First Bank v. DTSG, LTD. and Richard Brumitt

Affirmed as Modified and Opinion filed May 28, 2015.

In The

Fourteenth Court of Appeals

NO. 14-13-00694-CV

FIRST BANK, Appellant

V.

DTSG, LTD. AND RICHARD BRUMITT, Appellees

On Appeal from the 334th District Court

Harris County, Texas

Trial Court Cause No. 2009-64498

OPINION

In this lender-liability case, a company that sought to purchase the stock of

another company sued a bank alleging the bank failed to provide promised

financing for a stock-purchase transaction. Both the company and the owner of the

stock asserted various claims against the bank. The jury answered liability and

damages questions in favor of the company and the stockowner based on each

claimant’s breach-of-contract and negligent-misrepresentation claims, and the trial

court rendered judgment on the jury’s verdict. On appeal, we conclude that (1) the

trial court abused its discretion by allowing the stockowner’s lead trial counsel to

testify as an expert as to the company’s attorney’s fees; (2) none of the bank’s

other arguments challenging the breach-of-contract claims of the company or the

stockowner have merit; and (3) the company and the stockowner may not recover

under a negligent-misrepresentation claim because, as a matter of law, neither

party showed an injury independent from economic losses recoverable under a

breach-of-contract claim. Accordingly, we modify the trial court’s judgment to

delete the award of (a) attorney’s fees to the company, and (b) negligent-

misrepresentation damages and exemplary damages to the company and the

stockholder. We affirm the trial court’s judgment as modified.

I. FACTUAL AND PROCEDURAL BACKGROUND

In September 2007, Don Oprea, President of DTS Group, LLP approached

appellant/defendant First Bank seeking to obtain a United States Small Business

Administration (“SBA”) loan to provide funds to be used to purchase the stock of

two companies from appellee/intervenor Richard Brumitt. Oprea, who had a

banking relationship with First Bank, met with Tim Duffy, who was then the

president of First Bank’s SBA loan group. Later, DTSG 1 decided that it would

seek to purchase the stock of only one these companies—Southway Systems, Inc.

1

Appellee/plaintiff DTSG, Ltd., a Texas limited partnership was formed on July 23, 2008, after

the occurrence of many of the events on which this suit is based. Nonetheless, DTSG, Ltd. filed

this suit as successor in interest to DTS Group, LLP; and the distinction between these entities is

not material to our analysis in this opinion. For ease of reference, in this opinion both DTS

Group, LLP and DTSG, Ltd are referred to as “DTSG.”

2

According to Oprea, on various occasions, First Bank promised to fund a loan for

the purchase of the stock, with the proposed loan amount varying. According to

Oprea, Duffy made the promises in oral statements, in emails, and in three

commitment letters. First Bank never funded any loan to DTSG. DTSG did not

obtain a loan from any other lender nor purchase any of Southway’s stock. And,

Brumitt never sold the Southway stock.

In October 2009, DTSG sued First Bank asserting various claims, including

breach of contract and negligent misrepresentation. Brumitt intervened and

asserted various claims against First Bank, including negligent misrepresentation

and breach of contract as a third-party beneficiary of the alleged contracts between

DTSG and First Bank. Following a trial, the jury answered liability and damages

questions in favor of DTSG and Brumitt based on each claimant’s breach-of-

contract and negligent-misrepresentation claims. The jury also found the amount

of reasonable and necessary attorney’s fees for DTSG and Brumitt. After finding

that the harm to DTSG and Brumitt resulted from First Bank’s gross negligence,

the jury assessed exemplary damages against First Bank and in favor of DTSG and

Brumitt.

The trial court denied First Bank’s motion for judgment notwithstanding the

verdict and rendered judgment on the jury’s verdict, awarding each claimant actual

damages and attorney’s fees based upon the breach-of-contract claim, actual

damages based upon the negligent-misrepresentation claim, and exemplary

damages. On appeal, First Bank challenges the legal sufficiency of the evidence

supporting various jury findings.

II. ANALYSIS

When conducting a legal-sufficiency review, we consider the evidence in the

3

light most favorable to the challenged finding and indulge every reasonable

inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 823

(Tex. 2005). We must credit favorable evidence if a reasonable jury could and

disregard contrary evidence unless a reasonable jury could not. See id. at 827. We

must determine whether the evidence at trial would enable reasonable and fair-

minded people to find the facts at issue. See id. The jury is the only judge of

witness credibility and the weight to give to testimony. See id. at 819.

A. Did the trial court err in submitting the question of DTSG’s damages to

the jury because the evidence of DTSG’s damages allegedly should not

have been admitted into evidence?

In its first issue, First Bank asserts the trial court abused its discretion by

submitting questions regarding DTSG’s damages to the jury because DTSG’s

evidence of damages was subject to the exclusionary rule contained in Texas Rule

of Civil Procedure 193.6(a). See Tex. R. Civ. P. 193.6(a). First Bank argues that,

because DTSG failed to disclose certain matters that it was required to disclose by

applicable discovery rules, the trial court had no discretion except to exclude any

evidence of DTSG’s damages. First Bank states that it objected during trial to

various attempts by DTSG to offer evidence of damages other than evidence of the

value of DTSG as of December 31, 2007, and that the trial court sustained various

objections by First Bank to evidence regarding DTSG’s damages. Though the trial

court sustained these objections, First Bank argues that the trial court erroneously

rejected its complaints that no question regarding DTSG’s damages should be

submitted to the jury because evidence of such damages was inadmissible. 2

2

First Bank states that it obtained a pre-trial ruling granting its motion in limine based on this

argument. But, this ruling did not preserve error, nor did it preclude First Bank from waiving its

evidentiary objections by failing to object to evidence or testimony during trial. See In re Toyota

4

We presume, without deciding, the following: (1) First Bank preserved

error regarding these complaints; 3 (2) upon timely objection, the trial court should

have excluded all evidence of DTSG’s damages due to DTSG’s failure to comply

with applicable discovery rules; and (3) if First Bank had made a timely

evidentiary objection to all evidence of DTSG’s damages offered at trial, the trial

court could have determined that no question regarding DTSG’s damages should

be submitted to the jury or that any answer to such a question should be

disregarded. 4

Motor Sales, U.S.A., 407 S.W.3d 746, 760 (Tex. 2013); Underwriters at Lloyds v. Edmond,

Deaton & Stephens Ins. Agency, Inc., No. 14-07-00352-CV, 2008 WL 5441225, at *6, n.7 (Tex.

App.—Houston [14th Dist.] Dec. 30, 2008, no pet.) (mem. op.).

3

First Bank asserts that it presented these complaints in a motion for directed verdict, objections

during the charge conference, and a motion for judgment notwithstanding the verdict. We

presume First Bank preserved error as to such complaints at the charge conference and in the

motion for judgment notwithstanding the verdict. First Bank moved for directed verdict after

DTSG and Brumitt rested their cases-in-chief, but this motion did not preserve error because

First Bank presented evidence after the trial court denied this motion and First Bank did not

renew the motion for directed verdict at the close of all of the evidence. See Liberty Mut. Ins.

Co. v. Heitkamp Swift Architects, Inc., No. 14-12-00873-CV, 2014 WL 261010, at *1 (Tex.

App.—Houston [14th Dist.] Jan. 23, 2014, pet. denied) (mem. op.); Dalbosco v. Seibert, No. 14-

11-00429-CV, 2012 WL 1795108, at *4–5 (Tex. App.—Houston [14th Dist.] May 17, 2012, pet.

denied) (mem. op.).

4

First Bank relies upon the Third Court of Appeals’s opinion in Robinson v. Lubbering. See No.

03-09-00605-CV, 2011 WL 749197, at *2–9 (Tex. App.—Austin Mar. 2011, no pet.) (mem.

op.). In that case, the defendants objected throughout trial to all evidence of the plaintiff’s

damages on the grounds that the evidence should be excluded based on the plaintiff’s failure to

comply with discovery rules. See id. Rather than expressly overrule or sustain these objections,

the trial court “opted to carry [defendants’] objections and motions to exclude through trial and

ultimately to submit, over objection, [plaintiff’s] damages claims to the jury.” Id. at *2. After

the jury answered and found liability and damages as to one of the claims, the trial court

disregarded the damage finding on the ground that the evidence of plaintiff’s damages should

have been excluded based on the objections the trial court had “opted to carry.” See id. at *2–3.

The court of appeals affirmed this ruling, thus indicating that a jury’s answer to a damage

question may be disregarded on the ground that all evidence of damages should have been

excluded at trial, even though this evidence was not excluded. See id. at *9. We presume,

5

First Bank does not assert, and the record does not reflect, that (1) First Bank

obtained a running objection to the admission of any evidence of DTSG’s damages

based on these complaints, or (2) First Bank timely objected to all trial evidence of

DTSG’s damages.5 Under its first issue, First Bank does not assert that the trial

evidence is legally insufficient to support the jury’s damages findings regarding

DTSG’s claims. Even under the above presumptions, the trial court did not err in

submitting damage questions to the jury over these complaints or in refusing to

disregard the jury’s damage findings based on these complaints if First Bank failed

to timely object to all trial evidence of DTSG’s damages. See Grohlman v. Kahlig,

318 S.W.3d 882, 888 (Tex. 2010) (noting that Texas Rules of Civil Procedure

require the submission of jury questions raised by the pleadings and the trial

evidence and that a court may refuse to submit a question if there is no trial

evidence warranting the submission of a question); Bay Area Healthcare Group,

Ltd. v. McShane, 239 S.W.3d 231, 235 (Tex. 2007) (noting that any error in the

admission of evidence is waived if the complaining party allows the evidence to be

introduced without objection). Accordingly, we overrule First Bank’s first issue.

B. Did the trial court abuse its discretion in allowing Brumitt’s lead trial

lawyer to testify as an expert regarding DTSG’s attorney’s fees?

Under its second issue, First Bank asserts the trial court abused its discretion

by allowing Brumitt’s lead trial counsel to testify as an expert as to DTSG’s

attorney’s fees.

without deciding, that this case was correctly decided and would be followed by the Fourteenth

Court of Appeals.

5

First Bank’s failure to object to all of the evidence of DTSG’s damages is one of the factual

distinctions between today’s case and the Lubbering case. See Lubbering, 2011 WL 749197, at

*2–9.

6

We presume, without deciding, the following: (1) First Bank preserved

error regarding these complaints; 3 (2) upon timely objection, the trial court should

have excluded all evidence of DTSG’s damages due to DTSG’s failure to comply

with applicable discovery rules; and (3) if First Bank had made a timely

evidentiary objection to all evidence of DTSG’s damages offered at trial, the trial

court could have determined that no question regarding DTSG’s damages should

be submitted to the jury or that any answer to such a question should be

disregarded. 4

Motor Sales, U.S.A., 407 S.W.3d 746, 760 (Tex. 2013); Underwriters at Lloyds v. Edmond,

Deaton & Stephens Ins. Agency, Inc., No. 14-07-00352-CV, 2008 WL 5441225, at *6, n.7 (Tex.

App.—Houston [14th Dist.] Dec. 30, 2008, no pet.) (mem. op.).

3

First Bank asserts that it presented these complaints in a motion for directed verdict, objections

during the charge conference, and a motion for judgment notwithstanding the verdict. We

presume First Bank preserved error as to such complaints at the charge conference and in the

motion for judgment notwithstanding the verdict. First Bank moved for directed verdict after

DTSG and Brumitt rested their cases-in-chief, but this motion did not preserve error because

First Bank presented evidence after the trial court denied this motion and First Bank did not

renew the motion for directed verdict at the close of all of the evidence. See Liberty Mut. Ins.

Co. v. Heitkamp Swift Architects, Inc., No. 14-12-00873-CV, 2014 WL 261010, at *1 (Tex.

App.—Houston [14th Dist.] Jan. 23, 2014, pet. denied) (mem. op.); Dalbosco v. Seibert, No. 14-

11-00429-CV, 2012 WL 1795108, at *4–5 (Tex. App.—Houston [14th Dist.] May 17, 2012, pet.

denied) (mem. op.).

4

First Bank relies upon the Third Court of Appeals’s opinion in Robinson v. Lubbering. See No.

03-09-00605-CV, 2011 WL 749197, at *2–9 (Tex. App.—Austin Mar. 2011, no pet.) (mem.

op.). In that case, the defendants objected throughout trial to all evidence of the plaintiff’s

damages on the grounds that the evidence should be excluded based on the plaintiff’s failure to

comply with discovery rules. See id. Rather than expressly overrule or sustain these objections,

the trial court “opted to carry [defendants’] objections and motions to exclude through trial and

ultimately to submit, over objection, [plaintiff’s] damages claims to the jury.” Id. at *2. After

the jury answered and found liability and damages as to one of the claims, the trial court

disregarded the damage finding on the ground that the evidence of plaintiff’s damages should

have been excluded based on the objections the trial court had “opted to carry.” See id. at *2–3.

The court of appeals affirmed this ruling, thus indicating that a jury’s answer to a damage

question may be disregarded on the ground that all evidence of damages should have been

excluded at trial, even though this evidence was not excluded. See id. at *9. We presume,

5

court gave First Bank a running objection to the entirety of the testimony of

Brumitt’s counsel and allowed Brumitt’s counsel to testify to the reasonableness of

the attorney’s fees charged for the services DTSG’s attorneys rendered.

Texas Rule of Civil Procedure 193.6, which governs the consequences for

failing to timely respond to written discovery, provides in pertinent part as follows:

(a) Exclusion of Evidence and Exceptions. A party who fails to make,

amend, or supplement a discovery response in a timely manner may

not introduce in evidence the material or information that was not

timely disclosed, or offer the testimony of a witness (other than a

named party) who was not timely identified, unless the court finds

that:

(1) there was good cause for the failure to timely make, amend, or

supplement the discovery response; or

(2) the failure to timely make, amend, or supplement the discovery

response will not unfairly surprise or unfairly prejudice the other

parties.

(b) Burden of Establishing Exception. The burden of establishing

good cause or the lack of unfair surprise or unfair prejudice is on the

party seeking to introduce the evidence or call the witness. A finding

of good cause or of the lack of unfair surprise or unfair prejudice must

be supported by the record.

Tex. R. Civ. P. 193.6.

On appeal, DTSG suggests that it did not need to designate Brumitt’s

counsel as its expert because he was testifying based on his personal knowledge of

the work he did with DTSG’s attorneys. But, even if some of the testimony dealt

with the work Brumitt’s counsel did with DTSG, the core of the testimony at issue

is Brumitt’s expert testimony as to a reasonable fee for the necessary services of

DTSG’s attorneys, and this testimony is expert testimony for which an expert

designation is required. See E.F. Hutton & Co. v. Youngblood, 741 S.W.2d 363,

364 (Tex. 1987) (per curiam).

8

DTSG also argues that it did designate Brumitt’s counsel as its expert based

on the following language in its expert-designation document:

[DTSG] express[es] [its] intention to possibly call witnesses

associated with adverse parties and any other party’s experts.

...

[DTSG] hereby designate[s], as adverse parties, potentially adverse

parties, and/or as witnesses associated with adverse parties, all parties

to this suit and all experts designated by any party to this suit . . . .

We conclude that this language was insufficient to designate Brumitt’s counsel as

an expert regarding attorney’s fees or to satisfy DTSG’s obligations to update its

responses to First Bank’s requests for disclosure. 6 See American Cyanamid Co. v.

Frankson, 732 S.W.2d 648, 655–56 (Tex. App.—Corpus Christi 1987, writ ref’d

n.r.e.) (concluding that an expert designation in which a party reserved the right to

call all experts designated to testify as witnesses by other parties was insufficient).

By overruling First Bank’s objections and allowing Brumitt’s counsel to

testify on direct examination as DTSG’s attorney’s fees expert, the trial court

implicitly found that either (1) there was good cause for DTSG’s failure to timely

make, amend, or supplement the discovery response; or (2) the failure to timely

make, amend, or supplement the discovery response did not unfairly surprise or

unfairly prejudice First Bank.7 See Tex. R. Civ. P. 193.6. Though the burden of

6

DTSG relies upon this court’s opinion in Missouri Pacific Railroad Company v. Lemon. See

861 S.W.2d 501, 531 (Tex. App.—Houston [14th Dist.] 1993, writ dism’d by agr.). The part of

that opinion on which DTSG relies involved discovery responses regarding persons with

knowledge of relevant facst, rather than expert-witness designations, and in Lemon the objecting

parties themselves had designated the fact witnesses to which they objected. See id. We

conclude that Lemon is not on point. See id.

7

On appeal, DTSG argues that the record supports the trial court’s implied finding as to unfair

surprise or unfair prejudice; DTSG does not argue that the record supports the trial court’s

implied finding as to good cause.

9

At trial, DTSG attempted to call its lead trial counsel as an expert witness to

testify as to what a reasonable fee would be for the necessary services of DTSG’s

attorneys. First Bank objected that DTSG had not designated any expert witness as

to attorney’s fees in response to First Bank’s request for disclosure. The trial court

noted that DTSG had not designated an expert witness for attorney’s fees. Brumitt

had designated his lead trial counsel as an expert regarding Brumitt’s attorney’s

fees, and First Bank objected to the sufficiency of Brumitt’s disclosure regarding

this expert’s opinions. After the trial court indicated that it would overrule First

Bank’s objection to Brumitt’s expert and allow him to testify as to Brumitt’s

attorney’s fees, DTSG asked the trial court to allow DTSG to call Brumitt’s lead

counsel as an expert regarding DTSG’s attorney’s fees. DTSG noted that it had

sent its attorney’s fees invoices to First Bank. DTSG also relied upon a statement

in its expert designations that DTSG claimed was sufficient to designate the

experts of all other parties as experts for DTSG.

First Bank admitted receiving the invoices a couple of days before trial.

Nonetheless, First Bank stated that (1) DTSG did not designate an attorney’s fees

expert or provide any information regarding any expert’s opinions and (2) First

Bank did not know what amount DTSG was claiming to be a reasonable fee for the

necessary services of DTSG’s attorneys. After the trial court first indicated that it

would allow Brumitt’s counsel to testify only as to a reasonable fee for the

necessary services of Brumitt’s attorneys, the trial court then stated it would allow

Brumitt’s counsel to testify as to what DTSG disclosed to First Bank.

Brumitt’s counsel then testified regarding the contents of the attorney’s fees

invoices to DTSG. DTSG offered these invoices into evidence, but the trial court

sustained First Bank’s objection, and these invoices were never admitted. The trial

7

court gave First Bank a running objection to the entirety of the testimony of

Brumitt’s counsel and allowed Brumitt’s counsel to testify to the reasonableness of

the attorney’s fees charged for the services DTSG’s attorneys rendered.

Texas Rule of Civil Procedure 193.6, which governs the consequences for

failing to timely respond to written discovery, provides in pertinent part as follows:

(a) Exclusion of Evidence and Exceptions. A party who fails to make,

amend, or supplement a discovery response in a timely manner may

not introduce in evidence the material or information that was not

timely disclosed, or offer the testimony of a witness (other than a

named party) who was not timely identified, unless the court finds

that:

(1) there was good cause for the failure to timely make, amend, or

supplement the discovery response; or

(2) the failure to timely make, amend, or supplement the discovery

response will not unfairly surprise or unfairly prejudice the other

parties.

(b) Burden of Establishing Exception. The burden of establishing

good cause or the lack of unfair surprise or unfair prejudice is on the

party seeking to introduce the evidence or call the witness. A finding

of good cause or of the lack of unfair surprise or unfair prejudice must

be supported by the record.

Tex. R. Civ. P. 193.6.

On appeal, DTSG suggests that it did not need to designate Brumitt’s

counsel as its expert because he was testifying based on his personal knowledge of

the work he did with DTSG’s attorneys. But, even if some of the testimony dealt

with the work Brumitt’s counsel did with DTSG, the core of the testimony at issue

is Brumitt’s expert testimony as to a reasonable fee for the necessary services of

DTSG’s attorneys, and this testimony is expert testimony for which an expert

designation is required. See E.F. Hutton & Co. v. Youngblood, 741 S.W.2d 363,

364 (Tex. 1987) (per curiam).

8

C. Was the testimony of DTSG’s expert unreliable?

In its sixth issue, First Bank asserts that the testimony of DTSG’s expert,

Anthony DeBenedictis, was unreliable and thus legally insufficient to support the

jury’s verdict. Because of DTSG’s failure to timely disclose all of the matters on

which DeBenedictis planned to testify at trial, the trial court indicated that, though

DeBenedictis could testify as to his opinion regarding the value of DTSG on

December 31, 2007, DeBenedictis could not testify as to his opinion regarding the

value of DTSG on any other date or regarding the amount of damages DTSG

allegedly sustained. At trial, DeBenedictis testified regarding his opinion that the

value of DTSG on December 31, 2007 was $493,873. First Bank argues that this

testimony was not based upon specialized knowledge, did not have a sufficient

basis, and was not reliable.10 In support of its argument, First Bank asserts the

following:

• DeBenedictis became a Certified Public Accountant in 2010, and his

testimony at trial was only the second time that he had testified in court.

• DeBenedictis was unfamiliar with the opinions of recognized experts in his

field with regard to the “order of magnitude” that should be used when

comparing companies to determine value.

• During direct examination, DeBenedictis changed a percentage used in his

calculation from 7.2% to 6.0% as he was presenting his calculation to the

jury.

• DeBenedictis admitted that his workpapers and calculations contained

typographical errors for which he was responsible.

• Although the Statement of Standards of Valuation Services Number 1

10

First Bank raised these issues in a pre-trial motion to exclude DeBenedictis’s testimony. The

trial court denied the motion.

12

recommends using the income approach, the asset approach, and the market

approach in valuing a business, DeBenedictis used only the income and

market approaches.

• Though DTSG is not a publicly traded company, DeBenedictis used publicly

traded companies in his valuation analysis.

• When confronted with the fact that DTSG, Ltd. did not exist on December

31, 2007, DeBenedictis testified that he performed the valuation presuming

that DTSG, Ltd. was a successor company to DTS Group, LLP.

• First Bank’s expert, Richard Claywell, testified that DeBenedictis’s opinion

was not supported by sufficient relevant data and was unreliable because

DeBenedictis did not follow the professional standards that certified public

accountants are required to follow in performing business valuations.

• The “analytical gap” between the data upon which DeBenedictis relied and

his opinion as to the value of DTSG on December 31, 2007, was too great.

• DeBenedictis’s opinion as to value was not reliable because it was based on

a flawed methodology and mathematical errors.

For an expert’s testimony to be admissible, the expert must be qualified to

testify about “scientific, technical, or other specialized knowledge,” and the

testimony must be relevant and based upon a reliable foundation. See Tex. R.

Evid. 702; TXI Transportation Co. v. Hughes, 306 S.W.3d 230, 234 (Tex. 2010).

An expert’s testimony is relevant when it assists the jury in determining an issue or

in understanding other evidence. See Tex. R. Evid. 702; TXI Transportation Co.,

306 S.W.3d at 234. But, expert testimony based on an unreliable foundation or

flawed methodology is unreliable and does not satisfy the requirements of Texas

Rule of Evidence 702. See Tex. R. Evid. 702; TXI Transportation Co., 306

S.W.3d at 234.

When the reliability of an expert’s testimony is challenged, courts should

ensure that the expert’s opinion comports with the applicable professional

13

standards. See TXI Transportation Co., 306 S.W.3d at 235. To aid courts in

making that determination, the Supreme Court of Texas has suggested several

factors to consider when assessing the admissibility of expert testimony under Rule

702. See id. These factors include the following: (1) the extent to which the

theory has been or can be tested; (2) the extent to which the technique is dependent

upon the subjective interpretation of the expert; (3) whether the theory has been

subjected to peer review or publication; (4) the technique’s potential rate of error;

(5) whether the underlying theory or technique has been generally accepted as

valid by the relevant scientific community; and (6) the non-judicial uses of the

theory or technique. See id. at 235, n.2. The high court has emphasized, however,

that these factors are non-exclusive, and that they do not fit every scenario. See id.

at 235.

Expert testimony is unreliable when there is simply too great an analytical

gap between the data upon which the expert relies and the opinion the expert

offers. See id. at 239. Expert testimony is also unreliable if it is not grounded in

scientific methods and procedures, but rather is based upon subjective belief or

unsupported speculation. See id. The court’s ultimate task, however, is not to

determine whether the expert’s conclusions are correct, but rather to determine

whether the analysis the expert used to reach those conclusions is reliable and

therefore admissible. See id.

DTSG sought to recover damages based upon the decline in value of DTSG

that allegedly resulted from First Bank’s breach of contract. In question two of the

jury charge, the trial court asked the jury to determine the amount of money, if any,

that would fairly and reasonably compensate DTSG for its past consequential

damages that resulted from First Bank’s failure to comply with one or more of the

14

establishing good cause or the lack of unfair surprise or unfair prejudice was on

DTSG, that party did not expressly argue prior to this expert’s testimony that either

of these exceptions applied, nor did DTSG submit evidence to the trial court in an

attempt to establish either of these exceptions. An expert may testify that a

reasonable fee for the necessary services of a party’s attorneys is less than, equal

to, or more than the amount of fees charged by those attorneys. DTSG’s sending

to First Bank copies of its invoices a few days before trial did not communicate to

First Bank that DTSG intended to call any expert witness, or that any expert

witness would opine that any amount was a reasonable fee for the necessary

services of DTSG’s attorneys.

DTSG listed Brumitt’s counsel on its original witness list, but did not refer

to him testifying as an expert. Two weeks before trial, DTSG listed Brumitt’s

counsel on its amended witness list and referred to him as “expert witness on

attorneys’ fees.” But, DTSG did not state that counsel would be an expert witness

on DTSG’s attorney’s fees, and these lists did not constitute discovery responses or

provide the information about experts requested in First Bank’s request for

disclosure. DTSG correctly states that it has sought to recover attorney’s fees

throughout this case, but a party’s seeking to recover attorney’s fees does not

necessarily mean that the party will submit expert testimony regarding these

attorney’s fees. DTSG asserts that First Bank apparently anticipated DTSG would

call an expert witness regarding attorney’s fees because, more than a year before

trial, First Bank designated expert witnesses to testify regarding the reasonableness

and necessity of any attorney’s fees that any party in the case sought to recover.

But, designating a potential expert to testify as to whether the fees sought by

DTSG or Brumitt are reasonable and necessary does not mean that First Bank

knew that DTSG would call an attorney’s fees expert.

10

non-litigation purposes.

• The asset approach is based on converting the assets of a business to cash.

DeBenedictis considered using this approach but decided it would be

inappropriate to use this approach because DTSG is a service provider.

DeBenedictis explained how he calculated DTSG’s value on December 31,

2007, based upon the income approach using a discounted-cash-flow method.

DeBenedictis also testified regarding his calculation of DTSG’s value on

December 31, 2007, based upon the market approach using a public-company

model and a mergers-and-acquisitions model. DeBenedictis explained how he

weighted the three values to come up with a final valuation of $493,873.

After reviewing the record under the applicable standard of review, we

conclude that DeBenedictis’s testimony regarding his opinion of DTSG’s value on

December 31, 2007, was based upon specialized knowledge and was reliable. See

Von Hohn v. Von Hohn, 260 S.W.3d 631, 634–38 (Tex. App.—Tyler 2008, no

pet.) (rejecting argument that valuation expert’s testimony was irrelevant and

unreliable); In re Marriage of Rice, 96 S.W.3d 642, 647–48 (Tex. App.—

Texarkana 2003, no pet.) (rejecting argument that valuation expert’s testimony

was unreliable). We overrule First Bank’s sixth issue.

D. Is there merit in any of First Bank’s challenges under its eighth issue to

the jury’s breach-of-contract findings in favor of DTSG?

There was evidence at trial that at all material times Don Oprea has been the

owner of DTSG and that he was the owner of DTS Group, LLP, the predecessor to

DTSG. There was also evidence that First Bank sent an undated commitment

letter to Oprea of “DTS Group” in February 2008 (the “First Letter”). Oprea

signed the First Letter and then returned it to First Bank within the time period

specified in the First Letter.

16

There was evidence that First Bank sent a second, undated commitment

letter to Oprea of “DTS Group” in April 2008 (the “Second Letter”). The text of

the Second Letter is substantially similar to the text of the First Letter, except that

the amount of the loan and of the life-insurance policy was reduced from

$1,250,000 to $800,000. Oprea signed the Second Letter and returned the signed

letter to First Bank within the time period specified in the Second Letter.

There was evidence that First Bank sent a third, undated commitment letter

to Oprea of “DTSG, Ltd.” in August 2008 (the “Third Letter”). The text of the

Third Letter is substantially similar to the text of the Second Letter, except that (1)

the amount of the loan and of the life-insurance policy was increased to $923,000;

(2) the borrower was described as “DTSG, Ltd.”; and (3) the guarantors were

different. Oprea signed the Third Letter and returned the signed letter to First

Bank within the time period specified in the Third Letter.

In the jury charge, the trial court defined “Agreements” to mean “the loan

commitment issued by First Bank in February 2008, the loan commitment issued

by First Bank in April 2008, and the loan commitment issued by First Bank in

August 2008,” thus defining “Agreements” to mean the First Letter, the Second

Letter, and the Third Letter (collectively the “Letters”). In response to the question

one, the jury found that First Bank failed to comply with “any Agreement with

DTSG,” thus finding that First Bank failed to comply with one or more of the

Letters.

1. DTSG’s alleged failure to satisfy each condition precedent

Under its eighth issue, First Bank argues that the evidence is legally

insufficient to support the jury’s finding that First Bank failed to comply with one

or more of the Letters because DTSG did not satisfy its burden of proving that each

17

of the conditions precedent listed in the Letters was satisfied.

In its live petition, DTSG pleaded that all conditions precedent to its claims

for relief had been performed or had occurred. Therefore, DTSG was required to

prove only the conditions precedent that First Bank specifically denied. See Tex.

R. Civ. 54; Community Bank & Trust v. Fleck, 107 S.W.3d 541, 542 (Tex. 2002)

(per curiam). First Bank’s live answer to DTSG’s petition does not contain any

specific denials as to the alleged conditions precedent asserted by First Bank.11

Because First Bank did not specifically deny that any condition precedent had been

performed or had occurred, DTSG did not have to prove at trial that any condition

precedent was satisfied. 12 See Tex. R. Civ. 54; Community Bank & Trust, 107

S.W.3d at 542; Bencon Management & General Contracting, Inc. v. Boyer, Inc.,

178 S.W.3d 198, 203–05 (Tex. App.—Houston [14th Dist.] 2005, no pet.).

The only argument First Bank briefs in support of its contention that the

evidence is legally insufficient to support the jury’s finding that First Bank

breached one of the Letters is its argument that the evidence is legally insufficient

to support a finding that DTSG satisfied each of the applicable conditions

precedent. Because DTSG did not have to prove at trial that any condition

precedent was satisfied, this argument lacks merit. See Tex. R. Civ. 54; Community

Bank & Trust, 107 S.W.3d at 542; Bencon Management & General Contracting,

Inc., 178 S.W.3d at 203–05. Accordingly, we overrule First Bank’s eighth issue to

the extent First Bank argues that the evidence is legally insufficient to support the

11

The answer contains a general denial and does not mention anything about conditions

precedent. On appeal, First Bank does not assert that it specifically denied that any condition

precedent had been performed or had occurred.

12

First Bank cites several cases involving conditions precedent, but none of these cases involve

application of Texas Rule of Civil Procedure 54.

18

jury’s finding that First Bank failed to comply with one or more of the Letters.

2. Existence of evidence showing that any damages to DTSG resulted from

First Bank’s failure to comply with one of the Letters

In the second section under its eighth issue, First Bank asserts that there is

no evidence that its alleged breach of contract caused any injury to DTSG.

Specifically, First Bank contends that there is no evidence showing that its failure

to fund the loan caused damages to DTSG. In this part of its briefing First Bank

makes several statements about some of the evidence in the record. 13 First Bank

cites testimony from Oprea that DTSG entered into a three-year lease for a larger

space in anticipation of the acquisition of Southway, that DTSG hired an

acquisition consultant, and that DTSG moved a key salesperson to Southway. First

Bank notes that this activity all occurred in January or early February 2008, before

any of the Letters were issued. 14

First Bank does not mention in its briefing that, in response to question two,

the jury found that $300,000 would fairly and reasonably compensate DTSG for its

past direct damages that resulted from First Bank’s failure to comply with one or

more of the Letters and that $493,873 would fairly and reasonably compensate

13

First Bank cites Oprea’s testimony regarding (1) the current status of DTSG’s business, (2) the

status of DTSG’s business in 2007, (3) losses that DTSG suffered in 2008, 2009, 2010, and

2011. First Bank cites evidence indicating that (1) the Stock Purchase Agreement was never

rescinded, canceled, or breached; (2) after taking his loan file from First Bank, Oprea continued

to seek financing from other banks in 2009 to consummate the Stock Purchase Agreement; (3)

the Stock Purchase Agreement did not require First Bank to provide any financing; and (4)

DTSG’s obligation to close under the Stock Purchase Agreement was contingent upon DTSG

obtaining financing.

14

First Bank also states that DTSG did not deliver a copy of the final Stock Purchase Agreement

to First Bank until June 2008, and that this delivery was one of the conditions of the loan

commitment. As discussed in the previous section, DTSG did not have to prove at trial that any

condition precedent was satisfied.

19

DTSG for its past consequential damages that resulted from this failure to comply.

First Bank does not mention the trial court’s instructions to the jury regarding the

legal standard for the jury’s determination of direct damages and consequential

damages. At the charge conference, no party objected to either of these

instructions or to the form of question two. Therefore, the sufficiency of the

evidence supporting the jury’s damage findings is to be measured using the charge

given. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). First Bank does not

assert that the evidence is legally insufficient to support the jury’s finding in

response to question two.15 First Bank does not state that the evidence is legally

insufficient to support the jury’s finding that $300,000 in direct damages or

$493,873 in consequential damages resulted from First Bank’s failure to comply

with one or more of the Letters. The reporter’s record contains more than 830

pages of testimony from witnesses at trial and more than 6,900 pages of trial

exhibits. This court has no duty to search a voluminous record without guidance

from First Bank to determine its argument. See Marsh v. Livingston, No. 14-09-

00011-CV, 2010 WL 1609215, at *5 (Tex. App.—Houston [14th Dist.] Apr. 22,

2010, pet. denied) (mem. op.). Even under a liberal construction of this part of

First Bank’s appellate briefing, we conclude that First Bank is only arguing that

there is no evidence that any damage to DTSG resulted from First Bank’s alleged

breach of contract by failing to fund the loan to DTSG.

Oprea testified that in reliance on First Bank’s promises to fund a loan to

DTSG that predated the Letters, DTSG hired an acquisition consultant in January

15

At one point in this section of its brief, First Bank states that the evidence is legally

insufficient to support the “jury’s answer to the breach of contract question for DTSG.” But, that

question (question one) did not involve causation or the issue of whether any damage resulted

from First Bank’s failure to comply.

20

2008, and agreed to pay him $72,000 per year. Oprea also testified that in late

January or early February 2008 (approximately one month before the First Letter

was issued), DTSG moved a key salesperson over to Southway to begin the

transition that would occur when DTSG purchased the stock of Southway.

According to Oprea, moving that senior salesperson to Southway decreased

DTSG’s sales revenues, and DTSG also paid this employee a salary of $45,000 per

year to work at Southway while not creating any revenue for the company.

Though DTSG took these actions approximately one month before First Bank

issued the First Letter, under the applicable standard of review, the trial evidence

would enable reasonable and fair-minded people to find that, after First Bank

issued the First Letter, DTSG continued to pay the acquisition consultant and

continued to pay the salesperson to work at Southway in reliance upon the First

Letter and that damage to DTSG resulted from First Bank’s breach of contract by

failing to fund the loan to DTSG. Therefore, First Bank’s argument in the second

section under its eighth issue lacks merit.

3. First Bank’s challenges in support of its assertion that there was no

evidence of DTSG’s damages

In the third section under its eighth issue, First Bank asserts that there is no

evidence of DTSG’s damages. In support of this assertion, First Bank states that

DTSG’s only evidence of damages is DeBenedictis’s testimony. But, the

voluminous record from trial contains other evidence regarding damages, some of

which is discussed in DTSG’s appellate briefing. First Bank does not address this

evidence; rather, it presumes that DeBenedictis’s testimony as to DTSG’s value on

December 31, 2007, is the only arguable evidence supporting the existence of any

21

damages to DTSG resulting from First Bank’s breach of contract. 16

First Bank states in a conclusory manner that there is no evidence of any lost

profits, lost business opportunities, or any actual or consequential damages of any

kind caused by First Bank as a result of the failure to close and fund the loan

commitments. Though First Bank provides a few record cites and cites one case, it

does not evaluate or dissect the voluminous evidence admitted during trial or

present argument and analysis to show that under the applicable standard of

review, none of this evidence would enable reasonable and fair-minded people to

find that any damage to DTSG resulted from any failure of First Bank to comply

with any of the Letters. First Bank briefly outlines what would have happened if

the closing had occurred under the Stock Purchase Agreement, but this argument is

only relevant to benefit-of-the-bargain or expectancy damages. First Bank

correctly notes that its failure to fund any loan to DTSG did not cause DTSG to be

in breach of the Stock Purchase Agreement, which was conditioned on DTSG

obtaining financing. Though this conclusion means that DTSG did not suffer any

damages by being in breach of the Stock Purchase Agreement, it does not mean

that DTSG suffered no damages at all. In this short section, First Bank has not

sufficiently briefed an argument showing that, under the applicable standard of

review, the voluminous trial evidence would not enable reasonable and fair-minded

people to find that any damage to DTSG resulted from any failure of First Bank to

comply with any of the Letters. See Marsh, 2010 WL 1609215, at *5.

In light of our sustaining, in part, of the second issue, we need not address

16

First Bank also refers back to its arguments under the sixth issue. We already have addressed

and overruled this issue.

22

DTSG for its past consequential damages that resulted from this failure to comply.

First Bank does not mention the trial court’s instructions to the jury regarding the

legal standard for the jury’s determination of direct damages and consequential

damages. At the charge conference, no party objected to either of these

instructions or to the form of question two. Therefore, the sufficiency of the

evidence supporting the jury’s damage findings is to be measured using the charge

given. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). First Bank does not

assert that the evidence is legally insufficient to support the jury’s finding in

response to question two.15 First Bank does not state that the evidence is legally

insufficient to support the jury’s finding that $300,000 in direct damages or

$493,873 in consequential damages resulted from First Bank’s failure to comply

with one or more of the Letters. The reporter’s record contains more than 830

pages of testimony from witnesses at trial and more than 6,900 pages of trial

exhibits. This court has no duty to search a voluminous record without guidance

from First Bank to determine its argument. See Marsh v. Livingston, No. 14-09-

00011-CV, 2010 WL 1609215, at *5 (Tex. App.—Houston [14th Dist.] Apr. 22,

2010, pet. denied) (mem. op.). Even under a liberal construction of this part of

First Bank’s appellate briefing, we conclude that First Bank is only arguing that

there is no evidence that any damage to DTSG resulted from First Bank’s alleged

breach of contract by failing to fund the loan to DTSG.

Oprea testified that in reliance on First Bank’s promises to fund a loan to

DTSG that predated the Letters, DTSG hired an acquisition consultant in January

15

At one point in this section of its brief, First Bank states that the evidence is legally

insufficient to support the “jury’s answer to the breach of contract question for DTSG.” But, that

question (question one) did not involve causation or the issue of whether any damage resulted

from First Bank’s failure to comply.

20

damages to DTSG resulting from First Bank’s breach of contract. 16

First Bank states in a conclusory manner that there is no evidence of any lost

profits, lost business opportunities, or any actual or consequential damages of any

kind caused by First Bank as a result of the failure to close and fund the loan

commitments. Though First Bank provides a few record cites and cites one case, it

does not evaluate or dissect the voluminous evidence admitted during trial or

present argument and analysis to show that under the applicable standard of

review, none of this evidence would enable reasonable and fair-minded people to

find that any damage to DTSG resulted from any failure of First Bank to comply

with any of the Letters. First Bank briefly outlines what would have happened if

the closing had occurred under the Stock Purchase Agreement, but this argument is

only relevant to benefit-of-the-bargain or expectancy damages. First Bank

correctly notes that its failure to fund any loan to DTSG did not cause DTSG to be

in breach of the Stock Purchase Agreement, which was conditioned on DTSG

obtaining financing. Though this conclusion means that DTSG did not suffer any

damages by being in breach of the Stock Purchase Agreement, it does not mean

that DTSG suffered no damages at all. In this short section, First Bank has not

sufficiently briefed an argument showing that, under the applicable standard of

review, the voluminous trial evidence would not enable reasonable and fair-minded

people to find that any damage to DTSG resulted from any failure of First Bank to

comply with any of the Letters. See Marsh, 2010 WL 1609215, at *5.

In light of our sustaining, in part, of the second issue, we need not address

16

First Bank also refers back to its arguments under the sixth issue. We already have addressed

and overruled this issue.

22

as conferring any benefits on nonsignatory parties. 18 See id. at 652. Though the

MCI court could have crafted a legal standard limited to the determination of third-

party-beneficiary status in the context of a contract containing such a clause, the

MCI court did not do so. See id. at 651–52. Instead, after articulating the general

rules for third-party-beneficiary status, the MCI court indicated that the intention of

contracting parties to confer a direct benefit on a third party must be “clearly and

fully spelled out” in the contract itself. See id. at 651–52 (stating that “[t]here is

simply no contractual language to indicate that MCI and MoPac entered into the

contract directly for TU’s benefit. Thus, TU is not a creditor or donee beneficiary

of the contract and, at best, is an incidental beneficiary of the contract” and that

“[t]he contract between MCI and MoPac does not contain any such indication.

Therefore, TU is not a third party-beneficiary”) (citations omitted, emphasis

added).

The Supreme Court of Texas and a number of intermediate courts of appeals

have construed the MCI opinion as limiting the scope of the third-party-beneficiary

analysis to the four corners of a written contract. See Stine v. Stewart, 80 S.W.3d

586, 589 (Tex. 2002) (citing the MCI case for the proposition that the agreement in

question “must clearly and fully express an intent to confer a direct benefit to the

third party”) (per curiam); Ortega v. City Nat’l Bank, 97 S.W.3d 765, 773 (Tex.

App.—Corpus Christi 2003, no pet.) (citing the MCI case for the proposition that

“[t]he intent of the contracting parties to confer a direct benefit to the third party

must be ‘clearly and fully’ expressed in the agreement itself”).

We now consider whether two opinions issued by the Supreme Court of

Texas in 2011 changed this rule. See Sharyland Water Supply Corp., 354 S.W.3d

18

None of the Letters contain any such provision.

25

at 420–21; Basic Capital Management, 348 S.W.3d at 899–901. In Basic Capital,

the high court quoted various principles of third-party-beneficiary law from the

MCI opinion. See Basic Capital Management, 348 S.W.3d at 899–900. The Basic

Capital court then noted that the construction of an unambiguous instrument is a

question of law for the court. See id. at 900. The court did not state that the

determination of the third-party-beneficiary issue is a question of law for the court.

See id. at 899–901. The court then analyzed the contract in question and

concluded that, if the parties did not intend to benefit the third parties directly, then

the contract had no purpose whatsoever. See id. at 900. The court noted that the

contract did not contain an express statement of an intention to benefit the third

parties. See id. Nonetheless, the court concluded that the contract “‘clearly and

fully spelled out’ the benefit to [the third parties] because their role was basic to

[the contract].” 19 Id. at 901 (emphasis added). The Basic Capital court held that

there was no need to obtain a jury finding as to the third-party-beneficiary issue

because the contract was unambiguous and because “[t]he [contract] itself, and the

undisputed evidence regarding its negotiation and purpose, establish that [the third

parties] were third-party beneficiaries.”20 Id. at 901 (footnote omitted). In

determining that two plaintiffs were third-party beneficiaries entitled to recover

under an unambiguous loan-commitment contract, the Basic Capital court did not

limit its review to the four corners of the unambiguous contract; rather, the court

19

The Basic Capital court did not state that the contract “clearly and fully spelled out” the

contracting parties’ intention to confer a direct benefit on the third parties. Basic Capital

Management, 348 S.W.3d at 900–01.

20

Though the extrinsic evidence in Basic Capital was undisputed, the Basic Capital court

nonetheless considered it. See Basic Capital Management, 348 S.W.3d at 901. Thus, the reason

given by the Basic Capital court for why no jury finding was needed in light of the extrinsic

evidence was not that extrinsic evidence may not be considered, but that the extrinsic evidence in

that case was undisputed. See id.

26

considered evidence regarding the negotiation and purpose of the contract.21 See

id. We conclude that, after the Basic Capital decision, extrinsic evidence may be

considered in determining whether a person is a third-party beneficiary of the

contract, even if the contract is a written, unambiguous contract. See id. at 899–

901.

Six months after it decided Basic Capital, the Supreme Court of Texas

issued its opinion in Sharyland. See Sharyland Water Supply Corp., 354 S.W.3d at

420–21. Though the high court agreed with the court of appeals’s conclusion that

Sharyland was not a third-party beneficiary of the agreements as a matter of law,

the high court did not employ the same analysis. Compare Sharyland Water

Supply Corp., 354 S.W.3d at 420–21, with City of Alton v. Sharyland Water Supply

Corp., 277 S.W.3d 132, 148–52 (Tex. App.—Corpus Christi 2009), aff’d in part,

rev’d in part by Sharyland Water Supply Corp., 354 S.W.3d at 412–24. The court

of appeals applied the legal standard from the MCI line of cases, under which a

person is not a third-party beneficiary of a contract unless the contract itself shows

the contracting parties’ intention to confer a direct benefit on the person. See City

of Alton, 277 S.W.3d 132, 149–50. The high court in Sharyland indicated that

extrinsic evidence should be considered in determining whether a person is a third-

21

The Basic Capital court cited Banker v. Breaux, 128 S.W.2d 23, 24 (Tex. 1939) and described

this case in a parenthetical as “stating that the contracting parties’ intention, which is of

controlling importance, must be ascertained from their agreement ‘in the light of the attending

circumstances.’” Basic Capital Management, 348 S.W.3d at 901, n. 24. Nonetheless, the Basic

Capital court did not describe the extrinsic evidence it considered as evidence of “attending

circumstances”; rather the court described the extrinsic evidence as “evidence regarding [the

contract’s] negotiation and purpose.” Id. at 901.

27

party beneficiary of the contract:

Sharyland does not meet the criteria necessary to confer third party

beneficiary status. Sharyland is neither mentioned in the contracts

themselves, nor is there evidence that [the contracting parties]

intended to confer a direct benefit on Sharyland.

Sharyland Water Supply Corp., 354 S.W.3d at 421 (emphasis added). Though the

high court also noted that the contracts did not clearly and fully spell out any

intention by the contracting parties’ to confer a direct benefit on Sharyland, the

high court did not say that this was necessary for third-party-beneficiary status or

that the inquiry was limited to the four corners of the contract. See Sharyland

Water Supply Corp., 354 S.W.3d at 420–21. The Sharyland court distinguished

the facts of the Basic Capital case from the facts in Sharyland; nonetheless, the

Sharyland court did not express any disagreement with Basic Capital’s legal

standard. See id. We conclude that the Sharyland court did not abrogate or modify

the rule in Basic Capital that extrinsic evidence may be considered in determining

whether one is a third-party beneficiary of the contract, even if the contract is a

written, unambiguous contract.22 See id. The parties have not cited and research

has not revealed any case from the Supreme Court of Texas decided after Basic

Capital in which the high court disagrees with Basic Capital regarding the

consideration of extrinsic evidence. We conclude that under current law extrinsic

evidence may be considered in determining whether a person is a third-party

22

Though the opening paragraph of the third-party-beneficiary analysis in Sharyland contains a

sentence emphasizing the contents of the contracts, the court does not say that extrinsic evidence

should not be considered, and as quoted above, the court later indicates that extrinsic evidence

should be considered. See Sharyland Water Supply Corp., 354 S.W.3d at 420 (stating

“[b]ecause the contracts entered into between [the contracting parties] make no reference to

Sharyland and indicate no intention to confer a benefit on it, we agree with the court of appeals

that Sharyland was not a third party beneficiary of those contracts”).

28

beneficiary of the contract, even if the contract is a written, unambiguous contract.

See Basic Capital Management, 348 S.W.3d at 899–901. Therefore, the trial court

did not err in overruling First Bank’s objection that no third-party-beneficiary issue

should be submitted to the jury because the third-party-beneficiary analysis is

limited to the four corners of each of the Letters and because construction of the

unambiguous Letters is a matter of law for the court.

F. Is the evidence legally sufficient to support the jury’s finding that

Brumitt is a third-party beneficiary?

Under its third issue, First Bank focuses on the extrinsic-evidence argument

addressed in the previous section. We presume, under a liberal construction of its

briefing, that First Bank also is arguing the trial evidence is legally insufficient to

support the jury’s finding in response to question four that Brumitt is a third-party

beneficiary of one of the Letters. First Bank preserved error in the trial court on

this issue only by means of its motion for judgment notwithstanding the verdict.23

At the charge conference, no party objected to the legal standard submitted in

question four for the jury’s use in finding whether Brumitt was a third-party

beneficiary of one or more of the Letters. 24 Therefore, this court measures the

23

First Bank moved for a directed verdict after DTSG and Brumitt rested their cases-in-chief,

but the motion did not preserve error because First Bank presented evidence after the trial court

denied the motion and First Bank did not renew the motion for directed verdict at the close of all

of the evidence. See Liberty Mut. Ins. Co., 2014 WL 261010, at *1; Dalbosco, 2012 WL

1795108, at *4–5. Though First Bank presented objections to question four at the charge

conference, First Bank did not object that the evidence was legally insufficient under either the

legal standard submitted in question four or under the legal standard provided under Texas law.

24

During the charge conference, First Bank arguably objected to the part of the trial court’s

instruction that allowed the jury to consider extrinsic evidence in making this determination.

Nonetheless, this instruction was correct, as explained in the previous section of this opinion, and

this instruction addresses what the jury may consider in making its finding rather than the

substantive legal standard under which the jury was to make the finding.

29

sufficiency of the evidence to support the jury’s finding using the charge given.

See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000) (holding that appellate court

could not review the sufficiency of the evidence based on a particular legal

standard because that standard was not submitted to the jury and no party objected

to the charge on this ground or requested that the jury be charged using this

standard); Hirschfeld Steel Co. v. Kellogg Brown & Root, Inc., 201 S.W.3d 272,

283–86 (Tex. App.—Houston [14th Dist.] 2006, no. pet.) (reviewing sufficiency of

evidence based on unobjected-to jury instruction and rejecting various arguments

based on different legal standards).

In response to question four’s query “[d]id [First Bank] fail to comply with

any Agreement with Brumitt, as Third Party Beneficiary?” the jury answered

affirmatively. 25 For this question, the trial court instructed the jury as follows:

A “Third Party Beneficiary” is an intended, and not just an incidental,

beneficiary of a contract. If the intent to benefit a third party is not

expressed in the contract, then intent may be shown using other

evidence. The nature of the agreement, the identity of the alleged

intended beneficiaries, and the specific duty said to have been created

toward them are all factors for consideration. The beneficiary may

recover if he can show that he is one of a class of persons for whose

benefit the contract was made.

Under this instruction, a person would be a third-party beneficiary of a contract if

the person is an “intended beneficiary” of the contract.

25

Question four combined the issue of whether Brumitt is a third-party beneficiary of one or

more of the Letters with the issue of whether First Bank failed to comply with its obligations to

Brumitt as a third-party beneficiary of one or more of the Letters. At the charge conference, no

party objected to this aspect of question four. Even so, we note that, despite this aspect of

question four, the jury’s response to it still constitutes a sufficient jury finding that Brumitt is a

third-party beneficiary of one or more of the Letters.

30

The term “intended beneficiary” is not defined in the jury charge, so we

measure the sufficiency of the evidence against the commonly understood meaning

of “intended beneficiary.” See Barnhart v. Morales, —S.W.3d—,—, 2015 WL

1020869, at *7 (Tex. App.—Houston [14th Dist.] Mar 5. 2015, no pet.). Merriam-

Webster’s Collegiate Dictionary defines “beneficiary” as “one that benefits from

something” and “intend” as “to have in mind as a purpose.” Merriam-Webster’s

Collegiate Dictionary 114, 768 (11th ed. 2004). We conclude that the commonly

understood meaning of “intended beneficiary of a contract” is a person whom the

contracting parties intended to benefit from the parties’ agreement. The trial court

instructed the jury that, in determining whether there was an intent to benefit

Brumitt, the jury could look beyond the language of the Letters to extrinsic

evidence. The trial court mentioned factors the jury could consider but, in listing

these factors, the trial court did not address the standard by which the jury should

decide whether Brumitt was a third-party beneficiary of any of the Letters. The

trial court then stated that the beneficiary may recover if he can show that he is one

of a class of persons for whose benefit the contract was made. Based on the

commonly understood meaning of the words contained in the trial court’s

instruction, we conclude that the charge allowed the jury to find Brumitt was a

third-party beneficiary of one or more of the Letters based solely on a finding that

First Bank and DTSG intended Brumitt to benefit from one or more of the Letters.

In its argument under the third issue, First Bank asserts that (1) to be a third-

party beneficiary of a contract, the contracting parties must have entered into the

contract directly for the third party’s benefit; (2) a party’s status as a third-party

beneficiary should not be created by implication; (3) there is a presumption that a

non-contracting party is not a third-party beneficiary; (4) the contracting parties’

intent that another person be a third-party beneficiary of the contract must be

31

“clearly and fully spelled out”; (5) to be a third-party beneficiary of a contract, a

person must either be a donee beneficiary or a creditor beneficiary; and (6) a

person cannot be a third-party beneficiary through the person’s status as a creditor

beneficiary unless the contract shows an intent to confer a benefit on the person

and the intent that the person has a right to enforce the contract. Regardless of

whether any of these propositions are correct expressions of Texas law, none of

them were submitted to the jury, and no party objected to the omission of any of

these propositions from the jury charge. Therefore, we do not apply any of these

propositions as part of the standard by which we measure the sufficiency of the

jury’s third-party-beneficiary finding. See Osterberg, 12 S.W.3d at 55; Hirschfeld

Steel Co., 201 S.W.3d at 283–86. Instead, we review the trial evidence to see if

there is legally sufficient evidence that First Bank and DTSG intended Brumitt to

benefit from one or more of the Letters.

At trial Brumitt testified as follows:

• The Letters were for Brumitt’s benefit.

• Tim Duffy of First Bank appeared at Brumitt’s office one day

unannounced. Brumitt had never before met Duffy.

• After Duffy introduced himself, Brumitt invited Duffy into Brumitt’s

office.

• Duffy reassured Brumitt that Duffy “was going to get this thing done”

and that Oprea and Brumitt would be happy.

• Duffy stated that the loan would close the following Saturday and that

the funds would be available the following Monday or Tuesday.

• Duffy called Brumitt later that day and asked some questions about

the Bank loan.

At trial Oprea testified as follows:

• Southway had a line of credit with Wells Fargo Bank.

32

• Brumitt signed as a guarantor of this line of credit.

• Neither Wells Fargo Bank, nor Oprea, nor Brumitt was concerned that

this line of credit be paid off as part of the stock-purchase transaction.

• First Bank said it would not fund the loan unless this line of credit was

paid off as part of the stock-purchase transaction.

• After First Bank made the pay-off of this line of credit a requirement,

this pay-off was made a requirement of the parties’ agreement.

At trial Duffy testified as follows:

• Brumitt, as the “seller of Southway,” was going to get some of the

proceeds of the loan from First Bank.

• If the First Bank loan had funded, the Wells Fargo line of credit would

have been paid off.

• Duffy agreed that Brumitt would benefit from the Wells Fargo line of

credit being paid off.

After reviewing the trial evidence under the applicable standard review, we

conclude the evidence is legally sufficient to support a finding that First Bank and

DTSG intended Brumitt to benefit from one or more of the Letters and to support

the jury’s finding in response to question four. See Khan v. Safeco Surplus Lines,

No. 14-13-00024-CV, 2014 WL 3907976, at *5, n. 5 (Tex. App.—Houston [14th

Dist.] Aug. 12, 2014, pet. denied) (concluding there was sufficient evidence that

person was a third-party beneficiary of a contract). Accordingly, we overrule First

Bank’s third issue.

G. Does section 26.02 of the Business and Commerce Code apply to

Brumitt’s breach-of-contract claim?

In its ninth issue, First Bank asserts the evidence is legally insufficient to

support the jury’s verdict as to Brumitt’s breach-of-contract claim. Under this

issue, First Bank asserts that section 26.02 of the Business and Commerce Code

applies to his breach-of-contract claim and that there is no evidence of a loan

33

agreement between Brumitt and First Bank that would satisfy the statute-of-frauds

requirement contained in this statute. See Tex. Bus. & Com. Code Ann. § 26.02

(West, Westlaw through 2013 3d C.S.). Section 26.02 reads in its entirety as

follows:

(a) In this section:

(1) “Financial institution” means a state or federally chartered bank,

savings bank, savings and loan association, or credit union, a holding

company, subsidiary, or affiliate of such an institution, or a lender

approved by the United States Secretary of Housing and Urban

Development for participation in a mortgage insurance program under

the National Housing Act (12 U.S.C. Section 1701 et seq.).

(2) “Loan agreement” means one or more promises, promissory notes,

agreements, undertakings, security agreements, deeds of trust or other

documents, or commitments, or any combination of those actions or

documents, pursuant to which a financial institution loans or delays

repayment of or agrees to loan or delay repayment of money, goods,

or another thing of value or to otherwise extend credit or make a

financial accommodation. The term does not include a promise,

promissory note, agreement, undertaking, document, or commitment

relating to:

(A) a credit card or charge card; or

(B) an open-end account, as that term is defined by Section 301.002,

Finance Code, intended or used primarily for personal, family, or

household use.

(b) A loan agreement in which the amount involved in the loan

agreement exceeds $50,000 in value is not enforceable unless the

agreement is in writing and signed by the party to be bound or by that

party’s authorized representative.

(c) The rights and obligations of the parties to an agreement subject to

Subsection (b) of this section shall be determined solely from the

written loan agreement, and any prior oral agreements between the

parties are superseded by and merged into the loan agreement.

34

(d) An agreement subject to Subsection (b) of this section may not be

varied by any oral agreements or discussions that occur before or

contemporaneously with the execution of the agreement.

(e) In a loan agreement subject to Subsection (b) of this section, the

financial institution shall give notice to the debtor or obligor of the

provisions of Subsections (b) and (c) of this section. The notice must

be in a separate document signed by the debtor or obligor or

incorporated into one or more of the documents constituting the loan

agreement. The notice must be in type that is boldface, capitalized,

underlined, or otherwise set out from surrounding written material so

as to be conspicuous. The notice must state substantially the

following:

“This written loan agreement represents the final agreement between

the parties and may not be contradicted by evidence of prior,

contemporaneous, or subsequent2 oral agreements of the parties.

“There are no unwritten oral agreements between the parties.

……………………………… ………………………………

“Debtor or Obligor Financial Institution”

(f) If the notice required by Subsection (e) of this section is not given

on or before execution of the loan agreement or is not conspicuous,

this section does not apply to the loan agreement, but the validity and

enforceability of the loan agreement and the rights and obligations of

the parties are not impaired or affected.

(g) All financial institutions shall conspicuously post notices that

inform borrowers of the provisions of this section. The notices shall

be located in such a manner and in places in the institutions so as to

fully inform borrowers of the provisions of this section. The Finance

Commission of Texas shall prescribe the language of the notice.

Tex. Bus. & Com. Code Ann. § 26.02 (emphasis added) (West, Westlaw through

2013 3d C.S.). First Bank asserts that section 26.02 applies to the Letters and that,

35

because none of the Letters satisfy the statute-of-frauds requirements of section

26.02, Brumitt may not enforce any of the Letters. See id. § 26.02(b), (c), (d).

Brumitt argues that section 26.02 does not apply to any of the Letters because First

Bank failed to give the notice required by subsection (e). See id. § 26.02(e), (f).

A holding from the Second Court of Appeals and an obiter dictum from this

court support Brumitt’s construction of the statute. See Scott v. U.S. Bank Nat’l

Ass’n, No. 02-12-00230-CV, 2014 WL 3535724, at *10–11 (Tex. App.—Fort

Worth Jul. 14, 2014, no pet.) (holding that “if the notice required by subsection (e)

is not given on or before execution of the loan agreement or is not conspicuous,

section 26.02 does not apply to the loan agreement) (mem. op.); Comisky v. FH

Partners, LLC, 373 S.W.3d 620, 641, n. 25 (Tex. App.—Houston [14th Dist.]

2012, pet. denied) (stating in an obiter dictum that for section 26.02 to apply, the

financial institution must have given notice under subsection (e)). But, the Third

Court of Appeals has held that, if the financial institution fails to comply with

subsection (e), the statute-of-frauds requirement in subsection (b) still applies to

the loan agreement, although subsections (c) and (d) do not apply. See Maginn v.

Norwest Mortgage, Inc., 919 S.W.2d 164, 168 (Tex. App.—Austin 1996, no writ.).

The parties have not cited and research has not revealed any precedent from the

Supreme of Texas or any holding from this court addressing the effect of a failure

to give the notice required by subsection (e). 26

26

Though this court previously has applied section 26.02 to loan agreements, in these cases,

there was no issue as to the effect of a failure to comply with subsection (e). See BACM 2001-1

San Felipe Road Ltd. P’ship, 218 S.W.3d 137, 144–45 (Tex. App.—Houston [14th Dist.] 2007,

pet. denied); 1001 McKinney Ltd. v. Credit Suisse First Boston Mortgage Capital, 192 S.W.3d

20, 26–28 (Tex. App.—Houston [14th Dist.] 2005, pet. denied).

36

We review the trial court’s interpretation of applicable statutes de novo. See

Johnson v. City of Fort Worth, 774 S.W.2d 653, 655B56 (Tex. 1989). In

construing a statute, our objective is to determine and give effect to the

Legislature’s intent. See Nat’l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527

(Tex. 2000). If possible, we must ascertain that intent from the language the

Legislature used in the statute and not look to extraneous matters for an intent the

statute does not state. Id. If the meaning of the statutory language is

unambiguous, we adopt the interpretation supported by the plain meaning of the

provision’s words. St. Luke’s Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505

(Tex. 1997). We must not engage in forced or strained construction; instead, we

must yield to the plain sense of the words the Legislature chose. See id.

We conclude that, under the unambiguous language of subsection (f), if the

notice required by subsection (e) is not given on or before execution of the loan

agreement or is not conspicuous, section 26.02, including subsection (b), does not

apply to the loan agreement. See Tex. Bus. & Com. Code Ann. § 26.02(f); Scott,

2014 WL 3535724, at *10–11. Neither subsection (f) nor any other part of the

statute states that a failure to comply with subsection (e) means that only

subsections (c) and (d) do not apply to the loan agreement. No other part of

section 26.02 conflicts with the plain language in subsection (f). See Tex. Bus. &

Com. Code Ann. § 26.02. The Legislature could have provided that subsection (b)

applies to a loan agreement, as defined in section 26.02, regardless of whether the

financial institution gave notice under subsection (e). The Legislature chose not to

do so. See Tex. Bus. & Com. Code Ann. § 26.02; Scott, 2014 WL 3535724, at

*10–11; Comisky, 373 S.W.3d at 641, n. 25. But see Maginn, 919 S.W.2d at 168.

First Bank does not assert that it gave the notice required by subsection (e)

37

of section 26.02 as to any of the Letters. There was no jury finding that First Bank

gave such notice, nor does the trial evidence prove this proposition as a matter of

law. 27 Therefore, under the unambiguous language of the statute, section 26.02

does not apply to any of the Letters. See Tex. Bus. & Com. Code Ann. § 26.02;

Scott, 2014 WL 3535724, at *10–11; Comisky, 373 S.W.3d at 641, n. 25. But see

Maginn, 919 S.W.2d at 168.

Under its ninth issue, First Bank also asserts that there is no evidence (other

than evidence related to Brumitt’s claim as a third-party beneficiary of the Letters)

of any contract between First Bank and Brumitt, and Brumitt was not a third-party

beneficiary to any of the Letters as a matter of law. In Section II. F. above, we

concluded that First Bank’s legal-sufficiency challenge to the jury’s third-party-

beneficiary challenge lacked merit. This finding provided Brumitt with a basis to

seek recovery against First Bank for its failure to comply with one or more of the

Letters. See Khan, 2014 WL 3907976, at *5, n. 5.

Having addressed all of First Bank’s complaints under its ninth issue, we

overrule that issue.

H. Did either DTSG or Brumitt suffer any injury independent from

economic losses recoverable under a breach-of-contract claim?

In its fourth issue, First Bank asserts that the trial court erred in submitting

DTSG’s and Brumitt’s negligent-misrepresentation claims to the jury because

these tort claims were “subsumed” by the claimants’ breach-of-contract claims.

Under this issue, First Bank argues that neither DTSG nor Brumitt can recover

under a negligent-misrepresentation claim because neither party suffered any

27

Indeed, there does not appear to be any trial evidence that First Bank gave such notice.

38

injury independent from economic losses recoverable under a breach-of-contract

claim. First Bank further argues that, because neither party may recover based on

a tort claim, neither party may recover exemplary damages.28

Under the independent-injury requirement for negligent-misrepresentation

claims, to recover damages for negligent misrepresentation, a plaintiff must show

that it suffered an injury independent from economic losses recoverable under a

breach-of-contract claim. See D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973

S.W.2d 662, 663–64 (Tex. 1998); Owen v. Option One Mortgage Corp., No. 01-

10-00412-CV, 2011 WL 3211081, at *8 (Tex. App.—Houston [1st Dist.] Jul. 28,

2011, pet. denied); Esty v. Beal Bank, S.S.B., 298 S.W.3d 280, 301–02 (Tex.

App.—Dallas 2009, no pet.). Without this independent-injury requirement for

negligent-misrepresentation claims, every contract-interpretation dispute would

potentially be converted into a negligent-misrepresentation claim. See D.S.A., Inc.,

973 S.W.2d at 663–64.

In their respective contract claims, DTSG and Brumitt sought to recover

economic damages that allegedly resulted from First Bank’s failure to comply with

its contractual obligation to provide a loan to DTSG to be used to fund DTSG’s

purchase of Brumitt’s Southway stock. There is no distinction in the evidence

between damages allegedly resulting from First Bank’s failure to comply with one

or more of the Letters and damages caused by First Bank’s alleged negligent

misrepresentation. In its closing argument, DTSG asserted that this case was about

28

First Bank preserved error in the trial court as to this complaint by means of its motion for

judgment notwithstanding the verdict and, in part, by means of objections at the charge

conference.

39

“broken promises” and that despite at least nineteen promises by First Bank,

including the three Letters, no loan was funded. DTSG argued that, as a result of

First Bank’s broken promises, DTSG was harmed and was seeking damages.

DTSG described each of the nineteen promises as an agreement and asserted that

DTSG suffered damages in various respects by relying on these promises. Yet, in

discussing the liability question for negligent misrepresentation, DTSG’s counsel

stated that each of these broken promises also was a negligent misrepresentation

and that First Bank had misrepresented that the loan was going to be funded. In its

closing argument, DTSG did not distinguish between the breach-of-contract

damages it was seeking and the negligent-misrepresentation damages it was

seeking. Likewise, in closing argument Brumitt’s counsel did not distinguish

between First Bank’s acts that allegedly constituted breaches of contract and First

Bank’s acts that allegedly constituted negligent misrepresentations, and Brumitt’s

counsel urged the same damage amount for both of Brumitt’s claims.

DTSG argues on appeal that its negligent-misrepresentation claim does not

relate to First Bank’s failure to comply with any of the Letters, but rather to many

false promises that First Bank made about its ability to close and fund the loan on a

particular date. DTSG asserts that, because none of the Letters expressly state a

closing or funding date for the loan, First Bank’s false representations about its

ability to close and fund the loan are not based on the contractual terms of the loan.

But, the failure of the Letters to specify a closing or funding date does not mean

that the date on which the loan would close or fund is outside the scope of the

Letters; rather, in the absence of a specified time for performance in the Letters,

the court will construe the Letters as implying a reasonable time for First Bank to

perform. See Hall v. Hall,158 Tex. 95, 308 S.W.2d 12, 16 (Tex. 1957) (stating that

40

beneficiary of the contract, even if the contract is a written, unambiguous contract.

See Basic Capital Management, 348 S.W.3d at 899–901. Therefore, the trial court

did not err in overruling First Bank’s objection that no third-party-beneficiary issue

should be submitted to the jury because the third-party-beneficiary analysis is

limited to the four corners of each of the Letters and because construction of the

unambiguous Letters is a matter of law for the court.

F. Is the evidence legally sufficient to support the jury’s finding that

Brumitt is a third-party beneficiary?

Under its third issue, First Bank focuses on the extrinsic-evidence argument

addressed in the previous section. We presume, under a liberal construction of its

briefing, that First Bank also is arguing the trial evidence is legally insufficient to

support the jury’s finding in response to question four that Brumitt is a third-party

beneficiary of one of the Letters. First Bank preserved error in the trial court on

this issue only by means of its motion for judgment notwithstanding the verdict.23

At the charge conference, no party objected to the legal standard submitted in

question four for the jury’s use in finding whether Brumitt was a third-party

beneficiary of one or more of the Letters. 24 Therefore, this court measures the

23

First Bank moved for a directed verdict after DTSG and Brumitt rested their cases-in-chief,

but the motion did not preserve error because First Bank presented evidence after the trial court

denied the motion and First Bank did not renew the motion for directed verdict at the close of all

of the evidence. See Liberty Mut. Ins. Co., 2014 WL 261010, at *1; Dalbosco, 2012 WL

1795108, at *4–5. Though First Bank presented objections to question four at the charge

conference, First Bank did not object that the evidence was legally insufficient under either the

legal standard submitted in question four or under the legal standard provided under Texas law.

24

During the charge conference, First Bank arguably objected to the part of the trial court’s

instruction that allowed the jury to consider extrinsic evidence in making this determination.

Nonetheless, this instruction was correct, as explained in the previous section of this opinion, and

this instruction addresses what the jury may consider in making its finding rather than the

substantive legal standard under which the jury was to make the finding.

29

825 S.W.2d 439, 440–43 (Tex. 1991). The Sloane court addressed whether the

prospective borrowers’ negligent-misrepresentation claims against a bank were

barred by the statute-of-frauds requirement in section 26.01 of the Business and

Commerce Code and whether the prospective borrowers could recover mental

anguish or lost profits under these claims. See id. The prospective borrowers did

not assert breach-of-contract claims or allege that the bank agreed to loan them

money; rather, they alleged that the bank did not agree to loan them money yet

negligently represented that the bank had made such an agreement. See id. at 442.

The Sloane case is not on point. See id. at 440–43.

As a matter of law neither DTSG nor Brumitt showed an injury independent

from economic losses recoverable under a breach-of-contract claim; accordingly,

neither party may recover damages under the tort claim of negligent

misrepresentation. See D.S.A., Inc., 973 S.W.2d at 663–64; Owen, 2011 WL

3211081, at *8; Esty, S.S.B., 298 S.W.3d at 301–02; Cessna Aircraft Co. v.

Aircraft Network, LLC, 213 S.W.3d 455, 466–67 (Tex. App.—Dallas 2006, pet.

denied). And, because DTSG and Brumitt are only entitled to recover under their

respective breach-of-contract claims, they are not entitled to recover exemplary

damages. See D.S.A., Inc., 973 S.W.2d at 663–64. Therefore, we sustain First

Bank’s fourth issue.

I. In First Bank’s argument under the seventh issue, has First Bank shown

that the trial court erred in rendering judgment in favor of Brumitt?

In its seventh issue, First Bank asserts the testimony of Brumitt’s damages

expert, Anthony DeBenedictis, is unreliable and thus legally insufficient to support

the jury’s verdict regarding Brumitt’s damages. Though First Bank does not

specify any jury question in its argument, because we have sustained the fourth

42

issue, the only damages finding at issue would be the jury’s damages finding as to

Brumitt’s breach-of-contract damages in response to question number five. Under

its seventh issue, First Bank presents argument in support of the proposition that

DeBenedictis’s testimony is unreliable and conclusory and thus legally insufficient

evidence of Brumitt’s damages. First Bank asserts that, because DeBenedictis’s

testimony is legally insufficient, this court should reverse the trial court’s judgment

and render judgment that Brumitt take nothing. In essence, First Bank argues that

the trial court erred in rendering judgment in Brumitt’s favor because

DeBenedictis’s testimony is legally insufficient.

First Bank does not assert or present argument that (1) the trial evidence

(which is voluminous) is legally insufficient to support a finding that Brumitt

sustained any damages or to support any particular damage finding by the jury; (2)

DeBenedictis’s testimony is the only testimony at trial regarding Brumitt’s

damages; or (3) expert testimony was necessary to prove Brumitt’s damages.

Presuming, without deciding, that DeBenedictis’s testimony is legally insufficient,

we conclude that First Bank still has not shown that the trial court erred in

rendering judgment in favor of Brumitt as to his breach-of-contract claim. See

Riggins v. Hill, —S.W.3d.—, —, 2015 WL 293270, at *3 (Tex. App.—Houston

[14th Dist.] Dec. 23, 2014, no pet. h.). Accordingly, we overrule First Bank’s

seventh issue.

III. CONCLUSION

The trial court reversibly erred in allowing Brumitt’s lead trial counsel to

testify as an expert as to DTSG’s attorney’s fees. But, there is no merit in First

Bank’s challenges to the breach-of-contract claims of either DTSG or Brumitt.

The trial court did not err in overruling First Bank’s objection that no third-party-

43

beneficiary issue should be submitted to the jury because the third-party-

beneficiary analysis is limited to the four corners of each of the Letters and

because construction of the unambiguous Letters is a matter of law for the court.

The trial evidence is legally sufficient to support a finding that First Bank and

DTSG intended Brumitt to benefit from one or more of the Letters and to support

the jury’s finding in response to question four. Under the unambiguous language

of section 26.02 of the Business and Commerce Code, this statute does not apply to

any of the Letters.

As a matter of law, neither DTSG nor Brumitt showed an injury independent

from economic losses recoverable under a breach-of-contract claim, so neither

party may recover under the tort claim of negligent misrepresentation. Because

DTSG and Brumitt are entitled to recover only under their respective breach-of-

contract claims, they are not entitled to recover exemplary damages.30

Accordingly, we modify the trial court’s judgment to delete (a) all recoveries

of attorney’s fees in favor of DTSG, and (b) all recoveries under the negligent-

misrepresentation claims of DTSG and Brumitt, and (c) all exemplary damages.

We affirm the trial court’s judgment as modified.

/s/ Kem Thompson Frost

Chief Justice

Panel consists of Chief Justice Frost and Justices Donovan and Brown.

30

Based on the disposition, we need not and do not address First Bank’s fifth, tenth, and eleventh

issues.

44