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Opinion filed August 31, 2006
In The
Eleventh Court of Appeals
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No. 11-05-00153-CV
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KEY ENERGY SERVICES, INC., Appellant
V.
TBS INTERNATIONAL, INC. D/B/A TOOL
BRANDING SERVICE, INC., Appellee
On Appeal from the 142nd District Court
Midland County, Texas
Trial Court Cause No. CV-43,371
M E M O R A N D U M O P I N I O N
TBS International, Inc. d/b/a Tool Branding Service, Inc. (TBS) filed suit against Key Energy Services, Inc. (Key) alleging breach of contract, quantum meruit, and conversion.[1] The trial court granted Key=s motion for directed verdict on the claim for conversion. The jury found against TBS on its contract claims. The jury found in favor of TBS on the issue of quantum meruit and awarded TBS $45,000 in damages. The conversion claim was not submitted to the jury. Based upon the jury verdict, the trial court rendered judgment for TBS and awarded $45,000 in damages, $7,839.18 in prejudgment interest, and $35,000 in attorney=s fees. We reverse and render judgment that TBS take nothing on its claim for quantum meruit and on its claim for attorney=s fees.
TBS is an asset management company that provides services primarily for oil-field-related businesses. TBS affixes a permanent marking of the letters ATBS@ along with a series of numbers particular to a specific customer on the customer=s equipment to prove ownership and aid in identification in the event of theft. TBS also maintains an inventory list of the customer=s assets.
In 1997, Key hired TBS to mark and inventory its equipment. There was no formal written contract, only a brochure which contained a description of the services to be provided by TBS. Key paid TBS an hourly fee to mark its equipment and to prepare an inventory of it. Key also paid TBS a Amonthly reoccurring cost@ based upon the number of assets marked and inventoried. In its brochure, TBS explained the purpose of the Amonthly reoccurring cost@ as follows:
The fees basically lease the right to use TBS-owned Registered Trademark Codes to positively identify assets and the ability to network with Law Enforcement Agencies and Industry Affiliates on a national scale to enhance recovery ratios and to deter potential losses. These monthly fees generate capital that allows TBS to work closely with law enforcement, offer rewards, travel to auctions and equipment sales, coordinate and distribute information for industry awareness, maintain software and employ a quality and reliable staff.
The evidence showed that, when the relationship was terminated by Key, Key was paying TBS a reoccurring fee of $10,882.50 per month. The record shows that, at the time Key terminated its relationship with TBS, Key had paid TBS in excess of $600,000.
Key terminated its relationship with TBS effective August 1, 2000. Key did not pay the monthly reoccurring fee to TBS after that date. The TBS code, however, was permanently affixed to Key=s equipment.
On September 27, 2000, TBS sent a letter to Key in which TBS claimed that Key was continuing to use the TBS codes after the termination of their relationship. TBS claimed that Key had reported thefts of its equipment and had used the TBS code numbers for identification purposes. TBS requested that Key Acease and desist@ from the use of any TBS owned codes Ato identify assets or for use in connection with law enforcement agencies and industry affiliates.@ In a memo dated December 14, 2000, Key instructed its employees not to use the code numbers to identify any Key assets. TBS filed suit on May 9, 2001.
In its first issue on appeal, Key argues that the evidence is legally insufficient to support the jury=s finding on quantum meruit. Because TBS had the burden of proof on the quantum meruit finding, we consider only the evidence and inferences that tend to support the finding, disregarding any evidence or inferences to the contrary. Sw. Key Program, Inc. v. Gil‑Perez, 81 S.W.3d 269, 274 (Tex. 2002); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965); see Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). A legal sufficiency challenge may only be sustained when: (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005); Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998); Robert W. Calvert, ANo Evidence@ and AInsufficient Evidence@ Points of Error, 38 Tex. L. Rev. 361, 362-63 (1960). Evidence is legally sufficient if it would enable reasonable and fair-minded people to reach the verdict under review. City of Keller, 168 S.W.3d at 827. We credit favorable evidence if reasonable jurors could, and we disregard contrary evidence unless jurors could not. Id. Furthermore, we must review the sufficiency of the evidence in light of the charge submitted. See Bradford v. Vento, 48 S.W.3d 749, 754 (Tex. 2001); Osterberg v. Peca, 12 S.W.3d 31, 54-55 (Tex. 2000).
To recover in quantum meruit, a claimant must prove (1) that valuable services were rendered or materials furnished (2) for the person sought to be charged and (3) that those services and materials were accepted by the person sought to be charged (4) under such circumstances as reasonably notified the person sought to be charged that the plaintiff in performing such services was expecting to be paid by the person sought to be charged. Heldenfels Brothers, Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992).
The record shows that, after the termination of their relationship with TBS, Key reported at least four thefts of its equipment to law enforcement. Law enforcement officers obtained TBS code numbers from a Key employee to use as identifying information. The record also shows that, in a letter to the Midland County Sheriff=s Office dated after the termination of the relationship, a vice president for Key provided the sheriff=s office the Ago ahead@ to use the TBS code numbers to identify Key=s stolen equipment. In another letter to the sheriff=s office dated January 27, 2003, a Key employee stated:
If law enforcement confiscates or finds equipment with the brand TBS 101 that is not on Key property or is being used by a company other that Key[,] it can be deemed Astolen@ property. Any equipment or property with ANY identification recognized as a Key asset not on Key property or being used by another company can be deemed Astolen@ property.
Brad Roberts, president and owner of TBS, testified that, after the termination of the relationship, he often responded to calls from law enforcement personnel regarding Key equipment. He also went to an auction site along with law enforcement and helped identify Key equipment.
Quantum meruit is a theory of recovery based upon an implied agreement to pay for benefits received. Id. Key had already paid TBS for marking the equipment. As we have pointed out, the brochure produced by TBS contained the assertion that the fees covered the right to lease the codes so that the codes might be used to aid identification in the event of theft. In its brochure, TBS goes on to say that fees generate the capital necessary to enable TBS to do various things to assist in the recovery of assets and to deter losses. Until the time that Key terminated its relationship with TBS, it paid the monthly fee. When it terminated the relationship, it paid nothing more. TBS was no longer providing a valuable service to Key. Key paid TBS for the service of marking the equipment at the time that it was marked. The record shows that the markings were permanent. Key sought no other services from TBS after the termination of the relationship. Following the date that Key terminated its relationship with TBS, TBS did not provide a valuable material or service to Key that was accepted by Key knowing that TBS would expect payment. There was no implied agreement that Key would pay TBS more than the approximately $600,000 it had already paid.
The evidence is legally insufficient to support the jury=s finding on any of the elements of quantum meruit. Key=s first issue on appeal is sustained.
Because we find that the evidence is legally insufficient to support the jury=s finding on quantum meruit, we need not address Key=s second issue that there is insufficient evidence to support the jury=s finding on damages. Tex. R. App. P. 47.1.
The judgment of the trial court is reversed, and we render judgment that TBS take nothing on its claims against Key.
JIM R. WRIGHT
CHIEF JUSTICE
August 31, 2006
Panel consists of: Wright, C.J., and
McCall, J., and Strange, J.
[1]In its original petition, TBS also alleged trademark infringement. The trial court granted summary judgment in Key=s favor on the trademark infringement claim.