*1 (Tex.App.-Houston 2003, pet. strategy [1st Dist.] that he carried out in a reason- refd), Rivera, misplaced. to be Therefore, able manner. ap- we hold that appellant charged was aggravated pellant did not meet his proof burden of robbery appointed and was new counsel Strickland, prong the first making it during punishment phase of his trial. unnecessary prong. to address the second Id. at 24-25. only days Counsel had nine appellant’s We overrule point of error. prepare for the sentencing hearing and request days’ failed to notice or a con- Conclusion tinuance so that he verify could that the We affirm judgment of the trial report PSI was accurate. Id. at 25. This court. Court held that counsel’s failure to investi-
gate his background adequately client’s vi-
olated the prong first of the Strickland Rivera,
test.
ever, holding our in Rivera was narrow applied to counsel who had been
brought in only to defend a client at the
punishment phase of trial. See id. at 29-
32. CORPORATION, AVCO LY TEXTRON
Nevertheless, appellant argues that Riv- COMING EN RECIPROCATING applies era to the facts of this ease and GINE DIVISION OF AVCO CORPO suggests that cannot argued “[i]t be that a RATION, Appellant, within given course of conduct is the realm strategy of trial unless and until the trial SOUTHWEST, INTERSTATE
attorney has necessary legal conducted the LTD., Appellee. investigation and factual that would enable informed, him to make an rational deci- No. 14-05-00860-CV. sion.” Even assuming a full investi- Texas, Appeals Court of gation of the causation issue would have (14th Dist.). Houston shown no link between the prenatal lack of defects, care baby’s and the birth appel- Nov. lant why has not shown trial counsel’s Supplemental Opinion Overruling election to focus on appellant’s suitability Rehearing April community supervision, instead of on issue, that causation constituted deficient Indeed,
representation. trial counsel rea-
sonably could have determined that intro-
ducing type evidence of the lack of this
causation could have undermined his strat- (1)
egy ways: in two emphasizing the
birth defects that would not have existed
apart appellant’s from having sexually as- (2) complainant
saulted the giving impression appellant sought part
evade of the blame for his actions.
Ultimately, appellant’s challenge fails
because trial counsel had a trial reasonable
See also 145 S.W.3d *6 Carnegie, G. Harmon Hall
Jack James Houston, II, Cowan, Wagner Miguel Scott Estrada, DC, Washington, A. Theodore J. Jr., Thomson, Los Ange- Boutrous William les, CA, for appellant. Jr., Rose, H. Martin E.
Harold Walker Dallas, Sanfelippo, Roger Steven Dominic Houston, Townsend, appellee. D. ANDERSON, Panel consists Justices GUZMAN, HUDSON.* and Senior Justice * assignment. Harvey sitting by Senior Justice J. Hudson
OPINION under both Pennsylvania Texas and law. remand solely We for the determination of GUZMAN, EVA M. Justice. appropriate amount attorneys’ fees dispute, this commercial we are asked costs, if any, party award to either questions determine regarding standing in light of our rulings dispositive on the capacity, proper scope of declara- issues. relief, tory application of the ex- rule, press-negligence as well as traditional I. FACTUAL AND PROCEDURAL sufficiency challenges to certain evidence. BACKGROUND appellant, The engine aircraft manufac- Supply Agreement A. The Master turer, contracted a forging company production for the forgings Appellant Textron Lycoming Recipro- made to the specifications.1 manufacturer’s cating Engine Division Corpora- of AVCO failures, After a series of crankshaft an tion (“Lycoming”) manufactures aircraft affiliate of the forging company sued the engines, but does not manufacture all of manufacturer, engine alleging that the component parts. May On wrongfully manufacturer concealed infor- Lycoming entered into a Master Supply failures, mation about fraudulently in- (“MSA”) Agreement to obtain crankshaft duced the forging company to extend the forgings from corporation Wisconsin Inter- contract, and obtained the execution of a Industries, (“IFI”).2 Forging state Inc. contract by deception. extension The affil- forgings The Lycom- were to be made to sought iate also a ruling that the manufac- ing’s specifications, provides and the MSA turer was not entitled to contractual in- that IFI “will delegate or subcontract demnity. jury The found in favor of the any of the work or performed duties to be affiliate on its fraud claims and awarded it hereunder prior without the written con- damages for premi- increased insurance sent” of Lycoming.3 ums expert witnesses, and fees for togeth- asymmetrical MSA also includes in- fees, attorneys’ costs, er with and more provisions. demnification 5.3, Section than million in exemplary damages. $86 paragraph provides: MSA We conclude that the standing affiliate has Buyer [Lycoming] indemnify, shall reim- issue, to assert the claims at but the evi- *7 burse, harmless, and hold Seller [IFI] legally dence is support insufficient to its subsidiaries and and then- damages actual awarded. We therefore affiliates officers, respective directors and em- reverse and judgment render that the affil- ployees against any iate take from and nothing, but we affirm and all the trial losses, liabilities, claims, costs, court’s demands, conclusion that the contractual in- demnity provision [sic], fines, at issue is judgements unenforceable penalties, inter- pistons 1. engines of the aircraft at issue originally provided 3.The MSA that either crankshafts, party agreement connect to could terminate rods turn the and immedi- occurrences, ately upon including: certain propellers the crankshafts turn the of the air- fifty craft. sale or [t]he transfer of more than (50%) percent substantially of all or all of upon the assets or stock or the occurrence Industries, Forging Interstate Inc. subse- any of other transaction that in a results quently liability compa- converted to a limited change ownership party of or control of a ny Forging, known as Citation Wisconsin party expressly unless the other shall have clarity, L.L.C. For the sake of we have re- agreed writing.... thereto in single entity ferred to this as IFI. provision This was deleted in the First Adden- 4,May dum to the MSAon assets, IFI est, for its exchange of to ISW. expenses monetary or limitation, (including, any kind without partnership interest a 98% received costs, fees, expense[s] reasonable Lycoming’s con- IFI did not obtain ISW. attorneys and of and con- disbursements transfer inform of or sent sultants) as- (collectively “Damages”) and contends arrangement, in- imposed or against, upon serted Assignment knowledge it had no Seller, by as a claims or curred result of and ISW until Agreement between IFI any by parties, (including third lawsuits filed. this suit was injury such or lawsuit for personal claim damage) liability or property Second, Assignment Agreement where des- solely design on a based and/or the “true and lawful attor- ignated ISW defect warnings a defect in the and instructions of substitu- power for IFI with “full ney” by Buyer any negli- provided without tion, ... name and stead or in its [IFI] ” gence part Seller. on the similarly It authorized otherwise.... added). (emphasis paragraph The second or “prosecute to in the name [IFI] ISW indemnify requires IFI section 5.3 any proceedings ... all ... otherwise and “Damages”: for such may in order to proper deem [ISW] in- imposed or against, upon asserted claim, collect, any right or enforce assert Buyer or [Lycoming], curred whether Assets, any and do all or title of Division involving liability par- any third things acts and in relation thereto as other ty, resulting any from or arising out ” ... shall deem desirable.... [ISW] claim, recall, gov- ... lawsuit retrofit or investigation proceeding ernment or Third, Assignment Agreement re- against Buyer relating performance indemnify IFI. Under this quired ISW to limitation, (including or without “assumes, defects holds provision, [IFI] ISW defects), manufacturing or the breach from, pay agrees harmless any express implied warranty or fulfill, satisfy and the Division Liabilities.” manufactured [IFI] Products Seller agreed “absolutely and un- further pursuant Agreement, except to this defend, conditionally indemnify and hold Damages extent that such are direct- arising from all claims di- harmless [IFI] ly negligence Buy- caused indirectly respect rectly from or with or er. Liabilities, against Division added). (emphasis both, [IFI], or and to respect to [ISW] ” Assignment Assumption B. The satisfy pay same.... Agreement Between IFI day it executed this On the same producing any forg- Before assigned partnership IFI agreement, *8 ings, “Assignment IFI executed partner, in limited interest ISW ISW’s Agreement” (“Assignment Assumption corporation known as ISW Tex- Delaware Agreement”) in October to accom- company. IFI that Corporation. owns First, IFI purposes. plish three stated general partner, Corpo- Texas Steel assigned all the assets of its “Interstate ration, wholly by Corpo- owned Citation division” to Interstate South- Southwest Thus, (“Citation”), IFI. both ration as is (“ISW”). west, assigned assets Ltd. are affiliated with Citation. IFI and ISW Navasota, plant in physical included the Buker, Executive Citation’s Chief Offi- Ed forgings Texas were where crankshaft IFI cer, the chairman of both is also ISW, IFI’s According to be produced. Lycoming assigned ISW. contract with was also Changes Specifications
C. and Man- problem. Lycoming opined further ufacture the defects were “inadequate caused process proper controls to ensure heat Lycoming shipment received the first treatment.” forgings crankshaft on March 1997. On 16, 1998, November Lycoming issued an IFI subsequently reached a settlement engineering change requiring order the va- Lycoming regarding these failures. nadium content of forgings to be “con- part settlement, As of this the parties trolled” to 0.07% to 0.11%. The change agreed to a change the forging process. order provided, further “This material Specifically, Lycoming accepted IFI’s offer modification ensures a 2nd tempering press-tooling “build or hammer-tooling (at temperature of 1100° F or higher least put parts press....”6 on the higher 100° F than the tempering 1st Subsequent 2. Crankshaft Failures temperature) for 5 hours to engi- meet the engine Other failures occurred for which neering drawing requirements hardness ” readily apparent, cause was not normalized). .... (capitalization Lycoming employee, instructed its Dr. Beginning month, following forgings Kim, Yoon to investigate. The crankshafts were manufactured in a different furnace at issue crankpins, have six and the fail- generally operated was manually ures that are the litigation basis of this rather than by using the temperature con- generally originated below the outer ni- trols outside of the furnace. tride casing of the crankshaft near or be- tween the fifth crankpins. and sixth D. The Crankshaft Failures 28, 2000, On June a Lycoming engine Forgings 1. Failure to Heat-Treat failed after approximately 100 hours of Beginning a number of crank- report 27, 2000, service. In his July dated shaft failures occurred. some instanc- Dr. Kim concluded that a connecting rod es, the cause of the undisputed. failure is failed, bearing had and the resulting For example, July Lycoming stresses caused a subsurface fracture to notified IFI of an engine failure due to the the crankshaft between the fifth and sixth forging facility’s failure to heat-treat crankpins. 31, 2000, May On a crankshaft crankshaft forgings.4 Similar failures fol- Lycoming engine failed after 262 May lowed. Lycoming On wrote service, hours of report but the on that regarding IFI forgings 54 crankshaft failure, Australia, which occurred in treatment; lacked heat consequences completed until September of this 2000. “quality escape” included two in- A flight surface fracture failures.5 was observed on this wrote that IFI recognize crankshaft, “must liability” and and this [its] asked failure was also attrib- notify IFI its insurance carrier of the bearing uted to a failure. A third failure noted, previously ISW, As According contends it Ly- to evidence offered knowledge had Assignment Agree- of IFI’s coming previously forgings had asked that its ment with ISW and did not know that the method, produced using be but until the forgings actually produced were settlement, forging supplier had refused Thus, ISW. continued to direct change because the would increase the cost of IFI, its communications to and neither IFI production. *9 Lycoming. nor ISW corrected 27, Lycoming’s correspondence July 5. 1999 15, May and 2000 are both addressed to “In- Forging terstate Industries^] Inc.” 29, of its forma- In his not know the cause August re- We do
occurred 25, 2000, Dr. Kim at- effect on the mechanical port dated October tion nor its in front of the fatigue tributed the surface fracture on the especially properties^] bearing. crankpin shifting sixth you You can do whatever property. failures, In each of these three the crank- sample test impact with the want to do forgings shaft had been heat-treated. honey- the cause determine let me know comb Please structures. IFI immediately was not informed your findings possible. as soon as failure these heat-treated crankshafts. Although Lycoming met IFI on No- 11, 2001, Lycoming and On December 30, 2000 regarding vember and costs for concerning ten personnel IFI met crank- had three other failed crankshafts that not later, days Lycoming Two shaft failures. heat-treated, Lycoming been did dis- order prepared engineering requiring an three close this time heat- .01% vanadium to be limited to above treated crankshafts described had tempering to be conducted at second heat also failed. temperatures exceeding 1150°F. Lycoming previously had consulted an The E. Second Addendum to MSA firm engineering regarding outside time, By original five-year MSA crankshafts, failure the heat-treated expired, had but continued to M. Hilts of on December James forgings, order receive crankshaft os- Kingsway Engineering completed Services tensibly MSA, To from IFI. renew the report to Hilts wrote that Lycoming. his negotiated and IFI a Second indi metallagraphieal “the evidence [sic] 26, signed April Addendum IFI on crack have started as cates that the could 17, by Lycoming on July 2001. ISW (football) elliptical!-] shaped inclusion a signatory is not to and is not mentioned x roughly 0.01 inches 0.011 lying 0.005 Addendum, in the Second extended inch thick nitride inches the 0.026[-] below MSA five years. for another Although case.” Hilts tested material that form, strength was the exact or heat F. Crankshaft “not Failures Continue material,]” as the failed he con treatment After the Second Addendum suc- cyclic maximum “[i]f cluded that cessfully Dr. negotiated, Kim continued to truly range to 54 stresses are analyze completed additional He failures. ksi[,][7] initi no surface crack would have analysis July another failure ated on the surface” of the crankshaft. This was the first instance in which Dr. reasoned, Thus, aof he surface “[i]nitiation Kim that a failed concluded due require well crack would stresses over fatigue abnormally to subsurface from ksi[;][t]herefore, must have there been high stresses of unknown cause. defect.” pre-existing Kim On October Dr. wrote to then to recall crank- began IFI that a after crankshaft had failed 886.8 already in On shafts that were service. Kim, to Dr. According hours service. February Lycoming issued a man- failed 0.08% vana- crankshaft included datory recalling crank- service bulletin “honey- a microscopic dium contained shafts manufactured under MSA Concerning comb” structure. this struc- six-cylinder ture, tur- Dr. Kim were used wrote: "kilopounds 7. "Ksi” the abbreviation for tension. is per square inch” and a measurement of *10 later,
bocharged engines. days produce Ten required Replacement (“FAA”) Federal Aviation Administration pursuant to the Crankshafts terms of the issued a similar Directive Airworthiness 4, 1995, May made as of [MSA] amend- concerning Lycoming turbocharged all ed, are entering and into this [Release] engines TIO-540 and LTIO-540 of 300 hp prejudice respective posi- without to their higher or were manufactured from They on that tions issue....”9 further February March 1997to 2002. agreed that: Lycoming provided update an to IFI on amend, alter, Release] will not or [The 19, 2002, February informing it seven MSA, modify the except terms of the confirmed six and unconfirmed crankshaft extent specifically set forth in this letter, failures.8 In this Spigel- Brock A. [Release], ISW, [IFI], reserving and myer, Design Engineer Lycoming, for Citation their contention that the MSA wrote Lycoming’s “investigation has reserving invalid and to ... Lycoming is focusing been primarily presence opposition to [its] that contention and honeycomb-like features found the frac- claims, damage any, if except as [its] investigation ture because surfaces” “[t]he by limited this [Release]. has possibility any ruled out the dimen- Release, Under the terms machining[-]related sional or problems and agreed produce replacement crank- design itself has been substantiated subject Replacement shafts to a Crank- 20 or years more reliable service.” shaft Production Agreement (“Replace- Agreement”) ment Crankshaft attached as Indemnity Agree- G. The Release an to the and incorporated exhibit Release Replacement ment and Crank- reference. released and Agreement shaft IFI, ISW, agreed indemnify and Cita- August Additional recalls followed in costs, losses, tion for these and September Lycoming attempt- 2002. incurred result of entities “as a claims or negotiate agreement ed to under any party lawsuits kind third IFI produce replacement would crank- [Lycoming] Replacement to the relating shafts, but IFI refused to do so unless Crankshafts.” Lycoming agreed to indemnify past Replacement 2. Crankshaft Thus, Ly- and future crankshaft failures. Agreement coming following pair into the entered agreements on October to ad- Replacement Agree- In the Crankshaft replacement dress the crank- need ment, Lycoming acknowledged shafts. only agreements These contemporaneous execution of the Re- the record between and ISW agreed lease and that: production concerning the of crankshaft [Replacement] Agreement sep- is [T]his forgings. from, governed by, arate 1. The Release parties, between the [MSA] [the parties] agreed have further Agree- and Indemnity the Release (the “Release”), Citation, [Replacement] Agreement will not ment Lycoming, amend, alter, IFI, modify agreed the terms of the and ISW “the Parties MSA, concerning have a extent dispute except specifically [IFI] whether Textron, Corporation Forg- addressed Inc. and are also This letter is to “Interstate Avco Indemnity Agree- parties to the Release and ing Southwest.” ment. *11 indemnity under section and [Replacement] Agree- in contribution set forth (4) ment, MSA, declaratory judgment contention reserving to ISW its the 5.3 of reserving and to the MSA is invalid the that of concerning indemnity provisions its to that conten- Lycoming opposition (5) fees and costs MSA, attorneys’ and claims, ex- damage any, and its if tion of the Texas to 37.009 pursuant Section by this cept [Replacement] as limited ISW Remedies Code. Practice and Civil Re- Agreement and the attached para- the trial to hold that asked court .... lease duty to regarding IFI’s of the MSA graph Replacement the Release nor the Neither Lycoming was unenforceable indemnify Agreement any as- mentions Crankshaft a public and against policy was because assets, rights delegation signment time, At same contract adhesion. duties, attorney-in- of an existence asked the trial court declare ISW IFI and ISW. relationship fact between indemnifi- was entitled to contractual ISW does reveal Although record under MSA. Lycoming from cation produced pursuant failures of crankshafts and incorporated ISW the MSA Although Replacement Agree- Crankshaft original by reference its addenda ment, liability failures of crankshafts for allega- pleading contained petition, pursuant to the and its produced MSA assigned IFI had the MSA tions remained unresolved. For exam- Addenda acting represen- ISW or ISW than Release ple, less a week before the capacity.11 tative Replacement Agreements Crankshaft executed, Lycoming IFI were were Pennsylvania Lawsuits I. The arising in federal for damages sued court suit, day it answered this The before one or more of the of crank- from failures sued IFI and Citation —but produced pursuant shafts the MSA on Pennsylvania state court ISW—in (the “Flying litiga- Frog its Addenda suit, Lycoming In that May 2003. tion”); IFI were executives of and ISW aris- for its losses sought indemnification in- seek concerned would In a failures. ing from demnification for its own as well as losses lawsuit, Lycoming separate Pennsylvania Eventually, parties. third entry with IFI and Citation to the agreed and Lycoming attempted both ISW to re- In- Preliminary Agreed Order question solve the indemnification injunction 2003. junction on June The bringing respective suit home their required “produce IFI and Citation states. forgings ordered provide all crankshaft The H. Texas Suit Al- pursuant [Lycoming] [MSA].” granted trial court ISW though Texas filed instant lawsuit in Grimes injunction prevent temporary anti-suit causes County April asserting Pennsylva- from prosecuting (1) disparagement, action for business actions, the trial this court reversed nia (2) part breach of contract based in injunction. order and dissolved the court’s inform earlier Lycoming’s failure to Ltd., (3) Sw., failures, Corp. v. Interstate AVCO the crankshaft contractual suit, Co., Ly- in the Frog, IFI later intervened Flying v. Cessna L.L.C. Aircraft grounds. coming objected H-02-3817, on several No. filed on October intervention, and none struck the trial court Court for the South- the United States District parties trial erred in contend Texas, ern District Houston Division. doing so. 257, 260 (Tex.App.-Houston obligations [14th liabilities and of IFI con- *12 pet.). (c) no MSA; Dist.] cerning Assignment the the Agreement irrevocably appointed ISW as J. The Texas Causes of Action attorney-in-fact, thereby IFI’s assigning to 26, 2003, On June filed its ISW First right prosecute ISW the and defend Original in Amended Petition this case. (d) MSA; litigation concerning the because This petition contains first mention ISW, IFI assigned the MSA to ISW had of Assignment Agreement. the plead- suit; assert in standing to the claims this times, ings were amended several more (e) party ISW was the real in in interest and was eventually the case tried on ISW’s litigation and personal had a stake in Petition, Sixth Original Amended filed (f) outcome; ISW was authorized to June and Trial its First Amend- assert in the claims this lawsuit in its own ment, February 2005. In filed its live IFI; right as as on (g) well behalf of and pleadings, alleges ISW con- standing produced had ISW because all cealed the crankshaft failures from IFI the crankshafts. ISW, and privately but attributed the fail- Declaratory Judgment Regarding ures to deficiencies in forging process. the the MSA ISW, IFI, According “Lycoming and with the full and knowledge consent of heading “Declaratory Under the (and ISW) ISW on behalf of executed the Judgment MSA,” asked the trial ISW — early Second Addendum to the MSA the judgment court to a declaratory issue time, 2001” Lycom- summer of and at that (a) the crankshaft and failures the result- (1) ing of performing had intention lawsuits, settlements, groundings, and (2) MSA; under the the knew crankshafts recall, including resulting all damages for under-designed, were and knew that IFI losses Lycoming, directly suffered were (3) this; and did not know and ISW knew (b) by Lycoming’s negligence; caused that IFI and knowledge ISW had no of the not failures were caused the acts or additional crankshaft failures. (c) IFI; omissions of ISW or the failures ISW also asserted causes of action for were not caused performance or defects fraud, fraudulent of the inducement MSA or express implied the breach or Addendum, and Second violation of Section warranty any forgings produced under 2.306 of the Texas and Business Com- (d) MSA; the failures did not relate to Code, merce and breach contract. In performance” “the seller’s under the MSA addition, sought rescission of the (e) forgings; defects of asked MSA and its Addenda and the trial Lycoming comply failed to with the notice parties position “to to return MSA, provisions and this material they prior MSA were to the and its termination; breach resulted the MSA’s sought Addenda.” ISW also the declarato- (f) because it failed to follow the MSA’s ry relief discussed below. terms, express Lycoming could enforce Declaratory Judgment Regarding MSA; indemnity provisions (g) Assignment Standing and agreement indemnify Lycoming un- der the was as a MSA unenforceable mat- request declaratory judg- its first law, against policy, ter of public was and ment, court to ISW asked the trial declare (h) adhesion; was a and contract (a) Assignment Agreement that: valid- indemnity agreement was limited to the ly and assigned transferred ISW the negligence, any, if “of the under rights obligations seller MSA and all there- (b) under; process MSA in assigned forging ISW assumed and relation trial court contends the acts also negligent or omis- does cover” in- parties refusing give jury under certain other sions erred Lycoming’s control. concerning damages, punitive structions failure to of the trial court’s complains Amendment 3. Trial portions objections to sustain Finally, filed a trial amendment grounds closing arguments on of ISW’s asserting exemplary claims for argument. improper of relevance that, Lycoming se- alleged because *13 Adden- cured the execution of the Second Verdict L. The Directed statutory by deception, the limitation dum case-in-chief, completed its After ISW not apply.12 did exemplary damages on a successfully partial moved Rulings K.Pre-Trial and Trial on ISW’s verdict several directed trial court’s dis- appeals the claims. ISW standing Lycoming challenged ISW’s un- claims claims, prejudice missal with the capacity bring and and of the Business and Com- partial summary judg- der section 2.B06 granted trial court ment, standing both holding that ISW had Code. merce does chal- capacity. Lycoming Jury’s Findings M. summary on lenge partial judgment the appeal. trial Lycoming’s objection, the Over 6, separate jury to submit
The tried December court refused case was between trial, February 15, concerning 2005. Before but IFI ISW questions a “stipulation” filed unilateral jury questions regard- submitted instead seeking it indemnification was “Interstate” Lycoming’s conduct to ISW, stipula- opposed from but ISW the In damages incurred. “Interstate” trial, court tion. After the start of defined charge, “Interstate” was allow stipulation and refused to struck the The court both and IFI. trial include ISW a jury inform that such Lycoming to jury “that the court instructed further had been The trial stipulation offered. a of law that determined as matter has court also excluded documents and testi- may its claims and claims bring [ISW] mony offered to show that division Lycoming, including against [IFI] FAA the crankshaft failures to attributed relating to against Lycoming claims addition, court overheating.13 trial to include The was defined MSA MSA.” the data excluded evidence that both Addenda. cause part collected as of its own root two, jury found By a of ten vote in- investigation failures fraudulently “Lycoming induce[d] overheating of cluded information that the Second through of the MSA extension failures in the en- forgings caused similar “commit[ted] the MSA” and Addendum to Lycoming chal- gines competitor. of a jury was then Interstate[.]” The rulings appeal. fraud lenges each of these R.S., 21, 2001, Leg., includes certified ch. The excluded evidence May 77th 12. Act of 1208, 1209, 643, 3, Special "Lycoming § Tex. Laws copy report Gen. of a entitled 2, by (SCRT) June Sept. amended Act of eff. Final Re- Review Team Certification 13.06, R.S., § Leg., 78th ch. (“SCRT Lycoming de- Report"), port” 847, 888-89, by Act Tex. Gen. Laws amended report by The court the FAA. trial scribes May Tex. Sess. Law Serv. testimony Re- about SCRT also excluded (current (H.B. (West) 8) § ver- ch. 3.03 port or its conclusions. ANN. REM.CODE sion at TEX. CIV. PRAC.& (Vernon 41.008(c)(ll) Supp.2007)). § money asked to find the sum of incomplete would was insufficient compensate “Interstate” for damages under the Texas and United States consti- act, proximately caused either and was tutions, jury and the unanimously assessed told to limit its finding specific to two punitive damages $86,394,763. First, categories damages. the jury
was asked for “[t]he increase aviation Judgment N. The products liability premiums insurance sus- jury verdict, After the returned its past”; tained in the it assessed this proposed judgment, submitted a and the Second, amount at million. the jury $1.7 signed judgment trial court without asked find the “[reasonable and any change. judgment The court rendered expert necessary expenses incurred in the “for asserted on its claims investigation failures”; of the crankshaft own behalf as well as those claims asserted $2,715,623.17. assessed this amount at on behalf [IFI] in the amounts found ” jury also clear found and con- costs, jury, together *14 vincing evidence that harm “the to Inter- interest, and contingent awards of attor- state resulted from fraud or malice”14 and neys’ fees In appeals. for various connec- “from a specific by intent Lycoming to tion jury’s findings, with the the trial cause injury substantial to Interstate!.]” court: addition, In jury the found Lycoming 1. Rescinded pro- “the indemnification secured the execution of the Second Ad- vision of of Section 5.3 the [MSA] dendum to the MSA by deception, and Addenda, and its requires which the determined the reasonable fees for indemnify Buyer” Seller to due the necessary services of “Interstate’s” at- jury’s finding to “the of fraud and torneys $4,760,027.80 preparation was for fraudulent inducement....” The tri- $350,000 trial, and for an appeal to a court al court that as a further held result $30,000 appeals, of filing for or responding rescission, provision of the “can- petition to a for review in the Texas Su- [ISW], against not be enforced preme Court, $170,000 and briefing and [IFI], or their successors and as- argument on the in the merits Texas Su- signs”; preme jury Court. The further found that 2. “that Lycoming’s jury’s findings defect in Held design crankshaft entitle was the sole cause of the failures. entire [ISW] recover the amount exemplary damages awarded separate instructions, jury was jury even if it is later found that asked to determine the amount that should only nominal damages actual were against be assessed and award- recoverable”; ed to “Interstate” as exemplary damages. that, The trial 3. jury’s court overruled ob- Concluded due jections charge for exemplary findings, the exemplary damages filed, involved, 14. At the time this case was "malice” awareness of risk but neverthe- (A) specific as: proceeds defined intent with less conscious indifference to injury rights, safety, defendant cause substantial or or harm welfare others. Act of claimant; (B) (i) 20, 1995, R.S., April or or Leg., § an act omission: 74th ch. 108, 109, objectively when viewed from the 1995 Tex. Gen. Laws amended R.S., standpoint Leg., of the actor the time Act at of its of June 78th ch. 13.02, degree (cur- § occurrence involves an Tex. extreme Gen. Laws risk, considering probability magni- and rent version TEX. CIV. PRAC. & REM. others; (ii) (Vernon 41.001(7) potential § tude of the harm and CODE Supp. ANN. actual, 2007)). subjective of which the actor has with grounding aircraft to a statuto- subject awarded are not engines; damage ry cap;15 and that, [Lycoming’s] jury’s fac- a defect 4. Found based on 8. Because attorneys’ crankshafts was findings, design tual the award of just failures are and of the crankshaft equitable fees costs sole cause bulletins, are resulting those terms used Section service directives, Civil Practice 37.009 the Texas airworthiness Remedies Code.16 aircraft grounding recall [Lycoming] engines, Declaratory Relief recover, part, in whole or cannot losses, claims, costs, liabilities, concerning any rulings The trial court’s demands, judgments, penalties, requests declaratory relief interest, monetary paragraphs, fines, expense in six contained numbered kind, Declaratory Judg- (including refer to as which we fees, costs, ments 1-6: reasonable ex- to attor- penses and disbursements Assignment Bill of As- Sale consultants) (collectively neys and sumption Agreement (“Assignment been, “DAMAGES”) that have assigned the Agreement”) validly be, imposed may against, asserted [ISW]; Assignment [MSA] incurred, by [Ly- or suffered upon, irrevocably Agreement appointed *15 any as a claim or coming] result attorney-in-fact, [IFI’s] as [ISW] and law- (including claims lawsuit to, among full other power with injury prop- and personal suits for in things, legal proceedings initiate retrofit, recall, erty damage), [IFI], the name of or and to [ISW] investiga- grounding, government or collect, assert, any or enforce claim to, or relating any way in aris- tion any right in with or connection of, failures ing out the crankshaft asset, the including transferred bulletins, resulting and service the thereby as- [Lycoming], with [MSA] directives, crankshaft [ISW], airworthiness signing right prose- the aircraft grounding and and recall litigation cute defend related [IFI]; engines from [ISW] has and [MSA] [ISW] their successors standing prosecute [IFI] and defend and/or and/or or [MSA]; its assigns related to the and or under [MSA] claims [MSA], Addenda, 5.3 of the authorized to assert Section [ISW] lawsuit, theory in legal own any claims or other liability as on behalf of right impose [IFI]. [ISW] well would successors their [IFI] design of [Lycoming]’s 2. A defect in and/or and/or whether assigns, regardless of or the sole cause the crankshafts was right re- [Lycoming] asserts failures and the of the crankshaft DAMAGES, any, if un- bulletins, cover such resulting airworthi- service law, law, directives, case stat- der the common crankshaft recall ness ANN. CIV. & REM.CODE & ANN. 16. See TEX. PRAC. CIV. PRAC. REM.CODE 15. See TEX. (‘‘[I]n 41.008(c)(ll) (Vernon 1997) (provid- (Vernon any proceeding Supp.2007) § § 37.009 exception statutory limitations may chapter, the court award costs under this damages exemplary when the defendant necessary attorney’s fees and reasonable intentionally knowingly the execu- or secures just.”). equitable and as are by deception). tion a document ute, otherwise, including rule or In Declaratory Judgment but the trial not limited to claims for contribu- court declared that the indemnification tion, provision or implied express indemnity, paragraph second of Sec- negligence, liability strict or breach tion 5.3 “is MSA unenforceable aas any express matter law implied contract because does not meet the warranty.... legal requirements indemnification agreements under Texas or Pennsylvania Using the language, same broad the trial law....” in Declaratory Judgment stated that, design because a defect was the sole appeal timely This ensued. failures, cause the fail- consequences II.
ures and of the PRESENTED failures ISSUES “were not to or related caused [ISW] twenty-seven issues, Ly- In a total of [IFI], including any act and/or and/or standing coming challenges ISW’s and the forging process omission and/or legal sufficiency supporting of the evidence overheating of the steel in the forging judgment virtually respects.17 all process (regardless of whether such act Lycoming challenges also attorneys’ omission negligence),” constitutes and/or award; fees contends the damages actual thus, Lycoming could not recover legally are not cognizable; alleges legal theory. under In De- the punitive damage award exceeds consti- claratory Judgment which also was Finally, tutional bounds. as- predicated on finding design evidentiary jury serts various charge defect failures, was the sole cause of the errors. cross-points, two ISW chal- the trial court declared that: lenges the claim directed on its verdict
[The were not related to or failures] only breach of contract. We address those (1) by: caused [ISW]’s [IFI] and/or issues that are dispositive appeal. of this ’s performance Seller’s and/or TEX.R.APP. P. 47.1. *16 (2) Addenda; or perform-
MSA its ance of the forgings provided crankshaft III. STANDING ...; (3) under the MSA or its Addenda reaching Before ap- the merits of this (including manufacturing defects de- peal, we must standing. address issues of fects) in the crankshafts and crankshaft issue, In its first contends that forgings manufactured or provided to any standing ISW lacks to assert [Lycoming] under the or MSA its Ad- claims at issue a party because ISW is not denda; (4) or [ISW]’s [IFI] and/or ’s or its MSA its Addenda. In third any express Seller’s breach of and/or issue, Lycoming argues ISW lacks implied warranty or for any crankshafts standing sue own its be- or forgings manufactured or half a because offered formal provided [Lycoming] under MSA stipulation before trial that it had never or its Addenda.... and would never seek indemnification from again Ly- Lycom- The trial court concluded that ISW for crankshaft failures. coming any similarly could argues not recover in its sixteenth issue18 any legal from IFI or under theory. standing pursue ISW lacks its reached; independently Issues are in the discussed order issues were headings; clarity, under for numbered however, several we do issues not reach enumerated in the they we refer to the issues as if were Appendix. attached single in a numbered continuous list.
649 Brown, v. 80 County Cameron relief intent. declaratory claims for because (Tex.2002). addition, dispute 549, 555 stipulation offered eliminated S.W.3d granting basis ISW relief. must “may or consider evidence courts juris necessary so resolve do when Governing A. Law Indep. Bland dictional issues raised.” standing 547, party’s pursue Blue, A a v. 34 555 Sch. Dist. S.W.3d law question (Tex.2000). cause action is a we v. Mayhew review de novo. Town Sun confused Standing is to be (Tex.1998); 922, nyvale, 964 S.W.2d 928 standing “A has capacity. plaintiff with Energy Props., Inc. v. Halliburton Emmett aggrieved, regardless personally it is when (Tex. Inc., ervs., 365, 371 S acting legal authority; it is with of whether 2005, pet. App.-Houston [14th Dist.] de capacity legal has when it has party a nied). general standing test act, regardless of whether authority there be a real contro requires Texas a interest in the controver justiciable has versy that will be ac parties between the Nootsie, County sy.” v. Williamson Ltd. tually judicial declara determined (Tex. Dist, 659, S.W.2d 661 Appraisal 925 Tex. v. Tex. sought. tion Ass’n Bus. Air 1996). Capacity party’s per concerns “a (Tex. Bd., 446 Control S.W.2d court,” into right sonal to come while 1993). plaintiff standing a has Specifically, question “the of wheth standing concerns (1) sustained, plaintiff to sue if: has or right has an enforceable party er immediately danger sustaining, is Ctr., v. Nursing Inc. interest.” Austin a eom- injury some direct as a result of (Tex.2005) Lovato, 171 S.W.3d (2) act; wrongful plained-of there is di Alan Arthur (quoting Wright, 6A Charles relationship alleged inju rect between the Kane, Miller, Kay Mary R. Federal (3) asserted; ry and claim the plaintiff §2d Practice and Procedure: Civil personal controversy; has a stake (2d ed.1990)). Thus, (4) plaintiff at 441 challenged action caused the has (5) cognizable in the out- fact; legally no interest plaintiff injury in some standing to sue on party come of the case lacks plaintiff appropriate assert behalf, may authorized to public both its own interest and the inter but be own Nootsie, Paso Cmty. est the matter. El Part sue on behalf another. See Venture, 661; Neeley ners v. Joint see also W. S.W.2d B&G/Sunrise (Tex.App.-Austin Dist., Indep. Sch. Orange-Cove Consol. *17 (“[A] pet.). (Tex.2005) 746, par- 176 776 S.W.3d a does not ty’s standing to claim assert must Generally, pleader al willingness to look depend ability its affirmatively lege that demonstrate facts own.”). than its out interests other for jurisdiction to hear the case. the court’s (Tex. Forlenza, 373, 376 In re 140 S.W.3d Pleadings B. at Issue 2004) inju (orig. proceeding). alleged standing begins analysis our Because concrete, fairly ry particularized, must be must first pleadings, we plaintiffs with the allegedly un to the defendant’s traceable concerning Lycoming’s argument address conduct, likely to be redressed lawful In its are determinative. pleadings Todd, by Brown v. requested relief. issue, argues that Lycoming fourteenth (Tex.2001). 297, In review 53 S.W.3d 305 have refused trial court should Texas ruling on the issue of trial court’s jurisdiction over amend- ISW’s exercise pleadings construe the standing, we declaratory inter- judgment for pleader’s ed claim plaintiffs favor and consider the 650 alia, because,
preting the
and Addenda
primarily
MSA
its
those claims were
defenses
filed,
by the time the
petition
Pennsylvania
amended
was
to Lycoming’s
claims. On
requests
declaratory
for
Lycoming
ISW’s
relief ad-
appeal,
supports
argument
this
already
that
pending
dressed claims
were
by
awith statement made
when
Pennsylvania
in the
actions.19 In sub-
the case
last
before us:
stance, Lycoming
us to
asks
treat
forum,
Regarding choice of
Texas courts
Pennsylvania actions as “first-filed” suits
generally
plaintiffs
favor
choice
regard
requests
to ISW’s
declara-
ques-
deciding
when
intrastate venue
tory judgments.
However,
tions.
that a
the mere fact
chose a
plaintiff
Texas forum and the
Here,
originally filed suit
ISW
first
subsequently
defendant
mirror
filed a
contract, contribution,
breach of
contractu-
image
suit in a
sister state does
indemnity,
declaratory
al
judgment re-
support
itself
issuance of an anti-suit
garding
original petition
the MSA.20The
injunction;
may
both
una-
suits
continue
incorporated
the MSA and its Addenda
case,
reference,
Additionally,
present
bated.
in the
Lycoming correctly
but as
out,
many of
claims are
points
party
is not a
these
ISW’s
defensive
nature, seeking declaratory judgment
agreements. This
docu-
is shown
themselves,
defeat Lycoming’s
ments
docu-
would
affirma-
because these
incorporated by
ments are
tive
The nature of
claims
reference in the
claims.
petition,
weighs
policy favoring
the face of
a
pleading
against
general
shows
party
agree-
that ISW is not a
to these
a Texas venue.
Estevez,
ments.
See Cockrell v.
737 AVCO,
(citations omit
must the documents (Tex.1990) Millard, 800 S.W.2d show that under the IFI’s duties contract Heritage Heritage (quoting Ins. Co. v. Life delegated Ly- cannot be to ISW without Group Holding Corp., 751 S.W.2d coming’s consent, prior written and ISW denied); (Tex.App.-Dallas writ see not initially allege did that such consent Black, also Abor v. had been obtained or waived. (Tex.1985) (stating the trial court jurisdiction noted, should not over suit peti- As amended exercise before ISW tion, of non-liability by poten had for declaration Lycoming Pennsylvania filed its defendant); negligence tial argued Space lawsuits. Master therefore Int’l, Co., Inc., lacked Inc. v. standing prosecute Porta-Kamp Mfg. its de- claratory because, judgment (Tex.App.-Houston claims inter asks, Specifically, dispar- process," Texas claimed "Does *18 declaratory judg- aged bar general law ISW’s 'defensive' "the of busi- character indemnity subsequently ment claim on the issue in this case were ness....” These claims abandoned, question because ISW asserted that claim on behalf of and the of ISW’s stand- only Lycoming ing IFI had filed its suit to such a is not us. assert claim before after State, indemnity raising against seeking the IFI Westgate, Ltd. 448 See v. 843 S.W.2d Pennsylvania?” (Tex.1992) (sub. ("It issues in party’s request same op.) ais instructions, jury plead- issues not its ings, alleged disparagement a action ISW also business that determine whether cause of preserved.”). regarding “performance forging ISW's of the
651
writ)
to
opportunity
the
1990,
that
should be afforded
(noting
no
a
Dist.]
[1st
Bus.,
at
amend);
a suit for
may properly
trial court
dismiss
Tex. Ass’n of
declaratory
the court’s ex
judgment
plead-
when
litigant can amend
(noting
446
jurisdiction
“deprive
ercise of
would
standing);
allege
conferring
ings
facts
to
ability
plaintiff
appro
select the
to
Lovato,
(post-
171
at
see also
S.W.3d
852
case);
priate
hear
forum” to
Mission
plaintiff
a
assert-
limitations substitution of
Corp.,
Ins. Co. v. Puritan Fashions
706
in different
cause of action
a
the same
(5th Cir.1983) (“Antici
599,
F.2d
602 n. 3
back).22
capacity relates
patory
they
suits are
because
disfavored
four-
Lycoming’s
therefore overrule
We
aspect
forum-shopping.”)).
are
issue,
whether
and we determine
teenth
request
Assuming
plaintiff’s
that a
pursue
adjudicat-
standing
has
declaratory
for defensive
relief
raises
in its Sixth Amended
ed claims asserted
questions
standing,21
argument
this
does Original
and First Trial Amend-
Petition
parties
apply here. Unlike
ment.
relies,
par
cases on which
ties are not the same in the various law
Separately
Claims Considered
C.
ISW’s
v.
suits at issue here.
Tex.
Hawkins
Cf
Claims
from IFI’s
878,
724
Corp.,
Oil & Gas
S.W.2d
891
claims, we
considering
ISW’s
n.r.e.)
1987,
(Tex.App.-Waco
refd
writ
may
a
have
plaintiff
are mindful
trial
refuse to
(stating
court should
litigate
of the claims
standing
some
declaratory judgment
action if
entertain
litigate others.
standing
raised but lack
pending involving
action is
another
Casteel, 22
Ins.
v.
See
Co.
Crown Life
parties and in which the same issues
same
(Tex.2000)
378,
(holding that
S.W.3d
392
may
adjudicated). Moreover,
be
ISW’s
all of
standing
litigate
had
plaintiff
declaratory judgment
claims for
were not
exception
his
claims with the
asserted
pending in another court when the Texas
status); Mazon
requiring
claims
consumer
filed;
suit was
ISW filed this lawsuit be
Bank, Tex.,
Assocs., Inc.
195
v. Comerica
fore
Lycoming sued IFI
Citation
(Tex.App.-Dallas
no
S.W.3d
Pennsylvania,
and when
chal
(“The
pet.)
whether
determination
lenged
standing,
amended its
standing to assert a
plaintiff possesses
jurisdictional
pleadings to assert additional
depends on the facts
particular
claim
except,
specially
did not
facts.
cause
action asserted.”
pleaded and the
object,
amended
or move
strike the
TK-Taito, L.L.C.,
(quoting Everett
pleading,
effectively
relates back
(Tex.App.-Fort Worth
S.W.3d
pleadings
replaces
original
required
dis
pet.))).
no
We
P.
ISW’s first-filed suit. See TEX.R. CIV.
lack
claims
which we
only
miss
those
over
(a
place
pleading
takes the
substituted
Long, 207 S.W.3d
jurisdiction. Thomas v.
Brown, 80 S.W.3d
prior pleading);
(Tex.2006). Thus,
we consider
338-39
if
petition
does not
(stating
at 555
deter
separately
claims
adjudicated
affirmatively
incurable de
demonstrate
standing
possessed
mine whether ISW
jurisdiction,
issue is one of
fects
Casteel,
392;
SCI
sufficiency
each.
pleading
plaintiff
and the
See
ry
opinion
judgment
on
absence of
express
claims based
21. We
issue.
previously
standing
case
before
when the
Instead,
appeal.
expressly stated
us
we
argu-
note that if
We further
AVCO,
correct,
continue.
Texas suit could
that the
this court would
ment were
then
*19
obliged
145 S.W.3d at
been
to dismiss ISW's declarato-
have
Servs.,
Hijar,
Tex. Funeral
Inc.
by
v.
214 are
a
may
ques
affected
contract
have
148,
2007,
(Tex.App.-EI
S.W.3d
Paso
validity
tions of contract construction or
denied)
(“When
pet.
(op.
reh’g)
on
standing
court);
by
determined
Victoria
cf.
issue,
placed
question
is
is whether Bank & Trust Co. v. Brady, 811 S.W.2d
person
standing
whose
challenged
is
is
(Tex.1991) (“
931, 939-40
to
party
‘[A]
proper party
request
adjudication
a
to
an
in a
may,
legal pro
interested
contract
by
particular
a
issue and not whether the
faith,
ceedings or
in good
otherwise
inter
justiciable.”)
issue itself is
(emphasis add
fere with the execution of
contract
ed)
Cohen,
(citing
83,
Flast v.
392 U.S.
99- where there
ais bona fide
as to his
doubt
”
100,
88 S.Ct.
653
it
that
asserted
specifically pleaded
ISW
Lycoming
on
relies
the cases
behalf,
does
agents
Lycoming
in that the
those
on IFI’s
distinguishable
claims
ac-
or defended
inter-
proceedings prosecuted
justiciable
has a
dispute that IFI
not
on
solely
tions
in their own names but not
claims.
est
these
See,
Perry v.
e.g.,
the principal.
behalf of
addition,
Assignment Agreement
In
Breland,
182,
(TexApp.-
16 S.W.3d
187
own
in its
bring
ISW to
suit
authorizes
denied) (car
2000,
dealer’s
pet.
Eastland
on IFI’s
to assert certain claims
name
name; no
brought suit in his
agent
own
is
authority
a
scope
of that
behalf.
dealer);
indication he sued on behalf
challenge to
capacity,24and no
question of
Hahn,
County Peanut Co. v.
364
Wilson
ap-
court on
before the
capacity is
ISW’s
468,
(Tex.Civ.App.-San
470
Antonio
S.W.2d
peal.
writ)
1963,
purchaser
(holding
no
that seed
with ISW that
has
agree
therefore
We
standing
agent);
to sue seller’s
lacked
to liti-
standing
attorney-in-fact
as IFI’s
Dowell,
23, 27-28, 26
Tinsley v.
87 Tex.
that
tort claims.25
conclude
gate IFI’s
We
(1894)
946,
that
real
(holding
S.W.
tort
to
IFI’s
standing
has
assert
ISW
in his own
agent
brought
estate
who
suit
attorney-in-fact;
putative
IFI’s
claims as
purchas-
sue land
standing
name lacked
thus,
remaining bases
we do not reach the
transaction);
complete
er
failed to
see
who
IFI’s tort
standing
assert
for ISW’s
Inc.,
Props.,
S.W.3d
also Emmett
claims.
intervening
(holding
stockholders
bring
independent right
did not have an
on Behalf of
b. Claims Asserted
damage
corporation’s proper-
action for
contends
also
ty
not
noting
stockholders did
standing to assert
its own
lacks
corporation);
intervene on behalf of the
cf.
inducement
claims of fraud and fraudulent
Wilkinson,
v.
Wilkinson
956 S.W.2d
nor a
party
neither a
because ISW is
1997)
(Tex-App.-Houston
Dist.]
[1st
822-23
beneficiary
Ad
third-party
Second
bring
(holding that mother who
did
dendum,
party
be the
and therefore cannot
standing
suit as next friend had
to assert
argument,
support of
defrauded.26
right
accounting
to an
because
minor son’s
Mar
Nobles v.
part
relies
managing
con-
pleaded
she
her status
cus,
Supreme
Court
which the Texas
servator), op.
reh’g,
No. 01-
withdrawn
stated:
96-00219-CV,
(TexApp.-
Houston [1st Dist.] right primary person legal whose (prior opinion rendered moot when minor Here, redress for may has breached seek age eighteen). son reached the been Nootsie, standing pursue claims (stating party's determine 24. See 925 S.W.2d at standing legal question separately from its authority to act on its own behalf that the pursue representative. See capacity). claims as Res. v. Tex. Natural Conservation Elizondo Comm’n, (Tex.App. 931-32 challenge to 25. Because waived its determine, (holding plaintiff pet.) capacity, we need not be- Austin ISW's standing her individual ca reaching appeal, lacked to sue in fore the merits of Rests., scope authority actually Inc. Ba pacity): El T. Mexican whether cf. con, (Tex.App.-Hous encompasses be- 251-52 the claims it asserts on IFI’s denied) (capacity writ but [1st Dist.] half. ton upon standing to sharehold sue devolves thus, corporation; incapacitated share ers our conclu 26. This issue is not resolved representatives of the attorney- must sue as standing holders ISW has as IFI’s sion that claims, corporation). we IFI’s because in-fact to assert tort *21 its,” an injury.... legal recognize pur- Without breach of a we ISW’s standing to right to belonging plaintiff[,] the no judgment. sue its claims to See CHCA E. cause of action can to Houston, Henderson, accrue his bene- L.P. v. 99 S.W.3d fit.... A party who was not defrauded 630, (TexApp.-Houston [14th 633-34 Dist.] conveyance the has not suffered an 2003, standing pet.) (finding puta- for a right invasion of a legal therefore tive successor-in-interest assert a claim does not have standing bring suit for of “deciding breach contract because based that on fraud. pay goes who should whom a contract (Tex.1976). Here, 533 S.W.2d merits, standing to the heart of the while however, alleges pleadings ISW live its generally a question is of law to be deter- provided that “IFI and mined the pleadings”). court from the with direct and that constructive notice” overrule the of Lycoming’s We remainder IFI had transferred the MSA and the first and third issues.
forging facilities to ISW. al- ISW further leges that IFI executed the Second Adden- IV. LEGAL SUFFICIENCY dum on construing ISW’s behalf. After DAMAGE OF FRAUD pleadings liberally the considering EVIDENCE intent, pleader’s we conclude has A. Standard of Review alleged sufficient standing facts confer issue, eighth Lycoming challenges In its to assert its claims of fraud and fraudulent legal sufficiency sup- of the evidence inducement. porting damages jury the actual found Finally, Lycoming asserts that were caused fraud or fraud- standing ISW lacks because neither ISW ulent inducement. To determine whether IFI injury nor suffered actual as a result legally support evidence is sufficient to alleged. of fraudulent conduct But record, judgment, we review the entire damage causation and of are matters if crediting favorable evidence reasonable proof, standing and the determination of jurors disregarding contrary could and evi- require does not plaintiff “put a its jurors dence unless reasonable could not. simply jurisdiction. case” to establish See Wilson, City See Keller 168 S.W.3d Dist., Indep. Bland Sch. at 34 S.W.3d (Tex.2005). ju- We assume determining standing, “a court questions credibility rors decided may weigh the claims’ but must merits conflicting evidence favor the verdict only plaintiffs’ pleadings consider they reasonably if could do Id. at so. pertinent jurisdictional the evidence do judgment 820. We not substitute our Brown, inquiry.” Con 80 S.W.3d of the trier-of-fact if the evidence goes sideration of damages causation and jurisdictional falls within this beyond the zone reasonable dis- inquiry and into claims; if agreement. the merits but Id. at 822. If the evidence party claim, standing lacks trial assert would enable reasonable and fair-minded jurisdiction merits, court has no over conclusions, people to differ their then it dismissed, and the cause of action be must legally sufficient to support verdict. leaving the merits undecided. Bell v. Id.
Moores, (TexApp.- 753-54 denied). B. Insufficient Evidence of Harm
Houston writ [14th Dist.] that, jury Ly- was such advised find Because review of matters would in- require coming consideration of liable for fraud or evidence discussed fraudulent “goes ducement, heart the mer- it must find that “Interstate” infra Lycom- as a result of of 2002 injured reliance on the summer result indemnity. Specifically, Lycoming’s misrepresentations ing’s or non-dis- demand only jury premi- the insurance closures. But Buker testified that *22 Lycoming’s 2002, $795,000 fraudu- by $90,000 found were caused in in June ums were (1) in aviation lent conduct are the increase $1,175 in million Novem- November products liability premiums insurance sus- $1,051 in and million November ber (2) and past, in the reasonable tained trial, that this argued At ISW 2004. expenses in the necessary expert incurred in- in to a million increase amounted $2.7 the crankshaft failures. investigation of $90,000 above the base- premiums surance below, conclude For the reasons stated we Buker, According “Interstate” line. is category damages that neither of recov- million of this increase to passed $1 by on its own or on erable ISW behalf increasing crank- price behalf of IFI.27 produced to the forgings pursuant shaft 1. Lia- Increased Aviation Products leav- Agreement, Crankshaft Replacement bility Insurance Premiums premium insurance ing unreimbursed increase of million. $1.7 appeal, Lycoming argues
On legally is We conclude there insufficient support the record not an award of does damage award. support this consisting actual of the unreim- evidence in is no Initially, bursed increase “Interstate’s” aviation we note there evidence products liability premiums, insurance for in- demand contractual Lycoming’s moreover, legally such not damages are claim been a covered demnity would have cognizable. in ISW contends that policy.28 the relevant insurance under premiums in insurance foresee crease was Moreover, only that the in- Buker testified directly Lycoming’s able and traceable to “Inter- increased after premiums surance fraud. Lycoming’s informed its insurer state” indemnity, but in our review claim in support damage
The evidence of this record, not evi- we have discovered entirely award consists almost testi- indicating this demand was when dence Buker, president is mony of Ed who Ly- Although the record contains made. CEO Citation and the chairman indemnity from IFI coming’s demands for both IFI testified that the and ISW. Buker forgings that were in connection with insurance increased because premiums settled, heat-treated, in this claim was “Interstate” made an insurance claim regardless IFI ISW was named appeal, injured that was of whether or On adds it Flying Frog, we see no basis as a defendant in because was named as defendant in caused, injury Frog litigation. this an Flying plaintiffs But on which consider IFI, ISW, directly indirectly, by or fraud a fraudu- or named as a co-defen- suit lently-induced Ad- execution of the Second Lycoming. support its dant with In state- of IFI or Butler v. Flying dendum on behalf ISW. was a defendant ment Cf. (Tex.Civ.App.- Morgan, Frog, correspondence in its ISW cites n.r.e.) writ refd attorney Dist.] Houston attorney Lycoming's [1st asked substi- claiming plaintiff malicious (holding that ISW IFI in a settlement and release tute allege damage “conform- prosecution fails to agreement. correspondence is dated This damage legal because the standards” years the Second June 2003—two after “flowed, executed, directly indirectly, from the fact after was over a month Addendum filed”). filed, that suit more than two weeks this suit was against Lycoming filed IFI Penn- after suit record, Moreover, attorney repre- policy issue not in sylvania. coverage evidence of the carrier’s did there is no trial court that "Interstate” sented position. Frog Flying plaintiffs. And not settle with and was not at issue in this lawsuit. The insured an company, affiliated Rancho Cu- record also reflects demands camonga, which manufactured also aviation for indemnity as Pennsyl- Indeed, asserted products. ISW offered uncontro- Citation, vania against actions IFI and but testimony verted that Citation is poli- those demands were after suit made cyholder, policy and the affords coverage was filed and after “Interstate’s” insur- to Citation and all of its subsidiaries.30 ance premiums had increased. our re- Finally, it is uncontroverted that record, view of the we have discovered no premiums paid were Citation. Citation that Lycoming evidence indem- demanded MSA, Addenda, party is not a nity ISW, from and no acts *23 lawsuit, asserted no ISW claims that in an would result increase in “Inter- Thus, on Citation’s behalf. there is no premiums state’s” insurance sum- support evidence to the award damages of mer of 2002. ISW, own behalf or on behalf of IFI, addition, for Citation’s prod-
In increased aviation testimony Buker’s liability premiums. not ucts premium does link the insurance increase with Lycoming’s conduct; instead, fraudulent Lycoming argues that the absence of testimony his simply indicates he inferred tracing evidence the premium increase to premiums that the were increased because Lycoming’s one conduct illustrates of the Ly- “Interstate” informed its insurer that primary problems recognizing such a coming requested indemnity. But dam category damages: increased insurance ages “cannot mere speculation be based on premiums result many concurring from hypothesis.” v. McMillin State Farm factors, including market forces Lloyds, 183, 180 202 (TexApp- S.W.3d internal practices financial of the carrier. denied) 2005, pet. Austin (citing Formosa Higbie See Roth Constr. Co. v. Houston Corp. Plastics USA v. Presidio Engineers Concrete, 808, 1 Shell & S.W.3d 812-13 Inc., Contractors, & 49-50 S.W.2d (TexApp.-Houston pet. [1st Dist.] (Tex.1998)). ISW bore the burden to es denied) Indus., (citing Whirley Inc. v. Se Lycoming’s tablish that fraud or fraudu Pa.Super. gel, 462 A.2d lent damages, inducement caused that not (1983) curiam));31 (per Moiel Sand cf. Lycoming’s demand for indemnity was lin, 571 (Tex.Civ.App.- produced harmful. And no ISW evidence writ) Corpus (stating Christi no that premium that the increase was the result premiums the increased insurance in a ma Lycoming’s fraudulently- fraud of the prosecution licious case are “more analo induced Second Addendum.29 gous prepayment attorney’s to a fees expenses
There also no in defending is evidence that a incurred ... premi- fact, um cases are an defending increase was In IFI incident of foreseeable. any successfully civil .... negotiated necessarily are] for the suit [and deletion provision solely” the MSA that have attributable to the would defendant’s suit). required IFI wrongful argues to maintain insurance. And ISW that “Inter it is uncontroverted that the same policy premiums solely state’s rose because of engines practice charged premiums Most of the failures occurred to ISW using forgings Cucamonga. made crankshafts from earlier and Rancho There is no evi- produced pursuant original MSA. dence that amade demand for in- demnity companies. from either of these Cucamonga Buker testified Rancho claims, body Whirley opinion, made no and that the various Citation 31.In companies accounting appellees’ spelled Segal. followed an internal names are handwriting ex- costs indemnity excluding recover Lycoming’s claim— ... perts because] market factors.” But actual the influence [as ”). concerning ... litigation expenses the record contains no evidence [t]hese or the carrier’s these factors assessment investigative fees are that these contends by any companies posed risk of the various damages, as fraud expenses recoverable policy. covered binding precedent no although cites on the it relies argument, of this support in- assuming premium Even following cases. Lycoming’s linked to demand creases were no indemnity, the record contains evi- Tubing, Pipe & a. Holmes v. P.K fraud fraudulent dence that Inc. premium inducement was the cause us to v. P.K first refers Holmes Instead, increase. the uncontroverted evi- 530, 543 Pipe Tubing, Inc. 856 S.W.2d & policy and the dence establishes that 1993, no (Tex.App.-Houston [1st Dist.] responsibility were the of Cita- premiums writ). Holmes, leased defendant tion, allegation Ly- and there chemical property contaminated with the con- coming defrauded Citation. To *24 storing pipe, and plaintiff to the for waste are trary, interests not at issue Citation’s required plaintiff the to restore the lease in this we conclude there is case. Because at pre-lease condition. Id. the site to Ly- less than a scintilla of evidence that The did not disclose 532-34. defendant coming’s injured fraudulent conduct contamination, and the the existence by causing or IFI them increased aviation seven mil- plaintiff approximately stored liability premiums, products insurance we pounds directly over the cov- pipe lion not argument do reach Id. 534. Texas Water ered The waste. “opening damages the door to these would the to be re- required pipe Commission stopping enter field no sensible restored, the land and moved and the Co., Vogel Liberty v. Mut. Ins. point.” See Carden, hired an environmental plaintiff 704, 443, 451, 214 Wis.2d 571 N.W.2d 708 site, engineer, to the review com- inspect (Wis.App.1997). act as a liaison with the pliance plans, and Expert Witnesses’Fees First at 535. The Court Commission. Id. Lycoming also contends the the light held that “in defen- Appeals paid expert fees to witnesses whose work trial misrepresentations, dant’s performed preparation litigation in ex- awarding damages in did not err damages. See recoverable hiring in environmental penses incurred Stores, Chavana, Stanley v. 909 Inc. Carden, removing pipe from engineer 554, (Tex.App.-Corpus 568 Christi S.W.2d remediating the site.” Id. at cap, denied) 1995, (holding writ the trial court making equitable in an award of erred case, the Holmes present Unlike statutory au expert witness fees absent engineer court did not indicate that Mena, thorization); v. Richards 907 essential or that his work was testified 566, (Tex.App.-Corpus 571 Christi S.W.2d (stating action. See id. at 535 maintain the 1995, (holding by agr.) writ dism’d testify about expert that the “did in expenses incidental experts costs “are any report of his or about recom- contents not recoverable” for trial and preparation venture”). joint he made to the mendations good cause regardless as court costs Moreover, assisting in Carden’s work Acker, 750, shown); King v. litigation ex- 1987, was not remediate site no (Tex.App.-Houston [1st Dist.] 755 writ) in nature of re- was more pense, but (holding prevailing party “can-
658 Homes, pair. Jackson, v. See Stearman Centex 78 in expert contrast the ex- Cal.App.4th Cal.Rptr.2d perts 92 engaged identify here were not (2000) 771 (reversing judgment that proper party, omit- but to against defend actual ted by experts analyze fees incurred indemnity. soil foreseeable claims for And perform Jackson, design necessary calculations also unlike the expert the work repair to create plan). experts experts Unlike the of ISW’s formed the core of the Stearman, experts litigation. Producing Holmes here See Prairie Co. v. Co., were to repair Angelina not retained or remediate Hardwood Lumber 885 property the plain- owned leased S.W.2d 640-41 (Tex.App.-Beaumont tiff, denied) prove plaintiffs but to (op. “non-liabili- writ on reh’g) (clarifying ty.” expert testimony opinion that fees for party’s position essential to maintain a b. v. Jackson Julian one lawsuit are not recoverable as actual Julian, ISW next v. relies Jackson lawsuit). another (Tex.App.-Dallas c. ex United States rel. Wilkins v. writ). Jackson, In physi- defendant Corp. North American Construction allegedly misrepresented cian pa- addition, tient that another doctor had removed her In ISW directs us United fraud, ovary. patient alleg- sued for rel. States ex Wilkins North American justifiably that she relied Corp. F.Supp.2d mis- Construction (S.D.Tex.2001) (amended representation “employed attorney op.). mem. ... identify qui provisions doctor who removed the this suit under the tam right ovary Act,33 permission.” without her govern- Id. the False Claims the federal *25 at alleged injury 437. The trial court dismissed the ment the and reliance ele- fraud, cause of action for in constructive ments of common-law fraud. Id. at 645. part patient government because the no The stated dam- claimed it incurred inves- ages. Appeals tigative expenses The Fifth Court of re- in reliance on the con- versed, stating may that be “[i]t inferred tractors’ false certification that their Re- (“REA”) from allegation quest Equitable Adjustment this that would she not attorney an good have hired if doctor in the had was made faith. Id. at 646. The the alleged misrepresentation. government adequately made court held that the Thus, sufficiently pleadings lay alleged injury her the and reliance because the predicate that government required by her reliance caused her to was the Federal incur attorney’s Id. 437. Acquisition Regulation investigate fees.” at The such stated, court at patient further “Since the certified claims. 647. Id. expense seeks to recover the incurred in analogous duty in statutory The this hiring attorney investigate the other ISW, case is not borne but the doctor, distinguished as the cost from Transportation Safety Board, National Julian,
prosecuting her against action Dr. required investigate each is civil expense we that investigative hold such aircraft “accident.” See 49 U.S.C.A. may proximately resulting be found to be (2007). 1132(a) case, § present the Unlike alleged misrepresenta- from the doctor’s misrepresentation directly the Wilkins added). (emphasis tions.” Id. triggered government’s statutory the obli Again, gation there that The investigate is indication claim. Wil attorney testified at trial. id. In kins court cited the standard for common- See testified, (2003). seeking §§ 32. As Buker "I’m relief that 31 U.S.C.A. 3729-3730 my shows that it’s not fault so I don’t have any liability, reason to have Counsel.”
659
with
costs
connection
fraud
set
imbursement
consequential
law
investigation
ferreting out and
Perry
&
v.
forth Arthur Andersen
Co.
frauds.”)
added),
on
(emphasis
other
Corp.,34
relying on Jack
Equipment
affd
219,
148, 76
100
grounds, 350 U.S.
S.Ct.
Julian,
investigative
v.
concluded
son
(1956)
author
(upholding award
L.Ed. 149
damages.
may
consequential
be
expenses
Act).
Surplus Property
ized under
however,
noted,
As previously
Id.
Helvering
v.
in turn relied
Rex Trailer
expert
fees
distinguished
Jackson court
401,
391,
58 S.Ct.
See 303 U.S.
Mitchell.
prosecuting
incurred in
case.
(1938). There,
630, 634,
As for the goods the concealing can from sustain value, on v. Rex Trail single relied United States their hable to seizure is Cir.1955) (“It (7th Co., liability imposed F.2d 884 the er to assert is arbi- well that in addition to actual the of double the value is settled statute losses[,] to indemni- trary and without reference government the is entitled re Bayless, ("Consequential v. see also Stuart 34. 945 S.W.2d hand, curiam) damages, naturally, (Tex.1998) (stating the that con- (per other result necessarily, defendant's but from the not "are sequential damages in a contract action law, wrongful the common con- acts. Under parties contemplat- not unless recoverable damages sequential need not be the usual they made the contract ed the time foreseeable, wrong, must result of the but be damages probable result of would be such wrongful directly traceable and must be breach”). it.”) (citations omitted); act from and result may fication. Double the value not be Buker testified he “directed the complete more than indemnity. of filing this lawsuit in [his] various roles for including Citation” his roles presi- as Id. dent CEO of Citation of chairman Thus, the line of cases on which Ver- He purpose ISW. described the saggi relies Shrimp concerns the federal litigation as follows: government’s right to recover enhanced So, Q: filed, not, this lawsuit was was it damages, and derives from cases that sir, by in order to attempt [ISW] originally allowed the investiga- costs of protect possible [IFI] from claims tions as or exemplary damages sanctions by Lycoming? That pur- was the under federal statutes. This line cases lawsuit, pose it, of this wasn’t that, does not sir? proposition stand statute, absence an authorizing My filing A: intention on this lawsuit private partnership limited suing state get enough was to data and infor may common-law fraud recover actual mation to root cause find expenses expert the fees and 'problem prove that it was not testimony witnesses work whose were any part fault, Citation’s because used at trial prove and were essential to I get couldn’t data from sum, its claims.35 In none of cases any other way.36 which ISW relies precedent constitute So, Q: your testimony you is that filed court, binding on this and all of the cases the lawsuit in order conduct an are distinguishable. investigation?
e. Regarding Expert Evidence We began investigation. A: / Fees wanted that Lycoming the data had help the root cause find Finally, we find no evidence in the rec- problem has still ord to distinguish expert fees incurred proven to me. any this case from expert other fees litigation. incidental contrary, To the
the evidence demonstrates that ISW’s ex-
Q:
seeking any
You’re not
relief for-to
perts
engaged
provide
proof
were
you
allow
to conduct an investiga-
supporting
“non-liability”
declaration
tion,
you?
ISW requested
pleadings.
in its live
This
testimony
most evident
I’m seeking
Ed
A:
that shows that
relief
Buker.
it’s my
so I
don’t have
fault
Yandell,
additionally
Guaranty
cites
Corp.
Service
troleum
172 Miss.
*27
Corp.
Employers'
v. American
(1935) (same).
Insurance Co.
So.
(5th Cir.1990)
curiam)
(per
(ap
reason to Coun- testimony its attor- the of one of sented sel. (a) Rose, attor- regarding neys, Martin E. company that been Q: And the has (c) (b) fees, expert fees expenses, and neys’ you with—that believe threatened litigation.” Spe- conjunction with the “in liability was was threatened with expert fees he that the cifically, testified [IFI], itwas not? litigation conjunction in incurred at it A: I aim look from don’t $2,715,623.17. figure is the This totaled They point of view. threatened jury rep- by found identical amount by in one my they place made — necessary ex- the “reasonable resent of some group people. one There’s investigation expenses incurred in pert structures, they legal threaten but by “Interstate.” the crankshaft failures” of entity; and that’s Citation Buker testified: also I take. threat sir, true, not, is that all of Q: And it’s that have been retained experts Southwest, Ltd., by Interstate So, mind, issue, Q: your the real in is testify in this who here Court will was Cita- that there a threat investigation an were hired do tion entities as a whole. Correct? this specifically purposes for the A: Correct. litigation? Q: not You did draw distinctions Absolutely. A: legal between entities only hired Tellingly, expert before liabilities, actually did might have by filed was retained one this suit was you, sir? attorneys represented ISW at tri- who IA: did not. Attorney Bruce McKissock retained al. Q: had lawsuit filed you And this expert reconstruction engine aircraft order to shield from [ISW] 2002—the same Irvin37 October James indemnity claim Correct? [IFI]. Frog was filed—but Flying month suit purpose A: That’s one There this. prepare that he Irvin testified did is ability also the out the find April until Lycoming engines to test plan root cause to out whether there find prepare and did receive really any liability my part. testing May until Lycoming engines added). (emphasis sought material He he testified Moreover, no presented evidence was attorney asking ISW’s from experts actually investigated that ISW’s information; his request opinions based cause failures before taken part depositions on review although this suit was filed. And one case; test transmitted his results he re- experts testified that was attorneys ISW’s ex- other only to ISW’s attorney in Each litigation. tained October in the perts used after suit presented remaining experts was the ex- was retained no evidence filed.38 independently were retained perts issue *28 May He sent mg engines in 2003. then expert is also "James 37. This referred as companies iden- samples and data to Ervin.” various Mateo, no as and there is tified SIMI per- company’s work was that either April evidence was filed 2003. Irvin 38. This suit on litigation. or this Lycoming formed suit outside before testified that he visited a source 26, 2003, or Anthony was hired fifteen began receiv- Dr. J. DeArdo engines March but on record, On this we that conclude V. EXEMPLARY DAMAGES expert witness fees at issue not actual are issue, In its tenth Lycoming contends damages by caused conduct that, fraudulent because the award for actual dam- reversed, alleged must expenses. ages but are be litigation instead award of exem- plary damages must be reversed as well. 755; King, City See 725 S.W.2d at also see Keller, Tex. See Builders v. 928 S.W.2d Biggers, Houston v. 380 S.W.2d (Tex.1996) curiam) (reversing (per (Tex.Civ.App.-Houston writ refd punitive damage concluding after award n.r.e.) (holding experts that the “cost of compensable damages there were no from and other in expenses preparation for trial fraud). agree. We merely are expenses” litiga- incidental tion). damages Exemplary being remaining There actual plaintiff available unless the establishes damages, we portions reverse those of the injury that loss or as sustained actual judgment incorporating relying or on the underlying the result of an tort. TEX. jury’s findings that committed PRAC. REM.CODE ANN. CIV. & fraud or fraudulent inducement that 41.004(a) (Vernon § Supp.2007); Ex Fed. ISW or IFI damages. sustained actual Dutschmann, press Corp. v. 846 S.W.2d We sustain Lycoming’s eighth issue39 and curiam) (Tex.1993) (“Recov 282, 284 (per judgment ISW, render that on its own punitive ery requires finding damages a IFI, behalf and on nothing behalf take independent of an with accompanying tort its on claims for fraud and fraudulent in- damages.”). plaintiff actual A re cannot jury’s ducement. Because the findings of punitive if damages compensatory cover fraud and fraudulent inducement fail to damage claim precluded is as a matter provide portions basis for those of the States, Isom, Entergy law. Inc. v. Gulf judgment findings, relied these we (Tex.App.-Beaumont denied). also sustain fifteenth sev- 2004, pet. availability “The mere part.40 enteenth issues in theory recovery of a tort-based eighteen January proximately months before he testified in caused ISW or IFI to suffer 2005; thus, appears he (a) have been hired damages, because increased insurance June 2003. Dr. DeArdo worked with metals premiums expert witness in- fees cut Mateo from material received from during litigation curred are not recovera- Thermotemp performed Irvin. for ISW work Texas, (b) as ble in April nearly year suit after event, proximate there is no evidence of Engineering filed. Packer and its affiliated alleged cause because the reli- act of experts, Meyer Ship- Dr. John and Dr. Roch entering the Second into Adden- ance— dum—is not ley, were retained June 2004. Dr. John alleged in- related to September Naumann was retained in 2004. premiums expert crease insurance performed Chuck van Karsen of the some witness costs? Meyer, calculations for DeArdo Drs. both during of whom were hired course Lycoming argues its fifteenth issue litigation. Meyer As Dr. John for Packer En- findings jury and of the the trial court testified, gineering actually pretty "It was provide declaratory "fail for the basis frustrating, initially, because there seemed to relief, judgment equitable and other as well case, despite maturity we were be— brought fees, attorneys' court[J” awarded the trial relatively in to work on the case issue, Lycoming In its seventeenth asserts recently.” purported the trial court erred when it stated this issue as follows: provision indemnity rescind the of the MSA required indemnify legally Did ISW to IFI to "as fail introduce suffi any alleged jury’s finding cient evidence that fraud a result of the of fraud....”
663 claims in this sufficient; “to assert the from authorized actual sustained lawsuit, as well as on right in its own punitive must dam proven a tort be before ruling Although the last Fire behalf of City [IFI].” are available.” Ins. ages Twin (Tex. to only capacity assert Davis, 663, addresses ISWs 665 Co. v. 904 S.W.2d case, ruling 1995). the is unnec- the in this dam claims Consequently, exemplary previously essary the trial court because here must reversed. See ages awarded be Lycoming’s summary judgment on granted Builders, at 482. Tex. 928 S.W.2d We Lycoming and challenge capacity to ISW’s sustain tenth issue therefore The challenged judgment. has not portion judgment and reverse that rulings problematic for first three are awarding exemplary damages. ISW to rulings purport different reason: these RELIEF VI. DECLARATORY challenges to ISW’s stand- eliminate future claims litigate related capacity and argues fifteenth issue of itself and on to the MSA on behalf findings jury’s the record and are findings IFI. Neither the nor behalf of inadequate for declara- provide basis such relief. supports record broad relief, tory judgment equitable and other including attorneys’ subsidiary In fees. Judgment Act Declaratory The argument, Lycoming contends certain TEX. CIV. PRAC. is remedial nature. contrary declarations are to law.41 37.002(b) (Vernon § ANN. & REM.CODE declaratory judgments under Davis,
We review 1997); v. Republic Ins. Co. judgments (Tex.1993). the same as standards other 158, It “cannot be S.W.2d & and decrees. TEX. CIV. PRAC. REM. ground of recov invoked as an affirmative (Vernon 1997). § CODE ANN. 37.010 existing or ery rights to revise or alter” Thus, sufficiency legal we of the Ins., review legal Republic S.W.2d relations. declaratory supporting judg- discussed, evidence as previously at 164. And previously-described ments under litiga prosecute and defend right Keller, City standard set forth in and IFI depends to the or to tion related MSA novo. Smith review conclusions law de claims asserted and particular Smith, (Tex.App.- v. Agreement. Assignment language pet.). Houston [14th Dist.] pleadings must examine trial court and review the standing, to determine Regarding Standing, A. Declaration attor assignment power scope Assignment, Authority and instance, capacity. In this ney assess claims Judgment standing to assert Declaratory the trial ISW has (1) has Agree- litigated, Assignment actually court ruled that ISW; capacity to challenge to ISW’s validly assigned ment the MSA to waived its But (2) in this lawsuit. Agreement appointed assert the claims the Assignment necessarily ap do not attorney-in-fact power as these circumstances ISW IFI’s any may any right every claim assert ply claim or “in ISW to assert enforce future, declaratory judg asset, in- forum in connection with transferred “the inappropriate when thereby assigned ment relief cluding the [MSA]” sought relief is facts which the right prosecute upon and defend to ISW the (3) IFI; change.” Tex. subject to mutation and to the litigation related MSA Brown, prosecute and State AFL-CIO standing has defend (4) writ refd MSA; (Tex.Civ.App.-Austin is 922 claims related argument in discus- declaratory our challenged have addressed also standing. sion judgments pleadings, defensive and we *30 664
n.r.e.) Varner, (citing 477, Cal. Inc. v. 480 (Tex.App. Prods. Puretex 740 S.W.2d Juice, Inc., denied) (“An Lemon 1987, 160 Tex. 334 Houston [1st Dist.] writ (Tex.1960)). 780, S.W.2d 783 assignee right, title, only obtains assignor interest of his at the time of his case, In this was not author more.”); assignment, Pape and no Equip. litigate ized to IFI’s claims for fraudulent I.C.S., Inc., 397, Co. v. 737 S.W.2d 399 conduct that occurred after the Assign 1987, (TexApp.-Houston [14th Dist.] writ executed, Agreement ment but there (“To n.r.e.) refd on an assigned recover is no in law or in basis the record on which action, cause of one must plead prove to that Lycoming conclude has waived its that a of action capable being cause right challenge capacity to ISW’s to assert assigned assigned existed and was proceedings. other claims other And party alleging theory assignment.”); although Lycoming right waived Elevators, Esco Inc. v. Brown Rental challenge trial court’s failure to dismiss Co., Inc., Equip. 764 670 S.W.2d based on lack capacity, Lycoming (Tex.App.-Fort Worth writ refd preserved its challenge declaratory n.r.e.) (“In order upon to recover an as judgments that are not supported find action, signed allege must cause one ings or record. action, prove that there was a cause of Here, ruling that ISW is authorized that it was a cause of action could be pursue IFI’s tort claims is not sup assigned, that it assigned had been ported by the record Assign because the him.”) added). (emphasis Agreement ment did assign not those We see no basis on which to conclude appoint claims or its agent ISW as with that the common-law fraud or fraudulent respect yet to torts had not occurred. any point inducement claims relate back to See Nat’l Bank Dallas First v. Kina Assignment before execution of the brew, (Tex.Civ.App.- Agreement as to so render these claims n.r.e.) (“The Tyler 1979, writ refd nature assignable before the unforeseeable fraud- granted authority extent must ulent conduct occurred.42 Because Declar- instrument be ascertained from grant atory Judgment supported by is not power attorney and such instru jury’s findings evidence, conclusive strictly ment is to be construed to limit the we sustain fifteenth issue in fact.”). authority attorney IFI part and reverse the trial court’s first dec- appointed attorney-in-fact ISW as its laration.43 regard to the assets transferred but the claims at among tort issue Concerning Indemnity B. Declarations assets, and those there is no evidence that Legal Under Theories Untried IFI’s subsequent assigned tort claims were 3,44 Declaratory State Mortgage Judgment ISW. See Fid. Co. v. the trial contract, Supreme interpret "pro- 42. The Texas has Court also court to but instead assignments may skew hibited the trial only asked that the trial court make certain process confuse mislead the [and] specific findings. go do We therefore Indus., jury....” PPG Inc. relief, JMB/Houston beyond requested but restrict our L.P., (Tex. Ctrs. Partners rulings reversing the trial court's conclu- 2004). supported sions that are not evidence or authority. reversing declaratory judgment, 43. When appellate generally judg- court renders challenge Declaratory 44.We discern ment have the trial should rendered. Judgment 2. Here, however, ISW ask did not the trial *31 second of IFI or ISW. Under the gations ruled as court follows: MSA, IFI of 5.3 of the paragraph section [.Lycom- a in Because defect Defendant for indemnify Lycoming to required is design the was the ing’s ] of crankshafts claim, any of lawsuit damages “arising out ... cause sole crankshaft failures of recall, investi- government or ... retrofit recover, [Lycoming] cannot in whole or against [Lycoming] proceeding or gation any relating part, [Damages] in ... ... performance or ... relating to defect to, of, any way arising in or out pur- any by Products manufactured Seller ... failures from [ISW] extent except to [the MSA] suant their successors or [IFI] and/or and/or by directly are caused Damages that such Addenda, under or assigns its [MSA] (emphasis negligence [Lycoming ].” of or other of any Section 5.3 the [MSA] added). a asking jury In whether theory impose liability legal that would of the design defect the sole cause was suc- [ISW] ] on their [IFI and/or and/or failures, to appears have focused assigns, regardless cessors or whether of of section 5.3 of paragraph the first right [Lycoming ] asserts the to recover But that address provision does not MSA. DAMAGES, any, com- such under the if indemnify obligations IFI or ISW to law, law, statute, or oth- mon case rule rather, Lycoming’s it Lycoming; governs erwise, including but not limited indemnify duty IFI “where narrower contribution, claims or ex- implied liability solely is on a in de- based defect negligence, press indemnity, strict lia- sign....” Although previously ISW had bility any express or breach or im- declaratory judgment regarding requested warranty_ contract plied Lycoming’s obligations, indemnification added). (emphasis The trial fourth court’s pleadings its to withdraw that amended similarly and fifth contain declarations time request. pleadings In live at the its sum, language. overbroad the trial trial, sought clarify its ISW instead in judgments Ly- ruled these those obligations indemnification own coming cannot from recover Specifically, IFI. its Sixth Amended (a) by IFI or relying the MSA Petition, all finding ISW asked for a Addenda, (b) any theory, other legal Lycoming’s directly were caused losses law, law, statute, case whether “common thus, Ly- Lycoming’s negligence, and ” rule or these con- otherwise.... We hold indemnity un- coming was entitled to unsupported findings clusions are that corresponds the MSA—an issue der or the record. 5.3. paragraph the second of section Assuming that the indem MSA’s a was jury’s finding design The defect enforceable, nity provisions (as the find cause the failures described the sole 5.3) ings support do not the trial court’s conclu is not paragraph in the first section pertain finding sions because the facts found equivalent a (as para- obligations indemnification the second negligent described 5.3),45 pertains obli- of section but instead graph rather than the indemnification Gravel, Gomez, and determines if it exercised Humble manufacturer 45. See Sand & Inc. (Tex.2004): ordinary design production, 146 S.W.3d 181 n. 17 care in omitted); Armstrong Rub- supplier product (quotation see also care of a The taken sale, preparation, Urquidez, in its manufacture or 375-76 Co. v. ber is, liability; 1978) in strict (Tex. not however, consideration (holding that the of strict doctrine negli- question ultimate "applies though liability seller has even liability gence at the action. Strict looks preparation and sale of care in the exercised product and determines if it is defec- itself product-”). Negligence tive. looks the acts a claim agreement that was withdrawn. And con- al- indemnification though Lycoming jury proposed question paragraph tained in second of Sec- that would have determined whether the MSA, requires tion 5.3 of the by Lycoming’s failures were caused direct indemnify Buyer Seller to under certain negligence pleadings, as set forth circumstances[,] is as a unenforceable *32 objections the trial court sustained ISW’s it matter of law because does meet proposed the charge.46 to the legal requirements for indemnifica- agreements tion under Penn- Texas or plaintiff request When a fails to sylvania law.... finding regard an issue and an affirmative ing the omitted issue is essential to recov responds indemnity provision ISW that the ery, the trial court render judgment must satisfy unenforceable because it does not for the defendant. Dallas County Med. rule, the express-negligence which re- Ubinas-Brache, Soc’y 40 quires party seeking a for its indemnity denied). (Tex.App.-Dallas pet. In negligence express own with- to intent jury finding the absence of a or conclusive in the four corners the document. the directly evidence failures were agree express-negli We that the by Lycoming’s negligence, caused Here, gence provision. rule to this applies Ly- entitled to a declaration that required “Seller” is to hold coming could not its recover losses under harmless costs and damages: from all ruling. the MSA as stated in this involving any whether or not to liability Moreover, affirm we cannot the trial party, arising any third from or out of judgment court’s is barred claim, recall, gov ... lawsuit retrofit or recovery any from other theory. under investigation proceeding ernment sweeping unsupported This declaration is against [Lycoming] relating perform to record, by the which does not show that (including ance or without limita defects issues every legal theory tried included defects) tion, manufacturing ... for law, law, statute, under “common case rule pursu Products Seller manufactured Lycoming might or otherwise” that assert Agreement, ant to except this aas basis for indemnification. Because directly extent Damages that such are unadjudicated rulings these address claims negligence [Lycoming caused ]. action, causes of we Lycom- sustain added). (emphasis Although Lycoming ar ing’s pertains fifteenth issue De- gues express-negligence that the doctrine claratory Judgments and we apply does not does provision because portions reverse these of the judgment. liability negli not shift for Lycoming’s Enforceability Requir- C. of Provision gence, interpretation ignores word ing Indemnify Buyer Seller to “directly.” provision as written shifts liability consequences for claims and issue, Lycom- eighteenth if indir Lycoming’s negligence causation is ing contends the trial court erred in reach Moreover, ect.47 express-negligence the conclusion of law stated Declara tory Judgment rule indemnification strict applies 6: for design Lycoming proposed jury question: "Do mination" of whether defect was you find that all of losses related sole failures. cause of the provided forgings under the directly negligence, MSA were caused found, 47. Such causation could indirect be any, Lycoming?” objected if and ar- liability. example, cases of vicarious gued that it was entitled to the "factual deter- liability third-party shift Lighting & Pow issue does liability claims. Houston Atchison, claims, Fe Topeka, er Co. v. & Santa for which the economic losses (Tex.1994) Co., Ry. indemnification48 seeks (“[P]arties indemnity agreement to an defect to which product result expressly state their intent cover must rather applies, rule express-negligence terms.”). liability specific claims in strict the rule claim which than contract authority In the absence of or evidence apply. does not presume Pennsylva we contrary, indemni- conclude that the We therefore Texas, nia, express-negli applies like para- provision fication found the second liability gence rule to strict claims. See is unen- graph of 5.3 MSA section Co., Bottling Co. v. Coca-Cola Harmar Pennsylvania Texas and forceable under (Tex.2006) (“Texas 671, courts S.W.Bd *33 Accordingly, law. we overrule that presume the determinative law of can and affirm the trial eighteenth issue state is the same as Texas law another Declaratory Judg- ruling court’s stated contrary or proof argument absent ment 6.49 (ad ....”); 202 see also TEX.R. EVID. the law of
dressing determination of other states). Pennsylvania provides law also OF BREACH VII. CLAIMS ISW’S are provisions given that “indemnification AND OF VIOLATION CONTRACT only clearly explicitly when and stat effect SECTION 2.306 OF parties.” two ed in the contract between A. Contentions Mkts., Inc., Super Bernotas v. Fresh Food (2004); 483 581 Pa. 863 A.2d cross-issues, In ISW contends two Philadelphia, v. City see also Greer 568 Lycoming in granting trial erred 248^9, (2002) A.2d 379 Pa. a analyzing verdict. partial directed indemnification (stating provisions that verdict, apply stan directed we the same if only language “clearly and enforced summary applicable dard review in- unequivocally [the demonstrates notwithstanding judgments judgments and provide such indem demnitor] intended Keller, City 168 S.W.3d the verdict. See nification”). Thus, we review the evidence 823. appeal, Lycoming On relies Green non-mov- light favorable to the most International, support v. its Inc. Solis ant, if reason crediting favorable evidence express-negligence that the rule argument con jurors disregarding and able could Lycoming’s claim for apply does not jurors trary unless reasonable evidence economic reimbursement for its own loss- at 827. could not. Id. (Tex.1997) (hold- es. Here, ver- challenges the directed “no-damages-for-delay” that a contract vio- claim that denying dict its damages for that shifts economic clause Business lated section 2.306 of contract and does not shift liabil- breach the MSA and breached Commerce Code negligence ity third-party for tort forgings by demanding more crankshaft indemnity agreement). is not an actually Section however, required. than Here, provision at the contract noted, fraudulently induced ther ISW were previously Lycoming has IFI nor As assert- indemnity Pennsyl- extending its to enter a contract ed its claims indemnification vania, years. Haase obligations action. another five See rather than in this Glazner, (Tex.2001) fraudulently (stating party cannot be We further determination note contract). an unenforceable nei- induced to enter independent to conclude that an reason maintenance, generally requirements 2.306 governs con- additional additional over- tracts, time, as provides set-up expenses.” follows: and increased A quantity term which measures the partial moved for di output seller or require- rected these verdict on claims on the buyer ments of means such actual (1) grounds that: there was no evidence output may or requirements as occur in Lycoming beyond require ordered its faith, good except quantity that no un- (2) ments, no evidence there was ISW was reasonably disproportionate any stat- damaged any result violation of ed estimate or in absence of a stated (3) 2.306, section section 2.306 does not estimate normal or otherwise provide the basis for affirmative claim comparable prior output require- only defensively. and can be used As dis ments may be tendered or demanded. below, cussed is no there evidence that TEX. BUS. & COM.CODE ANN. beyond requirements ISW ordered 2.306(a) (Vernon 1994). Thus, § the Busi- damaged by ISW was the alleged ness imposes and Commerce Code a re- increase; thus, partial affirm the we di quirement faith good buyer, on the reaching Lycom- rected verdict without buyer’s ability limits the to demand the ing’s contention that section may 2.306 product in an *34 unreasonably amount only be used as defense. disproportionate the “stated estimate.” by Agree- B. Claim Barred Parties’ The MSA Addenda and its constitute a ment requirements contract with the following pertinent provisions: 2.306, many Section like other ” provisions ¶ of 2 of Article the Uniform “Planning Buy- 1.3 Volumes means Code, gap-filler Commercial “is a may [i.e., Lycoming’s]
er’s estimated annual parties’ agreement.” be varied the Le requirements. Co., nape Corp. Res. v. Tenn. Pipeline Gas (Tex.1996) (op. on reh’g). provides quantity ¶2.2 statute Seller, Capacity Reservation. at only term when contract does not un expense Buyer, no or cost to will com- ambiguously specify quantity of the mit plant, personnel equipment output requirements of the seller or the Buyer’s support Planning sufficient to 2.306(a)). buyer. (citing Id. section part Volumes for each number of Here, parties Buker testified will Buyer promptly Products. advise agreed on the number crankshafts to be Buyer’s Seller of initial Planning Vol- produced during period: relevant time in changes Planning umes and Vol- Buyer may change Planning umes. its Q: in an agreement And fact there was during any Volume time Con- Ly- reached Citation and between by giving tract Year not less than six coming on the number of crank- prior weeks notice to written Seller. produced shafts that would be through May the end MSA after ISW contends that this suit was correct? filed, Lycoming began ordering forg- more A: Correct. ings than it required stockpiled the for a supplier. excess while it looked new that,
ISW further alleges “[a]s a result of Q: running unnecessary products approxi- And was for agreement $359,200 10,000 press mately on its ISW forge, pro- incurred crankshafts to be press-tooling or hammer-tool- Lycoming, Citation for build duced press correct? on the put parts Yes, did A: and we that. sir.
Q: you agreed that’s what to do? And when you recall Q: approximately Do cranks[51] Yes, A: sir. be press-forged fact, that, Q: production? did you, gan And did not do you, sir? sometime A: I can—it would have been no.[50] not, A: didWe 2001, early in late parties agreement Because the reached an forg-
regarding the number of crankshaft ings produced, to be we conclude that sec- that conversion Q: In connection with apply. tion 2.306 does from the ham- crankshafts forge process press- Damages C. No Evidence mer — in- forge process, has Interstate Regardless of whether claim is im- curred —or that conversion has styled claim for as a violation of section operational costs of In- pacted or as a for breach 2.306 common-law claim terstate? contract, Ly- there is evidence that requirements damage. coming’s caused conversion has—on press A: The in- argues appeal to, fine it press was converted requirements filed creased after ISW repair raised the costs and die suit April then relies on cycle change press. on that testimony damages. Buker’s to establish Q: Explain you what mean that. testified, But as Buker these costs were You have a lot customers on one A: beginning incurred 2001 or late *35 press; you and have more when prior in- alleged to the lawsuit and the you coming press, business on Moreover, requirements. crease changes die increase amount of incurred as of costs were the result ISW’s necessary to If requirements. meet settlement with over the failure you you had one in there and die to earlier in a forgings, resulting heat-treat 1,000 you it for could pieces, ran prior series crankshaft failures. Buker 750; you begin run it only to settlement, part testified that as of that it’s, change more And basical- dies. change and agreed processing, ly, repetitive changes more die do it is change which caused the increase that. in costs: consequence running Q: As a these previous of our production A: one you parts press, did notice runs we failed to correct- heat-treat equipment effect on the Ly- ly component sent it to being run these cranks? was used to they coming caught it. And we sir.[52] settlement, Yes, part agreed, A: ISW, Citation, evidence less than two months after this 50.There is no June produced IFI crankshafts under a reservation was filed. lawsuit pro- rights performed or otherwise under Moreover, Pennsylvania in one test. experi- is the model that 51. This proceedings, agreed Citation and IFI this suit. enced the failures issue in Preliminary Agreed In- entry of an Order for junction requiring produce them the crank- Objection ruling omitted. forgings. This order was entered shaft Q: Tell MSA, me about that. violated section 2.306 of the Busi- Code, A: ness and running every Commerce or damaged time we ran IFI — products, increasing we had in- requirements creased maintenance costs for bad faith after analy- ISW filed suit. Our heaters and a dramatically in- sis is unaffected assertion that ISW’s creased maintenance cost for the Lycoming admitted it ordering ahead reducer, roll the first step mak- needs, of its actual or stockpiling. Specifi- ing the only billets smaller. It’s the cally, ISW relies on the deposition testimo- job we run on the roll reducer now. ny of Ronald L. Clayton, one Lycom- press And the clutches started ing’s Procurement Managers, that “[w]e out, wearing instead of nine to ten are buying crankshaft forgings ahead on months, in 90 days. added). our current (emphasis schedule.” Q: you Buker, Have attempted, Mr. testimony pertains This they to facts as quantify the expense additional in- existed on January 2005 and concerns curred Interstate as a conse- Lycoming’s purchases from a different quence running these crank- supplier. We overrule ISW’s first cross- on the press line? shafts issue partial and affirm the directed ver- sir, A: Yes we have. dict reaching without second cross- Q: you Can tell me what that calcula- issue. tion is? A: We looked at the additional cost of VIII. ATTORNEYS’FEES maintenance, the additional cost of The trial court attorneys’ awarded fees overtime, and the in up- reduction costs ISW under Declaratory time of press; and that cost is Judgments Act, Act. Under this the trial $300,000 approximately getme—let “may award costs and reasonable the exact you number for here— necessary attorney’s equi fees as are 350,000 $359,200. — just.” table and TEX. CIV. & PRAC. 359,200? Q: (Vernon § REM.CODE ANN. 37.009 Yes, A: sir. 1997). Here, jury made a finding re Q: what, represents And that sir? garding the fees were “reasonable and A: A combination of additional mainte- necessary,” concluded, and the trial court *36 nance, additional weekend overtime based jury’s finding, on the that the award work, spare and parts to run these attorneys’ fees and was “equitable costs products. just.” However, and we are not “reason Q: Now, in connection with the conver- ably certain that jury signifi was not line, press sion to the you did incur cantly by influenced the erroneous amount any increased setup expenses? damages it considered.” Barker v. Eck A: That would have been included in man, (Tex.2006). 313-14 $359,000. light In of our disposition of the on issues added.) (emphasis appeal, We further note that attorneys’ we reverse the award of ISW’s David Lisowski also testified that fees and solely costs and remand the case by agreeing to settle these claims re- for consideration of the costs and reason tooling, going “we were to make out on the able, necessary, equitable, just and attor deal.” fees, neys’ any, if party. to award to either 43.3; us, Qualls, TEX.R.APP. P. Young
On the record
before
we conclude
(Tex.2007)
damages
there is no evidence of
support
(per
314-15
cu
riam);
claim
Lycoming
ISW’s
that
Neeley,
breached the
IX. CONCLUSION IFI no actu- ISW and
Because sustained suf legally fail to introduce Did ISW judgment al we reverse damages, had evidence that ficient and judgment the tort claims render IFI or in to disclose” facts to ISW “duty nothing. trial ISW take Because the relation arms-length commercial this attorneys’ of costs fees court’s award ship? jury’s findings expressly based assuming Lycoming owed a Even jury reasonably and we are not certain the disclose, fail to intro duty to did ISW the er- significantly was not influenced Ly- legally sufficient evidence duce considered, damages roneous amount any such coming fraudulently breached we the awards of costs and attor- reverse concealing material by knowingly duty neys’ a deter- solely fees and remand intent defraud ISW IFI? facts with award, any, if appropriate mination legally fail to suf Did ISW introduce of this party light to be made to either and detri justifiable evidence of ficient opinion. affirm the trial court’s decla- We reliance, given that especially mental found indemnity provision ration that he did not believe IFI’s chairman said paragraph the second of section 5.3 IFI’s over Lycoming’s statements that under Texas MSA unenforceable crank heating during forging caused the law, and Pennsylvania but we reverse the failures? shaft rulings Declaratory trial court’s stated really claims Are ISW’s “fraud” dis 4,3, overly Judgments guised legally baseless—inchoate —and unsupported We broad and the record. prosecution malicious claims? partial affirm the directed verdict dismiss- legally fail introduce suf Did ISW to claims that breached ISW’s show, by “clear ficient evidence its contract and violated 2.306 of section evidence, Ly- anyone at convincing” sum, Business and Commerce Code. or malice that coming acted fraud ruling our leaves the trial court’s second extraordinary remedy justify the would declaratory intact but judgments sixth damages? punitive judgment the final in all other reverses legally fail introduce suf Did ISW to respects.53 evidence that a “vice-
ficient APPENDIX in, engaged knowingly author principal” approved ized or fraudulent malicious Ly- standing Does ISW lack to sue conduct? coming for fraud punitive punitive damage claim Is alleged of IFI
on behalf because the because, as a matter of law barred rights IFI to ISW assignment from most, dispute the fundamental predated by years five the events *37 reasonable, genuine involves a dis claims, case gave these thus these rise to regarding the cause agreement not have transferred claims could been failures? crankshaft assignment? IFI from ISW erroneously suf the trial court ex legally fail to Did introduce Did report FAA ... knowing that clude from evidence the ficient evidence false, analyzes the failures at ly any representa that crankshaft made material overheat- that IFI’s or IFI? issue and concludes tions of fact to ISW by Lycoming, disposition, presented enu- light we do not reach issues of our remaining Appendix. in the attached merated ISW's second cross-issue or the ing during forging, defect, design not a Did the trial punitive court’s dam instructions, was the root cause of the ages failures? which omitted basic legal requirements, violate Texas law Did the trial court erroneously ex and due process? clude other evidence that would have Does the Lycoming’s shown million good damage faith $86.4 state of award, which larger is 51 times than mind and integrity demonstrated the compensatory relevant portion of the and thoroughness investigation of its judgment and 59% of AYCO’snet worth and conclusions about the cause of the assets, and 10% of its total violate Texas failures, including evidence law because it statutory pu exceeds the one of competitors— damages cap, nitive TEX. CIV. PRAC. Teledyne experienced similar failures — § 41.008(b)(1)(A), & REM.CODE overheating determined that was a failed requirements to meet the cause of the failures of its crankshafts? exceeding the cap as matter of law? Did the trial erroneously ex Does the million punitive dam $86.4 evidence, clude including Lycoming’s age award violate the federal constitu stipulation, that Lycoming was not seek tional limits imposed by the Due Process ing and would never seek indemnity Amendment, Clause of the Fourteenth from ISW? Farm, 408[, see State 538 U.S. 123 S.Ct. jury Did the trial court’s instructions 1513,155 (2003)? L.Ed.2d 585] erroneously fail to distinguish between SUPPLEMENTAL OPINION IFI, ISW and conflating them into one ON REHEARING single entity, non-existent “Interstate”? Did the erroneously trial court re GUZMAN, EVA M. Justice. when, fuse jury to instruct if In its rehearing, motion for ever, duty give disclose that can rise argues court erroneously this concluded to a fraud claim arises in a commercial that it did not challenge portion of the context? declaratory judgment in which the trial Did the erroneously trial court re court stated that design defect was the fuse to instruct jury that it could not sole cause of the Ly- crankshaft failures. punish Lycoming alleged conduct di coming argues then portion parties rected at third not before the (a) judgment should be reversed because it court or for conduct that occurred out is a finding restatement of a factual uncon- Texas, erroneously side and then al nected to form of relief that survives low argue ISW’s counsel to jury (b) decision, our November is taint- punish Lycoming should in order to vin (c) error, by evidentiary ed conflicts alleged rights dicate the personal in with ruling “specifically our preserves jury nation, victims around the in direct Lycoming’s right pursue indemnity violation of the due process principles recovery other IFI against and ISW under established Supreme U.S. Court a variety of possible theories of law.”1 in State Farm Mut. Auto. Ins. Co. v. deny Lycoming’s We motion for rehear- Campbell, 538 U.S. 123 S.Ct. supplemental and issue this opinion to (2003)? clarify L.Ed.2d 585 ruling.3 the reasons for this Court, however, Lycoming argues, contemporaneously deny appellee's "The 2. We mo- *38 mistakenly assumed that did 'not rehearing. tion for 2, challenge[] appeal' ‘paragraph page on 4 ” Judgment.’ of the Appellant’s Final Motion Rehearing, at 2. re- such support necessary findings BY I. ISSUES PRESENTED proposed signed ISW’s The court MOTION LYCOMING ON lief. it submitted exactly as ISW judgment FOR REHEARING jury’s merely adopted and thus find- Declaratory Alleged Challenge to A. Question “[a] response in Judgment 24 Corpora- AVCO in Defendant defect crankshafts was design of the tion’s 2” consists of “Declaratory Judgment failures of the crankshaft sole cause statement, in “A defect trial court’s bulletins, airworthi- resulting service design of the crankshafts [Lycoming]’s directives, recall and crankshaft ness failures the crankshaft sole cause of Lycoming en- of aircraft grounding bulletins, resulting airwor- and the service however, is finding, This gines.” insuf- directives, recall thiness declaratory support relief ficient Lycoming en- of aircraft with grounding Question 8 because court entered ” it chal- Lycoming argues .... gines indemnity the MSA’s not address does 2 in the is- Declaratory Judgment lenged conceded. as ISW’s counsel provision, Fifteen, in identified as Issue sue that we omitted). added, record citations (emphasis findings Lycoming argued that which (i.e., jury’s finding that the agree We “fail to jury and the trial court of the support finding) does sole-cause declaratory judg- a basis for the provide (i.e., the decla- “declaratory relief’ entered relief, as as equitable well ment and other in rights and duties parties’ ration of fees, trial by the attorneys’ awarded Final of the Judgments 3-5 Declaratory Lycoming refers Specifically, court[.]”5 disagree we But Judgment). brief, in opening 29-30 of its pages us to 2 that Declaratory Judgment in statement argues it as follows: of the sole cause is the design defect declaratory re- included “the also fails failures is declaratory relief claim Lycoming’s brief describes. lief’ that court did not make because the trial findings jury's of fraud pertained to the plenary jurisdic- it appellate as 3. The court retains Declaratory inducement thirty days after and fraudulent judgment for tion over its 3, 4, 1, Corp. v. AVCO Judgments and 5. timely-filed overruling motions for rehear- all 661-62, 632, Ltd., Sw., 19.1(b). ing. Interstate TEX.R.APP.P. 4845443, (Tex.App.-Houston at *23 WL ("Is- Rehearing, h.) ("Be- at 1 Appellant’s pet. Motion for Nov. Dist.] [14th Presented”). rephrased on sue This issue findings of fraud and fraudu- jury’s cause Clearly "Appellant page 4 the motion as basis for provide a fail to lent inducement Declaratory Judgment 2 Sought Reversal of judgment that relied portions of the those Appeal.” findings, we also sustain these part.") and seventeenth issues fifteenth argues Motion for in its further id., added); WL (emphasis Rehearing: ("Because Declaratory Judgment 1 is not *26 findings jury’s conclu- supported by the only quot- this Court not This issue—which evidence, Lycoming’s fifteenth we sustain opinion also sive in 40 but ed verbatim sustained, first part reverse the trial court’s distinguish issue between does added); declaration.”) 2007 WL (emphasis por- Judgment 2 and the other Declaratory ("Because rulings ad- these at *27 judgment, in- declaratory but tions of ac- unadjudicated claims and causes en- dress challenges judgment in its stead tion, Lycoming’s fifteenth issue we sustain tirety. Declaratory Judgments omitted, pertains to (internal emphasis add- citations judg- portions of the these fact, and we reverse ed). that we we three times stated added). ment.”) (emphasis only only part, and Issue Fifteen sustained *39 Lycoming argued jury’s 665, that the finding 671 (Tex.Civ.App.-Tyler 1967, no writ). does not support declaratory relief en To contrary, quoted lan tered finding because the “does not ad brief, guage Lycoming only argued dress the MSA’s indemnity provision....” finding the sole-cause is insufficient to face, On its argument this applies to De support “the declaratory relief the court claratory 3, 4, 5, Judgments which entered” because the finding does not also purport to address the indemnity MSA’s then, indemnity. face, address On its this provision. But Declaratory Judgment 2 argument appears challenge the decla does not address indemnity provision. rations concerning right indemnity Moreover, Declaratory 8, 4, Judgments (i.e., Declaratory 5), Judgments and 5 “declaratory offer relief’ because in appear and does not to challenge Declara portions these judgment, of the the trial tory Judgment court the.rights parties, declares of the contrast, Lycoming’s argument on re- erroneously. albeit See TEX. CIV. PRAC. hearing premise is based on the that the 37.003(a) (Vernon § & REM.CODE ANN. trial repetition court’s jury’s “sole 1997) (“A court of juris record within its cause” finding “declaratory is relief’ to power status, diction has rights, to declare which argument in Lycoming’s Appel- and other legal relations whether or not applies. so, late Brief But if this is then claimed.”) (em further relief is or could be argument in Lycoming’s Appellate added). phasis Declaratory But in Judg Brief is circular. if Specifically, Declarato- 2, ment the trial merely repeats ry Judgment 2 part “declaratory of the jury’s finding; factual it offers no “declara briefed, relief’ challenge included tory relief1’ because it no makes declara Lycoming’s argument then respect rights, status, tion of the or other legal portion this judgment can be re- parties. relations between the See Indian jury’s stated as follows: “The finding that Linden, Beach Prop. Owners’ Ass’n v. design was the sole cause defect 682, 5.W.3d 699 (Tex.App.-Houston [1st sup- is insufficient to crankshaft failures 2007, (“The pet.) power Dist.] no to deter port the trial court’s declaration that de- fact, however, mine an issue of ‘does not sign was the sole cause the crank- defect concomitantly carry with it power jury’s because the finding shaft failures render such a finding of fact as a declara ” does not address the indemnity MSA’s tory judgment.’ (quoting Heritage Hill v. provision.” form, simplest Reduced to its Res., Inc., 89, 140 (Tex.App.-El Lycoming’s argument is that “A” does not denied))). Paso pet. “A,” equal because “A” “A equal does must emphasize We also + B.”6 challenge Declaratory did not Judgment If argument presents a challenge to on the basis it is a bare statement of Declaratory Judgment then further ex- fact, and previously did not contend that a planatory argument required. If we declaratory judgment “is not the proper had considered the trial court’s statement remedy if a factual dispute only is the “declaratory to be relief’ Querencia encompassed issue be resolved.” See within Props., Queren argument presented Lycom- R.L. S. de de C.V. v. New Partners, L.L.C., brief, Capital ing’s original contrary then Ly- cia (Tex.App.-Dallas coming’s pet.); appeal, assertion on and in the Burrows, Emmco Ins. Co. v. 419 S.W.2d absence of an explanatory argument, (the Although sion), finding) "A” Declaratory Judgment sole-cause does neither does (the indemnity provi- “B” merely repeats address MSA’s "A.” *40 posi- Lycoming’s conflicts with that a advanced unassailable logically seem would support trial. fact is sufficient tion at finding of jury’s of the same court’s recitation
for a trial Thus, Lycoming’s if we had read fact.7 Right to of Specific Preservation C. No we argument, presenting this brief as Indemnity Pursue argument considered would have argues as follows: further TEX. briefing. See inadequate for waived 38.1(h); Jordan v. R.APP. P. Jefferson directly conflicts opinion This Court’s (TexApp.- County, 153 S.W.3d another, 2 in Declaratory Judgment denied). Instead, we pet. Amarillo opinion way. explicit even more logi- Lycoming’s present brief to read right Lycoming’s specifically preserves of the that the declaration argument cal recovery indemnity and other pursue to Declaratory Judgments parties’ rights variety of IFI and ISW under against the MSA’s which do address ISW has of law. Yet possible theories supported by indemnity provision, is not that assert already begun publicly finding that does not jury’s sole-cause pre- 2 somehow Declaratory Judgment indemnity provision. the MSA’s address of recovery, disregard such cludes “A the form argument, which follows This to the con- express language this Court’s B,” logical not from the A + does suffer short, re- this Court should trary.9 inconsistency argument previously 2 in order Declaratory Judgment verse discussed. judgment November to ensure that its not undermined fully vindicated-and is Report B. FAA already made clear ISW, has as ISW at “argued Lycoming also contends hope it and IFI do.10 the trial court’s exclusion length pre- “specifically does not opinion But our report highly prejudicial the FAA was a indem- right pursue Lycoming’s serve[ ] directly impacted all of ISW’s error that recovery IFI and against nity and other hear- response But in to ISW’s claims.”8 con- To the Lycoming asserts. ISW” as trial, stated say objection that one reason trary, emphasized we offered for report that the FAA was not declaratory judgments court’s the trial asserted, but was the truth of the matters Lycoming’s right is that were overbroad state offered show instead under unidentified other claims pursue with the fraud of mind connection at issue.11 recovery was not theories of Lycom- only Not is evidence claims. express an Thus, not and do not we have to the de- ing’s state of mind irrelevant availability other opinion on cause of the termination of the actual indemnity. theories failures, now unidentified argument but the page 7 phrased on present an 10. This exhortation preserve and Lycoming did not "Declaratory rehearing as motion for legal challenge and factual appellate Directly with This Judgment 2 Conflicts supporting the sufficiency the evidence Ways Ruling Multiple November 1 Court’s finding. jury’s sole-cause Must Be Reversed.” and Therefore ("Is- Rehearing, at 1 Appellant’s Motion for judgment is not declaratory 11. A claim Presented”). sue action a valid cause of required be tied to See, & e.g., CIV. PRAC. damages. TEX. that is is based on material 37.004(b) (a 9. This contention § contract ANN. REM.CODE breach). part the record. may before a be construed II. CONCLUSION on grounds that were previously ar- gued, to eliminate an unchallenged finding previously argue did not *41 resulting from a jury six-week trial. It jury’s the recitation of the finding in De has 2, not addressed claratory Judgment its failure to brief these unconnected to claim, surviving arguments an improper previously, applica has not shown tion of the Declaratory Judgment Act. harmful error.12 See TEX.R.APP. P. 44.1 Generally, we do not rulings base our (establishing the standard for reversible arguments raised for the first time on error). deny We therefore Moore, rehearing. Sherrod v. 819 S.W.2d rehearing. motion for 201, writ) 1991, (Tex.App.-Amarillo 205 no (“It is well established that raised [issues]
for the first time a motion for rehearing
are too late and will not be considered.” Chan,
(citing 205, Morrison v. 699 S.W.2d (Tex.1985)));
206-07 see also Brown v. Ass’n, Inc.,
Hearthwood II Owners 153, S.W.3d 161 (Tex.App.-Houston [14th Kyle ALLEN, Appellant/Cross-Appellee, 2006, denied) pet. Dist.] (holding that fail ure to “advance analysis substantive waives the appeal”); issue on Cont’l FINANCE, AMERICAN GENERAL De-Kaizered, Dredging, Inc., Inc. v. INC., Appellee/Cross-Appellant. 380, S.W.3d 400 (TexApp.-Texarkana 2003, denied) pet. (op. reh’g) (refusing No. 04-06-00273-CV. arguments to consider raised in a motion Appeals Texas, Court of rehearing original but not raised on San Antonio. submission); Wheeler v. Methodist Hosp., 628, 95 S.W.3d 646 (TexApp.-Houston [1st 28, Nov. pet.) (stating Dist.] that an issue Rehearing Overruled Dec. adequately briefed in a motion for rehear ing is if original waived brief “is not
sufficient to acquaint the Court with present
issue and does not argument
that would allow the court to decide the
issue”); Jacob, Mortgage ICM Corp. v. (Tex.App.-El Paso denied) (“The
writ (op. on reh’g) appropri
ate time to seek ground, relief on this
however, original was on submission in this
Court, rehearing.”). not on sum, present chose to
twenty-seven issues to ap- this court on
peal. strategy This was successful. Nev-
ertheless, Lycoming now asks the court to issue, and, a twenty-eighth
consider based Davis, Republic 12. See ground recovery Ins. Co. v. tive to revise or alter” (Tex. 1993) (the Declaratory Judg relations). rights existing legal ment Act "cannot be invoked as an affirma