12, P-12A, P-13, P-15, P-16, P-17].
E. Defendant Austin Capital Collision's Assumption of the Loan.
22. Erik Pampalone began the process of leaving Capital Collision in 2006, and he formally
resigned in approximately April of 2007. After resigning, Erik Pampalone assisted Plaintiff in
56
oversight of repayment of the loan, corresponding by telephone and email with Defendant Eric
Hinojosa and other Capital Collision employees concerning the loan.
23. Following Erik Pampalone's resignation, Defendant Eric Hinojosa became and remained
the sole officer/director of Capital Collision. Capital Collision continued to repay the Loan to
Plaintiff pursuant to the agreed upon terms.
24. In June of 2009, Defendant Eric Hinojosa formed a new company, Defendant Austin
Capital Collision, LLC, [Exh. P-20] which became the owner of the Capital Collision business and
filed an assumed name of"Capital Collision." [Exhs. P-21, 22].
25. Following its formation, Defendant Austin Capital Collision, LLC, assumed the loan to
Plaintiff.
26. Approximately one year later, in July of 2010, Defendant Eric Hinojosa terminated the
HABP Entities (and, accordingly, the general partnership). [Exh. P-24].
27. At the time of termination of the HABP Entities and formation of Austin Capital Collision,
LLC, all entities were operated solely by Defendant Eric Hinojosa.
28. Defendant Eric Hinojosa did not provide notice-statutory or otherwise-to Plaintiff or
Erik Pampalone that he was terminating the HABP Entities or that Capital Collision was owned or
being operated by a new entity, Austin Capital Collision, LLC.
29. Although there was no formal purchase or transfer of assets between Austin Capital
Collision, LLC, and the HABP Entities, Austin Capital Collision, LLC, continued to use the same
assumed name, business email address (cptlcollision@aol.com) and email signature block (with the
same name and physical address) as the as the HABP Entities [Exh. P-14]. Austin Capital
Collision, LLC, also retained some of the same employees, took over control of the bank accounts
of the HABP Entities, and operated the same general business as the HABP Entities.
57
30. Prior to institution of this lawsuit, neither Plaintiff nor Erik Pampalone was aware or had
any reason to be aware that the HABP Entities had been terminated or that a new entity, Austin
Capital Collision, LLC, was operating the business and using the assumed name of Capital
Collision.
31. Following formation of Austin Capital Collision, LLC, and termination of the HABP
Entities, Austin Capital Collision, LLC, d/b/a Capital Collision continued to make payments to
Plaintiff pursuant to the agreed upon terms of the loan.
32. Austin Capital Collision, LLC, d/b/a Capital Collision made its payments from the Bank of
America account held in the names of "Eric Hinojosa" and "Capital Collision" until approximately
March of 2010 when the payments began being made from a Bank of America account held in the
names of "Eric Hinojosa" and "Capital Collision GP ." Because the payments were electronically
deposited into Plaintiff's bank account, Plaintiff was not aware of any change in the bank account
making the payments to her.
33. Defendant Austin Capital Collision, LLC, d/b/a Capital Collision was operating the Bank of
America accounts making the payments to Plaintiff. Its sole managing member and majority
owner, Defendant Eric Hinojosa, intentionally put money into the Bank of America account held in
the names of "Eric Hinojosa" and "Capital Collision, GP" to cover the monthly bill payments to
Plaintiff on the loan.
34. After Austin Capital Collision, LLC, was formed, Erik Pampalone, acting on behalf of
Plaintiff, continued to send correspondence concerning Plaintiffs loan to the
cptlcollision@aol.com email address. [Exhs. P-12a, P-13, P-14]. In response, Austin Capital
Collision, LLC, d/b/a Capital Collision continued to make payments on the loan as agreed. [Exhs.
P-3, P-3A].
58
35. In September of 2012, Erik Pampalone, acting on behalf of Plaintiff, sent an email to
cptlcollision@aol.com requesting that Eric Hinojosa change where he was sending the monthly
deposits to Plaintiff on her loan to Capital Collision. [Exh. P-14]. In response, Mirium Matta, Eric
Hinojosa's sister-in-law and an employee of Austin Capital Collision, LLC, responded from the
cptlcollision@aol.com email with "received and updated." [Exh. P-14].
36. Austin Capital Collision, LLC, acknowledged the loan to Plaintiff and its indebtedness
thereunder through its conduct and course of performance.
F. Austin Capital Collision, LLC's, Default on the Loan.
37. Defendant Austin Capital Collision, LLC, d/b/a Capital Collision made its last regular
monthly payment on the loan in April of2013. [Exhs. P-3, P-3A].
38. In October of 2013, Austin Capital Collision, LLC, d/b/a Capital Collision made a payment
of $6,000.00 to Plaintiff. [Exhs. P-3, P-3A ]. No further payments have been made to Plaintiff.
Austin Capital Collision, LLC, d/b/a Capital Collision has breached and defaulted on the loan to
Plaintiff.
39. Plaintiff made demand for payment upon Defendants, but Defendants failed and refused to
cure the default on the loan. [Exhs. P-16, P-25].
G. Plaintiff's Damages.
40. As a result of Defendant Austin Capital Collision, LLC's, default on the loan to Plaintiff,
Plaintiffhas suffered damages.
41. The parties stipulated that the amount due and owing on the loan as of the date of trial is
$56,758.68.
H. Attorneys' Fees.
42. As a result of Defendants' default, Plaintiff was compelled to file the instant lawsuit and
59
incur attorneys' fees and costs associated with same.
43. Through April 2015, Plaintiff incurred attorneys' fees in the amount of $44,950.30. [Exh.
P-18]. Plaintiff's fees incurred through trial are in excess of$90,000.00. These fees are reasonable
and necessary in Travis County, Texas.
44. The parties stipulated to Ms. Robbi's qualifications to present attorneys' fees testimony and
the reasonableness of the hourly rates being charged.
45. Plaintiff's attorneys were required to expend significant time engagmg m discovery,
drafting and filing a motion to dismiss claims asserted by Defendants, compelling discovery from
Defendants, attempting to subpoena documents from Defendants' accountant, preparing for and
attending depositions and mediation, attending hearings on Defendants' special exceptions and
motion for continuance, preparing for and attending trial, and drafting pre-trial motions, including a
motion to exclude the testimony of Defendant's corporate representative, Eric Hinojosa, who was
wholly unprepared for his deposition in which it was agreed he would provide answers in his
individual capacity and as the corporate representative for Defendant Austin Capital Collision,
LLC.
46. Plaintiff's reasonable and necessary fees for Travis County in the event of an unsuccessful
appeal by either Defendant to the Court of Appeals are $20,000.00.
47. Plaintiffs reasonable and necessary fees for Travis County in the event of an unsuccessful
appeal by either Defendant to the Texas Supreme Court are $20,000.00.
L Other Findings by the Court.
48. Defendant Eric Hinojosa lacks credibility, especially in light of the fact that Eric Hinojosa
was wholly unprepared for his corporate representative deposition, had not reviewed a single
document produced in the lawsuit or otherwise talked to any Austin Capital Collision, LLC,
60
employees or representatives regarding the designated deposition topics, and demonstrated a
repeated inability to provide substantive responses on his own behalf or on behalf of Austin Capital
Collision, LLC. Further, at trial of this cause, Eric Hinojosa tried to change many of the answers he
provided at his deposition which occurred approximately one month before trial.
III. Conclusions of Law
A. Breach of Contract.
49. Plaintiff and Capital Collision ("Capital Collision," as indicated, supra, referring to the
owners of the Capital Collision business which, at the time, were the HABP Entities as the general
partners of Capital Collision, G.P.) intended to and did enter into an agreement whereby Plaintiff
would loan the sum of $80,000.00 to Capital Collision and, in exchange, Capital Collision would
repay the loan over 20 years at 7% interest.
50. This agreement constitutes a valid, enforceable contract.
51. The statute of frauds does not bar the agreement, even though it is not in writing, because
Plaintiff fully performed under the agreement, and Defendant Austin Capital Collision, LLC, d/b/a
Capital Collision partially performed.
52. Plaintiff fully performed under the terms of the agreement, paying the sum of $80,000.00 to
Capital Collision.
53. Capital Collision performed on the agreement prior to the termination of the HABP Entities
by making monthly payments on the loan as agreed.
54. Austin Capital Collision, LLC, d/b/a Capital Collision assumed the loan from the HABP
Entities though its conduct and course of performance, including by continuing to make payments
on the loan in accordance with the terms of the agreement.
55. Austin Capital Collision, LLC, d/b/a Capital Collision partially performed on the agreement
61
by continuing to make payments on the loan to Plaintiff in accordance with the terms of the
agreement.
56. Austin Capital Collision, LLC, defaulted on the loan.
57. As a result of Austin Capital Collision, LLC's, default, Plaintiff suffered damages in the
amount of $56,758.68. Accordingly, Plaintiff is entitled to recover the sum of $56,758.68 from
Defendant Austin Capital Collision, LLC.
58. Plaintiff is entitled to post-judgment interest at the rate of5%.
B. Attorneys' Fees.
59. Because this is an expedited action under Texas Rule of Civil Procedure 169 and Plaintiff
cannot recover more than $100,000.00 inclusive of attorneys' fees, Plaintiff is entitled to attorneys'
fees in the amount of $43,241.32 which fees are reasonable and necessary in Travis County, Texas.
60. Plaintiff is entitled to a conditional award of $20,000.00 in the case of an unsuccessful
appeal by either Defendant to the Court of Appeals. This sum is reasonable and necessary in Travis
County, Texas.
61. Plaintiff is entitled to an additional conditional award of $20,000.00 in the case of an
unsuccessful appeal by either Defendant to the Texas Supreme Court. This sum is reasonable and
necessary in Travis County, Texas.
C Defendants' Affirmative and Other Defenses.
62. All of Defendants' affirmative or other defenses as alleged in its Fourth Amended Original
Answer, Verified Denial and Special Exceptions lack merit and any relief associated with same is
expressly denied.
63. Any conclusion of law deemed a finding of fact is hereby adopted as such.
62 *44 ~
SIGNED this 1 day of July, 2015.
TH DWONG
63
Tab 3
82 S.W.3d 429 (Tex.App. —Dallas 2002), 05-98-02050, Exxon Corp. v. Breezevale Ltd.
Page 429
82 S.W.3d 429 (Tex.App. —Dallas 2002)
EXXON CORPORATION, Appellant,
v.
BREEZEVALE LIMITED, Appellee.
No. 05-98-02050-CV.
Court of Appeals of Texas, Fifth District, Dallas
April 4, 2002
Page 430
[Copyrighted Material Omitted]
Page 431
[Copyrighted Material Omitted]
Page 432
[Copyrighted Material Omitted]
Page 433
David J. Beck, Beck Redden & Secrest, L.L.P., Houston, Nina Cortell, Haynes & Boone,
L.L.P., Dallas, for Appellant.
Stephen D. Susman, Susman Godfrey, L.L.P., Houston, for Appellee.
Before Justices BRIDGES, FITZGERALD, and FARRIS. [1]
OPINION
Opinion By Justice David F. FARRIS (Retired).
Exxon Corporation (Exxon) appeals the trial court's judgment following a jury verdict
awarding Breezevale Limited (Breezevale) $34.3 million as damages for breach of an oral
contract, $1 million for breach of a contract implied in law, and $3.495 million in attorneys' fees. In
its first three issues, Exxon asserts (1) the evidence is legally and factually insufficient to support a
finding that the parties reached an enforceable oral agreement, (2) the claimed agreement is not
enforceable under the statute of frauds, and (3) the trial court incorrectly instructed the jury
regarding the doctrine of promissory estoppel. In its
Page 434
final five issues, Exxon complains about the lost profits award, the attorneys' fees award, some of
the trial court's evidentiary rulings, and the judgment being contrary to public policy.
Breezevale brings three issues in a cross appeal. Breezevale first contends the trial court
erred in its calculation of interest on the breach of contract award. In two conditional cross-points,
Breezevale complains of the trial court's dismissal of its breach of fiduciary duty claim by directed
verdict and the trial court's exclusion of evidence.
For the reasons that follow, we reverse the trial court's award of $34.3 million on
Breezevale's breach of contract claim, affirm the award of $3.495 million in attorneys' fees, and
affirm the trial court's directed verdict on Breezevale's breach of fiduciary duty claim. [2]
FACTUAL BACKGROUND
In the early 1990s, the Nigerian government opened its deepwater offshore to oil and gas
exploration, inviting bids from international oil companies for deepwater blocks. Exxon submitted a
bid requesting blocks 209 and 210. In June 1993, the Nigerian government formally awarded block
209 to Exxon. Exxon subsequently leveraged some of its interest in block 209, through trades and
farm-ins, to acquire interests in other blocks that had been awarded to other companies.
This case arises from a dispute between Exxon and Breezevale, a company hired by Exxon
to provide local assistance in its effort to procure exploration rights in Nigeria. Breezevale, a
London-based corporation, operated in various countries in Europe, the Middle East, and Africa,
including Nigeria. Exxon contacted Breezevale in 1990, requesting its assistance with services
such as arranging appointments, conducting briefings, obtaining information and technical data on
available blocks of interest to Exxon, and speaking with government officials on Exxon's behalf.
Breezevale provided these types of services to Exxon over a period of approximately eighteen
months, with no formal agreement in place as to Breezevale's compensation for its services. As
the business relationship progressed, the parties began negotiating the terms of a contract to
formalize their relationship. Although Exxon initially pursued only a short-term services agreement
with Breezevale, Breezevale expressed an interest in a more involved, long-term relationship in
which Breezevale would share the risk and rewards of Exxon's Nigerian exploration.
Representatives of Exxon and Breezevale met several times to discuss their business relationship.
The last of these meetings occurred on April 3, 1992. In this and previous meetings, the
parties discussed both a services contract and a participation agreement. The parties discussed
different options that would provide Breezevale with a participation interest in Exxon's Nigerian
exploration and production, including a 2 1/2 percent paid working interest, whereby Breezevale
would pay 2 1/2 percent of the costs of production and receive 2 1/2 percent of the production
profits. The parties' dispute as to whether an oral working interest agreement was reached at the
April 3rd meeting became the basis for Breezevale's lawsuit against Exxon. Breezevale claimed
Exxon offered, and it accepted, a 2 1/2 percent working interest in all of Exxon's Nigerian oil
operations. Exxon
Page 435
claimed an agreement on essential terms was never reached and it terminated negotiations with
Breezevale before a contract was formed. Neither party disputes an agreement on the services
contract was never reached.
The day after the April 3, 1992 meeting, Exxon's main contact at Breezevale, Habib Bou-
Habib, traveled to Nigeria to speak with the Ministry of Petroleum on Exxon's behalf. Breezevale
contends the trip was made at the request of Exxon; Exxon asserts it never requested nor
authorized the visit. On April 9, 1992, Habib contacted Gerald Mudd, an Exxon representative,
telling him to "[g]o open the champagne," because Exxon had been awarded a block. Block 209
was formally awarded to Exxon by the Nigerian government in June 1993.
On April 13, 1992, Exxon sent Breezevale a letter terminating its relationship with
Breezevale and enclosing a $30,000 check to cover Breezevale's services. According to Mudd,
Exxon had begun to have concerns about Habib's actions in Nigeria; consequently, Exxon decided
to terminate the business relationship. Habib returned the check.
Breezevale sued Exxon, claiming, among other things, that Exxon breached its oral contract
with Breezevale and its fiduciary duty to Breezevale. The case was tried to a jury. After Breezevale
rested its case, Exxon moved for a directed verdict on all counts. The trial court granted Exxon's
motion for a directed verdict with regard to Breezevale's breach of fiduciary duty claim, but denied
the remainder of the motion. The jury found the parties had entered into an oral agreement that
Breezevale would acquire a 2 1/2 percent working interest in "any deepwater blocks awarded to
Exxon by the government of Nigeria" and "any deepwater blocks in which Exxon obtains a farm-in
from a private company by trading any interest awarded to Exxon by the government of Nigeria."
The jury valued the working interest at $34.3 million and additionally awarded Breezevale $1
million for services on an implied contract in law, and $3.495 million for attorneys' fees. The trial
court entered judgment on the jury verdict. Exxon appealed.
EXXON'S APPEAL
In its first three issues, Exxon attacks the jury's findings that an enforceable contract existed
between the parties. Specifically, Exxon claims there is no or insufficient evidence to support the
jury's finding that the parties reached an agreement on all the material terms necessary to the
formation of an enforceable agreement. Additionally, Exxon contends that, as a matter of law, the
claimed oral agreement is unenforceable under the statute of frauds. Finally, Exxon argues the
trial court erred in its submission of the jury question on promissory estoppel. Because we agree
with Exxon that the statute of frauds applies, we assume without deciding the parties reached an
oral agreement, and address Exxon's second issue regarding the applicability of the statute of
frauds.
Statute of Frauds
The statute of frauds, in section 26.01 of the Texas Business and Commerce Code,
provides in pertinent part:
(a) A promise or agreement described in subsection (b) of this section is not enforceable
unless the promise or agreement, or a memorandum of it, is
(1) in writing; and
(2) signed by the person to be charged with the promise or agreement or by someone
lawfully authorized to sign for him.
Page 436
...
(b) Subsection (a) of this section applies to:
(4) a contract for the sale of real estate;
...
(6) an agreement which is not to be performed within one year from the date of making of the
agreement.
TEX. BUS. & COM.CODE ANN. § 26.01 (Vernon 1987). Whether a contract falls within the
statute of frauds is a question of law to be decided by the court. Gerstacker v. Blum Consulting
Eng'rs, Inc., 884 S.W.2d 845, 849 (Tex.App.-Dallas 1994, writ denied).
In its second issue, Exxon contends the claimed agreement is not enforceable under the
statute of frauds because it was not in writing, and (1) the agreement involved the transfer of
working interests in oil and gas properties, which are interests in real estate, and (2) the
agreement could not possibly have been performed within one year. Breezevale responds that the
agreement does not involve real estate and could possibly have been performed within one year.
Breezevale alternatively contends that, if this Court determines the statute of frauds applies,
Breezevale avoids the application of the statute of frauds on the ground of either promissory
estoppel or partial performance.
Interest in Real Estate
It is undisputed that no written and signed working interest agreement existed between the
parties. We, therefore, first turn to the issue of whether the alleged agreement conveyed an
interest in real estate. Under Texas law, a conveyance of a working interest in oil and gas is a real
property interest that subjects the agreement conveying the interest to the statute of frauds. Hill v.
Heritage Res., Inc., 964 S.W.2d 89, 134 (Tex.App.-El Paso 1997, pet. denied); EP Operating Co.
v. MJC Energy Co., 883 S.W.2d 263, 267 (Tex.App.-Corpus Christi 1994, writ denied); see also
Procom Energy, L.L.A. v. Roach, 16 S.W.3d 377, 381 (Tex.App.-Tyler 2000, pet. denied) (working
interest and overriding royalty interest in oil and gas lease come within ambit of statute of frauds).
Conceding that the transfer of severable mineral interests in oil and gas leases are regarded
as a sale of real estate under the Texas statute of frauds, Breezevale contends on appeal that its
agreement with Exxon conveyed an interest in Nigerian Production Sharing Contracts (PSC), not a
working interest in mineral production. According to Breezevale, a PSC differs from a Texas oil
and gas lease in that the foreign state retains title to the minerals in the ground, giving the holder
of the PSC only a contractual right to a share of the production. Consequently, an interest in a
PSC is not an interest in real estate and is not subject to the statute of frauds.
Even if the conveyed interest were an interest in a PSC, the relevant issue in determining
whether the contract involves real estate is not whether title to the minerals passes, but whether
the interest is derived from rights to oil and gas in the ground, making the interest a realty interest
subject to the statute of frauds. As the Texas Supreme Court has stated, "a right to land
essentially implies a right to profits accruing from it, since, without the latter, the former can be of
no value ... [t]hus a devise of the profits of land, or even a grant of them, will pass a right to land
itself." Sheffield v. Hogg, 124 Tex. 290, 77 S.W.2d 1021, 1028 (1934) (quoting Green v. Biddle, 21
U.S. 1, 76, 5 L.Ed. 547 (8 Wheat. 1823)); see also United States Pipeline Corp. v. Kinder, 609
S.W.2d 837, 839 (Tex.Civ.App.-Fort Worth 1980, writ ref'd n.r.e.)
Page 437
. Thus, a conveyance of an interest in the minerals that are produced from land, such as a working
interest or a royalty interest, passes a right to the land itself. Pecos Dev. Corp. v. Hydrocarbon
Horizons, Inc., 803 S.W.2d 266, 267 (Tex.1991) (overriding royalty interest in future production
from unleased land is subject to statute of frauds; specifically disapproving court of appeals's
holding to contrary).
Here, Breezevale argues Exxon offered it a 2 1/2 percent working interest in its Nigerian
production. One of Breezevale's experts, Patrick Rooney, testified the parties' use of the term
"working interest" connoted agreement in part to share in the risks, losses, production, and profit
of Exxon's mineral development. The PSC gave Exxon unrestricted right of ingress to and egress
from "the Contract area,"and the right to lift and export oil from the allocated block. We conclude
the interest in this case is derived from rights to oil in the ground and is a property interest subject
to the statute of frauds.
Breezevale nonetheless contends the characterization a working interest carries under
Texas law is irrelevant because the Texas statute of frauds does not apply to an agreement
involving property located in a foreign country. According to Breezevale, the nature of a
transferred interest is determined by the law of the place where the property is located; thus, the
law of Nigeria should apply to the characterization of the agreement. Even if Breezevale is correct
in claiming that Nigerian law should apply to determine the nature of the interest conveyed,
Breezevale failed to give notice and prove Nigerian law in the trial court.
A party who intends to raise an issue about foreign law shall give notice and, at least thirty
days before trial, furnish all parties copies of any written materials or sources the party intends to
use as proof of foreign law. TEX.R. EVID. 203; Long Distance Int'l, Inc. v. Telefonos de Mexico,
S.A. de C.V., 49 S.W.3d 347, 350 (Tex.2001). If a party fails to give notice and prove foreign law
as provided by the rule, the foreign law may not be applied. In re Garcia-Chapa, 33 S.W.3d 859,
863 (Tex.App.-Corpus Christi 2000, no pet.); see also Pellow v. Cade, 990 S.W.2d 307, 313
(Tex.App.-Texarkana 1999, no pet.) (absent proper invocation of foreign law by pleading and
proof, Texas courts must presume foreign law to be same as that of Texas).
Because Breezevale did not give notice and prove up Nigerian law in the trial court, it cannot
rely on Hunt v. Coastal States Gas Producing Co., 583 S.W.2d 322, 325-26 (Tex.1979), to support
its assertion that the language of the PSC should control the nature of the interest. In Hunt, the
parties properly proved up Libyan law in a pretrial hearing that included testimony of international
and foreign law experts. Id. at 327 (Steakley, J., dissenting). Conversely, in this case, Breezevale
told the court there was "no need to invoke Nigerian law" and, consistent with that statement, did
not submit any evidence of Nigerian law. Breezevale cannot now rely on Nigerian law to claim the
conveyed interest was not an interest in real estate. See Garcia-Chapa, 33 S.W.3d at 863; Pellow,
990 S.W.2d at 313.
Because the interest is an interest in real estate, we conclude the oral agreement is subject
to the statute of frauds.
Exceptions to the Statute of Frauds
At trial, Breezevale sought to avoid the statute of frauds based upon two exceptions to the
statute: promissory estoppel and partial performance. The jury answered "yes" to questions on
both of these exceptions. Exxon contends the evidence
Page 438
is legally and factually insufficient to support the jury's answers to both questions.
Standard of Review
When considering the legal sufficiency of the evidence, we consider only the evidence and
inferences tending to support the jury's finding, disregarding all evidence to the contrary. Weirich
v. Weirich, 833 S.W.2d 942, 945 (Tex.1992). If the record contains any evidence of probative force
to support the jury's finding, the finding will be upheld. ACS Investors, Inc. v. McLaughlin, 943
S.W.2d 426, 430 (Tex.1997). When considering the factual sufficiency of the evidence, we assess
all the evidence and reverse for a new trial only if the challenged finding is so against the great
weight and preponderance of the evidence as to be manifestly unjust. Pool v. Ford Motor Co., 715
S.W.2d 629, 635 (Tex.1986). When both legal and factual sufficiency points are raised, we first
review legal sufficiency to determine if there is any evidence of probative value to support the
jury's findings. Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401 (Tex.1981); In re King's
Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).
Promissory Estoppel
In its third issue, Exxon complains the trial court erred in its submission of the jury question
on promissory estoppel because it was an incorrect statement of the law. Exxon also attacks the
sufficiency of the evidence to support the jury's answer. Jury question No. 3 asked, "Did
Breezevale reasonably rely upon the oral promise of Exxon, if any, to reduce its oral agreement to
writing?"
Promissory estoppel applies to bar the application of the statute of frauds and allow the
enforcement of an otherwise unenforceable oral agreement when (1) the promisor makes a
promise that he should have expected would lead the promisee to some definite and substantial
injury; (2) such an injury occurred; and (3) the court must enforce the promise to avoid the injury.
Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex.1982); " Moore" Burger, Inc. v. Phillips Petroleum Co.,
492 S.W.2d 934, 936 (Tex.1972). To invoke the application of promissory estoppel where there is
an oral promise to sign an agreement, as in this case, the agreement that is the subject of the
promise must comply with the statute of frauds. " Moore" Burger, 492 S.W.2d at 940 (op. on
reh'g). That is, the agreement must be in writing at the time of the oral promise to sign it.
Sonnichsen v. Baylor Univ., 47 S.W.3d 122, 126 (Tex.App.-Waco 2001, no pet.); Mann v. NCNB
Tex. Nat'l Bank, 854 S.W.2d 664, 668 (Tex.App.-Dallas 1992, no writ); Beta Drilling, Inc. v.
Durkee, 821 S.W.2d 739, 741 (Tex.App.-Houston [14th Dist.] 1992, writ denied).
Breezevale first contends the law is unclear as to whether the doctrine of promissory
estoppel may be applied in the absence of a written contract in existence at the time of the
promise. However, we agree with the court in Sonnichsen that "the holding from "Moore" Burger is
clear" that the agreement must be in writing at the time the promise is made. Sonnichsen, 47
S.W.3d at 126; see also Mann, 854 S.W.2d at 668 (where this Court held an agreement in writing
at time of promise is required element of promissory estoppel). According to Breezevale, because
Mudd told Habib at the April 3rd meeting that Exxon was going to memorialize the working interest
agreement into an attachment to the draft service agreement, "there was every reason for Mr.
Habib to believe this either had been done or could be done and [would be] ready to sign during
their next meeting." Irrespective of what Habib believed, there is no evidence
Page 439
either that (1) the attachment was ever prepared or (2) Mudd or any other Exxon representative
told Habib the working interest agreement had already been prepared. Thus, there is no probative
evidence in the record that the working interest agreement was in writing on April 3, 1992.
Pointing out that the promissory estoppel question submitted to the jury did not include the
requirement that a writing exist when the promise was made, Breezevale argues Exxon waived
any charge error by not submitting a substantially correct jury question. However, if there is no
evidence to support one or more of the elements of the doctrine, it is irrelevant whether Exxon
submitted a proper question. See TEX.R. CIV. P. 279 ("A claim that the evidence was legally or
factually insufficient to warrant the submission of any question may be made for the first time after
the verdict, regardless of whether the submission of such question was requested by the
complainant.") Rather, the issue is whether the evidence supports the finding, including any
deemed findings on elements not included in the question. See Crosbyton Seed Co. v. Mechura
Farms, 875 S.W.2d 353, 363-64 (Tex.App.-Corpus Christi 1994, no writ); see also Auto. Ins. Co. v.
Davila, 805 S.W.2d 897, 902 (Tex.App.-Corpus Christi 1991, writ denied) (element may not be
deemed found by court if no evidence supports it).
We conclude that, because there is no evidence there was a written working interest
agreement in existence on April 3, 1992, there is no evidence to support the jury finding of
promissory estoppel. We therefore overturn the jury's finding on Question No. 3. [3]
Partial Performance
Breezevale also relies on the jury's affirmative answer to the question, "Did Breezevale
partially perform the agreement, if any?" in arguing the doctrine of partial performance bars
application of the statute of frauds in this case. Exxon contends there is no or insufficient evidence
to support a finding of partial performance.
Under the partial performance exception to the statute of frauds, contracts that have been
partly performed, but do not meet the requirements of the statute of frauds, may be enforced in
equity if denial of enforcement would amount to a virtual fraud. Carmack v. Beltway Dev. Co., 701
S.W.2d 37, 40 (Tex.App.-Dallas 1985, no writ). The fraud arises when there is strong evidence
establishing the existence of an agreement and its terms, the party acting in reliance on the
contract has suffered a substantial detriment for which he has no adequate remedy, and the other
party, if permitted to plead the statute, would reap an unearned benefit. Id.; see also Hooks v.
Bridgewater, 111 Tex. 122, 229 S.W. 1114, 1116 (1921). The partial performance must be
"unequivocally referable to the agreement and corroborative of the fact that a contract actually was
made." Wiley v. Bertelsen, 770 S.W.2d 878, 882 (Tex.App.-Texarkana 1989, no writ) (citing
Chevalier v. Lane's, Inc., 147 Tex. 106, 213 S.W.2d 530, 533-34 (1948)). The acts of performance
relied upon to take a parol contract out of the statute of frauds must be such as could have been
done with no other design than
Page 440
to fulfill the particular agreement sought to be enforced; otherwise, they do not tend to prove the
existence of the parol agreement relied upon by the plaintiff. Teague v. Roper, 526 S.W.2d 291,
293 (Tex.Civ.App.-Amarillo, 1975 writ ref'd n.r.e.) (citing Francis v. Thomas, 129 Tex. 579, 106
S.W.2d 257, 260 (1937)).
Exxon contends Breezevale's claim of partial performance is not "unequivocally referable" to
the working interest contract because Breezevale's actions could be referable to the services
contract. Breezevale does not dispute that it never paid Exxon any of the costs associated with a
working interest in Exxon's blocks. The action on which Breezevale relies as evidence of its partial
performance is Habib's trip to Nigeria on April 4, 1992. [4] Breezevale contends Habib's trip to
Nigeria during this time period constituted sufficient partial performance to take the contract out of
the statute of frauds because Habib went to Nigeria in reliance on Exxon's promise of a working
interest in any block awarded. Exxon argues that such performance does not "show strong
evidence establishing the existence of the [working interest] agreement and its terms," see
Carmack, 701 S.W.2d at 40, and is more referable to the services agreement the parties were
negotiating than the working interest agreement.
Applying the no-evidence standard of review, and viewing the evidence in the light most
favorable to Breezevale, we find there is no evidence that Habib's actions in going to Nigeria were
unequivocally referable to the working interest contract, because even Breezevale admits there
was a services contract being negotiated between the parties and that it had been providing Exxon
with liaison services similar to those provided during the trip throughout the eighteen-month
period. See Teague, 526 S.W.2d at 293 (performance must be such as could have been done with
no other design than to fulfill particular agreement sought to be enforced); see also Rodriguez v.
Klein, 960 S.W.2d 179, 186 (Tex.App.-Corpus Christi 1997, no pet.) (because party's performance
was required under one or more of three agreements, including bill of sale, it could not be
unequivocally referable to bill of sale); Beta Drilling, 821 S.W.2d at 741 (overturning jury finding on
partial performance because appellee's employment services were not unequivocally referable to
oral agreement for sale of securities). In a no-evidence review of whether the performance was
"unequivocally referable," the relevant issue is not whether there is evidence that the performance
could be referable to the contract which the party is trying to enforce; rather, it is whether there is
evidence that the performance is solely referable to the contract. See Teague, 526 S.W.2d at 293;
Rodriguez, 960 S.W.2d at 186.
Habib's actions in traveling to Nigeria and speaking with the government officials on Exxon's
behalf were consistent with the services Breezevale had performed in the previous eighteen
months and could be referable to the services agreement. Further, nothing in Habib's trip to
Nigeria, even if made at the request of Exxon, showed "strong evidence establishing the existence
of the [working interest] agreement and its terms." See Carmack, 701 S.W.2d at 40. We conclude
there is no evidence that Breezevale's performance was unequivocally referable to the working
interest agreement.
Page 441
Moreover, even assuming there was evidence that Breezevale's actions were unequivocally
referable to the working interest agreement, the doctrine of partial performance also requires that
the party acting in reliance on the agreement suffer a substantial detriment for which there is no
adequate remedy. See Hooks, 229 S.W. at 1116; Carmack, 701 S.W.2d at 40. If Breezevale were
successful in removing the oral agreement from the statute of frauds because of partial
performance, Breezevale would be entitled to only reliance damages. See Magcobar N. Am. v.
Grasso Oilfield Servs., Inc., 736 S.W.2d 787 (Tex.App.-Corpus Christi 1987) (court's holding that
party may recover reliance damages and not breach of contract damages in case where
promissory estoppel takes case out of statute of frauds is consistent with equity, the principle
underlying all exceptions to statute of frauds), writ dism'd by agr., 754 S.W.2d 646 (Tex.1988); see
also Adams v. Petrade Int'l, Inc., 754 S.W.2d 696, 708 (Tex.App.-Houston [1st Dist.] 1988, writ
denied) (relying on "settled law" that party's damages based on promissory estoppel as exception
to statute of frauds are not measured by profits that reliance led him to expect, but limited to
amount necessary to compensate party for loss already suffered). Breezevale's reliance damages
would encompass only the services Habib performed during his April trip to Nigeria. See Fretz
Constr. Co. v. Southern Nat'l Bank, 626 S.W.2d 478, 483 (Tex.1981) (reliance damages are
amount necessary to restore plaintiff to position he would have been in had he not acted in
reliance on promise). We conclude that because Breezevale received $1 million on its contract
implied in law claim, it had an adequate remedy as a matter of law. Cf. Carmack, 701 S.W.2d at
40 (in analyzing partial performance of Beltway, court noted Beltway had no other adequate
remedy because broker could not recover for same services on implied contract, quasi contract, or
quantum meruit theory); Wiley, 770 S.W.2d 878, 882 (if person receives payment for services,
those services will not constitute partial performance as exception to statute of frauds).
Because there is no evidence that Breezevale's partial performance was unequivocally
referable to the working interest agreement, and because Breezevale did not suffer a substantial
detriment for which it had no adequate remedy, there is no evidence to support the jury's finding
on partial performance. We overturn the jury's finding to Jury Question No. 4.
Attorneys' Fees
Exxon contends if the award for breach of contract is reversed, this Court must likewise
reverse the trial court's award of $3.495 million in attorneys' fees. Breezevale responds that even if
this Court reverses the breach of contract claim, it is still entitled to attorneys' fees on its $1 million
award for the contract implied in law, or quantum meruit, claim. We agree with Breezevale.
Exxon does not appeal the jury's finding that Breezevale performed compensable services in
the amount of $1 million, nor does it argue attorneys' fees are not recoverable for the cause of
action underlying the $1 million award. Rather, Exxon asserts Breezevale cannot recover
attorneys' fees based on the award because Breezevale claimed, in a pretrial hearing, that it was
not seeking compensation for services rendered. According to Exxon, because Breezevale could
not have expended attorney time and expenses on a claim it disavowed, there would be no
evidence to support an award of attorneys' fees on that basis. Exxon further claims there could
have been no presentment of a claim that Breezevale denied it was seeking.
Page 442
The fact that Breezevale stated in a pretrial hearing it was not seeking compensation for
services rendered is irrelevant in light of the fact that the trial court submitted a jury question on
the issue, which Exxon does not appeal. Because Exxon did not complain of the trial court's
submission of the question and the jury's affirmative answer to it, it cannot now complain the issue
was not raised and litigated at trial. Further, because the issues involved in the quantum meruit
claim are necessarily interrelated with Breezevale's breach of contract claim, we also decline to
find there was no presentment of the attorneys' fees claim. The record shows that, after receiving
the letter from Exxon terminating the relationship, Breezevale communicated with Exxon regarding
its belief that it had a valid contract with Exxon, that Exxon should fulfill the contract, and that it
had performed valuable services for Exxon. We conclude this is sufficient evidence of
presentment. See Jones v. Kelley, 614 S.W.2d 95, 100 (Tex.1981) (no particular form of
presentment required); see also Criton Corp. v. Highlands Ins. Co., 809 S.W.2d 355, 358
(Tex.App.-Houston [14th Dist.] 1991, writ denied) (holding oral request to tender full performance
under contract, which was refused, sufficient to establish presentment).
Exxon does not dispute that attorneys' fees may be awarded for claims arising out of
quantum meruit, or that the quantum meruit claim is not so interrelated with the contract claim as
to be more or less inseparable. See Weitzul Constr., Inc. v. Outdoor Environs, 849 S.W.2d 359,
366 (Tex.App.-Dallas 1993, writ denied). Therefore, because attorneys' fees are authorized on the
quantum meruit cause of action, Breezevale may recover the total amount of attorneys' fees the
trial court awarded. See id.
Conclusion
Because we conclude the statute of frauds applies to render the oral agreement
unenforceable, we need not reach Exxon's other issues. We reverse the jury's finding to Question
No. 1 and its award of $34.3 million. We render judgment that Breezevale take nothing on its claim
for breach of an oral contract. We affirm the $3.495 million award of attorneys' fees.
BREEZEVALE'S CROSS APPEAL
Breezevale brings three issues in a cross appeal. Because of our disposition of Exxon's
appeal, we address only one of Breezevale's issues.
In its second issue, Breezevale contends the trial court erred in granting a directed verdict on
Breezevale's breach of fiduciary duty claim based on a two-year statute of limitations. In a "reply
point and conditional cross point," [5] Exxon contends that even if the trial court erred in granting
the directed verdict based on the statute of limitations, the breach of fiduciary duty claim was still
properly dismissed because there was no evidence of a fiduciary relationship. We agree with
Exxon's conditional cross point.
A court may direct a verdict if no evidence of probative force raises a fact issue on the
material issue. Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex.1994). On review, we
examine the evidence in the light most favorable to the party against whom the verdict was
rendered,
Page 443
disregarding all contrary evidence and inferences. Id.; Rodriguez v. United Van Lines, Inc., 21
S.W.3d 382, 383 (Tex.App.-San Antonio 2000, pet. denied). When no evidence of probative force
on an ultimate fact element exists, or when the probative force of the evidence is so weak that only
mere surmise or suspicion is raised as to the existence of essential facts, the trial court has the
duty to instruct the verdict. Villarreal v. Art Inst. of Houston, Inc. 20 S.W.3d 792, 796 (Tex.App.-
Corpus Christi 2000, no pet.). The reviewing court may affirm a directed verdict even if the trial
court's rationale for granting the directed verdict is erroneous, provided the directed verdict can be
supported on another basis. Id.
There are two types of fiduciary relationships-formal and informal. Crim Truck & Tractor Co.
v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 593-94 (Tex.1992). Formal fiduciary relationships
arise as a matter of law, and include the relationships between attorney and client, principal and
agent, partners, and joint venturers. Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex.1998).
Informal fiduciary relationships arise from "a moral, social, domestic or purely personal relationship
of trust and confidence, generally called a confidential relationship." Associated Indem. Corp. v.
CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex.1998). Confidential relationships may arise
when one party has dealt with another in a certain manner for a long period of time such that one
party is justified in expecting the other to act in its best interest, Morris, 981 S.W.2d at 674, and in
cases where "influence has been acquired and abused, in which confidence has been reposed
and betrayed." Associated Indem. Corp., 964 S.W.2d at 287. However, to give full force to
contracts, we do not recognize such a relationship lightly. Burleson State Bank v. Plunkett, 27
S.W.3d 605, 611 (Tex.App.-Waco 2000, pet. denied) (citing Thigpen v. Locke, 363 S.W.2d 247,
253 (Tex.1962)). To impose such a relationship in a business transaction, the relationship must
exist prior to, and apart from, the agreement made the basis of the suit. Schlumberger Tech. Corp.
v. Swanson, 959 S.W.2d 171, 177 (Tex.1997). The fact that one businessman trusts another and
relies on another to perform a contract does not give rise to a confidential relationship, because
something apart from the transaction between the parties is required. Crim, 823 S.W.2d at 594.
Although the existence of a confidential relationship is ordinarily a question of fact, where there is
no evidence to establish the relationship, it is a question of law. Seymour v. Am. Engine &
Grinding Co., 956 S.W.2d 49, 60 (Tex.App.-Houston [14th Dis.] 1996, writ denied); Kline v.
O'Quinn, 874 S.W.2d 776, 786 (Tex.App.-Houston [14th Dist.] 1994, writ denied).
Breezevale first asserts that a formal fiduciary relationship existed because it was partners
with Exxon. However, we have held there was no working interest agreement between the parties
because any oral agreement violated the statute of frauds. Therefore, there is no evidence the
parties were working interest partners. See Schlumberger, 959 S.W.2d at 176 (partnership
consists of express or implied agreement containing four required elements: (1) community of
interest in venture, (2) agreement to share profits, (3) agreement to share losses, and mutual right
of control or management of enterprise). Without an agreement, there is no evidence the parties
were partners and no evidence to support Breezevale's argument that a formal fiduciary
relationship existed arising from the partnership.
Breezevale also argues it submitted evidence that Breezevale and Exxon
Page 444.
had developed a relationship of trust and confidence and there was some evidence of an informal
fiduciary relationship between the parties. It relies on evidence that before Exxon and Breezevale
began the dealings at issue in this suit, Breezevale had a ten-year distributorship relationship with
Exxon Chemical in Nigeria. However, the evidence shows Exxon Chemical is a separate Exxon
affiliate, and nothing in the record indicates this relationship was anything more than an arms-
length business relationship. See Gillum v. Republic Health Corp., 778 S.W.2d 558, 568
(Tex.App.-Dallas 1989, no writ) (plaintiff could not bootstrap prior relationship with two separate
entities to claim twenty-six year confidential relationship with defendant hospital).
Breezevale also relies on evidence it "trusted Exxon's numerous promises that an
agreement ... would be forthcoming;" it clearly informed Exxon it wanted a long-term relationship; it
shared with Exxon confidential information it learned from the Nigerian officials regarding the
bidding process; and Exxon requested that Breezevale work exclusively for Exxon. Even if true,
these facts are not evidence of an informal fiduciary relationship. Breezevale's claim that it
subjectively trusted Exxon to provide it a working interest agreement is insufficient to impose
fiduciary obligations on Exxon as a matter of law. Mere subjective trust does not transform arms-
length dealing into a fiduciary relationship. Schlumberger, 959 S.W.2d at 177; Crim, 823 S.W.2d at
595; see also Tyra v. Woodson, 495 S.W.2d 211, 213 (Tex.1973) ("[T]he fact that one
businessman trusts another, and relies upon his promise to carry out a contract, does not create a
constructive trust ... [t]o hold otherwise would render the Statute of Frauds meaningless.") The
record shows the parties had an arms-length relationship, with each party separately represented
by its own counsel. There is no evidence of a long-term relationship apart from the parties'
negotiations for the services contract and working interest agreement. See Crim, 823 S.W.2d at
594. We conclude that, because the record contains no evidence of a fiduciary relationship
between the parties, the trial court did not erred in granting Exxon's motion for directed verdict on
Breezevale's breach of fiduciary duty claim. Furthermore, the trial court erred in denying Exxon's
motion for directed verdict on Breezevale's claim that it had a "special relationship of trust and
confidence" with Exxon. Consequently, we find no merit in Breezevale's second issue in its cross
appeal.
We reverse the trial court's award of $34.3 million against Exxon for breach of contract and
affirm the remaining portions of the trial court's judgment that are the subject of this appeal.
---------
Notes:
[1] The Honorable David F. Farris, Retired Justice, Second District Court of Appeals, Fort Worth,
Texas, sitting by assignment.
[2] Exxon does not appeal the portion of the trial court's judgment awarding Breezevale $1 million
for breach of contract implied in law, acknowledging that Breezevale provided services for which it
should be compensated. Therefore, we express no opinion as to the validity of that portion of the
judgment, and the $1 million award stands.
[3] In its appellate brief, Breezevale also argues Exxon should be equitably estopped from relying
on the statute of frauds because of its claims that Exxon misled Breezevale. The doctrine of
equitable estoppel, being distinct from the doctrine of promissory estoppel, was never submitted to
the jury. Breezevale thus waived any equitable estoppel claim. See TEX.R. CIV. P. 279; Brown v.
Bank of Galveston, N.A., 963 S.W.2d 511, 515 (Tex.1998).
[4] Any performance by Breezevale in reliance on the contract necessarily had to occur between
April 3, 1992, the date of the agreement, and mid-April, when Exxon terminated the relationship by
letter, because only during this time could Breezevale have reasonably relied on the existence of
an agreement.
[5] Because the trial court denied Exxon's motion for directed verdict on Breezevale's claim that it
had enjoyed a "special relationship of trust and confidence" with Exxon, Exxon conditionally
appeals this ruling in the event we reach the issue of whether there was a special relationship.
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[1] Those two entities, formed around 2002-03, were Hinojosa Auto Body & Paint, Inc. (Texas), and Hinojosa Auto Body & Paint, Inc. (Nevada), sometimes collectively referred to as the “HABP Entities”. See 2RR 171-72.
[2] Pampalone did testify that he made $2,000 contributions during certain months. 2RR 103.
[3] These are: (1) whether partial performance allows for the avoidance of the statute of frauds in connection with determining whether an underlying agreement could be enforced, and (2) whether partial performance years later on the part of Austin Capital Collision, LLC allows for the avoidance of the statute of frauds and excuses the absence of a writing showing it assumed the debt of another.
[4] Another type of agreement that must meet the requirements of the statute of frauds is a promise by one person to answer for the debt of another. T EX . B US . & C OMM . C ODE § 26.01(b)(2); see Cruz v. Andrews Restoration , Inc. , 364 S.W.3d 817, 827 (Tex. 2012); Chubb Lloyds Ins. v. Andrew's Restoration , 323 S.W.3d 564, 571-572 (Tex. App. – Dallas 2010, pet. denied); Hartford Fire Ins. v. C. Springs 300, Ltd. , 287 S.W.3d 771, 777 (Tex. App. – Houston [1st Dist.] 2009, pet. denied).