Ford Motor Company and Payne Imports, Inc. D/B/A Payne Mitsubishi, (APPELLANTS/CROSS-APPELLEES) v. Antonio Ozuna and Petra Ozuna, (APPELLEES/CROSS-APPELLANTS)--Appeal from 381st Judicial District Court of Starr County

No. 04-98-00957-CV
FORD MOTOR COMPANY

and Payne Imports, Inc. d/b/a Payne Mitsubishi,
Appellants/Appellees
v.
Antonio OZUNA and Petra Ozuna,
Appellees/Appellants
From the 381st Judicial District Court, Starr County, Texas
Trial Court No. DC-97-255
Honorable John A. Pope, Judge Presiding

Opinion by: Alma L. L pez, Justice

Sitting: Phil Hardberger, Chief Justice

Tom Rickhoff, Justice

Alma L. L pez, Justice

Delivered and Filed: November 30, 1999

AFFIRMED AS REFORMED

The Ozunas sought recovery for property damages to their home caused by a fire. Both sides appeal the judgment, raising issues concerning unauthenticated documentary evidence, settlement credits, joint and several liability, and attorney's fees. We reform and affirm the judgment as reformed.

Factual and Procedural Background

In 1992, the Ozunas purchased a 1991 Ford F-150 pickup truck from Payne Mitsubishi, a dealership in Weslaco, Texas. Four years later, on October 26, 1996, Mr. Ozuna used the vehicle to take his wife to a doctor's appointment. They returned to their home at noon. Ozuna parked the truck in the garage and they went inside their home. Later, the light bulb in the kitchen ceiling fixture exploded. Shortly after Ozuna replaced it, the new bulb exploded. He went outside and saw a fire coming from his garage. He tried to extinguish the fire with a garden hose until the fire department arrived and put it out. Damage to the truck, the house and its contents was extensive. The cause of the fire focused on a defective ignition switch in the truck's steering column.

At trial, a jury found Ford liable to the Ozunas under theories of design defect, manufacturing defect, negligence, and "knowing" and "intentional" violations of the Texas Deceptive Trade Practices Act (the DTPA) based on "unconscionable" conduct. The jury awarded Antonio and Petra Ozuna $3,500 each for past mental anguish and $3,500 each for future mental anguish. They also awarded Antonio $24,500 for property damage sustained to the truck, his house, and its contents, and $3,000 in lost wages, and Petra Ozuna $27,000 for property damages. The jury awarded $3,500 each for DTPA damages of "knowing" conduct and $13,500 each for "intentional" conduct. The jury also found that the fire damages were caused by malice on Ford's part and awarded the Ozunas $1,500 each in exemplary damages. The court entered a judgment in these amounts jointly and severally against Ford and Payne-Mitsubishi. All parties appealed and presented refreshingly candid and well-crafted arguments.

The Knowing and Intentional Evidence

In its first issue, Ford asserts error in the trial court's decision to admit a number of documents without authentication, or alternatively, without proof of admissibility under any exception to the hearsay rule. Because of this error, Ford claims that the jury awarded additional DTPA statutory damages and mental anguish damages. Ford asks that the damages awarded in these categories and the corresponding pre-judgment interest be reduced from $100,637.50 to $58,587.50.

We review decisions to admit or exclude evidence under an abuse of discretion standard. An appellate court should reverse only if the error was reasonably calculated to cause, and probably did cause, the rendition of an improper judgment. See Church & Dwight Co., Inc. v. Huey, 961 S.W.2d 560, 570 (Tex. App.-San Antonio 1997, pet. denied).

A. Authentication.

Authentication as a condition precedent to admissibility is established by evidence that the matter in question is what its proponent claims. Tex. R. Civ. Evid. 901(a)(1). This evidence can consist of testimony by a witness that the matter is what it claims to be. Tex. R. Civ. Evid. 901(b)(1). A document can be considered authentic if a sponsoring witness vouches for its authenticity. In re G.F.O., 874 S.W.2d 729, 731 (Tex. App.--Houston [1st Dist.] 1994, no writ). Mere production of a document does not necessarily render a document admissible. See Miles v. Ford Motor Co., 922 S.W.2d 572, 597 (Tex. App.--Texarkana 1996), modified on other grounds, 967 S.W.2d 377 (1998) (attorney's cover letter to document produced did not authenticate document where attorney did not testify and unsworn letter did not vouch for document's credibility).

When the authenticity of evidence is challenged, the trial court first determines preliminary questions about its admissibility. Tex. R. Civ. Evid. 104(a). If the preliminary proof is sufficient to raise an issue of fact on the genuineness of the evidence, the court must admit it and allow the jury to determine the weight it is given. See Beaumont Pasture Co. v. Preston & Smith, 65 Tex. 448, 451 (1886); Steenbergen v. Ford Motor Co., 814 S.W.2d 755, 761 (Tex. App.--Dallas 1991, writ denied); City of Corsicana v. Herod, 768 S.W.2d 805, 814-15 (Tex. App.--Waco 1989, no writ).

A fact issue is raised if the preliminary proof establishes a "reasonable probability that the paper ... is what it purports to be." Porter v. Rogers, 293 S.W. 577, 579 (Tex. Civ. App.--Waco 1927, writ ref'd); Barrera v. Duval County Ranch Co., 135 S.W.2d 518, 520 (Tex. Civ. App.--San Antonio 1939, writ ref'd); Herod, 768 S.W.2d at 815.

The evidence supporting findings of Ford's knowledge of the defect, Ford's intentional violation of the DTPA, and malice are a series of documents that Ford produced to the Ozunas two business days prior to the start of trial in response to requests for production made more than 30 days before trial. These documents were produced amongst "reams" of other internal Ford documents. The Ozunas state they were unaware of their existence until Ford produced them. Ford did not object that any of the documents were forged or altered, rather their objections focused on the fact that they were not authenticated under Rule 901, were not self-authenticating pursuant to Rule 902, and contained hearsay. The Ozunas argue that the circumstances of this production suggest their genuineness.

The documents show Ford's knowledge of hundreds of other ignition switch fires, its strategy for responding to the media's focus on such fires, Ford's warnings to its dealers about media attention to this problem, and Ford's response to federal safety officials about ignition switch fires, including Ford's recall to replace this type of defective ignition switch. Eight of the documents in question appear to have been generated by Ford executives or employees in the form of interoffice memoranda, e-mail, a field bulletin from an employee in Ford's Vehicle Service and Program Division to all Ford and Lincoln-Mercury Dealers, and a chart purportedly produced in-house. A ninth document is a letter on Transport Canada's letterhead and addressed to a Ford executive in Canada. None of these documents were introduced through a witness. The Ozunas argue that the contents, substance, appearance, and distinctive qualities of these documents lends authenticity.

In a well-written brief, Ford relies on two reported cases where the authenticity objection was properly sustained. The circumstances surrounding the cases Ford relies upon can be distinguished from the case at bar. In Miles, the document, although produced by Ford, was not created by Ford or connected to Ford in any discernible way. The only connection to the company was that it had the one-page document in its possession and presumably had knowledge of its existence. See Miles, 922 S.W.2d at 597. In this case, eight of nine documents show on their face that they were created by Ford employees, the ninth is sent to Ford by a Canadian governmental agency and all demonstrate Ford's knowledge that some of its ignition switches are defective. No Texas appellate court has found an abuse of discretion where the trial court admitted documents generated by the producing party without further authentication and we find none here.

Ford cites the Steenbergen case which held that crash test data could not be authenticated by plaintiff's expert merely testifying that the documents were printed on Ford stationary with a Ford logo. That data had been obtained by the testifying expert in another Ford case. Reports provided to him bore the Ford logo and other distinctive characteristics which he claimed demonstrated their authenticity. The Steenbergens sought to admit these tests in their case, relying on Rule 901(b)(4).(2) The trial court questioned the witness, and determined that the witness had obtained the tests not from Ford, but from the plaintiff's attorney in the other case. When asked by the court if he could verify that nothing in the tests had been altered or omitted, the witness admitted that he did not know. After this questioning, the trial court sustained Ford's objection to the admissibility of this evidence. Based on the witness's admitted inability to verify the authenticity of the tests, a finding that the evidence lacked the predicate for admissibility was within the sound discretion of the court. See Steenbergen, 814 S.W.2d at 761. The circumstances in this case are different. Here, Ford produced documents and did not question their accuracy. The documents are not of a type needing expert analysis, whereupon the accuracy of the data would be challenged. They are documents evidencing Ford's knowledge of the defective ignition switch and Ford's internal strategies to respond to media inquiry about the defect and recall of the product.

The only other way to authenticate these documents would have been to call a Ford representative as a witness or obtain a custodian of records affidavit or deposition. However, Ford did not produce these documents until two days before trial and did not bring a corporate representative to the trial. We find that plaintiffs produced a question of fact sufficient to admit these documents so that the jury could determine the weight they deserved. See id.

B. Hearsay.

Ford also objected to these documents on grounds of hearsay. We disagree, these documents are not hearsay. See Bangor Punta Acceptance Corp. v. Palm Center RV Sales, Inc., 611 S.W.2d 237, 240-41 (Tex. App.-Houston [1st Dist.] 1983, no writ). Rather, the documents generated by Ford employees are admissions or declarations against interest by a party-opponent and therefore admissible under Rule 801(e)(2)(D). See id.; Texas Whse. Co. of Dallas, Inc. v. Spring Mills, Inc., 511 S.W.2d 735, 740-41 (Tex. Civ. App.-Waco 1974, writ ref'd n.r.e.). The letter from Canada Transport is admissible under 801(e)(2)(B) as "a statement of which the party has manifested an adoption or belief in its truth." Ford eventually issued a recall of the defective ignition switches based on its knowledge of hundreds of incidents of fires related to vehicles with such switches.(3) The trial court admitted these documents for the purpose of showing Ford's knowledge, and not for the truth of the matter asserted. Although Ford argues that the court erred in admitting these documents for all purposes without any limiting instructions, Ford did not request any such instruction. The trial court did not abuse its discretion in admitting these exhibits. Ford's first issue concerning no evidence to support a jury's finding of "knowing," "intentional," or "malicious" conduct to support additional DTPA damages is overruled.

Settlement Credits

Prior to trial, Ford settled the subrogation claims of Northwestern National, the Ozunas' auto insurer, and of Texas Farm Bureau, their homeowner insurer.(4) Following a jury verdict in favor of the Ozunas, Ford asked that the judgment reflect a settlement credit of the subrogation claims. The trial court denied this relief which Ford argues has resulted in a double recovery to the Ozunas. Ford asks this court to reform the judgment to reflect the settlement credits it paid to Ozuna's insurers. The right of offset is an affirmative defense. The burdens of pleading and proving offset are on the party asserting it. See Southwestern Bell Telephone Co. v. Gravitt, 551 S.W.2d 421 (Tex. App.-San Antonio 1977, writ ref'd n.r.e.). Ford and Payne only pled offset in their Second Amended Original Answer, which the trial court struck as untimely. This ruling was not challenged in the appeal. The failure to plead offset results in waiver. See Brown v. American Transfer & Storage, 601 S.W.2d 931, 936 (Tex. 1980).

Although the Ozunas cite the Brown opinion for its "collateral source rule," we need not analyze this case under that rule. Rather, the issue on settlement credit is waived because evidence critical to its review is not in the record. Ford argues that it has preserved this issue for review by virtue of plaintiffs' live pleading at trial describing the exact amount of the subrogation insurers' claims; counsel for all parties acknowledged to the trial court that the subrogation insurers claims had been settled by the defendants; that the Ozunas' counsel told the court that his clients had received the proceeds; and that defendants preserved error by objecting to the judgment's failure to reflect the credit and by moving for a new trial on this point. We disagree. The underlying insurance policies are not part of the record, there is no testimony or documentary evidence in the record that the Ozunas assigned any of their rights against Ford and Payne to their insurers when the insurers settled the Ozunas' policy claims; the agreement between Ford and the insurers to settle the insurers' subrogation claims is not a part of the record; and there is no testimony or documentary evidence in the record of any assignment of the subrogation claims to Ford by the Ozunas' insurers in consideration of Ford's payment to the insurers. See Hartnett v. Hampton Inns, Inc., 879 S.W.2d 162, 167 (Tex. App.-San Antonio 1993, writ denied) (insurance agreement, express assignment, and testimony of assignment introduced without objection to prove right to offset). The trial court did not abuse its discretion when it denied relief on the settlement credits. Ford's second issue is overruled.

Joint and Several Liability

Payne Mitsubishi asks this Court to modify the trial court's judgment by removing all findings of liability against it because the jury found no liability or damages caused by Payne Mitsubishi. The jury verdict found a design and a manufacturing defect in the ignition switch and found that these defects were producing causes of the resulting fire which destroyed the Ozuna pickup, house, and its contents. The seller of a defective product is strictly liable for such damages. See Restatement of Torts Second 402A; Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334-35 (Tex. 1998). Payne Mitsubishi is the undisputed seller of the truck.

The jury, however, found that Payne Mitsubishi did not engage in any false, misleading, or deceptive practices that were a producing cause of the Ozunas' damages. The judgment assesses joint and several liability to Ford and Payne Mitsubishi for all actual damages, and to Ford alone for additional damages of $13,500 to each of the Ozunas. The actual damages awarded include those of mental anguish. As that is a damage suffered in connection with the DTPA claim, it should be borne by Ford alone. To that extent, Payne's issue on joint and several liability is sustained.

Attorney's Fees

The trial court sustained Ford's objection to the plaintiff's expert on attorney's fees on the grounds that the witness had not been identified in answers to interrogatories. Counsel for the Ozunas sought to present their expert as an agent to the Ozunas, who had been identified as fact witnesses. On appeal, appellants also raise inadvertence as an excuse. Evidence of plaintiffs' attorneys' fees was stipulated to as an offer of proof.

The plaintiff-appellants assert that the trial court committed error by denying them the opportunity to put on this testimony because the DTPA statute mandates that fees be awarded where the jury returns a favorable verdict on the merits. See Tex. Bus. & Com. Code 17.50(d)(Vernon Supp.1999); Hartnett v. Hampton Inns. 870 S.W.2d at 168; Satellite Earth Stations East v. Davis,756 S.W.2d 385, 387 (Tex. App.-Eastland 1988, writ denied).

Rule 215(5) of the former rules of civil procedure, in effect when this case was tried, stated:

A party who fails to respond to or supplement his response to a request for discovery shall not be entitled to present evidence which the party was under a duty to provide in a response or supplemental response or to offer the testimony of an expert witness or of any other person having knowledge of discoverable matter, unless the trial court finds that good cause sufficient to require admission exists. The burden of establishing good cause is upon the party offering the evidence and good cause must be shown in the record.

Appellants argue that this rule need not operate to frustrate the clear mandate of the DTPA to award aggrieved consumers recovery of their attorney's fees where there is no surprise. In support of this position, they point to the supreme court's opinion in Alvarado which reemphasized the trial court's ability to find good cause and to impose less harsh sanctions, i.e., "The punishment should fit the crime." Alvarado v. Farah Mfg. Co., Inc., 830 S.W.2d 911, 914 (Tex. 1992). The court further stated,

We note, however, that the trial courts are not without power to prevent the enforcement of Rule 215(5) from operating as an injustice in a particular case. When a party has failed to timely identify evidence in response to discovery requests, the trial court has the discretion to postpone the trial and, under Rule 215(3), to impose an appropriate sanction upon the offending party for abuse of the discovery process.

Id. at 915-16.(5) The Ozunas, however, did not request a continuance during the trial for the purpose of permitting defendants the opportunity to depose the witness or review billing records.

A trial court's exclusion of testimony under this rule is reviewed under the abuse of discretion standard. Aluminum Co. of America v. Bullock, 870 S.W.2d 2, 3 (Tex. 1994); Alvarado, 830 S.W.2d at 914. The trial court did not abuse its discretion in excluding the witness. E.F. Hutton, 741 S.W.2d at 364. It was not confronted with a showing of good cause which could overcome the harshness of the rule as it existed at that time.

An award of fees under the DTPA requires some evidence. See American Commercial Colleges, Inc. v. Davis, 821 S.W.2d 450, 455 (Tex. App.-Eastland 1991, writ denied). Because there was no evidence on fees in the record, the trial court did not abuse its discretion in refusing to award attorney's fees to plaintiffs. Id. The Ozunas' issue on cross-appeal is overruled.

Conclusion

The judgment of the trial court is reformed to eliminate Payne Mistubishi's joint and several liability for mental anguish damages under the DTPA. In all other things, the judgment of the trial court is affirmed.

Justice Alma L. L pez

DO NOT PUBLISH

1. Rule 901(b) contains a non-exclusive list of methods for authenticating or identifying evidence. Id. at 901(b).

2. Rule 901(b)(4) recognizes the authenticity of documents with "Distinctive Characteristics and the Like: Appearance, contents, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances." Tex. R. Evid. 901(b)(4).

3. Ford argues that some of these documents have nothing to do with switches installed in Ford F-150 pickups. However, the same switch design was widely used in a variety of models.

4. The Rule 11 agreement filed with the trial clerk reflected that Northwestern Nation settled its subrogation claim for $6,056.25 and Texas Farm Bureau settled its claim for $26,490.00 These amounts represented 75% of the amounts claimed by the insurers in the subrogation petition.

5. The supreme court advised the rules revision committee that new Rule 193.6 of the Rules of Evidence should clarify for the trial court that it has a wider range of sanctions available, especially where surprise and prejudice are not present when a witness was inadvertently not disclosed. Id. at 915.