Wingate, James Keith and Wingate, Karen v. Acree, Elick Gregory--Appeal from 405TH District Court of Galveston County

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Affirmed and Memorandum Opinion filed April 24, 2003

Affirmed and Memorandum Opinion filed April 24, 2003.

In The

Fourteenth Court of Appeals


NO. 14-01-00851-CV






On Appeal from the 405th District Court

Galveston County, Texas

Trial Court Cause No. 98CV0791



James Keith Wingate and Karen Wingate appeal a judgment favoring Elick Gregory Acree. In his petition, Acree alleged, inter alia, DTPA[1] violations, breach of contract, breach of fiduciary duty, and fraud. The trial court found the breach of contract cause of action was established as a matter of law and did not submit the issue to the jury. Finding for Acree on the DTPA, breach of fiduciary duty, and fraud causes of action, the jury awarded no actual

damages but assessed exemplary damages. The trial court granted Acree s motion for entry of judgment, made an actual damages finding, and entered judgment accordingly.

In eight issues, the Wingates contend: (1) the lawsuit should not have proceeded because of an automatic bankruptcy stay; (2) the trial court erred in awarding actual damages because the jury did not find any actual damages; (3) Acree s claims were barred by applicable statutes of limitations; (4) the DTPA is not applicable to a loan of money; (5) fraud was not shown because there was no evidence of the appellants intent not to pay at the time of loan; (6) the evidence is legally insufficient to prove the existence of a fiduciary duty; (7) the evidence is legally insufficient to prove breach of contract; and (8) there was no basis for the trial court s award of attorney s fees. We affirm.

I. factual background

Acree and the Wingates maintained personal friendships. Acree owned a certificate of deposit that was near maturity. He asked Karen Wingate, who was the branch manager of his bank, for investment advice regarding the funds. She told him about her husband s business, K and K Preferred Auto, which was involved in wholesale used car auctioning. In exchange for providing money to the business, Acree contends he was promised a partnership in the business and was given a promissory note as security. Although the Wingates made a few small payments on the note, they ultimately failed to pay the amount due, and Acree filed suit.

The jury found that Keith and Karen Wingate (1) knowingly engaged in false, misleading, or deceptive acts or practices; (2) knowingly engaged in unconscionable actions; (3) owed a fiduciary duty to Acree and breached that duty; and (4) committed intentional fraud with careless disregard for Acree s rights. A question was not submitted to the jury regarding the breach of contract claim or actual damages beyond mental anguish. The jury found no mental anguish damages but awarded Acree exemplary damages in the amount of $62,500 individually against the Wingates. After the verdict was returned, the trial court entered additional findings that (1) the balance due under the promissory note was $72,098.40; (2) the actual damages suffered by Acree were also $72,098.40; and (3) Acree was entitled to attorneys fees. The trial court found the Wingates breached their contract with appellee, and such finding, along with those of the jury, were incorporated into the final judgment.

II. analysis

A. The Bankruptcy Stay

In their first issue, the Wingates contend the lawsuit should not have proceeded to trial because they had filed for bankruptcy and there is nothing in the record indicating the automatic stay was lifted. The Wingates further assert that, even if Acree obtained a release from the stay, he does not allege that the release permitted a trial on his breach of contract claim.

We note, however, that after the Wingates filed their brief, a supplemental clerk s record was filed containing an order granting Acree relief from the stay, signed by the federal bankruptcy judge. The order expressly permits Acree to pursue the present suit to final judgment without setting any limitation on the type of claims allowed. Therefore, when the bankruptcy court lifted the stay to proceed with the present litigation, it necessarily included the contract claims contained in Acree s petition. Accordingly, the Wingates first issue is overruled.

B. Actual Damages Award

In their second issue, appellants contend the trial court erred in awarding actual damages because: (1) in response to the only question regarding actual damages, the jury found no damages; and (2) no breach of contract claim was presented to the jury. The Wingates also complain that the trial court impermissibly awarded exemplary damages when there was no award of actual damages.

However, except as to the exemplary damages issue, the Wingates wholly fail to cite any authority, and have failed to adequately brief their arguments on appeal. Accordingly, their arguments concerning actual damages are waived. Tex. R. App. P. 38.1(h); see also Trenholm v. Ratcliff, 646 S.W.2d 927, 934 (Tex. 1983); Wright v. Greenberg, 2 S.W.3d 666, 673 (Tex. App. Houston [14th Dist.] 1999, pet. denied).

Although exemplary damages cannot be awarded in the absence of an actual damages award, see Tex. Civ. Prac. & Rem. Code 41.004, in this case there was an award of actual damages by the trial court. Because appellants failed to brief the issue regarding the trial court s award of actual damages, we overrule their second issue.

C. Statute of Limitations

In their third issue, the Wingates contend the statutes of limitations barred Acree s causes of action. The Wingates, however, do not identify the applicable statutes and only cite to a case discussing limitations for breach of fiduciary duty. Accordingly, we find that by failing to properly brief the issues, they have waived their limitations arguments except as to breach of fiduciary duty. See Tex. R. App. P. 38.1(h); Wright, 2 S.W.3d at 673.

Even if the Wingates had properly raised their issues on appeal, we find they failed to preserve any of their limitations arguments, including breach of fiduciary duty, in the trial court. In order to rely on the affirmative defense of limitations, a defendant must plead, prove, and secure findings to sustain the affirmative defense. Woods v. Mercer, 769 S.W.2d 515, 517 (Tex.1988). The record does not reflect that the Wingates requested a jury question on the applicable statute of limitations defense. By failing to do so, they have not preserved these arguments for appellate review. See Rivas v. Cantu, 37 S.W.3d 101, 116 17 (Tex. App. Corpus Christi 2000, pet. denied) (holding defendant failed to preserve statute of frauds defense by, inter alia, failing to request jury charge or object to absence of charge issue); Abraxas Petrol. Corp. v. Hornburg, 20 S.W.3d 741, 763 (Tex. App. El Paso 2000, no pet.) (holding defendant waived estoppel and waiver defenses by failing to submit a jury question). Accordingly, we overrule appellants third issue.

D. DTPA Claim

In their fourth issue, the Wingates contend the trial court erred in awarding Acree judgment on his DTPA cause of action because money is not a good as defined by the DTPA. See Tex. Bus. & Com. Code 17.01-.854. To recover under the DTPA, a plaintiff must establish: (1) he or she was a consumer of the defendant s goods or services; (2) the defendant committed false, misleading, or deceptive acts in connection with the lease or sale of goods or services; and (3) such acts were a producing cause of actual damages to the plaintiff. See id. 17.50(a); Brown v. Bank of Galveston, N.A., 963 S.W.2d 511, 513 (Tex.1998). In support of their argument, the Wingates cite only Riverside National Bank v. Lewis, 603 S.W.2d 169 (Tex.1980). In Riverside, the court held that a loan applicant s attempt to borrow money for the purchase of a car did not involve goods or services so as to make him a consumer under the DTPA. Id. at 174.[2]

In their brief, the Wingates attempt to limit Acree s DTPA claim as merely a claim to recover a debt. However, Acree s pleadings and the evidence presented at trial demonstrate that his claim is not so limited. Acree testified he was induced into investing in the Wingates s business by both Karen and Keith. He specifically stated that he sought investment advice from Karen who was the branch manager of his bank. Keith Wingate testified that Acree was at one time considered a partner in the business and was expected to share in the business profits. See generally Howell Crude Oil Co. v. Donna Refinery Partners, Ltd., 928 S.W.2d 100, 111 (Tex. App. Houston [14th Dist.] 1996, writ denied) (stating loss of capital investment may be recovered under the DTPA in a proper case); Frizzell v. Cook, 790 S.W.2d 41, 43 (Tex. App. San Antonio 1990, writ denied) (holding broker could be liable under DTPA for misrepresentations made when investment advice was inextricably intertwined with the purchase of securities).

The Wingates do not make any arguments regarding the other grounds for Acree s DTPA claim. Indeed, their entire argument under this issue comprises two sentences and a citation to Riverside. We decline to sua sponte address these grounds, make no determination as to whether they are actionable under the DTPA, and overrule the Wingates fourth issue. See generally Nationwide Prop. & Cas. Ins. Co. v. McFarland, 887 S.W.2d 487, 496 (Tex. App. Dallas 1994, writ denied) (declining to consider unassigned error).

E. Intent to Not Pay

In their fifth issue, the Wingates contend Acree s fraud claim fails because there was no evidence to support the conclusion that they did not intend to pay Acree at the time of their agreement. The jury found that both Wingates committed fraud. In determining whether there is no evidence of probative force to support a jury s finding, all the record evidence must be considered in the light most favorable to the party in whose favor the verdict has been rendered, and every reasonable inference deducible from the evidence is to be indulged in that party s favor. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997). If more than a scintilla of probative evidence supports the finding, the no evidence challenge fails. Minn. Mining & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733, 738 (Tex.1997). More than a scintilla of evidence exists where the evidence supporting the finding, as a whole, rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Havner, 953 S.W.2d at 711. A no evidence point will be sustained when: (1) there is a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence conclusively establishes the opposite of a vital fact. Id.

A failure to perform pursuant to an agreement may constitute fraud under certain circumstances. A promise to do an act in the future is actionable fraud when made with the intention, design and purpose of deceiving, and with no intention of performing the act. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986); see also Turboff v. Gross, 833 S.W.2d 235, 238 (Tex. App. Houston [14th Dist.] 1992, writ denied). While the intent not to perform must be determined as of the time the party made the promise, such intent may be inferred from subsequent conduct. Spoljaric, 708 S.W.2d at 434; Oliver v. Rogers, 976 S.W.2d 792, 804 (Tex. App. Houston [1st Dist.] 1998, pet. denied). The determination of intent is uniquely an issue for the jury because it depends on the weight and credibility to be assigned to testimony. Spoljaric, 708 S.W.2d at 434. While failure to perform, standing alone, is no evidence of intent not to perform, it may be considered in the light of other facts in establishing intent. Id. at 435.

During the trial, evidence was offered to show the Wingates: (1) used the business s assets to pursue other interests, without having paid Acree; (2) failed to list the loan from Acree as a debt in applying for a loan from the Small Business Administration; and (3) on at least two occasions suggested that payments were about to be made to Acree and subsequently did not make those payments. We find these facts amount to more than a scintilla of evidence that the Wingates did not intend to pay back the loan at the time of the agreement. Accordingly, we overrule appellants fifth issue.

F. Fiduciary Duty

In their sixth issue, the Wingates contend no evidence supports the jury s finding of a fiduciary relationship between them and Acree. As stated above, in reviewing legal sufficiency we consider all of the record evidence in the light most favorable to the party in whose favor the verdict has been rendered and indulge every reasonable inference deducible from the evidence in that party s favor. Havner, 953 S.W.2d at 711. If more than a scintilla of probative evidence supports the finding, the no evidence challenge fails. Minn. Mining & Mfg. Co., 953 S.W.2d at 738.

Informal fiduciary relationships may arise in circumstances where a special confidence is reposed in another who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence. Tex. Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980); Herrin v. Med. Protective Co., 89 S.W.3d 301, 307 08 (Tex.App. Texarkana 2002, no pet.). A confidential relationship exists in cases in which influence has been acquired and abused, in which confidence has been reposed and betrayed. Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998) (quoting Crim Truck & Tractor Co. v. Navistar Int l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992)). To impose such a relationship in a business transaction, the relationship must exist prior to and apart from the transaction. Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex.1997). Whether a confidential relationship exists is usually a matter for the trier of fact because the existence of the relationship hinges on the surrounding circumstances. Herrin, 89 S.W.3d at 308.

The Wingates argue generally that Acree s subjective trust does not transform an arms-length transaction into a fiduciary relationship and that the fact a relationship was cordial and long-lasting does not necessarily prove a confidential relationship existed, citing Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962). Regarding Karen, they argue simply that she never participated in the loan.

At trial, Keith Wingate testified that he and Acree were friends.[3] He further acknowledged he was obliged to act in utmost good faith toward Acree, use scrupulous honesty with him, and place Acree s interests above his own in regard to the business. Evidence also demonstrated that at one point, the Wingates had considered Acree a partner in the business.[4] In her testimony, Karen admitted having known Acree since 1989, and she said they were good friends who had spent a lot of time together. Karen further testified Keith met Acree in 1991 and they were friends as well. Acree testified Karen provided investment advice to him on several occasions, including his purchase of a CD, and she later encouraged his investment in K and K Preferred Auto, without informing him that it was an assumed name for her as well as Keith. She also suggested he grant her a power of attorney so she could transfer money from his account and subsequently did move money from his account.

We find the foregoing constituted more than a scintilla of evidence that a fiduciary relationship existed between Acree and the Wingates. The evidence was therefore legally sufficient to support the jury s finding, and we overrule issue number six.

G. Breach of Contract

In their seventh issue, the Wingates contend: (1) Acree failed to meet his burden of proving a breach of contract and obtaining a jury question on the claim; and (2) the trial court erred in supplying a fact-finding regarding the issue of breach of contract.[5] The Wingates provide no cognizant argument concerning this issue and fail to cite to the record or any authority. Accordingly, they have waived the issue due to inadequate briefing. See Tex. R. App. P. 38.1(h); Wright, 2 S.W.3d at 673. Issue seven is overruled.

H. Attorneys Fees

In their eighth issue, the Wingates contend: (1) the trial court erred in awarding attorney s fees absent a proper breach of contract or DTPA claim; (2) no evidence was ever presented to the trial court supporting the amount of attorney s fees; and (3) Acree failed to


submit a pretrial demand for attorney s fees pursuant to section 38.002 of the Civil Practice & Remedies Code. Tex. Civ. Prac. & Rem. Code Ann. 38.002. Once again, the Wingates fail to provide appropriate citation to the record and authorities, thus waiving these arguments. See Tex. R. App. P. 38.1(h); Wright, 2 S.W.3d at 673.

Furthermore, even if the arguments were properly briefed, they are without merit. We find the first argument, regarding the absence of a valid DTPA or breach of contract cause of action, is moot because, as discussed above, we are affirming the trial court s judgment as to those claims. Second, the Wingate s argument that there was never any evidence presented to the trial court regarding the amount of attorney s fees is simply in error. The trial court held an evidentiary hearing and received both testimonial and documentary evidence regarding Acree s fees.

Third, regarding presentment of attorney s fees, the Wingates are again in error. Section 38.002 does not require a party seeking attorney s fees to make a pretrial demand in writing for attorney s fees as they suggest; instead, it is the underlying claim for damages that must be presented. See Tex. Civ. Prac. & Rem. Code Ann. 38.002; McMann v. McMann, 942 S.W.2d 94, 97 (Tex. App. Houston [1st Dist.] 1997, no pet.). Additionally, regarding this argument, Acree pled that all conditions precedent to recovery had been fulfilled. He need not then provide evidence on such an issue unless specifically denied by the opposing party. See Tex. R. Civ. P. 54; Associated Indem. Corp., 964 S.W.2d at 283 n.6. The Wingates did not specifically plead any failure to satisfy conditions precedent to recovery of attorneys fees; therefore, Acree did not have to demonstrate presentment. See Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 138 (Tex. App. Houston [14th Dist.] 2000, pet. dism d) (stating that pleading all conditions had been met for award of attorney s fees relieved party of burden of proof in absence of specific denial); see also Wallace v. Ramon, 82 S.W.3d 501, 505 (Tex. App. San Antonio 2002, no pet.) (holding lack of verified denial dispenses with necessity of proof of presentment); Knupp v. Miller, 858 S.W.2d 945, 955 (Tex. App. Beaumont 1993, writ denied) (holding claim for attorney s fees in trespass action was subject to Rule 54). Accordingly, we overrule issue number eight.[6]

The judgment of the trial court is affirmed.

/s/ Eva M. Guzman


Judgment rendered and Memorandum Opinion filed April 24, 2003.

Panel consists of Justices Edelman, Seymore, and Guzman.

[1] Texas Deceptive Trade Practices Act, Tex. Bus. & Com. Code 17.01-.854.

[2] At least one commentator has noted the whittling away of the Riverside doctrine by subsequent opinions. See James W. Paulson, Lenders and the Texas DTPA: A Step Back From the Brink, 48 SMU L. Rev. 487, 501 19 (1995) (discussing three exceptions to Riverside: (1) where the lender offers collateral services; (2) where the lender is inextricably intertwined with the transaction; and (3) where the loan itself can be considered a service).

[3] Keith stated he and Acree were pretty close friends, he (Keith) had a tremendous amount of compassion and love for Acree and Acree s wife, and he tried to be a counselor and advise [Acree] where [he] could.

[4] Partners in a partnership owe each other a formal duty of fiduciary duty. See Chapman Children s Trust v. Porter & Hedges, L.L.P., 32 S.W.3d 429, 439 (Tex. App. Houston [14th Dist.] 2000, pet. denied). Certainly, evidence regarding the existence of a formal fiduciary relationship may, in appropriate circumstances, also constitute evidence of the existence of an informal fiduciary relationship.

[5] The Wingates also assert under this issue that Acree has never alleged the bankruptcy court would allow a breach of contract claim and that no predicate request was made for an award of attorneys fees. Each of these arguments, however, is made more fully under another issue. The bankruptcy stay is discussed above under the first issue, and the award of attorneys fees is discussed below under the eighth issue. Accordingly, we do not re-address those arguments here.

[6] Although the Wingates do not raise the issue, we note the DTPA does indeed require notice to be given of the amount of attorney s fees prior to filing suit. Tex. Bus. & Com. Code Ann. 17.505(a). However, because the Wingates have not contested this issue in the trial court or on appeal, they have waived it. See, e.g., Hines v. Hash, 843 S.W.2d 464, 469 (Tex. 1992) (holding defendant waived right to DTPA notice by failing to request abatement of proceedings).