Chrisman, Clark M., Jr., Mechanics Adjustors, Inc. and Marine Adjustors, Inc. v. Electrastart of Houston, Inc. d/b/a Mobile Car Doctor--Appeal from 80th District Court of Harris County

Affirmed and Memorandum Opinion filed December 23, 2003

Affirmed and Memorandum Opinion filed December 23, 2003.

In The

Fourteenth Court of Appeals

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NO. 14-02-00516-CV

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CLARK M. CHRISMAN, JR., MECHANICS ADJUSTORS, INC.

AND MARINE ADJUSTORS, INC., Appellants

V.

ELECTRASTART OF HOUSTON, INC. D/B/A MOBILE CAR DOCTOR, Appellee

On Appeal from the 80th District Court

Harris  County, Texas

Trial Court Cause No. 00-41126

M E M O R A N D U M O P I N I O N

This is an appeal from a bench trial on cross-claims between appellants Clark M. Chrisman, Jr., Mechanics Adjustors, Inc. and Marine Adjustors, Inc. (collectively, the AChrisman Parties@), and appellee Electrastart of Houston, Inc. d/b/a Mobile Car Doctor (AMCD@). The Chrisman Parties and MCD were defendants in a lawsuit brought by Ginger Capperrelli alleging, inter alia, that the Chrisman Parties wrongfully repossessed and sold her vehicle with the consent of MCD. After MCD settled with Capperrelli, the only remaining claims were the cross-claims between MCD and the Chrisman Parties, both asserting entitlement to indemnification by the other. The Chrisman Parties appeal the take-nothing judgment on their claims. We affirm.

Background and Procedural Facts

In 1998, Capperrelli took her truck to MCD for repairs. After MCD performed the repairs on her vehicle, Capperrelli refused to pay a fifty-dollar remaining balance because she was dissatisfied with MCD=s work. MCD thereafter contacted Chrisman to do the paperwork to establish a mechanic=s lien, repossess and, if necessary, conduct a foreclosure sale of the vehicle. After a considerable amount of time had passed, Chrisman located and repossessed Capperrelli=s truck. Chrisman then purchased the truck for $500.00 after conducting a purported public sale. Capperrelli claimed she received no notice of the lien until after her truck had been repossessed and never received notice of the public sale. Capperrelli reported the allegedly wrongful repossession as a theft of her vehicle and filed a claim with her insurance company, State Farm Insurance Company (AState Farm@).

Capperrelli sued MCD, along with its principal owner, Thomas B. Fry, and the Chrisman Parties, alleging poor repair work, an invalid mechanic=s lien, wrongful repossession, and a wrongful foreclosure sale of her truck. After Capperrelli filed this lawsuit, State Farm intervened and obtained possession of the vehicle. Capperrelli settled her claims with MCD and apparently did not pursue any further claims against MCD or the Chrisman Parties, leaving only the cross-claims pending between the defendants. The Chrisman Parties sought a declaratory judgment that Chrisman, individually, was the owner of the truck, and pleaded a cross-claim against MCD for indemnification. MCD pleaded a cross-claim for contribution and statutory indemnity.

At the conclusion of trial, the trial court filed findings of fact and conclusions of law. It found the Chrisman Parties were acting as independent contractorsCnot employees, servants, or agents of MCDCat the time of the repossession and sale of Capperrelli=s vehicle. The trial court then concluded neither side was entitled to indemnification. This appeal followed.

The Chrisman Parties challenge the sufficiency of the evidence and present the following issues for our review: (1) whether, under the law of contracts or common law, the Chrisman Parties are entitled to payment for the costs of repossession and to reimbursement for attorneys= fees and defense costs; (2) whether the trial court=s independent contractor finding is dispositive; (3) whether MCD ratified the acts of the Chrisman Parties, and thereby assumed liability to pay for the Chrisman Parties= defense costs; and (4) whether the specific costs asserted by the Chrisman Parties are proved and recoverable. The Chrisman Parties ask this court to reverse the trial court=s judgment and award repossession costs of $875.00, plus attorneys= fees in the amount of $21,500.00 through trial, in addition to appellate attorneys= fees.

Standard of Review

A challenge to the legal sufficiency of the evidence is a question of law. R.S. v. B.J.J., 883 S.W.2d 711, 715 (Tex. App.CDallas 1994, no writ). We review the trial court=s findings of fact for legal sufficiency by the same standards applied in reviewing the evidence supporting a jury=s finding. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996) (per curiam). A no-evidence point challenging the legal sufficiency of a finding upon which appellant did not have the burden of proof will be sustained if there is no more than a scintilla of evidence to support the finding. Lenz v. Lenz, 79 S.W.3d 10, 19 (Tex. 2002). We consider only the evidence and inferences tending to support the trial court=s finding, disregarding all contrary evidence and inferences. Id. A challenge to the legal sufficiency of an adverse finding upon which the appellant had the burden of proof will be sustained when the evidence conclusively establishes the contrary proposition. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam). We first examine the record for evidence that supports the finding, while ignoring all evidence to the contrary. Id. If there is no evidence to support the finding, we will then examine the entire record to determine if the contrary proposition is established as a matter of law. Id.

Analysis

 A. Entitlement to repossession costs and attorneys= fees

In their first and second issues, the Chrisman Parties contend they should be reimbursed by MCD for their repossession and defense costs because a verbal contract for indemnification existed between the parties. Alternatively, the Chrisman Parties argue they should be indemnified based on the parties= alleged agent/principal relationship or the doctrine of common-law indemnification. The trial court found the Chrisman Parties were not entitled to indemnification under any of the proposed theories because they acted as independent contractorsCrather than agents of MCDCat the time of the repossession and the attempted sale of the Capperrelli vehicle. We agree with the trial court.

1. Repossession costs

The parties do not dispute that no express written contract governed the parties= relationship. Rather, the undisputed trial testimony revealed that the Chrisman Parties and MCD entered into an oral agreement concerning the repossession and potential sale of Capperrelli=s vehicle. Under the agreement, each party would be paid only out of the proceeds from the sale of a repossessed vehicle. MCD would recover lien proceeds for the unpaid amount of its repair work; the Chrisman Parties would recover repossession costs. The agreement was a contingency arrangementConly if a repossessed vehicle was sold would MCD and the Chrisman Parties be paid. After examining the entire record for evidence that supports the trial court=s finding, ignoring all evidence to the contrary, we conclude there is no evidence to support the Chrisman Parties= claim for reimbursement of its repossession costs. The trial court=s May 6, 2002 judgment characterizes the foreclosure of Capperrelli=s truck as an Aattempted sale.@ The trial court=s December 21, 2001 order declared State Farm as the rightful owner and possessor of Capperrelli=s vehicle. Pursuant to the parties= oral understanding, MCD was not required to pay the Chrisman Parties for their repossession services if there was no foreclosure sale generating sale proceeds. As a result, the Chrisman Parties are not entitled to recovery of their repossession fees.[1]

 2. Attorneys= fees

a. Indemnification

The right of indemnification generally arises by express contract. American Alloy Steel v. Armco, 777 S.W.2d 173, 175-76 (Tex. App.CHouston [14th Dist.] 1989, no writ). Here, the Chrisman Parties do not contend a right to indemnity based on a written contract[2] nor do they have pleadings or findings that might trigger a statutory indemnity right. See Aviation Office of Am., Inc. v. Alexander & Alexander of Tex., Inc., 751 S.W.2d 179, 180 (Tex. 1988) (per curiam). However, under the doctrine of common-law indemnity, courts may impose the duty to indemnify based on the relationship between the parties. Id. Common-law indemnity permits a party to recover its expenditures properly made to discharge liability when, through no act of its own, it has become subject to tort liability for the unauthorized and wrongful conduct of another solely based on the relationship between the parties. Humana Hosp. Corp. v. American Med. Sys., Inc., 785 S.W.2d 144, 145 (Tex. 1990).

Importantly, though, the Texas Supreme Court has abolished the common-law doctrine of indemnification between joint tortfeasors in negligence cases. B&B Auto Supply v. Central Freight, 603 S.W.2d 814, 816-17 (Tex. 1980). AThe only remaining vestiges of common law indemnity involve purely vicarious liability or the innocent product retailer situation.@ Aviation, 751 S.W.2d at 180. Relying on Oats v. Dublin National Bank, 127 Tex. 2, 90 S.W.2d 824 (1936), and Mira Pak, Incorporated v. G.E. Posey Corporation, 556 S.W.2d 86 (Tex. Civ. App.CWaco 1978, writ ref=d n.r.e.), the Chrisman Parties argue they are not barred from common-law indemnification because they are not joint tortfeasors. They further contend they are entitled to indemnity based on their status as MCD=s agents. See Oats, 127 Tex. at 11-12, 90 S.W.2d at 829 (finding that Aan agent who in the performance of his duties for his principal incurs liability for an act not morally wrong, may have indemnity from the principal@). However, the Texas Supreme Court has essentially overruled the cases relied upon by appellants and determined that, in cases governed by the comparative responsibility statute, an agent no longer has the common-law right of indemnity from his principal. Aviation, 742 S.W.2d at 837; see also Tex. Civ. Prac. & Rem. Code Ann. ' 33.001 et seq. (Vernon 1997) (proportionate responsibility statute).

b. Status as independent contractors

The Chrisman Parties contend that, because no finding of fault was made against them, they are not joint tortfeasors with MCD. However, appellants and MCD were sued as joint tortfeasors. Moreover, whether the parties are joint tortfeasors does not hinge on a legal determination of fault, but on whether the comparative responsibility statute would have been utilized in the case. See B&B Auto, 603 S.W.2d at 817. If there was an independent tort basis for Capperrilli to sue the Chrisman Parties, the case would have been governed by the comparative responsibility statute. Id. Here, Capperrilli sued MCD for wrongful repossession. She also sued the Chrisman Parties for conversion and a wrongful foreclosure sale. Accordingly, if the Chrisman Parties acted independently when they sold Capperrilli=s vehicle, they were sued for their own acts, are joint tortfeasors with MCD, and are barred from seeking common-law indemnification from MCD.[3]

The critical question then becomes whether the Chrisman Parties were acting as independent contractors at the time of the repossession and alleged public sale such that they are joint tortfeasors with MCD. So, contrary to the assertion of the Chrisman Parties, the trial court=s determination of appellants= status as independent contractors is dispositive of their claims in this case.

Appellants argue in their second issue that there is legally insufficient evidence to support a finding that they were independent contractors. We reject appellants= argument because, considering only the evidence and inferences tending to support the trial court=s finding and disregarding all contrary evidence and inferences, there is more than a scintilla of evidence to support the trial court=s independent-contractor finding.

A worker is an employee/agent rather than an independent contractor if the employer has the right to control the progress, details, and methods of operations of the work, considering (1) the independent nature of the worker=s business; (2) the worker=s obligation to furnish necessary tools, supplies, and materials to perform the job; (3) the worker=s right to control the progress of the work except about final results; (4) the time for which the worker is employed; and (5) the method of payment, whether by unit of time or by the job. See Limestone Prods. Dist., Inc. v. McNamara, 71 S.W.3d 308, 312 (Tex. 2002). MCD had no involvement in hiring the tow truck driver to do the repossession, providing tools or materials for the physical repossession, deciding the time and location of the repossession, deciding the location of storage of the truck after repossession, sending out the notice of lien letters (including to whom, where and how the notice of lien letters were sent), preparing the lien documents, conducting the alleged public sale, or preparing and deciding on the location of the public sale, content of the notices of the public sale, or where the notices were posted.

MCD=s principal testified he never instructed Chrisman how to do his job; he relied upon the Chrisman Parties= expertise in repossession. MCD merely controlled the end sought to be accomplishedCdetermining whose vehicle would be repossessed and the amount owed by the mechanic=s lien. The Chrisman Parties, on the other hand, controlled the means and details of accomplishing the work. See id. at 313 (holding that worker was independent contractor, not employee, and therefore, company was not vicariously liable for negligence of worker) (citations omitted).

We conclude the evidence is legally sufficient to support the trial court=s findings that appellants were independent contractors, not agents of MCD. See Astra Oil Co., Inc. v. Diamond Shamrock Ref. Co., L.P., 89 S.W.3d 702, 706 (Tex. App.CHouston [1st Dist.] 2002, pet. denied) (stating that parties had a contractual relationship, not a relationship giving rise to vicarious liability). Accordingly, the Chrisman Parties= first and second issues are overruled.

B. Ratification

In their third issue, appellants argue MCD ratified the acts of the Chrisman Parties and, therefore, assumed liability for the Chrisman Parties= repossession and defense costs. Ratification is the adoption or confirmation by a person, with knowledge of all material facts, of a prior act which did not then legally bind that person and which that person had the right to repudiate. Vessels v. Anschutz Corp., 823 S.W.2d 762, 764 (Tex. App.CTexarkana 1992, writ denied). Ratification may either be express or implied, but it must result from acts clearly evidencing an intention to ratify. Daugherty v. McDonald, 407 S.W.2d 954, 958 (Tex. Civ. App.CFort Worth 1966, no writ). Ratification of an agent=s wrongful conduct may occur when the principal retains the benefits of the transaction after he has acquired knowledge of the agent=s wrongful act. Land Title Co. v. F. M. Stigler, Inc., 609 S.W.2d 754, 756 (Tex.1980). ARatification is essentially a question of fact, to be determined from all the circumstances and evidence . . . .@ Colvin v. Blanchard, 103 S.W. 1118, 1119 (Tex. 1907).

The Chrisman Parties argue MCD ratified their conduct because MCD failed to withdraw its lien rights either before or after the repossession and attempted foreclosure sale. The Chrisman Parties also contend they repeatedly advised MCD=s principal of its activities and kept him informed of their actions. The record reflects, however, that MCD=s principal was not told the details of the repossession and sale. Accordingly, there is no evidence that MCD came into full possession of all the facts in order to ratify the Chrisman Parties= allegedly wrongful conduct. Moreover, it is undisputed that the Chrisman Parties never paid MCD the lien proceeds out of the purported sale proceeds; therefore, MCD did not retain a benefit from the alleged wrongful repossession and foreclosure sale of Capperrelli=s vehicle. Hence, there was legally insufficient evidence for the trial court to find ratification. Regardless, even if MCD had ratified the acts of the Chrisman Parties, appellant cites no authority for the proposition thatCin addition to making MCD liable to third-parties for the actions of the Chrisman PartiesCthe doctrine would require MCD to assume liability for the Chrisman Parties= repossession and defense costs. We overrule appellant=s third issue.

Because we have overruled appellants= first, second, and third issues, we need not address their fourth issue regarding proof of damages.

Conclusion

Finding no error, we affirm the trial court=s judgment.

/s/ Leslie Brock Yates

Justice

Judgment rendered and Memorandum Opinion filed December 23, 2003.

Panel consists of Justices Yates, Hudson, and Frost.

[1] The Chrisman Parties also allege that the existence of an oral agreement entitles them to recovery of their attorneys= fees pursuant to chapter 38 of the Texas Civil Practice and Remedies Code. However, in the absence of a valid claim for breach of contract regarding the repossession costs, they are not entitled to recovery of attorneys= fees pursuant to chapter 38. SeeTex. Civ. Prac. & Rem. Code ' 38.002 (listing elements for recovery of a valid claim on a contract under Texas Civil Practice and Remedies Code).

[2] The Chrisman Parties cannot make a claim for indemnification based solely on the existence of an alleged oral agreement between the parties. American Alloy, 777 S.W.2d at 175-76.

[3] Additionally, under the facts of this case, if the Chrisman Parties were acting as independent contractors, they could not have assumed vicarious liability based solely on the conduct of MCD. See generally, e.g., St. Anthony=s Hosp. v. Whitfield, 946 S.W.2d 174, 175 (Tex. App.CAmarillo 1997, writ denied).