Alvarez, Juan a/k/a Juan Alvarez Gottwald v. Labbruzzo, Donald V., Carlos Camarillo, Harbrook Tool & MFG. Co., and Plasticos Promex, U.S.A., Inc.--Appeal from 120th District Court of El Paso County

COURT OF APPEALS

COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

JUAN ALVAREZ a/k/a JUAN ALVAREZ )

GOTTWALD, )

) No. 08-02-00050-CV

Appellant, )

) Appeal from the

v. )

) 120th District Court

DONALD V. LABBRUZZO, CARLOS )

CAMARILLO, HARBROOK TOOL & MFG. ) of El Paso County, Texas

COMPANY, and PLASTICOS PROMEX, )

U.S.A., INC., ) (TC# 99-3903)

)

Appellees. )

MEMORANDUM OPINION

This is an appeal from a bench trial in which the trial court entered a declaratory judgment assessing the ownership percentages of the Appellant and Appellees Donald V. Labbruzzo, Carlos Camarillo, Harbrook Tool & MFG. Co. in the corporation Plasticos Promex, U.S.A., Inc., also an Appellee in this suit (we will refer to the four Appellees as AAppellees@).

 

On appeal, Appellant raises four issues: (1) whether the evidence was factually and legally sufficient to support the trial court=s interpretation of the Agreement and the determination of the capital contributions and ownership percentages of Mr. Alvarez, Mr. Camarillo, and Mr. Labbruzzo, specifically, attacking Findings of Fact Nos. 3, 5, 6, 7, 8, 10, 14, 17, 18, 26, 27, and Conclusions of Law Nos. 3 and 4; (2) whether the trial court erred in disregarding the testimony of Michael Bernstein on the ultimate issue of ownership percentages; (3) whether the evidence was factually and legally sufficient to support the trial findings as to any acts of Appellant, specifically attacking Findings of Fact Nos. 17, 18, 19, 20, 21, 22, 23, 25, 28, 29, 30, 31, and 32, and Conclusions of Law Nos. 1, 3, and 7; and (4) whether the trial court erred in awarding attorney=s fees to Appellees. We affirm the trial court=s judgment.

On August 25, 1995, Appellant Juan Alvarez and Appellees, Donald V. Labbruzzo and Carlos Camarillo, entered into a written agreement for the purpose of creating plastic injection molding maquiladora companies. The August 25, 1995 Agreement (AAgreement@) did not define the term corporation, did not name Plasticos Promex, U.S.A., Inc., and did not set a time limit as to when the parties would discontinue making capital contributions towards the establishment of the corporation. However, the parties agree that the terms of the Agreement would control the parties= ownership interests in the U.S. corporation. The pertinent translated portion of the Agreement states the following:

The parties declare that they wish to establish in the immediate future a corporation of adjustable capital (S.A. de C.V.) in Ciudad Juarez, Chihuahua, to carry out manufacturing operations consisting in the fabrication of plastic components. Said plastic components shall be sold, and/or assembled with others [sic] components and sold to other companies principally for their export.

This agreement shall be carried out under the following terms:

1. The parties shall have a right to shares of the Corporation in the proportion to their contributions in capital and/or contributions of credit guaranteed by entities other than the Corporation.

2. The administration of the Corporation shall be carried out by a board of administration which represents the interests of the parties in the proportion corresponding to each on as per their contributions in accordance with paragraph 1 above.

 

3. In order to carry out in the immediate future the activities of the Corporation previously described, the parties agree to buy six Nissei plastic molding machines from Industrial Assets, Inc. under the following conditions . . . .

To establish the plastic injection molding company, Mr. Alvarez, Mr. Labbruzzo, and Mr. Camarillo leased a building in Juarez and completed the necessary renovations and installations, including the purchase of six plastic injection molding machines. In January 1996, Plasticos Promex, S.A. de C.V., the Mexican corporation was incorporated. An Acta was executed under Mexican law which provided the following ownership percentages of Plasticos Promex, S.A. de C.V.: Mr. Alvarez -- 60 percent; Mr. Labbruzzo -- 20 percent; and Mr. Camarillo -- 20 percent. The incorporation of Plasticos Promex S.A. de C.V. was handled by Mr. Alvarez. Mr. Alvarez also named himself sole administrator of the Mexican corporation, although the parties involved had agreed there would be a board. At that time, no accounting existed of the parties capital contributions towards this venture. Mr. Labbruzzo and Mr. Camarillo were not concerned by the terms of Acta because they, along with Mr. Alvarez, had agreed the American twin company would ultimately own all the assets, handle all the contracts, and control everything, leaving the Mexican corporation as a shell corporation. From the date of incorporation of the Mexican company through mid-1997, all the parties continued to make capital contributions to the company.

 

On May 7, 1996, a U.S. corporation was formed by the name of Plasticos Promex, U.S.A., Inc., by changing the name of a dormant, pre-existing corporation, Tech Plastics International, Inc. The shareholders of Plasticos Promex, U.S.A. were to be Mr. Alvarez, Mr. Labbruzzo, and Mr. Camarrillo. The final accounting of the company was never completed and therefore, stock was never issued for the U.S. corporation.

On April 11, 1997, Mr. Alvarez, Mr. Labruzzo, and Mr. Camarillo agreed to sell 10 percent of the stock of the American corporation to Harbrook Tool & Mfg. Co. However, the sale to Harbrook was not completed since the ownership interests of the shareholders (Mr. Alvarez, Mr. Labbruzzo, and Mr. Camarillo) had not been made. For the next few years, the company continued to be profitable but the final accounting of the shareholders= ownership interest was never completed. Mr. Alvarez requested several times for the accounting to be completed, but it was never done.

By November of 1999, the relationship between Mr. Alvarez and the other shareholders had soured. Appellees filed this lawsuit requesting a declaratory judgment regarding the ownership interests of the parties in Plasticos Promex, U.S.A. and injunctive relief. On September 4, 2001, the trial court entered a judgment in which it declared the ownership interests as follows: Mr. Alvarez 35.25 percent; Mr. Camarillo 28.25 percent; Mr. Labbruzo 36.50 percent; and Harbrook Tool & Mfg. Co. 10 percent. The trial court also denied Appellees request for permanent injunction against Mr. Alvarez and awarded attorney=s fees in the amount of $132,064.60 in favor of Appellees. On November 21, 2001, Mr. Alvarez filed a motion for new trial which was apparently overruled by operation of law. Upon Mr. Alvarez=s request for findings of fact and conclusions of law, the trial court entered a series of findings of fact and conclusions of law. Mr. Alvarez now brings this appeal.

STANDARD OF REVIEW

 

In a bench trial, the trial court=s findings of fact and conclusions of law have the same effect as a jury verdict on special issues. Appraisal Review Board of the El Paso County Central Appraisal District v. Fisher, 88 S.W.3d 807, 815 (Tex.App.--El Paso 2002, pet. denied), citing City of Clue v. City of Lake Jackson, 559 S.W.2d 391, 395 (Tex.Civ.App.--Houston [14th Dist.] 1977, writ ref=d n.r.e.). In dealing with a Ano evidence@ or legal sufficiency challenge, we will consider the evidence in the light most favorable to the finding, disregarding all evidence and inferences to the contrary. Fisher, 88 S.W.3d at 815, citing Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex. 1987). If more than a scintilla of evidence exists to support the questioned finding, the legal insufficiency point fails. Id.

In considering a factual sufficiency challenge, we consider all the evidence, both the evidence tending to prove a vital fact as well as the evidence tending to disprove its existence. Heritage Resources, Inc. v. Hill, 104 S.W.3d 612, 620 (Tex.App.--El Paso 2003, no pet.). If the finding is so contrary to the great weight and preponderance of the evidence as to be wrong and manifestly unjust, the finding should be reversed. See id. When undertaking a factual sufficiency review, the court of appeals may not set aside fact findings merely because it could have drawn different factual findings and legal conclusions from the evidence. Omohundro v. Jackson, 36 S.W.3d 677, 680 (Tex.App.--El Paso 2001, no pet.). The appellate court cannot retry the case or otherwise substitute its judgment or opinion for that of the trier of fact. Id. The trier of fact is the sole judge of the credibility of the witnesses and the weight to be given to their testimony, and the appellate court should not act as a thirteenth juror in assessing the evidence and the credibility of the witnesses. Id.

 

A trial court=s conclusions of law are always reviewable. Leon Ltd. v. Albuquerque Commons Partnership, 862 S.W.2d 693 (Tex.App.--El Paso 1993, no writ). Incorrect conclusions of law will not require reversal, however, if the controlling findings of fact will support a correct legal theory. Leon, Ltd., 862 S.W.2d at 702.

In Issue One, Mr. Alvarez challenges the legal and factual sufficiency of the evidence to support the trial court=s interpretations of the unambiguous August 25, 1995 Agreement and the determination of the capital contributions and the ownership percentages of Mr. Alvarez, Mr. Camarillo, and Mr. Labbruzzo towards Plasticos Promex U.S.A., Inc.[1] Appellees allege that whether this Court finds the Agreement ambiguous or unambiguous, the evidence supports the trial court=s conclusions.

When interpreting a contract, the primary concern of the courts is to ascertain and give effect to the intentions of the parties as expressed in the instrument. Haddad v. Wood, 949 S.W.2d 438, 441 (Tex.App.--El Paso 1997, writ denied), citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); Duracon, Inc. v. Price, 817 S.W.2d 147, 149 (Tex.App.--El Paso 1991, writ denied). When the interpretation of the contract is at issue, the courts must first determine if the language of the provisions in question are ambiguous. Id.

Whether a contract is ambiguous is a question of law that must be decided by examining the contract as a whole in light of the circumstances present when the contract was entered. A contract is not ambiguous if it can be given a definite or certain meaning as a matter of law. On the other hand, if the contract is subject to two or more reasonable interpretations after applying the pertinent rules of construction, the contract is ambiguous, which creates a fact issue on the parties= intent. An ambiguity does not arise simply because the parties advance conflicting interpretations of the contract. For an ambiguity to exist, both interpretations must be reasonable.

 

Z.A.O., Inc. v. Yarbrough Drive Center Joint Venture, 50 S.W.3d 531, 540 (Tex.App.--El Paso 2001, no pet.), quoting Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587 (Tex. 1996)(citations omitted).

When the parties disagree over the meaning of an unambiguous contract, the court must determine the parties= intent by examining and considering the entire writing. Haddad, 949 S.W.2d at 441. To determine the objective intent of the parties, a court should examine the entire instrument in an effort to harmonize and give effect to all provisions of the contract so that none will be rendered meaningless. Id., citing Coker, 650 S.W.2d at 393. The intent of the parties must be taken from the agreement itself, not from the parties= present interpretation, and the agreement must be enforced as it is written. Haddad, 949 S.W.2d at 441, citing Sun Oil Company (Delaware) v. Madeley, 626 S.W.2d 726, 731-32 (Tex. 1981).

Mr. Alvarez contends that the date of incorporation of the Mexican company was, as a matter of law, the date that should have been used to calculate the capital contributions of the parties. However, we are not persuaded that the language of the Agreement provides any distinction between when capital contributions stop and contributions toward percentage ownership begin. The pertinent portion of the Agreement states the following:

The parties shall have a right to shares of the Corporation in the proportion to their contributions in capital and/or contributions of credit guaranteed by entities other than the Corporation.

 

This language indicates that the ownership interests would be determined based on the parties total capital contributions, which is how the trial court determined the ownership percentages. Furthermore, in reviewing the record, we find evidence of the parties intent to determine the ownership percentages after all the necessary capital contributions had been invested to establish the business. In addition, at the time Plasticos Promex S.A. de C.V. was incorporated, there was not an accounting of the capital contributions made by the parties involved. Mr. Alvarez also testified at trial that at the time the parties agreed to sell 10 percent of the stock to Harbrook Tool & Mfg. Co., the respective ownership interests had not been determined. Furthermore, Harbrook=s representative testified at the trial that Mr. Alvarez ensured him that no one shareholder had more than fifty percent ownership interest in the company. Harbrook=s representative further stated that but for Mr. Alvarez=s representation, they would have not invested in the company. We therefore conclude that the evidence is legally and factually sufficient to support the trial court=s findings with regards to the ownership percentages and capital contributions. Issue One is overruled.

In Issue Three, Mr. Alvarez alleges that the evidence was legally and factually insufficient to support the trial court=s findings as to any acts of Mr. Alvarez.[2] Specifically, Mr. Alvarez complains of the following findings of fact:

17. Juan Alvarez a/k/a Juan Alvarez Gottwald was entitled to receive credit for his contribution of the eight (8) plastic injection molding machines as an equity investment; but, the equity contribution for providing the machines should be considered on a >net present value= basis and with zero interest. Mr. Alvarez= investment should not be counted the same as those of the other two equity investors, on a dollar for dollar basis, because Mr. Alvarez= money was not substantially >at risk=, especially near the beginning of his investment when the collateral value of the molding machines equaled or exceeded the amount of money that he had invested. In part, this is due to the fact that title to the molding machines remained with Immobilaria Axial S.A. de C.V. This result is also due to Alvarez=s actions in having the molding machines removed from the Mexican manufacturing facility through the use of Mexican legal process.

 

18. Alvarez, acting through Axial and/or through Plasticos Promex, S.A. de C.V. initiated civil and/or criminal proceeding in Mexico after this lawsuit was initiated wherein it has sought and obtained possession of these eight (8) molding machines.

19. In 1998, Juan Alvarez Gottwald ordered Don Labbruzzo, the manager for the Juarez manufacturing facility, to refrain from paying rent on the building until the Lewis commission dispute was resolved.

20. Subsequently, the Mexican landlord, Lewis, advised Labbruzzo that he was going to initiate legal proceedings in Mexico to shut down the manufacturing facility if rentals were not paid.

21. The Mexican landlord would have been within his rights to shut down the manufacturing facility if rents were not paid.

22. Thereafter, in an effort to keep the facility open and operating, Labbruzzo began to authorize checks for payment of rent to Lewis. Subsequently, Alvarez found out about same and demanded that the rental payments be ceased. Alvarez removed Labbruzzo as an authorized signatory on Plasticos Promex, S.A. de C.V.=s bank accounts.

23. Alvarez terminated Labbruzzo=s Power of Attorney for Plasticos Promex, S.A. de C.V. Said act significantly impaired Labbruzzo=s ability to operate the Mexican manufacturing facility of Plasticos Promex, U.S.A., Inc.

. . .

25. Subsequently, the landlord terminated the lease; and, Plasticos Promex, U.S.A., Inc. has been required to do business in Mexico through its wholly owned subsidiary Servicios y Plasticos Ensambles, S.A. de C.V.

. . .

 

28. Prior to the filing of this lawsuit, the Defendant Alvarez threatened irreparable harm to the Plaintiffs= property and rights by removing Labbruzzo as a signatory authority on Plasticos Promex, S.A. de C.V.=s bank account, but withholding rental payments to Lewis, the Mexican manufacturing facility=s landlord, and by terminating Labbruzzo=s Power of Attorney. Further Alvarez attempted to revoke Labbruzzo=s signatory authority from Plasticos Promex, U.S.A., Inc.=s funds and bank accounts to enforce his alleged rights with regard to the Lewis commission agreement. Alvarez=s withdrawal of funds from the U.S. bank accounts for Plasticos Promex, U.S.A., Inc. would have prohibited and prevented Plasticos Promex, U.S.A., Inc. and Plasticos Promex, S.A. de C.V. from continuing in operation. Failure to pay the Mexican landlord, the failure to pay Mexican employees, or the failure to pay Mexican taxes would have resulted in a complete shutdown of the Mexican manufacturing facility. Shutdown of said facility would have resulted in the shutdown of the entire Plasticos Promex operation.

29. Either prior to the filing of the lawsuit of immediately thereafter, the Defendant Alvarez changed the customs broker for Plasticos Promex, S.A. de C.V. in order to exercise exclusive control over the operations of Plasticos Promex, U.S.A., Inc. As a result of the change in brokers, Plasticos Promex U.S.A., Inc.=s operations were effectively shut down for approximately five (5) days during the month of November, 1999.

30. The Plaintiffs were justified in arranging to operate in Mexico through Plasticos Promex U.S.A., Inc.=s wholly owned subsidiary, Servicios Plasticos y Ensambles, S.A. de C.V.

31. Alvarez= conduct in attempting to utilize the corporation and its assets to extract personal gain via the Lewis commission agreement was completely without right or entitlement. Said conduct would have been a breach of his fiduciary duty to the corporations.

32. The Plaintiffs had no adequate remedy at law for the potential injuries described in paragraph 27. above at the time suit was initiated.

Mr. Alvarez asserts that the above findings of fact are not germane to the determination of the ownership percentages in the U.S. corporation. Appellees contend that these findings of fact are germane to the ownership determinations of the U.S. corporation. We agree with Appellees= assertion.

Having considered all of the evidence in the instant case, we find that there was sufficient evidence to support the trial court=s findings. Further, we find that the trial court=s findings are not so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. We find no abuse of discretion and therefore overrule Issue Three.

 

In Issue Two, Mr. Alvarez asserts that the testimony of Michael Bernstein on the ultimate issue of ownership percentages was erroneously disregarded by the trial court. Appellees contend that the trial court did not abuse its discretion in denying the testimony of Mr. Bernstein concerning the ownership percentages of the parties.

We review a trial court=s exclusion of expert testimony for an abuse of discretion. Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 718-19 (Tex. 1998). A trial court abuses its discretion if it acts without reference to any guiding rules or principles. E.I. du Pont de Nemours & Co., Inc. v. C.R. Robinson, 923 S.W.2d 549, 558 (Tex. 1995). A reviewing court cannot conclude that a trial court abused its discretion if, in the same circumstances, it would have ruled differently or if the trial court committed a mere error in judgment. Id.

At trial, the court stated that it would not allow Mr. Bernstein to testify as to the ownership of the corporation since that was a legal question which the court had to resolve. The court however did allow Mr. Bernstein to testify as to the capital contributions made towards the corporation. There is no dispute that the Agreement would control the parties= ownership percentages. Mr. Bernstein testified that he had never seen the controlling Agreement. As such, his testimony regarding the ownership percentages of the parties lacked the proper foundation. We find that the trial court did not abuse its discretion in not allowing Mr. Bernstein to testify as to the ownership percentages of the corporation. We therefore overrule Issue Two.

In Issue Four, Mr. Alvarez challenges the trial court=s decision to award attorney=s fees to the Appellees. Mr. Alvarez contends that because the trial court erred in construing the Agreement, the award of attorney=s fees must be reversed. In the alternative, Mr. Alvarez contends that even if the construction of the Agreement was correct, the trial court applied the wrong legal standard of prevailing party in its decision to award attorney=s fees to Appellees.

 

Under the Uniform Declaratory Judgments Act, the trial court has discretion to award Areasonable and necessary attorney=s fees as are equitable and just.@ Tex.Civ.Prac.&Rem. Code Ann. ' 37.009 (Vernon 1997); see Fisher, 88 S.W.3d at 816. Absent a clear abuse of discretion, the trial court=s judgment will not be reversed on appeal. Fisher, 88 S.W.3d at 816-17, citing Leon Ltd., 862 S.W.2d at 708. An abuse of discretion occurs when the trial court=s judgment is without any reference to guiding principles, or is arbitrary or unreasonable. Fisher, 88 S.W.3d at 816-17, citing Stelly v. Papania, 927 S.W.2d 620, 622 (Tex. 1996).

At trial, the parties stipulated to the reasonableness and necessity of attorney=s fees and costs as requested by both sides. The trial court awarded the attorney=s fees to the Appellees in the amount of $132,064.60 and an additional $16,500 in the event of an appeal in which Appellees prevail. We find that the attorney=s fees awarded by the trial court was not an abuse of its discretion. We therefore overrule Issue Four.

For the reasons stated above, we affirm the trial court=s judgment.

April 29, 2004

DAVID WELLINGTON CHEW, Justice

Before Panel No. 1

Larsen, McClure, and Chew, JJ.

 

[1] Specifically, Appellant attacks Findings of Fact Nos. 3, 5, 6, 7, 8, 10, 14, 17, 18, 26, 27, and Conclusions of Law Nos. 3 and 4.

[2] Specifically, Appellant attacks Findings of Fact Nos. 17, 18, 19, 20, 21, 22, 23, 25, 28, 29, 30, 31, and 32, and Conclusions of Law Nos. 1, 3, and 7.