Vietentours GMBH v. the Ticket Company, Inc., and the Ticket Company International, Inc.

Opinion issued March 24, 2011

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-09-00732-CV

———————————

Vietentours GmbH , Appellant

V.

The Ticket

Company, Inc. and The Ticket Company International, Inc. , Appellees

On Appeal from the 165th District Court

Harris County, Texas

Trial Court Case No. 2006-69465

MEMORANDUM OPINION

Vietentours

GmbH, a German company, sued The Ticket Company Inc. and The Ticket Company

International, Inc. (“TC International”) on sworn account and for breach of

contract for services provided in connection with the World Cup held in Germany

in June and July 2006. Vietentours

claimed it provided over €5.3 million worth of services, but was paid only

€4.1million, leaving a balance of €1,217,451.55. A jury found that both TC International and

Ticket Company breached the contract with Vietentours, but their breach was

excused. The trial court entered a take

nothing judgment on Vietentours’s claims against both companies. Vietentours

raises four issues on appeal, focusing primarily on the legal and factual

sufficiency of the jury’s finding of excuse.

Vietentours also challenges the sufficiency of the evidence supporting

the jury’s finding of Vietentours’s breach, the submission of the damages

question, and the finding that the two companies are not jointly and severally

liable.

We affirm.

Background

Vietentours provides hotel brokering and logistical services

for major international sporting events such as the Olympics or World Cup. Ticket Company and TC International were Houston-based

ticketing companies that provided services for group and individual customers

to attend sport and concert events. Years

before this dispute arose, the two owners of Ticket Company, Christopher Toy

and Ali Fazeli, formed TC International with Andrew Worthington. [1] TC International specialized in selling

packages to events including hotels, airfare, tickets, and souvenirs, while

Ticket Company is a ticket broker. TC

International is no longer in business.

In 2004, Vietentours and one of the two companies—the

parties disagree which one—decided to collaborate on major international

sporting events. Vietentours contends

that it did business with Ticket Company.

Defendants assert that only TC International contracted for

Vietentours’s services and that they made the distinction clear. [2] Ticket Company and TC International shared

offices and had some overlapping employees, though they had separate bank

accounts, tax returns, and phone and fax numbers. Vietentours addressed its invoices to Ticket

Company, but TC International made all the payments. Worthington, who was Defendants’ primary

liaison with Vietentours, had business cards and emails identifying himself as

the “Director of International Sales and Marketing” for Ticket Company even

though he was a co-owner only of TC International. Regardless, the parties generally had a

satisfactory business relationship and worked on several events together.

In 2005, the managing director for Vietentours, Hans

Overhage, and several Vietentours principals met with Toy, Fazeli, and

Worthington in Germany to discuss providing a package for the 2006 World

Cup. The parties agreed that Defendants

would purchase tickets for the games and arrange for air travel, and

Vietentours would provide bookings for hotels, restaurants, and local

transportation. Early booking of the

hotel rooms was important because 600-700,000 visitors needed rooms during the

World Cup. The arrangements were not

exclusive—Vietentours assisted a total of 60,000 customers for all of its

clients and Defendants also booked hotels outside of the agreement with

Vietentours. Defendants were to provide

Vietentours with the number and dates of the hotel rooms needed for their

customers as soon as possible after the brackets for cities and teams was

announced in December 2005.

Vietentours sent Worthington a series of written contracts

between Vietentours and Ticket Company but they were never signed. The problem with the contracts was that there

were so many groups of customers with changing preferences and requirements that

it was “almost impossible to be producing contract after contract.” The parties decided to “keep control” of the

evolving list of needed hotels and their agreements through an excel

spreadsheet.

Vietentours ultimately provided hotel rooms and other

services to approximately 3,000 to 6,000 of Defendants’ customers for the World

Cup. The World Cup began on June 9 and

ended on July 9, 2006. The hotel rooms

were needed from June 6 until July 10. The

games were held in over a dozen cities in Germany.

On June 7, two days before the start of the World Cup, Overhage

informed Worthington that €1.8 million was overdue for Vietentours’s

services. Vietentours had already paid

for the hotel rooms and was facing a large loss and Defendants’ prior payments

did not cover the amounts owed. Worthington

responded that he understood that half of the past-due amount had been paid or

was going to be paid that day. Vietentours

did not provide Worthington with copies of any invoices for him to review so he

could verify this amount, but instead showed him various receipts and other

information that confirmed the approximate amount.

Vietentours and Worthington signed an agreement on June 7 that,

as of that date, Ticket Company owed Vietentours “about” €1,800,000. The June 7 agreement reflects that

Worthington was acting on behalf of Ticket Company. Worthington agreed to

provide proof of payment of €900,000 by 4:00 p.m. that day and to pay the

remaining €900,000 by June 9. The June 7

agreement stated that if Worthington failed to provide proof of the first

payment, “Vietentours will cancel the rooms” for guests checking in the next

day. Additionally, if the second payment

was not received by June 9, Vietentours would “cancel all the rooms and other

services” for guests arriving on or after June 14. TC International made payments of €600,000 by

June 9 and €400,000 before the end of the month. Therefore, based on the amounts stated in the

June 7 agreement, Ticket Company still had an outstanding balance of

€800,000. After receiving these

payments, Vietentours did not cancel the hotel rooms or its other

services. On the contrary, the parties

entered into an addendum agreement identifying additional services that

Vietentours had not yet invoiced.

On July 3, immediately before the World Cup finals, Worthington

and Overhage signed another agreement regarding the outstanding

indebtedness. Worthington met with Overhage

and Vietentours’s account manager for two days before he signed that agreement. By that time an unspecified number of Defendants’

customers had already left Germany to return to their homes. Worthington was given a number of invoices to

review so he could reconcile the accounts, but did not have the opportunity to

study them until returning to his hotel on the night of July 3. Nevertheless, Worthington signed another

agreement before his study of the invoices, again purporting to act on behalf

of Ticket Company. In the July 3

agreement, Ticket Company admitted that Vietentours had provided services and

supplies through that date with a value of €5,365,271.55. The July 3 agreement further stated that “the

amounts calculated and invoices are correct and not questioned.”

The agreement introduced during trial states that a

statement of individual and group calculations was attached and “correct and

agreed on by both parties.” The copy of

the July 3 agreement introduced as a trial exhibit does not include any

attachment. Several spreadsheets,

however, were admitted as a separate exhibit.

These spreadsheets show itemized charges for transfers from airports,

meals, transportation, and tours and were initialed by Worthington on behalf of

TC International on July 4. Overhage

testified the spreadsheets were attached to the July 3 agreement after Worthington

signed them on July 4.

Based on the undisputed evidence about the amounts Defendants

paid Vietentours, the July 3 agreement would leave an unpaid total of €1.2

million. [3] At trial, Worthington admitted in

cross-examination that Vietentours was not paid the entire amount owed, but he

did not know the amount of the outstanding debt. Toy, a co-owner of Ticket Company, testified

that Vietentours was not fully paid but deferred to Worthington as to the

amount outstanding. Neither party called

an accountant or bookkeeper to address the amount of the bills or payments.

Worthington and Defendants’ representatives testified that

they experienced problems with Vietentours’s services. Several hotels were not located in the

correct cities or within walking distance of public transportation as

promised. Several buses were late and

the guides provided by Vietentours did not speak Spanish as required. Rooms were also double booked so that some

businessmen shared rooms with only one bed.

The witnesses, however, testified in general terms and only provided

details for one specific problem: when Vietentours failed to deliver five rooms

at a five-star hotel and instead provided 11 rooms at a four-star, inferior

hotel. Defendants found replacement

rooms on the open market.

Worthington claimed that when he signed the July 3 agreement

he did not know customers were demanding refunds due to complaints about the

services provided by Vietentours. He acknowledged

on cross-examination, however, that all payments and credits were given by

Vietentours. Overhage testified that

Vietentours was willing to consider granting Ticket Company credits for any

deficiencies in its services, but Ticket Company never provided any details on

the amounts.

Worthington testified that Vietentours threatened to cancel all

services if he did not sign the June 7 and July 3 agreements—June 7 being two

days before the start of the World Cup and July 3 immediately before the finals. Overhage denied placing any pressure on

Worthington to sign the agreement. He

further claimed that he told Worthington that Vietentours would cancel only the

rooms that had not been paid for; it would not cancel the rooms covered by Defendants’

past payments.

The trial court granted a directed verdict that TC

International failed to comply with its contract with Vietentours. The jury then found that the remaining

parties, Ticket Company and Vietentours, also failed to comply with the

contract and that Ticket Company and TC International were excused from

performance on grounds of prior material breach or duress. The jury found that Worthington was

authorized to act for Ticket Company, even though he was a co-owner of TC

International, but that the companies did not have an alter ego or joint

venture relationship. Finally, the jury

assessed $400,000 in damages against TC International only and awarded

Vietentours attorney’s fees. The trial

court rendered a take nothing judgment on Vietentours’s claims.

Directed Verdict and Submission of Excuse Question

As part of his first

issue, Vietentours contends that the trial court erred in submitting jury

question two, asking whether TC International’s failure to comply was excused,

because the court granted Vietentours a partial directed verdict on that issue. The trial court granted a directed verdict on

one issue only: TC International’s admission that it owed Vietentours money

under the contract and, therefore, breached the contract. The trial court did not grant a directed verdict

on the excuse issue and excuse was not discussed during the directed verdict

motion. We overrule the first part of

Vietentours’s first issue.

Legal and Factual Sufficiency

In the remainder of its first issue, Vietentours argues the

evidence was legally and factually insufficient to support the jury’s findings

that Ticket Company and TC International’s performance was excused. The trial court utilized

a broad form jury question combining excuses of prior material breach and

duress. Because the trial court used a

broad form question without objection, Vietentours can prevail on its

sufficiency of the evidence claims only if the evidence is insufficient for

both prior material breach and duress. See City of Houston v. Levingston , 221

S.W.3d 204, 230 (Tex. App.—Houston [1st Dist.] 2006, no pet.). In other words, either of the submitted

theories may be the basis for concluding that sufficient evidence exists to

support the jury’s finding of excuse.

A. Standard of Review

We will sustain a legal sufficiency or

“no-evidence” challenge if the record shows one of the following: (1) a

complete absence of evidence of a vital fact, (2) rules of law or evidence bar

the court 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 conclusively establishes the opposite of the

vital fact. City of Keller v. Wilson , 168 S.W.3d 802, 810 (Tex. 2005). In conducting a legal sufficiency review, a

“court must consider evidence in the light most favorable to the verdict, and

indulge every reasonable inference that would support it.” Id. at

822 . If there is more than a scintilla

of evidence to support the challenged finding, we must uphold it. Formosa

Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc. , 960 S.W.2d

41, 48 (Tex. 1998). If the evidence at

trial would enable reasonable and fair-minded people to differ in their

conclusions, however, then jurors must be allowed to do so. City of

Keller , 168 S.W.3d at 822 ; see also

King Ranch, Inc. v. Chapman , 118 S.W.3d 742, 751 (Tex. 2003). “A reviewing court cannot substitute its

judgment for that of the trier-of-fact, so long as the evidence falls within

this zone of reasonable disagreement.” Keller , 168 S.W.3d at 822 .

In conducting a factual

sufficiency review, we must consider and weigh all of the evidence that

supports or contradicts the jury’s findings.

Plas-Tex., Inc. v. U.S. Steel

Corp. , 772 S.W.2d 442, 445 (Tex. 1989).

We set aside a verdict only if the evidence is so weak or if the finding

is so against the great weight and preponderance of the evidence that it is

clearly wrong and unjust. Dow Chem. Co. v. Francis , 46 S.W.3d 237,

242 (Tex. 2001). The jury is the sole

judge of the witnesses’ credibility and the weight to be given their

testimony. Golden Eagle Archery, Inc. v. Jackson , 116 S.W.3d 757, 761 (Tex.

2003).

B. Excuse by Duress

Vietentours

contends the evidence supporting the jury’s finding of excuse is legally and

factually insufficient because the company exercised a legal right to demand

payment without exerting any duress on Defendants.

1. Duress

In general terms, economic duress that may

invalidate a contract and render it unenforceable occurs when one party takes unjust

advantage of the other party’s economic necessity or distress to coerce the

party to enter into the contract. See Brown v. Cain Chem., Inc. , 837

S.W.2d 239, 244 (Tex. App.—Houston [1st Dist.] 1992, writ denied). There are five elements to an economic duress

defense:

(1)

a threat or action was taken without legal justification; (2) the threat or

action was of such a character as to destroy the other party’s free agency; (3)

the threat or action caused the opposing party’s free will to be overcome and

caused the other party to do that which it would not otherwise have done and

was not legally bound to do; (4) the restraint was imminent; and (5) the

opposing party had no present means of protection.

Graybar Elec. Co. v.

LEM & Assocs., L.L.C. , 252 S.W.3d 536,

546 (Tex. App.—Houston [14th Dist.] 2008, no pet.).

The test for causation—whether the duress

contributes substantially to the claimant’s decision to assent—is subjective

and considers all of the surrounding circumstances such as the background and

relationship of the parties and the emotional condition of the party claiming

duress. Sudan v. Sudan , 145 S.W.3d 280, 287 (Tex. App.—Houston [14th Dist.]

2004), rev’d on other grounds , 199

S.W.3d 291 (Tex. 2006). The d uress,

however, must derive from acts or conduct of the party accused of

duress and the emotions of the purported victim alone are

insufficient to establish duress. Williams v. Jackson , No. 01-07-00850-CV,

2008 WL

4837484 , at *2 (Tex. App.—Houston [1st

Dist.] Nov. 6, 2008, no pet.) (mem. op.); Sudan ,

145 S.W.3d at 286 . What constitutes duress is a question of law, but whether duress

exists in a particular situation is generally a question of fact dependent upon

the circumstances surrounding the situation.

Matthews v. Matthews , 725

S.W.2d 275, 278 (Tex. App.—Houston [1st Dist.] 1986, writ ref’d n.r.e.).

The jury charge in questions 2 and

5 d efined duress as “the mental, physical or economic coercion

of another, causing that party to act contrary to his free will and interest.” During trial, Vietentours objected to the

excuse questions based on legal and factual sufficiency and not to the language

of the charge. Absent an objection or

requested definition or instruction made to the trial court informing it that

the proposed charge incorrectly states the law, we must measure the sufficiency

of the evidence based on the charge given.

Wal-Mart Stores, Inc. v. Sturges , 52 S.W.3d 711, 715 (Tex. 2001) (holding review of

sufficiency of evidence is made against charge given, even if incorrect

statement of law, in absence of objection); Osterberg v. Peca , 12 S.W.3d

31 , 55–56 (Tex. 2000) (review evidence against charge in absence of objection).

B. Sufficient

Evidence of Duress

Vietentours argues that there is legally and factually insufficient

evidence to support the jury finding that Worthington signed the June 7 and July 3 agreements contrary to his

free will and interest as a result of mental or economic coercion. More specifically, Vietentours contends

that it only threatened to withhold continuing services if Defendants did not

pay or promise to pay, a threat it had a legal right to make. Vietentours further asserts that the threat

only involved further performance and did not involve paid-for hotel rooms.

To constitute duress, the threat must involve some act the

threatening party has no legal right to do.

Flameout Design & Fabrication,

Inc. v. Pennzoil Caspian Corp. , 994 S.W.2d 830, 837 (Tex. App.—Houston [1st

Dist.] 1999, no pet.). Vietentours

asserts it had a legal right to demand overdue payment for its services. Worthington testified he found nothing wrong

with Vietentours “asking to be paid for [its] services,” but he also stated

that everything would “collapse” if he did not sign the June 7 agreement because

their customers would not have any rooms, buses, or other services from

Vietentours. The World Cup tournament

began on June 9, therefore, Vietentours demands on June 7 left Defendants no

alternatives to accommodate their customers at a time when between 600,000 and

700,000 spectators were competing for rooms and services. Worthington claimed that Vietentours

threatened that all of Defendants’ customers would have no hotel rooms or

services. The June 7 agreement,

moreover, does not limit the threat to only rooms for which Defendants had not

yet paid. On the contrary, it states

that Vietentours “will cancel all the rooms and other services” for guests who

had not yet checked into the hotels.

Worthington testified

that “the same kind of threat” was made before the July 3 agreement—“sign it or

else.” He stated, “If I didn’t sign this

agreement, I wouldn’t get the rooms for the finals.” He testified that he had to sign both

contracts because he did not “have an option.”

Reading Worthington’s

testimony in the light most favorable to the verdict, as we must in a legal

sufficiency challenge, we reject Vietentours’s argument. The evidence is undisputed that Defendants

paid €4.1 million towards the amount owed, though the jury heard conflicting

evidence as to the amount of the remaining debt. Contrary to Vietentours’s contentions, the June

7 agreement does not limit the threat to only unpaid rooms and Worthington

testified that the same threats were made in conjunction with the July 3

agreement. The jury also heard evidence

that Vietentours timed the threats of total cancellation to coincide with the

start of the World Cup and the final rounds.

Vietentours had a

legal right to demand payment for the money owed for its services, but it did

not have the right to threaten to cancel all services, even those for which

Defendants had already paid.

Worthington’s testimony about the threat of total cancellation, despite

Defendants’ payments, and the timing of those threats are more than a scintilla

of evidence to show economic coercion causing a party to act “contrary to his

free will and interest.” We find the

evidence to be legally sufficient to support the jury’s finding of duress.

For a factual

sufficiency review, we must consider all the evidence, whether it supports or

contradicts the jury’s findings. See Plas-Tex., Inc. , 772 S.W.2d at 445 . The record does not reflect how many

customers remained in Germany by July 3 and Vietentours representatives

testified that the only threat concerned their continued performance, not the

cancellation of all rooms and services.

The jury determined the weight and credibility to give Worthington’s

testimony compared to the testimony of Vietentours’s witnesses. See

Golden Eagle Archery , 116 S.W.3d at 761 .

“The issue of duress actually boils down to the credibility of the

witnesses,” and we will not disturb the jury’s evaluation of that

testimony. Gooch v. Am. Sling Co. , 902 S.W.2d 181, 187 (Tex. App.—Fort Worth

1995, no writ). We cannot say, reviewing all of the

evidence that supports and contradicts the jury’s findings, that the evidence

was so weak as to make a jury finding of excuse by duress clearly wrong and

unjust. See id.

W e find one of the two grounds contained in the broad form

excuse questions is supported by legally and factually sufficient

evidence. We therefore overrule

Vietentours’s first issue.

Conclusion

The

remainder of Vietentours’s appeal argues the following: first, the evidence was

insufficient to show Vietentours breached the contract; second, that the trial

court erred in submitting a damages question because it asserts Worthington

made a judicial admission as to damages; and third, that the trial court failed

to hold Defendants jointly and severally liable under an alter ego theory for

the damages awarded. We have upheld the

jury’s finding of Defendants’ excused performance. Therefore, the trial court correctly entered

a take nothing judgment and we do not reach the remaining issues on Vietentours’s

breach, damages, or alter ego.

We

affirm the judgment of the trial court.

Harvey

Brown

Justice

Panel consists

of Justices Jennings, Higley, and Brown.

[1] At the time of trial, Worthington was

no longer associated with Ticket Company or TC International.

[2]

For ease and clarity, we will

refer to the two Houston companies as “Defendants” though we recognize the jury

found that no alter ego or joint venture existed between Ticket Company and TC

International.

[3] Neither

party disputes that Defendants paid Vietentours €4.1 million. Overhage did not explain why the amount

owing increased after the June payments except to state generally that

Vietentours provided additional unspecified services as agreed to in the

addendum.