Opinion issued October 24, 2002.
In The
Court of Appeals
For The
First District of Texas
NO. 01-00-00584-CV
FORMOSA PLASTICS CORPORATION, U.S.A. AND FORMOSA PLASTICS CORPORATION, TEXAS, Appellants
V.
MATERIAL PARTNERSHIPS, INC., Appellee
* * *
MATERIAL PARTNERSHIPS, INC., Appellant
V.
FORMOSA PLASTICS CORPORATION, U.S.A. AND FORMOSA PLASTICS CORPORATION, TEXAS, Appellees
On Appeal from the 113th District Court
Harris County, Texas
Trial Court Cause No. 9736829
OPINION ON MOTION FOR REHEARING
On June 28, 2002, we issued an opinion affirming the trial court's judgment in part, reversing it in part, and remanding the cause. Formosa Plastics Corporation, U.S.A. and Formosa Plastics Corporation, Texas (collectively "Formosa") have filed a motion for rehearing. We deny the motion, but we withdraw our previous opinion and issue this one instead.
In its appeal, Formosa challenges the judgment in favor of Material Partnerships, Inc. ("MPI") on MPI's claims for fraudulent misrepresentation and unjust enrichment. By its own appeal, MPI challenges the trial court's take-nothing judgment rendered on MPI's claim for profits lost due to Formosa's product deficiencies and the trial court's award of attorney's fees to Formosa for breach of contract.
We review (1) whether the evidence was legally and factually sufficient to support the trial court's findings of fraudulent misrepresentation and unjust enrichment, (2) whether the trial court erred by awarding MPI monetary damages up to June 1998, (3) whether the trial court erred by denying MPI damages based on profits after June 1998, (4) whether the trial court erred by awarding Formosa attorney's fees that included time spent on the defense of MPI's tort claims, and (5) whether the trial court erred by denying MPI recovery for alleged lost profits (MPI's "Exhibit B" claims). We affirm the judgment in part, reverse it in part, and remand the cause.
Facts
Formosa Plastics Corporation, U.S.A. is the parent company that markets plastic products manufactured at various Formosa facilities throughout the United States. Formosa Plastics Corporation, Texas owned and operated the Formosa facility at Point Comfort, Texas. In late 1993, Formosa began producing polyolefins (1) at its Texas plant. The by-products of this production process included scrap plastics. Formosa's vice-president of sales and marketing at that time was Dick Heinle. Heinle was responsible for the sale of polyolefins, even though he lacked experience in that area.
MPI is in the business of recycling and trading the following plastic products: (1) certified prime resin; (2) wide-spec or off-grade resin; and (3) scrap. In 1994, MPI had an established base of domestic customers of scrap plastics. MPI also sold prime and wide-spec product exclusively for export.
MPI's president, Joel Burgower, met with Heinle in April 1994. At that meeting, Burgower agreed to evaluate Formosa's scrap-plastic streams at the Point Comfort facility. Shortly after Burgower completed his inspection, MPI began purchasing prime and wide-spec product for its export customers, as well as smaller quantities of scrap plastic, from Formosa.
In September 1994, Heinle contacted Burgower and offered to allow MPI to purchase 100% percent of the scrap plastic generated in certain areas of the Point Comfort facility. In the same conversation, Heinle mentioned that Formosa was interested in developing direct sales and asked for MPI's help in establishing a sales base in the domestic market. According to MPI, Heinle offered to allow MPI to assist Formosa in securing direct domestic customers in exchange for Formosa's giving MPI direct access and best prices for Formosa's export products. The parties agreed to this proposal and discussed working together in this manner for the next 20 to 25 years. The parties did not discuss, much less agree, that Formosa would compensate Burgower or MPI by commission or an agent's fee, however.
Following the agreement, MPI identified its previously undisclosed customers to Formosa. Burgower introduced some of MPI's clients to Formosa representatives without compensation and often traveled across the country to do so. (2) During this time, several Formosa officers referred to MPI as Formosa's "partner" and to the relationship between the two entities as a "partnership." Heinle referred to Burgower as his "partner" several times, and Burgower frequently introduced Heinle to new clients as his "partner," without eliciting any complaints from Heinle. Burgower maintained that he introduced Formosa to his customers without seeking compensation because he believed MPI had a partnership with Formosa. Formosa's sales to customers referred to Formosa by MPI amounted to $53,013,996.51 between 1994 and June 1998.
As early as late 1994, Formosa noticed accounting discrepancies in MPI's account, causing Formosa to believe that MPI was in arrears in payments to Formosa. While trying to reconcile MPI's account, the parties continued to conduct business with each other, and Formosa extended MPI a $250,000 line of credit. In March 1997, Formosa stopped providing export product to MPI. At that time, MPI discovered it had not been receiving the best prices from Formosa since some time between August 1996 and March 1997.
In July 1997, the parties met, without success, to resolve the dispute over MPI's account. A few weeks later, MPI sued Formosa. MPI claimed Formosa had sold it defective products between 1994 and 1997. MPI also claimed it had lost profits because three companies MPI had provided with Formosa's defective products had stopped doing business with MPI. MPI also sought damages for claims made by third parties that had purchased Formosa's defective products. (3) Later, MPI claimed Formosa had made a fraudulent misrepresentation and had been unjustly enriched because Formosa's representation of a partnership caused MPI not to charge Formosa a commission for the clients MPI had introduced to Formosa. Formosa counterclaimed for breach of contract and sought $611,110.47 for outstanding invoices, plus interest and attorney's fees.
After a bench trial, the trial court awarded MPI approximately $3.8 million on its fraudulent-misrepresentation and unjust-enrichment claims. The trial court awarded Formosa $598,000 on its breach-of-contract counterclaim and applied this amount as an offset against MPI's award. The trial court also awarded Formosa $280,000 in attorney's fees. Formosa moved to modify the judgment and, alternatively, for a new trial. The trial court denied the motion for new trial, but granted the motion to modify, reducing MPI's award to $2.9 million. After applying the offset, MPI's award was approximately $2.44 million. MPI filed a motion to modify the reformed judgment, which motion the trial court denied.
Formosa's Appeal
In five issues, Formosa challenges the legal and factual sufficiency of the evidence to support the trial court's findings of fraudulent misrepresentation and unjust enrichment and the trial court's award of damages to MPI.
- Standard of Review
When, as here, the appellate record contains a complete reporter's record of the trial, we review the trial court's findings of fact under the same standards for legal and factual sufficiency as govern review of jury findings. Min v. Avila, 991 S.W.2d 495, 500 (Tex. App.--Houston [1st Dist.] 1999, no pet.).
In analyzing legal sufficiency, we consider all the evidence in the light most favorable to the prevailing party, indulging every reasonable inference in that party's favor. Assoc. Indem. Corp v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex. 1998). We are required to determine whether the proffered evidence as a whole rises to the level that would enable reasonable and fair-minded persons to differ in their conclusions. Id.
In analyzing factual sufficiency, we must first consider, weigh, and examine all of the evidence that either supports or is contrary to the verdict. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 198); Hall v. Diamond Shamrock Refining Co., L.P., 82 S.W.3d 5, 13 (Tex. App.--San Antonio 2001, no pet. h.). Having done so, we should then set aside the verdict only if the evidence which supports the verdict is so weak as to be clearly wrong and manifestly unjust. Hall, 82 S.W.3d at 13.
- Fraudulent Misrepresentation
In its first, second, and third issues, Formosa challenges the legal and factual sufficiency of the evidence to support the trial court's findings that Formosa fraudulently misrepresented the existence of a partnership between Formosa and MPI. The trial court found that Formosa fraudulently misrepresented to MPI that the companies were "partners" to gain access to MPI's customers and knowledge of the plastics business.
A false, material misrepresentation that was either known to be false when made or was asserted without knowledge of its truth is fraudulent. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998). Fraudulent misrepresentation also requires intent that the other party rely on the misrepresentation and be injured by that reliance. Id. A misrepresentation is a false statement of fact or a promise of future performance made with no intent to perform. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434-35 (Tex. 1986).
1. Misrepresentation
Formosa appears to argue that in order to prove Formosa misrepresented the existence of a partnership, MPI had to show that Formosa misrepresented all the elements of a legally binding partnership: (1) a community of interest in the venture; (2) the sharing of profits; (3) the sharing of losses; and (4) a mutual right of control or management of the enterprise. See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 176 (Tex. 1997) (citing Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 287 (Tex. 1978)). If MPI had needed to prove the existence of a partnership, then MPI would have had to show these things. MPI did not need to prove a partnership existed, however. In fact, to prevail on its fraudulent-misrepresentation claim, MPI had to show that no partnership existed. Therefore, MPI did not have to show that Formosa misrepresented each of the elements of a legally binding partnership to prove that Formosa fraudulently misrepresented that a partnership existed between Formosa and MPI. (4)
MPI produced sufficient evidence that Formosa misrepresented the existence of a partnership. MPI presented evidence of written and oral communications by Formosa in which Formosa referred to MPI as its partner. During one such communication, Gary Mills, a business director for Formosa, stated that MPI had been a good partner and that he looked forward to continuing the partnership for years to come. In another letter, Paul Huang, a vice-president of Formosa, wrote, "our partnership with you has always been based on more than you [sic] being an order taker." Additionally, one of Formosa's legal counsel referred to MPI and Formosa as "business partners." Finally, Heinle testified that he used the term "partner" when referring to MPI and was aware of the correspondence by his employees that referred to a partnership arrangement. Considering only the evidence that supports the finding, while ignoring all evidence to the contrary, we hold the evidence is legally sufficient to support the trial court's finding that Formosa misrepresented that a partnership existed between the parties.
In support of its factual sufficiency challenge, Formosa points out Heinle's testimony that Formosa never represented that any special arrangement existed between Formosa and MPI. Although Heinle admitted he had used the term "partner," he also testified that he commonly used that term to refer to suppliers and customers who were not partners. Additionally, Kenneth Gross, who owned one of the companies that MPI introduced to Formosa, testified that, although he heard Burgower introduce MPI and Formosa as partners in Heinle's presence, people in the plastics industry commonly used the words "partner" and "partnership" without implicating a legal relationship. We conclude this evidence does not render the finding that Formosa misrepresented that a partnership existed so against the great weight and preponderance of the evidence that the finding is clearly wrong and unjust. Therefore, we hold the evidence is factually sufficient to support that finding. 2. Knowledge of Falsity and Reckless Disregard of Truth
We now turn to Formosa's legal and factual sufficiency challenges to the trial court's finding that Formosa made misrepresentations knowingly or with reckless disregard for the truth.
The evidence shows that Formosa and MPI agreed that MPI would give Formosa its customer list and that MPI would receive best price and availability from Formosa as compensation. MPI also presented evidence that Formosa was not giving MPI best prices, although the best-prices agreement was supposed to last 20 to 25 years, and that Formosa obtained approximately 59 million dollars worth of business from its arrangement with MPI without incurring any substantial expense. Considering only the evidence tending to support the finding, we hold there is legally sufficient evidence to support the trial court's finding that Formosa either knew its representations of a partnership were false or acted with reckless disregard of the truth as to whether its representations were false.
In support of its factual sufficiency challenge, Formosa points to Heinle's testimony that he denied he had any special arrangements with Burgower regarding price or anything else. More specifically, Heinle denied that he agreed MPI would bring domestic sales to Formosa in exchange for Formosa's available export product at its best price. This evidence does not render the finding that Formosa made misrepresentations so against the great weight and preponderance of the evidence that the finding is clearly wrong and unjust. Therefore, we hold the evidence is factually sufficient to support the trial court's finding.
- Intent Not to Perform
Formosa challenges the sufficiency of the evidence to support the trial court's finding that Formosa did not intend to perform the promises it made to MPI, which finding is necessary to MPI's claim for fraudulent misrepresentation. Formosa contends there was no evidence of its officers' intent at the time the representations were made to MPI.
Fraudulent intent, which is generally difficult to prove, is usually established by circumstantial evidence. Frost Nat'l Bank v. Heafner, 12 S.W.3d 104, 112 (Tex. App.--Houston [1st Dist.] 1999, no pet.). To be found liable for fraudulent misrepresentation, a party must have no intent to perform when a promise is made, although lack of intent to perform may be inferred from the party's acts after the representation is made. Spoljaric, 708 S.W.2d at 434. Intent is a fact question vested with the trier of fact because it depends on the credibility of the witnesses and their testimony. See id.
Burgower testified that Formosa agreed to provide best prices for 20 to 25 years. There was evidence that Formosa stopped giving MPI best prices some time between August 1996 and March 1997. Heinle denied the existence of the best-prices agreement, but such a denial is merely a factor in determining intent. Spoljaric, 708 S.W.2d at 435. In fact, Formosa gave contradictory statements: Formosa claimed it stopped providing best prices because of MPI's late payments, but also contended that there was no agreement to provide best prices. Considering the evidence that supports the finding, while ignoring all evidence to the contrary, we hold the evidence is legally sufficient to support the trial court's finding of fraudulent intent.
In support of its factual sufficiency challenge, Formosa offered evidence that it intended to fulfill its duties under the agreement with MPI. Of course, Heinle, Formosa's own witness, also denied the agreement even existed. Considering Formosa's contradictory statements, we hold the evidence is not so against the great weight and preponderance of the evidence that the finding is clearly wrong and unjust. Accordingly, we hold the evidence is also factually sufficient to support the trial court's finding of fraudulent intent.
4. Reasonableness of Reliance
Formosa does not contest MPI's claim that MPI relied on the existence of a business agreement, but challenges the legal and factual sufficiency of the evidence to support the trial court's finding that the reliance was reasonable. MPI offered evidence that Formosa had no experience in the polyolefin market and that Formosa gained 59 million dollars in sales from the customers MPI introduced to Formosa. MPI also showed that the customary compensation for this service is a 5% commission on gross sales price. MPI did not charge the 5% fee because it relied on the supposed partnership agreement, which was intended to compensate MPI for the services. MPI offered evidence that it believed it had received best prices for some amount of time, but that Formosa had later stopped making the product available at best prices. As a result, MPI's evidence showed that it was not fully compensated for its service to Formosa. Moreover, MPI incurred expenses without compensation because it was relying on the partnership. Considering the evidence that supports the finding, while ignoring all evidence to the contrary, we hold the evidence is legally sufficient to support the trial court's finding MPI's reliance was reasonable.
Formosa contends that MPI's reliance was not reasonable because MPI did not assert its partnership and commission theories until a year after filing suit and MPI never inquired about profits or commissions. Formosa's evidence does not make the trial court's finding so against the great weight and preponderance of the evidence that the finding is clearly wrong and unjust.
We overrule Formosa's first, second, and third issues.
- Unjust Enrichment
In issues four and five, Formosa challenges the trial court's finding that Formosa was unjustly enriched as not supported by legally or factually sufficient evidence. Formosa argues it was not unjustly enriched because MPI received the benefit of its bargain from Formosa in the form of best prices and availability. Formosa also contends that a valid agreement governing the terms of compensation precludes recovery for unjust enrichment.
The law creates an implied obligation when a party is unjustly enriched in a manner not governed by binding contract. Burlington N. R.R. Co. v. S.W. Elec. Power Co., 925 S.W.2d 92, 97 (Tex. App.--Texarkana 1996), aff'd, 966 S.W.2d 467 (Tex. 1998). Recovery for unjust enrichment is appropriate when an agreement is unenforceable, invalid, not fully performed, or void for other legal reasons. Id. Unjust enrichment applies the principles of restitution to disputes that are not governed by contract and is usually found when a party obtains a benefit from another by fraud, duress, or the taking of an undue advantage. Id.
The trial court found that Formosa's fraudulent misrepresentations unjustly enriched Formosa to MPI's detriment and, accordingly, awarded monetary compensation based on the reasonable value of the services MPI had rendered to Formosa. Formosa argues that the finding of unjust enrichment was improper because (1) the trial court's finding of fraudulent misrepresentation was improper; (2) MPI received what it had bargained for, namely, best prices and availability for a period of time; and (3) the existence of a valid, binding agreement barred equitable relief under the theory of unjust enrichment.
Because we have already held there was sufficient evidence to support the trial court's finding of fraudulent misrepresentation, Formosa's first argument--that the trial court's finding of fraudulent misrepresentation was unjust--necessarily fails. Formosa's third argument--that a binding agreement bars equitable relief--also fails, regardless of how we construe that argument. For example, if we construe Formosa's third argument to mean that the parties had some type of binding agreement (just not a partnership) under which MPI introduced customers, divulged customer lists, and assisted in sales, the trial court made no such finding. Rather, the trial court found only that no partnership agreement existed. If, on the other hand, we construe Formosa's third argument to mean that the parties had a binding partnership agreement, the trial court necessarily found the opposite when it found Formosa had misrepresented a partnership's existence, a finding we have upheld. Thus, Formosa's third argument fails.
Formosa's second argument--that MPI received what it had bargained for--is two-pronged.
1. MPI Allegedly Received the Benefit of the Bargain
Formosa first contends that, because MPI received best prices and availability for some period of time, MPI received the benefit of its bargain. There was sufficient evidence, however, to support the opposite conclusion. The nature of the agreement required that (1) MPI disclose its customer list immediately, and (2) Formosa compensate MPI in the form of best prices and availability for 20 to 25 years. MPI presented evidence it did not receive best prices for the full three years the parties operated under the agreement. Furthermore, MPI presented evidence that it would not have been fully compensated even if Formosa had offered it best prices for the three years the parties operated under the agreement. When one has received or used something that warranted compensation to another, the remedy is money payment for the value of the thing given or the benefit received. City of Harker Heights v. Sun Meadows Land, Ltd., 830 S.W.2d 313, 319 (Tex. App.--Austin 1992, no writ). We hold there was sufficient evidence to show MPI did not receive the benefit of its bargain.
- Monetary Compensation Improper
Second, Formosa cites Peko Oil USA v. Evans to support its contention that, because MPI bargained for a business advantage, monetary compensation is improper. Id., 800 S.W.2d 572, 574 (Tex. App.--Dallas 1990, writ denied). In Peko Oil, Sunbelt Oil introduced Peko Oil to the Texaco Program, which Peko Oil entered. Id. After Peko Oil signed a letter of intent with Texaco, Sunbelt Oil demanded to become Peko Oil's exclusive gas marketing agent. Id. Peko Oil refused Sunbelt's demand, but offered an alternate arrangement. Id. Sunbelt Oil refused and sought the cash value of the services allegedly provided. Id. at 574-75. Under the principle of quantum meruit, the plaintiff must show that the party sought to be charged had reasonable notice that the plaintiff sought to be paid. Id. at 575. The Peko Oil court held that, because Sunbelt Oil was seeking a future business advantage, not compensation, Peko Oil did not have proper notice that Sunbelt Oil expected to be paid; that lack of notice precluded recovery under the theory of quantum meruit. Id. at 567-77. Peko Oil can be distinguished in two fundamental respects.
First, Sunbelt Oil provided Peko Oil a service before discussing compensation, which sequence would suggest that the service was provided gratuitously. See id. at 577. In this case, however, MPI did not release its customer list to Formosa until an agreement ensured that MPI would be compensated for this service. There is no evidence that MPI gave its personal customer list to Formosa gratuitously.
Second, Sunbelt Oil was attempting to recover under the equitable remedy of quantum meruit, a theory that does not involve the issue of fraud. See id. Quantum meruit is based on a promise implied in law to pay for beneficial services rendered and knowingly accepted. Id. at 575. An element that must be proved to recover under quantum meruit is that the person sought to be charged was reasonably notified that the plaintiff, in performing such services, was expecting to be paid by the person sought to be charged. Id. Quantum meruit is an equitable remedy, grounded in principles of unjust enrichment, but is only one of a number of equitable remedies available. Harker Heights, 830 S.W.2d at 318. Unavailability of quantum meruit does not preclude other remedies. See id. MPI did not attempt to recover under the principle of quantum meruit. MPI sought to recover under the equitable theory of unjust enrichment. Thus, Peko Oil does not apply.
We hold the trial court did not err in awarding damages based on the theory of unjust enrichment.
We overrule Formosa's fourth and fifth issues.
MPI's Appeal
MPI brings its own appeal, claiming that (1) the trial court erred by finding that MPI suffered no recoverable damages after June 1998, based on its fraudulent-misrepresentation and unjust-enrichment claims; (2) the trial court erred by awarding Formosa attorney's fees without requiring Formosa to segregate the fees corresponding to defending MPI's claims from the fees corresponding to successfully prosecuting Formosa's counterclaim; and (3) the trial court erred by finding that MPI did not suffer any damages as a result of freight overcharges, lost or damaged freight, or breach of contract that resulted from Formosa's actions.
- MPI's Damages
In its first issue, MPI contends the trial court erroneously cut off MPI's damages after June 1998. The trial court found the reasonable value of the unjust benefit to be 5% of the total sales by Formosa to companies introduced by MPI through June 5, 1998. MPI was awarded approximately $2.9 million in damages.
MPI argues it conclusively proved that its damages did not stop in June 1998 because MPI presented uncontroverted expert testimony establishing damages up to the time of trial. See Homes v. Alwattari, 33 S.W.3d 376, 383 (Tex. App.--Fort Worth 2000, pet. denied) (holding that in a legal sufficiency challenge, when there is an adverse finding on an issue that appellant had the burden of proving, appellant must show it conclusively established the issue). MPI first addresses the trial court's refusal to award past damages from June 1998 up to the time of trial, September 1999, and then MPI turns to future damages.
1. Past Damages: June 1998 to September 1999
MPI contends the trial court erred in failing to award MPI past damages from June 1998 to the date of trial in September 1999, as extrapolated by its expert witness and based on the figures from April 1994 through June 1998. MPI asserts that, because the expert testimony it offered was unchallenged and uncontroverted, MPI conclusively proved damages in that amount and the trial court was thus not free to disregard its expert's testimony of damages.
The trial court did not err in awarding MPI damages through June 1998 because the trial court could properly have disregarded MPI's sole evidence of damages after that date. The damages MPI sought were for lost profits. Recovery of lost profits must be shown with a reasonable degree of certainty, and opinions or estimates must be based on objective facts, figures, or data from which lost profits can be ascertained. Holt Atherton Indus. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992). MPI's expert calculated the profits lost after June 1998 by extrapolating sales figures from before June 1998. The expert did not base his calculations on Formosa's actual sales figures after 1998, although such post-June 1998 sales figures were available. It was reasonable for the court to require actual data instead of extrapolations calculated by MPI's expert witness. In cases involving lost earnings, the burden of proof for past earnings is greater than that for future earning capacity because evidence of a plaintiff's actual past earnings is certain. Strauss v. Continental Airlines, Inc., 67 S.W.3d 428, 435 (Tex. App.--Houston [14th Dist.] 2002, no pet.). Similarly, lost profits could have been accurately shown from actual sales from June 1998 until the time of trial. Therefore, MPI had a higher burden of proof. Because accurate evidence was available, but not presented, the trial court did not err in refusing to consider the extrapolations of MPI's experts based on past profits.
MPI relies on cases that do not involve the reasonably certain establishment of past lost profits. See Ralston Purina Co. v. Barkley Feed & Seed Co., 722 S.W.2d 431, 434 (Tex. App.--Houston [1st Dist.] 1986), rev'd on other grounds, 744 S.W.2d 932 (Tex. 1988); Mack v. Moore, 669 S.W.2d 415, 419 (Tex. App.--Houston [1st Dist.] 1984, no writ); Schwartz v. Pinnacle Comm., 944 S.W.2d 427, 433-36 (Tex. App.--Houston [14th Dist.] 1987, no writ). Furthermore, expert testimony is conclusive only if the nature of the subject matter requires that the fact finder be guided solely by the opinion of experts and the evidence is otherwise credible and free from contradiction. Mack, 669 S.W.2d at 419. Because MPI could have presented evidence regarding the actual sales Formosa made between June 1998 and the time of trial to companies MPI introduced to Formosa, the nature of the subject matter did not demand that the fact finder be guided solely by the opinion of experts. For these reasons, the trial court did not err in finding that lost profits were not shown with reasonable certainty from June 1998 until the time of trial.
2. Future Damages: September 1999 to 2004
MPI contends the trial court erred by not allowing MPI to recover future damages because the expert testimony of future damages was clear, direct, positive, and uncontroverted and, thus, was conclusively proved.
MPI's expert did not provide a basis for extrapolating a 20- to 25-year agreement through the year 2004, however. Therefore, the trial court did not err in determining that future damages were not proved with reasonable certainty and, thus, that MPI's award of damages should not be extrapolated through the year 2004.
We overrule MPI's first issue.
- Attorney's Fees
In its second issue, MPI asserts that the trial court erred by awarding Formosa attorney's fees both for successfully prosecuting its counterclaim for breach of contract and for unsuccessfully defending MPI's claims. The trial court awarded Formosa $280,000 in attorney's fees. That amount represented compensation for the hours Formosa's law firm spent defending against MPI's fraudulent-misrepresentation and unjust-enrichment claims, as well as the hours the firm spent prosecuting Formosa's counterclaim for breach of contract. The trial court did not require that Formosa segregate the fees corresponding to defending MPI's claims from the fees corresponding to prosecuting Formosa's counterclaim successfully.
As a general rule, the party seeking to recover attorney's fees carries the burden of proof. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991). Attorney's fees are not recoverable from an opposing party unless provided for by statute or by contract between the parties. Travelers Indem. Co. of Connecticut v. Mayfield, 923 S.W.2d 590, 593 (Tex. 1996). Section 38.001 of the Civil Practice and Remedies Code authorizes recovery of attorney's fees for suits on a contract, but does not apply to defense of actions for fraudulent misrepresentation and unjust enrichment. See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 1997). (5)
A party is generally required to segregate fees for claims for which fees are recoverable from fees associated with claims that do not permit recovery. Stewart Title, 822 S.W.2d at 10-11. "A recognized exception to this duty to segregate arises when the attorney's fees rendered are in connection with claims arising out of the same transaction and are so interrelated that their 'prosecution or defense entails proof or denial of essentially the same facts.'" Id. at 11; Flint & Assoc. v. Intercontinental Pipe & Steel, Inc., 739 S.W.2d 622, 624-25 (Tex. App.--Dallas 1987, writ denied). When the causes of action involved depend on the same set of facts or circumstances and are thus intertwined to the point of being inseparable, the party suing for attorney's fees may recover the entire amount covering all claims. Stewart Title, 822 S.W.2d at 11.
In moving for a partial new trial, Formosa claimed that "MPI's unjust enrichment claim and award for commissions do not share the same facts and issues as Formosa's counterclaim to collect an overdue debt." Formosa also contends, and we agree, that its own counterclaim is "factually and legally separable" from MPI's claim. In addition to these admissions by Formosa, the record shows that Formosa's counterclaim for a breach of contract arising out of unpaid invoices does not share the same facts and issues as MPI's claims for fraudulent misrepresentation and unjust enrichment. Accordingly, the exception articulated in Stewart Title does not apply, and the trial court erred by not requiring Formosa to segregate its attorney's fees. (6)
Because the determination of reasonable attorney's fees is a question for the trier of fact, we remand the cause to the trial court for determination of what portion of the $280,000 awarded to Formosa as attorney's fees is attributable to the successful prosecution of Formosa's counterclaim. See Stewart Title, 822 S.W.2d at 12. The portion of the $280,000 that corresponds to Formosa's defense of MPI's unjust-enrichment and fraudulent-misrepresentation claims cannot be awarded to Formosa and must be deleted. See id.
We sustain MPI's second issue.
- MPI's "Exhibit B" Claims
In its third issue, MPI challenges the findings of the trial court that MPI did not suffer any damages as a result of freight overcharges, lost or damaged freight, or breach of contract, the bases of MPI's"Exhibit B" claims. We apply the usual standards of review. See Dow Chem., 46 S.W.3d at 241-42. MPI claims that it presented conclusive evidence to prove it was entitled to damages, while Formosa offered no controverting evidence. Burgower testified that MPI suffered damages because Formosa either did not perform its part of the agreement with MPI, performed the agreement in an untimely fashion, or rendered substandard performance. During Burgower's cross-examination, Formosa repeatedly challenged Burgower on the ground he did not support his testimony with documentary evidence. Formosa did not offer any evidence controverting Burgower's claims. The trial court found that MPI did not prove the alleged damages on any of those claims. (7)
Although supporting documentation may affect the weight of evidence, it is generally not necessary to produce, in court, the documents that support opinions or estimates of damages arising from lost profits. See Heine, 835 S.W.2d at 84. Burgower did not support his testimony on transaction numbers 5, 6, 13, 14, 16, 17, 22, 30, and 33 with corroborating documentary evidence. Although his lack of documentation might have affected the weight the trial court placed on this evidence, the lack of documentation did not automatically invalidate his claims for lost profit damages.
As the trier of fact, the trial court is the sole determiner of the credibility of the witnesses and the weight to be given their testimony, and we may not substitute our judgment for that of the fact finder simply because we may disagree with the fact finder's conclusions. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986). Because they can observe a witness's demeanor, trial courts are given great latitude as fact finders to believe or disbelieve a witness's testimony, particularly when the witness is interested in the outcome. In re Doe 4, 19 S.W.3d 322, 325 (Tex. 2000). Moreover, the trial court can reject the uncontroverted testimony of an interested witness unless the testimony is readily controvertible, clear, positive, and direct and there are no circumstances that tend to discredit or impeach the testimony. Id.; Lofton v. Texas Brine Corp., 777 S.W.2d 384, 386 (Tex. 1989).
MPI's lack of written documentation to corroborate Burgower's verbal testimony as to transaction numbers 5, 6, 13, 14, 16, 17, 22, 30, and 33 could have caused the trial court to question the veracity of, and to discredit, Burgower's testimony. See Heine, 835 S.W.2d at 84. It was, therefore, within the province of the trial court, as the sole fact finder, to reject Burgower's uncontroverted testimony. See id. Accordingly, the evidence was both legally and factually sufficient to support the trial court's findings of fact relating to transaction numbers 5, 6, 13, 14, 16, 17, 22, 30, and 33. (8)
We overrule MPI's third issue.
Conclusion
We reverse the part of the trial court's judgment that awarded Formosa attorney's fees without requiring Formosa first to segregate those fees. We affirm the trial court's judgment in all other respects. We remand the cause to the trial court to determine the portion of Formosa's attorney fees associated with Formosa's counterclaim. This is a limited remand. See Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986); Hansen v. Academy Corp., 961 S.W.2d 329, 331 (Tex. App.--Houston [1st Dist.] 1997, writ denied).
Tim Taft
Justice
Panel consists of Justices Taft, Wilson, (9) and Price. (10)
Justice Wilson, dissenting.
Do not publish. Tex. R. App. P. 47.
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