SCTW Health Care Center, Inc., Stan Steele, Wynell Suitt and WTCS Health Care Center, Inc. v. AAR Incorporated

In The

Court of Appeals

For The

First District of Texas

NO. 01-07-00762-CV

SCTW HEALTH CARE CENTER, INC., STAN STEELE, WYNELL SUITT

AND WTCS HEALTH CARE CENTER, INC., Appellants

V.

AAR INCORPORATED, ST. PAUL FIRE & MARINE INSURANCE

COMPANY, AND ST. PAUL MERCURY INSURANCE COMPANY,

Appellees

On Appeal from the 212th District Court

Galveston County, Texas

Trial Court Cause No. 05-CV-1448

MEMORANDUM OPINION

Appellants, SCTW Health Care Center, Inc., Stan Steele, Wynell Suitt and

WTCS Health Care Center, Inc. , (collectively “SCTW”), were sued by AAR,

Incorporated (“AAR”) for failing to pay for mold remediation and storage services

that AAR had provided. After a trial by jury, the trial court awarded AAR

$422,049.05 in damages, pre-judgment interest and attorney’s fees. SCTW contends

the trial court erred by (1) failing to exclude expert testimony regarding AAR’s

damages; (2) striking SCTW’s cross-claim against its insurers prior to trial; and (3)

in spite of legally and factually insufficient evidence, rendering judgment in AAR’s

favor on its claims of breach of contract, quantum meruit, fraud, fraudulent transfer

of assets, civil conspiracy, and breach of a contract to which AAR was a third party

beneficiary; and (4) in awarding AAR its attorney’s fees. We affirm.

FACTUAL BACKGROUND

SCTW owns and operates a nursing home facility, Bayou Pines, in La Marque,

Texas. Bayou Pines apparently sustained significant mold damage, for which SCTW

sued its various contractors and architects in 2001. St. Paul Mercury Insurance

Company (individually and collectively with its affiliate St. Paul Liability and

Casualty Insurance Company, “St. Paul”), SCTW’s insurer, ultimately paid SCTW

$3,405,611.93 for damages and expenses SCTW incurred in dealing with the mold

and remediation of its facility, and St. Paul also intervened in SCTW’s lawsuit against

its contractors to protect its subrogation interests.

AAR performs mold remediation and related services at Bayou Pines

While SCTW’s lawsuit against its contractors and architects was pending, St.

Paul recommended, and SCTW hired, AAR to perform various mold remediation

services at Bayou Pines. These services included overseeing the collection,

remediation and storage of the residents’ belongings. SCTW signed two written

contracts accepting AAR’s proposals to provide mold remediation services. The first,

dated November 7, 2003, provides

This Letter of Contract will confirm S.C.T.W. Health Care’s acceptance

of your proposal to perform work based upon the Unit Rate Sheet which

is attached and made a part of this contract for:

Clean-up, Transportation, Storage and Disposal of Misc. Mold impacted

building materials and furnishings at the above referenced location, as

outlined in the Remediation Plan S.C.T.W. Bayou Pines, prepared by

Unified Building Sciences & Engineering, Inc. and dated September 03,

2003.

. . . .

All proceeds received from St. Paul Property and Liability Insurance

Company pertaining to the work which AAR, Inc. performs will become

payable to AAR, Inc. upon receipt. . . . Upon acceptance of each

segment of the work, Stan Steele will promptly process your payment.

The second contract, dated March 3, 2004, was similar but related to

Mold remediation, including sheetrock, flooring, lighting, insulation, a/c

duct, plumbing and other items associated with the remediation of the

perimeter walls, bedroom ceilings, lights and other ceiling penetrations

as outlined in the Remediation Plan S.C.T.W. Bayou Pines, prepared by

Unified Building Sciences & Engineering Inc. and dated September 03,

2003.

Both of these contracts are in the form of a “Letter of Contract” and both documents

are on SCTW letterhead.

AAR began packing out, cleaning and storing materials and furnishings at

Bayou Pines in November 2003. In March 2004, AAR began tearing out and

cleaning mold-impacted sheetrock, flooring, and other portions of the Bayou Pines

building. AAR completed this second phase of work in April 2004. SCTW was not

yet ready, however, to rebuild its facility at that time. Accordingly, AAR continued

to provide climate control in the Bayou Pines building until SCTW could re-build its

facility. AAR also continued to store SCTW’s furnishings.

AAR does not receive full payment for its services

SCTW paid for a portion of AAR’s work by negotiating and delivering to AAR

two insurance checks made jointly payable to AAR and SCTW. The two joint checks

did not, however, pay for all of the services AAR had rendered. Specifically, AAR’s

fees for continuing building climate control services and storage of the furnishings

remained unpaid.

Due to the continuing disagreement between SCTW and St. Paul regarding

SCTW’s insurance coverage, SCTW had not rebuilt the Bayou Pines facility as of the

end of September 2004. St. Paul stopped coverage under its policy for AAR’s

ongoing building climate control and storage services on October 1, 2004. St. Paul

also told SCTW it would pay no more money under the insurance policy.

By September 2004, AAR became impatient with the lack of payment on the

remaining sums due, and gave SCTW notice of its intent to file a lien. In late

September 2004 —after SCTW had received its final payments from St. Paul—Stan

Steele, SCTW’s Vice President, met with AAR’s Dwain Bankston and Michael

Mackey to discuss AAR’s outstanding charges and continuing services. Despite

having been notified by St. Paul that no further proceeds would be paid under the

policy, and despite having received $240,000 from St. Paul to cover AAR’s amounts

due, Steele told AAR’s representatives that he was still having disputes with St. Paul

concerning what the insurance policy covered and that he believed St. Paul should

pay for AAR’s services. Steele offered to pay AAR $125,000 toward AAR’s

outstanding charges for building climate control and storage. The parties agreed on

an allocation of the $125,000 between the outstanding charges for storage and

building climate control, leaving an unpaid balance that Steele stated would be paid

by SCTW when it was successful in the Contractor Lawsuit.

During this meeting, Steele did not tell AAR’s representative that St. Paul had

just paid SCTW over $1.6 million, or that St. Paul’s allocation of funds paid to SCTW

included $240,000 to pay for AAR’s building climate control and storage services.

Steele also never told AAR that SCTW and St. Paul had agreed that insurance

coverage for continued building climate control and storage services would end on

October 1, 2004. Instead, Steele requested that AAR continue to provide services and

also requested that it try to obtain reduced pricing. According to AAR’s

representatives, Steele also specifically promised to pay for ongoing building climate

control services and storage, even if St. Paul did not.

SCTW and St. Paul enter into a Rule 11 Agreement in the Contractor Lawsuit

On August 28, 2005, SCTW entered into a Rule 11 Agreement with St. Paul

in the Contractor Lawsuit. The Rule 11 Agreement contemplated a formal settlement

agreement, which was subsequently executed on August 30, 2005. As part of the

settlement agreement, St. Paul agreed to take no more than $1,000,000 of the

Contractor Lawsuit proceeds—significantly less than the amount St. Paul paid SCTW

on the Bayou Pines claim. In exchange, SCTW agreed, among other things, to release

St. Paul from any further obligations under the insurance policy. As part of the

settlement agreement, SCTW and St. Paul agreed that SCTW would “address any

claims of AAR/ServPro . . . .”

AAR files suit against SCTW and St. Paul

SCTW ultimately received $892,000 as a result of its lawsuit against the

architects and contractors. On October 26, 2005, following the successful conclusion

of SCTW’s lawsuit against these contractors, AAR demanded full payment of its

outstanding charges for building climate control and storage. SCTW refused to pay

the amounts demanded by AAR. Accordingly, on November 8, 2005, AAR filed the

lawsuit forming the basis of this appeal against SCTW and against Steele and his

sister Wynell Suitt, the President of SCTW. In addition, AAR filed suit against St.

Paul.

In its petition, AAR alleged claims for breach of contract, quantum

meruit/implied contract, fraud, negligent misrepresentation, misapplication of trust

funds, civil conspiracy, and tortious interference with contract related to mold

remediation, climate control, and contents storage services AAR provided to SCTW.

SCTW filed a counterclaim against AAR for fraud, negligent misrepresentation, and

violations of the Texas Deceptive Trade Practices Act.

SCTW transfers $500,000 to another corporate entity

In 2006, after AAR filed its suit against SCTW , SCTW transferred over

$500,000—the amount remaining from its recovery in the Contractor Lawsuit—to

another corporate entity, WTCS. WTCS was the corporate entity running the new

facility to which displaced Bayou Pines residents had been transferred. Wynell Suitt

was also the President of WTCS. SCTW did not receive anything of value for the

transfer. In fact, SCTW’s sole asset identified at trial, other than the vacant Bayou

Pines building that had been gutted by mold remediation and which Wynell Suitt

described as “defunct, ” was a unsecured note for $1,042.741.47 owed by WTCS to

SCTW (the “WTCS Note”). This WTCS Note had come due on December 31, 200 4 ,

and still had not been paid at the time of trial. Wynell Suitt admitted at trial that

WTCS lacked the funds to pay the Note.

At the time SCTW transferred the money to WTCS, SCTW was in default on

a building loan. At the time of the underlying trial in April 2007, Wynell Suitt

testified that SCTW owed $43,000 per month on that loan and that no payments had

been made on that loan for three years.

In the underlying lawsuit, both AAR and SCTW sought an interpretation of the

SCTW/St. Paul Rule 11 Agreement

On March 16, 2007—the deadline for amending and supplementing

pleadings— AAR filed its Third Amended Original Petition, adding an allegation that

AAR was a third-party beneficiary of the Rule 11 settlement agreement between

SCTW and St. Paul in the prior Contractor Lawsuit and that SCTW breached that

agreement. On the same day, SCTW filed its Original Cross-Claim against St. Paul

seeking a declaratory judgment that its agreement in the Rule 11 to “address” the

amounts due AAR was ambiguous and could not be enforced.

Shortly thereafter, St. Paul filed a motion to dismiss SCTW’s declaratory

judgment Cross-Claim, asserting that the Cross-Claim was improper because AAR

had already placed the settlement agreement at issue by pleading AAR was a third-party beneficiary of the settlement agreement which SCTW breached. St. Paul also

asserted that SCTW’s Cross-Claim should be dismissed because SCTW was merely

using the declaratory judgment to deny liability to AAR’s claims and to obtain

attorney’s fees. St. Paul further requested SCTW’s Cross-Claim be dismissed

because SCTW’s request that the trial court deem certain settlement agreement

language to be ambiguous and strike a complete sentence in its entirety from the

settlement agreement was not a proper remedy.

On the day of the oral hearing on St. Paul’s motion to dismiss, SCTW filed an

amended Cross-Claim asking the court to either invalidate the settlement language

or have the jury determine its meaning. After reviewing the evidence and hearing the

parties’ arguments, the trial court granted St. Paul’s motion to dismiss SCTW’s

Cross-Claim.

Thereafter, prior to trial, AAR resolved its claims against St. Paul and filed a

motion to dismiss all claims against St. Paul with prejudice, which the trial court

granted. SCTW subsequently supplemented its answer to AAR’s claims, denying that

AAR was a third-party beneficiary of the SCTW/St. Paul settlement agreement and

complaining that the settlement agreement language was ambiguous.

The jury trial and final judgment in favor of AAR

All remaining claims proceeded to trial on April 10, 2007, and the jury returned

a verdict in favor of AAR and against SCTW, Steele and Suitt on all submitted

questions.

The jury charge in this case was submitted with a damages question for each

theory of liability. The jury made the following findings: (1) SCTW and AAR agreed

for AAR to provide storage services or climate control services to SCTW; (2) SCTW

failed to comply with its agreement relating to AAR’s services; (3) AAR should be

awarded $290,211.01 for SCTW’s failure to comply with that agreement; (4) AAR

performed compensable work for SCTW; (5) AAR should be awarded $290,211.01

for that compensable work; (6) SCTW, Steele and Suitt committed fraud against

AAR; (7) AAR should be awarded $168,000 for damages sustained as a result of that

fraud; (8) SCTW fraudulently transferred assets to WTCS; (9) SCTW transferred

$550,000 to WTCS; (10) Steele and Suitt were part of a conspiracy to fraudulently

transfer SCTW’s assets, thus harming AAR; (11) SCTW failed to comply with its

settlement agreement with St. Paul; (12) AAR was a third party beneficiary to the

agreement between SCTW and St. Paul; (13) AAR should be awarded $290,211.01

for SCTW’s failure to comply with the settlement agreement; and (14) AAR should

be awarded $89,500 for its attorney’s fees for preparation and trial, $20,000 for

attorney’s fees in case of an appeal to the Court of Appeals, and $75,000 in attorney’s

fees in case of an appeal to the Supreme Court of Texas.

Although the jury had found in its favor on all of its submitted theories of

liability, AAR only moved for entry of judgment on the jury’s findings regarding

breach of contract, fraudulent conveyance and conspiracy to fraudulently convey

assets. The trial court granted the motion, awarding AAR actual damages in the

amount of $290,211.01, less $32,995.68 in settlement credits. The judgment also

awarded AAR pre-judgment interest and attorney’ s fees through trial, plus post-judgment interest, costs, and attorney’s fees on appeal.

ANALYSIS

I. Did the trial court err by allowing AAR’s expert to testify regarding

damages ?

In its first issue, SCTW complains that the trial court erred by (1) denying its

pre-trial motion to exclude expert testimony on AAR’s damages and (2) overruling

its trial objection to damages testimony from Dwain Bankston, whom AAR

designated as both a fact witness and an expert witness. At trial, Bankston testified

that the unpaid storage charges accrued from January 2004 to June 2006 and unpaid

climate control charges accrued from January 2004 through June 2005 amounted to

$290,211.01.

On appeal, SCTW contends that the trial court’s decision to allow Bankston to

testify regarding damages violates the Texas Rules of Civil Procedure because AAR

did not properly designate Bankston as an expert within the deadlines set by the

docket control order, and because AAR’s disclosures failed to adequately set forth

Bankston’s mental impressions and opinions, and the basis for those impressions and

opinions. Nor, argues SCTW, did AAR produce documentation that had been

reviewed by Bankston in reaching these opinions. SCTW, prior to trial, moved to

exclude Bankston on these grounds. The trial court overruled the motion without

specifying the reason for its decision. At trial, SCTW objected to Bankston offering

testimony that differed from AAR’s pre-trial disclosures, even though Bankston

testified that AAR’s damages were less than what had been in its disclosures, and

SCTW cross-examined him extensively on the issue of damages.

In response, AAR argues that the trial court did not abuse its discretion in

allowing Bankston to testify as to his mental impressions because AAR’s disclosures

were adequate under the discovery rules, and because Bankston’s testimony regarding

certain documents that were created shortly before trial did not prejudice SCTW

because these documents were merely summaries of Bankston’s deposition testimony

and other previously disclosed damages information.

A. SCTW’s Pre-trial Motion to Exclude Any Expert Testimony

Rule 194.2 requires disclosure of information regarding experts before trial,

provide adequate information about the experts’ opinions for the opposing party to

prepare to cross-examine the experts and to rebut the testimony with their own

experts. Taylor Foundry Co. v. Wichita Falls Grain Co. , 51 S.W.3d 766, 773 (Tex.

App.—Fort Worth 2001, no pet.). For testifying experts, Rule 194.2(f) allows a party

to request disclosure of the expert’s name, address and telephone number; the subject

matter on which the expert will testify; the general substance of the expert’s mental

impressions and opinions and a brief summary of the basis for them; all documents,

tangible things, reports, models, or data compilations that have been provided to,

reviewed by, prepared by or for the experts in anticipation of the expert’s testimony;

and the expert’s current resume and bibliography . Tex. R. Civ. P. 194.2(f). A party

is under a continuing duty to amend or supplement the response when it learns that

a response is no longer “complete and correct.” Tex. R. Civ. P. 193.5(a). Under

Texas Rule of Civil Procedure 193.6, an expert witness who is not timely identified

during discovery will not be permitted to testify unless the court finds good cause for

the proponent’s failure to timely identify the expert or finds that the opposing party

is not unfairly surprised or prejudiced by the expert’s testimony. In re Toyota Motor

Corp. , 191 S.W.3d 498, 501 (Tex. App.—Waco 2006).

We review a trial court’s decision to admit or exclude expert testimony for an

abuse of discretion. K-Mart Corp. v. Honeycutt , 24 S.W.3d 357, 360 (Tex. 2000).

A trial court abuses its discretion when it rules on the admissibility of evidence in an

arbitrary or unreasonable manner or without reference to guiding legal principles or

rules. Carpenter v. Cimarron Hydrocarbons Corp. , 98 S.W.3d 682, 687 (Tex. 2002). The parties do not dispute that SCTW timely requested the information listed

in Rule 194.2(f) from AAR, or that AAR timely responded to those requests.

SCTW’s arguments on this point instead relate to the adequacy of those responses.

SCTW contends that the trial court should have granted its pre-trial motion to exclude

all of AAR’s proposed expert testimony because AAR’s discovery responses failed

to state the particular mental impressions and opinions of AAR’s expert witnesses,

the bases for their opinions, and AAR failed to attach documents or data compilations

that had been reviewed by, provided to or prepared by or for the experts in

anticipation of their trial testimony. Accordingly, SCTW sought to exclude any

expert testimony for AAR at trial on the grounds that AAR had failed to timely

disclose its expert opinions and had further failed to show any good cause or lack of

unfair surprise, as would be required under Texas Rule of Civil Procedure 193.6 for

expert opinions made past discovery deadlines to be admitted into evidence.

Here, the trial court did not abuse its discretion by failing to exclude

Bankston’s testimony as an expert regarding AAR’s damages. AAR’s pre-trial

discovery disclosures included a detailed listing—with dates, description and

amounts—of the outstanding invoices for which AAR sought payment, amounting

to approximately $ 309,703.19. AAR disclosed that Bankston was an officer of AAR

and had “knowledge commensurate with [his] position, including knowledge of

charges for the project made the basis of this suit, payments received by AAR, the

work performed and the usual and customary charges for the work performed on the

project made the basis of this suit.” In addition, AAR disclosed that Bankston would

testify as an expert witness and that he had “experience and training in mold and

environmental remediation.” AAR’s disclosures stated that it was Bankston’s opinion

that “the charges for [AAR’s] services . . . are usual, customary, reasonable and

necessary charges for work performed and that the work performed was reasonable

and necessary.” AAR also produced a copy of Bankston’s resume, which listed his

responsibilities as including “[e]stimating and finalizing estimates of other

estimators;” “[t]racking accounts payable and receivable;” and “[m]onitoring job

costs, productivity and manpower.” Bankston produced an expert report stating that

the charges AAR sought were reasonable, and pointed to his deposition testimony

regarding those amounts. Bankston again stated that his opinion regarding those

charges, for which SCTW had been invoiced, were based on his experience in the

industry.

We find AAR’s pre-trial disclosures gave SCTW ample notice of the

experience and data from which Bankston drew his opinions and the substance of

those opinions. In its motion to exclude and on appeal, SCTW argues that the

amounts Bankston stated are due to AAR do not reflect all of the credits and offsets

due to SCTW, and that Bankston’s opinions in the pretrial disclosures do not set out

all of the criteria by which the prices charges might be calculated—for example, the

motion notes that Bankston offers an opinion that the storage charges AAR sought

were reasonable, but did not provide a summary of the methodology by which such

rates might have been calculated. These arguments, however, do not go to the

adequacy of AAR’s disclosures regarding Bankston’s testimony on damages.

Instead, SCTW’s arguments relate to the facts upon which SCTW might seek to

cross-examine Bankston at trial. The mere fact that an expert has not disclosed every

fact within his knowledge, or that his opinion or impression might be arguably

incorrect, is not grounds for finding disclosure of his opinion inadequate under Rule

194.2(f) or grounds for exclusion under Rule 193.6. The trial court did not abuse its

discretion in denying SCTW’s pre-trial motion to exclude Bankston.

B. SCTW’s Trial Objections to Bankston’s Testimony

At trial, SCTW objected to Bankston’s testimony on the grounds that the basis

for his opinions had not been properly disclosed at least 30 days before trial and on

the grounds that Bankston testified using documents that had been prepared shortly

before trial. In addition, SCTW appears to have objected to any deviation between

the testimony Bankston gave at trial from what he offered in his deposition.

We must uphold a trial court’s evidentiary ruling if there is any legitimate basis

in the record to support it. Owens-Corning Fiberglass Corp. v. Malone , 972 S.W.2d

35, 43 (Tex. 1998); Taylor v. Tex. Dep’t of Protective & Regulatory Servs. , 160

S.W.3d 641, 650 (Tex. App.—Austin 2005, pet. denied) .

In this case, Bankston’s damages testimony relied upon the contracts that

SCTW had signed, in particular the rates specified within those contracts, and the

invoices AAR and its subcontractor had forwarded to SCTW. Further, although

AAR’s final damages calculation at trial was different than the amount specified in

its pleadings and discovery, the amount sought at trial was less than what had been

previously stated. Although it points to Bankston’s admissions that the documents

from which he testified—summaries of various charges—had been prepared shortly

before trial, SCTW does not claim that it lacked the underlying documentation of

contracts and invoices about which Bankston testified, nor does it argue that it was

unfairly surprised by the amounts that AAR sought to recover.

In our opinion in Branham v. Brown , this Court noted that

[t]he general rule in Texas is that a party must make a full and complete

response to proper discovery requests, and this obligation includes the

duty to timely supplement discovery at least 30 days before trial. This

duty to supplement especially applies to information concerning expert

witnesses, and the trial court should exclude the testimony of an expert

witness when the duty to supplement has been violated. However, our

rules do not prevent experts from refining calculations and perfecting

reports through the time of trial.

925 S.W.2d 365, 370 (Tex. App.—Houston [1st Dist.] 1996, no writ) (citations

omitted). Further, “[c]aution must be taken in applying Rules 193.5(a) and 193.6 for

neither prevents an expert from refining his calculations and perfecting his report

through time of trial.” Koko Motel, Inc. v. Mayo , 91 S.W.3d 41, 50 (Tex.

App.—Amarillo 2002, pet. denied) (citing Exxon Corp. v. W. Tex. Gathering Co. , 868

S.W.2d 299, 304 (Tex. 1993); Foust v. Estate of Walters , 21 S.W.3d 495, 504 (Tex.

App.—San Antonio 2000, pet. denied).

We find the analysis in Lubbock County v. Strube instructive. 953 S.W.2d 847

(Tex. App.—Austin 1997, pet. denied). In Strube , the expert made additional

calculations immediately before trial regarding the plaintiff’s damages. Id. Though

the percentage of diminished earning capacity factored into the equation by the expert

increased, the methodology or formula he used to derive the sums did not. And,

because it did not, the court held that Lubbock County had the requisite information

it needed to “attack [the expert’s] testimony . . . whatever the level of diminished

earning capacity.” Id. at 856 . So, there were no “fundamental alterations that would

constitute a surprise attack” and necessitate supplementation. Id .; see W. Tex.

Gathering Co. , 868 S.W.2d at 304 (stating that the duty to supplement requires that

opposing parties have sufficient information about an expert’s opinion to prepare a

rebuttal with their own experts).

Similarly, in Navistar International Transportation Corporation v. Crim Truck

& Tractor Company , the court refused to hold that the new opinions of Navistar’s

expert had to be excluded because the new opinions did not constitute a “material

change in [the expert’s] testimony” but rather evinced “an expansion on an already

disclosed subject.” 883 S.W.2d 687, 691 (Tex. App.—Texarkana 1994, writ denied) .

At trial, the following exchange occurred while counsel for AAR was

questioning Bankston:

[Counsel for AAR]: Now, how much money is owed to AAR, Incorporated that you are asking this jury to

award?

[Counsel for SCTW]: Objection. That question violates a pre-trial

order. The answer certainly would. May we

approach?

THE COURT: Yes.

[Bench conference, on the record]

[Counsel for SCTW]: Your Honor, I believe [Counsel for AAR] is trying

to elicit answers from the witness which is going to

be something different from the last set of damages

figures in his request for disclosure which is

Defendant’s exhibit 8 . . . The amount of money in

their disclosures 30 days before trial is 309,703.19.

I am pretty sure, although Mr. Koger was about to

say something totally different.

THE COURT: Why?

[Counsel for SCTW]: Why? There was a conversation we had yesterday –

I’ll let him speak for himself.

[Counsel for AAR]: I am asking for less than what’s shown as the total

amount of damages.

[Counsel for SCTW]: You are asking for less than 309?

[Counsel for AAR]: Yes.

THE COURT: What’s your problem?

[Counsel for SCTW]: My problem is they didn’t give us the exact

calculation up until the day of trial and all of a

sudden we are going to get calculations from them

that have never been provided before, so we can’t

really be prepared for cross examination.

THE COURT: Overruled.

This evidence to which SCTW objected were mathematical calculations and

summaries of charges stated in invoices sent to SCTW. Based on the record before

us, Bankston’s decision to testify to fewer rather than all of these charges, and AAR’s

decision to seek less than the damages it stated in its pleadings, did not diminish or

in any way impair SCTW’s ability to cross-examine Bankston on his testimony. If

anything, Bankston’s change in testimony provided SCTW an avenue by which to

impeach Bankston and impair his credibility before the jury. As stated above, SCTW

does not contend that it did not have these invoices or that it was unaware of the

charges that accrued over a period of several months. Accordingly, in this case, we

hold that the trial court did not abuse its discretion by allowing Bankston to testify

as to AAR’s damages, or in admitting the summaries he prepared of the numerous

invoices that AAR sent to SCTW.

C. SCTW’s Havner Objection

SCTW also complains that the trial court erred when it overruled its trial

objections to Bankston’s testimony regarding reasonableness and necessity of the

charges because “his testimony was not based on sufficient underlying facts or data,

making his opinions inadmissible TRE 702, 703 and 705, Merrell Dow

Pharmaceuticals v. Havner , 953 S.W.2d 549 (Tex. 1995) .” In its appellate brief,

however, SCTW fails to explain which of Bankston’s particular statements it finds

violate the standards of scientific reliability as set forth in Havner and the cited Rules

of Evidence, nor does SCTW provide us with any citations to the record to support

this portion of its argument. Accordingly, this portion of the argument has been

waived. See Tex. R. App. P. 38.1(i) (an appellant’s brief must contain a clear and

concise argument for contentions made, with appropriate citations to authorities and

to record).

We overrule SCTW’s first issue.

II. Did the trial court err by striking SCTW’s Cross-Claim against St. Paul?

In its second issue, SCTW complains that the trial court erred by striking its

Cross-Claim against its insurer, St. Paul. St. Paul was already a co-defendant, having

been named in AAR’s original and supplemental petitions. In its Second Amended

Original Petition, filed August 22, 2006, AAR made claims for quantum meruit, fraud

and negligent misrepresentation against St. Paul based on its solicitation and

acceptance of work on the Bayou Pines facility, its failure to inform AAR that it

would not fully cover SCTW’s claimed losses, and its failure to inform AAR that it

had already disbursed “hundreds of thousands of dollars” under the insurance policy

to SCTW that it expected SCTW to pay to AAR. On September 27, 2006, St. Paul

answered with a general denial and by asserting the affirmative defense that others,

i.e., SCTW, were responsible for the acts upon which AAR based its suit. In a

Supplemental Petition filed October 5, 2006, AAR brought a breach of contract claim

against St. Paul based upon St. Paul’s failure to issue checks jointly to SCTW and

AAR, despite its promise to AAR that it would do so. For its part, SCTW had

answered the causes of action asserted against it in June 2006, asserting the

affirmative defense that AAR was estopped from seeking payment from SCTW

because AAR had allegedly agreed to seek payment from St. Paul.

SCTW filed an Original Cross-Claim against St. Paul on March 16, 2007, and

in this pleading SCTW alleged that it and St. Paul were parties to a binding

contract—the Rule 11 Agreement executed by St. Paul and SCTW during the

SCTW’s lawsuit against its contractors and architects, in which SCTW agreed it

would “address” the claims against it by AAR—and SCTW sought a declaratory

judgment from the trial court that this contract was ambiguous and therefore invalid.

St. Paul filed a motion to strike this pleading, arguing that the issues raised, i.e. ,

whether and to what extent SCTW had undertaken the obligation to pay AAR by

signing the Rule 11 Agreement with St. Paul, were already before the court by way

of AAR’s Third Amended Petition asserting that AAR was a third party beneficiary

to the Rule 11 Agreement between St. Paul and SCTW. St. Paul also alleged that

SCTW’s request that the clause at issue be stricken entirely from the agreement

and/or declared invalid was an improper remedy. Declaratory relief is not available

to settle a dispute that is currently pending before a court. BHP Petroleum Co., Inc.

v. Millard , 800 S.W.2d 838, 841 (Tex. 1990) (orig. proceeding); Staff Ind., Inc. v.

Hallmark Contracting, Inc. , 846 S.W.2d 542, 547-48 (Tex. App.—Corpus Christi

1993, no writ); John Chezik Buick v. Friendly Chevrolet , 749 S.W.2d 591, 594 (Tex.

App.—Dallas 1988, writ denied) (concluding that declaratory judgment counterclaim

was not properly brought because issue raised by defendant was already before court

as part of plaintiff’s case).

SCTW argues that the trial court improperly struck its Cross-Claim seeking a

declaratory judgment against St. Paul. On appeal, SCTW focuses its argument on the

issue of whether its Cross-Claim or AAR’s Third Amended Petition was the

document “first-filed” with the district court. SCTW ignores, however, the fact that

the issue at the heart of its Cross-Claim—whether and to what extent it assumed any

obligation to pay for AAR’s work by virtue of the Rule 11 Agreement with St.

Paul’s—was already at play in the pleadings filed by the parties. For example,

AAR’s claims against St. Paul included an allegation that St. Paul had committed

breach of contract and fraud and/or negligent misrepresentation by failing to inform

AAR that it would be SCTW’s responsibility, not St. Paul’s, to pay for the work AAR

performed. Further, St. Paul had answered AAR’s claims by asserting the affirmative

defense that others, i.e., SCTW, were responsible for the acts upon which AAR based

its suit. In other words, the meaning of the Rule 11 Agreement—what responsibility

was conferred upon SCTW when it agreed to “address” AAR’s “issues”—was already

before the trial court at the time SCTW filed its Cross-Claim seeking declaratory

relief as to that language. Accordingly, the trial court did not err by striking SCTW’s

Cross-Claim against St. Paul. We overrule SCTW’s second issue.

III. Were the jury’s findings in favor of AAR supported by legally and factual

sufficient evidence?

SCTW challenges each of the jury’s findings against it, alleging that the jury’s

findings are not supported by legally or factually sufficient evidence. At the outset,

we note that SCTW challenges each of the jury’s findings in this case on the grounds

of legal and factual sufficiency. However, because the trial court’s judgment was

based on only upon the jury’s affirmative findings relating to AAR’s breach of

contract, fraudulent conveyance and conspiracy to fraudulently convey claims, we

review only those findings, plus the jury’s findings regarding attorney’s fees.

A. Legal and Factual Sufficiency Standards of Review

In reviewing the legal sufficiency of the evidence to support a jury’s finding,

“we consider whether the evidence at trial would enable reasonable and fair-minded

people to reach the verdict under review, crediting favorable evidence if reasonable

jurors could and disregarding contrary evidence unless reasonable jurors could not.”

Adams v. YMCA of San Antonio , 265 S.W.3d 915, 917 (Tex. 2008) (per curiam)

(citing City of Keller v. Wilson , 168 S.W.3d 802, 822, 827 (Tex. 2005)). “We

consider all of the evidence in the light most favorable to the verdict, and indulge

every reasonable inference that would support it.” Id.

When considering a factual sufficiency challenge to a jury’s verdict, we must

consider and weigh all of the evidence, not just that evidence which supports the

verdict. Maritime Overseas Corp. v. Ellis , 971 S.W.2d 402 , 406–07 (Tex. 1998);

Ortiz v. Jones , 917 S.W.2d 770, 772 (Tex. 1996) (per curiam). A verdict may only

be set aside if it is so contrary to the overwhelming weight of the evidence as to be

clearly wrong and unjust. Maritime Overseas Corp ., 971 S.W.2d at 407 ; see also

Cain v. Bain , 709 S.W.2d 175, 176 (Tex. 1986) (per curiam). In conducting our

review of the factual sufficiency of the evidence, we are mindful that the jury, as

fact-finder, was the sole judge of the credibility of the witnesses and the weight to be

given their testimony. City of Keller , 168 S.W.3d at 819 .

B. Breach of Contract

In its third issue, SCTW challenges the legal and factual sufficiency of the

jury’s finding that it breached a contract with AAR. The elements of a breach of

contract claim are: (1) the existence of a valid contract; (2) performance or tendered

performance by the plaintiff; (3) breach of contract by the defendant; and (4) damages

sustained as a result of the breach. Valero Mktg. & Supply Co. v. Kalama Int’l,

L.L.C. , 51 S.W.3d 345, 351 (Tex. App.—Houston [1st Dist.] 2001, no pet.).

SCTW argues that the contracts at issue in this case were negotiated by St. Paul

and AAR, not between SCTW and AAR. Specifically, SCTW points to contract

language naming St. Paul, not SCTW, as the “payor” and contrary to testimony that

AAR representatives knew that St. Paul would review SCTW’s costs and would make

recommendations on the pricing . SCTW contends that the only evidence of any

agreement between SCTW and AAR is Steele’s verbal agreement that SCTW would

pay for climate control charges incurred from October 1, 2004 forward. SCTW

contends that there is no evidence that it similarly agreed to pay for any storage

charges from October 1, 2004 onward, and no evidence that it agreed to be

responsible for the entire amount of charges incurred between January 2004 and June

2006. SCTW contends that the evidence mandates that we find the judgment on

AAR’s breach of contract claim to be supported by legally and factually insufficient

evidence. We disagree.

The jury was presented with evidence, in the form of contracts bearing the

signature of Stan Steele, SCTW’s Vice President, that SCTW accepted AAR’s

proposals to perform services on its behalf. These contracts were on SCTW’s own

letterhead. The services listed in the contracts included “Clean-up, Transportation,

Storage and Disposal of Misc Mold impacted building materials and furnishings” and

“Mold remediation.” While the documents, dated November 7, 2003 and March 3,

2004, do reference SCTW’s “understanding” that the work would be a covered loss

under its policy with St. Paul’s, SCTW’s acceptance of AAR’s work—and its

responsibility to pay for that work—is never made contingent upon that being the

case. In fact, the documents agree that “[u]pon acceptance of each segment of work,

Stan Steele will promptly process your payment.” In addition, although a signature

line appears for it, St. Paul did not sign the documents at issue. While SCTW

complains that it did not have an opportunity to negotiate the terms of the pricing

reflected in these contracts, it does not deny that Steele signed the contracts on its

behalf. Similarly, it does not contend that the language of these particular contracts

is ambiguous in any way. Nor does SCTW dispute that it accepted the services AAR

rendered. Finally, SCTW does not dispute that it failed to pay all of the invoices for

climate control and storage which were sent to it by AAR, which Bankston testified

amounted to $290,211.01 . At trial, Wynell Suitt, SCTW’s President, testified she did

not know why SCTW did not pay AAR in full after receiving the October 26, 2005

demand. She agreed, however, that the obligations for the unpaid storage and climate

control services that SCTW received after October 1, 2004 were sums SCTW had

agreed to pay.

We therefore hold, after considering all of the evidence in the light most

favorable to the verdict, indulging every reasonable inference that would support the

verdict, that the evidence is legally sufficient to support the jury’s finding on AAR’s

breach of contract claim against SCTW. Similarly, considering and weighing all of

the evidence, not just that evidence which supports the verdict, we hold that the

evidence is factually sufficient to support the jury’s verdict on AAR’s breach of

contract claim against SCTW. We overrule SCTW’s third issue.

C. Fraudulent Transfer of Assets

The jury charge included a question tracking the elements of the Texas

Uniform Fraudulent Transfer Act (“TUFTA”), as set out in Section 24.006 of Texas

Business and Commerce Code. The purpose of TUFTA is to prevent debtors from

defrauding creditors by placing assets beyond their reach. Tel. Equip. Network, Inc.

v. TA/Westchase Place, Ltd. , 80 S.W.3d 601, 607 (Tex. App.—Houston [1st Dist.]

2002, no pet.). TUFTA provides remedies to creditors of debtors who fraudulently

transfer assets under certain circumstances. See Tex. Bus. & Com. Code Ann.

§§ 24.005-.006, .008 (Vernon’s 2009). Section 24.006(a) states,

A transfer made or obligation incurred by a debtor is fraudulent as to a

creditor whose claim arose before the transfer was made or the

obligation was incurred if the debtor made the transfer or incurred the

obligation without receiving a reasonably equivalent value in exchange

for the transfer or obligation and the debtor was insolvent at that time or

the debtor became insolvent as a result of the transfer or obligation.

Id. § 24.006(a). Therefore, in order to prove that SCTW’s transfer to WTCS was

fraudulent under section 24.006(a), AAR was required to show (1) a claim against

SCTW arising prior to the transfer; (2) WTCS did not pay reasonably equivalent

value for the transfer; and (3) SCTW was insolvent at the time of the transfer or

became insolvent as a result of the transfer.

SCTW argues that there was insufficient evidence to establish its “insolvency”

under the statute.

SCTW contends that the only evidence in the record of its debts

or assets at the time of the transfer was that it was in default of a loan at the time of

trial but that no other evidence of its assets or obligations was presented.

Under TUFTA, a debtor is insolvent “if the sum of the debtor’s debts is greater

than all of the debtor's assets at a fair valuation” and “a debtor who is generally not

paying the debtor’s debts as they become due is presumed to be insolvent.”

Id. § 24.003(a) , (b). The jury charge contained instructions to this effect.

The jury heard evidence of at least two debts that SCTW acknowledged it owed

but had failed to pay—the loan payment of $43,000 per month that was three years

overdue at the time of trial, and the AAR payments which Wynell Suitt admitted

SCTW owed to AAR. In addition, the jury heard that SCTW’s sole source of income,

the Bayou Pines facility was “defunct” and in need of significant additional work

before residents could return to it, and that the residents of the Bayou Pines facility

had all been moved to another facility run by another corporate entity. Finally, the

jury heard that SCTW held a note from WTCS that was three years overdue and

which WTCS lacked the funds to pay, and that SCTW had transferred the funds it

received from its Contractor Lawsuit to WTCS despite the outstanding note and its

own outstanding loan and other debts. Considering all of the evidence in the light

most favorable to the verdict, indulging every reasonable inference that would

support the verdict, we hold that the evidence is legally sufficient to support the jury’s

verdict that SCTW fraudulently transferred assets to WTCS. Similarly, considering

and weighing all of the evidence, not just that evidence which supports the verdict,

we hold that the evidence is factually sufficient to support the jury’s verdict that

SCTW fraudulently transferred assets to WTCS.

D. Civil Conspiracy

The elements of civil conspiracy are (1) two or more persons; (2) an object to

be accomplished; (3) a meeting of minds on the object or course of action; (4) one

or more unlawful, overt acts; and (5) damages as the proximate result . See

Operation Rescue-Nat’l v. Planned Parenthood , 975 S.W.2d 546, 553 (Tex. 1998).

The jury was asked to determine whether Stan Steele or Wynell Suitt were part of a

conspiracy to fraudulently transfer assets from SCTW.

SCTW argues that there was

no evidence presented of any “object to be accomplished” by the transfer of its assets

to WTCS, and that the evidence is therefore insufficient to support the jury’s verdict.

Conspiracy may be established by circumstantial evidence. See Lesikar v.

Rappeport , 33 S.W.3d 282, 302 (Tex. App.—Texarkana 2000, pet. denied). In this

case, the jury heard evidence that Wynell Suitt and Stan Steele were both officers of

SCTW and WTCS, and that they allowed SCTW to transfer over $500,000 of its

assets to WTCS after AAR filed suit against SCTW, even though SCTW was

insolvent at the time and had no ability to generate income for the foreseeable future,

and even though WTCS already owed over a million dollars on an unsecured note to

SCTW that it had failed to repay. In addition, the jury heard evidence of the close

interrelationships between Suitt, Steele, SCTW and WTCS, including the fact that

Suitt and Steele had each invested approximately one million dollars of their own

money in the Bayou Pines facility. Finally, the jury heard evidence that SCTW,

Steele and Suitt failed to reveal to AAR that SCTW had received a substantial amount

of money from St. Paul and from the Contractor Lawsuit and that SCTW had chosen

to transfer that money to WTCS rather than pay the invoices AAR had presented to

it.

While it is true that there was no evidence presented of a formal agreement

between Suitt and Steele regarding “an object to be accomplished,” the evidence at

trial is sufficient to support the jury’s finding that Steele and Suitt engaged in a

conspiracy to fraudulently transfer assets from SCTW to WTCS in spite of the fact

that SCTW owed money to both AAR and on its building loan.

We therefore hold, after considering all of the evidence in the light most

favorable to the verdict, indulging every reasonable inference that would support the

verdict, that the evidence is legally sufficient to support the jury’s verdict on AAR’s

civil conspiracy claim. Similarly, considering and weighing all of the evidence, not

just that evidence which supports the verdict, we hold that the evidence is factually

sufficient to support the jury’s verdict on AAR’s civil conspiracy claim. We overrule

SCTW’s sixth issue.

E. AAR’s Attorney’s Fees

SCTW contends that the award of attorney’s fees to AAR was improper

because AAR did not present sufficient evidence on any theory of liability that might

entitle AAR to recover its fees under Texas law. A party who recovers damages on

a breach of contract theory may, pursuant to statute, recover its attorney’s fees. Tex.

Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 2008). The jury question was

predicated upon the jury making an affirmative finding on any of several claims,

including breach of contract. Because we have held that the jury’s finding that

SCTW breached its contract with AAR was supported by legally and factually

sufficient evidence, we overrule SCTW’s eighth issue.

Conclusion

We overrule SCTW’s issues and affirm the trial court’s judgment below.

George C. Hanks, Jr.

Justice

Panel consists of Chief Justice Radack, Justice Alcala and Justice Hanks.