Computize, Inc., (APPELLANT/CROSS-APPELLEE) v. Longhorn Packaging, Inc., (APPELLEE/CROSS-APPELLANT)--Appeal from 73rd Judicial District Court of Bexar County

MEMORANDUM OPINION
No. 04-03-00138-CV
COMPUTIZE, INC.,
Appellant
v.
LONGHORN PACKAGING, INC.,
Appellee
From the 73rd Judicial District Court, Bexar County, Texas
Trial Court No. 2000-CI-15408
Honorable Andy Mireles, Judge Presiding

Opinion by: Alma L. L pez, Chief Justice

Sitting: Alma L. L pez, Chief Justice

Catherine Stone, Justice

Paul W. Green, Justice

Delivered and Filed: January 21, 2004

AFFIRMED

Computize, Inc. ("Computize") appeals a judgment rendered in favor of Longhorn Packaging, Inc. ("Longhorn Packaging"), in a lawsuit in which Longhorn Packaging asserted numerous causes of action arising from its use of Computize's services in purchasing a computer system. Computize challenges the sufficiency of the evidence to support numerous jury findings. Because we find the evidence sufficient to support the jury's findings with regard to Longhorn Packaging's breach of contract claim, we do not address Computize's issues regarding Longhorn Packaging's alternative claims. The judgment of the trial court is affirmed.

Background

Longhorn Packaging is a manufacturer of flexible packaging films and bags for items like potato chips, candy, and rice. Longhorn Packaging had been using various computer systems to manage their accounting software system for approximately twenty-five years. In 1998, Longhorn Packaging decided to acquire a new computer system because its existing system was not Y2K compliant and was running slow. Longhorn Packaging wanted to upgrade its system to include access to newer technology like e-mail and websites.

A meeting was arranged between representatives of Longhorn Packaging and Computize. At the meeting, Julian Gutierrez, Computize's sales representative, gave Computize's business brochure to Joe Carinhas, the owner of Longhorn Packaging. Gutierrez explained his background and qualifications and Computize's ability to analyze Longhorn Packaging's computer needs. Carinhas explained at the meeting that Longhorn Packaging's existing system was too slow and was not Y2K compliant. Carinhas further explained that the primary purpose of the computer system was to run the accounting software.

Although Computize's brochure stated that it chooses only high-quality products from leading manufacturers, Gutierrez recommended that Longhorn Packaging purchase the computers from P.C. Wholesale, stating that the computers would be more upgradable and more quickly serviced because the company was local. Gutierrez further recommended that Longhorn Packaging purchase P.C. units and tie them into a network system. Finally, Gutierrez recommended that Longhorn Packaging retain the services of Chelanie Israel to upgrade the accounting software.

Computize and Longhorn Packaging eventually entered into an agreement. Pursuant to the agreement, Computize agreed to set up and install the P.C. Wholesale system. After the installation, Longhorn Packaging experienced numerous problems with the computers. Initially, Longhorn Packaging would contact Gutierrez, who would either try to fix the problem or provide a temporary computer to use until the computer was fixed. Carinhas testified that when the system ran, it ran for a short period of time before something else went wrong.

In addition to having problems with the computers, Longhorn Packaging was having difficulty in obtaining the accounting software from Israel. Although Longhorn Packaging paid Israel $15,770 for the software, she did not produce any workable software. As a result, Longhorn Packaging sent a letter terminating the agreement and requesting that it be reimbursed the money it had paid to Israel. At that time, Longhorn Packaging had only three months to become Y2K compliant. As a result, Longhorn Packaging contacted Flexware, the local company who supplied the Southware accounting software that Longhorn Packaging previously used. Flexware was able to install the software on the P.C. Wholesale system by December of 1999.

After the Southware accounting software was installed on the P.C. Wholesale system, Longhorn Packaging discovered that the P.C. Wholesale system ran slower than the prior system and that the system continually broke down. As a result, Longhorn Packaging hired a consultant, Bob Warren, to evaluate and analyze the reason the system was experiencing so many problems. Longhorn Packaging paid Warren $9,000 to evaluate the system. Warren recommended that Longhorn Packaging "junk the P.C. Wholesale system and start over." Based on this recommendation, Longhorn Packaging purchased a Hewlett-Packard computer system for approximately $84,000. Longhorn Packaging did not experience any problems with the Hewlett-Packard system.

Carinhas contacted Computize and requested a meeting. Carinhas wanted Computize to take its equipment back and refund Longhorn Packaging's money. Carinhas and other representatives from Longhorn Packaging scheduled a meeting with Kevin Johnson, Computize's general manager of sales. At the meeting, Carinhas presented Johnson with a detailed list of the problems Longhorn Packaging had experienced with the system Computize had sold to Longhorn Packaging. Carinhas asked Johnson to reimburse Longhorn Packaging for the equipment, the money paid to Israel, and the money paid to Warren to analyze the system. Johnson indicated that he would have to speak to his bosses. When no response was forthcoming from Computize after this meeting, Longhorn Packaging filed the underlying lawsuit.

Standard of Review

In reviewing a legal sufficiency claim, we view the evidence in a light that tends to support the finding of the disputed fact and disregard all evidence and inferences to the contrary. Minyard Food Stores, Inc. v. Goodman, 80 S.W.3d 573, 577 (Tex. 2002). If more than a scintilla of evidence exists, it is legally sufficient. Id. More than a scintilla of evidence exists if the evidence furnishes some reasonable basis for differing conclusions by reasonable minds about a vital fact's existence. Id.

In reviewing a factual insufficiency point, we consider and weigh all of the evidence in the case and reverse only if the verdict is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1998). In conducting a factual sufficiency review, we must not substitute our judgment for that of the jury, even if the evidence would clearly support a different result, and the jury is the sole judge of the credibility of the witnesses and the weight to be given to their testimony. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998).

Discussion

A. Breach of Contract

In its third and fourth points of error, Computize challenges the legal and factual sufficiency of the evidence to support the jury's finding that it breached its agreement with Longhorn Packaging. Specifically, Computize relies on evidence that it delivered all of the goods and services Longhorn purchased from it. Although Computize's analysis focuses on its delivery of various component parts and services, Computize ignores the nature of its agreement with Computize. Based on the evidence presented, Computize agreed to create a "computer solution" that would solve Longhorn Packaging's computer issues, including upgrading the system to make it operate more quickly and efficiently and making the system Y2K compliant. In addition, Gutierrez agreed to support Israel's services in upgrading the accounting software. The evidence establishes that Computize breached its agreement by providing faulty equipment and insufficient expertise to solve Longhorn Packaging's problems by creating a "computer solution."

Sam Ru, owner of Computize, testified that Computize had a responsibility to make sure the equipment it sold to Longhorn Packaging worked properly. However, Carinhas testified that the computers Computize sold Longhorn Packaging lost information, burned up, crashed, and shocked the users. Pat White, Longhorn Packaging's office manager, also testified that from the beginning the computer monitors flickered, the CPUs were making excessive noise and would lock up or crash, and sometimes the users could not log on. When more people began using the computers, the problems increased, including lost information and users getting shocked. Two CPUs burned, and some computers were not properly hooked up to the network. When the computer system ran, it was only for a short period before another problem would occur. From the beginning, Longhorn Packaging repeatedly needed service from Computize to fix the computers. Computize would send its service people over to fix them, but the problems continued. Finally, at the end of December 1999, Computize stopped taking Longhorn Packaging's calls and no longer provided service, even though the computers were still having major problems. After the Southware accounting program was installed, the computers ran very slow, slower than Longhorn Packaging's old computers, and the other problems continued.

Bob Warren also testified that when he was hired by Longhorn Packaging to analyze the computers and find out what was wrong, he found that they were running very slow, would continually crash, and some of the machines were not able to run on the network or gain access to the accounting software. Also, several monitors and CPUs were burned up, and there were electrical charges on some that caused shocking. The modem on the server also was misconfigured. Computers were locking up several times a day and sometimes could not be powered up again. However, Warren did not simply recommend that Longhorn Packaging attempt to replace the faulty parts. He recommended that the Computize computers be completely replaced. Although replacing the system was more lucrative to Warren since he would get paid to install the new computers, Warren testified that he made this recommendation because the system would not work no matter how much it was repaired because the equipment was subpar - clone computers that are not designed for reliability. In general, Warren testified that the problems were due to faulty hardware, bad network design, lack of business-class systems, and an overall incorrect solution to Longhorn Packaging's needs.

After reviewing the record, we hold that the evidence is legally and factually sufficient to support the jury's finding that Computize breached its agreement with Longhorn Packaging, and Computize's third and fourth points of error are overruled.

In its fifteenth point of error, Computize argues that the jury's finding that Longhorn Packaging's breach of its agreement was excused is against the great weight and preponderance of the evidence. The jury charge, however, allowed the jury to excuse Longhorn Packaging's breach if it found that Computize failed to comply with a material obligation of the same agreement. As previously discussed, the evidence was sufficient to support the jury's finding that Computize did breach the same agreement by failing to comply with a material obligation of that agreement. Accordingly, Computize's fifteenth point of error is overruled.

B. Causation

In its first issue, Computize contends that it was not the cause of Longhorn Packaging's damages because Israel's failure to fulfill her agreement to upgrade the accounting software was a new and independent cause of Longhorn Packaging's damages.

Texas courts distinguish between a new and independent cause and a concurrent act. Benitz v. Gould Group, 27 S.W.3d 109, 116 (Tex. App.--San Antonio 2000, no pet.). A concurrent act cooperates with the original act in bringing about the injury and does not cut off the liability of the original actor. Id. A "new and independent cause" sometimes referred to as a superseding cause, however, is an act or omission of a separate and independent agency that destroys the causal connection between the negligent act or omission of the defendant and the injury complained of, and thereby becomes the immediate cause of such injury. Id. The new and independent cause must be one incapable of being foreseen by the original wrongdoer in the exercise of ordinary care. Id.

Computize's contention ignores all of the testimony regarding the problems Longhorn Packaging experienced with the P.C. Wholesale hardware, and the computer system's failure. In fact, the computer system was unable to properly run even with the upgraded Southware accounting software purchased from the prior vendor. In addition, Computize's contention ignores that Gutierrez agreed that Computize would support Israel and further agreed that Computize would be involved in the upgrade of the accounting software and would ensure that Israel's software would be compatible with the computers and would work. The evidence is factually sufficient to support the jury's causation finding, and Computize's first point of error is overruled.

C. Damages

In its second point of error, Computize argues that the trial court erred in awarding Longhorn damages under any theory of recovery because there was insufficient evidence to support the jury's findings on damages.

Questions were submitted to the jury regarding the following four categories of damages in relation to the breach of contract claim: (1) difference between the value of the computer equipment and services agreed to by the parties and the value of equipment and services received by Longhorn Packaging from Computize; (2) reasonable and necessary costs incurred by Longhorn Packaging in attempting to repair the goods and services provided by Computize; (3) difference between the amount paid by Longhorn Packaging to replace the computer equipment and services provided by Computize and the amount paid by Longhorn Packaging to Computize for the computer equipment and services; and (4) incidental and consequential damages. Because Computize did not object to the submission of each of the categories of damages in the jury charge, we do not consider whether the categories of damages are a proper measure of recovery for a breach of contract claim. Instead, we only consider whether the evidence is sufficient to support the amount of damages awarded for each category. Wilgus v. Bond, 730 S.W.2d 670, 672 (Tex. 1987); American Transfer & Storage Co. v. Reichley, 560 S.W.2d 196, 199-200 (Tex. Civ. App.--Amarillo 1977, writ ref'd n.r.e.).

In response to jury question 11a, the jury awarded $26,495.74, the entire amount of the invoice Longhorn Packaging paid for the first shipment of computers from Computize, as the difference between the value of the computer equipment and services agreed to by the parties and the value received by Longhorn Packaging. Computize argues that there is insufficient evidence that the computers and services it delivered were worth zero. However, as Longhorn Packaging notes, the total amount paid to Computize by Longhorn Packaging was $29,242.28. Therefore, the jury did not value the computers and services at zero; it simply assigned a low value to them. The testimony of Carinhas, White, and Warren shows that the computers never worked properly, lost information, were slower than the old computers, and were a physical hazard. This evidence supports the jury's award with regard to the difference in the value agreed upon and the value received.

In jury question 11b, the jury was asked to consider the "[r]easonable and necessary costs incurred by Longhorn Packaging, Inc. in attempting to repair the goods and services provided by Computize, Inc." The jury awarded $9,215.00, the same amount Longhorn paid for Warren's evaluation of Computize's computers. Computize argues that Warren did not repair the computers, but only advised Longhorn Packaging to buy a new system. However, Warren was hired to evaluate Computize's computers because, even over a year after their purchase and after many attempts by Computize to fix the computers, they still did not work properly. Longhorn Packaging had to hire someone else to fix or properly evaluate Computize's computers. Warren attempted to fix the computers but concluded that the computers should be replaced. Accordingly, the evidence was sufficient to support the jury's finding that the amount paid to Warren to evaluate and assess the repairs needed to the computers was a cost incurred in "attempting" to repair the goods and services.

In response to jury question 11c, the jury awarded $52,922.28 for the difference between the amount paid by Longhorn Packaging to replace the computer equipment and services provided by Computize and the amount paid by Longhorn Packaging to Computize for the computer equipment and services. The $52,922.28 represents the cost of the new Hewlett-Packard system plus Warren's installation fees, minus the cost Longhorn Packaging paid for the Computize computers. Accordingly, the jury's finding is supported by the evidence.

In jury question 11d, the jury was asked to consider incidental and consequential damages. The terms "incidental" and "consequential" are not defined. Consequential damages are damages that result naturally, but not necessarily, from the defendant's wrongful act. Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 182 (Tex. 1995). Incidental damages generally include expenses incurred in the inspection, care and custody of goods rightfully rejected, commercially reasonable charges and expenses in connection with effecting cover, and any other reasonable expense incident to the breach. Tex. Bus. & Com. Code Ann. 2.715 (a) (Vernon 1994).

The jury awarded $32,160 for incidental and consequential damages. Computize argues that this amount must include the $28,414.00 for expert witness fees and litigation costs, which are not recoverable elements of damage. Longhorn Packaging counters that the incidental and consequential damages do not include litigation costs, but include the amount paid to Flexware to update the Southware software after Israel failed to finish her program. Because Computize's agreement included an agreement to support Israel and to ensure that the software would be compatible with the computer system and would work, the jury could properly award the amount paid to Flexware for the accounting software in its incidental and consequential damage award.

After reviewing all the evidence, we conclude that the evidence supporting the jury's damage findings is not so weak as to be clearly wrong and manifestly unjust. Computize's second point of error is overruled.

Conclusion

The trial court's judgment is affirmed.

Alma L. L pez, Chief Justice