KaVo America Corporation v. Amdent Corporation, et al--Appeal from 40th District Court of Ellis County

IN THE

TENTH COURT OF APPEALS

No. 10-92-038-CV

KAVO AMERICA CORPORATION,

Appellant

v.

AMDENT CORPORATION, ET AL.,

Appellees

From the 40th District Court

Ellis County, Texas

Trial Court # 45,823

O P I N I O N

This is a libel, interference with contractual and business relations, and unfair competition case. Following a jury trial, plaintiffs Amdent Corporation and Jack and Deanna Smith, individually and doing business as the Amdent Company, recovered judgment against KaVo America Corporation for $3,163,218.33.

In seventeen points of error, KaVo complains there was no evidence, or insufficient evidence, to support the jury's findings (1) of actual and express malice, (2) that the Smiths were libeled, (3) awarding damages for mental anguish to the Smiths, (4) awarding damages for loss of reputation to Amdent Corporation and Jack Smith, (5) regarding interference with business relations and disparagement as they related to the Smiths, and (6) that KaVo abused any qualified privilege that may have existed. In other points, KaVo complains (1) that the court erred in refusing to submit its proposed question and instructions relating to "actual malice," (2) that the court erred in employing the preponderance-of-the-evidence standard instead of the clear-and-convincing evidence standard in regard to the question concerning actual malice, and (3) that the court erred in failing to suggest a remittitur. We will affirm.

FACTS

Prior to forming, with his son-in-law, a business to repair dental handpieces (drills) in the 1970s, Jack Smith had worked for several years as a dental-supply salesman and later as a manager of one of the largest dental-supply outlets in the United States. As his repair business grew, Smith discovered that frequently there was nothing wrong with the handpiece other than it was "gummed up" with contaminants from everyday use. Even though handpiece manufacturers marketed their own cleaning supplies for the handpieces, Smith began working on an improved formula to clean the handpieces. He eventually invented a product known as Amdent Spray-All. Jack and his wife, Deanna, marketed Spray-All first in Texas and then expanded to the southern United States in the early 1980s. Spray-All was such a success that Jack Smith reorganized his business in 1984, with his son-in-law retaining the repair business and the Smiths marketing the Amdent Spray-All.

Spray-All was well accepted in the market. In 1987 the Smiths began a nationwide expansion plan by recruiting and training seven high-quality sales representatives whom they located in the eastern and midwestern United States. Even though their business was located in Waxahachie, the Smiths travelled extensively throughout the United States for several years to develop their market.

KaVo America Corporation is the American arm of one of the largest dental-supply manufacturers in the world. Their parent company, DMI, is located in Germany. KaVo and Amdent were competitors in the marketing of products dentists use to clean and lubricate dental drills. The market was estimated to produce $48,000,000 in annual sales.

In 1989, at a time when Amdent was poised to take a significant portion of this market, KaVo sent to essentially every dental-supply dealer in the United States a "technical bulletin" accusing Amdent of selling a product that was dangerously defective. The bulletin warned not only that Spray-All should not be used on KaVo drills because of the potential damage it could cause to the drill, but also that Spray-All could cause headaches, dizziness, nausea, epileptic seizures, and even death. The bulletin further warned that even a droplet of Spray-All could cause corneal damage to the eye in a short period of time. Soon after the KaVo technical bulletin was issued on February 14, 1989, Amdent lost all of its sales representatives and virtually all its market in the dental industry, thus precipitating this lawsuit.

For KaVo to prevail on the no-evidence points, it must show that, after considering only the evidence and inferences which tend to support the verdict, there was no more than a scintilla of evidence to support the jury's answer. See Garza v. Alviar, 395 S.W.2d 821 (Tex. 1965). The reviewing court should consider only the evidence and reasonable inferences that tend to support the finding and disregard all evidence and inferences to the contrary. See, e.g., Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex. 1988). If there is any evidence of probative force to support the finding, the point must be overruled and the finding upheld. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).

In order to prevail on the insufficiency points, KaVo must show that the evidence is factually insufficient to support the jury's answer. Id. When the court of appeals reviews an insufficiency of the evidence challenge, it must examine all the evidence. Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805 (Tex. 1986).

In answer to Question Two, the jury found that KaVo published the libelous statement (the technical bulletin) with knowledge of the falsity or with reckless disregard concerning it. Further, in answer to Question Four, the jury found that KaVo acted with ill will, spite, evil motive, or purposing the injuring of another. These findings are commonly referred to as "actual malice" and "express malice," respectively. See Houston Belt & Terminal Ry. Co. v. Wherry, 548 S.W.2d 743, 754 (Tex.Civ.App. Houston [1st Dist.] 1976, writ ref'd n.r.e.), cert. denied, 434 U.S. 962, 98 S. Ct. 497, 54 L. Ed. 2d 447 (1977); 50 Tex.Jur.3d Libel and Slander 135 (1986). A finding of either type of malice will support the judgment in this case including the award of exemplary damages. See Wherry, 548 S.W.2d at 754.

Actual or express malice need not be proved by direct or extrinsic evidence; its existence is sufficiently shown by evidence of facts and circumstances from which it is reasonably inferable. It may be inferred from the relationship of the parties, the circumstances attending the publication, the language used, and from the words or acts of the defendants before, at, or after the time of the communication; but there must be evidence from which the jury can infer malice existing at the time of publication and actuating it. Id. A review of the entire record reveals ample evidence of both actual and express malice.

Chris Thomas, the KaVo employee who wrote the "technical bulletin," admitted that the bulletin was totally false in the following testimony:

QUESTION: . . . You no longer dispute, do you, Mr. Thomas, that applied to Amdent, essentially everything in that bulletin is false?

ANSWER: Yes, sir.

QUESTION: Yes, you admit it?

ANSWER: With reference to the exact safety hazards, those safety hazards that are listed relate to the Carbo-Chlor and from further information we received, that chemical is not contained in the Amdent supply, therefore, those hazards don't apply specifically to their product.

QUESTION: And the damage to the equipment doesn't apply either, correct?

ANSWER: Correct.

QUESTION: So, if you take out the damage to the equipment and you take out the safety hazards, essentially the entire bulletin is totally false as applied to Amdent; is that correct?

ANSWER: It doesn't apply. Correct.

Without citing other excerpts from the record, we note that the evidence revealed that Chris Thomas failed to check with several readily accessible sources from which he could have obtained correct information about the chemical qualities of Amdent Spray-All. From his failure to verify his information with these sources, the jury could have reasonably inferred that KaVo acted with reckless disregard in issuing the "technical bulletin."

Further, the jury could have reasonably found from the evidence that Thomas' explanations justifying the bulletin were not credible. The jury heard evidence that Thomas did not tell the truth concerning a telephone call to Deanna Smith at Amdent. In addition, the jury could have found that ill will, spite, evil motive, or purposing injury to another motivated KaVo to issue the bulletin, because Thomas admitted embellishing the misinformation contained in the bulletin by adding epileptic seizures to the list of safety hazards without any authority whatsoever.

The jury could have also found actual and express malice from the circumstances surrounding the delayed issuance of KaVo's retraction letter when KaVo's National Sales Manager referred to his "excellent vague note."

Without further cites from the record, we overrule all of KaVo's no-evidence and insufficient-evidence points because there is more than sufficient evidence to support each of the jury's findings.

We now address KaVo's complaint that the court erred in employing the preponderance-of-the-evidence standard instead of the clear-and-convincing-evidence standard in regard to the jury question concerning actual malice. KaVo refers us to several cases supporting its contention that "clear and convincing evidence" is required for the jury to find "actual malice." However, all of their authority, except one case, involves either public-figure cases or media-defendant cases that do apply the "clear and convincing" standard. See New York Times v. Sullivan, 376 U.S. 254, 279-280, 84 S. Ct. 710, 726, 11 L. Ed. 2d 686 (1964); Brady v. Cox Enterprises Inc., 782 S.W.2d 272, 275 (Tex.App. Austin 1989, writ denied). Their other case, Lone Star v. Wahl, 636 S.W.2d 217, 222 (Tex.App. Texarkana 1982, no writ), is not a libel case and not on point in the question before us.

In a libel case such as this, with no media defendant and no public-figure plaintiff, Texas courts have never held that a finding of actual malice must be made by clear and convincing evidence. See Leyendecker & Associates, Inc. v. Wechter, 683 S.W.2d 369, 374 (Tex. 1984); Wherry, 548 S.W.2d at 754. The court was correct in employing the "preponderance of the evidence" standard, and KaVo's point is overruled.

KaVo complains that the court erred in failing to submit its definition of "actual malice" and its instruction concerning "failure to investigate." The court submitted the correct definition for "actual malice." See Bolling v. Baker, 671 S.W.2d 559, 564 (Tex.App. San Antonio 1984, writ dism'd), cert. denied, 474 U.S. 824, 106 S. Ct. 79, 88 L. Ed. 2d 64 (1985). KaVo's requested definition added unnecessary surplusage and was properly refused by the court.

We find, for two reasons, that the court was correct in refusing to give the requested instruction concerning "failure to investigate." First, the instruction refers to "actual malice" and was submitted along with a definition of "actual malice" that we have already ruled to be incorrect. Since the instruction refers to an incorrect definition, it would be error to submit the instruction. Secondly, KaVo relies on cases which merely express the court's opinion regarding "failure to investigate" as part of a review of the record on a "no evidence" point. This "no evidence" rule of law is the court's concern and need not be submitted to the jury. DeLeon v. Otis Elevator Co., 610 S.W.2d 179, 181 (Tex.Civ.App. San Antonio 1980, writ ref'd n.r.e.).

Even if the court had erred in refusing to give either requested charge, KaVo has not demonstrated that refusal of any or all of the requests was reasonably calculated to cause and probably did cause rendition of an improper judgment. See Island Recreational Dev. Corp. v. Republic of Texas Savings Ass'n, 710 S.W.2d 551 (Tex. 1986). We overrule this point.

In its last point, KaVo complains that the court erred in failing to suggest a remittitur. In making a determination of whether the damages were excessive, we consider only the evidence that is favorable to the award. See Bell Helicopter Co. v. Bradshaw, 594 S.W.2d 519, 537 (Tex.Civ.App. Corpus Christi 1979, writ ref'd n.r.e.). The rule is that on appeal the findings by the jury will not be disturbed (on the grounds of excessiveness) if there is any probative evidence to sustain the award. Id. In the end the appellate court should not substitute its judgment for that of the jury in absence of a rather clear showing of passion, bias, or prejudice. Id. After such a review of the evidence, and if the end result is that the award is so excessive that it shocks the conscience of the appellate court, remittitur would be proper. Id. Here, KaVo fails to show why the damages are excessive and does not cite any authority for its contention. See Sunset Brick & Tile Inc. v. Milles, 430 S.W.2d 388, 393 (Tex.Civ.App. Corpus Christi 1968, writ ref'd n.r.e.). After applying the above rules to this case, we find the evidence is sufficient to support the damages awarded. We find no reason to disturb the findings of the jury. We overrule this point and affirm the judgment.

BOB CUMMINGS

Justice

Before Chief Justice Thomas,

Justice Cummings, and

Justice Vance

Affirmed

Opinion delivered and filed September 9, 1992

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