ACCEPTED
13-14-00711-CV
THIRTEENTH COURT OF APPEALS
FILED CORPUS CHRISTI, TEXAS
IN THE 13TH COURT OF APPEALS 8/11/2015 12:16:15 PM
CORPUS CHRISTI - EDINBURG CECILE FOY GSANGER
CLERK
8/11/15 NO. 13-14-00711-CV
CECILE FOY GSANGER, CLERK
BY DTello IN THE THIRTEENTH COURT OF APPEALS
FILED- IN
EDINBURG, TEXAS 13th COURT ----OF APPEALS
----
CORPUS CHRISTI/EDINBURG,
--- TEXAS
- - ---- ss ------
8/11/2015
-
- ID 12:16:15
- - PM
---- VO ------
CECILE - - - FOY GSANGER
DOUG GENGENBACH, ------- Clerk
Appellant,
V.
RECEIVED IN
13th COURT OF APPEALS
CORPUS CHRISTI/EDINBURG, TEXAS
JESUS RODRIGUEZ, 8/11/2015 12:16:15 PM
CECILE FOY GSANGER
Appellee.
Clerk
APPELLANT’S BRIEF
On Appeal from Cause C-1553-11-H
In the 389TH Judicial District Court
Of Hidalgo County, Texas
Hon. Letty Lopez, Judge Presiding
RICARDO GUERRA
Lead Counsel for Appellant
State Bar No. 24074331
ERIC DAYS
State Bar No. 24082907
Law Offices of Rick Guerra
2211 Rayford Rd. Ste. 111 #134
Spring, TX 77386
Direct: 281-760-4295
Fax: 866-325-0341
ORAL ARGUMENT IS REQUESTED
IDENTITY OF PARTIES & COUNSEL
Below is the complete list required by Texas Rule of Appellate Procedure 38.1(a)
of all the parties to the trial court’s judgment and the names and addresses of all
trial counsel and appellate counsel:
1. Plaintiff in the trial court (Appellant in this Court):
Doug Gengenbach
2. Defendant in the trial court (Appellee in this Court):
Jesus Rodriguez
3. Trial and Appellate Counsel for Plaintiff/Appellant:
Ricardo Guerra (Lead Counsel)
Eric Days
Brent Smith
2211 Rayford Rd. Ste. 111 #134
Spring, TX 77386
281-760-4295
4. Trial and Appellate Counsel for Defendant/Appellee:
Felipe Garcia Jr.
201 E. University Dr.
Edinburg, TX 78539
956-386-1900
_____________________________________________________________________________
Appellant’s Brief ii
TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................ iii
TABLE OF AUTHORITIES ................................................................................... iv
STATEMENT OF THE CASE ................................................................................ 1
STATEMENT REGARDING ORAL ARGUMENT .............................................. 1
ISSUES PRESENTED ............................................................................................. 2
STATEMENT OF FACTS ....................................................................................... 2
SUMMARY OF THE ARGUMENT ....................................................................... 4
ARGUMENT AND AUTHORITY .......................................................................... 7
I.
The Trial Court Committed Reversible Error by Denying the Submission of
Gengenbach’s Breach of Fiduciary Duty Claim. ............................................. 7
A.
Standard of Review ...................................................................................... 7
B.
Joint Venture/Partnership Defined ............................................................... 9
II.
The Trial Court Committed Reversible Error by Commingling a Broad Form
Jury Question, #11, with an Improper Damage Element in Question, #12. .. 17
A.
Standard of Review .................................................................................... 17
B.
Rodriguez failed to plead and prove fraudulent inducement; therefore out
of pocket damages was the only remedy available, if any. ........................ 18
C.
No evidence of Out of Pocket Expenses to Willacy Co-Op ...................... 26
D.
Submission of an improper damage element in jury question # 12 was
harmful error as the jury considered the finding in its calculation for
exemplary damages in question #13 and #14. ........................................... 28
III.
The Trial Court Committed Reversible Error in Entering Judgment on
Exemplary Damages ...................................................................................... 28
A.
Standard of Review .................................................................................... 29
B.
Exemplary damages are not recoverable for causes of action that sound in
contract alone. ............................................................................................ 30
C.
No independent tort proven for exemplary damages ................................. 31
IV.
The Jury’s Damage Findings are Against the Overwhelming Weight of the
Evidence. ....................................................................................................... 33
A.
Standard of Review .................................................................................... 33
B.
Excessiveness of Damages ........................................................................ 35
C.
Damages Awarded ..................................................................................... 38
V.
The Trial Court Committed Reversible Error in not Applying Offsets or
Credits. ........................................................................................................... 45
A.
Standard of Review .................................................................................... 45
B.
Right to offsets ........................................................................................... 46
PRAYER................................................................................................................. 49
_____________________________________________________________________________
Appellant’s Brief iii
APPENDIX............................................................................................................... 1
Appendix A ........................................................................................................... 2
Appendix B ........................................................................................................... 6
Appendix C ......................................................................................................... 27
Appendix D ......................................................................................................... 40
Appendix E .......................................................................................................... 87
Appendix F ........................................................................................................ 102
TABLE OF AUTHORITIES
Cases
Amoco Prod. Co. v. Alexander, 622 S.W.2d 563, 571 (Tex. 1981) _____ 30, 32, 44
Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007). ______________ 36
Bed, Bath & Beyond, Inc. v. Urista, 211 S.W.3d at 756 ____________________ 18
Brown v. Am. Transfer and Storage Co., 601 S.W.2d 931, 936 (Tex. 1980) ____ 46
Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) __________________________ 34
Circle C Child Dev. Ctr., Inc. v. Travis Cent. Appraisal Dist., 981 S.W.2d 483, 485
(Tex.App.-Austin 1998, no pet.) ____________________________________ 29
Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996) (per curiam) ___ 32, 37
Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 388 (Tex. 2000) _____________ 18
D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662, 664 (Tex. 1998) (per
curiam) ________________________________________________________ 32
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-242 (Tex.1985),
cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986) ________ 45
Duval County Ranch Co. v. Wooldridge, 674 S.W.2d 332, 335-36 (Tex. App.—
Austin 1984, no writ) _____________________________________________ 40
Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex.1992) _________________________ 8
Formosa Plastics Corp. USA v. Presidio Eng. & Contractors, 960 S.W.2d 41, 49
(Tex. 1998) _____________________________________________ 5, 35, 37, 40
George, 93 S.W. at 108 _____________________________________________ 40
_____________________________________________________________________________
Appellant’s Brief iv
Grant Thornton LLP v. Prospect High Income Fund, ML CBO IV (Cayman) Ltd.,
314 S.W.3d 913, 923 (Tex. 2010) ___________________________________ 39
Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001) _______________________ passim
Harlingen Irrigation Dist. Cameron County No. 1 v. Caprock Communications, 49
S.W.3d 520, 530 (Tex.App.-Corpus Christi 2001, pet denied) _____________ 29
Harris Cnty. V. Smith, 96 S.W.3d 230, 233 34(Tex.2002) __________________ 18
Hofland v. Fireman's Fund Ins. Co., 907 S.W.2d 597, 599 (Tex.App.-Corpus
Christi 1995, no writ) _____________________________________________ 29
In re G.M., 596 S.W.2d 846, 847 (Tex.1980) ____________________________ 34
Ingram v. Deere, 288 S.W. 3d 886, 896 (Tex.2009) _______________________ 10
Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex.1998); _______________ 9
Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986) ________ 30, 31
La.-Pac. Corp. v. Knighten, 976 S.W.2d 674, 676 (Tex.1998) ________________ 7
Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805 (Tex.1986) ______________ 34
McDonough v. Zamora, 338 S.W.2d 507, 513-14 (Tex. Civ. App.—San Antonio
1960, writ ref’d n.r.e.) ____________________________________________ 32
Meyer v. Cathey, 167 S.W.3d 327, 330–31 (Tex.2005) _____________________ 9
Morrow v. H.E.B., Inc., 714 S.W.2d 297, 298 (Tex.1986) _______________ 46, 48
Muller v. Nelson Sherrod & Carter, 563 S.W.2d 697, 701 (Tex.Civ.App.-Fort
Worth 1978, no writ) _____________________________________________ 29
Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996) _________________________ 34
Police Officers Union v. Tamez, 81 S.W.3d 401, 404-05 (Tex. App.—Corpus
Christi 2002, pet. dism'd) __________________________________________ 30
Pool v. Ford Motor Co., 715 S.W.2d 629, 634 (Tex.1986) _________________ 34
Roberts v. S. Pacific Transp. Co., 44 S.W.3d 183, 187 (Tex.App.-Houston [14th
Dist.] 2001, pet. denied) ____________________________________________ 8
_____________________________________________________________________________
Appellant’s Brief v
Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 1994) ________ 35
Shupe v. Lingafelter, 192 S.W.3d 577, 579 (Tex.2006) (per curiam) ___________ 7
SJW Prop. Commerce, Inc. v. Sw. Pinnacle Properties, Inc., 328 S.W.3d 121, 162
(Tex. App.—Corpus Christi 2010, pet. denied) _________________________ 35
Smith–Hamm, Inc. v. Equip. Connection, 946 S.W.2d 458, 462 (Tex.App.-Houston
[14th Dist.] 1997, no writ) __________________________________________ 8
Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493 ____________ 30, 32, 34
Stable Energy, 999 S.W.2d at 547 _____________________________________ 30
Stable Energy, L.P. v. Newberry, 999 S.W.2d 538, 547 (Tex.App.-Austin 1999,
pet. denied) _____________________________________________________ 29
State v. Addington, 588 S.W.2d 569, 570 (Tex.1979) ______________________ 35
Sutton v. Estate of McCormick, 47 S.W.3d 179, 184-85 (Tex.App – Corpus Christi
2001, no writ) ____________________________________________________ 8
Sw.
Bell
Tel.
Co.
v.
Garza,
164
S.W.3d
607,
627
(Tex.
2004)
_______________ 34
Sweet v. Port Terminal R.R., 653 S.W.2d 291, 294–95 (Tex.1983) ___________ 46
Texas Power & Light Co. v. Barnhill, 639 S.W.2d 331, 334 (Tex. App.—
Texarkana 1982, writ ref’d n.r.e.) ___________________________________ 33
Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 31 (Tex.1994) __________________ 34
Union Pac. R.R. Co. v. Williams, 85 S.W.3d 162, 166 (Tex.2002) ____________ 8
Washburn v. Krenek, 684 S.W.2d 187, 191 (Tex.App—Houston [14th Dist.] 1984,
writ ref’d n.r.e.) _________________________________________________ 10
Statutes
Tex. Civ. Prac. & Rem.Code Ann. § 41.001(2) (Vernon 2008) ______________ 34
TEX. BUS. ORG. CODE §152.051(b) _____________________________________ 9
TEX. BUS. ORG. CODE §152.052(a) ____________________________________ 10
_____________________________________________________________________________
Appellant’s Brief vi
Tex. Civ. Prac. & Rem.Code Ann.§ 41.003(a) (Vernon Supp.2009) __________ 34
Rules
Tex. R. App. P. 61.1(b) _____________________________________________ 18
Tex. R. Civ. P. 278 _________________________________________________ 8
Texas Rule of Civil Procedure 93 _____________________________________ 10
_____________________________________________________________________________
Appellant’s Brief vii
STATEMENT OF THE CASE
Nature of the Case: Plaintiff/Counter Defendant Doug Gengenbach initially filed
suit on June 10, 2011, against Defendant/Counter Plaintiff Jesus Rodriguez. (CR
24). Gengenbach asserted claims for breach of contract, quantum meruit,
promissory estoppel, negligent misrepresentation, conversion and fraud. (CR 27,
28). Rodriguez asserted counter claims for fraud and intentional infliction of
emotional distress. (CR 106, 107).
Requested Disposition from This Court: Doug Gengenbach seeks a reversal of
the jury’s findings and the trial court’s entry of judgment and a rendering of
judgment consistent with this Court’s findings or in the alternative a remand of his
claims to the trial court for further proceedings.
STATEMENT REGARDING ORAL ARGUMENT
Oral argument would provide meaningful assistance in deciding this appeal.
Although the issues before this Court are not novel, the facts of the case and the
application of the oral argument to the facts may provide additional clarity to the
Court and assist in reaching the appropriate outcome.
_____________________________________________________________________________
Appellant’s Brief
1
ISSUES PRESENTED
1. Did the trial court commit reversible error in omitting Doug
Gengenbach’s Breach of Fiduciary Duty claim from the jury charge?
2. Did the trial court commit reversible error in allowing Jesus
Rodriguez’s Jury Question # 11-13 regarding Common Law Fraud as
submitted?
3. Did the trial court commit reversible error in entering judgment on
exemplary damages after the jury’s finding of an agreement between
the parties?
4. Were the jury’s findings against the great weight of the evidence?
5. Did the trial court commit reversible error by disallowing any offsets
or credits to Doug Gengenbach?
STATEMENT OF FACTS
Doug Gengenbach offers the following statement of facts in support of his
argument that the final judgment signed by the trial court is erroneous.
This appeal arises from a case brought by Doug Gengenbach
Plaintiff/Counter Defendant (“Gengenbach” or “Appellant”) against
Defendant/Counter Plaintiff Jesus Rodriguez (“Rodriguez” or “Appellee”) for
claims of breach of contract, quantum meruit, promissory estoppel, negligent
misrepresentation, conversion and fraud.
On or about August 2010, Rodriguez contacted Gengenbach regarding
potential investment in a farming transaction. Rodriguez represented to
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Appellant’s Brief 2
Gengenbach that he had entered into farm leases of approximately 1300 acres,
within Hidalgo County, Texas.
Following negotiations between the parties Gengenbach agreed to invest
financially in the planting, farming, and harvesting of the 1300 acres. Gengenbach
agreed to a profit split of 75% for Gengenbach and 25% for Rodriguez. Rodriguez
agreed that his personal labor would be included in the 25% as sweat capital and
that he would not seek additional labor payments.
Despite significant investment by Gengenbach, Rodriguez reneged on his
agreement and threatened to destroy the crop if additional payments were not
made. To protect his investment Gengenbach agreed to and began to pay
Rodriguez a monthly fee.
Thereafter, Gengenbach was presented with an opportunity to sell a portion
of the sorghum crop for conversion to alcohol. The investor interested in the crop
advanced to Gengenbach the sum of $60,000 of which Gengenbach paid a quarter,
$15,312.00, to Rodriguez, in accordance with their profit sharing agreement.
Without Gengenbach’s permission, consent, or knowledge, Rodriguez,
harvested the crop and delivered the crop to Willacy Co-op for storage and sale.
Rodriguez represented that he was the sole owner and possessed the right to
control the disposition of the crop. Based on this representation, Willacy paid
Rodriguez an advance of $20,000.00. (CVExh-1 pg. 22). Rodriguez also collected
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Appellant’s Brief 3
$17,552.00 from the United States Department of Agriculture, Farm Service
Agency (FSA) in 2011 with $16,267 of these payments paid after June 10, 2011.
(CVExh-1 pg. 37). However, no portions of funds collected by Rodriguez were
delivered to Gengenbach as agreed.
On June 10, 2011, Gengenbach filed suit against Rodriguez. (CVClk Rec.
pg. 24). Gengenbach asserted claims for breach of contract, quantum meruit,
promissory estoppel, negligent misrepresentation, conversion and fraud. (CVClk
Rec. pg. 27, 28). Rodriguez in his verified pleadings specifically denied the
existence of a contract and counter sued for claims of fraud and intentional
infliction of emotional distress. (CVClk Rec. pg. 31, 34).
After a trial on the merits, the court submitted this cause to the jury. The
jury returned a verdict for Rodriguez. On September 25, 2015, the Trial Court
signed an Amended Final Judgment in favor of Appellee. (CVClk Rec. pg. 124).
SUMMARY OF THE ARGUMENT
The trial court erred by refusing to submit Gengenbach’s claim for Breach of
Fiduciary Duty. Gengenbach’s pleadings included a claim for breach of fiduciary
duty and Gengenbach introduced sufficient evidence for the trier of fact.
Gengenbach tendered a breach of fiduciary question in substantially correct form,
and the question was sufficiently supported by the pleadings and the evidence.
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Appellant’s Brief 4
Additionally, The submission of a broad form question of common law
fraud mixed with an unsupported damage element led to an improper judgment and
now prohibits Gengenbach from properly presenting his case to this Court. The
charges by Willacy County Coop were not out of pocket expenses and therefore
should not have been included in the charge. The inclusion of this question led to
the jury using a figure, unsupported by law, in deciding and calculating its answer
to jury questions # 12,13,14.
Furthermore, Rodriquez is not entitled to exemplary damages, because the
causes of action at hand sound in contract alone. Rodriquez pleaded and
consistently claimed there was no agreement. However, Gengenbach pleaded and
providence evidence of an agreement. The jury found an agreement with their
affirmative answer to Question #1. Therefore, as a matter of law, entry of judgment
on exemplary damages was reversible error.
The jury’s damage findings were against the great weight of the evidence.
Out of pocket damages is the appropriate method for determining damages in a
fraud case when no contract is alleged. Haase v. Glazner, 62 S.W.3d 795, 798-99
(Tex. 2001); Formosa Plastics Corp. USA v. Presidio Eng. & Contractors, 960
S.W.2d 41, 49 (Tex. 1998). Although the jury in this case found the existence of
an agreement to share profits and losses Rodriguez failed to plead and continued to
deny the existence of an agreement.
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Appellant’s Brief 5
Therefore, Rodriguez is entitled to no more than his out of pocket damages.
Rodriguez provided no documentation at trial of his out of pocket expenses.
Additionally, even if Rodriguez’s testimony at trial is taken to be one hundred
percent true, he showed no more than $51,335.21 in out of pocket expenses while
evidence and Rodriguez’s testimony showed payments to him of at least $56,899.
(CVExh-1 pg. 43-49, 53-55, 59-65, 69, 71-79, 85-95, 97, 99, 101, 103-104;
CVExh-1 pg. 23-24). Based on his own testimony and evidence that was not
refuted at trial Rodriguez generated a profit on the 400 acres. Without more than
nominal damages the jury’s award for exemplary damages is prohibited.
Lastly, if the jury’s award for damages is allowed Gengenbach is entitled to
the offsets and/or credits he requested from the trial court. The offsets are for
monies paid by Willacy and him for the production of and payment for the crop.
Gengenbach established payments directly to Rodriguez of $36,899.64 along with
an advance payment by Willacy of $20,000.00 for the crop. In addition
Gengenbach presented testimony and evidence of $33,612.48 he expended for
inputs to grow the crop. Lastly, Willacy placed $95,577.48 in the court registry as
payment for the harvested crop. Without offsets Rodriguez would inappropriately
receive $152,477.12 paid directly from Willacy and Gengenbach, the benefit of
$33,612.48 towards inputs for the crop, and $197,024.09 in damage awards from
the jury.
_____________________________________________________________________________
Appellant’s Brief 6
ARGUMENT AND AUTHORITY
I. The Trial Court Committed Reversible Error by Denying the
Submission of Gengenbach’s Breach of Fiduciary Duty Claim.
The trial court erred by refusing to submit Gengenbach’s claim for Breach of
Fiduciary Duty to the jury. The refusal was equivalent to summary disposition or a
directed verdict prior to reaching the jury. Gengenbach’s pleadings included a
claim for breach of fiduciary duty for joint venture, Gengenbach introduced
evidence at trial of a joint venture, Gengenbach tendered a breach of fiduciary
question in substantially correct form, and the question was sufficiently supported
by the pleadings and the evidence.
A. Standard of Review
Generally, appellate courts review a trial court's decision to refuse a
particular jury question or instruction under an abuse-of-discretion standard. Shupe
v. Lingafelter, 192 S.W.3d 577, 579 (Tex.2006) (per curiam). La.-Pac. Corp. v.
Knighten, 976 S.W.2d 674, 676 (Tex.1998). However, the cases cited do not
involve the trial court’s denial of an entire cause of action. Here, the trial court’s
refusal to submit Gengenbach’s Breach of Fiduciary Duty Claim was equivalent to
summary judgment as it struck an entire cause of action, not an individual question
or instruction within an issue already before the jury.
Texas Rule of Civil Procedure 278 requires a trial court to submit questions,
_____________________________________________________________________________
Appellant’s Brief 7
instructions and definitions raised by the written pleadings and the evidence. TEX.
R. CIV. P. 278; Sutton v. Estate of McCormick, 47 S.W.3d 179, 184-85 (Tex.App –
Corpus Christi 2001, no writ); Union Pac. R.R. Co. v. Williams, 85 S.W.3d 162,
166 (Tex.2002). Rule 278 is a directive to trial courts requiring them to submit
requested questions to the jury if pleadings and any evidence support those
questions. Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex.1992); Roberts v. S. Pacific
Transp. Co., 44 S.W.3d 183, 187 (Tex.App.-Houston [14th Dist.] 2001, pet.
denied). If there is some evidence to support the submission, the trial court
commits reversible error if it fails to submit the instruction. Smith–Hamm, Inc. v.
Equip. Connection, 946 S.W.2d 458, 462 (Tex.App.-Houston [14th Dist.] 1997, no
writ)
The refusal of the trial court to submit an entire cause of action should not be
reviewed under a different standard simply because the trial court decided the issue
at the jury charge conference. Had the trial court struck the breach of fiduciary
duty claim several days before trial, it would have been considered a dispositive
motion and would have been subject to a de novo review. The trial courts use of
an abuse of discretion test for an entire cause of action requires the Appellate court
to speculate whether the judgment was affected by the refusal of an entire cause of
action and is therefore inappropriate.
In the alternative, if this Court were to find that abuse of discretion is the
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Appellant’s Brief 8
proper standard, Gengenbach contends that the trial court’s denial of Gengenbach’s
Breach of Fiduciary Duty claim prohibits Gengenbach from properly presenting
his claim in this appeal.
B. Joint Venture/Partnership Defined
In certain formal relationships, such as attorney-client, partnership, or trustee
relationships, a fiduciary duty arises as a matter of law. Ins. Co. of N. Am. v.
Morris, 981 S.W.2d 667, 674 (Tex.1998); Meyer v. Cathey, 167 S.W.3d 327, 330–
31 (Tex.2005);
Under Texas law, a partnership is defined as “an association of two or more
persons to carry on a business for profit as owners…, regardless of whether … the
persons intend to create a partnership; or … the association is called a ‘partnership,
‘joint venture, or other name.’” TEX. BUS. ORG. CODE §152.051(b). The Texas
Business Organizations Code also enumerates five factors that indicate that
persons have created a partnership:
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) agreement to share or sharing:
A) losses of the business; or
B) liability for claims by third parties against the business; and
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Appellant’s Brief 9
5) agreement to contribute or contributing money or property to
the business.
TEX. BUS. ORG. CODE §152.052(a) The “most important factors” are the
sharing of profits and control over the business. Ingram v. Deere, 288 S.W. 3d 886,
896 (Tex.2009). Texas Rule of Civil Procedure 93 requires a party to specifically
deny the existence of a partnership in their pleadings; otherwise the partnership is
admitted as a matter of law. The failure to deny partnership status is an admission
of the partnership that cannot be controverted at trial. Washburn v. Krenek, 684
S.W.2d 187, 191 (Tex.App—Houston [14th Dist.] 1984, writ ref’d n.r.e.).
1) Existence of joint venture/partnership
Gengenbach pleaded that he entered into an agreement with Rodriguez to
farm acreage as a joint venture and thus a partnership as defined under Texas law.
(CVClkRec. pg. 42, 44-45) Gengenbach’s pleadings provide the alleged split of
75%/25%. Id.
Rodriguez failed to specifically deny the existence of a partnership as
required by Texas Rule of Civil Procedure 93. (CVCklRec. Pg 30-38) Rodriguez
did deny the existence of any agreement or relationship with Gengenbach in a
general sense. (CVClkRec. pg. 31) Gengenbach introduced evidence at trial in
support of his pleadings as follows:
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Appellant’s Brief 10
2) Parties agreed to share in the profits and losses of a farming
venture
Gengenbach introduced evidence that the parties agreed to share in the
profits and losses of the venture. The following is an excerpt from Gengenbach’s
direct examination:
Q. Okay. And once he approached you again, what
were the discussions?
A. Well, to make a partnership or work something out
for the 1911 crop -- or 2011 crop, excuse me.
Q. Okay. And once again, 2011 is September 1 through
-- September 1, 2010 through June 2011?
A. Yes.
Q. And what was -- what's your recollection of the
discussion? I mean, what terms were used? Was it
a partnership? Was it --
A. Well, it's a crop share. I would call it a crop share.
And the share that we talked about was 25 percent
for Jesus, 75 percent for myself. I pay the cost, the
expenses and he said he had machinery that he
could do the, you know, the fieldwork with. And
so he was going to furnish the machinery and I was
going to furnish the expenses.
Q. Okay. Let me stop you there. 25/75 percent. That's
what you said, right?
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Appellant’s Brief 11
A. Yes.
Q. Can you elaborate? I mean, was there -- if --
A. Well, that would be a percentage of the net profits.
Q. Okay. What did you take that to mean?
A. Well, I took it to mean that I had an obligation to pay my
expenses of the crop. He was going to do the farming
and that I was, with the help of God, that I would have
a crop to harvest in June.
Q. Okay. And net profit, is net profit a term that you use
regularly in farming?
A. Yes. It's called the bottom line. In other words, that's
what's left after everything is paid.
Q. Okay. And what generally happens with the money? I
mean, I'm assuming -- what happens with the money
that's invested, generally?
A. Well, the money that you invest, you know, you hope to
get it back in the returns of a good crop.
Q. Okay. What is your recollection or what do you recollect
Mr. Rodriguez saying at that time? Saying about that
agreement and what is it that he told you or --
A. Well, we come to the agreement that that's what we were
going to do. And first thing that we did was pay the rent
and I gave him money to pay the rent. (CVRptRecV1
pg. 43 ln. 8 – pg. 45 ln. 1)
During Gengenbach’s cross-examination, Rodriguez’s attorney’s line of
questioning acknowledged there was some agreement to a joint venture to farm.
Q. All right. And your deal with Don Jesus was that you
would pay the rent that you claim that you paid at Sal
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Appellant’s Brief 12
Del Rey, paid no rent on irrigatable property. 375 acres,
and put in the seed, no fertilizer and your arrangement
with him was on a sharecropping basis, correct?
A. Correct.
Q. And you get 75 percent and he gets 25 percent?
A. That is correct.
Q. And he puts up all three of his tractors?
A. I don't know how many tractors he had.
Q. However many tractors were needed, he was supposed to
put them up, correct?
A. Correct.
Q. Equipment?
A. Yes.
Q. And we're talking about discs?
A. Yes.
Q. Plows, cultivators?
A. Yes.
Q. Planters?
A. Yes.
Q. Now, you brought your planter down because you had a
planter that covered more ground, did you not?
A. Yes, I did have a planter that covered more ground.
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Appellant’s Brief 13
Q. I mean, you were able to plant faster by using your
planter rather than the one that he has, which is a little
smaller?
A. Yes. And the condition of his planter wasn't in very good
condition and so you need a good planter, so I brought a
planter down, yes.
Q. But primarily because you could put more rows at a time
than you could with his?
A. No, that's not really true. I didn't like the condition of his
planter.
Q. But he was happy with his, apparently, because that's
what he had been using?
A. That might be so. (CVRptRecV2 pg. 119 ln. 23 – pg.
121 ln. 11).
3) Both parties expressed intent to be partners in a joint venture
Notwithstanding the fact that Rodriguez alleged he was defrauded, there was
evidence introduced by both parties that they intended to be partners for the
farming venture. Gengenbach introduced a profit and loss accompanied by actual
cancelled checks showing payments from personal funds for rent ($14,726.00),
seed ($19,176.98), fuel ($27,136.28), labor ($18014.68), and parts & repairs
($2929.05) for a total of $81,982.99. (CVExh. pgs. 41-113, CVExh. pgs. 118-123).
Rodriguez admitted that all the payments he received from Gengenbach, were in
fact spent for the purpose of the Sal Del Rey farm. (CVRptRecV3 pg. 38 ln. 16 –
pg. 39 ln. 1). There is no other plausible reason to receive payments in these
_____________________________________________________________________________
Appellant’s Brief 14
amounts and to have spent them on the Sal Del Rey farm without at minimum, an
initial intent to be involved in a farming venture.
Additionally, there is a business record affidavit from Willacy Co-Op that
states that Jesus Rodriguez delivered grain that was marketed in the amount of
$171,853.70. (CVExh. pgs. 3-32). Despite his contentions of fraud, it is
implausible that Rodriguez could have expected to receive those sums of money
without any contribution towards the costs necessary to raise the crop. The record
contains sufficient evidence reflecting Rodriguez’s understanding of a business
relationship.
4) Both parties had right to participate in control of the business
such as payments, labor, inputs.
Gengenbach introduced business record affidavits from his bank containing
payments to Jesus Rodriguez and others in excess of $100,000.00. (CVExh. pgs.
41-113). Rodriguez admitted that he was in control of the property itself including
the harvesting of the crop. (CVRptRecV3 pg. 44 lns. 13-22). Additionally,
Rodriguez introduced 31 photograph exhibits of all of the farming equipment he
used in furtherance of the farming venture. (CVExh. pgs. 167-259). As previously
discussed above, there is evidence that Rodriguez had sufficient control of the crop
to market it to Willacy Co-Op for $171,853.70. (CVExh. pgs. 3-32).
_____________________________________________________________________________
Appellant’s Brief 15
5) Evidence that both parties agreed to contribute money or
property to the business.
As shown above, Gengenbach introduced a profit and loss statement
showing an investment of personal funds in the venture in the amount at least
$81,982.99 for the payment of rent, seed, fuel, labor, parts & repairs. Rodriguez
admitted that those payments were entirely invested in the farming venture.
Rodriguez admitted to contributing farming equipment for the benefit of the joint
venture. (CVExh. Pgs. 167-259).
6) Jury question was submitted in substantially correct form
Plaintiff proposed a jury question in substantially correct form. (CVClkRec.
pgs. 60-62). The trial court denied Gengenbach’s question as evidenced by the jury
charge submitted. (Record 63-82 & CVRptRecV004 pg. 5 ln. 14 – pg. 9 ln. 2).
Gengenbach objected in writing to the jury charge and submitted the proposed
question to preserve the error. (CVClkRec. Pgs. 58-62).
Based on Plaintiff’s pleadings, the evidence, and Rodriguez’s lack of
evidence to the contrary, Court erred in refusing to submit Plaintiff’s question on
Breach of Fiduciary Duty; therefore Gengenbach respectfully requests this Court to
reverse the trial court’s judgment and remand for a new trial on the merits.
_____________________________________________________________________________
Appellant’s Brief 16
II. The Trial Court Committed Reversible Error by Commingling a Broad
Form Jury Question, #11, with an Improper Damage Element in
Question, #12.
Gengenbach submitted timely objections to Rodriguez’s jury charge
questions 11-14 and to the inclusion of damages question related to Willacy Co-Op
in Question 12. (CVClk pgs. 58-62 & CVRptRecV004 pg. 5 ln.10- pg. 9 ln.2).
Question #12 stated, “Consider the following element of damages, if any, and none
other. Fee and expenses charged by Willacy County Coop: _____ in dollars and
cents, if any…” [CVClkRec. pg. 78] After answering the Willacy County Coop
damage element in the amount of $15,617.60, the jury answered questions #13 and
#14 in favor of Rodriguez. Question #14 awarded Rodriguez exemplary damages
in the amount of $140,618.49.
The submission of a broad form question of common law fraud mixed with
an unsupported damage element led to an improper judgment and now prohibits
Gengenbach from properly presenting his case to this Court. The charges by
Willacy County Coop were not out of pocket expenses and therefore should not
have been included in the charge. The inclusion of this question led to the jury
using a figure, unsupported by law, in its answer to jury questions # 12,13,14.
(CVClkRec. pgs 78-80).
A. Standard of Review
Reversible error is presumed when a broad-form question submitted to the
_____________________________________________________________________________
Appellant’s Brief 17
jury commingles damage elements that are unsupported by legally sufficient
evidence. Harris Cnty. V. Smith, 96 S.W.3d 230, 233 34(Tex. 2002); Crown Life
Ins. Co. v. Casteel, 22 S.W.3d 378, 388 (Tex. 2000). Including improper measures
of damage elements that are unsupported by legally sufficient evidence is harmful,
reversible, and a new trial required when the Court cannot determine whether the
jury based its verdict solely on the improperly submitted invalid theory or damage
element. Bed, Bath & Beyond, Inc. v. Urista, 211 S.W.3d at 756. The ultimate
question is whether “the trial court’s charge error ‘probably prevented the
petitioner from properly presenting its case to the appellate courts.’” Harris Cnty,
96 S.W.3d 231; see TEX. R. APP. P. 61.1(b).
B. Rodriguez failed to plead and prove fraudulent inducement; therefore
out of pocket damages was the only remedy available, if any.
“Fraudulent inducement is a particular species of fraud that arises only in the
context of a contract and requires the existence of a contract as part of its proof.
That is, with a fraudulent inducement claim, the elements of fraud must be
established as they relate to an agreement between the parties.” Haase v. Glazner,
62 S.W.3d 795 (Tex. 2001). Without a binding agreement, there is no detrimental
reliance, and thus no fraudulent inducement claim. That is, when a party has not
incurred a contractual obligation, it has not been induced to do anything. Glazner
at 798. Glazner also clarified that although some court opinions see no distinction
_____________________________________________________________________________
Appellant’s Brief 18
between fraud and fraudulent inducement, they are not interchangeable with
respect to the measure of damages that would be recoverable. Glazner at 798-799;
Harris Cnty, 96 S.W.3d at
As stated in Glazner, fraudulent inducement cannot be found where one was
not induced into something to their reliance. Here, Rodriguez failed to establish
fraud as it related to the farming agreement between the parties.
In his verified pleadings, Rodriguez stated “Defendant/Counter-Plaintiff
Jesus Rodriguez specifically denies that there was any contractual agreement or
relationship between the parties as alleged by the Plaintiff/Counter-Defendant
Doug Gengenbach that there exists no written contract between the parties as
required by the Statute of Frauds…” (CVClkRec. pg. 31). Rodriguez’s pleadings
also state, “Plaintiff-Counter Defendant Gengenbach is guilty of fraud in taking
advantage of the lack of education and communication skills of
Defendant/Counter-Plaintiff Rodriguez. Gengenbach asked for one-hundred (150)
acres of a certain type of grain sorghum to be farmed on Defendant/Counter-
Plaintiff Rodriguez’s leasehold at the rate of $400.00 per acre.” (CVClkRec. pg.
34).
Despite this allegation Rodriguez’s pleadings failed to request any actual
damages such as out of pocket expenses; they read as follows,
“Defendant/Counter-Plaintiff Jesus Rodriguez, seeks recovery for the following: a.
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Appellant’s Brief 19
Punitive and Exemplary damages in the maximum amount allowed by Texas law;
b. Attorney fees and the costs of the court; c. Pre-judgment and post-judgment
interest at the maximum rate provided by law and in the maximum amount allowed
by law.” (CVClkRec. pg. 35- pg.36).
Rodriguez’s testimony at trial failed to provide legally sufficient evidence
that he was wrongfully induced into any agreement. Given multiple opportunities,
it was clear that Rodriguez was unsure of the damages sought as his testimony
contradicted itself on multiple occasions. Examples of his contradictions are as
follows:
--------------------------------------------
In his opening remarks, Rodriguez’s counsel stated that
Gengenbach asked Rodriguez to custom farm six hundred acres
at $400 for 240,000 dollars but then “Gengenbach backed down
and went to 125 acres at 400 dollars…” (CVRptRecV1. pg. 14
ln. 22- pg.15 ln. 3)
--------------------------------------------
When asked specifically what amount he was seeking,
Rodriguez first stated that Gengenbach first asked for 600 acres
to be planted then only 400. (CVRptRecV3 pg. 18 ln. 13- pg.
19 ln. 3) Then Rodriguez stated that Gengenbach reduced it to
125 acres. Id.
--------------------------------------------
Subsequently, due to difficulty understanding the translator,
Mr. Rodriguez was asked again,
Q. (By Mr. Guerra) What amount of money are you asking
this jury to award you for your fraud and emotional
distress claims?
A. I'm only asking for the money that he promised me.
_____________________________________________________________________________
Appellant’s Brief 20
Q. And what quantity or what amount of money is that, Mr.
Rodriguez?
A. He promised me 400 dollars an acre. We planted 125
acres. I'm not sure, but I think that's the amount of 50,000
dollars, plus all of my equipment expenses. I am not
good at calculating, but he needs to pay me the expenses.
“ (CVRptRecV3 pg. 21 lns 12-23)
--------------------------------------------
Q. You claim, Mr. Rodriguez, that Mr. Douglas Gengenbach
owes you money. And it is extremely important that I
make this -- or that we get an answer of what Douglas
Gengenbach owes you?
A. He offered me -- we were talking about the harvesting,
that here in the Court I’m talking about 90,000 dollars.
Q. Mr. Rodriguez, has it—did it ever occur to you to credit
Mr. Gengenbach for what he has already given you?
A. No. What he’s given me.
THE INTERPRETER: The interpreter would like to ask
for a repetition.
A. The money that he has given me is for the money that he
owes me.
Q. (By Mr. Guerra) And I'm going to ask it again. What is
that amount?
A. Approximately 50,000 dollars. (CVRptRecV3 pg. 27 ln.
21 – pg. 28 ln. 13)
--------------------------------------------
Q. (By Mr. Guerra) Mr. Rodriguez, we were discussing that
somebody has to pay for the seed, fuel and other
expenses in order to grow a crop. You understand that?
A. Yes.
_____________________________________________________________________________
Appellant’s Brief 21
Q. And you're not claiming today that you paid for those
items, are you?
A. No, but how does he know how much money was used
for diesel fuel? I would take the tank of diesel to him
with my truck, to the land that we were harvesting on.
(CVRptRecV3 pg. 33 ln. 5- ln. 13)
--------------------------------------------
Q. You've also asked your attorney to bring counter claims
against Mr. Gengenbach for what you allege to be fraud
and emotional distress. Is that correct?
A. I never asked for a lawsuit to be filed against him.
Q. Going back through the questions from earlier, sir, can
you please state to the jury what amount of money you
are requesting from Mr. Gengenbach?
A. I'm not asking for an amount. I'm just asking for what he
owes me and what's at Willacy Co-op.
Q. And what does he owe you and what do you state is at
Willacy Co-op, sir?
A. Well, I'm not sure how much remains because there has
been Court costs and there have been expenses in taking
the grain over to where it's at, so I'm not sure how much
remains.
Q. So you're asking -- Mr. Rodriguez, you're asking the
Court or you're asking the jury just to write you a check
for whatever is in the Court registry?
A. I am not asking for anything I should not be asking for.
All my life I have worked, I have never committed fraud,
I have never filed a lawsuit, I have never been in a
lawsuit. This is the first time ever.
Q. Mr. Rodriguez, do you understand that if you are not able
to state either damages or any money that you are owed
_____________________________________________________________________________
Appellant’s Brief 22
that you may not be entitled to anything from the Court?
A. I should receive it because I believe that the sum of
money is already here, the one sent from the Co-op.
(CVRptRecV3 pg. 36 ln. 3 –pg. 37 ln. 7)
--------------------------------------------
Q. Sir, that's not the question I'm asking you. I ask the
question, you provide the answer. Do you have
accounting for this particular check?
A. All the checks were used at the work down in Sal Del
Rey.
Q. And isn't it true that Sal Del Rey is the property that you
farmed with Mr. Gengenbach?
A. I did all the work in Sal Del Rey -- and I Mr.
Gengenbach did the farming in Sal Del Rey. Every check
that I received, every expense that was made was used
only for Sal Del Rey. (CVRptRecV3 pg. 38-ln. 16 – pg.
39 ln. 1)
--------------------------------------------
Q. (By Mr. Guerra) And is Sal Del Rey the property that
you allege you had an agreement with Mr. Doug?
A. Yes.
Q. Okay. And doesn't this check say Jesus Rodriguez, Sal
Del Rey?
A. All the checks that are made out to my name is all for the
work done on Sal Del Rey or for paying things that have
to do with Sal Del Rey.
Q. So you're admitting to the jury, Mr. Rodriguez, that these
checks, that you cashed these checks and that went to the
Sal Del Rey property?
A. All of them, all the checks were used for Sal Del Rey. He
did give me some 8,000 dollars and I paid that back
_____________________________________________________________________________
Appellant’s Brief 23
quickly, but all the other checks he gave me were used to
pay for Sal Del Rey. Nothing was used for my personal
use. (CVRptRecV3 pg. 39 ln. 11 – pg. 40 ln. 1)
--------------------------------------------
Q. Mr. Rodriguez, nobody has stated that you used it for
your personal expenses, but please understand, sir that
you have brought a fraud claim against my client.
A. That's true.
Q. Do you know what fraud means, sir?
A. That you are not fulfilling your promises.
Q. Do you realize that these documents will live forever in a
court record?
A. Yes.
Q. And do you understand that you are claiming fraud
against my client, yet you don't have any documents in
front of you or you have presented no documents
yourself?
A. No, because I have no experience. Again, I repeat I have
no experience in this and this is the first I'm I'm in a
Court of Law. (CVRptRecV3 pg. 40 ln. 2 – ln. 17)
--------------------------------------------
Q. Sir, because we talked about a contract that Mr.
Gengenbach had yesterday for 490 dollars an acre.
A. There's a mistake there. At no time did Mr. Douglas want
to do a contract with me and I asked him for it several
times.
Q. That wasn't my question, sir. We are talking about the
125 acres of grain sorghum. You got this check and you
stated to Mr. Gengenbach that if you didn't get this, then
it was time to cut that down and do something else,
correct?
_____________________________________________________________________________
Appellant’s Brief 24
A. Yes. (CVRptRecV3 pg. 46 ln. 16 - pg. 47 ln. 1)
--------------------------------------------
Q. (By Mr. Guerra) And Mr. Rodriguez, because you're a
man of older age or your health is not good, that gives
you the right to be bringing fraud claims against Mr.
Gengenbach?
A. I'm not filing any lawsuit against this man. All I'm asking
is that -- to be granted what is rightfully mine.
Q. But you do understand, sir that, actually, your attorney
did bring a fraud claim against my client?
A. If he did so, he's in his full right because he is my
attorney and he is here to defend me.
Q. Is that something you're requesting, sir or is that
something that you're allowing him to do on his behalf?
A. Oh, no. He's never done anything out of order. And
personally speaking, he's always been a very honest man
with me.
Q. And I didn't say he wasn't, sir. But what I'm asking you
today to clarify for this jury is do you -- are you wanting
a fraud charge against my client, Mr. Doug Gengenbach?
A. I already answered no. I just want what's rightfully mine.
(CVRptRecV3 pg. 74 ln. 23 – pg. 75 ln. 20)
Rodriguez’s pleadings failed to request specific affirmative relief for
fraudulent inducement as set out in Glazner and Formosa. Additionally,
Rodriguez’s testimony and exhibits fail to provide any evidence that he was
induced into any agreement. In fact, Rodriguez specifically denies through his
verified petition that he did not enter into the agreement as alleged by Gengenbach.
_____________________________________________________________________________
Appellant’s Brief 25
At best, Rodriguez was entitled to a common law fraud question regarding out of
pocket expenses.
C. No evidence of Out of Pocket Expenses to Willacy Co-Op
Jury charge question #12, “fees and expenses paid to Willacy” was not a
proper question in calculating out of pocket expenses. Rodriguez offered no proof
of out of pocket expenses paid to Willacy Co-op in reliance of a fraudulent
representation. All of the expenses paid to Willacy Co-Op, “including drying
charges, grain sorghum check-off remittance, and Willacy’s accounts receivable
balance as related to Rodriguez” in the amount of $26,835.21 were necessary
expenses incurred in harvesting the crop. (CVExh. pg. 6) The same crop that
Rodriguez then sold and collected an advance of $20,000.00. (CVExh. pg. 22)
Without Willacy’s services, there would be no money in the court registry to fight
over.
The following discussion at the jury charge conference is evidence that even
Rodriguez’s counsel and the trial court acknowledged the question might not be
worded correctly,
“ Mr. GARCIA: ….So -- and the same thing with Willacy
County, I think I stated earlier, I'm not going to be looking for
the $26,000. I'm going to be looking for the 4,400 dollars that is
the attorney's fees that had to be spent by Willacy County that
was taken out of this money on item two.
THE COURT: Whatever the jury decides is the appropriate
_____________________________________________________________________________
Appellant’s Brief 26
amount.
MR. GARCIA: Well, I'm going to be asking for $4,400.
THE COURT: The thing about $26,000, $20,000 of that went
to your client, so you really can't be asking for something that
your client received, which was he received 20,000 dollars.
MR. GARCIA: Then –
THE COURT: And part of that $26- -- you can't get what
you've already gotten.
MR. GARCIA: They never pled a credit to begin with.
THE COURT: But you can't get what you've already gotten.
There's testimony that –
MR. GARCIA: And I'm just clarifying that all I'm going to ask
for is $4,400.
THE COURT: Okay. Is that your response to his argument?
MR. GARCIA: Yes, ma'am.
THE COURT: Okay. Your objections are overruled. Mr.
Guerra, the charge is going to remain the way it is….”
(CVRptRecV004 pg. 7 ln. 23 – pg. 9 ln. 2)
Neither the trial court nor Appellee’s counsel can controvert the record. The
trial court was clearly aware of the flaws within the question prior to submitting it
to the jury and Rodriguez was clearly rewarded with more than even his counsel
sought.
_____________________________________________________________________________
Appellant’s Brief 27
D. Submission of an improper damage element in jury question # 12
was harmful error as the jury considered the finding in its
calculation for exemplary damages in question #13 and #14.
The trial court’s submission of damages element in question #12, “Fee and
expenses charged by Willacy County Coop:” led to an improper judgment. By
answering the aforementioned damages element in the amount of $15,617.60
without any evidence or testimony to support the answer, the jury then used that
figure in its calculation for exemplary damages. Since this Court cannot determine
from the record, how the jury calculated or arrived at its exemplary damages, it can
be presumed that the answer played a role in the finding of exemplary damages in
the amount of $140,618.49. The trial court’s error now prevents Gengenbach from
properly presenting his claims before this Court, as it requires speculation to
determine what factor the improper damage element played in the jury’s overall
award. Based on the foregoing, Gengenbach respectfully requests that this Court
reverse the trial court’s judgment and remands this case for a new trial on the
merits.
III. The Trial Court Committed Reversible Error in Entering Judgment on
Exemplary Damages
The Court committed reversible error by entering judgment on exemplary
damages, because the causes of action sound completely in contract, and
exemplary damages are improper. Rodriquez pleaded and consistently claimed
_____________________________________________________________________________
Appellant’s Brief 28
there was no agreement. Gengenbach pleaded and provided evidence there was an
agreement, and the jury found an agreement in their answer to Question #1. As a
matter of law, when the cause of action sounds in contract alone, the court errs by
awarding exemplary damages.
A. Standard of Review
A trial court's conclusions of law are not binding on an Appellate Court, and
the Appellate Court is free to make its own legal conclusions. Harlingen Irrigation
Dist. Cameron County No. 1 v. Caprock Communications, 49 S.W.3d 520, 530
(Tex.App.-Corpus Christi 2001, pet denied); Muller v. Nelson Sherrod & Carter,
563 S.W.2d 697, 701 (Tex.Civ.App.-Fort Worth 1978, no writ). “Conclusions of
law are reviewed de novo as a question of law and will be upheld if the judgment
can be sustained on any legal theory supported by the evidence.” Harlingen
Irrigation Dist., 49 S.W.3d at 520 (citing Circle C Child Dev. Ctr., Inc. v. Travis
Cent. Appraisal Dist., 981 S.W.2d 483, 485 (Tex.App.-Austin 1998, no pet.)). A
trial court's conclusions of law may not be reviewed for factual sufficiency. Id.
Conclusions of law may be reversed only if they are erroneous as a matter of law.
Stable Energy, L.P. v. Newberry, 999 S.W.2d 538, 547 (Tex.App.-Austin 1999,
pet. denied); Hofland v. Fireman's Fund Ins. Co., 907 S.W.2d 597, 599 (Tex.App.-
Corpus Christi 1995, no writ). Incorrect conclusions of law do not require reversal,
provided that the controlling findings of fact support a correct legal theory. Stable
_____________________________________________________________________________
Appellant’s Brief 29
Energy, 999 S.W.2d at 547; McAllen Police Officers Union v. Tamez, 81 S.W.3d
401, 404-05 (Tex. App.—Corpus Christi 2002, pet. dism'd).
B. Exemplary damages are not recoverable for causes of action that sound
in contract alone.
The causes of action between Gengenbach and Rodriguez sound in contract
alone, and exemplary damages are not recoverable. Exemplary damages are
generally not recoverable in contract actions. Amoco Prod. Co. v. Alexander, 622
S.W.2d 563, 571 (Tex. 1981). In determining whether the plaintiff may recover on
a tort theory, it is also instructive to examine the nature of the plaintiff's loss. When
the only loss or damage is to the subject matter of the contract, the plaintiff's action
is ordinarily on the contract. Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494
(Tex. 1991). When the injury is only the economic loss to the subject of a contract
itself, the action sounds in contract alone. Jim Walter Homes, Inc. v. Reed, 711
S.W.2d 617, 618 (Tex. 1986). A suit that can only be characterized as a breach of
contract cannot support recovery of exemplary damages. Id. at 618.
But contractual relationships may create duties under both contract and tort
law. See Jim Walter Homes, 711 S.W.2d at 618. “The acts of a party may breach
duties in tort or contract alone or simultaneously in both. The nature of the injury
most often determines which duty or duties are breached. When the injury is only
the economic loss to the subject of a contract itself, the action sounds in contract
_____________________________________________________________________________
Appellant’s Brief 30
alone.” Id.
The major factors demonstrating the causes of action in this case sound only
in contract are that there were only damages of economic loss and the fact that the
jury found an agreement between the parties. The claims between Gengenbach and
Rodriguez all stem from their agreement in a joint venture for the business of
farming a tract of land. The actual damages, if any, that Rodriguez could contend
he suffered resulted from economic loss related to the contract. As in Jim Walter
Homes, when economic loss on the contract makes up the injury, then the action
sounds in contract alone.
Gengenbach pleaded and proved an agreement demonstrated by the jury’s
affirmative answer to Question #1 regarding a “verbal agreement to share profits
and losses.” (CVClkRec pg. 67). The jury determined there was an agreement
demonstrating that the proper determination should have been that these causes of
action sounded in contract alone. Economic loss as the characterization of the
injury, if any, and the jury finding of an agreement points to the determination that,
because these claims sound in contract alone exemplary damages are improper as a
matter of law, and judgment should not have been entered on those amounts.
C. No independent tort proven for exemplary damages
Rodriguez did not prove an independent tort that would allow for the
awarding of exemplary damages. There have been exceptions to the doctrine of
_____________________________________________________________________________
Appellant’s Brief 31
only sounding in contract, and the exception cases usually involve the existence of
an extra-contractual duty imposed by law, or a tort independent of the contract. See
McDonough v. Zamora, 338 S.W.2d 507, 513-14 (Tex. Civ. App.—San Antonio
1960, writ ref’d n.r.e.).
Even if a breach of contract is malicious, intentional or capricious,
exemplary damages may not be recovered unless a distinct tort theory is alleged
and proved. Amoco, 622 S.W.2d at 571. Neither gross negligence in a breach of
contract nor gross negligence in the inducement to contract will entitle a non-
breaching party to exemplary damages. D.S.A., Inc. v. Hillsboro Indep. Sch. Dist.,
973 S.W.2d 662, 664 (Tex. 1998) (per curiam).
A party alleging that exemplary damages are recoverable due to the
existence of an independent tort duty must plead and prove the independent tort in
addition to the breach of contract. Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14
(Tex. 1996) (per curiam) (holding that absent proof that defendant’s conduct would
give rise to liability outside the contract, the action sounds in contract);
Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex. 1991)
(finding that action was in contract and not in tort, because plaintiff’s claims
against telephone company for failure to publish yellow pages advertisement arose
solely from the contract, and the damages were only for economic loss); Texas
Power & Light Co. v. Barnhill, 639 S.W.2d 331, 334 (Tex. App.—Texarkana
_____________________________________________________________________________
Appellant’s Brief 32
1982, writ ref’d n.r.e.) (denying exemplary damages where evidence was factually
insufficient to prove independent tort).
Rodriquez was unable to demonstrate any costs he actually suffered.
Rodriquez’s counsel agreed he would not be asking for the money he already
received from Willacy, the Court was well aware that Rodriquez had received
payments, and agreed that Rodriguez could not request damages for amounts
already received. (CVRptRecV004 pg. 7 ln. 24 – pg. 8 ln. 20) Rodriquez made a
profit, did not suffer any actual damages, and is not entitled to exemplary damages.
Rodriguez did not prove an independent tort, was unable to even demonstrate
damages, and all of the arguments and evidence points to a breach of the
agreement between the parties. There was no independent fraud or other tort
proven by Rodriquez. Therefore, Gengenbach respectfully requests this Court to
reverse the trial court’s judgment and remand for a new trial on the merits.
IV. The Jury’s Damage Findings are Against the Overwhelming Weight of
the Evidence.
Rodriguez did not present evidence at trial that was factually sufficient to
support the jury’s finding of fraud damages in Question No. 12 of the Charge of
the Court or its finding of exemplary damages in Question No. 14.
A. Standard of Review
When considering a factual sufficiency challenge to a jury's verdict, courts
_____________________________________________________________________________
Appellant’s Brief 33
of appeals must consider and weigh all of the evidence, not just that evidence
which supports the verdict. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996);
Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805 (Tex.1986). A court of appeals
can set aside the verdict only if it is so contrary to the overwhelming weight of the
evidence that the verdict is clearly wrong and unjust. Ortiz, 917 S.W.2d at 772;
Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). The court of appeals is not a fact
finder. Accordingly, the court of appeals may not pass upon the witnesses'
credibility or substitute its judgment for that of the jury, even if the evidence would
clearly support a different result. Pool v. Ford Motor Co., 715 S.W.2d 629, 634
(Tex.1986).
However, Exemplary damages must be established by clear and convincing
evidence; thus, an elevated standard of review. Sw. Bell Tel. Co. v. Garza, 164
S.W.3d 607, 627 (Tex. 2004); TEX. CIV. PRAC. & REM. CODE § 41.003(a) (Vernon
Supp.2009). Clear and convincing evidence is that “measure or degree of proof
that will produce in the mind of the trier of fact a firm belief or conviction as to the
truth of the allegations sought to be established.” TEX. CIV. PRAC. & REM. CODE §
41.001(2) (Vernon 2008); see Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 31
(Tex.1994). This intermediate standard falls between the preponderance standard
of civil proceedings and the reasonable doubt standard of criminal proceedings. In
re G.M., 596 S.W.2d 846, 847 (Tex.1980); State v. Addington, 588 S.W.2d 569,
_____________________________________________________________________________
Appellant’s Brief 34
570 (Tex.1979); W.L. Lindemann Operating Co. v. Strange, 256 S.W.3d 766, 775
(Tex. App.-Fort Worth 2008, pet denied). “While the proof must weigh heavier
than merely the greater weight of the credible evidence, there is no requirement
that the evidence be unequivocal or undisputed.” Strange, 256 S.W.3d at 775
(citing Addington, 588 S.W.2d at 570); SJW Prop. Commerce, Inc. v. Sw. Pinnacle
Properties, Inc., 328 S.W.3d 121, 162 (Tex. App.—Corpus Christi 2010, pet.
denied).
B. Excessiveness of Damages
A plaintiff alleging fraud in Texas must prove a material misrepresentation,
which was false, and which was either known to be false when made or was
asserted without knowledge of its truth, which was intended to be acted upon,
which was relied upon, and which caused injury. Sears, Roebuck & Co. v.
Meadows, 877 S.W.2d 281, 282 (Tex. 1994). There are three types of damages for
fraud recognized by Texas law: out of pocket damages, consequential damages and
benefit of the bargain damages. Formosa Plastics Corp. USA v. Presidio Eng. &
Contractors, 960 S.W.2d 41, 49 (Tex. 1998).
1) Consequential damages
Consequential damages allow plaintiffs to recover for damages “that are
foreseeable and directly traceable to the fraud and result from it” and must be
properly pled and proved. Formosa Plastics, 960 S.W.2d at 49 n.1. However,
_____________________________________________________________________________
Appellant’s Brief 35
Rodriguez did not plead or present evidence at trial of any lost opportunities based
on Gengenbach’s alleged misrepresentation and is therefore not entitled to
consequential damages. (CVRptRec V3 pgs. 15-153).
2) Benefit of the bargain damages
Benefit of the bargain damages arise from the expectancy theory and
compare the difference between the value represented and the value actually
received. Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007).
There are limited situations in which benefit of the bargain damages can be
awarded. However, Texas courts have refused to award benefit of the bargain
damages in the absence of an enforceable contract. Haase v. Glazner, 62 S.W.3d
795, 798-99 (Tex. 2001); Baylor Univ., 221 S.W.3d at 636 (if the measure of
damages Sonnicshen seeks for fraud are benefit of the bargain damages he sought
to recover for breach of contract, his fraud claim fails).
While economic losses may be recoverable under either fraud or fraudulent
inducement that should not be interpreted to mean that fraud and fraudulent
inducement are substitutes with regards to the measure of recoverable damages.
Glazner, 62 S.W.3d at 798-99.
The jury found an agreement between the parties to share profits and losses.
(CVClk Rec. pg. 67). However, Rodriguez stated numerous times during trial
testimony that he did not have a contract with Gengenbach. (CVRptRec V3 pg. 46
_____________________________________________________________________________
Appellant’s Brief 36
lns. 18-20; pg. 102 lns. 12, 13; pg. 134 lns. 14-16; pg. 141 lns. 13-15; pg. 150 ln. 5,
6). Additionally, in his verified pleadings Rodriguez made no claim for breach of
contract and denied the existence of a contractual agreement with Gengenbach.
(CVClk Rec. pg. 31). A party alleging that exemplary damages are recoverable
due to the existence of an independent tort duty must plead and prove the
independent tort in addition to the breach of contract. Crawford v. Ace Sign, Inc.,
917 S.W.2d 12, 14 (Tex. 1996) (per curiam). Rodriguez is not entitled to benefit
of the bargain damages when recovery requires the existence of a contract that he
failed to plead and continued to deny at trial.
3) Out of pocket damages
The purpose of out of pocket damages is to allow the injured party the
ability to recover the actual injury suffered measured by the difference between the
value of that which he has parted with, and the value of what he has received.
Formosa Plastics, 960 S.W.2d at 49.
Assuming arguendo that Rodriguez is entitled to a recovery of damages of
any kind, out of pocket damages would be the appropriate method of calculation.
Therefore, “the out of pocket measure only compensates for actual injuries a party
sustains through parting with something, no loss of profits on a bid not made, and a
profit never realized, in a hypothetical bargain never struck. Id. at 49-50.
Rodriguez is not entitled to more than his out of pocket damages.
_____________________________________________________________________________
Appellant’s Brief 37
C. Damages Awarded
1) Willacy Co-Op
The evidence is insufficient to support the Jury’s award for fees and
expenses charged by Willacy County Co-op of $15,617.60. (CVClk Rec. pg. 78).
Rodriguez put on no testimony stating what amounts if any he personally paid to
Willacy. In fact Willacy made an advance payment of $20,000.00 to Rodriguez.
(CVExh-1 pg. 22).
Rodriguez delivered grain to Willacy with a total value of $171,853.70.
(CVExh-1 pg. 22). Willacy tendered a check to Mr. Rodriguez for $20,000.00 as
partial payment for the grain delivered. Id. Following filing of the underlying
lawsuit, Willacy submitted a payment to the court registry of $140,618.49. Id. at
23. The payment represented the total amount due for grain delivered by Mr.
Rodriguez less the $20,000.00 Rodriguez had already received. The additional
$11,235.21 withheld or actually charged by Willacy includes $4,819.42
outstanding on Mr. Rodriguez’s account, $4,400.00 for attorney’s fees, and
$2,015.79 for the cost of storing and drying the grain. Id. at 23-24.
All additional withdrawals of funds were by court order. $24,702.89 was
payable to Pedro Mata and Salazar Custom Harvesting for harvesting of the grain.
(CVExh-1 pg. 115). $20,338.12 was payable to NAV County Insurance Co. for
insurance charges for crop year 2011. (CVExh-1 pg. 117). The remaining
_____________________________________________________________________________
Appellant’s Brief 38
$95,577.48 was left in the court registry until the conclusion of the underlying
case. (CVClk Rec. pg. 128).
The expenses charged by Willacy could not have been incurred in reliance
on Gengenbach’s misrepresentations, they were necessary expenses to produce a
crop, they are not damages that resulted from the fraud as required by the jury
charge, and Rodriguez cannot recover them as out-of-pocket damages for his fraud
claim. See Grant Thornton LLP v. Prospect High Income Fund, ML CBO IV
(Cayman) Ltd., 314 S.W.3d 913, 923 (Tex. 2010)
Gengenbach provided $27,136.28 in funds payable to Willacy. (CVExh-1
pgs. 51, 57, 67, 81, 83, 96, 98, 100, 102). Rodriguez provided no testimony or
evidence regarding his out of pocket payments to Willacy. The fees and expenses
charged by Willacy were directly related to processing the crop, amounts owed by
Rodriguez on his Willacy account, and attorney’s fees related to the court case.
(CVExh-1 pg. 23). The $11,235.21 of expenses charged by Willacy was $4,382.39
less than those awarded by the jury. Rodriguez is not entitled to recover more than
the expenses charged. Additionally, the $20,000.00 paid to Rodriguez reduced his
out of pocket expenses by the value of the payment resulting in a profit of at least
$8,764.79. The Jury’s award for fees and expenses charged by Willacy County
Co-op is unsupported by the evidence. Therefore, Gengenbach respectfully
requests this Court to reverse the trial court’s judgment and remand for a new trial
_____________________________________________________________________________
Appellant’s Brief 39
on the merits.
2) Farming services
The evidence is insufficient to support the Jury’s award for unpaid farming
services rendered on 400 acres of $24,688.00. (CVClk Rec. pg. 78). Gengenbach
provided proof of payment to Rodriguez in excess of the amount awarded by the
jury. (CVExh-1 pg. 43-49, 53-55, 59-65, 69, 71-79, 85-95, 97, 99, 101, 103-104).
Rodriguez provided no proof at trial of any out of pocket expenses. Furthermore,
Rodriguez’s trial testimony if taken as true does not demonstrate total farming
costs on the 400 acres of $24,688.00.
Out-of-pocket damages measure the difference between the value paid by
the aggrieved party and the value received. Formosa Plastics, 960 S.W.2d at 49;
George v. Hess, 93 S.W. 107, 108 (Tex. 1906). Several courts have stated that the
goal in measuring out-of-pocket damages is to provide actual compensation for
injury, not profit. Duval County Ranch Co. v. Wooldridge, 674 S.W.2d 332, 335-
36 (Tex. App.—Austin 1984, no writ). The theory is that if the plaintiff receives a
sum of money that makes what the plaintiff received equal to what was actually
conveyed, the plaintiff is made whole. George, 93 S.W. at 108.
At trial Gengenbach presented testimony regarding payments along with
cancelled checks totaling $36,899.64 made payable to Rodriguez. (CVExh-1 pg.
43-49, 53-55, 59-65, 69, 71-79, 85-95, 97, 99, 101, 103-104). In addition to the
_____________________________________________________________________________
Appellant’s Brief 40
checks payable to Rodriguez, Gengenbach presented testimony and cancelled
checks for costs associated with inputs for growing the crop of $33,612.48, which
included $27,136.28 payable to Willacy. (CVExh-1 pgs. 51, 57, 67, 81, 83, 96, 98,
100, 102).
At trial Rodriguez was asked to estimate the cost of his work including
equipment, employees, his labor, and expenses including diesel. (CVRptRec V3
pg. 119 lns. 19-21). Rodriguez’s response was that including labor, equipment,
and diesel the cost was between $55.00 and $60.00 per acre. (CVRptRec V3 pg.
119 lns. 23-25). Rodriguez did not provide any additional testimony related to out
of pocket expenses. Assuming no offsets or credits and taking his testimony as
true Rodriguez’s out of pocket expenses would be between $22,000.00 and
$24,000.00 for the 400 acres in question. According to Rodriguez’s own estimate
of costs the jury awarded at least $688.00 more than he was entitled to.
$36,899.64 in checks from Gengenbach were made payable to Rodriguez.
(CVExh-1 pg. 43-49, 53-55, 59-65, 69, 71-79, 85-95, 97, 99, 101, 103-104).
Rodriguez’s testimony at trial was:
A. All the checks were used at the work down in Sal Del
Rey.
Q. And isn't it true that Sal Del Rey is the property that you
farmed with Mr. Gengenbach?
A. I did all the work in Sal Del Rey -- and I Mr.
Gengenbach did the farming in Sal Del Rey. Every check
_____________________________________________________________________________
Appellant’s Brief 41
that I received, every expense that was made was used
only for Sal Del Rey.
A. all the checks I received -- all the work, all the farming I
did was for Sal Del Rey and every check I received was
for the expenses for the farming in Sal Del Rey.
Q. And is Sal Del Rey the property that you allege you had
an agreement with Mr. Doug?
A. Yes.
Q. Okay. And doesn't this check say Jesus Rodriguez, Sal
Del Rey?
A. All the checks that are made out to my name is all for the
work done on Sal Del Rey or for paying things that have
to do with Sal Del Rey.
Q. So you're admitting to the jury, Mr. Rodriguez that these
checks, that you cashed these checks and that went to the
Sal Del Rey property?
A. All of them, all the checks were used for Sal Del Rey. He
did give me some 8,000 dollars and I paid that back
quickly, but all the other checks he gave me were used to
pay for Sal Del Rey. Nothing was used for my personal
use. (CVRptRec V3 pg. 38 ln. 19- pg. 39 ln. 1; pg. 39 ln.
7-pg. 40 ln. 1).
As previously stated, based on Rodriguez’s testimony at trial the most his
out of pocket expenses could have been was $24,000.00 on the 400 acres.
(CVRptRec V3 pg. 119 lns. 23-25). Furthermore, he acknowledged that
$36,899.64 was paid directly to him by Gengenbach for the 400 acres. (CVRptRec
V3 pg. 38 ln. 19- pg. 39 ln. 1; pg. 39 ln. 7-pg. 40 ln. 1). An additional $33,612.48
_____________________________________________________________________________
Appellant’s Brief 42
used for purchase of inputs on the crop. (CVExh-1 pgs. 51, 57, 67, 81, 83, 96, 98,
100, 102).
Therefore, Rodriguez did not have any out of pocket expenses but he
received a profit of $12,899.64 in payments from Gengenbach. Rodriguez spent
no money and received a minimum of $12,899.64 for farming on the 400 acres.
That figure is correct without considering any of the $33,612.48 for inputs. The
Jury’s award for unpaid farming services rendered on 400 acres is unsupported by
the evidence. Therefore, Gengenbach respectfully requests this Court to reverse
the trial court’s judgment and remand for a new trial on the merits.
3) Exemplary damages
The evidence is insufficient to support the Jury’s award for exemplary
damages of $140,618.49. (CVClk Rec. pg. 80). Despite Rodriguez’s testimony to
the contrary the jury believed that a contract existed between the parties. In their
answer to Charge of the Court Question No. 1, “Did Doug Gengenbach and Jesus
Rodriguez enter into a verbal agreement to share in the profits and losses of crops
at Sal Del Rey and Floral Rd. properties?” the jury answered Yes. (CVClk Rec.
pg. 67). The mere fact that there is a dispute between the parties regarding the
terms of an agreement does not transform a contractual disagreement into a fraud
claim. Miga v. Jensen, 96 S.W.3d 207, 211 (Tex. 2002).
Exemplary damages are generally not recoverable in contract actions.
_____________________________________________________________________________
Appellant’s Brief 43
Amoco Prod. Co. v. Alexander, 622 S.W.2d 563, 571 (Tex. 1981). When the
plaintiff’s injury is nothing more than the economic loss of a contract, the action
sounds in contract alone and tort damages are not recoverable. Southwestern Bell
Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991).
When the injury is only the economic loss to the subject of a contract itself,
the action sounds in contract alone.” Jim Walter Homes at 618. Therefore, the
Jury’s award of $140,618.49 for exemplary damages is unsupported by the
evidence and should be reversed.
However, if an award of punitive damages is allowable under Rodriguez’s
fraud claim the recovery is still limited by his out of pocket expenses. Considering
the testimony provided by Rodriguez related to farming costs on the 400 acres and
the accounting provided by Willacy, total out of pocket expenses for the two
claims could not have exceeded $35,235.21. (CVExh-1 pg. 23-24; CVRptRec V3
pg. 119 lns. 23-25). Rodriguez received $56,899.64 in payments from Gengenbach
and Willacy resulting in a minimum profit of $21,664.43. (CVExh-1 pg. 43-49,
53-55, 59-65, 69, 71-79, 85-95, 97, 99, 101, 103-104; CVExh-1 pg. 23-24). There
is no evidence that Rodriguez had any out of pocket expenses in excess of the
remaining damage award of $16,100.00 for down payment on the tractor.
Deducting the out of pocket expense of $16,100.00 from Gengenbach and
Willacy’s payments Rodriguez profited $5,564.43 on the 400 acres.
_____________________________________________________________________________
Appellant’s Brief 44
Exemplary damages cannot be awarded for nominal or zero damages. Tex.
Civ. Prac. Rem. Code 41.004. The Jury’s award of $140,618.49 for exemplary
damages is unsupported by the evidence. Therefore, Gengenbach respectfully
requests this Court to reverse the trial court’s judgment and remand for a new trial
on the merits.
V. The Trial Court Committed Reversible Error in not Applying Offsets or
Credits.
After finding an agreement between Gengenbach and Rodriguez to share
profits and losses the jury awarded Rodriguez damages including exemplary
damages totaling $197,024.09. (CVClk Rec. pgs. 67, 78, 80). Gengenbach plead
the fact to the trial court that the jury award provided no offsets for payments made
to Rodriguez by Willacy, the Federal Farm Service Agency (FSA), and
Gengenbach, nor did it factor in the existence of the $95,577.48 in funds placed in
the courts registry.
A. Standard of Review
A trial court abuses its discretion when it reaches a decision so arbitrary and
unreasonable as to amount to a clear and prejudicial error of law. Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 241-242 (Tex.1985), cert. denied,
476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986). In ascertaining whether the
trial court abused its discretion, the reviewing court must determine if the trial
_____________________________________________________________________________
Appellant’s Brief 45
court acted without reference to any guiding rules and principles. Morrow v.
H.E.B., Inc., 714 S.W.2d 297, 298 (Tex.1986). Texas courts of appeal have the
power to review excessiveness of damages and to order remittitur. Sweet v. Port
Terminal R.R., 653 S.W.2d 291, 294–95 (Tex.1983).
B. Right to offsets
The right to an offset is an affirmative defense. Brown v. Am. Transfer and
Storage Co., 601 S.W.2d 931, 936 (Tex. 1980). The party asserting offset has the
burden of pleading offset and of proving facts necessary to support it. Id.
Gengenbach through counsel stated that without allowing for offsets Rodriguez
would receive $80,829.37 in payments and credits from the agreement to share
profits and losses, $197,024.09 in damages from the jury, and $95,577.48 from the
court registry. (CVClk Rec. pg. 89). Gengenbach argued in his Motion for New
Trial that he had provided thousands of dollars in cancelled checks made payable
to Rodriguez and for inputs to grow the crop. (CVClk Rec. pg. 133 ¶ 11-136 ¶ 15).
It was also argued that the jury’s award was compensating Rodriguez for inputs
without offsetting to allow for sharing of profits. Id.
Willacy withheld $11,235.21 including $4,819.42 outstanding on Mr.
Rodriguez’s account, $4,400.00 for attorney’s fees, and $2,015.79 for the cost of
storing and drying the grain from its payment to the court registry. (CVExh pg.
23-24). Rodriguez did not provide a single cancelled check or document
_____________________________________________________________________________
Appellant’s Brief 46
demonstrating expenses above and beyond those withheld by Willacy. However,
evidence presented at trial showed that Rodriguez received a $20,000.00 payment
from Willacy. Id. pg. 22.
Rodriguez’s own testimony was that his expenses on the 400 acres were no
more than $24,000.00. (CVRptRec V3 pg. 119 lns. 23-25). Rodriguez did not
provide a single cancelled check or document demonstrating expenses above and
beyond those he testified to. Furthermore, Rodriguez admitted that Gengenbach
paid him $36,899.64 toward the 400 acres. (CVRptRec V3 pg. 38 ln. 19- pg. 39 ln.
1; pg. 39 ln. 7-pg. 40 ln. 1).
The funds on deposit in the court’s registry were from the sale of the crop
produced by Rodriguez and Gengenbach. Following the trial, the Trial Court
signed an Order of Dissolution of Temporary Injunction issuing funds of
$95,577.48 to Rodriguez. (CVClk Rec. pg. 128).
Rodriguez did not unilaterally incur expenses on the crop. Additionally, the
evidence of his out of pocket expenses if assumed one hundred percent true
demonstrates a maximum amount of $51,335.21 including charges by Willacy,
$60.00 per acre on the 400 acres and $16,100.00 for the tractor. Gengenbach
presented evidence of $56,899.64 paid directly to Rodriguez including $36,899.64
paid by Gengenbach and $20,000.00 paid by Willacy. (CVExh-1 pg. 43-49, 53-
55, 59-65, 69, 71-79, 85-95, 97, 99, 101, 103-104; CVExh pg. 23-24).
_____________________________________________________________________________
Appellant’s Brief 47
Gengenbach also presented evidence of $33,612.48 for inputs on the crop.
(CVExh-1 pgs. 51, 57, 67, 81, 83, 96, 98, 100, 102). The $95,577.48 in the court
registry along with the $20,000 was payment for the crop farmed by Gengenbach
and Rodriguez in an agreement to share profits and losses.
The trial court must act with reference to guiding rules and principles.
Morrow 714 S.W.2d at 298. The Trial Court had access to all the evidence
presented at trial and Gengenbach’s request for offsets. However, the Court
determined prior to the jury’s determination of liability or damages that “whatever
the jury decides is the appropriate amount,” and that “fees and expenses are
whatever they believe it is.” (CVRptRecV004 pg. 8 lns. 4-5; pg. 11 lns. 7-8).
During the hearing on dissolution of the temporary injunction,
Genganbach’s counsel argued to the court about the excessiveness of the damages
and that the $95,577.48 in the court registry should be applied as an offset to
damages. (CVRptRecV005 pg. 14 lns. 7-17). The trial court stated that
Gengenbach did not win and “the money goes to Mr. Rodriguez.”
(CVRptRecV005 pg. 15 lns. 23-24). At the hearing on Gengenbach’s Motion for
Trial counsel again requested offsets for inputs and the $95,577.48 in the court
registry. (CVRptRecV006 pg. 10 lns. 1-20).
Gengenbach was entitled to offset the damage award by monies already
given to Rodriguez, monies paid towards inputs, and the $95,577.48 in the court
_____________________________________________________________________________
Appellant’s Brief 48
registry. The Trial Court erred by not applying offsets or credits to the jury’s
award for damages of $197,024.09. Therefore, Gengenbach respectfully requests
this Court to reverse the trial court’s judgment and remand for a new trial on the
merits.
PRAYER
Gengenbach presented sufficient evidence at trial to establish the existence
of a joint venture. Therefore, the trial court erred by denying the submission of
Gengenbach’s breach of fiduciary duty claim. Additionally, the establishment of
an agreement between Gengenbach and Rodriguez should have precluded the
award of exemplary damages without the establishment of a separate and distinct
tort claim. Moreover, Rodriguez was not entitled to anything more than out of
pocket reliance damages without establishing an independent tort claim. The cash
payments to Rodriguez by Willacy and Gengenbach that Gengenbach requested as
offsets or credits should have been applied to reduce Rodriguez’s out of pocket
expense and/or the overall damages award. Accordingly, the entry of judgment
against Gengenbach should be reversed, and the action should be remanded to the
389TH Judicial District Court Of Hidalgo County, for further consideration.
_____________________________________________________________________________
Appellant’s Brief 49
Respectfully submitted,
Law Offices of Rick Guerra, PLLC
By: /s/ Ricardo Guerra
Ricardo Guerra
Texas Bar No. 24074331
Email: service@rickguerra.com
Law Offices of Rick Guerra, PLLC
2211 Rayford Rd Ste 111 #134
Spring, Texas 77386
Tel. (281) 760-4295
Fax. (866) 325-0341
Attorney for Plaintiff/Counter Defendant
Doug Gengenbach
_____________________________________________________________________________
Appellant’s Brief 50
APPENDIX
_____________________________________________________________________________
Appellant’s Brief
1
Appendix A
_____________________________________________________________________________
Appellant’s Brief
2
Electronically Filed
9/23/2014 5:50:20 PM
Hidalgo County District Clerks
Reviewed By: Claudia Rodriguez
124
Electronically Filed
9/23/2014 5:50:20 PM
Hidalgo County District Clerks
Reviewed By: Claudia Rodriguez
September 25
125
Electronically Filed
9/23/2014 5:50:20 PM
Hidalgo County District Clerks
Reviewed By: Claudia Rodriguez
126
Appendix B
_____________________________________________________________________________
Appellant’s Brief
6
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
Appendix C
_____________________________________________________________________________
Appellant’s Brief
27
Rule 278. Submission of Questions, Definitions, and Instructions, TX R RCP Rule 278
Vernon's Texas Rules Annotated
Texas Rules of Civil Procedure
Part II. Rules of Practice in District and County Courts
Section 11. Trial of Causes
D. Charge to the Jury
TX Rules of Civil Procedure, Rule 278
Rule 278. Submission of Questions, Definitions, and Instructions
Currentness
The court shall submit the questions, instructions and definitions in the form provided by Rule 277, which are raised by the
written pleadings and the evidence. Except in trespass to try title, statutory partition proceedings, and other special proceedings
in which the pleadings are specially defined by statutes or procedural rules, a party shall not be entitled to any submission of
any question raised only by a general denial and not raised by affirmative written pleading by that party. Nothing herein shall
change the burden of proof from what it would have been under a general denial. A judgment shall not be reversed because of
the failure to submit other and various phases or different shades of the same question. Failure to submit a question shall not
be deemed a ground for reversal of the judgment, unless its submission, in substantially correct wording, has been requested in
writing and tendered by the party complaining of the judgment; provided, however, that objection to such failure shall suffice
in such respect if the question is one relied upon by the opposing party. Failure to submit a definition or instruction shall not
be deemed a ground for reversal of the judgment unless a substantially correct definition or instruction has been requested in
writing and tendered by the party complaining of the judgment.
Credits
July 15, 1987, eff. Jan. 1, 1988.
Editors' Notes
COMMENT--1988
Formerly a part of Rule 279.
Notes of Decisions (313)
Vernon's Ann. Texas Rules Civ. Proc., Rule 278, TX R RCP Rule 278
Current with amendments received through 6/1/2015
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Rule 93. Certain Pleas to Be Verified, TX R RCP Rule 93
Vernon's Texas Rules Annotated
Texas Rules of Civil Procedure
Part II. Rules of Practice in District and County Courts
Section 4. Pleading
C. Pleadings of Defendant
TX Rules of Civil Procedure, Rule 93
Rule 93. Certain Pleas to Be Verified
Currentness
A pleading setting up any of the following matters, unless the truth of such matters appear of record, shall be verified by affidavit.
1. That the plaintiff has not legal capacity to sue or that the defendant has not legal capacity to be sued.
2. That the plaintiff is not entitled to recover in the capacity in which he sues, or that the defendant is not liable in the capacity
in which he is sued.
3. That there is another suit pending in this State between the same parties involving the same claim.
4. That there is a defect of parties, plaintiff or defendant.
5. A denial of partnership as alleged in any pleading as to any party to the suit.
6. That any party alleged in any pleading to be a corporation is not incorporated as alleged.
7. Denial of the execution by himself or by his authority of any instrument in writing, upon which any pleading is founded, in
whole or in part and charged to have been executed by him or by his authority, and not alleged to be lost or destroyed. Where
such instrument in writing is charged to have been executed by a person then deceased, the affidavit shall be sufficient if it
states that the affiant has reason to believe and does believe that such instrument was not executed by the decedent or by his
authority. In the absence of such a sworn plea, the instrument shall be received in evidence as fully proved.
8. A denial of the genuineness of the indorsement or assignment of a written instrument upon which suit is brought by an
indorsee or assignee and in the absence of such a sworn plea, the indorsement or assignment thereof shall be held as fully
proved. The denial required by this subdivision of the rule may be made upon information and belief.
9. That a written instrument upon which a pleading is founded is without consideration, or that the consideration of the same
has failed in whole or in part.
10. A denial of an account which is the foundation of the plaintiff's action, and supported by affidavit.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Rule 93. Certain Pleas to Be Verified, TX R RCP Rule 93
11. That a contract sued upon is usurious. Unless such plea is filed, no evidence of usurious interest as a defense shall be received.
12. That notice and proof of loss or claim for damage has not been given as alleged. Unless such plea is filed such notice and
proof shall be presumed and no evidence to the contrary shall be admitted. A denial of such notice or such proof shall be made
specifically and with particularity.
13. In the trial of any case appealed to the court from the Industrial Accident Board 1 the following, if pleaded, shall be presumed
to be true as pleaded and have been done and filed in legal time and manner, unless denied by verified pleadings:
(a) Notice of injury.
(b) Claim for compensation.
(c) Award of the Board.
(d) Notice of intention not to abide by the award of the Board.
(e) Filing of suit to set aside the award.
(f) That the insurance company alleged to have been the carrier of the workers' compensation insurance at the time of the
alleged injury was in fact the carrier thereof.
(g) That there was good cause for not filing claim with the Industrial Accident Board 1 within the one year period provided
by statute.
(h) Wage rate.
A denial of any of the matters set forth in subdivisions (a) or (g) of paragraph 13 may be made on information and belief.
Any such denial may be made in original or amended pleadings; but if in amended pleadings the same must be filed not less
than seven days before the case proceeds to trial. In case of such denial the things so denied shall not be presumed to be true,
and if essential to the case of the party alleging them, must be proved.
14. That a party plaintiff or defendant is not doing business under an assumed name or trade name as alleged.
15. In the trial of any case brought against an automobile insurance company by an insured under the provisions of an insurance
policy in force providing protection against uninsured motorists, an allegation that the insured has complied with all the terms
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Rule 93. Certain Pleas to Be Verified, TX R RCP Rule 93
of the policy as a condition precedent to bringing the suit shall be presumed to be true unless denied by verified pleadings which
may be upon information and belief.
16. Any other matter required by statute to be pleaded under oath.
Credits
Oct. 29, 1940, eff. Sept. 1, 1941. Amended by orders of March 31, 1941, eff. Sept. 1, 1941; Sept. 20, 1941, eff. Dec. 31, 1941;
June 16, 1943, eff. Dec. 31, 1943; Oct. 12, 1949, eff. March 1, 1950; July 21, 1970, eff. Jan. 1, 1971; July 22, 1975, eff. Jan.
1, 1976; June 15, 1983, eff. Sept. 1, 1983; Dec. 5, 1983, eff. April 1, 1984.
Notes of Decisions (794)
Footnotes
1 The name of the Industrial Accident Board was changed to the Texas Workers' Compensation Commission pursuant to Acts 1989,
71st Leg., 2nd C.S., ch. 1, § 17.01. The Texas Workers' Compensation Commission was abolished and the Workers' Compensation
Division of the Texas Department of Insurance was established pursuant to Acts 2005, 79th Leg., ch. 265, § 1.003.
Vernon's Ann. Texas Rules Civ. Proc., Rule 93, TX R RCP Rule 93
Current with amendments received through 6/1/2015
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
§ 152.051. Partnership Defined, TX BUS ORG § 152.051
Vernon's Texas Statutes and Codes Annotated
Business Organizations Code (Refs & Annos)
Title 4. Partnerships (Refs & Annos)
Chapter 152. General Partnerships
Subchapter B. Nature and Creation of Partnership
V.T.C.A., Business Organizations Code § 152.051
§ 152.051. Partnership Defined
Effective: January 1, 2006
Currentness
(a) In this section, “association” does not have the meaning of the term “association” under Section 1.002.
(b) Except as provided by Subsection (c) and Section 152.053(a), an association of two or more persons to carry on a business
for profit as owners creates a partnership, regardless of whether:
(1) the persons intend to create a partnership; or
(2) the association is called a “partnership,” “joint venture,” or other name.
(c) An association or organization is not a partnership if it was created under a statute other than:
(1) this title and the provisions of Title 1 applicable to partnerships and limited partnerships;
(2) a predecessor to a statute referred to in Subdivision (1); or
(3) a comparable statute of another jurisdiction.
(d) The provisions of this chapter govern limited partnerships only to the extent provided by Sections 153.003 and 153.152
and Subchapter H, Chapter 153.
Credits
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
Notes of Decisions (2)
V. T. C. A., Business Organizations Code § 152.051, TX BUS ORG § 152.051
Current through Chapters effective immediately through Chapter 46 of the 2015 Regular Session of the 84th Legislature
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 152.051. Partnership Defined, TX BUS ORG § 152.051
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
§ 152.052. Rules for Determining if Partnership is Created, TX BUS ORG § 152.052
Vernon's Texas Statutes and Codes Annotated
Business Organizations Code (Refs & Annos)
Title 4. Partnerships (Refs & Annos)
Chapter 152. General Partnerships
Subchapter B. Nature and Creation of Partnership
V.T.C.A., Business Organizations Code § 152.052
§ 152.052. Rules for Determining if Partnership is Created
Effective: January 1, 2006
Currentness
(a) Factors indicating that persons have created a partnership include the persons':
(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) agreement to share or sharing:
(A) losses of the business; or
(B) liability for claims by third parties against the business; and
(5) agreement to contribute or contributing money or property to the business.
(b) One of the following circumstances, by itself, does not indicate that a person is a partner in the business:
(1) the receipt or right to receive a share of profits as payment:
(A) of a debt, including repayment by installments;
(B) of wages or other compensation to an employee or independent contractor;
(C) of rent;
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 152.052. Rules for Determining if Partnership is Created, TX BUS ORG § 152.052
(D) to a former partner, surviving spouse or representative of a deceased or disabled partner, or transferee of a partnership
interest;
(E) of interest or other charge on a loan, regardless of whether the amount varies with the profits of the business, 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) of consideration for the sale of a business or other property, including payment by installments;
(2) co-ownership of property, regardless of whether the co-ownership:
(A) is a joint tenancy, tenancy in common, tenancy by the entirety, joint property, community property, or part ownership;
or
(B) is combined with sharing of profits from the property;
(3) the right to share or sharing 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.
(c) An agreement by the owners of a business to share losses is not necessary to create a partnership.
Credits
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
Notes of Decisions (129)
V. T. C. A., Business Organizations Code § 152.052, TX BUS ORG § 152.052
Current through Chapters effective immediately through Chapter 46 of the 2015 Regular Session of the 84th Legislature
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
61.1. Standard for Reversible Error, TX R APP Rule 61.1
Vernon's Texas Rules Annotated
Texas Rules of Appellate Procedure
Section Four. Proceedings in the Supreme Court
Rule 61. Reversible Error (Refs & Annos)
TX Rules App.Proc., Rule 61.1
61.1. Standard for Reversible Error
Currentness
No judgment may be reversed on appeal on the ground that the trial court made an error of law unless the Supreme Court
concludes that the error complained of:
(a) probably caused the rendition of an improper judgment; or
(b) probably prevented the petitioner from properly presenting the case to the appellate courts.
Credits
Eff. Sept. 1, 1997.
Notes of Decisions (45)
Rules App. Proc., Rule 61.1, TX R APP Rule 61.1
Current with amendments received through 6/1/2015
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 41.001. Definitions, TX CIV PRAC & REM § 41.001
Vernon's Texas Statutes and Codes Annotated
Civil Practice and Remedies Code (Refs & Annos)
Title 2. Trial, Judgment, and Appeal
Subtitle C. Judgments
Chapter 41. Damages (Refs & Annos)
V.T.C.A., Civil Practice & Remedies Code § 41.001
§ 41.001. Definitions
Effective: September 1, 2003
Currentness
In this chapter:
(1) “Claimant” means a party, including a plaintiff, counterclaimant, cross-claimant, or third-party plaintiff, seeking recovery
of damages. In a cause of action in which a party seeks recovery of damages related to injury to another person, damage to
the property of another person, death of another person, or other harm to another person, “claimant” includes both that other
person and the party seeking recovery of damages.
(2) “Clear and convincing” means the measure or degree of proof that will produce in the mind of the trier of fact a firm
belief or conviction as to the truth of the allegations sought to be established.
(3) “Defendant” means a party, including a counterdefendant, cross-defendant, or third-party defendant, from whom a
claimant seeks relief.
(4) “Economic damages” means compensatory damages intended to compensate a claimant for actual economic or pecuniary
loss; the term does not include exemplary damages or noneconomic damages.
(5) “Exemplary damages” means any damages awarded as a penalty or by way of punishment but not for compensatory
purposes. Exemplary damages are neither economic nor noneconomic damages. “Exemplary damages” includes punitive
damages.
(6) “Fraud” means fraud other than constructive fraud.
(7) “Malice” means a specific intent by the defendant to cause substantial injury or harm to the claimant.
(8) “Compensatory damages” means economic and noneconomic damages. The term does not include exemplary damages.
(9) “Future damages” means damages that are incurred after the date of the judgment. Future damages do not include
exemplary damages.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 41.001. Definitions, TX CIV PRAC & REM § 41.001
(10) “Future loss of earnings” means a pecuniary loss incurred after the date of the judgment, including:
(A) loss of income, wages, or earning capacity; and
(B) loss of inheritance.
(11) “Gross negligence” means an act or omission:
(A) which when viewed objectively from the standpoint of the actor at the time of its occurrence involves an extreme
degree of risk, considering the probability and magnitude of the potential harm to others; and
(B) of which the actor has actual, subjective awareness of the risk involved, but nevertheless proceeds with conscious
indifference to the rights, safety, or welfare of others.
(12) “Noneconomic damages” means damages awarded for the purpose of compensating a claimant for physical pain
and suffering, mental or emotional pain or anguish, loss of consortium, disfigurement, physical impairment, loss of
companionship and society, inconvenience, loss of enjoyment of life, injury to reputation, and all other nonpecuniary losses
of any kind other than exemplary damages.
(13) “Periodic payments” means the payment of money or its equivalent to the recipient of future damages at defined intervals.
Credits
Added by Acts 1987, 70th Leg., 1st C.S., ch. 2, § 2.12, eff. Sept. 2, 1987. Amended by Acts 1995, 74th Leg., ch. 19, § 1, eff.
Sept. 1, 1995; Acts 2003, 78th Leg., ch. 204, § 13.02, eff. Sept. 1, 2003.
Notes of Decisions (178)
V. T. C. A., Civil Practice & Remedies Code § 41.001, TX CIV PRAC & REM § 41.001
Current through Chapters effective immediately through Chapter 46 of the 2015 Regular Session of the 84th Legislature
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
§ 41.003. Standards for Recovery of Exemplary Damages, TX CIV PRAC & REM § 41.003
Vernon's Texas Statutes and Codes Annotated
Civil Practice and Remedies Code (Refs & Annos)
Title 2. Trial, Judgment, and Appeal
Subtitle C. Judgments
Chapter 41. Damages (Refs & Annos)
V.T.C.A., Civil Practice & Remedies Code § 41.003
§ 41.003. Standards for Recovery of Exemplary Damages
Effective: September 1, 2003
Currentness
(a) Except as provided by Subsection (c), exemplary damages may be awarded only if the claimant proves by clear and
convincing evidence that the harm with respect to which the claimant seeks recovery of exemplary damages results from:
(1) fraud;
(2) malice; or
(3) gross negligence.
(b) The claimant must prove by clear and convincing evidence the elements of exemplary damages as provided by this section.
This burden of proof may not be shifted to the defendant or satisfied by evidence of ordinary negligence, bad faith, or a deceptive
trade practice.
(c) If the claimant relies on a statute establishing a cause of action and authorizing exemplary damages in specified circumstances
or in conjunction with a specified culpable mental state, exemplary damages may be awarded only if the claimant proves by
clear and convincing evidence that the damages result from the specified circumstances or culpable mental state.
(d) Exemplary damages may be awarded only if the jury was unanimous in regard to finding liability for and the amount of
exemplary damages.
(e) In all cases where the issue of exemplary damages is submitted to the jury, the following instruction shall be included in
the charge of the court:
“You are instructed that, in order for you to find exemplary damages, your answer to the question regarding the amount of
such damages must be unanimous.”
Credits
Added by Acts 1987, 70th Leg., 1st C.S., ch. 2, § 2.12, eff. Sept. 1, 1987. Amended by Acts 1995, 74th Leg., ch. 19, § 1, eff.
Sept. 1, 1995; Acts 2003, 78th Leg., ch. 204, § 13.04, eff. Sept. 1, 2003.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 41.003. Standards for Recovery of Exemplary Damages, TX CIV PRAC & REM § 41.003
Notes of Decisions (282)
V. T. C. A., Civil Practice & Remedies Code § 41.003, TX CIV PRAC & REM § 41.003
Current through Chapters effective immediately through Chapter 46 of the 2015 Regular Session of the 84th Legislature
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Appendix D
_____________________________________________________________________________
Appellant’s Brief
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DOUGLAS GENGENBACH
75211 R0422 1295
EUSTIS NE 69026
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