Bernstein v. Portland Savings & Loan Ass'n

sanctions, The trial court based BERNSTEIN, Appellant, im wrongful Sidney part, appellant’s T. the trial

proper seeking of a continuance of open and its violation of the court’s date AND LOAN PORTLAND SAVINGS freezing discovery. ruling On Janu court ASSOCIATION, Appellee. 15th, date, scheduled trial the court ary for granted appellant’s Motion heard No. 13-91-336-CV. However, purposes for Continuance. Texas, discovery, Appeals that the trial the court stated Court January Corpus or Christi. 15th. court commenced discovery After hear all frozen. dered March 1993. appellant notices for the tak ing, re-issued April Rehearing Overruled took depositions New York and depositions. re-noticed one of three argues taking that the

Appellant deposition, originally scheduled for Oc trial tober, the trial was not violation of discovery. court’s freeze on 29th, court heard the January On and Motion for Protection Motion Strike Quash Deposition[s]. Be- and Notice 30th, January the court im- fore trial on posed sanctions. penalty sanctions

We conclude death abuse, any, were unwar- discovery not indicate that ranted. The record does imposition the trial court considered the sanc- lesser sanctions or whether lesser compliance. The promoted tion would have fail meet imposed extreme sanctions prong. second We sus- Trans American’s point appellant’s tain of error one. disposition Due to our first error, unnecessary we find it to discuss remaining points. Tex. appellant’s See 90(a). R.App.P. The case is reversed and remanded. Crews, Jr., Douglas Kennedy,

Richard Brin, Christi, Nye, Corpus Thomas Brin & appellant. for Thomas, Thomas, J. Norman Harris & Corpus Christi, appellee. for KENNEDY, Before DORSEY HINOJOSA, Jr., FEDERICO JJ.

OPINION

KENNEDY, Justice. trial,

After a the trial entered court judgment Savings for Portland and Loan (Portland) against Sidney Association Sidney Bernstein and the Estate fraud, conversion, stein for and civil con- spiracy. twenty-three error, By points of Sidney Sidney Bernstein and the Estate appeal. Bernstein1 and render We reverse Sidney collectively 1. We will Sidney refer T. and the Estate T. Bernstein part sheet of taken Bernstein indicates appellant Legel that if would Harris stated Braswell safekeeping agreement and would enter a rescission, they agree not to would resort simply hold either hold onto the bonds or going to Texas legal to action such as the was them as collateral for a loan. There General, Exchange Attorney the Securities conflicting testimony Legel toas whether Commission, Department, the or Justice Bernstein, attorney, Sidney Braswell’s have, would Any others. of these actions safe- approved drafted or either the written minimum, impaired Legel severely Bras- agreement it- keeping or the transaction Legel ability to trade securities. The well’s Portland, Legel self. to Unbeknownst by them- representatives off Braswell went reregistered then the bonds into Braswell they to the matter. When selves discuss pledged its name and them as collateral returned, Legel stated that Bras- Bernstein Co., Eastman, Blyth, a loan from Dillon & Legel agreed to rescission. Braswell well Legel Inc. to Braswell. $100,000 good- gave check as a Portland safekeeping Within a trans- week the agreement. deposit on the Harris faith simultaneously the action and almost with Legel testified that understood meeting, Savings FHLBB the Texas and pinch, in a had the cash but Braswell (the Department Department) Loan issued The wherewithal to make Portland whole. stop speculative an order that Portland all agree specific parties did not to terms. trading. Department securities The contin- 9, parties met on The next November eventually investigate ued Portland and to 1978, Though expect- in Texas. Harris had voluntary con- placed supervisory it under agreement, ed to finalize terms the president trol. dismissed. agreement was reached. how- part investigation, Depart- As of its the ever, expressly represented Legel inquired ment into the status of GNMA make Portland whole. Braswell would 21,1978, September response in bonds. On proposed rescission Bernstein drafted Department to or Portland’s second agreement during this meeting. or after Legel inquiry, Dan Braswell accountant Department rejected The this and Harris Department Deputy Jones wrote Commis- proposal. Wright sioner Jim that the GNMA bonds 1978, On attend- reregistered Legel had been Braswell’s November Bernstein pledged meeting A offi- Legel name and were as collateral. ed a between Braswell certificates, Maes, “appellant.” will as We use name "Bernstein" These also known Ginnie supported by single family underlying discussing are Sidney when actions taken Bern- They real estate are traded loans. bond stein. market. jury bankruptcy attorneys. spiracy. compensatory Portland found ciáis The Legel $1,236,000 totaling contends that determined to damages exemplary Braswell bankruptcy meeting; $2,472,000. file at this we will damages jury also below, sup- the evidence discuss does found that Portland should have known port argument. On November participation Bernstein’s in the conversion proposed Portland rescission another 1978. The December further agreement. On November that, 9, 1978, found before November Port- (with mailgram stein sent a to Harris investigated original land transaction Wright) copy which Braswell between Portland and Braswell and (the pay $1,336,000 agreed Portland condition the financial Braswell. proposed) “disposing amount granted ig- The court Portland’s motion to providing agreement this matter mutual findings knowledge nore the on Portland’s terms contained on other and conditions investigation, clearing away potential agreement relating recit- parties, statute of limitations bars entry als, schedule, payments, guarantee” judgment against Bernstein. The court en- (emphasis added). and commas against judgment tered the Estate of Sid- letter, mailgram followed with a dated ney T. Bernstein. Bernstein and his estate 7, 1978, Wright yet proposing December appealed. another rescission addition- DISCUSSION Wright al collateral. Neither Portland nor begin discussion our of the case responded proposal to this until after examining validity filed bankruptcy. testified Harris against the estate. We will then discuss gave concern”, “great letter him instruction, evidentiary court’s ba- him, “spooked” and prompted him to seek findings, sis for certain and the court’s authority to sue. disregard jury findings. of certain 13, 1978, On December Portland’s board Validity Judgment of gave of directors authority Harris the against fifteen, file suit of error By point appel Mean- Braswell. while, Legel apparent- judgment principals Braswell’s lant contends that the is void on engaged in ly purports transactions which drained its face it hold the corporate assets. damages. Portland did not file suit estate liable for An estate is not Chapter before Braswell filed for 11 a legal entity proper party a and is not a in (reorganization) January bankruptcy on v. lawsuit. Henson Estate Bruce L. of bankruptcy 1979. The was to a Crow, (Tex.1987). converted “A Chapter (liquidation) bankruptcy. seeking suit establish the lia decedent’s subject and bility property on a claim During the course of in its discovery suit payment ordinarily estate to its should against Legel Braswell, found evi- personal representa the against instituted it potential liability by dence felt showed circumstances, or, appropriate tive under brother, Zayle Bernstein and his Bern- against or beneficiaries.” the heirs Price against stein.3 Portland filed the this suit Anderson, v. Estate in brothers 1982. Sidney Bernstein died of If, however, (Tex.1975). personal rep the Though appeal 1985. the record on con- appears par the estate resentative of suggestions death, tains of no it reveals case, involving ticipates judgment in the formal substitution of and no parties may validly represen “the estate” bind the petition amended In reflecting his death. Price, 692; tative. 522 S.W.2d at Dueitt 1990, Zayle granted Bernstein was sum- Dueitt, (Tex.App.— judgment mary on all against claims him. 1991, writ); Houston see also Dist.] proceeded [1st against Sidney The suit Henson, 734 S.W.2d at 649. stein’s estate. jury personal The found that purported representa Bernstein intention- The fraud, conversion, ally committed participated and con- in the case. tive the estate always ney Zayle 3. References to "Bernstein” refer to Sid- and never to Bernstein. through attorney its of record and indirectly that Portland The record reflects required ready for procedure the when a announced trial.” followed provide rules defendant dies.4 Court judgment against We find the the follows: valid, representative personal even die, upon defendant shall the Where the against though incorrectly it entered rec- suggestion being entered of death Though the estate. Portland never amend- court, petition open upon or ord in estate, find pleadings ed its to sue plaintiff, the clerk shall issue a scire motions and the show or facias for the administrator executor personal representative had that the notice appear him and de- requiring or heir participated sufficiently in the ease upon of such fend suit and the return judgment binding against to make service, proceed against the suit shall representative. We overrule of error or such executor or heir. administrator fifteen. Tex.R.Civ.P.152. suggestion of death Fraud open supplemented court and was made three, points through In of error one suggestion of death dated record appellant argues that trial erred court sugges- 1986. The record of February overruling objections to the court’s Zayle Bernstein is tion death states fraud, failing to submit instruction personal representative of the estate instruction, proposed and in appellant’s In Sidney September Bernstein.5 submitting an erroneous instruction. The attorneys, Zayle by his filed a on three different court instructed “individually and as motion for sanctions infor- fraudulent acts: failure to disclose Representative Personal of the Estate action, intent to induce mation with the Bernstein, by attorneys.” Sidney T. misrepresentation, and failure to material signed by attorney and The motion was one actually a statement correct party others. The same listed two Appellant objected to the instruc- false.6 attorney supplemental memo- submitted through for fraud non- tion on the actions motion in Octo- randum in of that disclosure, contending is no that there transcript ber Though the contains fiduciary confiden- to disclose absent by anyone acting no other as the motions parties, or re- relationship tial between estate, representative personal prior of fact that liance on a statement attorneys later filed motions and two listed Appellant also turns out to be incorrect. Zayle amended answers on behalf of it objected to instruction because made the the estate. The states stein and status on Bernstein’s (actually, no distinction based “Sidney per- T. the Appellant objected attorney. as an representative sonal of the Estate of Sid- misrepresentation material instruction on ney having properly T. Bernstein been an ele- by it included recklessness as facias) appeared by served writ of scire (5) party; upon by and the be acted the other filed a motion to set aside scire Defendants 4. facias, it; (6) complaining party had not fol- and in reliance on the other acted apply procedures that to all lowed the notice representations party injury. other suffered open court. The trial who, made that one hav- You are further instructed the court denied motion. representation a when made made which true, or to be remains silent was true believed 1990, sugges- In the filed their own defendants and that has that it is untrue after he learned Sidney docu- tion of death of Bernstein. This upon relying is is it person to it made whom any representative ment makes no reference to him, posi- same transaction with is estate. was that his statement false tion as if knew 6. The instruction provided as follows: is fraudulent made. also when Non-disclosure You in order to find intentionally are instructed revealed for the facts are when FRAUD, (1) repre- you a material must find purpose inducing another. action false; made; (2) was and it was and sentation (3) that mere silence You are further instructed it, speaker he knew it was when the made misrepresenta- to fraud or a does not amount recklessly false made it edge knowl- without tion. assertion; positive of its truth and as (4) he it it should made with the intention that 701 care, Inc., 432, (Tex.1986); ment of the standard of even when 708 S.W.2d evaluating promises. Appellant unfulfilled Corp. Datapoint Corp., Chase v. Com. proposed prom- submitted instruction on (Tex.App. S.W.2d 365-366 — Dallas

ises or about the future writ); Tamers, Tempo no Inc. v. that eliminated the recklessness standard. Four, Ltd., Crow-Houston 715 S.W.2d objections The court overruled the and de- 658, (Tex.App. writ ref’d — Dallas appellant’s proposed clined to submit in- n.r.e.). dutyA to disclose can arise when struction. parties fiduciary have a or confidential Tamers, relationship. Tempo jury found the court’s at 669. We find no indication in the record proper unchallenged jury broad-form any duty that Bernstein owed to disclose questions. We cannot determine information to Portland. We find no evi face of jury’s answers which of the relationship dence of such a Bern between types three fraud the found. We personally stein and Portland. The testi possibilities will discuss each of the in turn. mony only showed that Bernstein’s contact reviewing error, When charge we consider with Portland occurred in the context of pleadings, evidence, charge and the limited, negotiations. these Such arms- entirety its charge reverse if the length contact is error not the stuff of which amounted to such a appel denial of fiduciary or rights relationships lant’s confidential are reasonably calculated made. probably did cause rendition of an im proper judgment. Island Recreational The above-cited cases that outline fraud Corp. Dev. Republic Texas Sav. through lawyers silence do not create in Ass’n, (Tex.1986); duty to disclose confidential information Chevy-Olds-Pontiac, Winkle Inc. v. Con parties; about their client to third this ab- don, (Tex.App . —Cor duty emphasized sence of when the law- pus Christi writ by agr.). dism’d yer fiduciary has no or confidential rela- tionship party. with that third The state Failure to disclose bar rules indicate that the runs to the one, In of error appellant argues client and to remain silent. We look to that the trial court in overruling erred guides, binding these rules as not as law. objections to the instructions on fraud be Attorneys knowingly are barred from re- cause the instructions explana lacked an vealing confidential information about their tion necessity of a confidential rela Texas, Supreme clients Court of tionship and because as a matter of law Governing Rules the State Bar of Texas there special confidential or rela (SBR), X, 9, 1.05(b)(1992). art. Rule This § tionship between Bernstein and Portland. 1.05(c)(7), tempered by rule is Rule which Portland notes that the instruction on fail attorneys states that may confiden- reveal ure to disclose given information in this prevent tial information in order to case “approved” resembles one we in Coro committing client from a fraudulent act. nado O’Shea, Transmission Co. v. 703 SBR, X, 9, 1.05(c)(7). art. Rule Even if § S.W.2d 731 (Tex.App. Corpus Christi — attorneys the have confidential information n.r.e.). writ ref’d Actually, we mere “clearly establishing likely that a client is ly quoted the given by instruction the trial act,” to they commit a ... fraudulent are parties court. The in Coronado did not only required to reveal infor- confidential challenge propriety the of the instruction likely mation if that act is in death to result disclose, as it related duty to to so we did person. bodily or substantial harm to a not rule on that issue. See Id. at 735. The SBR, X, 1.05(e) (1992); art. Rule see § quoted case, instruction in the Coronado SBR, X, 1.05, art. Rule comment also § therefore, analysis. does not control our (1992). Supreme Because the Texas Silence can attorneys be fraudulent when to force to Court has chosen not nonspeaker the is under duty a to disclose client confidences to non- disclose avert information. Spoljaric Tours, clients, by v. Percival violent to do so fraud we decline duty misrepresentation under no to

as well.7 Bernstein was Material his client disclose information about Appellant argues point er under Braswell to Portland. ror that it cannot be liable for fraud two through misrepresentation Bern holding no duty Our that Bernstein had merely lawyer stein was a for benefi in this run a case does not afoul of case on fraud, citing ciary of the v. Rosen Schatz relies, which Portland Likover v. Sunflow Cir.1991) (4th berg, 943 F.2d 494-95 Ltd., (Tex. II er Terrace federal (applying Maryland law and securi writ). App.—Houston no Dist.] [1st laws). not ties Such is the law Texas. Likover, attorney In an his counseled client century- to a The court Likover referred wrongfully signature to a withhold from holding privilege old a law shields party document in order to coerce a third to yer com liability from for fraudulent acts $400,000 pay client an to sal additional of a fraudu mitted behalf client because vage The a land deal. Id. court scope lawyer’s are of a lent acts outside finding upheld trial court’s Likover, (citing role. 696 S.W.2d at for to de attorney was liable Ry., 58 Tex. 134 Poole v. Houston & T.C. holding in fraud. Id. at 474. The Likover (1882)). imposed The fraud Poole court attorney taking an addresses fraudulent liability lawyer actively participat aon who advising action on behalf of a client or to help ed series transactions The fraudulent action a client. Likover supplier’s stoppage evade a of deliv client analysis our case does control fraud ery If Bern to his client. 58 Tex. at 137. attorney-client through in an nondisclosure fraud meet the test stein’s actions is no context where there evidence his role as a through misrepresentation, duty. existence of a liability is no under lawyer shield find that the court erred when it precedent. Texas We overrule second objections charge overruled that tar point mis of error as it relates to material geted court’s to an failure include addi representation. limiting scope tional instruction three, By point appellant of error fraud to nondisclosure situations where refusing that the court erred contends disclose; duty there is a to this error submitting its instruction on fraud and give caused the court to an instruction that Appellant urges Portland’s instruction. incorrectly. stated the law We sustain that these actions were erroneous because it of error one as relates to a instruction included reckless through of fraud on the fraud failure to jurors apply could ness standard theory disclose because we find no evidence em the future. We about fiduciary relationship confidential or ploy an abuse of discretion standard when between Bernstein Portland. fail reviewing a trial court’s refusal submit ure include the instruction on need requested jury. Magro instructions probably for a led therefore to an Inc., Bros., Ragsdale improper judgment on this Tex. issue. See (Tex.1986). R.App.P. 81(b)(1); see also Island Recre ational, pro- in this given 710 S.W.2d at 555. We must ex The instruction case jury- jury’s finding amine as an element of fraud that the whether vides speaker made a material supported misrepresenta under material find that the must “when the misrepresentation tion or failure correct theories before we and that whether, speaker viewing representation], can made determine case [the recklessly whole, or it a this error was harmful. it was false made knew great duty tionships. particularly lawyers If because 7. we found to disclose The risk situation, may confidential would information have show that silence would not events lawyers position place in the difficult been fraudulent. choosing either remain silent and risk fraud to way any holding This in no affects liability betray client or to confidences and risk to the information. client disclose jeopardizing attorney-client other rela-

703 garding any knowledge without of its truth and as the existence of the sale of the positive correctly assertion.” Portland park and the notices to tenants that language given notes that this tracks that representa whole statement amounted to a Coronado, 703 at 735. anal- S.W.2d Our tion of facts. Id. at 931. ysis point of error three is not controlled Portland contends under Tren- by Coronado because in that case we were promise Legel holm that the Braswell appro- not asked to and did not rule Portland so inextri would make whole was priateness portion of the recklessness cably implications intertwined with that Le- the statute. gel Braswell had the wherewithal to make unqualified inclusion of the Portland promise whole as make the portion recklessness of the instruction was representation Trenholm, of fact. See repre erroneous in relation to Bernstein’s representa at 930-31. S.W.2d Bernstein’s Legel sentation that make Braswell would Legel tion that Braswell would make Port If representation Portland whole. is a repre land whole was less entwined with promise action, of future it cannot form the sentations of current facts than were Rat- promissor basis of a fraud action unless the cliff’s statements. Portland asserts that contemporaneous perform. lacked intent to representation Bernstein’s indicated that 434; Spoljaric, 708 S.W.2d at See also Legel Braswell had the wherewithal Co-op, Schindler v. Austwell Farmers whole, make Portland but does not (Tex.App. Corpus S.W.2d Christi — testimony actually evidence or that he 1992), grounds on other modified Legel said Braswell did. Our review dis (Tex.1992); aff'd, 841 S.W.2d 853 v.Wolf closes no evidence that Bernstein stat ever Fernandez, (Tex. Legel ed that had the Braswell funds in App. n.r.e.). Antonio writ ref’d — San hand; the evidence discloses instead the breakage Mere promise or failure to opposite. Harris, attorney dur perform prove represen does not that the negotiations, testified at trial: tation was Spoljaric, fraudulent. 435; Schindler, S.W.2d at See also Right. A. I they knew didn’t have a S.W.2d at 286. correctly points million three hundred and some thousand out that appropriate recklessness is still an day dollars when we were down representations standard for opin that are They Florida. told us that. ions about the future and are so inter Q. you they And knew wouldn’t have a present twined with facts that the whole million three hundred thousand dollars statement amounts representation to a coming in within the next few weeks fact. Ratcliff, Trenholm v. they you they only told had five (Tex.1983). Trenholm, 930-31 In Rat coming, they? hundred thousand didn’t cliff, developer, Trenholm, a land told A. That’s correct. homebuilder, park that a trailer near a gave $100,000 Braswell Portland a proposed sold, subdivision had been partial payment. Legel check as Bras- the tenants given had been notice to va proposal well’s on November 9 does not cate, park that the “should up close some expect- indicate that had Braswell April,” time in park and that the would shortly ed to obtain the full amount Port- thereafter be bulldozed. 646 agreed land desired. Braswell purchased Trenholm lots and built $1,336 figure million on November sub- homes in reliance representations. on these fact, ject repayment. on terms of In park had not been sold and the proposal In the conditional made on Decem- given tenants had not been notice to va park again cate. The ber admitted that trailer remained and de pressed hand, price the sales it did not have sufficient funds in of Trenholm’s hous but expected soon, es. Id. at 930-31. The court to obtain some funds held that representation Ratcliff’s regarding offered additional collateral. None of the eventual park elimination of the proposals inextricably was so settlement were in- intertwined representations with the present re tertwined with allowing attorney of the to remain so as to make them statements favor

wealth (and ignored the later the promises fact instead of silent.9 The court’s instruction might on terms Port- promises possibility were conditioned have had that really prom- rejected and so were not duty any representation land to no correct all). ises at Apply made on Braswell’s behalf. given instruction, jury the the could refusal to submit the instruc- court’s learning have found that after promises prevented jury from tion on the bankruptcy seek that Braswell would considering under the these statements creditors, protection from committed standard, probably resulted proper when to tell Portland that point fraud he failed improper judgment.8 We sustain an longer to Legel Braswell no able error would be three. find make Portland whole.10 Because we update Failure to duty personal update, he had no to the that regarding Appellant’s point of error one overruling appellant’s objection court’s court’s nondisclosure the instruction to probably judgment. did lead to an incorrect applies update to to as well. the failure point therefore of error one as We sustain person The court the that a instructed Tex. to this form of fraud as well. fraud representations makes commits who 81(b)(1). R.App.P. the notify recipient if he fails that to though representations, true or believed by Bern- Summary discussion offraud made, Ap- actually true when were false. individually stein pellant contends that the court erred any find that fraud based We giving this instruction because Bernstein Bernstein's actions is based on individual duty since had no to disclose information in- findings under on reached erroneous fiduciary duty he had no to or confidential that the law does relationship structions. hold Portland. require attorney to reveal information an discussed in the section As client party a to a third when about disclose, through on to above fraud failure non-violent, perpetrating purely client duty attorney despite speak on an an through silence. When financial fraud client is silence countervailed attorney misrepresentations on be- makes protect rules requiring attorney an client, however, stan- general of a half the client’s confidences. Failure to disclose attorney. applies for fraud to the dard party information can be fraudulent Making of a representations behalf repre previous learns that its affirmative not, in the though, duty does create a client Tamers, Tempo sentations are false. attorney those to correct 669; Susanoil, S.W.2d at Inc. v. Continen they prove to be false. should Co., (Tex.Civ. 230, 236 tal Oil n.r.e.). through Any finding fraud non-disclo- App. ref’d Antonio writ — San (either tips updating) or not We find here as well that the sure via silence balance error, only general duty between 8.Late It is conflict its discussion this may specific duty Portland keeping that it consider the safe- speak indicates attor- out and the of the an basis for a alternate ney protect creates client confidences that Appellee misrepresentation fraudulent claim. exceptions fraud standards. These these to the argue theory jury at trial. did not to the exceptions do For not extend the client. disputed There is some evidence that Bernstein if, client, attorney example, on behalf of a an safekeeping agreement approved drafted the false, representation proves which later makes subsequent exchange money of securities for client still bears the to correct began underlying of events these the chain misrepresentation under fraud standard. however, is, actions. There no evidence agreed reregis- Bernstein ever intended or argument to file 10. This assumes that decision pledging tration of the securities and bankruptcy necessarily means creditors that no securities claims vio- as collateral common, may but will be made whole. This Thus, agreement. safekeeping evi- lated the necessarily it is not the exclusive outcome. supports any jury dence safekeep- drafting Bernstein based on ing agreement. taking for safe- After the bonds give bonds. directly by affected the failure was regis- attorney keeping, Legel proceeded is Braswell stating that an an instruction pledge them client information in its name required not to disclose ter bonds Still, attorney Blyth. has parties unless the for a loan from to third as collateral relationships himself fiduciary confidential that Bernstein or there is no evidence in parties. any We find no evidence control over personally those third exercised ever fiduciary any paid hourly, or confidential the record was the bonds. Bernstein relationship Bernstein and Port- participated between that he there is no evidence Any finding of fraud based on land. any gains the conversion. from misrepresentation in material point of error ten To the extent statement that Braswell Bernstein’s by finding of conversion addresses the directly would make whole Bernstein, point of error. we sustain the give special by the failure to affected Conspiracy promises. find regarding instruction affirmatively jury responded The lapses proba- that the effect of these question court’s of whether broad-form resulting bly improper finding of fraud an conspiracy. It is not clear they found improper judgment. of an in the rendition conspiracy com- jury found whether error two because We overrule or to commit one or more of mit conversion exempt liability lawyers are not must, therefore, variations. We fraud lawyers on fraudulent acts the commit be- analyze possibilities. each of points sustain half of their clients. We points error that appellant’s error one and three as to individual Some by findings Bernstein. and instructions on attack the also serve to attack fraud or conversion Conversion or conspiracy to commit fraud finding of ten, By point appellant argues of error dual-purpose attack is This conversion. overruling that the trial court erred conspiracy requires possible a civil because judgment notwithstanding motion for by persons or more “a two combination and for new trial there is verdict purpose or to ac- accomplish an unlawful no or insufficient evidence to by unlawful complish purpose a lawful jury’s findings that Bernstein committed Co., Armco Massey means.” v. Steel conspiracy conversion civil commit (Tex.1983). 932, 934 conversion. We will now examine whether there our anal- was conversion reserve conspiracy ac plaintiff The ysis conspiracy until the next section. (2) (1) persons, more prove tion must two or (3) meeting accomplished, object an to be The court instructed the action, object on the or course of minds wrongful conversion “is the exercise of do (5) unlawful, acts, (4) one or more overt property minion and control over another’s proximate result. Id. damages as the denial of and inconsistent with proven, each con Stores, conspiracy is rights.” Once a civil See Waisath v. Lack’s Inc., (Tex.1971). responsible for the acts done spirator Port 474 S.W.2d the con any conspirator to further points land to no evidence that Bernstein other Chevrolet, personally any spiracy. time exercised dominion Carroll v. Timmers (Tex.1979); bonds, Inc., Lik and our or control over over, Because of the As 696 S.W.2d at 474. review of the record discloses none. above, conspiracies, al nature of courts disputed mentioned there was testi secretive by cir mony prepared plaintiffs the safe low to show that Bernstein direct evidence. rather than keeping agreement under which cumstantial (Tex. Cruce, possession Kirby took of the bonds. n.r.e.). writ ref’d prepare agree App. did Even Bernstein — Dallas formal, the under ment, need not be preparation is no evidence tacit, conspirator standing may and each Bernstein since Bras- conversion conspira- well, not know the details possession took need 164; 629, (Tex.1986) Dyson at Tex 635 and v. cy. Id. Bourland v. State Olin of 456, (Tex.1985). as, 350, (Tex.Civ.App.— Corp., 692 458 528 354 S.W.2d S.W.2d n.r.e.). weigh of ref’d facts consider and all the evidence Austin writ Vital will not, however, proved in the case the and may be unreason and set aside upon only for a if by piling or inference remand new trial we conclude able inferences jury’s finding factually that the insuffi- Schlumberger Surveying inference. Well great Corp., against weight 435 cient or so the and Corp. v. Oil & Gas Nortex (Tex.1968). preponderance with of the evidence as to be S.W.2d 858 Persons Pool, object manifestly purpose unjust. the of knowledge out of 715 S.W.2d conspiracy coconspirators the cannot be be 635. they agree to cause cannot the commission prerogative It is the fact the of they nothing. wrongs which of about know finder, jury, any in this case the to resolve

Id. in contradictions or inconsistencies the evi to judge credibility dence and the Conspiracy to commit fraud weight given and to their witnesses the attorney can for An be liable Garcia, testimony. Blanco v. 767 S.W.2d knowingly conspiracy to defraud (Tex.App. Corpus 897 Christi — finder can person. to agrees defraud a third Likover writ). The reason no fact make 472. Evidence of an attor 696 S.W.2d at inferences and deductions from direct able ney’s the nature knowledge of fraudulent or circumstantial evidence. Id. intent to of his and others' actions and to We find insufficient evidence in the of that defeat share fruits fraud can conspired support finding that Bernstein attorney ignorant a claim of that the was testimony, commit In his Harris to fraud. solely di acting fraud and at the clients’ theory of essentially laid out Portland’s expose attorney the to lia rection can to the Bernstein’s involvement addition bility Kirby, to defraud. began representations. the Harris with 164; Bourland, 688 528 S.W.2d S.W.2d at entry just safekeeping agreement and its knowledge at 355. and silence are Mere agencies brought state and federal before however; enough prove conspiracy, to Portland. heightened scrutiny to bear on attorney’s duty preserve the to unusual, was He stated that the trade confidences, client there indica must be reregistration more He unusual. the even attorney agreed that the fraud. tions the to that said that Bernstein wrote said Jones nine, safekeeping appellant language for point In of error out stated agreement. He noted that Jones contends that there is or insufficient “the safekeeping was support evidence to thing profit only This that made conspired to commit fraud. year.” pointed to applies three of fraud. able that Harris point to all theories response inqui point of reluctant reviewing When a “no evidence” Braswell’s error, (confirmations) regarding bonds—' only infer we evidence and ries consider respond first and lack finding, and to the one support ences that failure tend response complete forthrightness disregard all evidence and inferences suspect. pro He stated contrary. the second—as further If there is evidence September finding, the “no Bernstein’s notes bative force intimately in the “he involved point must show evidence” be overruled preparation of the finding upheld. Responsive creation of the—in the Terminal Jones, Am., dated also Boy Inc. confirmation letter” Sys., Scouts of use of (Tex.1989). September consid 21. He stressed that the When notes as “adjusted suffi trade” his ering challenging error the words evidence, culpability. Harris ciency of the well- evidence Bernstein’s follow familiarity with Plas-Tex, pointed next to Bernstein’s established tests in Inc. v. U.S. (a (Tex. Corp., personnel Braswell’s offices Steel indica- 1989), employees) 60 or as an Co., Pool Motor staff of so v. Ford operation. knowledge he had no or information familiarity tion of his original impressed participated in the Harris said he that Bernstein SEC, He testified that neither Bernstein past lawyer stein’s as a for the trade. any attorney participated acknowledgment problems with the nor Roberts, trade, trading spokesman at the activities. and his role as Braswell’s directors, testified meeting. member of the board November believing no that that he had basis essentially argues circum- that helped prepare safekeeping Bernstein partic- stances combined with Bernstein’s documentation, though he had he admitted drafting safekeeping ipation in the of the knowledge of the firm day-to-day no real letter, agreement, the ne- the confirmation only He since his role was as a director. gotiations, meeting bankruptcy at- with prepared documents stated that such were continuing negotiations torneys, and the instantaneously in the normal course of jury’s finding are sufficient to that he of no reason business and knew part conspiracy. that Bernstein was of a have Rob- Bernstein would been involved. disagree. that, Bush, employee, ert an testified in- regarding Bernstein’s evidence though involvement with Portland his first preparation the safe- volvement in the nothing in in the fall of he saw keeping agreement is insufficient show any in- the Portland account to indicate in a to defraud. his involvement said he volvement Bernstein. Bush did regarding Harris’s information Bernstein’s that not believe Bernstein was involved later un- preparation was second-hand and he safekeeping transaction because sources. Harris dercut its Jones told any legal never saw counsel involved with Legel told Bern- Larry had Jones that Portland transactions. approved wording stein had of the approve did the lan- Even Bernstein agreements and the trade itself. Jones agreement, there guage safekeeping of the Larry Legel him testified that later told any agreed that he mal- is no evidence approve that Bernstein did not the word- deputy commissioner feasance. Former ing, Legel Mary Ann had Gibson nature of the trans- Wright stated that the up wording, Legel come with and that illegal, though magni- not action was approved had said that Bernstein the word- great for Portland’s re- tude was too (Legel). Legel to cover himself also above, there is no sources. As discussed ap- said he was not sure if Bernstein had agreed knew of or evidence that Bernstein proved the trade or had even been consult- into Le- reregistration of the bonds ed. At that time also told Jones gel name. Braswell’s say anything deposition he not in his would September 21 notes and Legel’s deposition cor- Bernstein’s to hurt Bernstein. most, are, at letter detailing Legel’s Jones’s al- Jones’s confirmation roborated evidence of involve- minimal circumstantial tered view of Bernstein’s involvement. alone, Standing any conspiracy. ment persons cast Other unquestionably insufficient. they would par- doubt on the assertion that Bernstein link these two is no direct between There ticipated drafting safekeeping in the of the other than the dates. documents McGowan, agreement. Lawrence many key contain stein’s notes corporate secretary, he had Braswell’s said GNMA, players in the words case— partici- that Bernstein reason believe Jones, trade, Blyth, safekeeping, adjusted he did pated. Though McGowan admitted there is no evidence Larry —but floor, trading he did spend not time on the agreement to nefari- approval of or of his being remember Bernstein involved not in either document. ous schemes safekeeping producing the confirmation Legel Bras- familiarity with Bernstein’s computer room where that came from the no evi- personnel is offices and that trad- well’s He testified McGowan worked. wrongdoing agreed dence that Bernstein for normal ers would not consult on recross examina- Harris said Legel testified either. As or unusual trades. Allen tion, (Harris’s) lawyer seeking protection role as for Port- bankruptcy court. familiarity personnel with its did land misdealings mean that he knew of vague Portland relied on some rather predicament. president of its or its financial testimony postulate from Jones to that Le- totality Harris stated that the of the cir- gel bankruptcy Braswell determined to file cumstances, including Bernstein’s familiari- November, it, that Bernstein knew and 2,11

ty the office on November indicat- kept that both the decision a secret. Jones ed that Bernstein was of what was aware stated regarding safekeeping going on trans- meetings I don’t think the leading A.

action. Awareness is not basis of con- bankruptcy, the decision to file I don’t however; kind of spiracy, some Sidney being recollect there. I do think required. testify Harris did not Sidney original meeting pri- attended the agreed to the nor transaction bankruptcy or to at the offices down agreed reregistration. attorneys bankruptcy that he to the that filed the present I for us. think he was then. testified that he did not know Q. filing bankrupt- Prior to the of the Legel position financial what Braswell’s cy? negotiation period. was until after Right, prior filing. A. to the September in Roberts testified that Q. only meeting you That’s the that painted glowing the firm’s accountants a were at? picture year. of the firm’s financial only A. That’s the one that I recollect. glow picture apparently in that due Q. you present Do recall at who was largely Bern- to the Portland transactions. meeting? being stein testified that he remembered principals All A. and the executive negotia- hired late October 1978 for the committee, myself. Harry had Braswell Portland, process though tion with he stat- from New York. He was flown down prelimi- ed that his records showed some I think that was it. there. regard- nary work of less than two hours Q. discussed at that meet- What was ing early August Al- Portland as 1978. ing? Legel len testified that Bernstein had no Well, general discussion knowledge Legel A. it was Braswell’s financial that, know, attorneys that you with the independent Legel Allen condition what bankruptcy, going to were handle Legel had him. Bernstein that told told made to con- that the decision had been Legel Braswell did not have million on $1.3 they thought. And sult them what about Legel hand. Bernstein testified that Bras- that, up quick decision they came with him immedi- well officials told that a forced bankruptcy. I was yes, we should file payment bankrupt ate million would $1.3 required as to what would be instructed company, passed Bernstein said he filing. get up petition for me to categori- this statement on to Harris. He cally Legel he Bras- denied that knew Bern- testimony not contradict This does obligations not meet the con- well could gives no dates for testimony. Jones stein’s offers, those tained his settlement even testimony is that both meeting, but his the November 15 meeting made after attended attended the he and Bernstein meeting bankruptcy attorneys. Bern- with decided to file bank- Legel which Braswell stein testified that the November 15 meet- time ruptcy. comparison A of Bernstein’s Legel testimony a decision that Bras- indicates ended with Jones’s sheets with bankruptcy. meeting He not the well did not need to file that the November 15 meeting not asked to and did Braswell decided testified that he was at which bankruptcy. record Legel Braswell’s financial situa- file Bernstein’s not review Legel, lists Allen conference January tion until when he advocated November layout. engaged times Testimony He was at different and time records showed enough variety purposes. Bras- Bernstein was involved of different for a gained familiarity people have well to with its McGowan, background, Roberts, bankruptcy Against this we will discuss and the allegations conspiratorial bad individual attending. Absent from this lawyers as acts. present list on Jones’s roster but meeting are Braswell and Jones decisive conspira to disclose. The Failure testimony explicitly

himself. Bernstein’s cy findings proper in the must viewed arguing against mentions Braswell as legal framework. That framework should January meeting at bankruptcy at question include a threshold of whether Legel Braswell decided to file bank- which conspirators alleged Bernstein and his ruptcy testimony indicates that Jones’s Ap duty to disclose to Portland. owed meetings bankruptcy there on be- were given on pellant assails the instruction January, November and and other tween through it did nondisclosure because principals testified that looted possibility witnesses for the that there was allow the firm. There is no evidence that of this to disclose. Our discussion meetings regard non-conspiracy or knew of these to the stein attended issue with conspiracy or the There is no counts is relevant issues raids. evidence conspiracy requires proof of bad bankruptcy Braswell decided to file acts. A flaw in the instruction on the agreed 1978 or that Bernstein November (fraud) predicate act unlawful can thus un keep any such decision secret. dermine based on persistence making Bernstein’s settle- fraud.12 proposals ment behalf The court’s instruction did not allow bankruptcy meeting after the is not suffi- any relationship jury to consider whether finding support jury cient to a that he was giving duty to a to disclose existed rise conspiracy in a involved to defraud. Port- conspirators alleged between the and Port argues land that his offers were hollow Tamers, at Tempo land. See 715 S.W.2d promises, relying testimony by on this Al- respect to Bernstein 669. With individual Legel: len was, above, ly, this as discussed an incor I think what it boiled down to is that we rect statement of the law. Because the not to yet. were able make an brokers, alleged conspirators were howev keep I things open, wanted to so I sent a er, they fiduciary relationship a with had saying agree letter that I could to the City Mortgage Portland at one time. First they agree number and to wanted to a (Tex. Gillis, Co. whole lot more. 1985). App. There Dist.] [14th — Houston duty time support finding likely This does not a was nevertheless no at the that alleged fraud Portland ef stein’s later offers were false or fraudu- fectively terminated the broker-client rela All representations following lent. demanding all tionship by rescission of representation Legel Braswell did not transactions. Portland show would make Portland whole were condition- no real indication in the record we found al agreeing on Portland to the terms of re any fiduciary other or confidential above, repayment. As discussed Bernstein lationship existed between Portland Legel stated and Harris understood that any conspiracy involving Bernstein. The Braswell did not have cash on hand. probably erroneous instruction caused Legel, “keeping things open,” try- was finding resulting jury to make an incorrect ing pay- to stave off demand for immediate improper judgment. an rendition of ment which he testified that he knew (and Bernstein knew testified he told Har- overruling therefore find that the ris) Legel would force appellant’s objections charge Braswell into bank- on the ruptcy. definition of fraud based on non-disclosure individual, committing plan 12. Failure find to fraud an how- a to commit fraud without ever, automatically finding does not person bar a for fraudulent acts. That can be liable conspiracy to commit fraud that individual. conspiracy. person may agree support A know of and to and duty ity conspirators had no to conspiracy to reversible error as to Though the rescis through update representations. nondisclosure claim. commit fraud any fiduciary likely ended sion demand that, if a We also find even there were relationship, a duty from the broker-client sup- to duty, there is insufficient evidence speaker if learns duty update arises to port finding conspiracy a to defraud representation is false. that an earlier involving There is no direct evi- Bernstein. 669; Tamers, Tempo Susa wrongfully agreed dence that Bernstein Above, noil, found 519 S.W.2d at 236. from Portland intend- withhold information lawyer largely as a that Bernstein’s role ing to induce detrimental reliance. update excepted any duty him from as to that he did evidence in the record indicates client, representations made on of a behalf Legel not know of Braswell’s financial might still have but that Braswell bankruptcy intent to file dur- state Thus, update. could not negotiations, and thus agreed personnel agreed to withhold this' information. have support promise update they insufficient to once learned that a The evidence is made, finding part of a con- for that Bernstein was false when he could be liable through spiracy to defraud nondisclosure. conspiracy find that there to defraud. We support is insufficient evidence misrepresenta through Fraud finding to defraud on discussed all of the various mis tion. We theory. representations by Braswell which complains we discussed when evidence to There insufficient misrepresentations by Bernstein. above the finding conspired to re- that Bernstein The flaw the instruction that undermines discovery main silent about a through misrepresenta good unable to make Braswell would be tion—failure to set out the correct standard original promise. There is no direct promises undermines a find rep- —likewise that Bernstein knew that the evidence through ing conspiracy of to commit fraud Testimony indicated resentation was false. misrepresentation. Since evidence indi that Bernstein attended the November representations by cates that Bernstein and meeting Legel Braswell discussed at which alleged conspirators promises were not filing bankruptcy, but there is no evidence inextricably representations entwined with make any of decision not to that he knew facts, of current this incorrect instruction Instead, de- Bernstein Portland whole.13 probably is reversible error because it impres- him meeting gave nied that the improper judg caused the an rendition of Legel not be able sion that Braswell would ment. only The evi- to make Portland whole. Bernstein, dence is that under instructions update. through Fraud to failure Braswell, Legel attempt to continued regard conspiracy As to we discussed with plan.14 agreement payment to reach an on a nondisclosure, through to defraud the con Testimony principals that also indicated spiracy allegations must be viewed proceeded to drain the com- duty. gave context of The court an in assets, possibil struction did there is no evidence pany not allow the of its but (revised 29(a) accept argument 13. Even if we Portland’s and recodified at 11 U.S.C. § bankruptcy 362) Braswell decided to file at this preferences, includ- § and the avoidance meeting, there is no evidence liens, (re- of such knowl- ing judgment 11 U.S.C. § under edge. 547)), any at 11 U.S.C. § vised and recodified 2, 1978, delay filing November suit after note, aside, purely 14. We as an that we are actually recovery from reduced Portland’s surprised to find no reference in the briefs—and light bankruptcy filing in Braswell in of the regarding little reference in the the ef- record— January recovery Portland's was not 1979. If bankruptcy provisions fect of the code on Port- reduced, reli- then the detriment of Portland’s how, recovery. considering land’s We wonder recovery ance—and thus litigation provisions —is the realities of and the less certain. predecessors bankruptcy to the current code (e.g. stay litigation under 11 U.S.C. another, deny the action does not agreed by or remain that Bernstein knew of to rights; these silent about activities. inconsistent with the owner’s not thus, there is no conversion. Portland sup- There is also insufficient evidence to supposed preparation points to Bernstein’s port finding conspiracy defraud agree safekeeping approval and/or of the through update failure to to the extent that support its claim ment and transaction any Portland’s claim is of the based engaged conspiracy in a that Bernstein was proposals bankruptcy made after the deci- sup not to convert the bonds. This does proposals promised sion. Those rescission agreement by re- port finding conspiracy conditioned on on terms of to convert 1) payment. There is no evidence that prepared ap or Bernstein. Even he Bernstein learned these conditional proved safekeeping agreement and/or representations agreed were false and not cash, merely exchange of the bonds for Portland, 2) to tell or Portland relied on Portland, exchange facilitated an to which any rep- failure amend these conditional through president, agreed, negating only to its resentations detriment. evi- find no evidence that conversion. We dence is that Bernstein testified that he agreed to the acts Bernstein knew of pro- believed Braswell could meet claim, that form the basis of conversion posed obligations, reject- and that Portland reregistration pledging i.e. the proposals ed these and decided to file suit.15 beyond that was bonds collateral The evidence in the record indicates that scope and inconsistent any Bernstein did not know of reason that rights. find that there with Portland’s his earlier false or were finding support is no evidence amending, needed therefore he could not conspiracy by Bernstein to commit conver conspired by amending have to defraud sion. them. ten, points To the extent that of error We find insufficient evidence to thirteen, fourteen address the jury finding conspired to commit conversion by agreeing defraud Portland not to amend points sustain the of error. representation affirmative that he later learned was false. We therefore sustain Disregarded findings point of error nine as to this issue. points four of er- Appellant contends Conversion disregard- trial court erred in ror that the points fourteen, In ap- of error ten and jury’s findings. We dis- certain of pellant contends that the court erred agree. overruling judgment its motion for notwith- by points Appellant complains of error standing the verdict and for new trial be- trial court erred eleven and twelve that the cause there no or insufficient evidence to judgment granting in Portland’s motion for support jury’s finding that Bernstein verdict, notwithstanding disregarding committed civil to commit con- six, finding denying jury’s number version. Point of error thirteen makes the entry judgment for Bernstein on that of argument respect any finding same Question finding. provided six as follows: conspiracy by of Bernstein with Braswell. If, Question 2, you in answer to No. have Sidney participated found that Bernstein above, As discussed conversion any way in the conversion of wrongful is the exercise of dominion and Savings property of Portland and Loan property another’s in denial of control over Association, then find the date which rights. and inconsistent with his See Wais Savings and Loan Association ath, rightful Portland 474 S.W.2d at 446. When the or, in the exercise of reasonable owner consents to the dominion and control knew rejection seriously proposals. 15. Portland’s undermines in these any argument of reliance on the act, particular bad i.e. care, partic- had committed have known of should participation conversion. We overrule ipation. 12. points of error 11 and 7, (Date): Dec. ANSWER: six, appellant error By points of five granted the motion to disre The trial court grant- argues that the trial court erred judgment gard this answer and rendered judgment not- motion for The court cit Portland’s notwithstanding the verdict. verdict, withstanding disregarding the disregarding the for ed the correct bases seven, deny- question jury’s answers and lack of eviden- findings immateriality — Winn, for based ing entry tiary support. See Eubanks jury’s question seven. (Tex.1967); on the answers also See S.W.2d Hernandez, Question provided as follows: seven Ins. Co. v. Transamerica (Tex.App. Corpus Christi preponderance youDo find from a — denied). trial court correct writ The that on or November evidence before question six disregarded the answer to ly Savings and Loan Associ- Portland support it. there is no evidence investigation made an follow- ation ing: is no have found that there Because we original transaction between findings A. The support the of conver-

evidence to Savings and Loan Association Portland conspiracy to convert sion or (sic) Legal, Braswell? logically can no evi- find that there any date on support dence Yes ... ANSWER: or should have known which Portland knew Legel, B. The financial condition unproven participation. We will of that Braswell? argument put also address the nevertheless Yes ... ANSWER: by appellant on this issue. We will forth judgment notwith- trial court rendered The “no apply the standard of evi- review standing findings, stating that there these points dence” set out above. findings support no evidence to Appellant contends that evidence were immaterial. questions and that that Portland was aware of the loca- shows trial, asserting for a new Bernstein moved tion, transfer, and control over the bonds findings disregarding these that the Appellant cites December before court denied the motion. error. The trial proposition. much evidence to correctly disregard- the court We find that however, six, Question deals with Port- immaterial. questions ed the activities, knowledge land’s of Bernstein’s questions are immaterial be The just Legel Braswell’s activities or the negate reli they do not Portland’s cause general state of the bonds. evidence Ap representations. ance on Bernstein’s provides no appellant adduced evidence an pellant that the affirmative contends knowledge, imputed, actual or investigation mean that swers on Bernstein’s activities. law, not, have relied could as a matter Appellant argues reply brief by Bernstein. any representation See Portland knew or should have known of Co., 698 Lloyd’s Ins. Chitsey v. National participation in the 1985), Bernstein’s conversion 766, (Tex.App. S.W.2d 769 — Austin Harris, lawyer, testified because 641 738 S.W.2d grounds, on other aff'd (Tex.1987); credibility no after run- Deposit that Bernstein had Laughlin v. Federal 9,1978, meeting. (Tex. ning 477, out on the November Corp., 483 Ins. 657 S.W.2d support 1983, writ). Harris’s Appellant also cites as These cases App. Tyler no — Decem- testimony Employers’ that Bernstein’s letter of Ins. rely on Kolb v. Texas concern, 7, 1978, 870, (Tex.Civ.App.— gave great Ass’n, him 872 ber 585 S.W.2d n.r.e.), him, 1979, a case him to seek writ ref’d spooked prompted and Texarkana proposition nearly did not state the authority to sue. Harris’s belief that which court has re strongly. unset- The Texarkana credibility lacked and wrote so stein interpre jected Chitsey Laughlin the and tling is no evidence that Portland letters of Kolb as too broad. Lutheran known that Bernstein tation knew or should have

713 Inc., edge Co., positive 829 of truth and as a asser- Peabody Kidder & Bhd. v. may 300, tion.” I a reckless believe assertion (Tex.App. S.W.2d 308 — Texarkana dism’d). indeed a basis for fraud the 1992, court constitute writ The Texarkana present. are other elements that reli held in Lutheran Brotherhood key. cannot re Litigants ance is the Id. decep of The essence actual fraud is a for fraudulent when cover intent induce tion with the to deceive and investigation, they rely solely on their own Peat, Marwick, Bell v. reliance. Blue they rely still recover if on anoth but can Co., (Tex. 408, 715 S.W.2d 415 Mitchell & representations in their own er’s addition to 1986, n.r.e.). It is App. writ ref’d — Dallas investigation. Id. The trial court an duty breach of one’s intentional case, relying finding implied jury on an truth, designed injure speak other to representations, on the could reliance have advantage. wrongful some procure that the and thus found found reliance Chen, 484, 759 S.W.2d 494-95 Chien v. investigations immaterial. were 1988, writ). Dal (Tex.App. no — Austin support We the evidence exists to believe explained las Court in Blue Bell points such a decision. We overrule requires intent a fraud action element error five and six. purposeful conduct; great degree is, merely it “should be known” CONCLUSION speaker that another rely will on Bell, find that erred in representation enough. trial court is not Blue overruling objections and alterna- rejecting at 415. S.W.2d specified its fraud tives to instruction. As The intent to deceive must exist at above, points we sustain part all or time the false statement relied on is made. one, three, thirteen, nine, ten, error Prods., Misty See Atlantic Co. v. Richfield Because sustaining points fourteen. these 414, Inc., (Tex.App S.W.2d . —Hous judgment, of error undermines the entire Bell, 1991, denied); ton Blue Dist.] [14th points we do not address the remaining at 415. diffi always Intent is evidentiary rulings error on issues such as proof prove, usually cult to and its damage awards. we found Because surrounding circumstances, one duty that Bernstein himself had no dis- rarely false charged with admits the close information about his client intending uttered statement to deceive update misrepre- generally Leasing, the other. Custom See made sentations on behalf of Bras- Dallas, Bank Inc. v. Texas & Trust Co. of well, judgment render appellant for (Tex.1974); Alamo regarding these issues acts Bernstein’s as Sav. Texas v. Forward Ass’n Constr. an Because individual. we found no evi- (Tex. Corp., S.W.2d 899-900 dence to of conversion or Christi App. Corpus writ dism’d — by to convert we ren- (fraud transaction); in the w.o.j.) O’Shea judgment appellant der issue. on that Co., 656 Coronado Transmission We reverse remand for a trial on new (Tex.App. Corpus Christi — remaining issues. n.r.e.), remand, 703 appeal writ ref’d after (Tex.App. Corpus S.W.2d 731 Christi — Concurring opinion by BONNER n.r.e.). ref’d writ DORSEY, J. of a Intent to deceive the utterance DORSEY, Justice, concurring. may certainly false statement be shown court, speaker

I in the state concur evidence that knew the however, disagree analysis Dowling I with the at the time. v. ment was false Inc., disposition appellant’s of er- 631 727 Mktg., third NADW Smith, (Tex.1982); The court court ror. holds that the trial v. 697 S.W.2d Johnson by instructing (Tex.App. erred jury that Dist.] [14th — Houston 1985, writ). However, ignorance could based on a false statement falsity “recklessly was made without knowl- truth or of the statement as well may truth assertion of it as reckless GLEASON, Appellant, the statement also a conclusion Dana that the other was made with the intention v. it his detriment. Leas act on Custom LAWSON, Appellee. Carol (quoting ing, 516 S.W.2d at Wilson No. 13-91-523-CV. Jones, (Tex.Comm.App. stated, 1932)). The Court Wilson Texas, Appeals Court affirmative “[W]here Corpus Christi. designed be acted fact are made and March believing and he does so

upon by another false, they are one them to be true when liable, re

making representations is knowledge falsity gardless of his Wilson, intent to deceive.” added); 37 C.J.S. Fraud (emphasis see (1943). majority holds that § promise of a future action order for a representation, the a fraudulent constitute perform. intent to promissor must lack the case, promissor, In this allegedly perform in party who will not the Rather, representation the future. promise by Bernstein that made here was a Braswell, per entity, another would act, not that Bernstein form some future do so. himself would cer- One can never know with absolute perform; one tainty another will whether anoth- promise the future actions of cannot such, requisite er. As element appli- is not promissor’s perform intent to Therefore, this one. cable to situations like law of frauds to apply the standard required All that is is an assertion case. knowledge recklessly or with fact made other intent that the falsity with the could not know party rely. will make Braswell would whether whole, made that yet Bernstein the intent representation to Portland with action. and induce deceive point of error three. I overrule would judgment of the I concur in the Otherwise court. for and remand notes remaining day participated he in a issues. that on that same new trial telephone during which discussed call BACKGROUND bonds, including possi- the status of the with the Portland conducted business illegal nature of the transaction. Port- ble brokerage Legel, firm of Braswell Govern- Legel land’s accountants and Braswell’s ac- In during ment 1977 and 1978. Securities early attempt met in October to countants May Federal Home Loan Bank to sort out the transactions between it to discuss Board notified Portland wished Wright entities. directed Portland’s attor- position at the end of Portland’s financial Harris, meeting ney, to schedule a Jim Days before Portland officials the month. Legel offices in Florida to dis- Braswell’s meet with travelled to Little Rock to cuss of all between rescission transactions officials, gave president FHLBB brokerage company. Portland and approximately million in Government $1.36 2,1978, Wright On Harris and November (GNMA) Mortgage Association National met with Bernstein and Braswell’s safekeeping Braswell for bonds2 Wright principals. and Harris stressed the Roberts, exchange for cash. John W. position seriousness of Braswell’s board member Wright and/or pressed for rescission. directors, generally a broker testified that

Case Details

Case Name: Bernstein v. Portland Savings & Loan Ass'n

Court Name: Court of Appeals of Texas

Date Published: Apr 15, 1993

Citation: 850 S.W.2d 694

Docket Number: 13-91-336-CV

Court Abbreviation: Tex. App.