Tom Sonnichsen v. Baylor University--Appeal from 170th District Court of McLennan County

IN THE

TENTH COURT OF APPEALS

_______________

No. 10-02-00125-CV

TOM SONNICHSEN,

Appellant

v.

    BAYLOR  UNIVERSITY,

Appellee

_____________________

From the 170th District Court

  McLennan County,  Texas

Trial Court No. 97-4214-4

MEMORANDUM Opinion

Tom Sonnichsen sued Baylor University after Baylor terminated his employment as its women s volleyball coach. He alleged breach of contract and fraud. The trial court granted Baylor s no-evidence summary judgment motion which challenged three elements of Sonnichsen s fraud claim. The court also sustained Baylor s special exceptions as to Sonnichsen s contract claim and rendered a take-nothing judgment. Sonnichsen contends that he produced sufficient evidence to overcome the no-evidence summary judgment motion and that the court abused its discretion by sustaining the special exceptions. Because we agree, we will reverse and remand.

BACKGROUND[1]

Baylor hired Sonnichsen as its women s volleyball coach in 1989. At that time, all Baylor coaches other than the football coach and the men s basketball coach had oral, one-year contracts. Then athletic director Bill Menefee advised Sonnichsen that he would be able to retire at Baylor if he ran a clean program and treated his players appropriately. Menefee s successor, Dr. Richard Ellis, made similar representations, at least until Baylor decided to join the Big 12 athletic conference.

When it was decided that Baylor would join the Big 12 in 1996, Dr. Ellis advised the coaches that it would be imperative for them to strengthen and develop their programs to be competitive in the new conference and that winning would be important. Sonnichsen determined to strengthen the volleyball program by scheduling tougher opponents. As a result, the win-loss record for the program suffered in 1994 and 1995.

Sonnichsen discussed his plan with Dr. Ellis and Sonnichsens s immediate supervisor Jeanne Nowlin during his annual evaluation before the 1994 season and told them that the team s win-loss record would suffer significantly. Neither Dr. Ellis nor Nowlin expressed any concern about the win-loss record nor did either suggest that Sonnichsen s employment at Baylor may be jeopardized by a losing record.

In May 1995, general counsel Basil Thomson advised the head coaches (other than the head football and men s basketball coaches) that they would be receiving written two-year contracts as part of Baylor s effort to resolve a Title IX complaint regarding disparities between its men s and women s athletic programs.[2] That fall, Thomson told Sonnichsen that the contracts were under review in the athletic department.

During this period, Baylor was also experiencing a transition from the administration of its president when Sonnichsen was hired, Dr. Herbert H. Reynolds, to that of his successor, Dr. Robert B. Sloan, Jr. Sloan took office in June 1995. Dr. Ellis anticipated that the contracts discussed by Thomson would have to be approved by Dr. Sloan.

In Sonnichsen s annual written evaluation prepared in August 1995, Nowlin identified supervision of the volleyball players and bolder recruiting practices as areas for improvement. Dr. Ellis agreed but characterized the 1994 season as disappointing. Both rated Sonnichsen s overall performance as above standards. Nowlin told Sonnichsen that the contracts were coming when she gave him the written evaluation. Nowlin told Sonnichsen on November 13 (at or near the end of the volleyball season) that the contracts were being revised.

Nowlin and Ellis discussed Sonnichsen s continued employment in light of the difficulties of the 1995 season at various times during the season. Nowlin recommended to Dr. Sloan on or before December 13 that Sonnichsen s employment be terminated. Ellis counseled against this course of action and recommended that Sonnichsen be given one more year.

At some point, Baylor determined to give its coaches one-year contracts. Dr. Sloan and Dr. Ellis signed the finalized contracts in December 1995. These contracts had a term running from June 1, 1995 through May 31, 1996. The contracts were delivered to the coaches in January 1996. Because Sonnichsen s employment was terminated in December, his contract was never delivered.

Nowlin summoned Sonnichsen for a meeting on December 29. She handed him a letter dated December 28 advising him that he would not be granted a new contract for the 1996-1997 year but would be paid in full through the end of [his] contract, which [would] expire on May 31, 1996. Nowlin later told Sonnichsen that his employment was terminated because of his team s losing records in 1994 and 1995.

PROCEDURAL HISTORY

Sonnichsen filed suit in December 1997 alleging fraud and breach of contract. Baylor sought a summary judgment primarily on the ground that both claims were barred by the statute of frauds. Sonnichsen asserted the counter-defense of promissory estoppel. The trial court granted summary judgment in Baylor s favor, and Sonnichsen appealed. We affirmed the judgment as to Sonnichsen s contract claim, reversed it as to the fraud claim, and remanded the case to the trial court for further proceedings. Sonnichsen v. Baylor Univ., 47 S.W.3d 122, 127 (Tex. App. Waco 2001, no pet.).

On remand, Baylor filed a no-evidence summary judgment motion challenging three elements of Sonnichsen s fraud claim. Sonnichsen filed a response to the summary judgment motion with supporting evidence and simultaneously filed an amended petition adding a claim for breach of his contract of employment, including his contract rights created by [Baylor s] representations and [by] the terms of the 1995-96 written contract which was never delivered to him.

Baylor responded to the amended petition with an amended answer and special exceptions. Baylor specially excepted to the amended contract claim on the grounds that it is a violation of the doctrines of the law of the case, estoppel, and res judicata. The trial court granted the summary judgment motion, sustained the special exceptions, and rendered a take-nothing judgment.

Because Sonnichsen presented some evidence to support the challenged elements of his fraud claim and because the court abused its discretion by sustaining the special exceptions, we will reverse and remand.

SONNICHSEN PRESENTED SOME EVIDENCE TO SUPPORT

THE CHALLENGED ELEMENTS OF HIS FRAUD CLAIM

Sonnichsen contends in his first issue that the trial court erred by granting Baylor s no-evidence summary judgment motion because he presented some evidence that: (1) Baylor representatives made false representations with knowledge of their falsity or made them recklessly without any knowledge of the truth; (2) the representations were made with the intent that they be acted upon; and (3) Sonnichsen suffered compensable damages because of his reliance on the representations.

Baylor contends that the only potentially actionable representation alleged is Thomson s statement that each head coach would receive a written employment contract with a two-year term. Undoubtedly, this is the primary allegation, but it is not the only one. In fact, Sonnichsen identified eight alleged representations in his summary judgment response: (1) former athletic director Menefee told him that he could retire at Baylor so long as he ran a clean program and treated his players appropriately; (2) Dr. Ellis initially made similar representations; (3) Dr. Ellis announced that winning was important with Baylor s entry into the Big 12 and that coaches needed to take the necessary steps to ensure that their teams were competitive; (4) Thomson told the coaches that head coaches in sports other than football and men s basketball would receive written employment contracts with two-year terms; (5) Thomson told Sonnichsen in the fall of 1995 that the written contracts were being reviewed in the athletic department; (6) Nowlin told Sonnichsen that fall that the contracts were coming and were still being revised; (7) Dr. Ellis and Nowlin represented by their silence in 1994 that a losing record in 1994 or 1995 would not be a ground for termination; and (8) Dr. Ellis represented by his failure to cite the 1994 win-loss record as an area needing improvement that a losing record in 1995 would not be a ground for termination.[3] We will review the summary judgment in light of more than just the primary Thomson representation. See e.g. Ho v. Univ. of Tex. at Arlington, 984 S.W.2d 672, 690-93 (Tex. App. Amarillo 1998, pet. denied) (reversing summary judgment on 10 of 32 fraudulent representations and omissions committed by university personnel).

Knowledge Of Falsity

Baylor contends that Sonnichsen can produce no evidence that Thomson knew his statement about written, two-year contracts was false or that he made it recklessly without any knowledge of its truth. Sonnichsen responds that Thomson knew the statement was false or recklessly made the statement without knowledge of its truth because it was known at that time that Dr. Sloan would have to approve the contracts.

Sonnichsen produced Dr. Ellis s deposition testimony to support this assertion. Dr. Ellis described the process by which Thomson and he worked closely with a Baylor vice-president in the Reynolds administration to develop the contracts Thomson told the coaches about. Dr. Ellis assumed that this vice-president and/or Dr. Sloan would have to approve the final version of the contracts. Viewed in a light most favorable to Sonnichsen, it can be inferred from this evidence that Thomson (because of his close working relationship with the vice-president and Dr. Ellis on the contracts) was at least reckless about whether Dr. Sloan would approve the final version of the contracts.

Nowlin told Sonnichsen during his August 1995 performance evaluation that the contracts were coming. Thomson told Sonnichsen that fall that the contracts were under review. And during a meeting on November 13, Nowlin told him that she had been talking about the contracts that were being revised or rewritten.

Nowlin and Ellis discussed Sonnichsen s continued employment in light of the difficulties of the 1995 season at various times during the season. Nowlin recommended to Dr. Sloan on or before December 13 that Sonnichsen s employment be terminated. Ellis counseled against this course of action and recommended that Sonnichsen be given one more year.

To summarize, Nowlin told Sonnichsen that his contract was being revised at the same time or perhaps after his continued employment was under review. No more than thirty days later, she recommended that his employment be terminated. Given the evidence of Nowlin s and Dr. Ellis s prior statements, Thomson s prior statements, and Nowlin s status as his immediate supervisor, Nowlin s statement that his contract was being revised and her failure to even suggest that his continued employment was under review collectively constitute some probative evidence of an actionable misrepresentation. See Bradford v. Vento, 48 S.W.2d 749, 755 (Tex. 2001) (failure to disclose can be actionable when there is a duty to speak); Columbia/HCA Healthcare Corp. v. Cottey, 72 S.W.3d 735, 744 (Tex. App. Waco 2002, no pet.); Lesikar v. Rappeport, 33 S.W.3d 282, 299 (Tex. App. Texarkana 2000, pet. denied).

Collectively, this evidence supports an inference that Thomson was reckless about whether Dr. Sloan would approve the final version of the contracts and that Nowlin knew Sonnichsen s continued employment was in jeopardy and that he would not receive a contract or was reckless about the truth of her statement that his contract was being revised and the underlying implication that his employment at Baylor would continue.

Intent

Baylor contends that Sonnichsen can produce no evidence that Thomson (or any Baylor representative) intended for Sonnichsen to rely on their representations. Sonnichsen responds that intent can be inferred from Baylor s denial that Thomson promised written, two-year contracts and from the fact that Sonnichsen did not receive a written contract.

Intent may be inferred from subsequent acts. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986); IKON Office Solutions, Inc. v. Eifert, 125 S.W.3d 113, 124 (Tex. App. Houston [14th Dist.] 2003, pet. denied); Batto v. Gafford, 119 S.W.3d 346, 348 (Tex. App. Waco 2003, no pet.). Although failure to perform a promise standing alone is not evidence of fraudulent intent, it is a circumstance to be considered with other evidence of such intent. Id.

Slight circumstantial evidence of fraud, when considered with the breach of promise to perform, is sufficient to support a finding of fraudulent intent. Spoljaric, 708 S.W.2d at 435; Batto, 119 S.W.3d at 348; Oakwood Mobile Homes, Inc. v. Cabler, 73 S.W.3d 363, 372 (Tex. App. El Paso 2002, pet. denied). A party s denial that it made the promise or representation at issue is another factor showing fraudulent intent. See T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex. 1992); Beal Bank, S.S.B. v. Schleider, 124 S.W.3d 640, 649 (Tex. App. Houston [14th Dist.] 2003, pet. denied); Batto, 119 S.W.3d at 348.

Thompson represented that Sonnichsen would receive a written, two-year contract. Nowlin represented that this contract was being prepared as late as November 13, 1995. Baylor denies that it ever told the coaches they would in fact receive written, two-year contracts. Baylor prepared and signed a written, one-year contract for Sonnichsen but never delivered it to him. The actions Baylor s representatives took after Thomson s statement, specifically during the course of the 1995 volleyball season and immediately thereafter, collectively constitute some probative evidence of fraudulent intent.

DAMAGES

Baylor contends that Sonnichsen can produce no evidence of compensable damages. Sonnichsen responds that he has suffered the following compensable damages: (1) inability to obtain employment for the 1996-97 season; (2) lost opportunity to advance his career and increase his earning capacity; (3) loss of revenues from a Nike contract; (4) lost revenues from his 1996 summer volleyball camps; and (5) loss of tuition benefits by which he could complete his master s degree at Baylor s expense.

Baylor contends that Sonnichsen cannot rely on lost revenues from the Nike contract on appeal because he did not include them in the list of damages he itemized in his response to Baylor s summary judgment motion. We need not address this particular contention because Sonnichsen alleged other damages in the response sufficient to defeat Baylor s motion.

A prevailing plaintiff may generally recover actual (or direct) damages and consequential (or special) damages for a common law fraud claim. Formosa Plastics Corp. USA v. Presidio Engrs. & Contractors, Inc., 960 S.W.2d 41, 49 & n.1 (Tex. 1998); Rivas v. Cantu, 37 S.W.3d 101, 118 (Tex. App. Corpus Christi 2000, pet. denied). There are two measures for actual damages: (1) out-of-pocket; and (2) benefit-of-the-bargain. Id. When a common law fraud claim is based on an oral promise to execute a written contract which is never executed, the statute of frauds bars the plaintiff from recovering damages for the benefit of the bargain. Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001).

Special damages must be specifically pleaded and proved. Tex. R. Civ. P. 56; Formosa Plastics Corp., 960 S.W.2d at 49 n.1; Rivas, 37 S.W.3d at 118. Lost earnings or profits are a form of special damages when they are not earnings or profits which would have been received as a direct result of the fraudulent representation. See Rivas, 37 S.W.3d at 118; Koko Motel, Inc. v. Mayo, 91 S.W.3d 41, 51-52 (Tex. App. Amarillo 2002, pet. denied); Weingartens, Inc. v. Price, 461 S.W.2d 260, 264 (Tex. Civ. App. Houston [14th Dist.] 1970, writ ref d n.r.e.); but cf. Foley v. Parlier, 68 S.W.3d 870, 884 (Tex. App. Fort Worth 2002, no pet.) (characterizing loss of income as out-of-pocket damages).

Sonnichsen s loss of revenues from the 1996 volleyball camps are special damages. See Rivas, 37 S.W.3d at 118; Koko Motel, 91 S.W.3d at 51-52; Weingartens, 461 S.W.2d at 264. However, he did not plead these lost revenues or any other special damages in his amended petition. Cf. Tex. R. Civ. P. 56; Formosa Plastics Corp., 960 S.W.2d at 49 n.1; Rivas, 37 S.W.3d at 118. Nevertheless, Baylor did not complain in the trial court and does not contend on appeal that he has failed to properly plead special damages. Cf. Saucedo v. Rheem Mfg. Co., 974 S.W.2d 117, 119 (Tex. App. San Antonio 1998, pet. denied); Boat Superstore, Inc. v. Haner, 877 S.W.2d 376, 379 (Tex. App. Houston [1st Dist.] 1994, no writ); Weingartens, 461 S.W.2d at 262. Because this is a summary judgment appeal and not an appeal following a trial on the merits, we hold that Sonnichsen s failure to plead special damages at this juncture is not fatal.

Sonnichsen presented evidence that he lost revenues from his 1996 volleyball camps because of Baylor s misrepresentation. These are special damages which may be awarded to a prevailing plaintiff in a common law fraud case. Accordingly, Sonnichsen presented some evidence of compensable damages.

Thus, we sustain Sonnichsen s first issue.

THE TRIAL COURT ABUSED ITS DISCRETION

BY SUSTAINING BAYLOR S SPECIAL EXCEPTIONS

Sonnichsen contends in his second issue that the trial court erred by sustaining Baylor s special exception challenging Sonnichsen s contract claim without first giving him an opportunity to amend his pleadings. Resolution of this issue depends in large part on whether we expressly limited the scope of remand when we reversed and remanded the case in Sonnichsen s first appeal.

When an appellate court remands a cause to the trial court, the case is reopened in its entirety unless the appellate court s decision specifically limits the scope of remand to a particular issue or issues. Graham Sav. & Loan Assn. v. Blair, 986 S.W.2d 727, 729 (Tex. App. Eastland 1999, no pet.); Univ. of Tex. Sys. v. Harry, 948 S.W.2d 481, 483 (Tex. App. El Paso 1997, no pet.). For the scope of remand to be limited, the appellate court s intent must clearly appear from the decision. Garcia v. Martinez, 988 S.W.2d 219, 221 (Tex. 1999). Thus, the Supreme Court found in Garcia that the court of appeals clearly intended that the trial on remand be limited when it remanded the case as to the issue of the Guardian Ad Litem s fee for an evidentiary hearing. Id.

In Sonnichsen s first appeal, we affirmed the judgment as to the contract claim Sonnichsen alleged in his first amended petition. We reversed as to Sonnichsen s fraud claim, severed the fraud claim from that contract claim, and remanded this cause to the trial court for further proceedings. Sonnichsen, 47 S.W.3d at 127. Our prior decision did not limit the scope of the remand. Cf. Garcia, 988 S.W.2d at 221. Thus, Sonnichsen could amend his pleadings on remand to assert other claims.[4] Cf. Walston v. Walston, 119 S.W.3d 435, 437 (Tex. App. Waco 2003, no pet.) (petitioner amended petition on remand to allege new partition claim).

Sonnichsen alleged in his first amended petition that Baylor breached a written, two-year employment contract which Baylor never executed. He further alleged the counter-defense of promissory estoppel in response to Baylor s contention that his contract claim was barred by the statute of frauds. We held on appeal that promissory estoppel did not apply because Sonnichsen failed to raise a fact issue regarding whether the contemplated written contract was in existence at the time Thomson represented that the coaches would receive such contracts. Sonnichsen, 47 S.W.3d at 126-27.

On remand, Sonnichsen amended his petition to allege that Baylor breached his contract rights created by its representations and [by] the terms of the 1995-96 written contract which it never delivered. Sonnichsen characterizes this allegation on appeal as a claim that Baylor breached his one-year oral contract and/or . . . his one-year written contract. [5] This is a different claim than that alleged in Sonnichsen s first amended petition. Without passing on the merits of this claim, we hold that it was proper for Sonnichsen to amend his pleadings to assert the claim.

A trial court may dismiss a case upon sustaining a defendant s special exceptions without giving the plaintiff an opportunity to amend his pleadings if the plaintiff s allegations are incurably defective. Mowbray v. Avery, 76 S.W.3d 663, 677-78 (Tex. App. Corpus Christi 2002, pet. denied); Zaremba v. Cliburn, 949 S.W.2d 822, 828-29 (Tex. App. Fort Worth 1997, pet. denied). Baylor contends that Sonnichsen s contract claim suffers the following incurable defects: (1) it is barred by limitations; (2) Sonnichsen affirmatively pleaded that Baylor never delivered the written contract to him; (3) it is barred by the law-of-the-case doctrine; and (4) it is barred by res judicata.

When we review a contention that the trial court erred by dismissing a case upon sustaining special exceptions without giving opportunity to amend, we conduct a two-step analysis. See Mowbray, 76 S.W.3d at 678. First, we examine whether the court abused its discretion by sustaining the special exceptions. If not, then we determine whether dismissal was proper. Id.

Baylor did not allege in its special exceptions that Sonnichsen s contract claim is barred by limitations. Accordingly, we do not consider that argument on appeal. See Tex. R. App. P. 33.1(a)(1).

Baylor contends that Sonnichsen cannot prevail on his contract claim because he has affirmatively pleaded that Baylor never delivered the written, one-year contract to him. Delivery is a requisite to the existence of a valid, enforceable contract. Choctaw Props., L.L.C. v. Aledo Indep. Sch. Dist., 127 S.W.3d 235, 245 (Tex. App. Waco 2003, no pet.); New Caney Indep. Sch. Dist. v. Burnham AutoCountry, Inc., 30 S.W.3d 534, 537 (Tex. App. Texarkana 2000, pet. denied). However, Sonnichsen s contract claim is not premised solely on the undelivered written contract. Rather, it is also based on the oral, one-year contracts which Baylor provided its coaches before it began offering written contracts for the 1995-96 year. Accordingly, lack of delivery of the written contract is not fatal to Sonnichsen s contract claim.

Baylor contends that Sonnichsen s contract claim is barred by the law-of-the-case doctrine. However, the law-of-the-case doctrine has limited application following a summary judgment appeal. Ash v. Hack Branch Distribg. Co., 54 S.W.3d 401, 409 n.3 (Tex. App. Waco 2001, pet. denied) (citing Hudson v. Wakefield, 711 S.W.2d 628, 630-31 (Tex.1986)). This is so because on remand the parties may be different or the parties may amend their pleadings to allege other theories of recovery. See Hudson, 711 S.W.2d at 630-31; Ash, 54 S.W.3d at 409 n.3. This is precisely what has occurred in Sonnichsen s case.

Baylor contends that Sonnichsen s contract claim is barred by res judicata. Res judicata bars the parties and their privies from bringing a second suit not only on matters actually litigated, but also on causes of action or defenses which arise out of the same subject matter and which might have been litigated in the first suit. Compania Financiara Libano, S.A. v. Simmons, 53 S.W.3d 365, 367 (Tex. 2001) (quoting Barr v. Res. Trust Corp., 837 S.W.3d 627, 630 (Tex. 1992)). Sonnichsen s first suit has not yet been finally adjudicated. Accordingly, res judicata does not bar his amended contract claim. See Creative Thinking Sources, Inc. v. Creative Thinking, Inc., 74 S.W.3d 504, 512 (Tex. App. Corpus Christi 2002, no pet.).

None of the grounds asserted in Baylor s special exceptions support the court s decision to sustain them. Thus, the court abused its discretion by sustaining the special exceptions.

Baylor contends in the alternative that this error did not result in rendition of an improper judgment because Sonnichsen cannot amend his contract claim to avoid limitations and the other challenges asserted. See Tex. R. App. P. 44.1(a)(1). However, Sonnichsen s amended contract claim survives a limitations challenge under the relation-back doctrine because he timely-filed suit and his amended contract claim arises from the same transaction or occurrence as his original contract claim. See Tex. Civ. Prac. & Rem. Code Ann. 16.068 (Vernon 1997); Barnett v. Coppell N. Tex. Ct., Ltd., 123 S.W.3d 804, 821 (Tex. App. Dallas 2003, pet. denied).

We have already explained why Baylor s other challenges fail. Accordingly, we sustain Sonnichsen s second issue

We reverse the judgment and remand this cause to the trial court for further proceedings consistent with this opinion.

FELIPE REYNA

Justice

Before Chief Justice Gray,

Justice Vance, and

Justice Reyna

(Chief Justice Gray dissenting)

Reversed and remanded

Opinion delivered and filed August 25, 2004

[CV06]

[1] Consistent with the applicable standard of review, we present the background facts in the light most favorable to Sonnichsen. See Turner v. KTRK TV, Inc., 38 S.W.3d 103, 109 (Tex. 2000); see also Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003) (appellate court views record in light most favorable to nonmovant when reviewing no-evidence summary judgment motion).

[2] One of the specific disparities noted was that no coach in a women s athletic program had a written contract.

[3] Sonnichsen actually contends in his summary judgment response that Ellis and Nowlin represented by their silence that losing seasons in 1994 and 1995 would not be grounds for concern about continued employment.

[4] In fact, Baylor s special exception characterizes Sonnichsen s contract claim in his second amended petition as a different breach of contract claim.

[5] When a defendant contends that the plaintiff s petition does not state a valid cause of action, we view the allegations and inferences arising from them in the light most favorable to the plaintiff. Mowbray v. Avery, 76 S.W.3d 663, 678 (Tex. App. Corpus Christi 2002, pet. denied); accord Perry v. S.N., 973 S.W.2d 301, 303 (Tex. 1998).