Shaoguang He v. Wen Hong Jiang--Appeal from 190th District Court of Harris County

Opinion issued May 3, 2007

In The

Court of Appeals

For The

First District of Texas

NO. 01-06-00255-CV

SHAOGUANG HE, Appellant

V.

WEN HONG JIANG, Appellee

On Appeal from the 190th District Court

Harris County, Texas

Trial Court Cause No. 2004-16944

MEMORANDUM OPINION

Appellant, Shaoguang He, appeals from a judgment rendered upon a jury's award of damages for breach of contract and fraud in favor of appellee, Wen Hong Jiang. In two issues, He argues that (1) the statute of frauds bars Jiang's recovery and (2) the evidence is legally insufficient to support the judgment.

We reverse and render.

Facts and Procedural History

He and Jiang first met each other in 2001 in Houston. Sometime thereafter, He and Jiang entered into an agreement.

According to He, Jiang approached him about doing some investment work for her. He agreed, testifying that Jiang had agreed to pay him $100,000 per year for his work. At the end of one year, Jiang refused to pay He for his work because she had not yet made any profits on her investments, but she agreed that she would pay him at the end of the following year for two years' work. At the end of two years, however, Jiang did not pay He for his work.

According to Jiang's testimony, she and He had entered into an agreement whereby He would borrow money from Jiang, make interest payments at specified intervals, and ultimately return the principal to Jiang.

From December 2001 through July 2002, Jiang made seven payments to He pursuant to their alleged agreement totaling $453,000. Of this, $200,000 was given to He directly; $100,000 was wired to a company named De Li Industries; and $153,000 was wired to another company named Guanging Honda, of which He is a shareholder. Of the $200,000 sent to He directly, the transfer of $150,000 is memorialized in two writings signed by He and given to Jiang on June 21, 2002:

Agreement of Cooperation

I received $50,000.00 (fifty thousand dollars) from Wenhong Jiang to purchase U.S. stocks. Stocks will be purchased through mutual consultation. I will return premium along with the interest to Wenhong Jiang when profits are realized.

Participant:

Shaoguang He (signature)

6/21/02

Agreement of Cooperation

I received $100,000.00 (one hundred dollars) [sic] from Wenhong Jiang. (The first part of $33,400.00 was received on 3/25/2002; the second part of $66,600.00 was received on 5/7/2002.) The term of the agreement is one year. I agree to pay the interest of $6000.00 every 70 days and there will be five times for such payments. Afterwards I will pay the interest by days. The date to start to calculate interest is 3/25/2002. The first pay date for the interest is 7/16/2002. I agree to return premium along with interest after one year.

By:

Shaoguang He (signature)

6/21/02

Ten days after her last payment to He, He executed another writing:

Calculation Methods

Profits of $100,000.00:

360 days per year:

Every 70 days, interest earned: $6,000.00

For one year (360 days), interest earned: $6,000.00 x 1 + $857.00 = $6,857.00

Profit of the first $33,400.00:

42 days x $33,400.00 x 0.000857 (profit per day of $1.00) = $1,202.00

Profit due to Wenhong Jiang by 7/16 is:

$6,000.00 + $1,202.00 = $7,202.00

Shaoguang He (signature)

7/15/02

(Note: based on the opinion of Wenhong Jiang, the profit of $7,202.00 will be put into the toy business, starting to calculate interest on $7,202.00 from 7/17. Starting to calculate interest on $153,000.00 from 7/12).

From January 2002 through January 2004, He made twelve payments to Jiang totaling $220,510. When Jiang did not pay He for the investment work he had done for her, He filed suit against Jiang alleging breach of contract. In her second amended original answer, Jiang alleged counterclaims for breach of contract and fraud.

In considering the evidence, the jury was required to answer several questions about the facts and answer "yes" or "no." The jury found that He and Jiang had entered into an agreement but that only He had failed to comply with that agreement and awarded to Jiang $232,500 in damages. The jury also found that He had committed fraud against Jiang and awarded an additional $41,900 in direct and consequential damages.

On November 30, 2005, He filed a motion for judgment notwithstanding the verdict and a motion to disregard jury findings arguing that "[a] directed verdict would have been proper in this case, because there is no evidence to support any of the answers to the jury questions. Accordingly, the jury's answers should be disregarded and a take nothing judgment on the entire case should be entered." On December 19, 2005, the trial court denied He's motions, and, based on the jury's findings, rendered (a) a take-nothing judgment against He and in favor of Jiang on He's breach of contract claim and (b) a judgment in favor of Jiang and against He on Jiang's breach of contract and fraud claims for $274,400.

On June 16, 2006, He filed a motion for a new trial alleging that Jiang had presented no evidence to support her causes of action against him. The record does not reflect whether the court ruled on this motion. Consequently, it was overruled by operation of law. See Tex. R. Civ. P. 329b(c).Legal Sufficiency In his second issue, He contends that the evidence is legally insufficient to support the trial court's judgment for breach of contract and fraud. In conducting a legal sufficiency review, we consider all the evidence in the light most favorable to the prevailing party. Scottsdale Ins. Co. v. Nat'l Emergency Servs., Inc., 175 S.W.3d 284, 300 (Tex. App.--Houston [1st Dist.] 2004, pet. denied). We indulge every reasonable inference in that party's favor and disregard all evidence and inferences to the contrary. Id. When, as here, the complaining party challenges the legal sufficiency of the evidence underlying an adverse finding on which he did not have the burden of proof, he must demonstrate that there is no evidence to support the finding. Id. If more than a scintilla of evidence supports the finding, the no-evidence challenge fails and the finding is legally sufficient. Id. (citing Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex. 2001)).

Breach of Contract

He argues that the evidence supporting the breach of contract portion of the judgment is insufficient because (1) no verbal or written agreement existed in which He agreed to pay $232,500 to Jiang and (2) Jiang testified that she had lost the $232,500 because she had met He, not because he had breached any agreement.

The elements of a breach of contract claim are that (1) a valid contract existed; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) the plaintiff was damaged as a result of the breach. Hussong v. Schwan's Sales Enters., Inc., 896 S.W.2d 320, 326 (Tex. App.--Houston [1st Dist.] 1995, no writ). Whether a particular agreement constitutes a valid contract is generally a question of law. Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 678 (Tex. App.--Houston [1st Dist] 1996, no writ). A valid contract is formed by an offer, an acceptance, a meeting of the minds, each party's consent to the terms, and, in the case of a written contract, execution and delivery of the contract with the intent that it be mutual and binding. Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 17 (Tex. App.--Houston [1st Dist.] 2005, pet. denied). However, if an alleged agreement is so indefinite such that it is impossible for a court to fix the legal obligations and liabilities of the parties, the agreement cannot constitute an enforceable contract. Shaw v. Palmer, 197 S.W.3d 854, 856 (Tex. App.--Dallas 2006, pet. denied); accord Farah, 927 S.W.2d at 678 ("A contract is not legally binding unless it is definite enough in its terms so a court can understand what the promisor undertook.").

Jiang did not present sufficient evidence from which the jury could have identified the terms of the alleged contract. At trial, Jiang testified that He proposed an agreement whereby He would borrow money from Jiang, make interest payments at specified intervals, and ultimately return the principal to Jiang. Thus, according to her testimony, Jiang entered into a loan agreement with He.

In a contract to loan money, the material terms are generally (1) the amount to be loaned; (2) the maturity date of the loan; (3) the interest rate; and (4) the terms of repayment. Farah, 927 S.W.2d at 678. Here, we cannot ascertain the material terms of the loan agreement between He and Jiang because no evidence was presented at trial as to the amount to be loaned. Jiang did not present any evidence regarding how much Jiang had agreed to loan to He. Rather, two writings were presented showing that He, prior to the execution of these two writings, had received $150,000 from Jiang. Jiang argues, however, and the record reflects that Jiang sent to He and companies selected by He a total of $453,000. Thus, we cannot ascertain the amount Jiang agreed to loan to He. Because the amount to be loaned is material in a loan agreement and it is impossible to ascertain Jiang's financial obligation to He, the alleged agreement cannot constitute an enforceable contract. See Shaw, 197 S.W.3d at 856 (noting that if alleged agreement is so indefinite such that it is impossible for court to fix legal obligations and liabilities of parties, agreement cannot constitute enforceable contract); Farah, 927 S.W.2d at 678 (noting that amount to be loaned is material term in contract to loan money). Therefore, because Jiang did not establish the existence of an enforceable contract, (1) the evidence is legally insufficient to establish the breach of contract portion of the judgment. See Scottsdale, 175 S.W.3d at 300.

We sustain the breach of contract portion of He's second issue.

Fraud

He contends that the evidence supporting the fraud portion of the judgment is insufficient because Jiang testified that she had lost the $232,500 because she had met He, not because he made any false representations to her.

To recover on an action for fraud, the party must prove: (1) a material representation was made; (2) it was false; (3) when the speaker made the representation, he knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made it with the intention that it should be acted upon by the party; (5) the party acted in reliance upon it; and (6) the party thereby suffered injury. Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).

Jiang did not produce evidence on all the elements of fraud. At trial, Jiang testified that He proposed an agreement whereby He would borrow money from Jiang, make interest payments at specified intervals, and ultimately return the principal to Jiang. Jiang failed to present any evidence, however, that He made these statements knowing that he would not make the interest payments or return the principal to her. See Solis, 951 S.W.2d at 390. Thus, the evidence is legally insufficient to establish the fraud portion of the judgment. See Scottsdale, 175 S.W.3d at 300.

We sustain the fraud portion of He's second issue. (2)

Conclusion

We reverse and render a take-nothing judgment against Jiang and in favor of He with respect to Jiang's counterclaims for breach of contract and fraud.

Evelyn V. Keyes

Justice

Panel consists of Justices Nuchia, Keyes, and Higley.

1. See Hussong v. Schwan's Sales Enters., Inc., 896 S.W.2d 320, 326 (Tex. App.--Houston [1st Dist.] 1995, no writ) (setting out elements of a breach of contract claim).

2. Because our resolution of He's second issue is dispositive of his first issue, we need not reach his first issue. See Tex. R. App. P. 47.1.