Lion Copolymer Holdings, LLC v. Lion Polymers, LLC

Opinion issued December 21, 2021

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-17-00671-CV
———————————
LION COPOLYMER HOLDINGS, LLC, Appellant

LION POLYMERS, LLC, Appellee

On Appeal from the 190th District Court
Harris County, Texas
Trial Court Case No. 2014-10394A

MEMORANDUM OPINION ON REMAND

Appellant, Lion Copolymer Holdings, LLC (the “Company”), challenged the

trial court’s judgment, entered after a jury trial, in favor of appellee, Lion Polymers,

LLC (“LP”), in LP’s breach-of-contract suit against the Company. On original
submission of this appeal, the Company raised four issues, challenging the legal and

factual sufficiency of the evidence supporting the jury’s verdict and contending that

the trial court erred in admitting certain evidence and in awarding interest and costs.

We held that the evidence was legally sufficient to support the jury’s verdict,

that the factual sufficiency point was inadequately briefed, that the trial court did not

err in admitting the complained-of evidence, and that the trial court erred in awarding

interest and costs. Lion Copolymer Holdings, LLC v. Lion Polymers, LLC, 614

S.W.3d 156, 178–79 (Tex. App.—Houston [1st Dist.] 2019), rev’d, 614 S.W.3d 729

(Tex. 2020). Accordingly, we reversed the portion of the trial court’s judgment

awarding pre-judgment interest and remanded for a recalculation, modified the trial

court’s judgment to delete the award of a specific amount of costs, and affirmed the

remainder of the trial court’s judgment.

The supreme court disagreed that the factual sufficiency point was

inadequately briefed and remanded the case to this court for consideration of the

factual sufficiency issue and its effect, if any, on our judgment. Lion Copolymer

Holdings, LLC v. Lion Polymers, LLC, 614 S.W.3d 729, 735–36 (Tex. 2020).

On remand, we hold that the evidence is factually sufficient to support the

jury’s finding that the Company breached the parties’ contract and the jury’s award

of damages to LP in the amount of $361,295. We affirm the portion of the trial

court’s judgment awarding LP damages in accordance with the jury’s verdict.

2
Background

The Company manufactures synthetic rubber for the automotive and

construction industries. Pursuant to the amended “LLC Agreement” (the

“Agreement”), under which the Company was formed, the Company’s “members,”

such as LP, share in the Company’s profits and proceeds through tiered distribution

provisions, or “waterfalls,” based on the type and quantity of units, or fractional

membership interests in the Company, that each member holds. In 2007, the

Company admitted LP as a member and issued it 1,237,500 Class 1 Preferred Units

and 1,964,492 Class 3 Common Units. At issue in this case is the Company’s

distribution of proceeds related to LP’s holdings of Class 3 units.

Pertinent Portions of the Agreement

The Company, as a pass-through entity taxed as a partnership, allocates its

profits and losses to each individual member, who then pays taxes on the amounts

allocated. Because a member may incur tax liability on profits not actually

distributed, the Agreement, at section 6.01(d), provides for certain “Tax Advances”

as follows, in pertinent part:

On each Tax Distribution Date, the Company shall, to the extent the
Board determines such amounts to be available for distribution, make
distributions to the Members in such amounts as the Board determines
are sufficient to satisfy the Members’ projected estimated income tax
liability with respect to the Company’s income allocable to their Units
for such period. . . . Such tax liability will be calculated as though each
Member were an individual residing in the State of New York based
upon the highest marginal income tax rates, taking into account U.S.
3
federal, state, and local income taxes . . . , which the Board estimates
are applicable, utilizing the respective rates for ordinary income or
capital gains, depending on the characterization of the Company’s
estimated income for such period. Any distribution made to a member
pursuant to this Section 6.01(d) shall be treated as an advanced
distribution of, and shall reduce, the amounts next distributable to such
Member pursuant to Section . . . 6.02.

Section 6.02 of the Agreement governs how and to whom proceeds are to be

paid after a “Recapitalization Transaction,” defined as the financing or refinancing

of debt secured by the assets of the Company in an amount in excess of $10,000,000,

in the aggregate, and followed by the distribution of all, or a significant portion of,

such amounts to the members existing as of such date. Section 6.02(1) generally

provides:

[U]pon a Recapitalization Transaction, after adjusting the Capital
Accounts for all distributions made under Section 6.01 and all
allocations under this Article 6, all available proceeds distributable to
the Members shall be distributed to the Members as follows:
(a) First, to the Holders of Class 4 Common Units in an amount
equal to the amounts owed to such Holders . . . .
(b) Next, to the Holders of Class 1 Preferred Units until their Unpaid
Class 1 Return is eliminated; . . . .
(c) Next, to the Holders of Class 1 Preferred Units until their
Unreturned Class 1 Capital is eliminated; . . . .
(d) Thereafter, to the Holders of Class 2 Common Units, Class 3
Common Units, and Class 4 Common Units (but not the holders
of Class 1 Preferred Units) pro rata in proportion to the number
of such Units.

Thus, reading sections 6.01(d) and 6.02 together, the Company advances sufficient

cash to each member to satisfy the member’s estimated income tax liability and then

4
recoups the advance from a subsequent non-tax distribution of proceeds under, as

pertinent here, section 6.02 by reducing the amount of the member’s distribution.

The Instant Suit

On September 9, 2011, the Company, after a $300,000,000 Recapitalization

Transaction, distributed $150,000,000 in proceeds to its members (the “2011

Distribution”). On March 7, 2013, after a $230,000,000 Recapitalization

Transaction, the Company again distributed a portion of the proceeds to its members

(the “2013 Distribution”).

LP, disputing that it had received its proper share of the proceeds in the 2011

and 2013 Distributions, brought a breach-of-contract suit against the Company. In

its suit, LP alleged that the Company had improperly (1) withheld certain sums, as a

“strike-price deduction,” from LP’s portion of the 2011 Distribution (the “strike-

price claim”) and (2) withheld certain section 6.01(d) tax advances twice—once

from LP’s portion of the 2011 Distribution and again from LP’s portion of the 2013

Distribution (the “double-deduction claim”). The trial court granted summary

judgment in favor of LP on the strike-price claim, and we affirmed, as modified, the

trial court’s judgment. See Lion Co-Polymers Holdings, LLC v. Lion Polymers,

LLC, No. 01-16-00848-CV, 2018 WL 3150863, at *18 (Tex. App.—Houston [1st

Dist.] June 28, 2018, pet. denied) (mem. op.). The trial court severed LP’s double-

deduction claim into the instant suit.

5
In its second amended petition, LP asserted, with respect to its

double-deduction claim, that the Company breached the Agreement by failing to

distribute proceeds in accordance with its terms. LP asserted that the Company, in

paying LP its share of the 2011 Distribution, deducted $361,295 for future tax

advances attributable to the third and fourth quarters of 2011 that the Company had

not yet paid to LP. LP asserted that the Agreement did not authorize deductions for

future tax advances. Subsequently, the Company paid LP the tax advances at issue.

However, in paying LP its share of the 2013 Distribution, the Company again

deducted $361,295 as a recoupment of the same tax advances.

LP explained that it had learned about the double-deduction through its

deposition in the underlying strike-price suit of the Company’s Tax Matter Member,

Rich Furlin. LP notified the Company that, in support of its claim, it intended to

introduce at trial a spreadsheet that Furlin created in February 2012 (the “February

2012 Spreadsheet”) and his deposition testimony about the spreadsheet. The

Company moved to exclude the February 2012 Spreadsheet and “any testimony

related to that spreadsheet.” The trial court denied the Company’s motion.

Trial

At trial, Stephen Lyttleton, an owner and manager of LP, testified that, on

September 9, 2011, he received a letter from Furlin describing LP’s share of the 2011

Distribution, with respect to both its Class 1 and Class 3 units. The trial court

6
admitted into evidence a notice of wire transfer, reflecting the Company’s payment

to LP for its Class 1 and Class 3 units, combined. Furlin also sent Lyttleton a

spreadsheet detailing how he had calculated LP’s share. Lyttleton testified that

Furlin’s calculations were incorrect because none of the tax advances that LP had

received in 2010 and prior to the date of the 2011 Distribution had been deducted.

Lyttleton testified that, to correct the errors, Furlin compiled and sent to LP

the February 2012 Spreadsheet. He testified that the February 2012 Spreadsheet also

contained errors, however. Although Furlin had properly deducted the tax advances

that the Company had paid to LP in 2010 and prior to the September 9, 2011

Distribution, he had also improperly deducted future tax advances, i.e., for the third

and fourth quarters of 2011 that the Company had not yet paid to LP. Lyttleton

testified that the Agreement did not authorize the Company to make deductions for

future tax advances. He testified that the total amount that the Company should have

deducted from the 2011 Distribution for LP’s tax advances attributable to its Class

3 units was $1,603,197. However, the February 2012 Spreadsheet showed that LP

“Class 3 had $1,964,492 deducted from its . . . 2011 [D]istribution.”

Lyttleton testified that the difference, $361,295, was attributable to LP’s tax

advances for the third and fourth quarters of 2011. The trial court admitted into

evidence the February 2012 Spreadsheet, which reflects that a total of $1,964,492 in

“Article 6.01(d) Distributions,” or tax advances, was deducted from LP’s share of

7
the 2011 Distribution, including “Tax Allocations” in the amount of $313,328 and

$47,967, totaling $361,295, for the third and fourth quarters of 2011, as follows:

On February 21, 2012, Furlin sent Lyttleton an email stating that he had

“applied the Article 6.01(d) distributions for [LP’s] Class 3 Common to equal

$1,964,492 in the September 2011 distribution detail schedule.” On February 23,

2012, Lyttleton sent an email to Furlin, explaining that, although Furlin had properly

deducted $146,071 and $1,457,126, a total of $1,603,197, in tax advances that the

Company had paid to LP prior to the September 9, 2011 Distribution, he had also

improperly deducted future tax advances, i.e., for the third and fourth quarters of

2011, that were not paid to LP prior to the 2011 Distribution.

The trial court admitted into evidence a wire-transfer notice, showing that the

Company paid LP a “Q3 Tax Distribution” on September 15, 2011. Lyttleton noted

that the sum transferred was for its Class 1 and Class 3 units combined and that the

portion attributable to LP’s Class 3 units was $313,328. The Company states in its

brief that it paid LP its fourth quarter 2011 tax advance in January 2012.

On March 8, 2012, Lyttleton sent an email to Furlin, with an attached

spreadsheet, asking to discuss the errors in the February 2012 spreadsheet in light of

Lyttleton’s own “draft” calculations.

8
On May 25, 2012, LP, through its principal, Pete De Leeuw, sent an email to

the Company’s board of directors, Company manager Goradia Capital (“Goradia”),

and Furlin, stating that LP’s tax attorney, Robert Phillpott, had analyzed the actual

distributions to understand whether the Agreement had been properly followed. The

trial court admitted into evidence Phillpott’s report and spreadsheets.

In his report, Phillpott stated that he had reviewed a Goradia spreadsheet dated

April 17, 20121 and had concluded that there existed “material differences for all

Members with respect to the amounts that should have been distributed to the

Members through the 2011 [Distribution].” With respect to LP’s tax advances,

Phillpot concluded that LP, prior to a 2010 recapitalization transaction, had received

cumulative tax advances in the amount of $238,086. And, between that date and the

September 9, 2011 Distribution, LP had received cumulative tax advances in the

amount of $2,375,013. The trial court admitted into evidence cancelled checks and

bank records reflecting these amounts.

Lyttleton explained that Phillpott’s stated sums included LP’s tax advances

for both its Class 1 and Class 3 units. Thus, to obtain the portions of the tax advances

attributable solely to LP’s Class 3 units at issue in this case, the advances must be

multiplied by the portion of the total amount attributable to LP’s Class 3 units, i.e.,

1
This spreadsheet is not included in the appellate record.

9
61.35 percent.2 Doing so resulted in $146,066 in tax advances attributable to LP’s

Class 3 units for 2010 and $1,457,070 in tax advances attributable to LP’s Class 3

units through the date of the 2011 Distribution. Together, these total $1,603,136 in

tax advances attributable to LP’s Class 3 units that should have been deducted from

LP’s share of the 2011 Distribution. Lyttleton noted that these amounts

approximated those shown on the February 2012 Spreadsheet. The issue, however,

was that the February 2012 Spreadsheet went further and also deducted future tax

advances, i.e., a total of $361,295 for the third and fourth quarters of 2011 that the

Company had not yet paid to LP.

On March 7, 2013, Lyttleton received a letter from Company accountant

David Wascom, notifying LP of its 2013 Distribution and explaining that the tax

advances that the Company had paid to LP after the 2011 Distribution would be

deducted. Thus, LP’s third and fourth quarter 2011 advances, which were actually

paid to LP after the date of the 2011 Distribution, were again deducted from LP’s

share of the 2013 Distribution. Lyttleton testified that, based on the double

deduction, LP had suffered damages in the amount of $361,295.

2
The record shows that members, such as LP, owning more than one classification
of membership interest, i.e., Class 1 and Class 3, have a single capital account, but
the taxable income is allocated to each type of membership unit. Thus, LP’s capital
account reflected an ownership interest based on the sum of its Class 1 and Class 3
units, of which 38.65% was allocated to LP’s Class 1 units and 61.35% was
allocated to its Class 3 units.
10
Vijay Goradia, chairman of the boards of Goradia and the Company, testified,

by videotaped deposition, that he “rel[ied] on Rich Furlin to do the calculations”

pertaining to the Company’s tax advances and distributions. He testified that

Goradia manages the Company and that Furlin had worked for Goradia since it

began managing the Company.

Furlin testified at trial that, as secretary of the Company and its Tax Matter

Member, it was his responsibility to ensure that the members’ distributions were

correct. He noted that he was also a vice president of Goradia. He testified that he

was “the person who calculated the 2011 Section 6.02 distribution that the Company

paid.” He admitted that the initial calculations supporting the 2011 Distribution to

LP were incorrect because LP’s tax advances paid prior to the 2011 Distribution had

not been deducted in accordance with the Agreement. He performed the

recalculation of the 2011 Distribution in the February 2012 Spreadsheet, a file he

titled: “Lion 2011 Distribution, Final Reallocation, February 2012.”

Furlin testified that only $1,603,197 had been paid to LP as tax advances on

its Class 3 units prior to the 2011 Distribution and that the Agreement did not

authorize the Company to deduct future tax advances from its distributions. He

admitted that he applied $1,964,492 in the February 2012 Spreadsheet because he

had included $361,295 attributable to LP’s third and fourth quarter 2011 tax

advances, which had not yet been paid. He explained that he used the incorrect

11
deduction of $1,964,492 in the February 2012 Spreadsheet because the Company

“had another lawsuit going on unrelated to this. And [he] thought that what [he] was

supposed to do was put in that amount that was . . . being disputed in the other

lawsuit.” He added: “I thought that that was the right number to put in given what

was transpiring. It was a mistake, and I was wrong.”

Furlin also testified that the Company did not actually use the February 2012

Spreadsheet or the spreadsheets later prepared by Lyttleton or Phillpott. Rather, the

Company obtained its “final calculation” from its attorney, Corby Brooks. Furlin

testified that, in June 2012, Brooks compiled a set of spreadsheets (the “June 2012

Spreadsheet”), which Brooks submitted to the Company attached to a letter titled,

“Confidential Settlement Negotiations.” Furlin explained that the June Spreadsheet

was “used to determine how much people should have gotten in 2010 versus what

they got in 2010, and how much they should have gotten based on the correct

calculation in 2011 versus how much they did get in cash in 2011.” Furlin later

testified, however, that Brooks’s June 2012 Spreadsheet was also not the final

schedule.

Furlin also testified that the Company finalized its calculations in August

2012, determined that it had actually overpaid LP in the 2011 Distribution, and

resolved to recoup such overpayment by withholding certain sums from LP, as

follows:

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Q. . . . . When did the Company actually complete its work with
respect to trying to figure out how to adjust the distributions that
had already been made to take into account these tax advances?
A. It—it took until the beginning of August 2012 for us to know
exactly what the right amounts of the final distribution should be.
Q. All right. And how did you communicate that determination to
Mr. Lyttleton?
A. Well, there are—there are two ways. One is, each quarter, we
knew people owed—we knew certain people owed money. So
each quarter from December through the second quarter of 2012,
we were taking out estimates of what we thought the final would
be. So they knew that in—that in Q1—or the fourth quarter of
2012, their entire—that we were going to be make a repayment
of $600,000. They knew in 20—in the first quarter we were
making another 200—400,000. And that by the June tax
distribution, we had withheld another 200,000.
So the sum of that all was $1.3 million. And then we sent
[Lyttleton] that—all—and all the shareholders their notification
of whether they were getting money or whether they had owed
money. But everybody had had their payments already reduced
by that time. But it took through August of 2012 to get
everything finalized.

Thus, testified Furlin, there was not a double-deduction of tax advances. The trial

court admitted into evidence the Company’s spreadsheet (the “August 2012

Spreadsheet”), reflecting that LP owed the Company $1,331,655, of which $865,361

was attributed to its Class 3 units.

With respect to correlating the Company’s spreadsheets with actual

distributions to LP, Furlin testified:

Q. You heard some assertions that this is all about following the
money, and you have to tick and tie everything, and you have to
show that everything ties to cash, and you should reconcile the

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bank accounts because the bank accounts will show that
everything ticks and ties, right?
A. That was what was said, yes.
Q. But you admit that the final spreadsheet, whatever the final
spreadsheet is, won’t actually tie to what was actually distributed
to all of the unitholders, would it?
A. Well, these are deductions. These aren’t how much was paid in
cash.

Furlin noted that, although the Company, in its live answer in this case, stated

that it had “made $1,935,154 in Section 6.01 distributions [tax advances]” to LP,

that was “wrong.” He further noted that, in May 2015, he executed an affidavit3 in

this case stating that, prior to the 2011 Distribution, LP “received a total of over 1.9

million in Section 6.01 distributions [tax advances] related to its Class 3 units” and

that he was including amounts paid for the entire month of September.

In the excerpts of his videotaped deposition presented to the jury, Furlin

testified that he was “the only one that made calculations that the Company used”;

that the February 2012 Spreadsheet was the final spreadsheet that he compiled; and

that the “ultimate amount” withheld in tax advances from LP’s share of the 2011

Distribution was “1 million 964.”

Wascom, a certified public accountant from the firm Hannis T. Bourgeois,

testified that he prepared tax allocations and returns for the Company. He “did not

do any calculations.” He testified that it was Furlin who created the spreadsheets

3
The affidavit itself was not admitted into evidence.
14
from which the Company eventually made its 2011 Distribution to members, as

follows:

Q. So you don’t know what the Company actually did in 2011
because you didn’t review any of Furlin’s spreadsheet
calculations of the 2011 distribution, did you?
A. Not at that time, but subsequently I did.
....
Q. But you told me at the deposition that you didn’t review any of
them?
A. I didn’t review his calculations, but I have to be provided the
calculations to know how much distributions each member gets
in preparation of a tax return.
Q. So it’s your testimony that you looked at the spreadsheets, you
just didn’t check his calculations?
A. And let’s—let’s be clear. Which spreadsheets are you referring
to?
Q. I’m referring to the spreadsheets that Mr. Furlin made to
calculate the 2011 Section 6.02 distribution.
A. I would have had to have seen those spreadsheets.
Q. You looked at those spreadsheets?
A. Yes.
....
Q. You agree with me that it was Rich Furlin who created the
spreadsheets that calculated payments made to the members for
Section 6.02 distributions that were eventually made, don’t you?
A. Yes.
Q. Not Corby Brooks, somebody else. It was Rich Furlin, right?
A. Correct.

(Emphasis added.)

15
On cross-examination, Wascom testified that he had used the August 2012

Spreadsheet, which he stated represented the final correction to LP’s share of the

2011 Distribution, in preparing tax documents (including LP’s Schedule K-1 tax

form) and that, according to such calculations, LP was overpaid in the 2011

Distribution and owed the Company $1.3 million. On redirect, however, Wascom

again testified that Furlin had performed the calculations:

Q. Rich Furlin did the calculations, right?
A. Which calculations?
Q. The—the 2011 Section 6.02 calculations, right?
A. Yes.

On March 7, 2013, Wascom sent a letter to LP stating that he was preparing

the 2013 Distribution and had taken into account all section 6.01(d) tax advances

since the 2011 Distribution, which included the third and fourth quarter 2011 tax

advances.

Eugene Kenyon, the managing director of Goradia and a member of the

Company’s board of directors, testified that, based on August 2012 Spreadsheet,

which he stated was the final spreadsheet, the Company withheld $1,331,655 from

LP’s 2011 Distribution.

In its charge, the trial court asked the jury to determine whether the Company

“failed to comply with the [Agreement] by double deducting $361,295 in tax

advances from LP” and, if so, to determine the amount of damages, if any, owed to

16
LP. The jury answered that the Company had breached the Agreement and awarded

damages to LP in the amount of $361,295. The trial court entered a judgment on the

verdict, awarding LP damages in the amount of $361,295. The trial court also

awarded LP pre-judgment interest in the amount of $66,072.44 through April 19,

2017, increasing by $49.49 per day until the date of judgment, May 24, 2017, and

costs in the amount of $3,707.85.

Appeal

The Company appealed the trial court’s judgment to this Court, challenging

the legal and factual sufficiency of the evidence and asserting that the trial court

erred in admitting Furlin’s testimony about the February 2012 Spreadsheet and erred

in assessing pre-judgment interest and costs. Lion Copolymer Holdings, 614 S.W.3d

at 175–76.

The Company asserted that the evidence was legally and factually insufficient

to support the jury’s findings that the Company breached the Agreement and that LP

was entitled to $361,295 in damages. Id. at 166.

We noted that a party challenging the legal sufficiency of the evidence to

support an adverse finding on which it did not have the burden of proof must

demonstrate that there is no evidence to support the adverse finding. Id. at 166–67.

And, in conducting a legal-sufficiency review, we consider evidence in the light

most favorable to the verdict and indulge every reasonable inference that would

17
support it. Id. at 167. We noted that it was within the province of the jury to resolve

conflicts in the evidence and that the jury is the sole judge of the witnesses’

credibility and may choose to believe one witness over another. Id.

It was undisputed that the Agreement was valid and that it did not authorize

the Company to deduct future tax advances from its distributions to LP. Id. at 168,

170. The issue presented was whether the Company breached the Agreement by

deducting future tax advances from LP’s 2011 Distribution. Id. at 167–68.

We concluded that, from the evidence and testimony, the jury could have

reasonably found that $1,603,197 had been paid to LP as tax advances on its Class

3 units prior to the 2011 Distribution, but that Furlin applied $1,964,492 in the

February 2012 Spreadsheet because he had included $361,295 attributable to LP’s

future third and fourth quarter 2011 tax advances. Id. at 170. Although Furlin

testified that $1,964,492 was “not the ultimate amount that was actually distributed”

and that “the ultimate distribution” was later “finalized” in “the final August 2012

schedule,” this testimony was impeached by Furlin’s deposition testimony that he

was “the only one that made calculations that the Company used”; that the February

2012 Spreadsheet was the final spreadsheet that he compiled; and that the “ultimate

amount” withheld in tax advances from LP’s share of the 2011 Distribution was “1

million 964.” Id. And, Furlin testified that, long after the events, in May 2015, he

executed an affidavit in this case stating that, prior to the 2011 Distribution, “[LP]

18
received a total of over 1.9 million in Section 6.01 distributions related to its Class

3 units.” Id.

The Company asserted that the evidence of the parties’ continuing discussions

and the existence of subsequent spreadsheets “conclusively established” that it did

not use the February 2012 spreadsheet and instead used the August 2012

Spreadsheet. Id. at 166, 169. We concluded that the jury could have reasonably

chosen to credit Goradia’s and Furlin’s testimony that Furlin was in charge of

calculating the distributions to members and ensuring their accuracy; Furlin’s

testimony that the February 2012 Spreadsheet was the last set of calculations that he

prepared and that he was “the person who calculated the 2011 Section 6.02

distribution that the Company paid”; and Wascom’s testimony that Furlin “created

the spreadsheets that calculated the payments made to the members for the section

6.02 distributions that were eventually made.” Id. at 169–70.

We concluded that the ongoing nature of the dispute, without more, did not

establish that the February 2012 Spreadsheet was not ultimately used or that the third

and fourth quarter 2011 tax advances were not twice deducted from LP’s

distributions. Id. Furlin, himself, testified that the subsequent spreadsheets by

Lyttleton, Phillpott, and Brooks were not used. Id. Although Furlin and Wascom

testified that the Company used the August 2012 spreadsheet, their testimony was

inconsistent, and the jury could have reasonably discredited it. Id.

19
The Company asserted that, between January 2010 and March 8, 2013, it paid

LP $19,719,245.27 and that there was no evidence that the total amount it owed LP

differed from that amount. Id. at 171. We noted that LP’s burden at trial, however,

was limited to presenting evidence supporting its claim for damages in the amount

of $361,295. Id.

Considering the evidence in the light most favorable to the verdict, we

concluded that there was more than a scintilla of evidence that the Company

breached the Agreement by twice deducting the tax advances at issue from LP’s

distributions and that LP was damaged in the amount of $361,295. Id. We held that

the evidence was legally sufficient to support the jury’s findings. Id.

We concluded that the Company failed to adequately brief its factual

sufficiency issue because, although it recited an “alternative” factual-sufficiency

challenge, it did not advance a distinct factual-sufficiency argument. That is, it did

not explain why the jury’s findings were so contrary to the great weight and

preponderance of the evidence as to make them clearly wrong and unjust. Id.

The Company argued that the trial court erred in denying its motion to exclude

Furlin’s deposition testimony about the February 2012 Spreadsheet because the

probative value of the testimony was substantially outweighed by the danger of

unfair prejudice and misleading the jury. Id. at 172. We held that the trial court did

not err in admitting the complained-of evidence. Id. at 174–75.

20
The Company also asserted that the trial court erred in assessing pre-judgment

interest because it used an incorrect accrual date. Id. at 175. We held that the trial

court erred in assessing pre-judgment interest beginning on September 3, 2013,

rather than beginning on October 30, 2015. Id. at 176. We reversed this portion of

the trial court’s judgment and remanded for a recalculation. Id. at 178.

Finally, the Company argued that the trial court erred by taxing specific costs

in the judgment and including costs for copies of deposition transcripts. Id. at 176.

We held that the trial court erred by taxing the Company with a specific amount of

costs in the judgment. Id. at 178 (citing Diggs v. VSM Fin., L.L.C., 482 S.W.3d 145,

158 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (“The judgment should not

state the amount taxed as costs, but only that costs are awarded against a certain

party.”)). We also held that the trial court erred to the extent that its award included

fees for copies of deposition transcripts. Id. We modified the trial court’s judgment

to delete the costs. Id. at 178–79. As modified, we affirmed the remainder of the

trial court’s judgment. Id. at 179.

Remand

In its petition for review in the supreme court, the Company argued that this

Court erred in upholding the trial court’s denial of its motion to exclude Furlin’s

deposition testimony about the February 2012 Spreadsheet and erred in concluding

that the Company failed to adequately brief its factual sufficiency issue.

21
The supreme court held that this Court did not err in upholding the trial court’s

admission of Furlin’s deposition testimony. It held, however, that the Company

adequately briefed its factual sufficiency issue. The supreme court reversed this

Court’s judgment and remanded for consideration of the factual sufficiency issue, as

follows:

[W]e grant Company’s petition for review, reverse the court of appeals’
judgment, and remand the case for the appellate court to consider
Company’s factual sufficiency complaint and its effect, if any, on its
judgment.

Lion Copolymer Holdings, 614 S.W.3d at 735–36; see also Phillips v. Bramlett, 407

S.W.3d 229, 237–38 (Tex. 2013) (holding that, although not expressly stated,

unchallenged portion of court of appeals’ judgment was not reversed).

Factual Sufficiency

On remand, we consider only whether the evidence is factually sufficient to

support the jury’s finding that the Company breached the Agreement and the jury’s

award of damages to LP in the amount of $361,295.

Standard of Review

When a party challenges the factual sufficiency of the evidence supporting an

adverse finding on an issue on which it did not have the burden of proof, it must

demonstrate that the finding is so contrary to the overwhelming weight of the

evidence as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d

175, 176 (Tex. 1986); Levine v. Steve Scharn Custom Homes, Inc., 448 S.W.3d 637,
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653 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). In conducting our review,

we examine, consider, and weigh all evidence that supports or contradicts the jury’s

determination. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001).

The jury is the sole judge of the credibility of the witnesses and the weight of their

testimony. See Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex.

2003). The jury may choose to believe one witness and to disbelieve others, and it

may resolve inconsistencies in the testimony. McGalliard v. Kuhlmann, 722 S.W.2d

694, 697 (Tex. 1986). “It is the province of the jury to resolve conflicts in the

evidence, and when reasonable jurors could resolve conflicting evidence either way,

we presume they did so in accordance with the verdict.” Gunn v. McCoy, 554

S.W.3d 645, 665 (Tex. 2018). We set aside the verdict only if the evidence is so

weak or the finding is so against the great weight and preponderance of the evidence

that it is clearly wrong and manifestly unjust. Francis, 46 S.W.3d at 242; Pool v.

Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986).

Breach and Damages

To prevail on its breach-of-contract claim, LP was required to establish

(1) that a valid contract existed between the parties; (2) that LP tendered

performance or was excused from doing so; (3) that the Company breached the terms

of the contract; and (4) that LP sustained damages as a result of the Company’s

breach. See West v. Triple B Servs., LLP, 264 S.W.3d 440, 446 (Tex. App.—

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Houston [14th Dist.] 2008, no pet.). Here, neither party argues that the Agreement

was not a valid contract or that LP failed to tender performance. The Company

asserts, rather, that the evidence is insufficient to support the jury’s finding that the

Company breached the Agreement by deducting the same tax advances twice and

that LP incurred damages in the amount of $361,295.

As its evidence that the Company breached the terms of the Agreement by

withholding future tax advances from the 2011 Distribution, LP presented section

6.01(d) of the Agreement which provides, in pertinent part:

(Emphasis added.) Thus, the parties agreed that the Company would advance

sufficient cash to LP to satisfy LP’s estimated income tax liability and then recoup

these tax advances from LP in a subsequent non-tax distribution of proceeds by

reducing the amount it paid to LP. See Valence Operating Co. v. Dorsett, 164

S.W.3d 656, 662 (Tex. 2005) (holding that we give contract terms their plain,

ordinary, and generally accepted meaning).

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Lyttleton, an owner and manager of LP, testified that, on September 9, 2011,

LP received its first distribution of proceeds from the Company, i.e., the 2011

Distribution. Lyttleton also received a letter from Furlin, describing LP’s share of

the 2011 Distribution, with respect to both its Class 1 and Class 3 units. It is

undisputed that Furlin’s calculations were incorrect because none of the tax

advances that LP had received in 2010 and prior to the date of the 2011 Distribution

had been deducted and that Lyttleton notified Furlin of the errors. Lyttleton testified

that LP’s tax advances prior to the 2011 Distribution, attributable to its Class 3 units

at issue in this case, totaled “1.6 million and a few thousand.”

Lyttleton testified that, in February 2012, Furlin compiled and sent to LP the

February 2012 Spreadsheet to correct the errors in the 2011 Distribution. However,

the February 2012 Spreadsheet also contained errors. Although Furlin had properly

deducted the tax advances that the Company had paid to LP in 2010 and prior to the

September 9, 2011 Distribution, he had also improperly deducted future tax

advances, i.e., for the third and fourth quarters of 2011, that the Company had not

yet paid to LP. Lyttleton testified that the Agreement did not authorize the Company

to make deductions for future tax advances. He testified that the total amount that

the Company should have deducted from the 2011 Distribution for LP’s tax

advances attributable to its Class 3 units was $1,603,197. However, the February

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2012 Spreadsheet showed that LP “Class 3 had $1,964,492 deducted from

its . . . 2011 [D]istribution.”

Lyttleton testified that the difference, $361,295, was attributable to LP’s tax

advances for the third and fourth quarters of 2011. The February 2012 Spreadsheet

reflects that a total of $1,964,492 in “Article 6.01(d) Distributions,” or tax advances,

was deducted from LP’s share of the 2011 Distribution, including “Tax Allocations”

in the amount of $313,328 and $47,967, totaling $361,295, for the third and fourth

quarters of 2011, as follows: