Dupont Employees Recreation Association v. A.V.A. Services, Inc.

Opinion issued May 12, 2005

In The

Court of Appeals

For The

First District of Texas

NO. 01-04-00053-CV

__________

DUPONT EMPLOYEES RECREATION ASSOCIATION, Appellant

V.

A.V.A. SERVICES, INC., Appellee

On Appeal from the 23rd District Court

Brazoria County, Texas

Trial Court Cause No. 95-C0465

MEMORANDUM OPINION

In this conversion and breach of contract case, a jury found that Dupont

Employees Recreation Association (“Dupont”) breached its contract with A.V.A.

Services, Inc. (AVA) and awarded AVA $106,725 in addition to pre-judgment

interest and attorney’s fees. In five points of error, Dupont contends that (1) the

evidence was legally and factually insufficient to support the jury’s finding for breach

of contract, damages, and market valuation; (2) the trial court erred in allowing

AVA’s “expert” to testify; and (3) there was a fatal conflict in the jury’s answers thus

requiring a new trial. We affirm.

Background

On December 1, 1990, Dupont and AVA entered into a vending services

agreement, in which AVA agreed to provide vending machines, primarily cold drink

machines, to Dupont’s plant in Orange, Texas. The agreement provided that AVA

would pay commissions to Dupont on a monthly basis payable on the 20th of the

following month. In addition, AVA agreed to pay a $5000 bonus. The agreement

was for three years and was automatically renewed for two additional years unless

written notice of non-renewal was given. The agreement was terminable without

cause upon 90 days’ notice and terminable for just cause following 30 days’ notice.

In January 1992, AVA and Dupont entered into a two-year commission

agreement running from January 1992 through January 1994. The automatically

renewable agreement designated a 12 percent commission for the 68-can drink

machines and a three percent commission, if sales exceeded $400 each, for the eight

snack machines. The agreement also declared that

Upon termination of this agreement by lapse of time or otherwise, AVA

or its assigns shall have the right to immediately remove the equipment

installed. It is understood that the equipment remains the property of

AVA or its assigns and the title to the equipment is and shall remain in

AVA or its assigns at all time.

In January 1993, AVA and Dupont entered into another two-year, automatically

renewable, commission agreement. The configuration of the machines in the

subsequent agreement is different: there were only 65 drink machines and, in

addition to the eight snack machines previously identified, the new commission

agreement added another snack machine that would generate seven percent

commission regardless of the machine’s monthly sales. The commission agreement

indicated that Dupont requested “monthly comm. check.”

In September 1994, Dupont notified AVA that the vending services agreement

would expire at the end of the annual service period, and its board of directors sought

competitive bids, including one from AVA, for vending services at its facility.

Dupont invited AVA to enter into the bidding process. AVA submitted its bid, but

on December 22, 1994, Dupont advised AVA that another company was awarded the

contract. The letter further stated as follows:

Accordingly, it will be necessary for you to remove your property from

the DuPont premises as soon after the contract expiration date as

possible.

Prior to reclaiming your equipment, we would very much appreciate you

bringing your financial obligations to [Dupont] current. Our records

indicate you owe us commissions for October, November and December

of 1994, as well as the annual $5,000 bonus.

One month later, Dupont sent AVA another letter indicating that the service

agreement was to expire on January 29, 1995, and, because AVA had neglected to

pay the $5000 bonus and several commission checks, Dupont was claiming “a

security interest in the equipment” AVA had on the Dupont site. Dupont informed

AVA that it would not be permitted to “remove such equipment without a complete

remittance” of Dupont’s funds.

AVA attempted to retrieve its machines, but was

denied access to the Dupont premises.

On February 14, 1995, AVA filed suit against Dupont, in which it alleged that

Dupont breached the commission agreement by “permitting other persons or entities

to sell cold drinks on its premises in competition with [AVA],” and AVA sought

$32,500 for this breach. AVA also contended that it had overpaid commissions “in

the amount of at least $10,000.00” and contended that it was “entitled to recover such

overpayment” from Dupont. AVA further asserted that Dupont’s refusal to release

AVA’s vending machines was “a clear and material breach of the agreement, and

[AVA was] entitled to recover the direct and consequential damages it suffered as a

result of such breach.” “In the alternative,” AVA alleged that Dupont “converted

such equipment along with the contents of each machines.”(sic) AVA sought “to

recover the fair market value of the equipment and inventory contents of the

equipment at the time and place of conversion . . . January 30, 1995 in Orange

County.” AVA also sought exemplary damages for the conversion in excess of

$200,000. In its third amended petition, AVA abandoned the liquidated damages

claim resulting from the alleged sale of competitor’s products, but continued to

pursue the breach of contract, conversion, and overpayment of commissions claims.

The jury found no conversion, but did find that Dupont breached its agreement

with AVA. The jury determined that the fair market value for the equipment and

inventory was $106,725, and it also assessed attorney’s fees. The trial court denied

Dupont’s motion for judgment notwithstanding the verdict, and Dupont’s motion for

new trial was overruled by operation of law.

Sufficiency of the Evidence

In points of error one and two, Dupont contends that there is legally and

factually insufficient evidence to support the findings of (1) breach of contract and

(2) damages resulting therefrom.

Standard of Review

When reviewing a legal sufficiency question, we consider only the evidence

and inferences that tend to support a finding, and we disregard all evidence and

inferences to the contrary. Holt Atherton Indus., Inc. v. Heine , 835 S.W.2d 80, 84

(Tex. 1992). If there is more than a scintilla of evidence to support the finding, the

no-evidence challenge fails. Id . More than a scintilla of evidence exists when the

evidence, as a whole, supporting the finding “rises to a level that would enable

reasonable and fair-minded people to differ in their conclusions.” Merrell Dow

Pharms., Inc. v. Havner , 953 S.W.2d 706, 711 (Tex. 1997).

When reviewing a factual sufficiency question, we consider and weigh all of

the evidence and may set aside the verdict only if the finding is so against the great

weight and preponderance of the evidence that it is clearly wrong and unjust. Cain

v. Bain , 709 S.W.2d 175, 176 (Tex. 1986). The jury may believe one witness and

disbelieve another, and it may resolve inconsistencies in any testimony. Eberle v.

Adams , 73 S.W.3d 322, 327 (Tex. App.—Houston [1st Dist.] 2001, pet. denied).

Breach of Contract

In point of error one, Dupont contends that there is legally and factually

insufficient evidence to support the finding of breach of contract.

After having found that the parties entered into agreements on December 1,

1990; January 1, 1992; and January 29, 1993, the jury affirmatively answered the

question “Did [Dupont] fail to comply with any of its agreements with [AVA]?”

Dupont contends that it is “undisputed” that (1) AVA demanded access to or the

return of its machines; (2) Dupont offered AVA access to or the return of its machines

conditioned upon presentation of title documentation and or satisfaction and

resolution of Dupont’s claims; and (3) after 10 days from demand, AVA simply “gave

the machines up” and, pursuant to its conversion claim, contended that the machines

belonged to Dupont.

Based on these undisputed facts, Dupont asserts that there are two reasons why

the evidence was legally and factually insufficient. First, AVA did not attempt to

remove the machines until after the contract expired; therefore, it could not breach a

contract that was no longer in effect. Second, “with all the uncertainty as to

ownership of the machines and the status of the account between the parties, Dupont

could not have been in breach by its actions. We disagree with both propositions.

The commission agreement stated that

Upon termination of this agreement by lapse of time or otherwise, AVA

or its assigns shall have the right to immediately remove the equipment

installed. It is understood that the equipment remains the property of

AVA or its assigns and the title to the equipment is and shall remain in

AVA or its assigns at all time.

The contract clearly stated that AVA had the right to remove its machines when the

agreement terminated. A contractual duty that first arises when the contract ends is

enforceable.

Secondly, the contract specifically stated that the equipment belonged to AVA

or its assigns and that title to the equipment remained in AVA or its assigns. Dupont

places some significance on that fact that the “AVA did not own the machines in

question.” This is irrelevant to the breach of contract question. Dupont also argues

that, because AVA owed it commissions and a bonus, Dupont could not have

breached the contract. This was not the question that was asked of the jury. The jury

was simply asked if Dupont failed to comply with any of its agreements with AVA.

Neither party argues that the contract was ambiguous. Bill Stautmeister

testified that, when the contract ended, Dorsett instructed him to go to the Dupont

facility and retrieve AVA’s machines. Stautmeister was denied entrance and was

unable to “remove the equipment installed” as it had contracted to do.

We hold that the evidence was legally and factually sufficient to support the

finding that Dupont breached its contract with AVA. Accordingly, we overrule point

of error one.

Damages

In point of error two, Dupont contends that there is legally and factually

insufficient evidence that AVA sustained damages resulting from Dupont’s alleged

breach of contract. The only damages question submitted to the jury asked as

follows:

What was the fair market value, if any, of the equipment and inventory

on or about February 3, 1995?

“Fair market value” means the amount that would be paid in cash by a

willing buyer who desires but is not required to buy to a willing seller

who desires but is under no necessity to sell.

ANSWER: ($106,725)

Dupont concedes that it did not object to the submitted charge.

Dupont also

concedes in its brief that “the jury was not asked to find the damages, if any, which

resulted from Dupont’s alleged breach of contract.” Despite these concessions,

Dupont argues, on appeal, that “AVA presented absolutely no evidence of any

damage it sustained by virtue of any alleged breach of contract.” This was simply not

a question that was asked of the jury. Further, the record does not indicate that

Dupont submitted a question on causation that was later refused by the trial court.

See Tex. R. Civ. P. 276.

We hold that Dupont has waived any error regarding the submission of the

damage issue. See Tex. R. Civ. P . 274; Tex. R. App. P. 33.1(a)(1); In re B.L.D. , 113

S.W.3d 340, 349 (Tex. 2003). We overrule point of error two.

Market Value

In point of error three, Dupont argues that the trial court abused its discretion

by failing to grant Dupont’s motion to strike or exclude expert testimony and in

allowing unqualified and unreliable opinion evidence of “value.” In point of error

four, Dupont contends that there is legally and factually insufficient evidence to

support the jury’s answer to the “market value” question.

Expert Testimony

Dupont alleges that

the testimony of Grant Dorsett, AVA’s founder, lacked foundation; that

Dorsett had no training or education to appraise the value of vending

machines; that values based upon experience are subjective; that Dorsett

included calculations on values of vending machines that were not

owned by AVA; that Dorsett could not produce evidence of the purchase

price of any machine in issues; and, the at [sic] effective time of his

damage estimate, he had not seen much of the equipment for some time.

We review the trial court’s decision to admit expert testimony for abuse of discretion.

E.I. du Pont de Nemours & Co., Inc. v. Robinson , 923 S.W.2d 549, 558 (Tex. 1995).

In a complaint regarding the reliability of expert testimony, a party must present it to

the trial court, or appellate review is waived. See Maritime Overseas Corp. v. Ellis ,

971 S.W.2d 402, 409 (Tex. 1998).

Before trial, Dupont filed a motion to strike AVA’s expert and exclude damage

evidence. In its motion, Dupont contended that Dorsett’s testimony would be

unreliable under rule 702 and “totally lack[ed] any measurable foundation.” It argued

that “Mr. Dorsett is not a component [sic] expert under Texas law, and this patchwork

of self-interested guesses is not admissible evidence of any damage suffered by

A.V.A.” The trial court ruled that he would take the “motion under consideration,

and you remind me to do this. And when Mr. Dorsett comes to testify and gets into

matters covered by the motion let me know. I’ll recess the jury. I’ll hear the

testimony and rule at that time.”

While questioning Dorsett during trial, AVA’s attorney asked to approach the

bench. There was a discussion off the record, and the testimony continued. Dupont

did not object to any of Dorsett’s market-value testimony.

After the jury returned its verdict, there was a hearing on AVA’s motion for

entry of judgment. The trial court granted AVA’s motion, and Dupont, “out of an

abundance of caution,” asked the trial court to rule on several motions that had not

been ruled on. One such motion was Dupont’s “motion to disallow Mr. Dorsett as an

expert witness and to bar his testimony on damages.” The trial court responded that

I think the record would reflect my ruling at the time because I did let

him testify. As I recall, I let him testify as to the thing that you objected

to. To me that ruling is there, even though you brought it up by a

separate motion. Well, for your purposes that’s denied.

There was no objection in the record during Dorsett’s testimony. The record reflects

what Dupont’s pretrial objections were to Dorsett’s testimony, but there were no

objections raised during the testimony. The record is silent as to what agreements

may have been entered into “off the record.” It is unclear from the record whether

AVA’s attorney’s request to “approach the bench” during Dorsett’s testimony was

even related to Dupont’s pretrial objection to the admissibility of Dorsett’s testimony.

Accordingly, we hold that Dupont has failed to preserve its point of error

challenging the admissibility of Dorsett’s testimony. See id . We overrule point of

error three.

Sufficiency

No objection is required, however, to preserve Dupont’s no-evidence challenge

to Dorsett’s conclusory expert testimony. See Coastal Transp. Co. v. Crown Cent.

Petroleum Corp. , 136 S.W.3d 227, 233 (Tex. 2004) (holding that objection is

required if challenging underlying methodology, technique, or foundational data

supporting expert testimony, unless testimony is wholly speculative or conclusive).

Opinion testimony that is conclusory or speculative is not relevant evidence, because

it does not tend to make the existence of a material fact “more probable or less

probable.” See Tex.R. Evid . 401; Coastal Transp. Co., Inc. , 136 S.W.3d at 232 .

Even unobjected-to conclusory testimony cannot be “some evidence” to support a

judgment. See Coastal Transp. Co., Inc. , 136 S.W.3d at 232 .

On appeal, Dupont contends that, because he “could not testify with certainty

as to the real and original purchase price of the machines,” Dorsett’s testimony was

“entirely too conjectural, arbitrary and speculative.”

Dorsett testified that he has been in the vending industry for almost 25 years,

and, during that time, he has bought approximately 4500 vending machines. He

testified that he was familiar with the cost and value of canned drink and candy

machines in the Texas market,

and he was familiar with the condition of the

machines that were at the Dupont facility on February 2, 2003. Dorsett explained that

he was familiar with the equipment in the Dupont facility because he had spoken with

representatives from Dupont on many occasions who requested updated machines.

When asked if he had expertise and knowledge equal to anyone in the vending

business, Dorsett responded that he “probably bought more machines individually

than anybody in Texas.” He explained how he valued each machine

and concluded

that the fair market value for the machines that Dupont refused to release was

$98,000, and he valued the unrecovered product inventory that was in those machines

at $8,525.25. AVA introduced two exhibits reflecting invoices for these amounts that

were sent to Dupont in March 1995.

Dorsett gave his opinion on the description of the types of machines involved,

their respective purchase cost, the condition of the machines on an average basis, the

basis for his opinion, and their market value at the time that the agreements ended.

Furthermore, Dorsett was subjected to cross-examination on his opinions. We hold

that the evidence was legally and factually sufficient to support the market value

award. We overrule point of error four.

Fatal Conflict

In point of error five, Dupont asserts that the jury’s finding that Dupont was in

lawful possession of the personal property by virtue of a qualified refusal fatally

conflicts with the jury’s finding that the same conduct constituted breach of contract.

When determining whether jury findings irreconcilably conflict, we apply a de

novo standard of review. See Bender v. S. Pac. Transp. Co. , 600 S.W.2d 257, 260

(Tex. 1980). In reviewing the jury findings for conflict, the threshold question is

whether the findings address the same material fact. Id . This Court may not strike

down jury answers on the ground of conflict if there is any reasonable basis upon

which they can be reconciled. Id . This Court must reconcile apparent conflicts in the

jury’s findings, if reasonably possible, in light of the pleadings and evidence, the

manner of submission, and the other findings considered as a whole. Id . This Court

does not determine whether the findings may reasonably be viewed as conflicting;

to the contrary, the question is whether there is any reasonable basis upon which the

findings may be reconciled. Id . However, if “one of the answers would require a

judgment in favor of the plaintiff and the other would require a judgment in favor of

the defendant, then the answers are fatally in conflict.” Little Rock Furniture Mfg.

Co. v. Dunn , 222 S.W.2d 985, 991 (Tex. 1949). If we determine that a fatal conflict

exists, we must remand to the trial court for a new trial. See Cotton Belt R.R. v.

Hendricks , 768 S.W.2d 865, 870 (Tex. App.—Texarkana 1989, no writ) ( citing Ins.

Co. of N. Am. v. Brown , 394 S.W.2d 787, 789 (Tex. 1965)).

Dupont contends that, because the jury found no conversion, the jury could not

have properly found Dupont breached any contract with AVA. We disagree.

Dupont’s argument cannot proceed past the threshold question—whether the findings

address the same material fact.

A review of the pleadings reveal that AVA pursued this case on two alternative

theories—conversion and breach of contract. AVA asserted that Dupont exercised

dominion and control over AVA’s vending machines and excluded AVA from

possession, thereby converting the property. Alternatively, AVA claimed that Dupont

breached its contract with AVA by refusing to return the vending machines when the

contract ended.

In submitting the conversion issue and, despite AVA’s objection, Dupont’s

instruction on “qualified good-faith refusal” was given to the jury. The instruction

stated as follows:

You are further instructed that the law recognizes a qualified good-faith

refusal to surrender personal property, and conversion does not occur if:

(1) [Dupont] refused to deliver the property because of a justified

need to investigate the rights of the parties.

(2)[Dupont’s] refusal to deliver the property was made in good faith

to resolve a doubtful matter.

(3)[Dupont’s] reason for its qualified refusal was distinctly stated to

AVA in a timely manner. Any reasons for refusing to turn over

the property which are not mentioned at the time of refusal are

lost and may not be raised later.

As previously stated, the breach of contract question in the charge simply asked, “Did

[Dupont] fail to comply with any of its agreements with [AVA]?” There was no

“qualified good-faith refusal” instruction given to the jury on the breach of contract

question. As such, the “qualified good-faith refusal” raised different material facts

for the jury to consider regarding conversion than had to be considered for breach of

contract.

We hold that, because the jury questions on conversion and breach of contract

addressed different material facts, there is no conflict in the answers. Accordingly,

we overrule point of error five.

Conclusion

We affirm the trial court’s judgment.

George C. Hanks, Jr.

Justice

Panel consists of Justices Keyes, Hanks, and Bland.