Lead Opinion
delivered the opinion of the Court,
In this case, we review a court of appeals judgment reinstating a jury verdict finding that Louis Deere, D.O. and Jesse C. Ingram, Ph.D. formed a partnership pursuant to the Texas Revised Partnership Act (TRPA).
TRPA lists five factors to be considered in determining whether a partnership has been formed. This determination should be made by examining the totality of the circumstances in each case, with no single factor being either necessary or sufficient to prove the existence of a partnership. Here, the evidence is legally insufficient to establish that a partnership existed between Ingram and Deere. Because the evidence of the formation of a partnership is legally insufficient, we do not address the issue raised in Ingram’s cross-petition challenging the court of appeals’ decision that Ingram owed Deere a fiduciary duty. Accordingly, we reinstate the trial court’s take-nothing judgment in favor of Ingram and reverse the court of appeals’ judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
Ingram, a licensed psychologist, and Deere, a board certified psychiatrist, entered into an oral agreement in 1997, which provided that Deere would serve as the medical director for a multidisciplinary pain clinic. Deere contends that they agreed he would receive one-third of the clinic’s revenues, Ingram would receive one-third, and the remaining one-third would be used to pay the clinic’s expenses. Deere also claims that when he and Ingram began working together, Ingram told him their work “was a joint venture, or [they] were partners, or [they] were doing this together.” Ingram contends that they only agreed Deere would receive one-third of the clinic’s revenues and that there was no agreement as to the other two-thirds. Deere acknowledges that, during his time at the clinic, he never contributed money to the clinic, he did not participate in the hiring of any employees, he did not know any of the clinic staffs names, he never purchased any of the clinic’s equipment, his name was not on the clinic’s bank account, and his name was not on the lease agreement for the clinic space.
Fourteen months after Deere began working at the clinic, Ingram prepared a written agreement to memorialize their arrangement. The document was entitled “Physician Contractual Employment Agreement” and stated that Ingram was-the “sole owner” of the clinic. Deere refused to sign the document, claiming that it contradicted their initial arrangement. Immediately after Deere received the document, he ceased working at the clinic.
Deere later sued Ingram, asserting claims of common law fraud, statutory fraud, fraudulent inducement, breach of
Ingram filed a motion for judgment non obstante veredicto (judgment n.o.v.). After a hearing, Judge David Evans signed a new judgment, eliminating a portion of the damages awarded by the jury and reducing the award of attorneys’ fees. Following his decision, Judge Evans recused himself without explanation, and the case was assigned to Judge Merrill Hartman. Ingram then filed a second motion for judgment n.o.v. or, in the alternative, a motion for new trial. Judge Hartman signed a judgment n.o.v. and rendered a take-nothing judgment in Ingram’s favor.
The court of appeals reversed the trial court’s take-nothing judgment on the second motion for judgment n.o.v. and reinstated the trial court’s judgment on the first motion for judgment n.o.v. The court held that Ingram waived his right to challenge the existence of a partnership because he failed to raise the issue in his second motion for judgment n.o.v.
II. LAW AND ANALYSIS
A. Preservation of Error
As an initial matter, we must address Deere’s contention that Ingram failed to preserve his no evidence argument regarding the existence of a partnership. First, Deere argues Ingram failed to
We addressed a similar issue in Sage Street. In that case, we discussed whether the trial court should have submitted a contract’s ambiguity to the jury, although neither party pleaded it. Sage St.,
Second, Deere argues that error was not preserved because Ingram’s motion for a judgment n.o.v. did not assign a no evidence point of error regarding the jury’s answer to the partnership question. However, Ingram prevailed on his motion for judgment n.o.v. Thus, as the prevailing party, he need only raise the issue of whether a partnership existed as a cross-point. Tex.R.App. P. 38.2(b). When a trial court renders judgment n.o.v. and the losing party appeals, the prevailing party may also appeal and present points or issues on any ground that would either vitiate the verdict or preclude affirming the judgment and reinstating the verdict, including grounds not raised in the judgment n.o.v. See id. (providing that when a trial court renders a judgment n.o.v., “the appellee must bring forward by cross-point any issue or point that would have vitiated the verdict or that would have prevented an affirmance of the judgment if the trial court had rendered judgment on the verdict” (emphasis added)). This is an exception to the general rule that as a prerequisite to presenting a complaint for appellate review, the record must show that the complaint was made to the trial court and that the trial court ruled or refused to rule on the request. See Tex.R.App. P. 33.1(a). Because Ingram properly raised the issue to the court of appeals, he did not waive the issue for review by either this Court or the court of appeals.
B. Standard of Review
When reviewing a court of appeals judgment reversing the trial court’s judgment n.o.v., we conduct a legal sufficiency analysis of the evidence. Guevara v. Ferrer,
C. Partnership Law
1. Texas Common Law
Under the common law, the Court recognized that a partnership or joint enterprise “presupposes an agree
2. Texas Statutory Law
The Texas Uniform Partnership Act (TUPA) was passed in 1961 and substantially adopted the major provisions of the Uniform Partnership Act (UPA), which itself was adopted in every state except Louisiana after it was approved by the National Conference of Commissioners on Uniform State Laws in 1914. See Harry J. Haynsworth, IV et al., Should the Uniform Partnership Act Be Revised?, 43 Bus. Law. 121, 121 (1987); Revised Unif. P’Ship Act, 6 U.L.A. 45 (1997). TUPA was replaced by TRPA, effective January 1, 1994,
(1) receipt or right to receive a share of profits of the business;
(2) expression of an intent to be partners in the business;
(3) participation or right to participate in control of the business;
(4) sharing or agreeing to share:
(A) losses of the business; or
(B) liability for claims by third parties against the business; and
(5)contributing or agreeing to contribute money or property to the business.6
Id. art. 6132b-2.03(a). The common law required proof of all five factors to establish the existence of a partnership. See Coastal Plains, 512 S.W.2d at 287. However, TRPA contemplates a less formalistic and more practical approach to recognizing the formation of a partnership.
First, TRPA does not require direct proof of the parties’ intent to form a partnership. Tex.Rev.Civ. Stat. art. 6132b-2.02 (stating that two or more persons may form a partnership regardless of “whether the persons intend to create a
The question of how many of the TRPA factors are required to form a partnership is a matter of first impression for this Court. The TRPA factors seem to serve as a proxy for the common law requirement of intent to form a partnership by identifying conduct that logically suggests a collaboration of a business’s purpose and resources to make a profit as partners. After examining the statutory language and considering that TRPA abrogated the common law’s requirement of proof of all five factors, we determine that the issue of whether a partnership exists should be decided considering all of the evidence bearing on the TRPA partnership factors. While proof of all five common law factors was a prerequisite to partnership formation under the common law, the totality-of-the-circumstances test was, in some respect, foreshadowed in Texas case law. As Justice Jack Pope wrote for the San Antonio Court of Appeals,
No single fact may be stated as a complete and final test of partnership.Each case must rest on its own particular facts and the presence or absence of the usual attributes of a partnership relation. The earlier Texas rule indicated that profit sharing was the controlling test. We think it is now generally held that such a test is not all-inclusive and controlling_ The absence of an express provision obligating the parties to share in the losses is also important and indicates that no partnership existed. But this feature too is not controlling.
Davis v. Gilmore,
D. Existence of a Partnership
In this case, we consider whether more than a scintilla of evidence of any of the factors indicative of a partnership was introduced at trial.
1. Profit Sharing
Deere argues that he received or had the right to receive a share of the clinic’s profits because he and Ingram had an agreement in which each of them would receive one-third of the clinic’s “gross revenue” and the remainder would be used for expenses. It is true that the “receipt or right to receive a share of profits of the business” may be indicative of the existence of a partnership under TRPA, but a share of profits paid as “wages or other compensation to an employee or independent contractor” is not indicative of a partnership interest in the business. Tex.Rev. Civ. Stat. art. 6132b-2.03(b)(1)(B); see Friedlander,
The evidence does not establish that Deere received a share of profits as contemplated under TRPA for two reasons. First, the agreement between Ingram and Deere cannot constitute Deere’s receipt of “profits,” but rather of gross revenue. Because TRPA does not define the term “profits,” we define it using its ordinary meaning. Tex. Gov’t Code § 312.002; Heritage Res., Inc. v. NationsBank,
Second, Ingram wrote twenty checks to Deere as compensation from January 1997 until March 1999. These checks referred to Deere as a “medical consultant” and the payments as “contract labor.” Therefore, they contradict his argument that he received profits as a partner in the clinic. Under TRPA, receipt of profits as compensation for an employee’s services or an independent contractor’s work is not evidence that parties were partners. Tex.Rev.Civ. Stat. art. 6132b-2.03(b)(1)(B); Strawn Nat’l Bank,
2. Expression of Intent to Be Partners
“[Expression of an intent to be partners in the business” is one of five factors courts use in determining whether a partnership exists. Tex.Rev.Civ. Stat. art. 6132b-2.03(a)(2). This is different from the common law definition of a partnership that required proof that the parties intended to form a partnership at the outset of their agreement. Coastal Plains,
When analyzing expression of intent under TRPA, courts should review the putative partners’ speech, writings, and conduct. While under the common law, evidence probative on other factors is considered evidence of “intent,” under TRPA, the “expression of intent” factor is
Evidence of expressions of intent could include, for example, the parties’ statements that they are partners, one party holding the other party out as a partner on the business’s letterhead or name plate, or in a signed partnership agreement. See Reagan v. Lyberger,
The terms used by the parties in referring to the arrangement do not control, Coastal Plains,
Deere argues that he expressed his intent to be a partner with Ingram by sharing the clinic’s profits and losses and having access to the clinic’s records. His evidence of other factors, sharing of profits and losses and control of the business, is insufficient to establish expression of intent. Deere’s evidence is also insufficient because there must be evidence that both parties expressed their intent to be partners. Tex.Rev.Civ. Stat. art. 6132b-2.03(a) (explaining that “[fjactors indicating that persons have created a partnership in-
The evidence of Ingram’s expression of intent to be business partners is the following exchange during Deere’s trial testimony:
Q. What representations did [Ingram] make to you when you were forming this idea that later turned out to be not true?
A. [Deere] Well, that number one, that this was a joint venture, or that we were partners, or we were doing this together.
Deere’s testimony is unclear and gives the alleged arrangement with Ingram three different characterizations — that they were joint venturers, partners, or “were doing this together.” It is unclear from this testimony what Ingram believed to be the nature of their relationship. Any significance of Deere’s testimony is further obviated because he testified that partner “means some people working together.” Accordingly, Deere called the employees he supervised at his clinic “partners.” After Deere’s counsel explained to him the legal definition of a partnership during his testimony, Deere referred to his trial attorney as his “partner” because he was “depending on [him].”
Deere also testified that the clinic kept its established name after he joined as the medical director, and he and Ingram never discussed a name change. He never signed a lease agreement for the building owned by Ingram where the clinic was housed, was not named on the clinic’s bank account, never signed a signature card for the clinic’s bank account, and never filed taxes representing that he was co-owner of the clinic. Additionally, Deere paid his own medical malpractice insurance, which he acknowledged was his common practice when he did contract work. Deere cannot provide the content, context, or circumstances to give any of the alleged expressions of intent legal significance as evidence of a partnership.
3. Control
Deere argues he had an equal right to control and manage the clinic’s business because, although he was never allowed to see the books and records, he repeatedly requested to see them. He also points to Ingram’s testimony that “maybe” Deere viewed the clinic’s books on one occasion.
The right to control a business is the right to make executive decisions. See Brown v. Cole,
4. Sharing of Losses and Liability for Third Party Claims
Contrary to the common law, under TRPA an agreement to share losses is not necessary to create a partnership. Tex. Rev.Civ. Stat. art. 6132b-2.03(c); see Coastal Plains,
According to Deere, he and Ingram agreed that Deere would receive one-third of the clinic’s gross revenue, Ingram would receive one-third of the clinic’s gross revenue, and the remainder would be used to pay clinic expenses. Deere argues that this agreement determined how losses would be shared, but he testified that there was never a discussion of how expenses in excess of one-third of the clinic’s gross revenue would be divided between him and Ingram. The meaning of “net operating losses” is “the excess of operating expenses over revenues, the amount of which can be deducted from gross income if other deductions do not exceed gross income.” Black’s Law Dictionary 963 (8th ed.2004). Here, Ingram and Deere never discussed what would happen to the allocation if expenses exceeded one-third of the revenue or gross income. They never discussed losses, only expenses. There is no legally cognizable evidence to support the contention that Ingram and Deere agreed to share losses.
5. Contribution of Money or Property
Finally, there is no evidence that Deere “contribut[ed] or agree[d] to contribute money or property” to the clinic as a partner. Tex.Rev.Civ. Stat. art. 6132b-2.03(a)(5). Deere does not argue that there was any agreement that he contribute either money or property to the enterprise. See Id. Furthermore, Deere does not contend that he actually contributed money to the clinic. In fact, Deere acknowledged at trial that he did not contribute to clinic renovations or the purchase of medical equipment and supplies and that he did not agree to use his personal resources to pay for any expenses in the operation of the clinic. Rather, Deere’s only argument regarding this factor is that he contributed his reputation as property to the alleged partnership.
TRPA defines “property” as “all property, real, personal, or mixed, tangible or intangible, or an interest in that property.” Id. art. 6132b-1.01(15). Reputation is a type of goodwill and may be valuable intangible property. Tex. & Pac. Ry. Co. v. Mercer,
a. Contribution of Valuable Property
Although Deere claims his reputation was a valuable contribution to the alleged partnership, the evidence does not support this assertion. Deere argues that the testimony of Ingram’s expert, Ron McClellan, who stated that Deere’s reputation was a “benefit to the clinic” and “added value” to the clinic, supports his claim. However, McClellan only testified generally that Deere’s reputation could add value to the clinic, and he acknowledged that his statements were unsupported and mere assumptions, stating: “Not knowing Dr. Deere and his reputation, I can only assume.” His opinion, therefore, was merely speculation. Coastal Transp. Co. v. Crown Cent. Petroleum Corp.,
The only other evidence supporting Deere’s claim is his unsubstantiated statements given during his testimony that his reputation added value to the clinic. Assuming he is qualified to give an opinion on this matter, his testimony is devoid of support for that conclusion. Deere testified that he did not know how many clients came to the clinic specifically because of his presence and that the clinic’s name never changed to highlight his addition to the alleged venture. Moreover, the pain clinic was not marketed using his name. Neither Deere nor McClellan ever explained how Deere’s reputation contributed to the clinic’s success. See Mercer,
b. Contribution as a Partner
Furthermore, there is no evidence that Deere added value to the clinic as a partner and not an employee. Even if we were to assume that Deere contributed quantifiable value and enjoyed a good reputation in the psychiatric or pain management fields, he cannot establish this factor without evidence that the contribution is distinguishable from the contributions of an employee. Employees may contribute to business endeavors by lending their time and reputation, but that is not a contribution to the venture indicative of a partnership interest. Even assuming Deere’s reputation was impeccable, nothing indicates that Deere contributed or agreed to contribute to the clinic as a partner and not as an employee. In sum, there is no legally sufficient evidence that Deere contributed property to the multidisciplinary pain clinic that would establish a partnership interest.
III. CONCLUSION
Whether a partnership exists must be determined by an examination of the total
Justice JOHNSON filed a concurring opinion.
Notes
. The only argument Deere makes to this Court in support of his claim that Ingram breached a fiduciary duty he owed to Deere is that such a duty arose by virtue of their partnership. See Tex.Rev.Civ. Stat. art. 6132b-4.04 (recognizing the unwaivable duties of care and loyalty and the obligation of good faith required of partners under the Texas Revised Partnership Act); see also Bohatch v. Butler & Binion,
. Prior case law discusses differences between joint ventures and partnerships. We see no legal or logical reason for distinguishing a joint venture from a partnership on the question of formation of the entity. See Gray v. West,
. UPA was revised in 1997 and renamed the Revised Uniform Partnership Act (RUPA). Unif. P’Ship Act, intro., 6 U.L.A. 5 (2001). Although Texas has adopted portions of RUPA, it has not adopted the uniform act in its entirely. Id. at 45.
. Three statutory regimes have governed partnerships formed in Texas — TUPA, TRPA, and the Texas Business Organizations Code (TBOC). TRPA, enacted in 1993, replaced TUPA. Act of May 31, 1993, 73rd Leg., R.S., ch. 917, § 1, 1993 Tex. Gen. Laws 3887, 3893. TRPA governs partnerships formed on or after January 1, 1994, and other, existing partnerships that elected to be governed by it. Tex.Rev.Civ. Stat. art. 6132b — 11.03(a). In 2003, the TBOC replaced TRPA. Act of May 29, 2003, 78th Leg., R.S., ch. 182, § 1, 2003 Tex. Gen. Laws 267, 592-93. The TBOC gov
. TUPA did not provide a list of considerations or factors that were important or necessary to the establishment of a partnership. With one exception, TUPA only provides rules indicating circumstances that did not give rise to a partnership. TUPA reads as follows:
(1) Except as [otherwise provided] persons who are not partners as to each other are not partners as to third persons.
(2) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not of itself establish a partnership, whether such co-owners do or do not share any profits made by the use of the property.
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived.
(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:
(a) As a debt by installments or otherwise,
(b) As wages of an employee or rent to a landlord,
(c) As an annuity to a widow or representative of a deceased partner,
(d) As interest on a loan, though the amount of payment vary with the profits of the business,
(e) As the consideration for the sale of a good-will of a business or other property by installments or otherwise.
(5) Operation of a mineral property under a joint operating agreement does not of itself establish a partnership.
Tex.Rev.Civ. Stat. art. 6132b, § 7
. Four years after TRPA was enacted, Oregon adopted factors almost verbatim to the factors listed in TRPA for determining whether a partnership exists. Or.Rev.Stat. § 67.055 (2008). Oregon and Texas are the only states to enact a statute that deviates from the UPA's rules for determining the existence of a partnership.
. According to TRPA, "[one] of the following circumstances, by itself, does not indicate that a person is a partner in the business”:
(I)the receipt or right to receive a share of profits:
(A) as repayment of a debt, by installments or otherwise;
(B) as payment of wages or other compensation to an employee or independent contractor;
(C) as payment of rent;
(D) as payment to a former partner, surviving spouse or representative of a deceased or disabled partner, or transferee of a partnership interest;
(E) as payment of interest or other charge on a loan, regardless of whether the amount of payment varies with the profits of the business, and including a direct or indirect present or future ownership interest in collateral or rights to income, proceeds, or increase in value derived from collateral; or
(F)as payment of consideration for the sale of a business or other property by installments or otherwise;
(2) co-ownership of property, whether in the form of joint tenancy, tenancy in common, tenancy by the entireties, joint property, community property, or part ownership, whether combined with sharing of profits from the property;
(3) sharing or having a right to share gross returns or revenues, regardless of whether the persons sharing the gross returns or revenues have a common or joint interest in the property from which the returns or revenues are derived; or
(4) ownership of mineral property under a joint operating agreement.
Tex.Rev.Civ. Stat. art. 6132b-2.03(b).
. McCrary v. Butler,
. In closing argument, Deere’s counsel told the jury that a partnership could be established by finding proof of only one factor. He argued, “A joint venture is a partnership too, you know. [The judge] put ‘ors’ after all these elements. You don’t have to have all of them ladies and gentlemen, you can have any one of them, or you can have two of them, or you can have three of them....” There was no objection to the charge on this point.
. This argument contradicts Deere’s trial testimony that he was never allowed to look at the books.
Concurrence Opinion
concurring.
Deere sued Ingram, claiming they formed a partnership for the purpose of creating an interdisciplinary pain clinic. The jury found they did. The trial court, however, eventually granted Ingram’s motion for judgment notwithstanding the verdict and entered a take-nothing judgment. The court of appeals reversed in part, reinstating the jury verdict.
In this Court, Ingram claims Deere offered no evidence that a partnership was formed. See Tex.Rev.Civ. Stat. art. 6132b-2.03(a).
The jury charge contained seven questions. Question One asked
Did [Deere] and [Ingram] form a joint venture1 without giving it a name for the purpose of a interdisciplinary pain clinic that included the following terms:
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That [Deere] and [Ingram] would each own 50% of the unnamed joint venture;
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The jury was also instructed to consider the factors enumerated in the Texas Revised Partnership Act to determine whether a joint venture was created. See id. It found that a joint venture was created. Ingram challenges the legal sufficiency of the evidence to support the jury’s answer.
I agree that evidence of one factor normally, but not necessarily always, will be legally insufficient to support a partnership finding. The Court says even considering Deere’s testimony that Ingram said “this was a joint venture, or that we were partners, or we were doing this together,” the evidence is legally insufficient as to any factor, including the factor of intent to form a partnership. I disagree the evidence was legally insufficient to support a finding of intent. After all, the jury did determine Deere’s testimony was credible. Otherwise, it could not have found a joint venture existed.
However, we need not labor over whether Deere’s testimony was legally sufficient evidence as to intent to form a partnership. Regardless of such testimony, there was no evidence to support the specific term of ownership percentage included in Question One.
According to the charge, one of the terms Deere had the burden of proving was that he and Ingram “would each own 50% of the unnamed joint venture.” Deere did not object to Question One, so sufficiency of the evidence is measured against the charge as it was given. Osterberg v. Peca,
Deere offered no evidence that equal ownership of the business was ever de-
For the foregoing reasons, I join the Court’s opinion except for Part II-D 2. I also join the Court’s holding that the evidence is legally insufficient to support a judgment for Deere and join the Court’s judgment.
. The jury question inquired about a "joint venture.” As the Court notes, the parties reference the relationship both as a joint venture and a partnership. At 894 n. 2.