*1 provisions We conclude the trial court did not err trial could not alter the of its summary interlocutory motion for order when it rendered its granting appellees’ judgment. argue final Nor does PSB or judgment on PSB’s fraud cause of action. authority showing percent cite that fifteen Conclusion pre- post- was not the correct rate of and judgment interest. See Tex. Fin.Code Ann. conclude the trial court did not err We (Vernon 2006) (money judgment § 304.002 in granting appellees’ summary motion for provides on contract that for interest earns 166a(c) 166(a)(i). judgment under rule post-judgment interest at lesser of rate We overrule PSB’s first and second issues.
specified
percent).
in contract or 18
Ac-
cordingly,
argument
properly
this
is not
INTEREST
briefed, and the asserted error is waived.
issue,
In the third
PSB contends
Tex.R.App.
38.1(h);
See
P.
Okere v. Chase
the trial
in including pre-judg
court erred
910,
Manhattan
Mortg. Corp.,
judgment
ment interest
in the final
2006,
(Tex.App.-Dallas
pet.);
no
Dallas
that the court used the incorrect rate in
Ass’n,
Firefighters
full per- at the lesser of the rate percent per
mitted law or 15 applicable
year.” interlocutory granting order
partial summary judgment, the trial court $36,481.53,
awarded LIT “the sum of PC (5%)
plus percent interest a rate of five CORP., FORMOSA PLASTICS annum from this until Af- per paid.” date USA, Appellant, parties ter the stipulated the amount fees, attorney’s the trial court final entered judgment awarding LIT actual dam- PC INTERNATIONAL, KAJIMA fees, ages, attorney’s pre-judgment inter- INC., Appellee. $7809.79, post-judgment est of interest percent “at the contractual rate of fifteen No. 13-02-00385-CV. (15%) judgment date of per annum from Texas, Appeals Court of any authority, paid.” citing until Without Corpus Christi-Edinburg. vary PSB asserts the trial court could not contained in the provisions the interest 28, Dec. 2006. interlocutory partial summary judgment judgment.
when it rendered the final legal analysis
PSB’s brief contains no
authority in that the support position 3, filed 2003. Accord- had to be filed December 2003 to avoid its answer on October ingly, could have been no than limitations. PSB did not file its fraud claim service later pro- Monday following January October 2003. The until 2004. Section 16.069 twenty days exception applicability vides an of stat- after October 2003 is Novem- limitations; however, Thus, tolling not a 16.069 utes of it is
ber even if section suits, apply separate provision. could PSB’s claims *7 Antonio, TX, Montpas, David R. San Appellant. Lownds, Selander, Quilling,
Steven John Dallas, TX, Cummiskey Lownds, & Appellee.
OPINION ON EN BANC REHEARING *8 VALDEZ, ROGELIO Chief Justice. International, Appellee, Kajima Inc. (“Kajima”), rehearing moved for en banc opinion of this Court’s issued November 10, 2004, in which the Court concluded that (“Formosa”) Corp., Formosa Plastics USA disqualify “Chip” met its burden AW. Hutchison, witness, Kajima’s expert on the colleague, basis that Hutchison’s Steven Huyghe, previously consulted with Formo- fraudulent conduct in Kaji result of Formosa’s sa. Formosa Plastics USA 13-02-00385-CV, Int’l, Inc., bidding process and 2004 connection with ma No. 9950, inducement of extra-con- Tex.App. LEXIS its fraudulent WL Kajima, According tractual work. Nov. (Tex.App.-Corpus *15 Christi h.). drawings for its work at the pet. engineering no The reversed the Court plant were full of errors polypropylene the matter for a judgment and remanded inaccuracies, yet knowingly Formosa trial that Hutchison and new with directions design misrepresented quality firm not be and others from his would during the bid- permitted testify. drawings project See id. at *20. Jus for the Formosa ding process. Kajima asserts dissenting opinion tice concluded Castillo’s fraudulently induced it to enter into the had Formosa waived side-switch issue, artificially low bids on affirmed the contracts and make ing and would have by withholding information trial court. Id. at *83 the contracts judgment of the (Castillo, J., drawings of the relating design and dissenting). as- plant. Kajima further polypropylene granted rehearing The has en Court knowingly provided Kajima serts Formosa original opinion our banc. We withdraw concerning ole- false schedule judgment and issued on November that multi- plant fins which failed to reveal accompa- and opinion and issue this in the working be ple contractors would judgment in their stead. On rehear- nying location, time, at the same same and failed to ing, we conclude Formosa by Kajima, preventing thus planned disqualify proof meet its burden Kajima executing responsibilities from Hutchison, judgment affirm the and we Moreover, according the contracts. under the trial court. Kajima, engaged “string in a in which Formosa along” fraud scheme Background I. promises compen- repeated made false Kajima (“Kajima”), Inc. International Kajima delays, disruptions, bid sate company, construction submitted industrial omissions, costs in order to and additional expan- Formosa’s several bids for work on keep Kajima working. At the conclusion located in Point Com- plant project sion in excess project, Kajima spent had fort, Kajima awarded Texas. Formosa only but had received million $10 $38 contracts, work involving piping five some million from Formosa. involving and others the olefins area Kajima spent counters that in the equipment setting work piping because of prices excess of the contract plant. speci- Each contract polypropylene bidding contract admin- Kajima’s own gen- performance. fied a schedule of mistakes. Formosa asserts istration all and conditions common to eral terms adequate building drawings were Kajima to over- permitted contracts work arose, and, Kajima problems bidding when Kajima only time if or its subcontractors to the contract. For- event, paid pursuant work, and, in such an delayed the knew mosa further contends compensa- Kajima received no additional working within contractors would other tion for the overtime. scheduling any conflict its area and that *9 than longer took much Performance Kajima’s own misman- the result of was contracts, Ka- causing in provided for agement. vastly the contract jima’s costs to exceed Formosa Kajima Formosa and Kajima sued by Formosa. asserts paid amount Texas”) (“Formosa in Corp., Texas money this as a Plastics required spend it was confidential, contract, fraud, and no and not January 1993 for breach of discoverable shared with confidential information was arising from five of quantum and meruit Kajima as- Huyghe. or further Hutchison the construction contracts. The matter that, if confidential information serts even jury jury in was first tried to 1997. The knowledge that Huyghe, was disclosed any of found that Formosa did not breach Hutchison. The imputed could be fraudulently in the five contracts but did this matter background regarding factual duce one of the contracts. The trial court understanding properly is critical to subsequently judgment Kaji- rendered for analyzing this issue. $4,491,066.65. Kajima appealed, ma for and this reversed and remanded the Court litigation with Ka- question When the Kajima case for a new trial. Int’l Inc. v. jima originated, first Formosa retained USA, Formosa Plastics Jones, Day, Pogue firm of Reavis & law (Tex.App.-Corpus Christi (“Jones Day Day”). Counsel for Jones denied). pet. heavy in in- Huyghe, expert contacted president dustrial construction and of A.W. again Kaji- The case was tried in 2002. California, Inc. Hutchison & Associates of ma and the mat- nonsuited Formosa Texas an assistant met with attor- Huyghe and jury ter was submitted to the on the issue Day neys from Jones and in-house counsel jury guilty of fraud. The found Formosa They spoke “strate- for Formosa. about Kajima approximate- of fraud and awarded gies for this case and what kind of defense dollars, ly roughly million or 60% of $15 establish,” ought to and “what the con- we damages sought. The trial court Kajima against were that had tentions judgment Kajima rendered for for actual going were to an- Formosa and how we $15,432,123.45, damages of prejudgment allegations.” They some of those swer $14,210,269.65, $403,156.86 interest of Kajima’s allegations further discussed in appeal costs. This ensued. Formosa against allegations Formosa and which nine appeal. raises issues on might Huyghe true or were not true. in and or- was to assist document review Expert Disqualification II. had.” ganization order to “see what we willWe first address Formosa’s third attorneys requested never The Formosa is, disqual- issue on that appeal, expert confidentiality maintain re- Huyghe ification issue which the Court found de- documents, garding these conversations appeal original terminative of the in its any execute they request nor did that he opinion. alleges confidentiality agreement. Hutchison, expert, “Chip” should not A.W. Huyghe organized reviewed and docu- testify. permitted have been by Formosa produced ments that had been argues expert first that an retained and Kajima produced from and documents paid party one cannot switch sides and a work prepared to Formosa. He testify party opposing as an proposed plan outlining his method the same case. Formosa contends situation as well as an index evaluating the Associates, the firm of A.W. Hutchison & Kaji- received from of relevant documents “consulting” ex- Inc. served as Formosa’s ma. require- all perts and Formosa satisfied to Jones Chip Huyghe firm and sent several letters disqualify ments to of those letters to contrast, Kajima Day copied contends some Hutchison. Hutchison, Hutchi- colleague his A.W. provided information Formosa Atlanta, Associates, Inc., sepa- Huyghe, son & colleague, Steven Hutchison’s *10 a corporation attorneys. Huyghe sign but related from that tact the new did rate employed Huyghe.1 provided by which “conflict certification” affidavit Kajima, in which he certified that “A.W. letters, The first of these dated June Inc., Associates, has not re- Hutchison & consulting group’s discussed the any confidential information from ceived in “possible litigation, involvement” any entity or from its counsel.” work, and men- provided examples prior however, it Kajima Huyghe; did not hire tioned that Hutchison was available for Chip Hutchison and Brian did hire both you “if so desire.” A letter dated meeting Associates, Rogers of A.W. Hutchison & 19, 1993, October discussed what A.W. Atlanta, in Georgia. Inc. Hutchison & Associates had done for past explained clients in the and the meth- trial, that he Huyghe At the testified odology usually employed to evaluate any had not received confidential informa- problems. This letter was marked as contrast, tion from Formosa. In an attor- “privileged Huyghe and confidential.” ney Day testified that she had Jones provided agreement also a letter information, including revealed confidential included a engagement group and strategies, Huyghe. settlement Never- confidentiality proposed agreement, which theless, Day Jones admitted that had attorneys signed. Formosa’s never regarding whether made determination transferred its late Huyghe testifying would be utilized as a Day to the law firm of defense from Jones expert. Hedges. Hedges Porter & The Porter & Huyghe testified that he had never dis- attorneys Huyghe’s proposed received any information cussed Formosa-related plan work index of documents Rogers. Hutchison or Counsel for with Kajima, employ not to from but decided lawyers that the at the 6,1994, Day Jones testified Huyghe’s April services. On Port- firm with Hutchin- had no communications Hedges Huyghe er & told to consider hijn- any infor- “indefinitely By point, Rogers, on hold.” this son or did not disclose self Huyghe totaling ap- Rogers, had submitted bills mation to Hutchinson or and knew $22,000 than proximately for more 167 of no confidential information that was 15, 1994, Huyghe April hours work. On from Formosa to Hutchin- ever disclosed and, Hedges detailing & contacted Porter Rogers. also knew of no son Counsel cases, group’s prior requested his work on Day contact with Jones and Hutchinson opportunity to meet with Formosa’s testified that Atlanta. Hutchison himself on the attorneys present thoughts his knowledge he had no Formosa- Hedges accept case. Porter & failed to Huyghe. known to related information this invitation. disclosure, lack of On the basis of this later, Kajima’s attorney A few months motion to the trial court denied Formosa’s Huyghe consulting about approached Rogers from tes- disqualify Hutchison Huyghe lawsuit. informed jury subsequently and the awarded tifying, Day, suggested attorneys at Jones who Kajima. verdict favor contacting Hedges & about this Porter this are: The chief issues before Court possibility any potential conflicts should have framed Huyghe guidelines did not con- what Apparently interest. Inc., California, matter, employed which Hutchison's ates of 1. Prior to the trial of this Associates, corporation, A.W. & Huyghe. Hutchison Inc., merged with A.W. & Associ- Hutchison *11 currently Thus, turn to the issue we disqualify decision whether to trial court’s Court, is, disqualifica- the before and Associ- Hutchison and A.W. Hutchison non-attorney expert witness tion of a (2) (“AWH”); the trial ates whether expert’s work for on another based properly court’s decision was executed We will also examine opposing party. guidelines. Any question within those opposing party expert’s contacts with expert’s about an breach of his or her expert litigation. in While the issue of duties, otherwise, fiduciary to a former re expert’s in terms of an disqualification Likewise, at issue client is not here. tangen a law firm has been lationship with question Huyghe of whether hypothetical Texas opinions by in tially discussed disqualified should have been is not before courts, appellate Supreme Court and other Court, hypothetical question nor impression. at hand is one of first the issue disqualification and other sanc- of whether See, In re Am. Home Prods. e.g., if appropriate tions would have been (Tex.1998) 68, (orig.proeeed 985 S.W.2d Huyghe lawyers and Hutchison and were of counsel ing) (considering disqualification engineering experts. of their retention of plaintiffs because separately write on this issue on We testifying expert previously who had rehearing following en for the rea- banc consulting for defendant expert worked as dissenting opinion Helicop sons. The Court’s on litigation); In re Bell the same ter, (Tex.App.-Fort rehearing adopts two-part expert dis (considering orig. proceeding) Worth qualification test outlined Koch Co. Ref. firm of its disqualification of law because MV, L. Boudreaux 85 F.3d Jennifer had consulting expert who retention (5th Cir.1996). 1178, 1181 do not While we in the worked for defendant previously utilization of disagree with the dissent’s specifically, the is litigation). same More test, and, fact, apply this would must address impression we sues first uti same basic test with additional factors (1) be dis expert are: an should whether courts, diverge lized other we from the by one where he was retained qualified insofar as it concludes that Formo dissent expert to an somehow related side but was un disqualification sa met its burden for party; opposing previously retained is, der this standard. That the dissent experts firm of and whether the entire objectively states that it was reasonable belong experts both of these which for Formosa to believe that it had a confi- disqualified. should be Hutchison and relationship dential confidential information was disclosed appro must decide the We first conclude otherwise. The Hutchison. We general, we standard of review. priate rehearing asserts concurring opinion to admit or the trial court’s decision review right to seek dis- that Formosa waived its for an abuse of exclude evidence be- of Hutchison and AWH qualification Fire & Cas. Co. v. discretion. State Farm failed to assert a claim of cause Formosa (Tex.App.- Rodriguez, 88 S.W.3d imparted confidentiality over information denied); pet. see Gua San Antonio judgment Huyghe, and would affirm the Kraft, 77 River Auth. v. dalupe-Blanco waiver, (Tex.2002). finding Rather than no below. We see concurrence, simply we conclude herein apply does the this standard reason not quali its initial turns not on though that Formosa has failed to meet this matter even reliability, but rather on disqualification is nec- fications or burden to show that of interest. We reverse alleged conflict essary. *12 disqualification. present based on the erroneous admission or exclu must be to merit Hewlett-Packard, only if appellant F.Supp.2d sion of evidence shows 330 at See eiTor that was calculated to cause and if (explaining only 1093 that one of the probably did cause the rendition of an present, disqualification likely factors is is Tex.R.App. 44.1(a); improper judgment. P. inappropriate). apply Other courts also Alvarado, City Brownsville v. 897 factors, generally additional sometimes (Tex.1995); 750, 753 Doncaster v. spoken general of in such terms as “funda- Hernaiz, 594, (Tex.App.- 161 601 “prejudice.” mental fairness” and These (“error 2005, no pet.) ques San Antonio weigh competing poli- courts consider and generally tions of evidence is not revers considerations, cy disqualification whether appellant ible unless the can show that the party would be fair to the affected or particular whole case turns on the evi- unduly prejudicial, dis- would be whether excluded”). dence admitted or We note integrity qualification promote would disqualification ais drastic measure judicial process, and whether the “hesitantly, impose only courts should allowing an public has interest reluctantly, rarely.” Wange and Owen v. allowing testify. expert See Grioli rin, (7th 312, Cir.1993); 985 F.2d 317 Koch Corp., F.Supp.2d v. Delta Mach. Int’l 395 Co., 1181; at 85 F.3d Hewlett-Pack (E.D.N.Y.2005) 11, cases); (citing Ref. 13 Hew- 1087, Corp., ard Co. v. F.Supp.2d EMC 330 Co., F.Supp.2d lett-Packard 330 at 1094- (N.D.Cal.2004); 1092 v. Sa United States cases). (citing 95 As stated in Hewlett- lamanca, 1023, F.Supp.2d 244 1025 Packard: (D.S.D.2003); Haugen, Proctor & Gamble Co. v. important policy It is to consider other (D.Utah 1999); 184 F.R.D. 413 Palm goal concerns order to achieve the (D.Md.1992). Ozbek, er v. 144 F.R.D. 67 protecting integrity of the adver- sary process promoting public and of disqualification
When on a based legal system. in the confidence Such prior relationship adversary an is with re concerns include consideration of the quested, majority of courts have ... parties’ strategic positions adopted two-prong test which balances in- creating avoidance of ‘troublesome competing parties. interests of the See experts centives for both re- Clawges, ex rel. v. 620 Billups W. Va. (2005) (col taining party.’ example, experts For if 162, 167, 22 S.E.2d 218 W.Va. permitted confidentiality cases); Wilmore, are breach lecting v. Mitchell (Colo.1999). they might test, agreements, be motivated P.2d Under (1) ‘to their to the opinions opposing if: sell disqualification is warranted without moving party possessed objectively parties highest rea or the bidder about the confidential- potential sonable basis to believe that a confidential concern ity previous of their consultations. The relationship party existed between (2) witness; ‘not expert retaining party might and the confiden be motivated privileged previously designated tial or information was in fact to withdraw a ex- litigation pending for fear provided expert by moving par pert to the while Co., 1181; party’s confidential information ty. See Koch 85 F.3d at Ref. Co., F.Supp.2d would become available to its adver- Hewlett-Packard However, case, sary.’ if too eas- In the both factors are 1093.2 usual ‘experts Laboratories, by Wang two-part first set forth in Paul This test was Inc. v. Toshiba Co., (E.D.Va.1991). 123 F.R.D. F.Supp. Rawlings Sporting Goods (S.D.Ohio 1988), and later framed (8) was discussed product work attorneys whether ily disqualified, unscrupulous provided or documents were relationships may attempt to create expert; experts at potential numerous the abili- hoping preempt fee nominal commu- confidential alleged whether expert to obtain ty of their adversaries party or from nications were assistance.’ versa; vice *13 Hewlett-Packard, Co., at F.Supp.2d 330 (10) funded moving party the whether omitted). (internal citations 1095 opin- formation of the the or directed test, moving par this the trial; Under at to be offered ion demonstrating that the burden of ty bears (11) the expert to which the extent Grioli, necessary. 395 disqualification litigation strate- party’s learned of the Co., 14; at Hewlett-Packard F.Supp.2d gies. seeking at F.Supp.2d party 330 196, F.Supp.2d v. Bic 339 Lacroix bears the burden of estab disqualification Hewlett-Packard, (D.Mass.2004); 330 200 confidentiality lishing both the existence 1093; v. Fairchild at Stencel F.Supp.2d ex rel. and its nonwaiver. United States (D.Ca. 1080, F.Supp.2d 1083 Corp., 174 Ctr., Inc. v. Cherry Hill Convalescent Dell, 1, 2001); 139 F.R.D. 3 Mayer Inc., F.Supp. Sys., Healthcare Rehab 994 (D.D.C.1991); Rawlings Sporting Paul v. (D.N.J.1997); 244, Cordy v. 249 Sherwin- (S.D.Ohio Co., 271, 280 123 F.R.D. Goods (D.N.J. Co., 156 F.R.D. 580 Williams 1988). is more long-term relationship A 1994). a supports the “record likely to exist when prong of the evaluating the first In interactions, which longstanding series test, is, objec whether there anwas a basic under ... coalesced to create have tively reasonable to believe that basis modus retaining party’s the standing of the relationship confidential existed with and deci patterns operation, operandi, fac expert, courts have considered various Hewlett-Packard, sion-making process.” tors, including: (quoting Marvin F.Supp.2d at 1093 330 (1) relationship the was one of whether Co., 113 Co. v. Norton Lumber & Cedar frequent involved long standing and (D.Minn.1986)). Con F.R.D. 591 single contacts instead of a interaction occur when versely, informal consultations expert; with the into the insight received no expert the (2) parties entered into whether In exam litigation strategy. Id. present confidentiality agreement; test,
formal emphasis prong of the ining this retained expert was (3) is not on whether expert was asked to whether se, was a relation whether there per but agree not to discuss the case with the litigant to rea permit counsel; ship would parties or opposing any communications sonably expect that (4) any of expert derived whether Lacroix, Id.; remain confidential. would un- specific his ideas from work done (D.Mass.2004). F.Supp.2d at 200 339 retaining par- of the der the direction ty; is in information Confidential (5) meetings between the the number particular significance “of either formation attorneys; expert and as readily can be identified which [that] (6) ex- party retained the whether the attorney product work or within either litigation;
pert to assist Hew attorney-client privilege.” scope of (cita- lett-Packard, fee; F.Supp.2d at 1093 paid whether omitted). Grioli, subject tions It could include discussion to different standards. See 13; party’s strategy litigation, in the F.Supp.2d re Ambassador Inc., experts party expects kinds of Group, Litigation, F.Supp. re- tain, (E.D.N.Y.1994). party’s strengths view of the attorneys, Unlike ex side, weaknesses of each the role of pert generally each of witnesses serve as sources hired, the experts anticipated necessarily to be of information and not recip- as 1094; Lacroix, See, defenses. Id. at 339 ients of e.g., English confidences. F.Supp.2d Norden, at 201. Communication based F.Supp. Feedlot v. information, (D.Colo.1993) (“The upon opposed technical expert disqualification advice, legal privileged, is not considered distinguished standard must be from the Indus., Salton, Inc., Nikkal Ltd. v. 689 attorney-client relationship because ex- (S.D.N.Y.1988), F.Supp. 191-92 nor is perts perform very different functions in *14 routinely information that is discoverable. Paul, litigation attorneys.”); than 123 Mitchell, 176; In re 981 P.2d at Palmer v. at (stating attorneys F.R.D. 281 that occu- Ozbek, (D.Md.1992). 144 F.R.D. trust, position “a py higher of with con- attorney-client communications, Unlike duties, fiduciary comitant to a client than parties discussions between or counsel and consultant”). does an expert majority experts carry presumption do not the that of that courts have considered the issue of confidential exchanged. information was expert disqualification applied have differ- Hewlett-Packard, 1094; at F.Supp.2d ent standards from those used when re- Indus., Ltd., F.Supp. Nikkal at 191— viewing attorney. the an disqualification of party 92. Because the burden is on the approach This is well-reasoned and we seeking disqualification, party that should adopt Accordingly, it. the Court will not to point specific unambiguous and disclo apply stringent attorney-client the conflict that, revealed, sures if prejudice would in determining Kaji- standards whether Hewlett-Packard, party. F.Supp.2d expert ma’s disquali- this case should be at 1094. fied.
In urging disqualify Applying this to foregoing principles Court AWH, case, Hutchison and Huyghe Formosa cites au instant it seems clear that thority regarding disqualification disqualified representing of le would be from gal personnel suggests Kajima, and law firms and if that cur- indeed were issue rently that Hutchison objectively and AWH should be dis before us. It was rea- qualified in this case under the same rules sonable for that a conclude that prevent attorney represent an from confidential relationship existed between ing adversary Formosa, an a against Huyghe former client. and and the evidence While the rationale for disqualifying an before the trial court would sup- have expert is similar to that for disqualifying ported the conclusion that confidential or attorney interest, privileged who has conflict of information was disclosed to distinguishable the two situations are Huyghe.3 This would be clear-cut case According testimony opinions by expert from counsel with held facts Day, yet expert (regardless Jones the firm had not made a deci known to the of when the regarding designate acquired) sion whether it would factual information was which re Huyghe testifying expert impres as a or utilize him as late to or form the basis mental consulting expert meeting opinions by expert, when with sions and held are 166b(2)(e); Huyghe. abundantly The law is clear that the P. discoverable. See Tex.R. Civ. 166b(3)(b); subject matter on which an witness is see also Tex.R. Civ. P. In re Am. (Tex. expected testify, impressions mental Home Prods. Inc., According- Ctr., at 249. immediately F.Supp. that would side-switching had a Koch, not find that Formosa ly, 85 F.3d we do disqualification. merit See AWH, or relationship with confidential at 1181. relation- Formosa had a confidential However, currently be the issue merely by virtue ship with Hutchison disqualification not the fore Court is Huyghe with or Hutchison’s association court Huyghe, but whether trial consulting group. Huyghe’s refusing disqual abused discretion Moreover, if were to conclude even we ify Hutchison. We hold that For- objectively that it was reasonable to meet either failed its burden meet (1) it had a confidential mosa to believe that it prong of Koch test: was Hutchison, there remains relationship with objectively for Formosa to con reasonable showing prong the second relationship regarding no clude that had a confidential test, is, confidential Hutchison; the Koch priv or confidential or was privileged to or information disclosed ileged provided information fact Huyghe. Day Hutchison either Jones or Formosa, the mov Hutchison either Saliently, none the trial testi- his witnesses ing party, Huyghe, colleague they infor- fied that disclosed confidential AWH. closely ex- mation to Hutchison. We have Based on our review of record evi- *15 amined the written communications dence, objectively it was not reasonable for Huyghe copied sent to Formosa and it Formosa to conclude that had a confi- Hutchison, signs no therein of and we see For- relationship dential with Hutchison. or confidential information. privileged not prior relationship mosa did have a with primarily These communications consisted met, corresponded, Hutchison and never estimates, efforts, marketing budget spoke with him litigation. or about this fact, In at proposals for work. Although Huyghe told Formosa of the when those letters stage litigation Hutchison was available on work sent, work on the case was Huyghe’s were case, did perform Hutchison not infancy in its work clearly additional matter, in any work Formosa on this remained to be done. Huyghe coordination with otherwise. Accordingly, war- disqualification is not We conclude that Hewlett-Packard, ranted. See the two- failed to meet its burden under F.Supp.2d at articulated prong disqualification test by the Fifth Circuit in Koch. Koch
Insofar as Formosa’s motion
See
Ref.
However,
Co.,
in
disqualify
disqualification
late
litigation,
at which time
disqualification
likely
is more
disrupt
An expert
may testify
witness
judicial
proceedings. Hewlett-Pack-
scientific,
regarding
technical, or other
ard,
Formosa bore the proof burden of (Tex.2001); *16 respect disqualification of Hutchison E.I. du Pont de Nemours & Co. v. Robin AWH, son, and (Tex.1995). and we that 549, conclude it failed to 923 S.W.2d 556 In Co., sustain that Koch burden. 85 determining whether expert testimony is Ref. 1181; Hewlett-Packard, F.3d at rehable, 330 a court should examine prin “the F.Supp.2d at research, 1095-96. ciples, Because of this methodology underly- and party seeking 4. The expert’s to exclude way quackeiy profession the ed. That lies. A testimony argu- must offer than questions more mere resolves of method in the same ment; reaches, proof it must offer some of the alterna- way it conclusions about other methodologies tive proof or issues; of the weakness empirical which method is best is used; methodology of the question subject a inqui- itself to scientific ry.... litigant A that wants court of lawyers lampoon Syson GM’s the methods appeals judge’s to set aside a district deci- used to test the sun visor and to reach expert sion to testimony admit has to do engineering conclusions about com- appeal lawyer’s more than to a sense of promises optimize that would a sun vi- how science should be done. performance light sor’s of the risks in- GMC, 715, (7th DePaepe v. 141 F.3d 720 Cir. volved. But their cri de coeur is not 1998); Corp. see up by also Zenith Elecs. v. WH-TV any body backed references to 416, (7th Cir.2005) knowledge. Broad. 395 F.3d engi- scientific What 419 tests do (noting questions analysis neers that Daubert use to resolve of the "will not do to kind Syson con, stop lawyers’ arguments pro addressed? What tests should he and performed? may have appreciate What data these fail did he over- to the difficulties apparently appellate experts look? Counsel want that bona fide encounter. Scientific judges priori judgments to make a about decisions must be made scientific rather means.”). how inquiry scientific should be conduct- than rhetorical
453 record, conclude that Hutchison’s trial we an conclusions.” Mack ing expert’s Tamez, 572, criticized testimony v. 206 578 did not include the Trucks S.W.3d (Tex.2006) Pipeline calculating Exxon Co. v. dam- (quoting “as-released method” (Tex.2002)). Zwahr, 623, 88 S.W.3d method relates ages. The “as-released” testimony involves scientific When causation, opin- and Hutchison’s delay knowledge, expert’s must conclusions testimony on the causa- ion was not based procedures based on the methods and rather, delays, was limited tion of but science, testimony is “no or the more by Kaji- performed valuation of work ‘subjective unsupported belief than or testimony regarding ma. Hutchison’s Robinson, at speculation.’” of the value calculation reasonable (quoting Daubert v. Merrell Dow objective- by Kajima was performed work Pharms., Inc., 590, 579, 509 U.S. 113 S.Ct. pric- and on unit ly verifiable was based (1993)). apply L.Ed.2d We utilized standard ing quantities and and certain non-exclusive factors examine does not estimating techniques. Formosa reliability expert testimony based any criticism relevant this testi- offer knowledge, on scientific but these factors mony. Accordingly, we conclude may apply testimony when involves reliability attack on Formosa’s specialized knowledge. or other technical and testimony misplaced, Hutchison’s Trucks, 578; Mack see is subject this Formosa’s subissue on Chevrolet, v. Jack Williams Gammill third Formosa’s overruled. We overrule (Tex.1998) (listing fac- issue. tors). Supreme The Court in Kumho Tire v. suggested Co. Carmichael . Damages III. Fraud one, Daubert standard is flexible issue, argues first that the trial court should “make certain legally factually insuffi- evidence expert, basing testimony whether fraud jury’s cient award of support upon professional personal studies ex- Formosa, ration- According to damages. perience, courtroom the employs finding. damages al must exist for a basis rigor same level of intellectual that charac terizes the of an in the practice jury charge trial court’s asked Kumho relevant field.” Tire Co. Car damages fraud determine michael, 526 U.S. 119 S.Ct. *17 dif- jury to consider “[t]he instructed the (1999). expert 238 L.Ed.2d When ference, any, if the reasonable between testimony on or is based technical other Kajima’s (excluding any profit) value knowledge, must be specialized there some what it for Formosa and performed work reliability. opinion basis for the show its Ka- Kajima paid.” jury The awarded was Gammill, And, at 726. there $15,432,123.45. jima great “analytical gap” be cannot too opinion expert between the data broad discretion Juries have offered. Id. damages provides assessing where law measure; findings legal jury’s precise no challenge
Formosa not Hutchison’s does merely its disregarded because will not be opin- of his qualifications or relevance figures may arriving at its reasoning ions, solely but instead focuses on the re- unclear, for its long a rational basis so as liability testimony of Hutchison’s v. State calculation exists. McMillin on the allegedly insofar as it was based (Tex. 183, 201 Lloyds, 180 S.W.3d quantify dam- Farm “as-released” method to pet.); no Swank App.-Austin of the instant ages. Based on our review Sverdlin, (Tex.App. supports argument Formosa as 2003, pet. denied); -Houston [1st Dist.] by to the randomness of the point award Keilman, First State Bank v. 851 S.W.2d ing question jury. to a from During (Tex.App.-Austin writ de deliberations, jury sent a note to the nied). trial asking: “Judge, question court two, number are we to base our answer on argues Formosa that the record is owed, million, the amount that is or 25.3 devoid of supporting evidence they how much In response, deserve.” jury’s award of $15,432,123.45and that the jury trial court referred the back to the sequencing numerical finding shows jury charge. Formosa contends that the that the award was randomly chosen and jury inappropriately chose to award an not based on the jury. evidence before the Kajima amount that it believed deserved argues that this case is identical rather than follow the given instructions by to that considered the Austin Court of Again, it. disagree. question we Appeals Keilman, in First State Bank v. jury regarding from the Kajima how much (Tex.App.-Austin S.W.2d 914 equates value, deserved to the reasonable denied). Keilman, writ In plaintiffs excluding profit, of its work. brought usury against claim First State Bank, arguing they that charged were We conclude that the evidence here was $7,161.44in unauthorized interest. id. See jurors sufficient to enable reasonable at 931. The bank submitted evidence range possible choose from a damage it charge did not unauthorized interest. $15,432,123.45 awards that included the jury Id. The damages heard evidence that ultimately amount awarded. ex- $7,161.44 zero, were either yet awarded Hutchison, pert, regarding testified Id. at 929. The $360. Austin Court held damages Kajima. by suffered Hutchison award, that no supported evidence this as first by calculated the total costs incurred “inexplicable in light of the evi $38,717,854. Kajima to be He then sub- dence” appeared and “it jury $3,330,574 tracted from that figure, as pulled a number out of a hat.” at Id. provide costs did not value to Formo- case, In Kajima the instant asked the sa, $35,387,380, arriving thus repre- $25,307,287. jury contrast, to award it senting the reasonable value of the work argued jury should performed Kajima. by Hutchison then However, Kajima award nothing. this is $10,000,000 paid subtracted as the amount situation, Keilman, not a inas where there by Kajima argued Formosa. that the re- only possible were two answers to the $25,387,380, sulting figure, represented the damage question. The evidence before the difference in value giv- between what was jury did present a situation where en paid what was For- damages only could be calculated based mosa. *18 possible two say, choices. That is to contrast, argued Kaji- Formosa that than a binary “[r]ather choice or a series figure ma’s choices, of should be reduced because of binary this evidence presented jury the with a wasted labor that did not add value for range possible of awards.” McMillin, Holloway, Formosa. a at Mike Formosa S.W.3d 203. The fact jury supervisor, specifically that the field that figure chose neither the re testified quested by Kajima spent by Kajima half of all figure suggest nor the labor was wast- by ed Formosa does not ed. testimony invalidate the Other attacked award. productivity methodology. and work ver jury based us, testimony of determine whether case
In the before submitted invalid an improperly and lengthy was dict experts witnesses and v. Cas Ins. Co. theory.” See regarding The dam Crown evidence detailed. Life (Tex.2000). teel, 22 S.W.3d many components to contained ages of val disparate and estimates considered with Formosa’s disagree We v. assigned Aboud to be to each. See ues the multiple applies Casteel argument. (Tex. Schlichtemeier, 742, 749 contrast, the instant by liability; ories of denied). App.-Corpus pet. Christi Con only one-fraud. involves situation damages jury were awarded contention, Casteel trary to Formosa’s This range of evidence. well within the require granulated a submission does not jury to supplied a basis for the evidence theory a multiple single acts under as to per rationally ascertain the value of work Moreover, note liability.5 I would See id. by Kajima and what was formed un including factually the error of a that legally We hold that there is paid. jury ques claim in a broad-form supported factually support sufficient evidence to always reversible. Romero v. tion is not damages. jury’s finding regard in to actual Inc., Consol., KPH S.W.3d first We overrule Formosa’s issue. (Tex.2005). reversible, the errone To be pre have “probably instruction must ous Charge IV. Error pre properly from appellant vented issue, In its second Formosa contends appeals.” senting the case to the court of single the trial of a court’s submission Tex.R.App. Romero, 44.1(a)(2); P. See liability question reversible broad-form Here, con underlying at 227. case, asked, In this the jury error. was liability jury upon which the found duct Kaji- fraud against “Did commit five of the essentially the same all argues charge ma?” Formosa record, we at On this are contracts issue. separate have answer provided should “reasonably jury that the was not certain at for each of the five contracts blanks errone influenced issues significantly in this issue case. Formosa contends Romero, to it.” See ously submitted separate failure to include answer even if Consequently, 227-28. each it impossi- blanks for contract makes analysis, in the instant we applied Casteel damage jury’s to trace the award back ble in any have error would found any specific contracts contract over jury instruction was harmless. We from challenging prevents issue. rule Formosa’s second sufficiency as to the evidence contracts. individual Ratification V. issue, Formosa In its fourth to order a new required
We are by refus that the trial court erred argues under Insurance Co. trial Crown Life on ratifi liability ing requested to submit its issue single when broad-form Casteel “a Formosa, jury. According multiple theories of cation question incorporates jury requested way pleaded properly “cannot liability” such that we traffic, failing proper in the lane misinterpretation of Casteel remain If Formosa’s correct, failing simple steering, negligent case negligent even a car wreck were require granulated brakes, would submission Crown apply the *19 etcetera. See Life negligent in 378, (Tex. driver was Casteel, whether defendant v. 22 S.W.3d 388 Co. Ins. lookout, keep negligent in failing proper a 2000). speed, negligent in failing to a safe maintain 456
submission on
and
ratification
there
issues
supported by
authorized and
law
ample
support
evidence to
an
governing
issue on
the case. Harris
v.
County
Smith,
230,
(Tex.2002).
plea
ratification.
is a
in
Ratification
avoid-
96 S.W.3d
234
“If
properly pleaded
ance and
issue is
sup-
thus an affirmative
and
defense
is
which,
ported
evidence,
consent,
by
a
by
litigant
absent trial
some
is waived
is enti-
controlling questions
tled to have
affirmatively
unless
pleaded. Land Title
submit-
Inc.,
ted to
jury.” Triplex
Riley,
Stigler,
754,
Co. v. F.M.
609
Comm. v.
S.W.2d
(Tex.1980).
716,
(Tex.1995);
900 S.W.2d
718
756
see Tex.R.
278;
Smith,
Civ. P.
v.
see also Elbaor
845
person
A
ratifies an unautho
(Tex.1992).
240,
S.W.2d
243
if, by
conduct,
rized act
or
word
The trial court has broad discre
knowledge
facts,
of all material
he con
in
jury questions
tion
in
submitting
recognizes
firms or
act
as valid. Mil
Trading
structions. Plainsman
v.
Co.
Minshew,
v. Kennedy
ler
142
&
S.W.3d
Crews,
(Tex.1995).
786,
898 S.W.2d
791
325,
2003,
342-43 (Tex.App.-Fort Worth
a question
“Failure to submit
shall
not
denied);
pet.
Mo.
R.R.
Lely
Pac.
Co. v.
ground
judg
deemed a
for reversal of the
787,
Dev. Corp., 86
792 (Tex.App.-
S.W.3d
substantially
ment
ques
unless a
correct
dism’d).
2002,
Austin
pet.
Ratification
tion
requested
writing
has been
by
express
need
be shown
word or
by
party complaining
tendered
may
deed but
be inferred
a course of
judgment.”
a
Tex.R. Crv. P. 278. “When
Miller,
342-43;
conduct.
142 S.W.3d at
trial court
proper
refuses
submit a
Co.,
Mo. Pac. R.R.
adduced evidence that showed “the was both irrelevant cumula evidence intention, clearly manifested, abiding by of tive trial. of other evidence adduced the affirmance of the contract” or evidence regarding items omitted from Evidence Kajima’s of intention acts indicated Kajima’s bid irrelevant a fraud case Accordingly, waive the fraud. See id. we involving out-of-pocket an measure overrule Formosa’s fourth issue. damages. See Formosa Plastics Exclusion of Evidence Contractors, VI. Eng’rs. USA Presidio & v. (Tex.1998). Moreover, issue, fifth its Formosa contends that cumulative inso excluded evidence was court trial committed reversible error regarding far as several witnesses testified prevented when it Formosa from submit- Kajima’s and the omissions from the bids ting Kajima’s damages evidence that were evidence, excluded such bids. Other argues not caused fraud. Formosa alleged mismanagement, bribery, Kaji- the trial court excluded evidence that Kajima’s managers, one theft ma omitted “millions of worth of dollars also to the ultimate issue re irrelevant items from and also excluded bids” garding or not Formosa commit whether testimony Kajima’s showing other ted fraud. were and were not damages self-inflicted proximately by any alleged caused fraud entire defense the case Formosa’s part. on Formosa’s mismanage- alleged centered on self-inflicted project causing to admit or exclude ment of the
Whether In the entire evidence is a matter committed to trial loss. context Formosa’s defense, agree we cannot that exclusion City court’s discretion. See sound Brownsville, 753; verdict. improper Bic the evidence caused 897 S.W.2d at Pen (Tex. Carter, fifth Accordingly, Corp. we overrule Formosa’s granted). App.-Corpus pet. Christi issue.
VII. Out of Pocket
Losses
signed, applies
to a purchase and sale of
such,
See
it
business.
id. As
is inappli-
issue,
In its
alleges
sixth
Formosa
that
cable to construction contract. Even if it
Kajima’s out-of-pocket loss
not have
could
however,
did apply,
apply
we would not
awarded,
exceeded half of what
jury
the
to a contract for services wherein the evi-
erroneously
the trial court
to
refused
“string-along”
arising
dence showed
fraud
Kajima’s
admit
evidence
self-inflicted
contracts,
after execution of the
as the
losses and to instruct
jury
mitiga-
the
evidence
this case establishes. A dam-
tion.
analysis
age
focusing solely on the date
are
There
two
of dam
measures
that the contract was executed would omit
ages
They
for fraud.
are the benefit-of- damages
post-contract
attributable
the-bargain
out-of-pocket
measure
the
Kajima,
fraud. See
ty proposition party that an the re- required damages is not minimize trial, granted court Prior trial Foods, sulting Meadolake from fraud. judg- partial summary motion (Tex.Civ. Estes, 862, Inc. v. 218 868 S.W.2d and found Formosa USA ment 1948), n.r.e., App.-El Paso 148 writ ref'd single as were a operating Formosa Texas 13, (1949); Duper Tex. 441 219 S.W.2d see jury Accordingly, the enterprise. business Bank, 740, v. 754 ier Tex. State 28 S.W.3d that it consider the was instructed could 2000, pet. (Tex.App.-Corpus Christi dism’d deciding of Texas when conduct Formosa v. by agmt); New Inc. Process Steel liability of Formosa USA. Tex., Inc., 209, 703 Corp. Steel S.W.2d of issue, In its Formosa contends seventh 1985, (Tex.App.-Houston 215 [1st Dist.] by granting a the trial court erred n.r.e.). writ ref'd summary judgment finding Second, Formosa had the bur a operated as and Formosa Texas USA den to show that did not use ordi enterprise. con- single business nary dam reducing avoiding care (1) required for a actual fraud is tends ages. See Moulton v. Alamo Ambulance (2) enterprise, of business finding single (Tex.1967). Serv., 444, To 414 S.W.2d a enterprise ques- is fact single business instruction, a mitigation be entitled to (3) if jury, and even the issue tion for the (1) clearly evidence must show that law, a matter of could be considered as plaintiffs mitigate decision caused not evidence to Formosa submitted sufficient damages, sufficiently guide further create a fact issue. jury determining damages which legal pro of plaintiffs purposes decision For were attributable subsidiary par Dairy ceedings, corporations and not to v. Gon mitigate. Hygeia Co. zalez, 220, corporations separate are distinct (Tex.App.-San ent law, and the 1999, as a matter of pet.). “persons” Antonio no The defendant entity corporations gener will separate prove not have to an exact amount does courts even where plaintiffs ally con be observed damages attributable to the may dominate or control duct, company evi one required present but some is compa other company, a or treats the jury can make other dence from which the instrumentality, department, ny that oc as mere calculation of the losses reasoned Processing Co. S. Tex. agency. not to or plaintiffs decision Valero curred due Dist., 954 County Appraisal v. Starr mitigate. Id. Timmons, (Tex.App.-San S.W.2d Antonio v. Hall 255-56 denied). (con pet. The “single (Tex.App.-Beaumont business pet.) no enterprise” theory equitable doctrine cluding that than a more scintilla evi- disregard separate used to existence supported jury’s finding dence corporations corporations are when the single enterprise); business Paramount entities, operated separate but rather Ctr., Corp. Taylor Petroleum Rental integrate their resources achieve com (Tex.App.-Houston [14th *23 mon purpose. Republic business Old Ins. n.r.e.) 1986, (same); Dist.] writ ref'd see 393, Corp., Co. v. Ex-Im Servs. 920 S.W.2d (USA) Gladstrong SSP Partners v. Invs. 1996, (Tex.App.-Houston 395-96 [1st Dist.] 27, 44 Corp., 169 (Tex.App.-Corpus S.W.3d writ). no filed) 2005, pet. Christi to (declining extend liability the to a party’s doctrine vicarious courts, appellate Several intermediate wrongful for the acts of a see including Court, non-party); recognized this have a Tex., Simons, Allright of also Inc. v. 501 concept “single enterprise” in business See, 145, e.g., one context or another. Nat’l S.W.2d 150 (Tex.Civ.App.-Houston Adm'rs, Co., 1973, Plan Inc. Nat’l n.r.e.); Murphy Dist.] v. Health Ins. writ ref'd [1st 718, 2004, (Tex.App.-Austin 150 S.W.3d 744 E. Bros. Chevrolet v. Oakland Auto Auc filed) pet. (Tex.Civ. a (recognizing tion, doctrine as valid 272, 437 S.W.2d 275-76 equitable corporate piercing n.r.e.). means of the 1969, App.-El Paso writ ref'd We impose liability); Bridgestone Corp. veil to supreme would note that has the court (Tex. 670, v. 131 Lopez, S.W.3d 686-87 viability spoken single on the of the busi 2004, App.-Corpus pet. Christi granted, enterprise theory. ness See Southern Un w.r.m.) judgm’t vacated (finding exercise 74, City v. Edinburg, ion Co. 129 S.W.3d of jurisdiction of comported process due (Tex.2003) (“We today 87 need not decide corporations operated where two a sin as theory ‘single whether a enter of business gle enterprise); business El de Puerto prise’ is a addition necessary to Texas law Liverpool, S.A. v. de C.V. Servi Mundo regarding theory the of ego alter for disre Llantero, C.V., 622, S.A. de 82 S.W.3d 636- garding corporate structure the theo and 2002, (Tex.App.-Corpus pet. 37 Christi venture, joint joint enterprise, of ries or w.o.j.) (affirming special dism’d denial of joint partnership imposing for and several appearance companies where com- shared liability.”). employees, mon used a centralized ac Factors to considered deter system, counting performed and services mining separate corporations whether other); Int’l, for each In re U-Haul 87 should be as one in enterprise treated 653, (Tex.App.-San S.W.3d Antonio (1) (2) employees; com clude: common pet.) (considering no the issue of (3) offices; accounting; mon centralized production alleged document from entities (4) corporation payment wages by of one operate single enterprise); as a business (5) corporation’s employees; to another Lines, Emmons, N. Am. Van Inc. v. name; (6) common business services ren 103, 119-21 (Tex.App.-Beaumont S.W.3d denied) employees corporation dered the of one pet. (recognizing equitable (7) of un corporation; on behalf another may apply under cir exceptional doctrine cumstances); (Boliv documented transfers funds between Aluminum Chems. (8) ia), Corp., corporations; Inc. Bechtel unclear allocation (con (Tex.App.-Texarkana profits corporations. no losses between pet.) appellant had issue Paramount cluding waived Petroleum pertaining single enterprise); business at 536. holder, owner, sub- single business basis purpose scriber, or ego theory like or is
enterprise theory, the alter affiliate pierce or on designed corporation, and other doctrines ego alter veil, prevent inequitable an corporate is fraud or construc- of actual the basis Branscum, Castleberry v. result. See fraud, a a to perpetrate sham tive (Tex.1986).6 The courts fraud, unless theory, similar or other ratio have articulated several different obligee demonstrates disregarding corporate nales for fic subscriber, holder, owner, or affiliate (1) tion, used including: when it is as corporation be used caused (2) fraud; perpetrating means of where did perpetrating and purpose corporation organized operated actual fraud on perpetrate an tool business of another mere conduit per- obligee primarily direct (3) corporation; where it is used evade owner, holder, sonal benefit existing legal obligation; where it is *24 subscriber, ... or affiliate or a employed perpetrate to achieve mo Corp. 2.21(A) (Vernon Ann. art. (5) Tex. Bus. it is to circumvent nopoly; where used 2003). The Bar Committee Comment (6) statute; corporate a where the of Business Cor- to article 2.21 the Texas is upon protection fiction relied as a of poration Act states: justify or at wrong. crime to Id. 272. Castleberry, particular in its use of con-
We first address Formosa’s asser piercing the required tion that actual fraud for a fraud a basis of is structive as veil, finding single enterprise. many of For business was considered corporate argument mosa its on article bases to decided. practitioners incorrectly be 2.21(A)(2) Corpora the Texas of Business Further, in con- questionable while Act. tion See Act Ann. art. Tex. Bus. claims, use of CoRP. text of tort construc- 2.21(A)(2) (Vernon 2003).7 This section piercing a of tive fraud as means provides: a cloud on the corporate veil created shares,
A. A any holder of an owner of public policy sanctity of contract and shares, in a beneficial interest or sub- separate recognizing corporations of subscription scriber for shares whose apart from them shareholders. entities has been or accepted, any affiliate there- Castleberry, Article 2.21 response corporation, of or of the shall be under of the TBCA was amended obligation no to the or corporation un- legislative a clear standard establish obligees respect with to: liability of a shareholder der which corporation is to obligations
for the
of
be
in the context of contrac-
determined
any
cor-
obligation
contractual
relating
obligations and all matters
any
relating
tual
poration or
matter
to or
on the
thereto.
arising
obligation
from
necessary
impose personal
Castleberry
7.
elements
is cited
for its historical
The
6.
herein
carried
theories,
liability
a shareholder have been
origins
but
discussion of
of these
of the Business
forward in section 21.223
superceded
largely
by subsequent
it has been
Org.Code
Organizations Code. See Tex Bus.
Castleberry
statutory
Compare
amendments.
(Vernon Supp.2006).
§
That
21.223
Branscum,
(Tex.1986);
Ann.
Based facts before this re- Jersey With apply Livingston, that article 2.21 does not New conclude issue, project companies instant because the contracts gard case by USA, signed Formosa not Formo- account- were or coordinated had a centralized Texas, wholly subsidiary. sa owned system they to the extent related ing There is no Formosa Texas contract. For- change orders approval construction party mosa Texas not a the contracts compa- regard project. Both at issue in this case. name: a common business nies shared Employees corporation of one “Formosa.” Moreover, case, jury in the instant on behalf of the other. rendered services guilty Formosa its own found USA Dobbs, employee of Formosa Glenn herein, sup- fraud. As discussed evidence Texas, analyses Formo- performed bid ports jury’s finding USA Rob- project. USA on the construction sa committed fraud. Because the evidence Chang, employ- ert Hsueh and Simon both Formosa USA’s own fraud is sufficient Texas, L.F. reported to ees of Formosa support jury’s finding Pan, Formosa USA. employed who fraud, committed Formosa has USA for Formosa legal The director of services ruling harmed trial been court’s Texas, Mehrens, Camp reported Jack single enterprise. business Wu, Texas and an officer of both Formosa *26 subissues, In its next two Formo employee, Formosa USA. Another Jack a single sa contends that whether business if he Huang, he was not sure testified enterprise question exists is a fact for the USA or Formosa worked Formosa jury, and even if the issue could be consid An- the project. Texas on Point Comfort law, as a ered matter of Formosa submit he employee, Tseng, Jeff testified other fact ted sufficient evidence create a be- the differences did not understand matter, an that issue. As initial we note Texas. Formosa USA Formosa tween single appellate courts have considered comparing facts and Considering these enterprise a law. business to be matter of the in Para them to factors enunciated Tex., Simons, Allright Inc. v. 501 See Corp. Taylor Rental mount Petroleum (Tex.Civ.App.-Houston Ctr., determining separate whether n.r.e.); writ ref 'd see also [1st Dist.] one en corporations should be treated as Murphy Bros. Co. v. E. Oakland Chevrolet Kajima we that met its Auction, (Tex. terprise, conclude Auto 437 S.W.2d n.r.e.). both no issue showing genuine burden Civ.App.-El Paso writ ref'd partial material fact and entitlement to However, single whether or not business as matter of on the issue judgment law enterprise jury fact issue for the or enterprise. single business See of of that can established a matter issue Tex.R. 166a(c); P. Paramount Petroleum law, Kajima suffi Civ. we conclude that offered at 536. We overrule grant evidence for the trial court to cient that seventh issue. summary judgment resolving Formosa’s partial Withholding However, IX. Evidence failing error in to send ex- jury during hibits the room delibera- issue, In eighth alleges not call tions does for reversal unless the that the by withholding trial court erred probably error caused rendition of an documentary evidence from dur- jury Tex.R.App. judgment. improper See P. ing its even docu- though deliberations 44.1(a)(1). ments had been admitted into evidence. twenty-sev- Formosa’s complaint concerns case, In the reporter’s this rec en engineer- volumes drawings, of CTCI ord does not indicate that all of the draw ing drawings design used to and build bid ings fact, were admitted into evidence. In the CM project. Formosa contends trial, trial earlier court did not that drawings these were the center of drawings published allow some of the to be Kajima’s fraud claim insofar as as- jury grounds they that were not defective, drawings serted that were part Accordingly, of the contract. the trial defective, they Formosa knew were if court did not err. Even trial court Formosa withheld that information from however, erred; we cannot conclude that Kajima. contrast, Formosa contended any alleged error probably caused the ren the expert testimony indicated the judgment. of an improper dition over We CTCI drawings were suitable to bid and eighth rule Formosa’s issue. project. build the Accordingly, Formosa contends that the documents were crucial Prejudgment X. Interest jury for the Kajima argues to review. issue, In its ninth and final drawings, other in- than those contends the trial court erred cluded in package, the CM 903 bid were awarding Kajima prejudgment excessive The evidence. trial court allowed Specifically, Formosa interest. contends the jury only drawings to have that, Tex., Higgins under Johnson & part were of the CM package. 903 bid Inc., Energy, Inc. v. Kenneco Texas Rule of Civil Procedure (Tex.1998), court the trial should have provides that: section applied 304.105 Fi- Texas shall, jury and on may, request take Code to nance reduce claim for them their retirement prejudgment interest. See Tex. Fin.Code instructions, charges general spe- (Vernon 2006). § 304.105 Section Ann. cial, them, given which were and read to *27 304.105(b)provides, in that: part, evidence, any except and written the judgment If for a claimant is more than witnesses, depositions of but shall not amount of a the settlement offer of the take special charges with them defendant, prejudgment interest does part which have refused. been Where of not accrue the amount the settle- only of a has in paper been read evi- during period ment offer the the offer dence, jury shall not the same take may accepted. be them, with part unless the so read to them is from detached that which was 304.105(b). § Id. Formosa contends that excluded. Kaji- it offers to made several settlement mandatory, ma, $15,361,000, This including rule is and the trial court an of offer and required is all to send exhibits admitted the trial court should not have awarded jury during into evidence de- prejudgment peri- to room interest for the relevant Employees liberations. First Co. v. time during Ins. ods of which offers could Skinner, (Tex.1983). 170, accepted. 646 S.W.2d 172 been have of court of state.” ty damage an case this legal
There are two
sources for
304.105,
(1)
addressing
§Id.
304.101. Section
prejudgment
award of
interest:
com
a settlement offer on
(2)
the effect of
equitable principles;
mon law
and
interest,
of
part
is
prejudgment
accrual of
enabling
Higgins
statute.
Johnson &
of
B,
accordingly, applies
subchapter
(Tex.1998).
Tex., Inc.,
The majority concludes that the trial tial summary judgment that Formosa USA court abused in refusing its discretion comprised and Formosa single Texas disqualify expert Hutchison as an witness business enterprise. The trial court Kajima. for For the same reasons es- agreed. Kajima nonsuited Formosa Tex- submission, poused original I respect- as. It also all of its nonsuited claims fully concur result. with the
against except fraud. USA I. THE HISTORY CASE OF during Before and both the retrial This is a jury suit for fraud tried to a trial, 2002 and the unsuc- appeal after In January and remand. cessfully sought Kajima’s to strike expert International, Kajima (“Kaji- Inc. witness, claiming that the opin- witness’s ma”), an international industrial con- ions were unreliable and that he had firm, struction sued Formosa Plastics during “switched the litigation. sides” At Corporation, USA Formosa Plastics trial, testified, the 2002 over Corporation, (“Formosa”), a petro- Texas objection, Kajima Formosa’s expend- company operations chemical $38,717,854.00 ed in total in complet- costs Comfort, County, Point Calhoun Texas. ing project. Kajima He also testified sought damages fraud, expended $3,330,547.00in costs that added contract, meruit, breach quantum no project. parties value to the The did negligent misrepresentation arising out not dispute paid Kajima that Formosa ap- performed of five contracts for work $10,000,000.00 proximately on the project. Kajima in expanding Formosa’s Point Kajima’s expert Kajima’s concluded that facility.1 Comfort out-of-pocket damages equaled mistrials, After two the case went $25,387,380.00. jury verdict in 1997. trial court en- evidence, At the judgment conclusion notwithstanding jury’s tered trial findings Kajima’s single court submitted broad-form favor on some but not question jury. fraud It refused recovery. Kaji- all theories of for a appealed resulting judgment request question ma Formosa’s fraud $5,591,066.65, findings that asked for complaining separate the trial as to each erroneously court refused to submit a contract. It refused also Formosa’s re- For a (Tex.App.-Corpus pet. more detailed discussion of the rele- *29 Christi facts, opinion Kajima denied). vant see in this Court’s Int’l v. Formosa Plastics Kaji- denying challenge in quested mitigation and ratifica- discretion its instruction expert’s question. arguing that the expert, tion ma’s In the first methodology was unreliable. trial, the 1997 had parties Before the three, claims also part of issue Formosa 11 agreement regard- entered into a rule the trial court should have struck that the admissibility pages of ing the thousands of “side- expert disqualifying because Af- See Tex.R. P. 11. documents. Civ. In issue switching” conflict of interest. remand, parties agreed the that their ter five, court’s challenges Formosa the trial agreement regarding the admissi- rule Kajima caused of evidence that exclusion bility party’s applied of each trial exhibits damages by of its own underbid- portion During to the second trial. deliberations ding the contracts and other “self-inflict- trial, all jury requested at the second ed” losses. Kajima provid- objected trial exhibits.
ing post-contract drawings technical grounds irrele- jury they on the were Expert Challenges 1. The Witness vant, misleading, and not evidence. responded
Formosa the documents Reliability a. par- admitted in were accordance with opinions asserts that Formosa agreement. court ties’ rule The trial witness, “Chip” Kajima’s expert A.W. Kajima’s to all objections sustained Hutchison, Relying are unreliable. post-contract drawings. and its Formosa con- progeny, Robinson deliberating, jury After answered of formu- tends that Hutchison’s method fraud the broad-form question expert lating opinions, his to which the Kajima’s damages favor. It assessed Method,” is as the “Hutchison referred $15,432,123.45. judgment The resulting idiosyncratic accepted and not within Formosa, 12, 2002, against April filed industry. E.I. du Pont construction See Kajima $15,432,123.45 awarded in actual Robinson, & Co. v. de Nemours $403,156.86 costs, damages, fraud (Tex.1995). Kajima ac- $14,210,269.65in prejudgment interest at knowledges used term annum, percent the rate of ten for a per mate- promotional “Hutchison Method” in judgment $29,642,393.10. The total How- methodology. rials to describe his also in- judgment postjudgment awarded ever, did not Kajima argues, Hutchison post- terest at the rate of ten In percent. delay testify in the 2002 trial about causa- motions, judgment sought an ad- tion, expertise which is area of justment prejudgment interest argument, but which Formosa directs its judgment awarded in the to reflect settle- Kajima only the value the work about ment credits. The trial court refused. Kajima notes performed for Formosa. appeal presents This ensued. Formosa fully Hutch- that Formosa cross-examined The majority nine issues. sustains challenged damages calcula- ison and his issue, For third reverses remands. contends, any event, Kajima tions. below, stated I affirm the reasons would not Hutchison’s challenge Formosa did judgment. based education and qualifications, on his experience in the construction extensive II. DISPOSITION industry, opinion to render an about Evidentiary A. Issues Kajima. performed by of the work value court, three, in the trial By raising For- issue part In the second of issue concludes, waived that the its mosa asserts trial court abused *30 468
challenge appeal reliability to the court acts as a “gatekeeper.” Gammill v. Hutchison’s opinions regarding Kajima’s Chevrolet, Inc., Jack Williams 972 S.W.2d I damages. appeal, (Tex.1998). note that on 713, 726 We review a trial does not challenge Hutchison’s credentials court’s preliminary determination of the expertise or otherwise assert admissibility expert testimony witness Hutchison was unqualified or that his under an abuse-of-discretion standard. opinions Rather, not were relevant. For- Guadalupe-Blanco River Auth. v. Kraft, opinions mosa asserts that Hutchison’s 805, (Tex.2002); Tamez, 77 S.W.3d were not based on a rehable foundation. S.W.3d at 554.
(1) Standard of Review and (2) Reliability Scope of Review Burden of Proof I objected note that Formosa Rule 702 of the Texas Rules of Evidence reliability before, opinions of Hutchison’s governs admissibility expert testi- during, and after both the 1997 and the Robinson, mony. 702; See Tex.R. Evid. 2002 trials. The record before us consists at provides: S.W.2d 554. Rule 702 “if of Hutchison’s 1997 affidavit as well as scientific, technical, or other specialized testimony in multiple proceedings, includ- knowledge will assist the trier of fact to ing judi- both trials.2 The trial court took understand the evidence or to determine a cial prior proceedings, notice of the includ- issue, in fact qualified witness as an ing hearing, during a Robinson the 2002 skill, expert by knowledge, experience, trial. This Court has had occasion to training, or may testify education thereto determine the scope of our review ex- in the form of an opinion or otherwise.” amining a trial court’s exercise of discre- 702; Trucks, Tamez v. Mack Tex.R. Evid. tion in performing gatekeeping function Inc., 100 S.W.3d (Tex.App.-Cor- regard expert testimony. Two of pus 2003, pet. granted). Christi The ex- appeals our sister courts of have concluded pert qualified must be prof- render the appellate that an court examines rec opinions. fered testimony Id. at 556. The ord reviewing as whole when the trial also must be relevant and based on a preliminary admissibility court’s determi reliable foundation. oppos- Id. Once the 104(a). J.B., nations under rule In re objects ing party proffered expert testi- (Tex.App.-Waco 619-20 mony, proponent of the witness’s testi- denied); pet. accord State Farm Fire & mony bears the demonstrating burden of Cas. v. Rodriguez, Co. its admissibility. Id. at 557. denied) (Tex.App.-San pet. Antonio (“The burden,
To meet this proponent record as a whole shows that [the (1) must demonstrate expert’s] opinions that: is grounded are in scienti qualified; expert’s testimony fic procedure method and and amount to Robinson, relevant subjective and reliable. See unsupported 923 more than belief or record, S.W.2d at 556. speculation.”). These are threshold issues light On this the trial court multiple determines under rule proceedings which Hutchi- 104(a) admitting testimony. before testimony son’s was both offered and 104(a); Robinson, cross-examined, See Tex.R. Evid. I would hold that regard, this the trial scope of our review of the reliability of his 2. We ordered the along record of the 1997 trial with the record of the 2002 trial. included within the record of this appeal *31 is I described above ty. approach The record. encompasses complete opinions 619-20; J.B., management projects see in at utilized See In re Co., pro- after the analysis of claims Farm Fire & Cas. well as also State ap- This completed. at 320. have been jects method used only effective is the proach (3) Reliability Analysis complex projects industrial analyzing in affidavit, spe- “In Hutchison stated: and consultants who by engineers In his firm litigation, my Kajima/Formosa cialize in that endeavor. analyzing years three spent past has Hutchison tes- hearing, At one Robinson pro- pages one million approximately method “is some- the “as-released” tified his explained He ject-related records.” about, years say, I would thing that’s methodology: been around old, years old. It has generally ac- methodology that is The in relation to con- time and is new long approach appropriate as the most cepted in in terms of its use but not new struction project is to evaluate an industrial to use delay evaluating project in forecasting and This method. called the “as-released” developing After restriction.” and work subject peer methodology has been through edu- qualifications Hutchison’s many years. scrutiny and review con- experience and extensive cation my spe- past years, For the area of (which industry Formosa has struction in- analysis of cialization has been the Hutchi- challenged), established jobs quan- and the dustrial construction evaluating regard to expertise son’s delays, damages tification of involve delays: construction acceleration, productivity and disruption Now, your company does Q. Okay. approach The is losses. “as-released” analysis management and construction and non- widely litigation used for both delays on delays and what causes management pur- construction litigation projects? large industrial have reviewed the meth- poses. Courts case, Yes, have A. sir. odology applied in this and rea- logical found that it was both do, you do part of what Q. Okay. As sonably calculated to reflect the extent occur? why delays you determine de- delays and causation for such Yes, A. sir. that I lays general approach .... The you to do? people hire Q. That’s what delay, related ac- analyzing used in A. It is. jobs and extra work on all five celeration usually to deter- Q. you And are hired in this is the “as-released” issue delays? or what causes mine who approach which we method.... has been have used to evaluate this case A. I am. analyzing times in indus-
used countless much those Q. you Do determine how outside trial It has been used projects. delays cost? a number of litigation context on do, yes, I sir. A. (1) occasions, University of including of deter- Q. process is the And what Facility Cogeneration Carolina North delays cost? much the mining how (2) Hill, Certainteed Chapel Vetrotex you go method that What’s (3) Texas, Falls, West- plant Wichita to determine that? through Saraville, facility in Saraville inghouse damages, which (4) Center, Quantification A. Jersey, Dallas Civil New costs, is to which what I call what Sewage Treatment facili- Fort Worth go project into the records and to look ... be asked is did Formosa commit money expended against Kajima? at how the fraud *32 study composition the crude Yes, A. sir. job and to see how crews were used Q. Now, things one of the that we’re and to see what conditions this labor going to want to I looking and subjected and part parcel is of think agreed important it’s that it’s evaluating why projects cost more Kaji- what did Formosa know before they than planned are to cost. signed ma its contracts. And have you in seen evidence this record step any analysis The first is to that Formosa knew that these draw- estimate, find out what is the what ing problems Kajima and existed cost, should it what is the—what is very types problems would have the accomplish the normal cost to this job they that it had on and that this work. Kajima signed knew that before identify The next is to what are the contract? cases, additional tasks. In some it is Yes, sir, really A. I have. And that’s very easy, discrete exercise of sim- this, part the unbelievable is that work, ply looking at extra such as the they Formosa knew it and still let this jointing double pipe project. this job go forward. cases, In other it has do phe- to with Now, Q. you do base on the For- nomenon associated with overcrowd- you’ve mosa internal memos that seen ing congestion or overtime or dilu- or Kajima that were written before supervision, tion of concepts all which signed its contract? have been around construction for Yes, A. sir. years years years and and have by evaluated our firm been for the testimony Hutchison’s 2002 trial shows past years but have evaluated been that Hutchison testify any opin- did not by many experts different and author- regarding application ion of the “as-re- ities over that time. methodology leased” in determining causa- Q. many years you personal- How have delays alleged by tion for the construction
ly spent analyzing delays Kajima causes of to have caused Formosa. been quantification court, arguments the cost of those trial Formosa delays on large projects industrial like acknowledged that Hutchison did not dis- job? the Formosa cuss “the ‘as built’ or the Hutchison Meth- od that he made so much at the last trial A. For past years. having anything to do with fraud dam- Q. you living? That’s what do for a Rather, ages.” Hutchison arrived at his A. what I for a living. That’s do opinions by skill, applying knowledge, his However, trial, at the 2002 experience, training, and education to his out, points opin- basis Hutchison’s review of relevant construction documents. documents, ions consisted of Formosa’s He then summary testified to a of his including memoranda, internal not the ex- review of the documents as the basis for pert’s “as-released” methodology. Hutch- See Tex.R. Evid. opinions. his I ison testified: opinions regard- conclude that Hutchison’s Hutchison,
Q. Mr. keep perspec- ing culpability Formosa’s for fraud and the case, project tive what’s at issue in this one of value of work on the were questions jury’s that the going expe- to based on his education and extensive testify- own discovery because Formosa’s industry, not on in the construction rience Huyghe’s reviewed challenged expert witness methodology ing “as-released” I did not appeal. Accordingly, in this product; work sign any “analytical gap” Huyghe between and did formally do not find retain testimony by Huyghe for his provided Hutchison’s and the basis agreement retention opinions I his to be and non- opinions, confidentiality nor do find included “subjective unsupported specula- clause, waiving any belief claim thus disclosure Gammill, 726. I 972 S.W.2d at tion.” See provided information now that *33 the trial court did not would hold that confidential. Huyghe was that determining abuse its discretion (1) that: Hutchison Formosa counters testimony met the threshold Hutchison’s Hutchison & Associ- controlled both A.W. reliability requirements of rule 702. See California, (“AWH-C”), which of Inc. ates Tex.R. Evid. I would overrule the corporation that em- was the California part of Formosa’s third issue. second Huyghe, and Hutchison & ployed A.W. Associates, (“AWH”), Inc. which was b. Conflict of Interest employed that Hutchi- Georgia corporation (1) “Side-Switching” Issue (2) son; merged corporations the two and determining I turn first to Kaji- prior to trial. attempt disqualify Formosa’s applica- scope of “side- the standard and of review expert ma’s witness because analysis. im- ble to this switching” presents an issue of first pression parties agree in Texas. The (2) Disqualiñcation Expert Standard
Kajima expert an retained Hutchison as Scope Review of witness. Hutchison was associated with Huyghe, expert initially an Steve witness legal court has set out No Texas by Formosa. Formosa asserts consulted For- analyze we must by standards which (1) that: it disclosed confidential informa- Kajima’s expert motion to strike mosa’s (2) Huyghe; Huyghe actually tion to dis- interest. As disqualifying for a conflict of Hutchison; closed those confidences to or above, stan- the abuse-of-discretion noted (3) Huyghe presumed conclusively is of the applies appellate dard review have disclosed Formosa’s confidences to of preliminary trial court’s determinations Hutchison because of their association. the relevance expert qualifications and (1) testimony. Kajima reliability expert’s responds that: did and Tamez, 807; Kraft, 77 Huyghe, employee not retain who was an apply I note that we separate entity at 554. also corporation in review an abuse-of-discretion standard corporation employed from the Hutchison, motions. attorney disqualification ing and Formosa did not retain (2) Hutchison; Syntek v. Fin. not disclose Ins. Co. Formosa did Metro. Life (Tex.1994). Specifi Huyghe; information to 881 S.W.2d any confidential (3) an cally, has reviewed under if did disclose confiden- this Court even Formosa attorney standard Huyghe, knowledge abuse-of-discretion tial information alleged motion imputed disqualification cannot to Ka- that information be confidential information merely sharing because jima’s testifying expert See Rio counsel for co-defendants. corporation tween Huyghe employed was Euresti, Hutchison; Implement Co. even if For- Hondo controlled Christi (Tex.App.-Corpus information to S.W.2d mosa disclosed confidential (“We proceeding) review subject orig. Huyghe, the information was trial finding court’s that confidential infor- way doing nese business as a result of mation was not shared under an Fuji our involvement in their Photo Film standard.”). Thus, abuse of discretion Processing project, Plant among others only purposes of determining the for Japanese clients over past five apply standard of review to to Formosa’s years, and this could be advantageous challenge conflict-of-interest should negotiations occur. expert, analogize I to the standards asso- From June through December of appellate ciated with review a trial Huyghe other employees AWH-C met ruling attorney disqualifica- court’s on an with Formosa’s outside counsel and re- Accordingly, tion motion. I would hold viewed, organized, indexed more than
that an
ap-
abuse-of-discretion standard
sixty
produced by
boxes of documents
Ka-
plies to our review of the trial court’s
jima
discovery.
to Formosa in
denial
Kaji-
of Formosa’s motion to strike
did not
any confidentiality
seek
or non-
ma’s
disqualifying
because of a
agreement
disclosure
with AWH-C before
Kraft,
conflict of interest. See
*34
807;
outside counsel met with
staff or
see also Rio
AWH-C
Implement
Hondo
Co.,
they
before
As we we have a work- task ing knowledge Kajima Japa- agreement and the outside counsel. The retention 3. The letterhead on the invoices shows "A.W. the record includes a check from Formosa Associates, Atlanta, Hutchison, payable Hutchison & Inc.” at an made to "A.W. Inc.” for $20,875.89. Georgia Payment address. documentation If when the at this time. and confidentiality and non-disclo- services included a you. I change, will contact circumstances sure clause: All services and the resultant work confidentiality such The letter did not mention privileged remain and con- product shall April On or non-disclosure. fidential and shall not be disclosed Formosa’s new Huyghe confirmed with except may be any person party “on Formosa work was counsel that required carry complete out and this hold.” may compelled by any project or as 1994, Kajima’s ap- counsel August ordinance, law, rule, order, regulation, consulting about proached Huyghe legislative court or administrative or Huyghe informed Kajima in this lawsuit. jurisdiction. Upon body competent contact former counsel of the Formosa’s completion project payment of this and retention. Formosa’s former potential charged of all of full to AWH its fees counsel testified: incurred in connection expenses me that he He had called me told engagement, foregoing
with this by Kajima approached been was—had obligation non-disclosure shall termi- represent or to be an nate. going I think that that was to be and did “Privileged In a letter marked and Con- on the amount of work problem based 19, 1993, fidential” and also dated October And, I told they had done for us. Huyghe proposed budget submitted esti- be, thought him that I that it could $340,000.00 $400,000.00. mate of *35 attorney For- longer we were no expressly “preparation estimate excluded mosa, part- and that I would talk to the provision testimony.” for or the of expert firm, my which I did. Mr. ners in I Huyghe and had one other conversa- Meanwhile, changed Formosa outside it. He told me that the con- tion about counsel in December of 1993. New coun- Kajima had had versations that he with Huyghe sel met with on December very cursory, they had had been Huyghe provided lawyers copy the new it, just approached by that he been of the indices prepared AWH-C had thought they talking were to some other Kajima expert documents. The solicited they’d be re- people, wasn’t sure even work, retention on the remainder of the any in tained and there wasn’t sense representing that Hutchison would stirring up in going and kind of However, testify expert. available to as an they if nest until he found out hornets’ retaining Huyghe, instead of Formosa’s I told him going were to be retained. Huyghe not to do new counsel instructed to thought ought [For- that I he contact April in any By further work. letter counsel], [they] mosa’s new because firm Formosa’s new law confirmed attorney, ought and he were now their Huyghe that AWH-C’s services were that was to find out whether or not longer needed: no I him that going to be a conflict.... told spoke After last week I visited with we involved in this thought I he’d been too Alexander about Hutchison’s role Ken some probably and I said knew case The net re- the above referenced case. thought that I it would make things you yourself sult is that should consider other represent for him to difficult indefinitely on “hold”. side. Although happy I would be to listen in the record of you if are ever in There is no evidence
your presentation by Formosa’s Houston, taken at that time your not need to use actions we do I by response hereby certify former Formosa in further counsel that A.W. Huyghe’s Associates, of the contact & disclosure Hutchison Inc. has not Kajima. Huyghe prepared any analysis damages did contact Formo- in this regarding Kajima’s ap- sa’s new counsel case for Formosa and had not been proach. Nor did Formosa’s new counsel hired this case to act as Huyghe. expert contact witness. September In late dis- 9, 1994, August On counsel discovery responses closed in to Formosa Huyghe confirming
sent a letter to their expert that it had hired Hutchison as an initial discussions: 4, 1995, witness. On October discussed, As we we want to be abso- filed its motion to strike the lutely certain and comfortable with the time, “side-switching.” At that Huyghe fact that there is no conflict of interest provided Kajima’s copies counsel of let- your part. Based on the facts that billings ters and between AWH-C and me, you I described do not believe hearing, Formosa’s counsel. After a that there would be. trial court denied the motion to strike. discussed, you As we also I would like your speak be sure to review flies and (4) The Burden of Proof of your to all those preliminary involved Confidentiality and prior discussions with Formosa’s counsel Non-Waiver nothing to make sure that there is Generally speaking, party asserting remotely suggest would the existence of that information to a party disclosed third conflict. protected by attorney-client privi- process I am in preparing lege proving has the burden of no waiver you conflict certification for sign in communicating occurred the information basically certify which will that there is party. to the third See Jordan v. Fourth interest, you no conflict of have not Appeals, Court *36 of any received confidential information (Tex.1985) (orig.proceeding). the con- you agree from Formosa and that expert disqualification text of based on keep provided you by all information “side-switching,” jurisdic- in courts other Kajima in connection with this matter party tions that seeking have held confidential. disqualification bears the burden of estab- lishing confidentiality the existence of both The record also contains “Conflict Cer- See, e.g., and its non-waiver. United form, tification,” in August affidavit dated Cherry ex States rel. Hill Convalescent 11, signed by Huyghe presi- 1994 and Ctr., Inc., Sys., Inc. v. Healthcare Rehab Associates, dent of Hutchison & Inc. A.W. (D.N.J.1997); F.Supp. Cordy 249 Certification,” Huyghe In the “Conflict at- Co., v. 156 F.R.D. Sherwin-Williams tested: Feedlot, (D.N.J.1994); English Inc. hereby certify I Hutchison A.W. Labs., Inc., F.Supp. Norden Associates, any Inc. & has received (D.Colo.1993). For- Accordingly, 1501-02 any confidential information from For- establishing mosa bears the burden of both entity mosa or from its counsel related confidentiality the existence of con- in any litigation. manner to this Huyghe sultation with and its non-waiver repre- any confidentiality The “Conflict Certification” further of that attached to the conveyed information it or to expert sented: Jordan, expert’s product. work comprised See ces and other documents that product. Again, AWH-C’s work Formo- 649. sa’s initial outside counsel did not. party Waiver occurs when a either in Fourth, at the time Formosa’s new counsel tentionally relinquishes a right known or any declined further services and instruct- engages in intentional conduct inconsistent hold,” ed Huyghe put the work “on Tenneco, claiming that right. See Huyghe counsel could have instructed Co., Inc. v. Enter. Prod. 925 S.W.2d Formosa considered confidential all infor- (Tex.1996); Exploration Sun & Prod. Huyghe mation AWH-C and had received Benton, (Tex. Co. v. product generated and all work on Formo- 1987). A party may expressly renounce a sa’s behalf. Formosa’s new outside coun- Tenneco, right known and waive it. See particularly sel did not. This omission is Inc., 925 S.W.2d at A party’s silence significant fight rejection of Formosa’s inaction, long period so it Huyghe’s agreement, of retention which shows an yield intention to the known express contained an confidentiality and right, enough prove is also waiver. See and, fact, non-disclosure clause provided id. I first determine if Formosa met its any duty of non-disclosure terminated burden of proving non-waiver. Finally, when the consultation concluded. Huyghe reported when the initial contact Analysis Waiver by Kajima, Formosa or its counsel could Formosa had at opportunities least five objected specifically any have retention Huyghe establish with that AWH-C and by Kajima unequivocally of Hutchison Huyghe were to maintain the confidentiali- confidentiality any asserted the informa- ty information acquired and work tion received or product AWH-C work product generated on Formosa’s behalf. generated. No one did. AWH went on to First, Formosa’s in-house counsel could accept Kajima’s ultimately retention and have addressed confidentiality performed issue thousands hours of work and Huyghe initially when solicited the billed almost a million in consulting consul- dollars tation litigation. from Formosa. fees in this In-house counsel Second, did not. Formosa’s outside coun- I note that some cases that address the sel could have insisted on confidentiality “side-switching” experts suggest an obli when Huyghe met with Formosa’s first set gation part on the to “take lawyers. Outside counsel did not. This care to avoid conduct that to a contributes *37 particularly omission is significant light clarity lack of about the relationship.” of Huyghe’s letter to outside counsel con- See, Labs., Inc., Wang e.g., v. Toshiba firming that AWH-C had been involved in (E.D.Va. Corp., F.Supp. 762 1250 Kajima project another to the extent that 1991). Nonetheless, by as noted one of the “working knowledge its of ... Formosa, by primary cases relied on the advantageous could be should negotiations attorney burden remains with the to estab occur.” The solicitation letter evidences lish a basis concluding reasonable for that knowledge, throughout Formosa’s expert understood the na confidential litigation, course of this previous of a relationship. Rawlings ture of the Paul v. Co., working relationship expert Sporting between the Goods 123 F.R.D. (S.D.Ohio 1988). Kajima. Third, and The Paul court rea Formosa’s counsel soned: could have insisted on confidentiality when
they transmitted to Huyghe documents participants attorney- Of the two in an analysis they ..., and when expert relationship attorney, received the indi- be- matters, confidentiality
ing expert legal an should be information has potential more aware both of been or if the legally waived information pass to the ex- privileged information to actually claimed confidential is rou- be discoverable.”). pert, for the need to [sic] and insure tinely against finding way such information its of part I would the first Formo- overrule adversary. into the hands of an Conse- Having sa’s third found that issue. For- quently, place is unfair to not] [it of proving mosa did not meet its burden that making expert burden of sure non-waiver, I would not address whether type relationship understands by provided the information Formosa to exists, the need to infor- keep which and Huyghe confidential or whether during mation disclosed the course of conclusively Huyghe actually pre- confidential, that at- relationship on the sumed to confidential informa- have shared torney in the first instance. Id. Tex.R.App. tion with Hutchison.4 See P. Further, Formosa does not that dispute 47.4. provided
it the document indices created Mitigation by 2. Evidence of testifying expert. AWH-C expert underlying facts an and known to Appeal a. The Issue on impressions opin- mental expert’s issue, In its fifth asserts ions to a case are related discoverable excluding the trial court erred evidence “regardless when and how factual Formosa, Kajima, caused much of acquired.” information was Tex.R. Crv. P. relies on its own losses. Formosa Arthur 192.3(e)(3); see Aetna Cas. & v. Sur. Co. Perry Equip. Andersen & Co. v. Blackmon, (Tex.App. (Tex.1997): 1991, orig. -Corpus proceeding) Christi emphasize plaintiffs recovery We that a (holding designation party employ only damages is limited not his testifying expert attorney- ee as waived client, evidence, by the party own but also defen- product, work communi plaintiffs cation dant’s evidence of the failure privileges privileged infor reasonably mitigate losses or forming mation relied on in evidence If plaintiffs causes. impressions opinions intervening mental related to case). to his own losses are attributable mis- takes or factors outside either of the I hold that Formosa Accordingly, would control, parties’ may the defendant of proving has not met its burden non- limiting entitled in- appropriate confidentiality waiver of its claim of over jury. struction to the provided it and the information (citations omitted). Formosa contends Huyghe work created and Id. product Jordan, 649; pleaded the defense of properly AWH-C. See Wilmore, refused, 172, mitigation, trial court over 981 P.2d but the see also Mitchell omitted) (“The (Colo.1999) (citations objection, permit develop- Formosa’s *38 Kajima’s “self-inflict- ment of evidence of of mere technical information discussion jury. argues a ed” losses to the party’s about a does not meet bur- case prohibited repeatedly framework. Nor is trial court disqual- den under this examining Kajima’s from about expert] appropriate an where witnesses [of ification My pert disqualification not be as that the should read conclusion abuse-of-discretion adopting applicable attorney attorney conflict-of-interest stan- standard of review dis- qualification proceedings applies experts. also ex- dards to bid omissions and other mitigating causes mitted to the trial court’s sound discretion. Kajima’s Specifi- Co., inflated damages. State Bristol Hotel Asset (Tex.2001). cally, attempted at trial to cross- A trial court abuses examine Hutchison about how he account- regard its discretion when it acts without for Kajima’s ed bid when he omissions any guiding principles. rules or Id. prepared damages his calculations. How- (citing Aquamarine Operators, Downer v. ever, trial Kajima’s Inc., (Tex.1985)). court sustained 241-42 S.W.2d objections questions to the because the
court agreed that the bid omissions Mitigation Analysis were c. Kaji- irrelevant the reasonable value of (1) Evidence of Bid Omissions ma’s work. See Formosa Corp. Plastics Contrs., Eng’rs support position USA v. Presidio & for its that bid omis- (Tex.1998). S.W.2d 49-50 sions were not relevant to the fraud meas- Presidio, damages, Kajima ure of cites Kajima argues that the trial court con- which held: mitigation cluded that evidence was not relevant after out-of-pocket nonsuited its con- only [T]he measure com- tract proper claims. The pensates injuries party fraud measure for actual a sus- damages, Kajima maintains, through parting out-of- tains something, loss, pocket made, the difference profits between the not loss of on a bid not realized, reasonable value of Kajima per- profit the work hypothetical never in a formed and what it Thus, received. Bid bargain omis- never struck. the $1.3 sions do not factor into $600,000 the fraud measure hypothetical million bid less the damages, Kajima actually probative concludes. received is not of Pre- out-of-pocket sidio’s proper loss. The Formosa also contends that the trial out-of-pocket damages, calculation of court abused its discretion in excluding based on testimony, Burnette’s testimony Kajima’s of other causes of loss $831,000 actually less the amount he re- es, such mismanagement, overcharges, ceived, $600,000, damages by Kajima theft personnel. Kajima $231,000. responds party that the who caused a loss Presidio, (footnote bears the burden of proving lack of dili 49-50 omitted). gence part on the plaintiff Applying as well as logic Presidio’s the amount which damages case, were facts of this I would hold increased mitigate. failure to See trial court did not abuse its discretion in (Tex. Lester v. Logan, 893 excluding evidence of bid omis- denied). App.-Corpus Christi writ sions. See id. Kajima argues that Formosa does not in Mitigation Other Evidence of
its brief cite to showing evidence increase the amount of damages created preserve To an error related to exclu- by Kajima’s mitigate. failure to witness, testimony sion of the party proof excep- must offer or a formal bill of Evidentiary
b. The Standard Tex.R.App. 33.2; tions. P. Tex.R. Evid. of Review 103(a)(2). bill, In that offer or the party The trial court preliminary specify determines must what the proffered witness questions admitting about or excluding testify testify. evi- would to if allowed to 104(a). 103(a)(2). dence. Tex.R. Evid. Only by Whether to Tex.R. Evid. such *39 admit or exclude evidence is a matter com- may measures the failure to allow testimo-
478
Corp.
2.21(A)(2) (Vernon
v.
Ann. art.
ny
preserved. Fletcher Minn. Min-
Act
2003)
Co.,
602,
imposition
liability on
ing Mfg.
(prohibiting
&
57
606-07
of
S.W.3d
2001,
(Tex.App.-Houston
pet.
corporate
showing
[1st Dist.]
affiliate
absence of
denied).
case,
corporation
Formosa submitted
that
this
affiliate caused
to be used
testimony of
proof
offers of
a num-
purpose
perpetuating
per
for
of
and did
However,
ber of witnesses.
Formosa does
primarily
fraud
direct
petuate actual
for
affiliate).
not cite
its
record in its
briefs
personal
of
Formosa ar
benefit
developed
of proof
offers
where it
evidence
Kajima
summary-
not
gues that
did
submit
Tex.R.App.
38.1(h).
damages.
P.
of
See
judgment
that
evidence
Formosa USA
Having
each of
offers of
examined
engaged
single
Texas
busi
Formosa
no evidence of the
proof
finding
Kaji-
enterprise
perpetrate
ness
fraud.
Kajima
amount
which Formosa claims
proof
ma
that
not
responds
of fraud is
I
damages,
its
hold
increased
own
would
required
a single-business-
to recover on
preserve
that Formosa
error over
did
enterprise finding. See
Am. Van
N.
challenge
court’s
to the trial
exclusion Lines,
Emmons,
103, 119
Inc. v.
50 S.W.3d
testimony
of Kajima’s
of other causes
denied).
2001,
(Tex.App.-Beaumont
pet.
Fletcher,
damages. See
part of issue seven.
jury
proper
to reach a
R
R
verdict.
&
Contrs.,
(citing
C. The Mandlbauer, Comp. Workers’ Ins. Fund v. (Tex.2000) 909, 34 (per S.W.3d 912 cu Alleged Charge 1.The Error riam)); see Tex.R. Civ. P. 277. A trial six, In a subissue within issue Formosa court has considerably more discretion in claims that the trial court abused its dis- submitting instructions and definitions cretion in not instructing jury on than it in submitting questions. has Ed mitigation. seven, Within issue Formosa D’Unger, Rachal Found. v. 117 S.W.3d asserts that the trial court abused its 348, 2003, (Tex.App.-Corpus 364 Christi in instructing discretion jury filed) (en banc) pet. (citing Harris v. Har Formosa USA and oper- Formosa Texas ris, 801(Tex 798, 765 .App.-Hous S.W.2d ated as a single enterprise. business 1989, denied)). ton [14th writ Dist.] contends, Formosa four, also in issue that the trial court abused its discretion Mitigation a. in not charging jury on ratification. I already have concluded that the trial two, In issue Formosa challenges the tri- court did not abuse its discretion in exclud- al court’s submission of single broad- ing Kajima’s evidence of bid omissions as form liability question fraud rather than not relevant fraud claim. I submission of a liability question fraud also have concluded that Formosa did not required a jury finding as to each of preserve error exception bill of or offer
the five contracts. proof any increase in the amount of damages Kajima it contended caused
2.Charge Error Standard of Review mismanagement, theft, overcharges, The standard of review for error in a mitigating other I factors. find that jury charge is abuse of discretion. In re evidence did support submission of a V.L.K., 338, 24 (Tex.2000); S.W.3d R mitigation instruction. See Elbaor v. Torres, & R v. Smith, (Tex.1992) Contrs. 88 S.W.3d 845 S.W.2d (Tex.App.-Corpus Christi pet. (holding that trial may court refuse to dism’d). We accord the trial court broad jury question submit if no evidence war- submission). long discretion so charge legally suggests rants its Formosa Hyundai correct. Motor Co. v. expert testimony Rodri that Hutchison’s that Ka- (Tex.1999). guez, $3,330,547.00 jima expended If a in costs that party timely a proper request raises that a project supported did not add value to the jury matter be included charge, mitigation we submission of a instruction. However, cannot permit judgment to stand Kajima when the amount of costs ex- the trial court refuses to submit pended a valid that did not add pro- value to the theory recovery or a ject vital defensive a factor Hutchison took into ac- pleadings issue that the fairly and evidence in calculating count the reasonable value of Perez, present. Corp. Kajima Exxon 842 the performed. work I conclude (Tex.1992) curiam). (per mitigation that a instruction rea- was not sonably jury though necessary go enable the forward even it knew that it R cost complete verdict. R & would million to proper reach See $25 Contrs., contracts, Kaji- I Accordingly, argues, at 696. evidences fraud acknowledgment alleged would hold that the trial did not ma’s court Kajima re- to instruct and constitutes ratification. refusing abuse discretion Thus, jury sponds I that Formosa had the mitigation. See id. burden acted produce would fourth issue. evidence overrule Formosa’s knowledge full of the fraud and of all Single Enterprise b. Business material to entitle ratifica- facts no produced tion instruction. An explanatory improper *43 instruction is evidence, Kajima argues, such because if it only is a misstatement of the law as ongoing “string-along” of the the nature D’Unger, facts. applicable to the 117 is, Formosa, perpetrated by fraud that its at already S.W.3d 364. I have concluded for post-contract payment assurances Kajima showing that met its burden of overages per- as inducement continued genuine no both issue of material fact and concludes, Kajima Accordingly, formance. judgment entitlement to a mat- partial as Formosa was not entitled to a ratification of single ter of law on the issue business question. Kajima also that Formo- asserts Thus, enterprise. single-business-enter- in the question sa’s ratification was not necessary prise reasonably instruction was substantially form it did correct because jury to enable to reach a ver- proper the jury not allow to Formosa’s the consider Contrs., R R 88 at 696. dict. See & S.W.3d Rather, Kajima ar- post-contract fraud. Accordingly, hold trial I would that the as ratification gues, submitted Formosa’s court did its in in- not abuse discretion the trial court to commit question invited structing jury to the consider charge the same error we reversed and single Texas and Formosa USA as a busi- trial in I. Kajima remanded for a new See Thus, enterprise. ness See id. I would I, 15 at 291. Kajima S.W.3d the part overrule second of issue seven. analysis of general guides No rule the Questions Jury
4.
what acts of ratification will or will
a. Ratification
fraud
Fortune
waive
inducement.
(and
Co.,
it
cited
timely
Formosa contends
Prod.
at 678-79
submitted
authorities).
jury
in-
proper
question
supreme
ratification
that
I first note that the
only
ratification
when a
court held in Fortune Prod.
that
structed that
occurs
Co.
(1)
accept
plaintiffs
perform
defrauded
party:
continues
who continued
fraudulently
benefits under the contract after it became
after the
induced contracts
recovering
of the
the con-
recognizes
expired
precluded
aware
fraud
were
from
(2)
knowledge
damages
full
Id.
On the
binding,
tract
the fraud.
at 680.
hand,
permitted
at the
ratifi-
supreme
the fraudulent act
time of the
other
court
cation,
ratify
recovery
damages by
plain-
the con-
of fraud
those
intends
binding
perform
fraud.
spite
tract
Fortune
tiffs who continued
See
Inc.,
Conoco,
they
term after
Prod. Co.
contracts for a stated
(Tex.2000).
that
fraud that
those
argues
676 n.
learned
induced
recog-
I
that
Kajima
the evidence
that
contracts.
Id. at 679.
conclude
showed
occurs if
fraud no
nized in March 1992 that
lose
ratification of fraud
“the
would
$25
at
performance.”
cancelled
Id.
longer
million unless it
the contracts
induce[s]
job. Kajima’s
and walked
decision
was on Formosa
off
burden
prove
Kajima
knowledge
bility,
Kajima
that
had full
in this case fraud. See id.
ongoing
voluntary,
points
fraud and made a
also
out that the “law of the case”
ratify
intentional choice to
I
by Kajima
the transactions
established
mandated the
I,
light
knowledge.
Arroyo
of that
See
broad-form submission. See
Farm,
Shrimp
Hung Shrimp
Farm v.
S.W.3d at 291. Formosa counters
our
(Tex.App.-Corpus
only
prior holding
required
Christi
submission on
writ).
jury question
permitted
no
I
remand of a
find
Formosa intro-
jury
point
post-contract
duced no evidence of a
to consider
fraud
which
inducement,
fraud
well as fraud in the
not sub-
longer
Kajima’s perform-
no
induced
liability
mission of a broad-form fraud
ance so as to support submission of a
Elbaor,
question that did not
question.
ratification
differentiate between
See
However,
prior holding
contracts.
our
S.W.2d at 243. I would hold that
trial
trial
required the
court to submit a broad-
court did not abuse its discretion in refus-
question
permitted
form fraud
ing
charge
jury
on ratification. See
Contrs.,
jury
post-contract
to take Formosa’s
R
fraud
& R
Evidence ruling, jury did not send the documents into the eight, challenges issue during room can- deliberations. Formosa trial court’s refusal to permit examination not any pre-contract contend now that jury plans specifications drawings erroneously were withheld from entered into evidence. Rule 281 of the deliberating jury aas result of the trial Texas Rules of Civil Procedure sets out ruling court’s post-contract draw- jury “may, shall, that the and on request Formosa, ings. party offering the evi- take with them in their retirement ... dence, excising had the burden of the inad written evidence.... part only Where portions missible from the evidence so that paper evidence, has been jury read portion the admissible could be submitted them, shall not take the same with unless jury. Am. See Gen. Fire & Casual part so read to them is detached from Store, ty v.Co. McInnis Book 860 S.W.2d that which is excluded.” Tex.R. Civ. P. (Tex.App.-Corpus Christi no 281. Rule 281 mandatory. is First Em- pet.). objecting party pro “The ... must ployees Skinner, Ins. Co. v. a reviewing vide court with a record that (Tex.1983). 170, 172 The trial court objectionable shows portion required to send all exhibits admitted into clearly evidence was identified either evidence to jury room during the delib- objection or in ruling of the trial erations. Id. The self-operative rule is so, court.” Id. Formosa does do nor and requires request jurors no from the provided has it specific citation in the rec counsel. Id. ord to the post-contract documents to If the drawings described appeal which its issue on I applies. would *46 evidence, were admitted into the trial hold that appeal Formosa waived on court, by refusing to drawings submit the complaint that the trial court did not com jury deliberations, during would ply with rule 281. See Tex.R.App. P. have acted without guiding reference to 38.1(h). Thus, I would decline to address principles by rules and ignoring rule 281. eighth Formosa’s issue.
This would be an abuse of discretion. See
Prejudgment
F.
Interest
Downer,
However,
Tex. Fin.Code
(“If
expansion plant
at Formosa’s
judgment
performed
for a claimant is
Supp.2004)
Comfort,
In
in
Texas.1
project
amount of a settlement
Point
more than the
defendant,
trial,
jury
inter-
the trial court ren
prejudgment
following
of the
offer
Kajima
the amount of the
judgment
est does not accrue on
dered
$5,591,066.65.
during
period
Kajima appealed,
the of-
contend
settlement offer
the trial
may
accepted.”).
ing, among
things,
fer
Formosa has
other
chapter
in
to submit a broad
any authority
applies
refusing
cited
court erred
claims,
I
none.
reversed
question.
to fraud
and have found
form fraud
This Court
invitation to
the trial court for a new
I
decline Formosa’s
and remanded to
would
Int’l,
Higgins
Kajima
to fraud claims.
Inc. v. Formosa
extend Johnson &
trial. See
(Tex.
Thus,
ninth
I
Formosa’s
would overrule
Plastics
denied).
App.-Corpus
pet.
Christi
issue.6
remand, Kajima
all of its
non-suited
On
III. CONCLUSION
Following jury
tri-
except fraud.
claims
trial
judgment
I
affirm the
would
al,
judgment
trial court rendered
court.
Kajima
awarded
favor
$15,432,123.45
damages, plus pre-
in actual
YÁÑEZ, Justice, dissenting.
$14,210,269.65 and
interest of
judgment
For-
majority
appellant,
holds that
$403,156.86in
followed.
appeal
costs. This
(“Formo-
Corporation,
mosa Plastics
USA
sa”),
disquali-
its burden for
failed to meet
Disqualification of
II.
witness, A.W.
fying Kajima’s expert
Expert Witness
(“Hutchison”). Because
“Chip” Hutchison
Background Facts of “Side-
A.
I
that the trial court erred
would hold
Switching” Issue
Hutchison on the
refusing
disqualify
“side-switching,” I would sustain
issue,
basis
Formosa contends
In its third
issue,
trial
third
reverse the
Formosa’s
disqualify
refusing
trial court erred
judgment, and remand for
new
court’s
be-
Kajima’s expert witness
Hutchison as
I
dissent.
Accordingly,
respectfully
trial.
“side-switching.” In
For-
cause of
Jones,
counsel,
Day,
mosa’s former outside
Background
I.
(“Jones Day”), retained
Pogue
&
Reavis
an associate of Hutchison’s
Huyghe,
for Steve
sued Formosa
Associates,
Inc.
meruit,
&
contract, fraud,
Hutchison
quantum
A.W.
breach of
AWH,
(“AWH”),2
firm,
Formo-
*47
as
and
arising from
negligent representation
and
brief,
I
the new issue.
sa did not seek leave to raise
reply
Formosa raises for the
In its
improperly raised
do not address Formosa’s
within issue nine
first time as a subissue
A.M.,
re
“conflict which Applicable Law hereby certify that A.W. Hutchison and Associates, Inc., any has not con- received a trial We review court’s decision fidential information any from disqualify an expert whether to witness for or entity from its counsel related discretion.3 an abuse of The test for Huyghe manner to this litigation.” testi- is abuse of discretion whether the trial form, signed fied he the certification any guid- court acted reference to without though explain even Lownds did not ing A trial court has principles.4 rules or provide definition of “confidential infor- no discretion determine what the law mation.” or in the law to the applying facts.5 *48 ly-owned subsidiary of A.W. Hutchison & As- 3. See Co. v. L. Koch Boudreaux Ref. Jennifer MV, 1178, (5th sociates, Cir.1996). 1181 85 F.3d Inc. Hutchison that he la- testified merged A.W. into ter Hutchison of California Inc., Aquamarine Operators, 4. Downer v. 701 Associates, &
A.W. Hutchison Inc. 238, (Tex.1986). S.W.2d 241 Packer, 833, (Tex. 827
5. Walkerv. 840 488 may to appellate obligated expert
An
court is not
which
be breached when an
sides,
any
a trial
from the
give
particular
necessity
deference to
switches
and
to
legal
public
preserve
court’s
conclusions.6 We review
confidence in the fairness
integrity
judicial
and
questions
proceedings.11
of law de novo.7
Disqualification of an
expert
Accordingly,
majority’s
I agree with the
switches sides in a lawsuit is an issue
adoption
two-part expert-qualifica
However,
impression in Texas.
first
party
tion test outlined
Koch.12 The
Fifth Circuit has addressed the test courts
seeking disqualification
the burden
bears
to
apply
determining
should
when
whether
proving
both elements
the test.13
disqualify
previ-
witness
has
expert
who
Koch,
In
Fifth
that in
Circuit noted
ously been retained to
with anoth-
consult
sides,
expert has
cases where an
switched
party.8
er
seriously
no one would
contend that a
Koch,
adopted
Fifth
Circuit
permit
court
to
should
consultant
two-part
adopted by
majority of
test
party’s expert
as
it is
serve
one
where
(1)
courts that have considered the issue:
undisputed
pre-
was
consultant
first
objectively
reasonable for the
viously
as an
expert
retained
who
the ex-
party
claims to have retained
and
party
litigation
adverse
the same
confidential
to
that a
rela-
pert
conclude
had
confidential
information
received
and
tionship
party
existed between that
pursuant
party
from the adverse
expert;
party
did
first
earlier
This is
case for
retention.
clear
in-
privileged
disclose
confidential or
disqualification.14
formation
expert?9
two-part
the inherent
to dis- The Koch court notes that
power
Courts have
applies
“disqualification
That
derives
thus
cases
qualify experts.10
power
test
necessity
protect
expert
clear
privileges
from the
other than those in which
1992).
applying two-part
disqualify
test
case);
malpractice
v. Wil
in medical
Mitchell
Co.,
Pegasus Energy Group Cheyenne
v.
Pet.
6.
more,
172,
(Colo.1999)
(ap pl
981 P.2d
175-77
112,
(Tex.App.-Corpus
3 S.W.3d
121
Christi
two-part analysis
disqualify
ying
car acci
1999,
denied).
pet.
expert);
v.
dent
reconstruction
Nelson
897,
(D.C.1997)
McCreary, 694 A.2d
903-04
7. Id.
(applying
deny disqualifica
two-part test to
Koch,
8.
F.3d at
I note that
See
85
1181.
paid by
expert who
tion of medical
had been
authority
controlling
Texas
absent
from the
sides,
privi
lack of confidential or
both
due to
Court,
may
Supreme
we
the Fifth
look to
information).
leged
guidance.
Virginia
See
Indon. Co.
Circuit
Dist.,
County Appraisal
v. Harris
910 S.W.2d
Koch,
10.
489 writing present case, request sides.”15 ly switched In the trial court state disputes findings whether Formosa’s its of conclusions of law.18 earli fact and of passage Any party may request er retention and confidential additional also Thus, I apply findings information occurred. would amended of fact and conclusions two-part findings test outlined Koch.16 of law if he the court’s believes re- deficient in some conclusions are Kajima argues that because Formosa findings spect.19 The court must make request findings failed of fact and con controlling ultimate or conclusions on clusions law with to the regard disquali issues, required but is not to do on so issue, fication must presume this Court evidentiary issues.20 An ultimate fact is- the trial “implied court made find right sue is one that is essential support ings” judgment. sup of its In action, evidentiary while issue argument, of its port Kajima cites Lemons deciding jury may one that the consider in Co., 372, Mfg. v. EMW S.W.2d 747 373 issue, a controlling but is not (Tex.1988), Elizondo, Gutierrez v. 139 Here, controlling issue itself.21 the issue 768, S.W.3d 773 (Tex.App.-Corpus Christi Kajima’s expert whether witness was 2004, pet.), no Valley Mechanical Con disqualified alleged because of “side- Gonzales, 832, tractors v. 894 S.W.2d switching” a 1995, writ). controlling was not issue. (Tex.App.-Corpus Christi no Accordingly, it have inappro- cases would been Those stand for well-settled priate that in proposition non-jury trial, request for Formosa to findings where findings of fact fact and regard and conclusions conclusions law with of law requested filed, were neither reject Kajima’s nor issue. I argument will implied that the trial court all we “implied made must defer to the trial neces court’s sary findings to support judgment.17 findings” its on the issue.22 Here, however, Kajima argues that we Here, the filed a trial court “letter to must defer to the trial court’s “implied 20, file” on October its explaining findings” with respect to the court’s denial reasons for denying Formosa’s motion of Formosa’s motion strike strike. The court noted that the letter I expert. am unpersuaded by Kajima’s was “not finding intended as of fact or argument. only conclusion of law” but as a “brief any
In case tried in the district insight analysis.” or coun- into [its] The letter stat- ty court without a jury, party may ed: Koch, (emphasis added).
15. Id. an insurer 19. See Tex.R. Civ. P. 298. expert retained an dispute in an insurance parties. with two other Id. After the insurer Abatement, 20. See ASAI v. Vanco Insulation with the parties, expert settled two Inc., (Tex.App.-El Paso by parties retained adverse to the insurer. Id. pet.). no Thus, the Koch court characterized the case sides, not as one in which the switched Limbaugh Limbaugh, 21. 11 S.W.3d as one party changed but in which the (Tex.App.-Waco pet.). no position. Id. Indus., id. 22. 16. See See IKB Ltd. v. Pro-Line (Tex.1997) (noting that when Lemons, 373; Elizondo, 17. See 747 S.W.2d at findings help- required of fact are not but are 768, 773; Gonzales, 139 S.W.3d ful, they weight do not have the same 832, 834. appeal findings under made rule 296 and court). binding appellate are not on the See TexR. Civ. P. 296. *50 During my courtroom about I time to our discussions have taken the discuss of appropriateness hiring somebody finding the intended ruling, but it is not as a witness, else’s we referred to this set of only of It of fact a conclusion law. facts as test.” failing pass to the “smell analy- insight my a into illustrates brief me, Although doesn’t I think offend sis.
it is an in- inappropriate concept. For comments, on court’s I Based the trial stance, dealing when with cases of first court failed apply conclude trial to impression, I think a trial court must be two-part expert-disqualification test out- cautious, cautious, very establishing in in lined the Fifth Circuit Koch. bright exists, none especially line where if the resulting disqualifica- decision is Analysis D. tion. testimony The of former Justice by addressing the begin part I first of and, interesting guideline Cook was as a in two-part test outlined wheth- Koch: practicing attorneys, for I would is one objectively Formo- er was reasonable for however, follow; advocacy like to when to conclude that it had sa established and blurred lines of conduct con- ethical relationship Huyghe confidential
flict, it oppressive require is to an attor- I conclude that it was. AWH. ney to ignore good for his client what at the For- hearing Kelihar testified on subjective high and take the road. motion to strike23 in mosa’s doubt, When in I do a trial not believe AWH, Huyghe retained but court presume disqualifica- should confidentiality agreement was not that a tion is I suggest the answer. would it’s necessary Day considered because Jones opposite. Consequently, my- I find [Huyghe] had “used as before.” self unwilling require to the Plaintiff to copies of to The record contains invoices subjective meet may test that exist ren- Day from services Jones AWH24 in hir- group’s Although one mind. Formosa, including preparation dered ing previously employed by witnesses plan,” “key pro- compilation a “work one side might perceived inappro- be as documents,” “project docu- review of ject priate, until a clear established rule is mentation,” staff.” and “discussion with occurs, before the conduct it shouldn’t a check copy record also contains condemned, unwilling begin I’m to 21, 1998, Formosa, December from dated process. might unfair say One it is $20,875.89 to at its in the amount of AWH somebody to hire else’s in expert, but “Kajima Atlanta office for work clearly prohibiting absence of rules 7,1994 Huyghe A letter acts, January oppressive prohibit such it is case.” from Formosa refers invoices experts by use of coun- from opposing those to Formosa provided there “for services especially sel. This is true when AWH Jones, Day, & Reavis ways confidentiality. requested by are protect in ended Plastics which 23. to Recon- Inc. Formosa Attached to Formosa’s “Motion Expert Striking April sider Plaintiff’s Witness—A. Unless otherwise a mistrial Hutchison,” February noted, W. in the filed "testimony” and "the all references County 135th is the District Court of Calhoun testimony at hearing” opinion refer this hearing statement of facts from on Formo- hearing. the October Experts,” held on Octo- sa’s "Motion to Strike 12, 1995, Michael ber before Honorable "A.W. as from are identified 24. The invoices Fricke, judge County Court- presiding M. Associates, Inc.” at its office & Hutchison County Calhoun in trial court at-Law No. 1 in Atlanta, Georgia. Int’l, 93-CV-29, styled cause number *51 Pogue” Day attorneys. and asks about the location of “the of the Jones At the meet- your product company produced.” work ing, Huyghe said he had been retained response, Huyghe a letter from identi- that Formosa. Aexander understood For- product” produced fies “work Huyghe mosa had retained AWH and including “original an claims work firm as firm. worked for the Aexander testified plan prepared proposed to our outline meeting, Huyghe that at made a case evaluating performance method for offer,” for A.W. Hutchison had to “what Kajima,” and an “index and review of doc- (who Chip and said that Hutchison later Kajima. uments received to from date” testifying expert Kajima) became a had 15,1994 April An Huyghe letter from to “expertise lawyers to offer to [Formosa’s] attorney at & Hedges Porter notes that way it was needed to whatever assist “initial assignment” to “review and with the defense ease.” Aexander Kajima’s critique claim and to research the they Kajima’s said that discussed claims records, identifying pertinent ways go and “the which we would about documents” has completed. been Based responding to those claims.” Aexander evidence, on this I would that it hold was said he considered the information ex- objectively reasonable for Formosa to con- changed meeting at the confidential. Sim- clude that a confidential relationship exist- case, ilarly, at the trial in the present Huyghe ed with and AWH. Aexander that at meeting, testified he Next, I consider whether Formosa dis- discussed confidential information with closed confidential Huyghe. information to Huyghe, including probable Formosa’s de- Kelihar that in meetings, testified several claims, Kajima’s fenses to evidence that (1) she discussed with Huyghe: Formosa’s might developed be and had been devel- “strategies for this case and what kind of time, oped up pertaining to that to matters (2) establish;” ought defense we to infor- witnesses, potential “strategies,” and vari- mation gathered from poten- interviews of ous other confidential matters. tial witnesses Formosa and what testi- that no infor- argues confidential (3) mony such witnesses provide; could Huyghe, mation was shared with and even which might “good” witnesses was, if it that such information cannot be Formosa; “bad” for the amount of imputed Kajima points to Hutchison. money Formosa was willing expend identify the fact that Kelihar failed to spe- Kajima’s settle claims. A letter dated Oc- cific confidential documents that Formosa Huyghe tober 1993 from Day to Jones provided Huyghe Huyghe’s and to testi- describes budget AWH’s initial estimate mony meetings that in all of his with For- for additional services based on its “knowl- attorneys, exposed mosa’s he edge gained to date” from reviewing For- and did not discuss information he mosa documents and development of a Kajima argues considered confidential. plan.” “claims work The October Huyghe’s work for lim- Formosa was “Privileged letter is labeled & Confiden- ited to the of a in- preparation document tial.” dex. Aexander, partner
Ken with Porter & Hedges, arguments persuasive. testified are not that on December 1993, following Huyghe’s statement that he did not discuss Formosa’s transfer of its Day anything defense from Jones to Porter & with Formosa that he considered Hedges, conclusory.25 he met un- Huyghe and several confidential is Kelihar’s (Tex.1998) (conclusory opin- 25. See In re Amer. Home Prods. ed,” and,-then, “Atlanta, Huyghe you’ve testimony got, controverted dis- Los that, strategies, Angeles, Washington, cussed Formosa’s D.C.” po- defense under witnesses, and -willingness tential settle correct? provided
establishes confi- A: Correct. to Huyghe.26 dential information Q: And, part these all are A.W. *52 Associates, Inc., Hutchison and correct? Kajima argues if also that even confi- A: Yes. to dential information was disclosed Huyghe, the trial court did not err in addition, and Huyghe’s June for allowing testify Kajima Hutchison to (marked 19, 1993 and “Privileged October by Huyghe employed because was A.W. Confidential”) to and his Day letters Jones Inc., California, Hutchison of which was a April Hedges to Porter letter & firm, separate entity Hutchison’s from copied April were to Hutchison.28 The AWH, in Atlanta.27 1994 letter states that AWH’s initial as- signment, critique which was to review and
Huyghe’s
Ka-
testimony
own
contradicts
Kajima’s claim
to
research Formosa
jima’s
Huyghe testified that
argument.
records,
documents,
identifying pertinent
Associates, Inc.
A.W. Hutchison &
of Cali-
completed.
requests
has been
The letter
Chip
by
fornia and AWH were both owned
meeting
attorneys
another
with Formosa’s
hearing
At the
on the
Hutchison.
motion
discussing
in
purpose
of
detail
strike,
also
Huyghe
to
testified
follows:
suggestions
resolving
and de-
AWH’s
And,
Q
again,
[Formosa’s counsel]:
Kajima’s allegations. Ke-
fending against
professional
when
talk
you
about “our
lihar
that
that
Huyghe
testified
said
team,”
Chip
you’re including Mr.
Hutch-
firm,
retaining
was
hiring the
that,
ison in
correct?
having
to
option of
Hutchison available
A [Huyghe]:
compa-
Yes.
have—our
We
Similarly,
testify,
if Formosa
chose.
so
ny is
into
an
broken
divisions. We have
Huyghe repre-
Alexander
testified that
Division,
experts,
Industrial
a team of
expertise was
sented that Hutchison’s
got twenty
thirty years.
who have
itway
“in whatever
available to Formosa
And—
of
was needed to assist with
defense
Q: And,
Chip
part
Mr.
Hutchison is
of
that he
Huyghe
the case.”
testified
experts,
that
of
team
correct?
he
Chip
“shared with
that
[Hutchison]”
A: Yes.
Day
had
of the Jones
met with several
lawyers
then represented
who
Formosa.
Q: Okay.
you
If
look down on
also testified that he
turned
your Huyghe
later
project
regarding
little
and so
on the
over
“entire
file”
logo
forth
bottom
his
there,
letters,
Lownds,
in
says,
big
it
“A.W.
case to
counsel.
Associates,
pro-
file
that had
Incorporat-
Hutchison and
included documents
been
regarding
27.
ions of witnesses
what is "confiden-
See footnote 2.
issue).
tial
raise fact
information” does not
Huyghe
"corporate
testified that
Koch,
("confidential
26. See
terest As noted mind, in your own about whether A.W. above, I agree adoption with the and has Hutchison Associates such two-part expert-disqualification test out- requires disqual- conflict of interest that applied lined in Koch and have to reach ification? my dissenting opinion in this case. A: My opinion is that it has such At the hearing on Formosa’s motion to My disqualification. opinion is based strike, Supreme former Court Eu- Justice First, upon following factors: there gene Cook testified for Formosa as an testimony, today, that was the settle- expert on concerning rules conflicts of in- disclosed, authority ment was disqualification experts
terest and
and
This, clearly,
defenses were disclosed.
public policy
reasons
such rules.
is confidential information. One of the
provided
Justice Cook
the following testi-
stamped,
letters from
Hutchison is
A.W.
mony:
confidential,”
“privileged which is an
Q
Cook,
[Formosa’s counsel]: Justice
In listening
Huyghe
admission.
to Mr.
general
regarding
what is the
rule
dis-
testify, he
about a
involve-
talked
short
qualifications?
every-
copy
ment. He talked about
A
really pretty
[Justice Cook]: It’s
sim-
thing
goes
that comes out of our file
An
ple.
expert,
attorney,
like an
is not
corporate
Chip
... Mr.
Hutchison.
permitted
change
sides
the middle
paid
He talks
the fact that he was
about
of a lawsuit.
Twenty
over
Thousand Dollars. He un-
Q: Why that?
derstood his services would be on hold.
And,
Probably,
assignment,
A:
original
There’s several reasons.
from what
down,
critique
I
one
the most fundamental reasons is
took
review
Wilmore,
Kajima
29. Formosa Plastics
U.S.A. v.
30. See Mitchell v.
III. Justice Castillo’s defense, he under- sa’s Alexander testified Argument Waiver that had been retained stood AWH that Justice Castillo contends Formosa Huyghe that for the Formosa and worked right disqualification its of waived seek that until he firm. He also testified by failing Hutchison and to assert a AWH Kaji- that September learned in late confidentiality claim of over information expert, as its he ma had named Hutchison provided product Formosa to and the work option believed Formosa still retained the by Huyghe. created Justice Castillo ar- capacity it using of Hutchison whatever op- at least five gues that “Formosa had chose.31 confidentiality portunities” to establish the Formosa Justice Castillo contends provided Huyghe, information it it failed “opportunity” missed a fifth when so, by failing to do Formosa waived object the ini- Huyghe “reported after right confidentiality. a claim of
its to assert The record re- by Kajima.” tial contact flects, however, Huyghe “re- argues initially Formosa Justice Castillo contacted that he had been ported” failed to address the issue confidentiality Day, For- Kajima only fall to Kelihar Jones points during at several of 1998 Kelihar testified Huyghe performing work for mosa’s counsel. when former approached had been Day. Huyghe said he request Formosa at the of Jones Castillo, her by Kajima to be an asked According to Justice Formosa the work he opinion regarding whether “opportunity’ missed a fourth when performed firm had earlier Day defense from Jones to and the transferred its in a conflict. Keli- Formosa could result Hedges Porter & in December Huyghe telephone with involv- present conversations 31. Alexander also testified at the trial (in 2002) February Hedges & ing that after Porter confidential information. defense, he had several assumed Formosa's thought Huyghe har told she he knew Texas, The STATE of State things that ... would make it diffi-
some him the other side” represent cult for Hedg- contact Porter & and that he should admitted that he never called Huyghe
es. ZASCAVAGE, Appellee. Charles know Hedges Porter & to let Formosa No. 2-06-126-CR. Kajima. signed up had AWH Formosa learned that Hutchison and Brian Texas, Appeals Court AWH) (also Rogers designat- had been Fort Worth. Kajima’s testifying experts Sep- ed as 19, 1995, tember when Formosa received Jan. 2007. re- supplemental interrogatory later, sponses. Approximately weeks two 4, 1995, filed its mo-
on October
tion to strike. The trial court held a hear-
ing on Formosa’s motion on October only a few
By filing its motion strike learning Kajima’s designa- after
weeks experts, preserved
tion of
right disqualification to seek of Hutchison
and AWH.32
IV. Conclusion
I would hold Formosa met its burden (1)
establishing reasonably that: it con-
cluded that it had a confidential relation- AWH; Huyghe
ship
disclosed confidential information
Huyghe Accordingly, I would AWH.33
hold that the trial court abused its discre- refusing disqualify
tion in Hutchison as expert Kajima.
an witness for I would judgment
reverse the of the trial court and for a trial in which
remand this case new to testi- permitted
Hutchison would
fy witness. 1995, orig. proceeding) (holding two and re Amer. Prods.
32. See In
Home
(delay
delay
than two months
S.W.2d at 73
of less
does not constitute
one-half month
filing
disqualify
did not
motion to
counsel
right
disqualify)).
waiver of
(citing
right
disqualify)
constitute waiver of
Euresti,
Implement
Rio Hondo
Co.
Koch,
See