concluding evidence insufficient to support lost-profits damages because, among other reasons, there was no evidence the contract on which plaintiff would earn a 32% profit margin was sufficiently similar to the terminated contracts such that plaintiff “would earn the same profit margin on all three of them”
How later courts described this case
- concluding evidence insufficient to support lost-profits damages because, among other reasons, there was no evidence the contract on which plaintiff would earn a 32% profit margin was sufficiently similar to the terminated contracts such that plaintiff “would earn the same profit margin on all three of them”
- stating that when an appellant attacks the legal sufficiency of an adverse finding on an issue on which it did not have the burden of proof, it must demonstrate on appeal that there is no evidence to support the adverse finding
- describing lost profit as the loss of net income to a business, that is, income for lost business activity less any expenses that would have been attributable to that activity
- rejecting pro forma as a basis for awarding damages
Written by the judges who cited it.
The opinion
Affirmed as Modified and Substitute Opinion filed June 20, 2013.
In The
Fourteenth Court of Appeals
NO. 14-11-00988-CV
UNIVERSITY GENERAL HOSPITAL, LP AND ASCENSION PHYSICIAN
SOLUTIONS, LLC, Appellants
V.
PREXUS HEALTH CONSULTANTS, LLC AND PREXUS HEALTH, LLC,
Appellees
On Appeal from the 270th District Court
Harris County, Texas
Trial Court Cause No. 2009-77474
SUBSTITUTE OPINION
We issued an opinion in this case on April 2, 2013, modifying the trial
court’s judgment to delete awards of lost profit damages and affirming the
judgment as modified. Appellees subsequently filed a motion for rehearing.
Without changing the disposition of the case, we deny the motion for rehearing,
withdraw our previous opinion, and issue this substitute opinion.
Appellants University General Hospital, LP (“University General”) and
Ascension Physician Solutions, LLC (“Ascension”) appeal from a judgment
rendered against them following a jury trial. Concluding that there is legally
insufficient evidence to support the jury’s awards of lost profit damages, we
modify the trial court’s judgment to delete those awards and affirm the judgment as
modified.
BACKGROUND
Appellees Prexus Health Consultants, LLC and Prexus Health, LLC
(collectively “Prexus”) provide healthcare management, administrative support,
and consulting services to hospitals such as University General. On March 2,
2009, University General entered into a Professional Services Agreement (“PSA”)
with Prexus. Pursuant to the PSA, Prexus would provide three distinct services to
University General: medical transcription, medical coding, and billing. On that
same day, Ascension, which was responsible for the day-to-day operation of
University General, entered into a Consulting Services Agreement (“CSA”) with
Prexus. Through the CSA, Prexus agreed to provide various consulting services
related to the daily operation of University General. The term of both the PSA and
the CSA was three years, with both expiring on March 2, 2012.1
On September 8, 2009, University General and Ascension terminated both
the PSA and the CSA. In December 2009, Prexus filed suit against University
1
Both the PSA and the CSA contain choice-of-law clauses providing that they are to be
governed by Ohio law. Neither side has raised an issue on appeal addressing the choice-of-law
clauses or arguing that Ohio law conflicts with Texas law. Thus, we need not address any
choice-of-law issue, and we apply Texas law. See 1993 GF P’ship v. Simmons & Co. Int’l., No.
14-09-00268-CV, 2010 WL 4514277, at *9 n.15 (Tex. App.—Houston [14th Dist.] November 9,
2010, no pet.) (mem. op.).
2
General, Ascension, and numerous other defendants not parties to this appeal.
Prexus alleged University General had breached the PSA and Ascension had
breached the CSA. Prexus sought damages for unpaid invoices for work already
performed as well as damages for lost profits Prexus allegedly would have earned
during the two-and-a-half years remaining under both agreements. The lawsuit
went to trial before a jury on April 11, 2011.
The jury found that University General breached the PSA. The jury then
determined that University General owed Prexus $146,000 for work already
performed under the PSA and that Prexus suffered $900,000 in lost profits as a
result of University General’s breach. The jury also found that Ascension
breached the CSA. The jury found that Ascension owed Prexus $608,005 for work
already performed pursuant to the CSA and determined that Prexus experienced
$1,200,000 in lost profits as a result of Ascension’s breach. Finally, the jury
determined that Prexus’s reasonable and necessary attorneys’ fees through trial
were $107,000.
Contending the evidence was insufficient to support the award of lost profits
under either contract, appellants moved for judgment notwithstanding the verdict.
The trial court denied appellants’ motion and rendered judgment in accordance
with the jury’s verdict. This appeal followed.
ANALYSIS
Appellants’ three issues on appeal challenge only the portion of the trial
court’s final judgment awarding Prexus lost profits. Because it is dispositive of
this appeal, we need only reach appellants’ second issue, in which appellants
contend the evidence is legally insufficient to support the jury’s awards of lost
profits under the PSA and the CSA.
3
I. Standard of review
If an appellant attacks the legal sufficiency of an adverse finding on an issue
on which it did not have the burden of proof, the appellant must demonstrate on
appeal that there is no evidence to support the adverse finding. Price Pfister, Inc.
v. Moore & Kimmey, Inc., 48 S.W.3d 341, 347 (Tex. App.—Houston [14th Dist.]
2001, pet. denied). In conducting a legal sufficiency review, we must consider the
evidence in the light most favorable to the appealed finding and indulge every
reasonable inference that supports it. 2900 Smith, Ltd. v. Constellation
NewEnergy, Inc., 301 S.W.3d 741, 745 (Tex. App.—Houston [14th Dist.] 2009, no
pet.) (citing City of Keller v. Wilson, 168 S.W.3d 802, 821–22 (Tex. 2005)). The
evidence is legally sufficient if it would enable reasonable and fair-minded people
to reach the decision under review. Id. This court must credit favorable evidence
if a reasonable trier of fact could, and disregard contrary evidence unless a
reasonable trier of fact could not. Id. The trier of fact is the sole judge of the
witnesses’ credibility and the weight to be given their testimony. Id.
This court may sustain a legal sufficiency (or no evidence) issue only if the
record reveals one of the following: (1) the complete absence of evidence of a vital
fact; (2) the court is barred by rules of law or evidence from giving weight to the
only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital
fact is no more than a scintilla; or (4) the evidence established conclusively the
opposite of the vital fact. Id. at 745–46. Evidence that is so weak as to do no more
than create a mere surmise or suspicion that the fact exists is less than a scintilla.
Kellmann v. Workstation Integrations, Inc., 332 S.W.3d 679, 684 (Tex. App.—
Houston [14th Dist.] 2010, no pet.).
4
II. Prexus’s awards of lost profit damages are not supported by legally
sufficient evidence.
Lost profits are damages for the loss of net income to a business. Miga v.
Jensen, 96 S.W.3d 207, 213 (Tex. 2002). Broadly speaking, they reflect income
from lost business activity, less any expenses that would have been attributable to
that activity. Kellmann, 332 S.W.3d at 684. While the recovery of lost profits
does not require that the loss be susceptible of exact calculation, the party seeking
such damages must do more than show that it suffered some lost profits. ERI
Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010) (quoting
Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992)). The amount
of the loss must be shown by competent evidence with reasonable certainty. Id.
A party seeking lost profit damages need not produce documentary evidence
in court supporting an award, but any opinions or estimates of damages must be
based on objective facts, figures, or data from which the amount of lost profits can
be ascertained. Id. Conclusory or speculative evidence of lost profits cannot
support an award. See Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649–50
(Tex. 1994). A party seeking lost profit damages must demonstrate one complete
calculation of lost profits. Kellmann, 332 S.W.3d at 684. That calculation must be
based on net profits, not gross revenue or gross profits. Id.
A. The evidence regarding lost profits
The judgment awards Prexus $900,000 in lost profits from the PSA and $1.2
million in lost profits from the CSA. In their second issue, appellants contend that
the evidence is legally insufficient to support either award under the legal
standards discussed above. Considering the evidence in the light most favorable to
the awards, there were at most two witnesses who testified on the issue of Prexus’s
alleged lost profit damages: Dr. Ajay Mangal and Mike Griffin. Both testified as
5
fact witnesses, not experts.
Mangal testified that, in addition to being an ear, nose, and throat doctor, he
is a partial owner as well as the Chief Executive Officer (“CEO”) of Prexus.
Mangal also testified that he was serving as the CEO of Prexus in 2009. Mangal
informed the jury he had an MBA in general business. While he testified about
numerous subjects during the trial, Mangal’s testimony eventually turned to the
subject of Prexus’s lost profit damages. Mangal began his testimony on this
subject by explaining that he was quite familiar with and worked closely with the
company’s financials, reviewing them before presentations to the board and
analyzing pro formas for any new projects.
A bench conference then occurred during which the trial court, after
ascertaining that Mangal had not been designated as an expert, ruled that Mangal
would not be allowed “to offer any expert testimony about any damage model.”
Mangal then continued with his testimony.
Q. Ajay, you have written some numbers on this chart, how
has Prexus been damaged by [University General]
terminating the PSA?
[Mangal]. I can speak in basic terms that I looked at the numbers,
the PSA and CSA. And over three years, . . .
[Objection and ruling omitted]
[Mangal]. It would have - - just the revenue number would have
been about $8 million revenue. Okay. That is not profit,
just revenue, what we would have billed [University
General] for those contracts and for the services for the
three years.
And our profit margin or contribution margin being - -
[Counsel]. Your honor, I also object that he is about to get into
expert testimony.
6
The Court. Sustained.[2]
Q. Ajay, how much money have you lost as a result of
defendant’s breach of the PSA and the CSA?
[Objection and ruling omitted]
[Mangal]. About $2.4 million over three years.
[Objections and rulings omitted]
Q. So when you say three years, you mean the two and a
half years remaining on the contract, correct?
[Mangal]. Absolutely.
Q. How did you get that number?
...
[Mangal]. We look at the revenue that is lost and so we know the
income that is lost from new contracts. And that is what
I have to, as the CEO, look at that data and see what, you
know, each contracts [sic] means to us as a company.
...
Q. All right. So for the damages for the breach of contract
by [University General] and Ascension, what would
those damages include?
[Mangal]. They would include loss of PSA and CSA for about two
and a half years.
Q. Okay. And what are the numbers?
[Objections and rulings omitted]
[Mangal]. $2.4 million.
Mangal’s testimony then turned to a potential agreement Prexus was
negotiating with Humble Surgical Hospital (“Humble Hospital”), a planned new
hospital in the northern part of Harris County. Prexus would later argue that the
expected profit margin on this potential agreement could be used to calculate lost
profits under the PSA and CSA. Mangal’s testimony focused on a pro forma
2
On appeal, Prexus does not challenge any of the trial court’s evidentiary rulings.
7
projecting the income Prexus expected to earn if the negotiations with Humble
Hospital proved successful and Humble Hospital came into existence.
Q. When you need to make sure it is profitable, is one thing
you do is look at a pro forma to determine what you
would expect to make in future years once you perform
the contract?
[Mangal]. That’s correct.
Q. And from - - how do you look at a pro forma to
determine that?
[Mangal]. Look at the income and expenses and the bottom line.
...
Q. Sorry, Ajay. As Prexus’ CEO, did you do this in
evaluating the Humble Hospital project?
[Mangal]. Yes.
Q. And with whom did you participate in this effort with
Prexus?
[Mangal]. Initially, Mike Griffin and Jerry Fye.
Q. Exhibit 35, which is the pro forma, does it show the
money that Prexus was to make over three years?
[Mangal]. Yes.[3]
Q. And what does it say?
[Mangal]. We were expecting to collect about $13 million.
Mangal’s testimony later turned back to the Humble Hospital negotiations.
Q. Ajay, a while ago when you testified about the 13
million, is the 13 million your profit from the project?
[Mangal]. No, that is the revenue that we would have gotten from
three years of the CSA and the PSA.
Q. What is your profit?
3
Plaintiff’s Exhibit 35 is a document entitled: “Humble Surgical Hospital-Business
Model and Assumptions.”
8
[Counsel]: Objection, Your Honor. He is not qualified to give that
testimony.
The Court: Sustained.
Q. You have testified that in your role as CEO, you know
what your revenues are, correct?
[Mangal]. That’s correct.
At that point, Prexus passed the witness. Following appellants’ cross-
examination, Prexus resumed questioning Mangal the next day. Once again, the
questions were directed at the revenue and profit expected if the Humble Hospital
negotiations proved successful.
Q. Yesterday, you told the jury through this Exhibit 35 that
Prexus expected to make 13 million in revenue from
[Humble Hospital]; do you remember that?
[Mangal]. Yes.
Q. Ajay, what is your profit margin on that revenue?
[Counsel]: Objection, Your Honor, foundation, and also object on
the grounds that his testimony was not timely disclosed
in discovery.
The Court: Overruled.
[Mangal]. 32 percent based on our last year data.
Q. I’m sorry, based on what?
[Mangal]. Last year financials.
Mike Griffin was the second witness whose testimony touched on the issue
of Prexus’s lost profits damages. Griffin served as Prexus’s Chief Financial
Officer and later left to help found another company that provides management
services to University General.
While Griffin testified on many subjects, he was also asked about Prexus’s
alleged lost profit damages.
9
Q. Won’t [sic] don’t you pull up, if you will - - if you’ll go
to Plaintiff’s Exhibit No. 35. Exhibit No. 35, this is a
proforma, I think you’ve heard about a little while ago
that was prepared between Prexus and Humble Surgical
Hospital; do you recall that?
[Griffin]. Yes.
Q. Okay. And - - and I think Ajay’s testimony was that you
didn’t ultimately prepare this exhibit 35, but you
prepared the majority of the iteration that led to this, do
you recall that?
[Griffin]. Yeah, I helped, definitely.
Q. In fact, you prepared a lot of these numbers and
projections; isn’t that correct?
[Griffin]. I can’t answer that 100 percent. I did a proforma for the
project.
Q. Right.
[Griffin]. But I don’t know if this was the final and if the numbers
were changed and whatnot, but I did definitely do a
proforma.
...
Q. There are some numbers there on that page. And if you
add up some of those numbers, you come up with a
number around $13 million. You heard Ajay testify to
that yesterday?
[Griffin]. Yeah. I don’t know where he’s getting this number.
Q. Look, if you will, at . . . the first three columns in Lines 3
through 5. Those would be part of the anticipated
revenues. In other words, if you look at . . . transcription
services, coding services and billing services for the three
years, you would add those numbers together - -
[Griffin]. Got it.
Q. - - to determine revenue for Prexus, correct?
[Griffin]. Got it.
Q. Is that - - do you agree with that?
10
[Griffin]. Yes.
...
Q. Okay. And - - and in order to determine what profit
Prexus would have made, you would have had to - - you
have to apply a profit margin, right?
[Griffin]. That’s correct.
Q. Okay. So whatever the profit margin is times the $13
million, that equals the amount of revenue that Prexus
would have - - was supposed to have received according
to the proformas from the [Humble Hospital] contract.
[Griffin]. Right.
...
Q. Now, with respect to the damages that Prexus has
suffered, . . . you heard the testimony from Ajay that the
calculation for the two and a half years remaining on the
contract was $2.4 million. You heard that, correct?
[Griffin]. For revenue.
...
Q. You heard Ajay’s testimony that the amount of money
that Prexus lost on the remaining two and a half years on
the PSA and the CSA with [University General] was $2.4
million.
[Griffin]. Yes, I did.
Q. Okay. That was profit, correct, it’s not revenue?
[Griffin]. I did factor that.
Q. And do you disagree with that?
[Griffin]. I don’t know the answer. I wouldn’t - - I wouldn’t be
able to tell you that number.
B. This evidence is legally insufficient to support any lost profit
damages.
We conclude that this evidence is legally insufficient to support awards of
lost profit damages to Prexus. As explained above, the plaintiff seeking lost profits
11
damages bears the burden of providing a single complete calculation of lost profits,
which reflects revenue from lost business activity less expenses that would have
been attributable to that activity. Kellmann, 332 S.W.3d at 684. Prexus did not
provide that calculation here. With respect to revenue, although documentary
evidence is not required, Mangal’s testimony includes no objective facts, figures,
or data explaining how he arrived at his $8 million anticipated revenue figure. See
Szczepanik, 883 S.W.2d at 650 (“There is nothing in the record to show how [the
appellee] determined the amount of lost profits.”); Holt Atherton, 835 S.W.2d at 84
(“[T]his testimony is legally insufficient because it does not provide any indication
of how the Heines determined what their lost profits were.”); see also Glattly v. Air
Starter Components, Inc., 332 S.W.3d 620, 635 (Tex. App.—Houston [1st Dist.]
2011, pet. denied) (holding evidence of lost profits was legally insufficient because
it did not establish that calculation was based on objective facts, figures, or data).
Mangal also did not discuss expenses, though he testified that Prexus “lost”
$2.4 million as a result of appellants’ breach of both the PSA and the CSA. It is
far from clear that this figure represents lost profits (revenue minus expenses), but
even if we assume it does, Mangal once again did not provide any objective facts,
figures, or data explaining how he arrived at that amount. When asked how, he
said that “[w]e look at the revenue that is lost and so we know the income that is
lost.” But lost revenue or lost income is not a proper basis for an award of lost
profit damages. Kellmann, 332 S.W.3d at 684. We therefore hold that the
testimony recited above does not provide a single complete calculation of Prexus’s
alleged lost profits.
The lack of a single complete calculation is further confirmed by the jury
charge. The jury charge asked two lost profits questions. The first asked: “The
amount [University General] agreed to pay Prexus for the [PSA] less the expenses
12
Prexus saved by not completing the [PSA].” The second lost profits question
asked: “The amount Ascension agreed to pay Prexus for the [CSA] less the
expenses Prexus saved by not completing the [CSA].” There were no objections
lodged to either lost profits question. In this circumstance, we measure the
sufficiency of the evidence according to the charge submitted to the jury. Romero
v. KPH Consol., Inc., 166 S.W.3d 212, 221 (Tex. 2005); Osterberg v. Peca, 12
S.W.3d 31, 55 (Tex. 2000).
The appellate record is devoid of any evidence demonstrating the expenses
Prexus saved by not completing the PSA or the CSA. Nor is there any evidence
from which the jury could determine how to apportion Mangal’s figures, which
addressed “the PSA and the CSA” together, in order to provide the separate
damage answers for each agreement that the verdict form required. For these
additional reasons, the evidence is insufficient to establish a single complete
calculation of lost profits from either the PSA or the CSA. See Kellmann, 332
S.W.3d at 686; Wiese v. Pro Am Serv., Inc., 317 S.W.3d 857, 863–64 (Tex. App.—
Houston [14th Dist.] 2010, no pet.).4
We reject Prexus’s argument that Griffin’s testimony somehow confirmed
the accuracy of Mangal’s $2.4 million figure as Prexus’s lost profits. Even if we
accept Griffin’s nebulous comment that he “did factor that” as confirmation he
4
On rehearing, Prexus argues a remand is required because evidence of damages that are
not segregated among claims is more than a scintilla of evidence of segregated damages. But the
problem we have described above is a failure of proof, not a failure to segregate. In the case
Prexus cites, the supreme court remanded because the jury had awarded lost profits to all four
plaintiffs as a single lump sum, and two of the plaintiffs were not entitled to recover. See Minn.
Mining & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733, 738–39 (Tex. 1997). In this case, however,
the jury charge segregated Prexus’s damages, providing separate answer blanks for the PSA and
CSA. The problem is that Prexus did not provide legally sufficient evidence of a complete lost
profits calculation for either contract. Because Prexus’s awards are neither unsegregated nor
supported by legally sufficient evidence, Nishika does not require a remand. Cf. id. at 739
(“When supported by legally sufficient evidence, an unsegregated damages award . . . ordinarily
requires a remand.”).
13
believed the $2.4 million figure referred to profit rather than revenue, he went on
to testify, when asked if he disagreed with that figure, that he did not know the
answer and could not tell the jury that number. This testimony confirms nothing
except Griffin’s lack of knowledge on this subject.
During oral argument, Prexus suggested the $2.4 million number was based
on the six months the PSA and the CSA were performed prior to appellants’
breaches. While basing a lost profits calculation on historic performance may be
acceptable in some circumstances, Mangal provided no testimony connecting his
$8 million and $2.4 million numbers to Prexus’s actual past performance under the
PSA and the CSA. See Spring Window Fashions Div., Inc. v. Blind Maker, Inc.,
184 S.W.3d 840, 884 (Tex. App.—Austin 2006, pet. granted, judgm’t vacated
w.r.m.) (stating that while there is no one correct method to calculate lost profits, it
is not enough to supply pieces of several different methods).
In an effort to establish a single complete calculation, and relying on the
Texas Supreme Court’s ERI Consulting opinion, Prexus points to Mangal’s
testimony that Prexus anticipated it would achieve a 32 percent profit margin if its
negotiations with the nascent Humble Hospital ever came to fruition. See ERI
Consulting, 318 S.W.3d at 876–77. Mangal testified the 32 percent figure was
based on the prior year’s financials. Even if we assume the number is accurate, it
was linked only to the profits Prexus estimated it would receive if and when its
contract with Humble Hospital was performed. There is no evidence in the record,
from Mangal or any other witness, providing a link between this expected 32
percent profit margin figure and the profit margin Prexus was earning on its PSA
with University General or its CSA with Ascension. In other words, no one
testified about the profit margin Prexus was earning on the two existing contracts
at issue here, and there is no evidence that the potential contract with Humble
14
Hospital was sufficiently similar to each of those contracts that Prexus would earn
the same profit margin on all three of them.5 As a result, we conclude the
anticipated Humble Hospital profit margin cannot serve as a basis for the required
single complete calculation of lost profits from the PSA and CSA. See Exel
Transp. Servs., Inc. v. Aim High Logistics Servs., LLC, 323 S.W.3d 224, 234 (Tex.
App.—Dallas 2010, pet. denied) (holding that evidence of lost profits must be
connected to the lost profits actually alleged to have been lost as a result of the
defendant’s conduct).
On rehearing, Prexus argues for the first time that there is sufficient evidence
linking the contracts, and it cites evidence it did not address in its pre-submission
brief. Appellate courts generally do not consider arguments raised for the first
time on rehearing. AVCO Corp. v. Interstate Sw., Ltd., 251 S.W.3d 632, 676 (Tex.
App.—Houston [14th Dist.] 2007, pet. denied) (supp. op. on reh’g).6 Nevertheless,
even these new record citations do not alter our conclusion that Prexus offered no
evidence linking the contracts.
Specifically, Prexus now points to testimony that: (1) the Humble Hospital
pro forma was indicative of the type of pro forma that Mangal reviewed in
evaluating whether to enter into a project; (2) University General and Humble
Hospital had some common shareholders; and (3) in creating a pro forma, Griffin
5
On rehearing, Prexus argues that its evidence of lost profits is nevertheless sufficient
under ERI Consulting. But the failure of proof we have identified above concerns an issue that
was not presented in ERI Consulting. The sole owner of ERI Consulting testified to its profit
margin on an existing contract with Merico, and the supreme court held this testimony sufficient
to support an award of lost profit damages on that same contract. ERI Consulting, 318 S.W.3d at
876. In this case, however, Prexus is attempting to support its awards of lost profit damages by
citing the profit margin it anticipated earning on a different potential contract without tying that
margin to the contracts at issue.
6
Moreover, we are not required to make an independent search of a voluminous record
for evidence supporting a party’s position. See Tex. R. App. P. 38.1(i), 38.2(a); Hakemy Bros.,
Ltd. v. State Bank & Trust Co., 189 S.W.3d 920, 927–28 (Tex. App.—Dallas 2006, pet. denied).
15
would “find out the volume that [the different physician specialists] could
potentially bring into a center like that,” would “use the net revenue data that we
had on other centers,” and “had a whole mechanism to screen to determine the
expense structures.” This testimony is no evidence that Prexus’s expected profit
margin on the Humble Hospital contract was the same as its existing profit margin
on either the University General or the Ascension contracts. Whether Prexus used
a certain type of pro forma to evaluate a potential project says nothing about
whether that project’s profitability will be the same as established projects, even if
the projects have some common shareholders. In addition, Griffin helped create
the Humble Hospital pro forma, but he did not prepare the final version and did not
know if the numbers had changed. Nor did he say that the net revenue data he
used in earlier versions came from the University General and Ascension contracts
specifically. Yet even if it did, there is no evidence that the physician specialists
included in the Humble Hospital pro forma had the same profitability as those
practicing at University General, or that the expense screening mechanism used in
the pro forma matched the expenses Prexus was incurring on the University
General and Ascension contracts. For these additional reasons, the Humble
Hospital pro forma does not provide sufficient evidence to support the jury’s
awards of lost profits on the University General and Ascension contracts.
Finally, we reject Prexus’s argument that we must accept the $8 million and
$2.4 million figures as conclusive evidence of Prexus’s lost profits because
appellants had the burden to come forward with contradictory evidence and failed
to meet that burden. In support of this contention, Prexus once again cites ERI
Consulting. 318 S.W.3d at 877 n.5. In ERI Consulting, the Supreme Court of
Texas stated that “the defendant properly bears the burden of providing at least
some evidence suggesting that an otherwise complete lost profits calculation is in
16
fact missing relevant credits.” Id. at 878 (emphasis added). That is not the
situation here because we have already held that Prexus did not provide a complete
lost profits calculation. Because Prexus never met its burden to introduce evidence
of a single complete calculation of lost profits, the burden never passed to
appellants to come forward with contradictory evidence.
For these reasons, we conclude the evidence is legally insufficient to support
the judgment’s awards of lost profit damages to Prexus. Therefore, we sustain
appellants’ second issue on appeal.
III. The proper remedy is to modify the judgment to delete the lost profit
damages, not to remand.
Generally, the proper legal remedy for legal insufficiency of the evidence is
rendition of judgment for the appellant. Vista Chevrolet, Inc. v. Lewis, 709 S.W.2d
176, 177 (Tex. 1986). Despite that general rule, Prexus asserts that, at most,
appellants are entitled to a remand for a new trial. In support of this contention,
Prexus cites numerous cases for the proposition that when there is legally sufficient
evidence of some ascertainable amount of damages, but not the amount awarded
by the jury, a take-nothing judgment is not proper. See, e.g., ERI Consulting, 318
S.W.3d at 880. We disagree that we are presented with such a situation. Instead,
as we have explained above, we have a situation where there is no competent
evidence establishing any amount of lost profits with reasonable certainty. Cf. id.
at 877–78 (holding remand required if plaintiff’s evidence is legally sufficient “to
prove a lesser, ascertainable amount of lost profits with reasonable certainty”). In
that situation, the general rule requires that we render judgment that Prexus take
nothing on its lost profits claims against appellants. See Kellmann, 332 S.W.3d at
686–87.
17
CONCLUSION
Having sustained appellants’ second issue, we modify the final judgment to
delete (1) the award of $900,000 in lost profits as a result of University General’s
breach of the PSA, and (2) the award of $1,200,000 in lost profits as a result of
Ascension’s breach of the CSA. We affirm the judgment as modified.
/s/ J. Brett Busby
Justice
Panel consists of Justices Frost, Boyce, and Busby.
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