Joe Wayne Owings and Ernestine Owings, APPELLANTS/CROSS-APPELLEES v. Mardoche Abdelhak, APPELLEE/CROSS-APPELLANT; Stewart Title Company, APPELLEE ONLY--Appeal from 288th Judicial District Court of Bexar County

MEMORANDUM OPINION
No. 04-02-00633-CV
Joe Wayne OWINGS and Ernestine Owings,
Appellants
v.
Mardoche ABDELHAK,
Appellee
From the 288th Judicial District Court, Bexar County, Texas
Trial Court No. 2000-CI-11013
Honorable Carol R. Haberman, Judge Presiding

Opinion by: Alma L. L pez, Chief Justice

Sitting: Alma L. L pez, Chief Justice

Karen Angelini, Justice

Phylis J. Speedlin, Justice

Delivered and Filed: October 29, 2003

AFFIRMED IN PART; REVERSED AND RENDERED IN PART

Joe Wayne Owings and Ernestine Owings ("Owings") and Mardoche Abdelhak ("Abdelhak") each appeal the judgment entered in a lawsuit arising out of the sale of a mobile home park. The Owings contend that the judgment is erroneous because: (1) no damages should have been awarded for lost profits; (2) the trial court erred in excluding an offer from evidence made by the City of San Antonio to purchase a portion of the mobile home park; and (3) the trial court erred in failing to include an agency instruction in the jury charge. Abdelhak also contends the judgment is erroneous because: (1) the trial court erred in reducing the amount of damages the jury awarded for lost profits; (2) the damages awarded by the jury were against the overwhelming weight of the evidence; (3) the trial court erred in failing to award attorneys' fees; and (4) the jury's failure to find liability on the part of Stewart Title Company is against the overwhelming weight of the evidence. We reverse the portion of the trial court's judgment reducing the amount of damages the jury awarded for lost profits sustained in the past and render judgment awarding the amount of damages found by the jury. We affirm the remainder of the trial court's judgment.

Background

The Owings entered into an Earnest Money Contract to sell their mobile home park to David Reynolds ("Reynolds") in the spring of 1998. Prior to the execution of the contract, Joe informed Reynolds that the mobile home park was not located in a flood plain. The Owings also showed Reynolds a map indicating that the mobile home park was not located in the flood plain. The map was attached to the contract which states that the property is not in a flood plain, referring to the map and an attached addendum. The addendum states, "Buyer has been furnished a map showing the 100-year flood plain area. This condition shall not constitute grounds for termination or rejection of this contract."

Although the contract provided that Reynolds could not assign the contract because the Owings had agreed to finance a portion of the purchase price by accepting a note, the Owings permitted Abdelhak to be added as a buyer at closing. Abdelhak testified that he reviewed the contract and verified with Reynolds that the property was not in a flood plain. Stewart Title Company acted as the closing agent for the transaction.

In October of 1998, the mobile home park flooded. Prior to the flood, Reynolds had sold his interest in the mobile home park to Jonathan Beren. The parties subsequently discovered that the mobile home park was located in a flood plain. Abdelhak was forced to sue the City of San Antonio and seek an injunction to keep the mobile home park in operation. Abdelhak later sued the Owings and Stewart Title Company for negligence and deceptive trade practices. A jury found the Owings liable but found Stewart Title Company was not liable. Both parties appeal the trial court's judgment.

Sufficiency

When the party that does not bear the burden of proof on an issue challenges the legal sufficiency of the evidence to support a finding, we consider all the evidence in the light most favorable to the finding, and we disregard all evidence and inferences to the contrary. Texas Dept. of Mental Health & Mental Retardation v. Rodriguez, 63 S.W.3d 475, 480 (Tex. App.--San Antonio 2001, pet. denied). If there is more than a scintilla of evidence to support the finding, the finding will be upheld. Id.

When a party attacks the legal sufficiency of an adverse finding on an issue on which he has the burden of proof, he must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). In reviewing a "matter of law" challenge, the reviewing court must 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, the reviewing court will then examine the entire record to determine if the contrary proposition is established as a matter of law. Id. The point of error should be sustained only if the contrary proposition is conclusively established. Id.

Factual sufficiency issues are designated either as "great weight and preponderance" issues, if the complaining party had the burden of proof at trial, or, if not, then as "insufficient evidence" issues. See Raw Hide Oil & Gas, Inc. v. Maxus Exploration Co., 766 S.W.2d 264, 275 (Tex. App.-- Amarillo 1988, writ denied). In reviewing an insufficient evidence point, we must examine the entire record to determine if there is some probative evidence to support the finding, and, if there is, we must determine whether the evidence supporting the finding is so weak or the answer so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. Id. at 276. In reviewing great weight and preponderance points, we must examine the entire record to determine if there is some evidence to support the finding, and then determine whether, in light of the entire record, the finding is manifestly unjust. Id. The trier of fact is the sole judge of the credibility of the witnesses and the weight to be given to their testimony. Texas Dept. of Mental Health & Mental Retardation v. Rodriguez, 63 S.W.3d at 480. Because the appellate court is not the fact finder, it may not substitute its own judgment for that of the trier of fact, even if a different answer could be reached on the evidence. Id.

Lost Profits

The jury awarded $50,000 in lost profits sustained in the past and $0 for lost profits that, in reasonable probability, Abdelhak would sustain in the future. The Owings filed a motion to disregard jury findings, asserting that the jury's answer awarding $50,000 in past lost profits should be disregarded. The trial court entered a judgment awarding Abdelhak $25,000 in past lost profits, but no amount was awarded for future lost profits.

Recovery for lost profits does not require that the loss be susceptible to exact calculation. Helena Chemical Co. v. Wilkins, 47 S.W.3d 486, 504 (Tex. 2001). However, the injured party must do more than show that it suffered some lost profits. Id. The loss amount must be shown by competent evidence with reasonable certainty. Id. At a minimum, opinions or lost-profit estimates must be based on objective facts, figures, or data from which the lost-profits amount may be ascertained. Id.

Past profits, coupled with other facts and circumstances, may establish a lost-profits amount with reasonable certainty. Id. at 505. Our focus is on whether damages can be shown with reasonable certainty. Id. This can be accomplished with a profit history or some other objective data, such as future contracts, from which lost profits can be calculated with reasonable certainty. Id.

A trial court may only disregard a jury's answers if they have no support in the evidence. Southeastern Pipe Line Co., Inc. v. Tichacek, 997 S.W.2d 166, 172 (Tex. 1999). The record is reviewed in the light most favorable to the jury's finding, considering only the evidence and inferences that support the finding and rejecting the evidence and inferences contrary to the finding. Aquila Southwest Pipeline, Inc. v. Harmony Exploration, Inc., 48 S.W.3d 225, 245 (Tex. App.--San Antonio 2001, pet. denied). If there is more than a scintilla of competent evidence to support the jury's finding, a trial court errs in disregarding the finding. Id.

In their appeal, the Owings contend that the trial court erred in submitting a jury question on lost profits because the evidence was legally insufficient to support any award. In his cross-appeal, Abdelhak asserts that the trial court erred in disregarding the full amount awarded by the jury and that the jury erred in not awarding more for lost profits.

Joe Owings testified that he had operated the mobile home park for 20 years. Ernestine Owings testified that the amount of profit fluctuated during the 1980s and 1990s, but profit had increased since 1995. Ernestine stated that the mobile home park was making a good profit at the time of closing, but not a great profit. Ernestine estimated that the income at the time of the sale was approximately $6,200-6,500 per month, and the expenses were approximately $2,000-3,000 per month.

Abdelhak testified that thirty-eight lots were occupied at the time he purchased the mobile home park. The lots were rented for between $150 and $200 a month which was standard in the industry. Income statements were introduced into evidence showing the amount of income Abdelhak received each month. Abdelhak testified that the gross income was approximately $7,500 each month, and his expenses averaged between $800 and $1,500 each month. Abdelhak was paid 10% of the gross profits each month for managing the mobile home park. Based on this information, Abdelhak estimated that he could reasonably expect to receive $3,250 a month or $39,000 a year in profit.

Abdelhak testified that he purchased the property in July of 1998. In October of 1998, the property flooded. Abdelhak estimated that four to six weeks after the flood, only ten to twelve lots remained rented. In late June or July of 1999, Abdelhak received a letter from the City stating that no new tenants could move into the mobile home park until Abdelhak obtained a permit. In order to obtain the permit, Abdelhak would have to raise the land and build a nine-foot highway into the park, which was cost prohibitive. Abdelhak sued the City to obtain an injunction to permit him to continue operating the mobile home park. In March of 2000, Abdelhak obtained a temporary injunction that permitted him to continue his operations on a month to month basis, but Abdelhak was required to notify prospective tenants that he could only rent on a monthly basis because if the City won the lawsuit, the tenants would have to move. Abdelhak testified that the City was awaiting the outcome of his suit against the Owings before proceeding further in the other litigation.

The evidence is legally and factually sufficient to support the jury's award of $50,000 in lost profits. The Owings testified regarding the profitability of the mobile home park during their ownership of it, and Abdelhak testified regarding the profits he was receiving after he purchased the park. Income statements were introduced from which the jury could calculate gross income, and Abdelhak and Ernestine Owings provided testimony regarding expenses. Accordingly, the trial court did not err in submitting the damage issue to the jury; however, the trial court did err in disregarding the jury's answer.

With regard to Abdelhak's "great weight" issue regarding the lost profits awards, the jury could have believed that the City would win its lawsuit; therefore, Abdelhak would have to cease operations and would not have additional lost profits in the future. Furthermore, the jury could have believed that fewer and fewer tenants would continue to utilize the mobile home park in view of the information Abdelhak was required to disclose. Finally, the jury's damage award was within the range permitted by the evidence, and we cannot substitute our judgment for the amount the jury awarded even if a different answer could be reached.

Fair Market Value

The jury awarded $32,500 for the difference in the fair market value of Abdelhak's interest in the mobile home park as it was received and the price paid. Abdelhak challenges the factual sufficiency of the evidence to support the jury's finding, and Abdelhak had the burden of proof on the issue.

Abdelhak testified that he paid $160,000 of the purchase price for the property, which was $250,000. Two experts testified regarding the appraised fair market value of the property at the time of the purchase. The engineer retained by Abdelhak testified that the tract was worth $39,800 at the time of purchase. The engineer retained by the Owings testified that the fair market value of the property at the time of purchase was $130,000. The jury's award was within the range permitted by the evidence, and in light of the entire record, the finding is not manifestly unjust.

Cost of Repair

The jury awarded $9,000 for the costs to repair the property in the past. Abdelhak challenges the factual sufficiency of the evidence to support the jury's finding. Abdelhak had the burden of proof on the issue.

The jury considered the following evidence from Abdelhak regarding costs of repair:

After the flood, we were talking briefly about clean-up costs, and I want to come back to that. Do you know how much that you have incurred yourself, not for Mr. Beren's part, but yourself in terms of clean-up expenses, repair expenses, all of the expenses that you have had to incur yourself as a result of that flood? I would think with the expense to come and stay and look, it would be close to 20 thousand dollars. And so it would be your testimony that it would definitely be no lower than 15 thousand dollars, and if you add in all of the additional trips you have had to make down here, as high as 20 thousand dollars? Yes, sir. That's correct. And tell the jury some of the major expenses that you had to incur as a result of the park infrastructure being destroyed during the flood, some of the expensive items. We didn't know that the meters were damaged. So when we read the electricity the following month, what's left, the electrical meters was [sic] backwards. The meters? Yes, electrical meters. Electrical meters? As I said before, we [were] subcontracting everyone separate. Everyone was metered through us when it was the flood, the whole month. I'm not an expert in electricity. The guy was running it, he doesn't know nothing electric. So when we come to read it, it was terrible, we can't read it. When we had the problem, the city come [sic] and say they have a problem with their meters also. So they come and change the meters. But they have a way to average according to last month, so I bill them that average. What I was trying to explain, we have talked about you having to spend 15 thousand to 20 thousand dollars. What did you spend that on? We have to build the fence, every space originally fenced, most of them knocked down, you have mud all over. They have roads all cracked. We had the water lines broken and there was running water in the street. So all of that occurred that we have to have cleaned up. I had to have some people to clean up and to start to get the park back the way it was before at least.

The jury is the sole judge of the credibility of the witnesses and the weight to be given to their testimony. Texas Dept. of Mental Health & Mental Retardation v. Rodriguez, 63 S.W.3d at 480. The jury could have determined that the lower end of the estimated expense range was too high in view of the fact that Abdelhak's attorney suggested $15,000 as the lower end of the range and because Abdelhak failed to provide an itemization of the specific expenditures. The jury's award was within the range permitted by the evidence, and in light of the entire record, the finding is not manifestly unjust.

Stewart Title Company

The jury refused to find that any negligence by Stewart Title Company proximately caused damages to Abdelhak or that Stewart Title Company engaged in any false, misleading, or deceptive act or practice that was a producing cause of damages to Abdelhak. Abdelhak challenges the factual sufficiency of the evidence to support the jury's finding. Abdelhak had the burden of proof on the issue.

Although Stewart Title Company supplied the Owings with a form for the Earnest Money Contract, the parties completed the form themselves. Roy Sullivan, the closing agent, testified that he did not read the contract at the time it was deposited with the escrow funds. Sullivan testified that he did read the contract before closing. Stewart Title Company required that a survey be obtained prior to closing for purposes of obtaining an accurate legal description; however, no one requested that Stewart Title Company obtain a flood certificate for the property.

David Reynolds, the real estate broker who originally purchased the property with Abdelhak, testified that he would not expect a title company to verify that property was not within a flood plain unless asked. Reynolds testified that there was no discussion at the closing regarding the flood plain. Reynolds testified that Stewart Title Company may have known the property was in a flood plain because of the close relationship between the Owings and Sullivan, but Ernestine Owings testified that Sullivan was merely the closing agent that she used because she had used Stewart Title Company on another transaction in the past. Ernestine Owings stated that she did not discuss the flood plain with Sullivan.

In view of this evidence and in light of the entire record, the jury's failure to find Stewart Title Company liable is not manifestly unjust.

Attorneys' Fees

Section 17.506 of the Texas Business and Commerce Code provides a defense to the award of attorneys' fees in a deceptive trade practices action. To be entitled to the defense, the defendant must prove that: (1) before the consummation of the transaction; (2) the defendant gave reasonable and timely written notice to the plaintiff; (3) of the defendant's reliance on written information relating to the particular goods or service in question; (4) obtained from another source if the information was false or inaccurate; and (5) the defendant did not know and could not reasonably have known of the falsity or inaccuracy of the information. Tex. Bus. & Com. Code Ann. 17.506(a)(2) (Vernon 2002). In the jury charge, the jury found that the Owings complied with this section by providing reasonable and timely written notice that they were relying on written information relating to the real property in question obtained from another source without knowing and without reasonably being able to know that the written information was inaccurate. Abdelhak contends that the record contains no evidence to support this finding. The Owings had the burden of proof on this issue.

The map relied upon by the Owings in representing that the property was not in a flood plain was attached to the earnest money contract. Abdelhak testified that he reviewed the contract and the map prior to purchasing the property. Joe Owings testified that he did not know the map was outdated. This evidence is legally sufficient to support the jury's finding that the Owings provided Abdelhak with written notice that they were relying on the map without knowing and without reasonably being able to know that the written information was inaccurate.

Offer by City

The Owings contend that the trial court erred in excluding from evidence an offer by the City to purchase certain lots from Abdelhak. The offer was made in November of 2000 during the pendency of the ongoing litigation between Abdelhak and the City. The Owings contend that rejection of the offer was a failure to mitigate damages, and the jury was entitled to the evidence.

We review the exclusion of evidence under an abuse of discretion standard. City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex. 1995). The Owings contend that the trial court erred in excluding the evidence under rule 408 of the Texas Rules of Evidence; however, the record does not reflect that the trial court's ruling was based on rule 408. The record only reflects that the Owings made an offer of proof with regard to the evidence to preserve error. An appellate court must uphold the trial court's evidentiary ruling if there is any legitimate basis for the ruling. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998).

During Abdelhak's testimony regarding the City's offer, he testified that the lots the City wanted to purchase would cut off access to the rest of the mobile home park and require the park to close. "It has long been the law in this state that offers of settlement and compromise generally are excluded in order to allow a party to buy his peace and encourage settlement of claims outside of the courthouse." State Farm Mut. Auto Ins. Co. v. Wilborn, 835 S.W.2d 260, 261 (Tex. App.--Houston [14th Dist.] 1992, no writ). Rule 408 furthers this policy of excluding offers to compromise; however, Rule 408 permits such offers to be admitted for a purpose other than proving liability for or invalidity of a claim or its amount. Tex. R. Evid. 408.

Under Rule 403, a trial court may exclude relevant evidence if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury. Tex. R. Evid. 403. The probative value of Abdelhak's refusal to accept the City's offer with regard to the issue of mitigation is low when the transaction's effect on the continued operation of the park is considered. Although it appears that the trial court could have admitted the evidence of the City's offer for the purpose of establishing Abdelhak's failure to mitigate, the trial court had the discretion to exclude the evidence because of the danger of unfair prejudice or jury confusion and because of the general rule that settlement discussions are confidential. See Allison v. Fire Ins. Exchange, 98 S.W.3d 227, 259-60 (Tex. App.--Austin 2002, no pet.). Because the trial court could have determined that the danger of prejudice or confusion substantially outweighed the probative value of the settlement offer, the trial court did not abuse its discretion in excluding the evidence.

Jury Instruction on Agency

The parties appear to brief this issue from two different angles. The Owings appear to be arguing that the trial court erred in refusing the Owings' requested agency instruction because the evidence established that Abdelhak and Reynolds were engaged in a joint enterprise; therefore, the instruction would have permitted the jury to assign any percentage of responsibility that the jury might have assigned to Reynolds to Abdelhak. Abdelhak responds that the instruction would not have assisted the Owings because it would still permit Reynolds' knowledge to be imputed to Abdelhak. Abdelhak's response ignores the Owings' contention that the Owings wanted the instruction in order to "impute" Reynolds' responsibility to Abdelhak - not Reynolds' knowledge.

We review a trial court's decision to submit or refuse a particular instruction under an abuse of discretion standard of review. In re V.L.K., 24 S.W.3d 338, 341 (Tex. 2000). The trial court has considerable discretion to determine necessary and proper jury instructions. Id.

The Owings' argument is premised on their contention that the trial court should have instructed the jury on agency because Reynolds and Abdelhak were engaged in a joint enterprise. The elements which are essential to a joint enterprise are commonly stated to be four: (1) an agreement, express or implied, among the members of the group; (2) a common purpose to be carried out by the group; (3) a community of pecuniary interest in that purpose, among the members; and (4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control. Texas Dept. of Transp. v. Able, 35 S.W.3d 608, 613 (Tex. 2000). Generally, whether the elements required to establish a joint enterprise have been met is a question of fact for a jury to decide. See St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 525-530 (Tex. 2002) (joint enterprise issue determined by jury); Texas Dept. of Transp. v. Able, 35 S.W.3d at 613-16 (same). The Owings did not request a jury charge question on joint enterprise. See Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges PJC 7.11 (2002). The Owings do not contend in their brief that a joint enterprise was established as a matter of law and do not set forth the evidence that conclusively establishes each of the four elements necessary to prove a joint enterprise. Accordingly, because the Owings requested an instruction on agency rather than a jury question on joint enterprise, the trial court did not abuse its discretion in denying the Owings' requested instruction. See Tex. R. Civ. P. 278.

Conclusion

The portion of the trial court's judgment reducing the amount of damages that the jury awarded for lost profits sustained in the past is reversed, and judgment is rendered awarding Abdelhak $50,000.00 for lost profits in reasonable probability sustained by Abdelhak in the past. The remainder of the trial court's judgment is affirmed.

Alma L. L pez, Chief Justice