Marinecorp International, Ltd. v. the Chopper Group, LLC and Outlaw Country, LLC

No. 01-14-00707-CV

IN THE FILED IN

1st COURT OF APPEALS

HOUSTON, TEXAS

FIRST COURT OF APPEALS 10/30/2015 1:52:16 PM

CHRISTOPHER A. PRINE

at HOUSTON, TEXAS Clerk

––––––––––––––––––––––––––––––––––––

MARINECORP INTERNATIONAL, LTD.

Appellant,

v.

THE CHOPPER GROUP, LLC, AND

OUTLAW COUNTRY, LLC

Appellees.

––––––––––––––––––––––––––––––––––––

Appealed from the 80th Judicial District Court of

Harris County, Texas, Trial Court Cause No. 2012-23983

________________________________________________________________

BRIEF FOR APPELLANT

________________________________________________________________

THE STROTHER LAW FIRM

Macon D. Strother

Texas Bar No. 19420000

4306 Yoakum Blvd., Suite 560

Houston, Texas 77006

Tel. (713) 557-9238

mstrother@strotherlawfirm.com

ATTORNEY FOR APPELLANT,

MARINECORP INTERNATIONAL, LTD.

APPELLANT REQUESTS ORAL ARGUMENT

IDENTITY OF PARTIES AND COUNSEL

Appellant: Marinecorp International, Ltd.

Counsel for Appellant: The Strother Law Firm

Macon D. Strother

State Bar No. 19420000

4306 Yoakum Blvd., Suite 560

Houston, Texas 77006

Tel. (713) 557-9238

mstrother@strotherlawfirm.com

Appellees: The Chopper Group, LLC

Backwoods Country Club, LLC

Tony Miller

Counsel for Appellees: The Akers Firm

Brock C. Akers

State Bar No. 00953250

3401 Allen Pkwy., Suite 101

Houston, Texas 77019

Tel. (713) 877-2500

Fax (713) 583-8662

bca@akersfirm.com

Appellee: Kyle Tones

Counsel for Appellee: The Cochell Law Firm, PC

Stephen R. Cochell

State Bar No. 24044255

5555 W. Loop S., Suite 200

Bellaire, Texas 77401

Tel. (832) 767-1065

Fax (832) 767-1686

srcochell@gmail.com

i

Appellees: Lee Harless, pro se

Dawn Marie Harless, pro se

Counsel for Appellees: N/A

Trial Court: Hon. Judge Larry Weiman

Judge, 80th Judicial District Court

Harris County Civil Courthouse

201 Caroline, 9th Floor

Houston, Texas 77002

Tel. (713) 368-6100

ii

TABLE OF CONTENTS

Identity of Parties and Counsel..........................................................................i-ii

Table of Contents……………………………………………………………..iii

Index of Authorities..........................................................................................vii-x

Statement of the Case....................................................................................... 1-3

Statement Regarding Oral Argument...............................................................3-4

Issues Presented...............................................................................................4-6

Statement of the Facts......................................................................................7-11

Summary of the Argument…………………………………………………..12-15

Argument:

Relative to Issue No. 1: Chopper and Outlaw's claims of a breach of

contract fail because they did not meet the conditions precedent of giving

written notice of the alleged defaults and allowing Marinecorp thirty days

to cure each such default as required by the subject leases. [Germane to

Motion to Disregard Jury Findings, CR 449 and Motion for New Trial,

CR 498]…………………………………………………………… 15-19

Relative to Issue 2: Chopper and Outlaw deprived themselves of any

excuse for ceasing performance on their part because they elected to treat

the leases as continuing. [Germane to Motion to Disregard Jury

Findings, CR 449 and Motion for New Trial, CR

498]……………………………………………………………… 20-22

Relative to Issue 3: The trial court should have rendered judgment

against Chopper and Outlaw for damages for past and future lease

payments, as ample evidence existed of Marinecorp’s mitigation of

damages. [Germane to Motion to Disregard Jury Findings, CR 449 and

Motion for New Trial, CR 498]………………………………… 23-24

iii

Relative to Issue 4: Outlaw should not have been awarded damages as a

result of not being able to open its dance hall for business as a result of

Marinecorp's actions because the overwhelming evidence attributes

causation of damages to Outlaw preventing it from opening earlier due to

its own actions or inactions. [Germane to Motion to Disregard Jury

Findings, CR 449 and Motion for New Trial, CR 498]………… 24-29

Relative to Issue 5: The trial court committed harmful error by not

submitting to the jury an instruction and question regarding mitigation of

damages as it relates to Outlaw. [Germane to Motion to Disregard Jury

Findings, CR 449 and Motion for New Trial, CR 498]……....... 24-29

Relative to Issue 6: Chopper and Outlaw’s claims constitute a breach of

contract action and not a DTPA violation…………………….. 30-41

Relative to Issue 7: Chopper and Outlaw’s claims for damages as a

result of an alleged wrongful eviction fail as a matter of law and do not

constitute a DTPA violation. [Germane to Motion to Disregard Jury

Findings, CR 449; Third Supplement to Motion to Disregard, CR 592-

593; and Motion for New Trial, CR 498]……………………… 30-41

Relative to Issue 8: The evidence does not support the jury's answers to

a violation of the DTPA by Marinecorp because:

(a) There was no evidence or insufficient evidence to establish that

Marinecorp did not have an intention of fulfilling its promise when

made. [Germane to Motion to Disregard Jury Findings, CR 449

and Motion for New Trial, CR 498]…………………….. 30-41

(b) There was no evidence or insufficient evidence that any

representation by Marinecorp was a producing cause of damages to

Chopper and Outlaw. [Germane to Motion for New Trial, CR

498]……………………………………………………… 30-41

(c) There was no evidence or insufficient to establish that

Marinecorp’s actions were unconscionable. [Germane to Motion to

Disregard Jury Findings, CR 449 and Motion for New Trial, CR

498]…………………………………………………….. 30-41

iv

(d) There was no evidence of insufficient evidence to establish that

Marinecorp breached an implied warranty, as the lease provisions

stated the tenants accepted the property in its “as-is” condition.

[Germane to Motion to Disregard Jury Findings, CR 449 and

Motion for New Trial, CR 498]……………………… 30-41

Relative to Issue 9: The trial court should not have awarded Chopper

and Outlaw pre-judgment interest because the alleged damages were not

definitely determinable at a definite time……………………. 41-42

Relative to Issue 10: The trial court should have awarded Marinecorp

damages for Miller and Tones' breach of the subject guaranty agreements.

[Germane to Motion for New Trial, CR 498]……….. 42-43

Relative to Issue 11: The trial court should not have rendered judgment

for cumulative damages for concurrent causes of action arising out of the

same acts. [Germane to Supplemental Motion to Disregard Jury

Findings, CR 513]…………………………………………... 43-47

Relative to Issue 12: The trial court should have entered judgment

against Miller for the full amount of principal and interest owing on his

promissory note payable to Marinecorp. [Germane to Motion to

Disregard Jury Findings, CR 449 and Motion for New Trial, CR 498]

………………………………………………………………. 48

Relative to Issue 13: The evidence does not support the jury's answers

awarding Chopper and Outlaw damages for loss of the benefit of the

bargain; remedial damages; expenses; loss of income; loss of use; and

wrongful eviction. [Germane to Motion to Disregard Jury Findings, CR

449; Supplemental Motion to Disregard Jury Findings, CR 513-517;

Third Supplement to Motion to Disregard Jury Findings, CR 592-593;

and Motion for New Trial, CR 498]……………………….. 48-69

Conclusion and Prayer........................................................................... 70-73

Certificate of Service.............................................................................. 73

Certificate of Compliance With Tex.R.App.P. 9.4(i)(3)……………… 74

v

Appendix................................................................................................ 75

A. Charge of the Court

B. Modified Final Judgment

C. Standard Lease Contract by and between Marinecorp as Landlord and

Outlaw as tenant

D. Standard Lease Contract by and between Marinecorp as Landlord and

Chopper as tenant

vi

INDEX OF AUTHORITIES

Cases: Page(s)

Alexander of Texas, Inc. v. Bacchus Indus., Inc.,

754 S.W.2d 252 (Tex.App.-- El Paso 1988, writ denied)………… 29

Alexander & Sorbus, Inc. v. UHW Corp.,

855 S.W.2d 771 (Tex.App.-- El Paso 1993, writ denied)………… 29

American Baler Co. v. SRS Systems, Inc.,

748 S.W.2d 243 (Tex. App.-- Houston [1st Dist.]

1988 , writ denied).......................................................................... 46

Bd. of Regents of the Univ. of Texas v. S & G Constr. Co.,

529 S.W.2d 90 (Tex.Civ.App.-- Austin 1975, writ ref’d n.r.e.)… 22

Bennett v. Bank United,

114 S.W.3d 75 (Tex.App.—Austin 2003, no pet.)……………… 36

Black Lake Pipe Line Co. v. Union Construction Co., Inc.,

538 S.W.2d 80 (Tex. 1976)……………………………………… 41

Briseno v. Martin,

561 S.W.2d 794 (Tex. 1977)……………………………………. 28

Cain v. Bain,

709 S.W.2d 175 (Tex. 1986)……………………………………. 16

Chastain v. Koonce,

700 S.W.2d 579 (Tex. 1985)……………………………………. 36

Cheung-Loon, LLC v. Cergon, Inc.,

392 S.W.3d 738 (Tex.App.-- Dallas 2012, no pet.)…………….. 17

Crawford v. Ace Sign, Inc.,

917 S.W.2d 13 (Tex. 1996)……………………………………… 31

Davis v. City of San Antonio,

752 S.W.2d 518 (Tex. 1988)…………………………………….. 15

vii

Daugherty v. Jacob,

187 S.W.3d 607 (Tex.App.-- Houston [14th Dist.] 2006, no pet.).. 36

El Dorado Motors, Inc. v. Koch,

168 S.W.3d 360 (Tex.App.-- Dallas 2005, no pet.)…………….. 53

Gym-N-I Playgrounds, Inc. v. Snider,

220 S.W.3d 905 (Tex. 2007)…………………………………… 40, 41

Harris v. Harris,

765 S.W.2d 798 (Tex.Civ.App.-- Houston

[14th Dist.] 1989, writ denied)…………………………………. 28

Hernandez v. Gulf Group Lloyds,

875 S.W.2d 691 (Tex. 1994)…………………………………… 22

Holt Atherton Industries v. Heine,

835 S.W.2d 80 (Tex. 1992)……………………………………. 53

James L. Gang & Associates, Inc. v. Abbott Labbs, Inc.,

198 S.W.3d 434 (Tex.App.-- Dallas 2006, no pet.)…………… 49, 59

Long Trusts v. Griffin,

222 S.W.3d 412 (Tex. 2006)(per curium)……………………… 22

Lyendecker & Associates, Inc. v. Wechter,

683 S.W.2d 369 (Tex. 1984)…………………………………… 45

McKenzie v. A.C. Carte,

385 S.W.2d 520 (Tex.Civ.App.-- Corpus Christi 1964,

writ ref’d n.r.e.)………………………………………………… 34

Merrell Dow Pharms., Inc. v. Havner,

953 S.W.2d 706 (Tex. 1997)…………………………………… 15

Pinson v. Red Arrow Freight Lines, Inc.,

801 S.W.2d 14 (Tex.App.-- Austin 1990, no writ)…………… 29

viii

Pool v. Ford Motor Co.,

715 S.W.2d 629 (Tex. 1986)…………………………………… 16

Pope v. Moore,

711 S.W. 622 (Tex. 1986)……………………………………… 24, 42, 47, 48

Prudential Ins. Co. of Am. v. Jefferson Assoc.,

896 S.W.2d 156 (Tex. 1995)…………………………………….. 40

Racko Properties, Inc. v. Alabama Great S.R.R.,

No. 07-2898, 2009 WL 178884 (E.D. La. Apr. 17, 2008)…….. 17

Stewart Title Guar. Co. v. Sterling,

822 S.W.2d 1 (Tex. 1991)……………………………………… 46

Texas Instruments, Inc. v. Teletron Energy Mgt, Inc.,

877 S.W.2d 276 (Tex. 1994)………………………………….. 53

Tony Gullo Motors LLP v. Chapa,

212 S.W.3d 299 (Tex. 2006)………………………………….. 32, 44, 46

Western Irr. Co. v. Reeves County Land Co.,

233 S.W.2d 599 (Tex.Civ.App.-- El Paso 1950, no writ)……. 22

W.O. Bankston Nissan, Inc. v. Walters,

754 S.W.2d 127 (Tex. 1988)…………………………………. 34

Statutes:

Tex.Bus. Comm. Code Sec. 17.45(5)………………………….. 35

Tex.Bus. Comm. Code Sec. 17.45(9)………………………….. 35, 38

Tex.Bus. Comm. Code Sec. 17.50(a)(2)……………………….. 39

Tex.Bus. Comm. Code Sec. 17.50(a)(3)……………………….. 35

Tex.Prop.Code 93.002(g)(1)…………………………………… 33

Tex.Prop.Code 93.002(g)(2)…………………………………… 33

ix

Rules:

Tex.R.App.P. 44.1(a)………………………………………….. 28

Tex.R.Civ.P. 279………………………………………………. 34

Tex.R.Evid. 801(e)(2)…………………………………………. 21

x

STATEMENT OF THE CASE

The facts and issues in this case involve two commercial real property leases

by and between Appellant ("Marinecorp") 1, as the landlord, and Appellees

("Chopper and Outlaw") as the respective tenants and Tony Miller ("Miller") and

Kyle Tones ("Tones") as lease guarantors (See Standard Lease Contract by and

between Marinecorp as Landlord and Outlaw as Tenant, Appendix "C" and

Standard Lease Contract by and between Marinecorp as Landlord and Chopper as

Tenant, Appendix "D"). Chopper and Outlaw sued Marinecorp for breach of

contract, fraud, and violation of the Texas Deceptive Trade Practices Act (DTPA).

(CR 6). Marinecorp filed its counter-claim against Chopper and Outlaw for breach

of contract and asserted a third-party action against Miller and Tones on their

guaranty agreements and against Miller and Lee and Dawn Harless ("Harlesses")

for breach of a promissory note payable to Marinecorp. (CR 97). Tones filed a

cross-claim against Miller for fraud. Shortly before trial ended, Tones and Miller

entered into a settlement agreement and Tones' cross-claim was severed from the

underlying case.

1

The parties to this appeal will hereafter be referred to in this brief collectively as

“Appellees” or individually as follows:

•Appellant Marinecorp International, Ltd. on appeal as “Marinecorp.”

•Appellee Chopper Group, LLC on appeal as “Chopper.”

•Outlaw Country, LLC on appeal as “Outlaw.”

•Individuals Tony Miller will be referred to as “Miller” and Kyle Tones will be

referred to as “Tones.”

1

Course of Proceedings:

The jury trial below took place place between the dates of April 14 – 23,

2015. The Honorable Larry Weiman of the 80th District Court, Harris County,

Texas, was the presiding judge. The jury found the following: (1) Marinecorp

failed to comply with the agreements with Chopper and Outlaw; (2) Outlaw failed

to comply with the agreement with Marinecorp; (3) but found that Chopper did not

fail to comply with the agreement (CR 427); (4) Marinecorp failed to comply with

the agreements first (CR 423); and (5) Marinecorp violated the DTPA, and did so

knowingly. (CR 427) (See Charge of the Court, Appendix “A”)

The jury awarded Chopper actual damages for the breach of contract and

awarded actual damages for the DTPA violations in the amount of $223,000.00

together with attorney's fees in the amount of $104,483.50 and DTPA "knowingly"

damages in the amount of $11,000.00. (CR 427) It awarded Outlaw actual

damages in the amount of $370,000.00; attorney's fees in the amount of

$104,483.50, and DTPA "knowingly" damages in the amount of $11,000.00. (CR

427) (See Charge of Court, Appendix “A”). The Court entered judgment for such

amounts. (CR 427).

Marinecorp filed Motions to Disregard Jury Findings (CR 430 and 449) and

a Motion for a New Trial (CR 498), which the court denied. (CR 511). Marinecorp

also filed Supplemental, Second Supplemental, and Third Supplemental Motions to

2

Disregard Jury Findings and Motion for New Trial (CR 513, 519 and 592), which

the Court also denied. (CR 512). Appellees filed their Motion to Disregard the

Jury Answers, which the Court granted. (CR 479)

The Court subsequently reduced Chopper's actual damages to $210,000.00;

reduced its previous award prejudgment interest to $21,776.71, and post-judgment

interest; and attorney's fees in the amount of $104,483.50 were approved, however,

it awarded an additional $20,000 as attorney’s fees for an appeal to the court of

appeals and another $12,500 for an appeal to the Texas Supreme Court. (CR 589)

The Court subsequently reduced Outlaw's actual damages to $290,000.00;

reduced its previous award of prejudgment interest to $30,072.60, and post-

judgment interest; and attorney's fees in the amount of $104,483.50 were approved,

however, it awarded an additional $20,000 as attorney’s fees for an appeal to the

court of appeals and another $12,500 for an appeal to the Texas Supreme Court.

(CR 589)

Marinecorp challenges on appeal the jury’s verdict and the trial court’s final

Judgment.

STATEMENT REGARDING ORAL ARGUMENT

The Court should grant oral argument for the following reasons:

a. Oral argument would give the Court a more complete understanding of

the facts presented in this appeal.

3

b. Oral argument would allow the Court to better analyze the complicated

legal issues presented in this appeal. This is true because of the

numerous theories sued upon, the apparent conflict in the jury answers,

and numerous issues raised by Appellant.

c. Oral argument would significantly aid the Court in deciding the case.

ISSUES PRESENTED FOR REVIEW

Issue 1: Chopper and Outlaw's claims of a breach of contract fail because they did

not meet the conditions precedent of giving written notice of the alleged defaults

and allowing Marinecorp thirty days to cure each such default as required by the

subject leases. [Germane to Motion to Disregard Jury Findings, CR 449 and

Motion for New Trial, CR 498]

Issue 2: Chopper and Outlaw deprived themselves of any excuse for ceasing

performance on their part because they elected to treat the leases as continuing.

[Germane to Motion to Disregard Jury Findings, CR 449 and Motion for New

Trial, CR 498]

Issue 3: The trial court should have rendered judgment against Chopper and

Outlaw for damages for past and future lease payments, as ample evidence existed

of Marinecorp’s mitigation of damages. [Germane to Motion to Disregard Jury

Findings, CR 449 and Motion for New Trial, CR 498]

Issue 4: Outlaw should not have been awarded damages as a result of not being

able to open its dance hall for business as a result of Marinecorp's actions because

the overwhelming evidence attributes causation of damages to Outlaw preventing

it from opening earlier due to its own actions or inactions. [Germane to Motion to

Disregard Jury Findings, CR 449 and Motion for New Trial, CR 498]

Issue 5: The trial court committed harmful error by not submitting to the jury an

instruction and question regarding mitigation of damages as it relates to Outlaw.

[Germane to Motion to Disregard Jury Findings, CR 449; Motion for New Trial,

CR 498; Appellant’s Requested Jury Instructions & Questions, CR 362 & 363]

Issue 6: Chopper and Outlaw’s claims constitute a breach of contract action and

not a DTPA violation. [Supp. RR Vol. 6-A at 11-12]

4

Issue 7: Chopper and Outlaw’s claims for damages as a result of an alleged

wrongful eviction fail as a matter of law and do not constitute a DTPA violation.

[Germane to Motion to Disregard Jury Findings, CR 449; Third Supplement to

Motion to Disregard, CR 592-593; and Motion for New Trial, CR 498]

Issue 8: The evidence does not support the jury's answers to a violation of the

DTPA by Marinecorp because:

(a) There was no evidence or insufficient evidence to establish that

Marinecorp did not have an intention of fulfilling its promise when made.

[Germane to Motion to Disregard Jury Findings, CR 449 and Motion for

New Trial, CR 498]

(b) There was no evidence or insufficient evidence that any representation

by Marinecorp was a producing cause of damages to Chopper and

Outlaw. [Germane to Motion for New Trial, CR 498]

(c) There was no evidence or insufficient to establish that Marinecorp’s

actions were unconscionable and were a knowing violation of the DTPA.

[Germane to Motion to Disregard Jury Findings, CR 449; Motion for

New Trial, CR 498; Supp. RR Vol. 6-A at 113-14]

(d) There was no evidence of insufficient evidence to establish that

Marinecorp breached an implied warranty, as the lease provisions stated

the tenants accepted the property in its “as-is” condition. [Germane to

Motion to Disregard Jury Findings, CR 449 and Motion for New Trial,

CR 498]

Issue 9: The trial court should not have awarded Chopper and Outlaw pre-

judgment interest because the alleged damages were not definitely determinable at

a definite time.

Issue 10: The trial court should have awarded Marinecorp damages for Miller and

Tones' breach of the subject guaranty agreements. [Germane to Motion for New

Trial, CR 498]

5

Issue11: The trial court should not have rendered judgment for cumulative

damages for concurrent causes of action arising out of the same acts. [Germane to

Supplemental Motion to Disregard Jury Findings, CR 513]

Issue 12: The trial court should have entered judgment against Miller for the full

amount of principal and interest owing on his promissory note payable to

Marinecorp. [Germane to Motion to Disregard Jury Findings, CR 449 and Motion

for New Trial, CR 498]

Issue 13: The evidence does not support the jury's answers awarding Chopper and

Outlaw damages for loss of the benefit of the bargain; remedial damages;

expenses; loss of income; loss of use; and wrongful eviction. [Germane to Motion

to Disregard Jury Findings, CR 449; Supplemental Motion to Disregard Jury

Findings, CR 513-517; Third Supplement to Motion to Disregard Jury Findings,

CR 592-593; and Motion for New Trial, CR 498]

6

STATEMENT OF FACTS

Chopper opened its doors for business as a biker's bar in mid-July 2010. (3

RR 142:12) Chopper was operating under a lease agreement it signed with

Marinecorp. (8 RR 1, Exs. 1 and 2) After open for business, Outlaw negotiated

another lease for the adjoining former Walgreens space where Miller and Tones

intended to operate a country western dance hall. (3RR 140:1 & 147:17) The

parties to the lease were Marinecorp and Outlaw, with the lease date of September

20, 2010 and its commencement date was November 1, 2010. The Walgreens

store had been vacant for several years and it was structurally sound, however, it

needed repairs to make the premises ready for business. (3 RR 148:5) The lease

provided that Marinecorp must pay Outlaw a tenant improvement or “ build out”

allowance, which would be equal to a sum of $17.73 per square foot (10,998 s.f.)

for a total of $194,994.54 and that the completion date was January 31, 2011.

Prior to the Outlaw lease being executed, thieves stole the electrical wires

from the premises. (3 RR 148:10). The Outlaw lease therefore included a hand

written provision in the "as-is" section as follows: "Except for electrical, service

shall remain at 1000 amps and installed by landlord, HVAC at 60 tons.” (4 RR

32:9) Marinecorp's property manager told Outlaw that it would have the power

restored and AC units installed sometime during the first part of November 2010.

However, the electrical hook up was Outlaw’s responsibility because Marinecorp

7

does not supply the meters, but only has the ability to connect the meters. (6 RR

67:8)

On November 8, 2010, Marinecorp’s electrician presented his invoice for his

labor involved in installing the electrical power to Outlaw’s building. (9 RR P:Ex.

20) However, the power company did not approve the work. (5 RR 178:4). So,

the electrician talked to Marinecorp’s property manager and then he disassembled

it and rebuilt it. (5 RR 179:2) Outlaw had service on January 24, 2011. (3 RR

179:6)

Marinecorp bought and installed all the air conditioning as agreed and paid

AC Dang Heating $53,800 in the months of October and November of 2010 for the

units and installation (21 RR D-Exs. 11, 12 & 13)

Tones had no prior experience owning or operating a bar. (6 RR 97:15)

However, he had a considerable sum of money, having received a second million

dollar settlement in a personal injury accident many years ago. (6 RR 88:12) In

contrast, Miller had uncommon business sophistication as he was previously

involved in building commercial strip malls (3 RR 131:23) and projects such as the

Chopper and Outlaw business ventures. (3 RR 132:1) He had experience dealing

with bankers, lawyers, CPAs, realtors (3 RR 179:22); he had put a business plan

together (3 RR 134:13); he had worked with trustees (13 RR 137:6); and he owned

corporations (3 RR 141:9). The parties negotiated the terms of both leases, which

8

included the requirement that Miller guarantee both leases and Tones guarantee the

Chopper lease. (4 RR 18:2; 18:20; 18:21; 19: 22; 20:5)

Miller, Tones and their broker, Tibbs, all knew that the larger Outlaw

building that was going to be the country-western dance hall, which needed many

more repairs than the Chopper’s premises. Outlaw’s building had been sitting

vacant for several years; the roof leaked severely; there was insulation everywhere;

mold was present; the air conditioners had been stolen off the roof; and copper

thieves had stolen all the wires. (3 RR 148:5)

Marinecorp agreed to pay Miller the build-out monies and he would pay for

the labor and materials using Marinecorp's money for the build-out allowance in

the lease. (8 RR P Ex.2) Miller was aware of the condition of the buildings when

Chopper and Outlaw entered into the leases. (3 RR 148:5) The leases expressly

provided that except for those matters set forth on p. 29 of the lease, they were

leasing the building in an "as-is" condition. (8 RR, P. Ex. 1&2, Section 3.1) The

Outlaw lease was executed on September 28, 2010, but the commencement date

was November 1, 2010.

Chopper's restaurant next door was up and running the middle of July 2010.

(3 RR 142:12) However, after the restaurant had been in operation for some time,

thieves also stole the facility’s air conditioning units and underground electrical

lines. (3 RR 144:3 and 6 RR 7:10). The nature of the theft made it very difficult

9

to restore the power. (6 RR 7:11) During the period of time that Chopper's power

was not at full strength, Marinecorp brought in four 300 watt spotlights and big

diesel lights to illuminate the parking lot. (3 RR 145:7 and 146:9)

During the early part of Chopper's lease, the tenant complained that the roof

leaked and the air conditioners weren't working properly. In addition to the

electrical power problems, Outlaw also complained about leaks on the dance floor.

However, Marinecorp repaired all of the leaks to Outlaw’s satisfaction (4RR

64:16), with repairs occurring before there was damage to the dance floor. (4 RR

65:12)

From the very beginning, Outlaw failed to timely pay its rent. (5 RR 84:1).

It’s first payment was two months late but the check bounced (5 RR 83:21 & 3 RR

83:22). Outlaw was never current with its payments. (3 RR 84:1) Miller sold

Outlaw to the Harlesses in October 2011. (3 RR 69:21) After the Harlesses

purchased Outlaw, the delinquency in rent became so large that as a means of

avoiding having to evict Outlaw, Marinecorp accepted a personal promissory note

from Miller and the Harlesses for rent in arrears in the amount of $56,545.00. (RR

9, D Ex. 36) This represented the amount necessary to bring the lease payments

current. (5 RR 96:3 & 5 RR 96:3) However, they did not make these payments as

agreed either. The then current balance of the promissory note was $53,000. (5 RR

96:16). Subsequently, Chopper and Outlaw continued to fail to pay the rent,

10

causing Marinecorp to lock them out in January 2011. (3 RR 74:5) The

underlying lawsuit was filed by Chopper and Outlaw shortly thereafter.

11

SUMMARY OF ARGUMENT

Neither Chopper nor Outlaw complied with the conditions precedent set

forth in the respective leases requiring that they give Marinecorp thrity (30) days

written notice to cure alleged defects and notice of default in the terms of the lease

agreement. They did not send the notice in writing to Marinecorp's offices; and

their texts and oral complaints wholly failed to comply with the lease notice

requirements.

Appellees treated the leases as continuing and, therefore, they were not

excused for ceasing performance on their part. They admitted at trial that they

wanted the leases to continue. They were only concerned about the repairs,

electrical power, air conditioning and general maintenance matters.

The Court refused to render judgment for Marinecorp and against Appellees

for damages and for past and future lease payments. The jury found that Outlaw

breached the lease and that its failure was unexcused but did not award Marinecorp

damages. Ample evidence exists that Chopper also breached its lease without

excuse and, therefore, Marinecorp was entitled to an award of past and future rents.

Therefore, as argued above, since Appellees continued to treat the lease as

continuing, they were not excused from future performance. The record is rife

with evidence of Marinecorp’s mitigation of damages.

12

Damages should not have been awarded Outlaw because of the alleged

failure of Marinecorp to connect the power, as the overwhelming evidence

attributes any damages to Outlaw’s actions and inactions preventing it from

opening earlier. Its failure to open was due to Outlaw’s actions and inactions, not

Marinecorp’s failure to connect power.

The trial court erred by not submitting to the jury an instruction and question

regarding mitigation of damages as it relates to Outlaw.

Marinecorp challenges the jury’s award of DTPA damages. To begin with,

Outlaw’s damage claim relates to the alleged failure of Marinecorp to connect the

power, which sounds in contract, not in DTPA. Appellees’ remedy was in

contract, as any representations from Marinecorp regarding the provision of power

originated in the express terms of the subject leases. Also lacking is evidence that

Marinecorp intended not to perform when representations, thereby defeating all

DTPA claims. No evidence exists that any Marinecorp representation was a

producing cause of damages to Appellees.

Appellees never alleged or proved an action for wrongful eviction and the

jury did not consider the elements of such a cause of action; therefore, a wrongful

eviction cannot serve as the basis of a DTPA claim.

There could be no unconscionable DTPA violation by Marinecorp because

the Plaintiff, Miller, was a sophisticated businessman who had the knowledge,

13

ability, experience and capacity that would take him out of the unconscionable

category. No evidence exists that Marinecorp engaged in unconscionable action or

course of action that was a producing cause of damages to Chopper and Outlaw.

Also lacking was evidence of a knowing violation of the DTPA.

Evidence was lacking that Marinecorp breached an implied warranty, as the

lease provisions in question stated that tenants accepted the leased property “as-is.”

The judgment should not have awarded prejudgment interest because the

alleged damages were not definitely determinable at a definite time.

The trial court should have awarded Marinecorp damages for their cause of

action against Miller and Tones as a result of their breach of the personal Guaranty

Agreements.

Marinecorp challenges the judgment in that it improperly awards cumulative

damages for concurrent causes of action arising out of the same acts. This violated

Texas’ “one satisfaction” rule.

Marinecorp should have been awarded a judgment against Miller and the

Harlesses for the full amount of principal and interest owing on the promissory

note executed by them and payable to Marinecorp. Miller admitted he executed

the note but has not paid it. A directed verdict was rendered against the Harlesses.

Finally, Marinecorp challenges all the jury's damage awards because the jury

did not follow the court's instructions and there was no, or insufficient, evidence to

14

support the jury’s award of different elements of damages and, moreover,

Appellees failed to meet their burden in proving up such damages. The damages

awarded were also against the great weight and preponderance of the evidence and

manifestly unjust.

ARGUMENT

Issue 1: Chopper and Outlaw's claims of a breach of contract fail because

they did not meet the conditions precedent of giving written notice of the

alleged defaults and allowing Marinecorp thirty days to cure each such

default as required by the subject leases.

A. Standard of Review

In assessing whether the evidence supporting a jury finding is legally

sufficient, the appeals court only considers evidence favorable to the jury’s

decision and disregards all evidence and inferences to the contrary. See Davis v.

City of San Antonio, 752 S.W.2d 518, 522 (Tex. 1988). If there is more than a

scintilla of evidence to support the finding, the no evidence challenge fails. Id. A

legal sufficiency point will be sustained when (a) there is a complete absence of

evidence of a vital fact, (b) the court is barred by the rules of law or evidence from

giving weight to the only evidence offered to prove a vital fact is no more than a

mere scintilla, or (c) the evidence conclusively establishes the opposite of a vital

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

By comparison, in considering a challenge to the evidence’s factual

sufficieny, the appeals court is to review all of the evidence and reverse for a new

15

trial only if the challenged finding shocks the conscience, clearly demonstrates

bias, or is so great against the great weight and preponderance of the evidence that

it is manifestly unjust. See Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.

1986). A finding is set aside only if the evidence is so weak or the finding is so

contrary to the overwhelming weight of the evidence as to be clearly wrong and

unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curium).

b. Legally and Factually Sufficient Evidence Does Not Support the Jury’s

Findings that Marinecorp breached the Chopper and Outlaw lease agreements,

as the latter two parties did not meet contractual conditions precedent of

providing Marinecorp with notice of defaults and by allowing Marinecorp thirty

days to cure each alleged default, as expressly required by the subject leases.

The lease agreements required Appellees to give 30 days' written notice to

Marinecorp's offices of the matters giving rise to any alleged default by

Marinecorp of the terms of the leases. This would have allowed Marinecorp 30-

days to cure any such default. Neither Appellee complied with this condition

precedent. Their few complaints did not comply with the requirements set forth in

the leases providing that if the tenants, at any time, alleged Marinecorp was in

default in the terms of the lease, they agreed to give written notice to Marinecorp

specifying each default. Since they failed to comply with the agreements, their

claims fail.

16

The case of Cheung-Loon, LLC v. Cergon, Inc., 392 S.W.3d 738

(Tex.App.— Dallas 2012, no pet.), involved was a similar lease provision

requiring the tenant to give “written notice of any failure by Landlord to perform

any of Landlord’s obligations under this Lease to Landlord…” (Supp. RR Vol. 6-A

at 7). Under the belief that it had exclusive use of a parking lot, the tenant gave

actual, but not written, notice to the landlord that other tenants were using the

parking lot. The court found this notice not sufficient and in noncompliance with

the requirement of the lease and it did not serve as notification of a breach. In

summary, the tenant bore the burden of showing all conditions precedent were met,

with a condition precedent being an act that must occur before there is a breach of

a contractual duty.

In the instant case, Appellees failed to produce any evidence that they

provided notice of any alleged breach to Marinecorp. Also see cf. Racko

Properties, Inc. v. Alabama Great S.R.R., No. 07-2898, 2009 WL 178884, at *4

(E.D. La. Apr. 17, 2008) (“[N]otice and cure requirements are entitled to no less

deference than the obligations imposed upon the lessee.”).

With regard to the matter of notice and the landlord’s right to cure, Sections

3.1 and 17.11 of the leases required that thirty (30) days’ notice be given at

Marinecorp’s offices, and Section 21.1 required the tenants to provide written

17

notice to the Houston address provided at Section 1.1c of the leases. Neither

Appellee complied with these conditions precedent. Appellees’ claim that actual

notice was provided is besides the point, as it remains undisputed that Marinecorp

never received actual notice of an alleged default. At the most, Marinecorp's

property manager received some texts and oral complaints--but no notice of an

alleged default. However, the property manager was not on the board of directors

of Marinecorp, nor did he have an interest in said corporation (5 RR 222:22 &

222:25), as he was simply a property manager in charge of day-to-day routine

matters related to the properties (5 RR 222:19). Any such notices or complaints

were never received by Marinecorp's officers, directors, principals, or corporate

management (6 RR 69:8), and Marinecorp never received any notice, actual or

otherwise, that Chopper and Outlaw were claiming that Marinecorp defaulted or

breached the subject leases.

It was especially important that Marinecorp’s management receive the notice

rather than one of its employees because the president and principal of the

company, Mr. Ayaz Nasser, testified without contradiction that he was "a hands-on

owner" (6 RR 68:14) and that he was personally involved in all tenant problems.

He met regularly with his employees, including the property manager. (6 RR

68:14) He would go over the many issues which would include any notices of

breach of contract or repairs needed. Mr. Nasser further testified that if he had

18

known that the power had not been connected, he would have hired someone to

make sure it was done (6 RR 69:16). He was denied this option by Appellees

because they did not comply with the lease by sending the company notice of any

default. As a result, Marinecorp cannot be held to have been in default of the terms

of the leases.

Miller testified that it was reasonable for Marinecorp to expect him to

comply with the lease until its higher management and even the owner could make

sure all problems were taken care of. (4RR 26:11) He doesn't know why once he

had learned of the electrician's problems with getting the power connected, that he

didn't give Marinecorp an opportunity to take care of it (4RR 41:22). He further

admits that he never told Marinecorp of the air conditioning problems in

November, December, or January. (4RR 48:11)

The evidence discussed above establishes that there is a complete lack of

evidence, or alternatively less than a scintilla of evidence, supporting a finding that

Marinecorp breached the subject lease agreements, as instead the uncontroverted

evidenced established that Appellees did not meet conditions precedent of

providing proper notice of default and providing an opportunity to cure. This same

evidence is against the great weight and preponderance of the evidence and is

manifestly unjust. For these reasons, Marinecorp’s arguments should be sustained

on appeal.

19

Issue 2: Chopper and Outlaw deprived themselves of any excuse for ceasing

performance on their part because they elected to treat the leases as

continuing.

A. Standard of Review

In this point of error, Marinecorp challenges the jury’s affirmative answer to

Question No. 3, wherein they answered that Marinecorp was the first party to fail

to comply with the agreement. (CR 423; Supp. RR Vol. 6-A at 7) The evidence

was legally and factually insufficient to support the jury’s answer to Question No.

3. The trial court further erred in failing to disregard the jury’s answer to Question

No. 3 because under the evidence and facts presented, this answer is immaterial,

improper, and prejudicial to Marinecorp in that the jury’s answer prevented the

jury from advancing to questions regarding damages to Marinecorp and its

attorney’s fees.

B. Appellees Elected to Treat the Lease Agreements as Continuing.

Even if Marinecorp is found to have committed a material breach of the

agreements, Appellees were not discharged or excused from their obligations to

perform because they elected to treat the lease agreements as continuing, thereby

depriving themselves of any excuse from continued performance under the lease

agreements (Supp. RR Vol. 6-A at 7). Evidence that Appellees elected to treat the

leases as continuing includes: (1) Appellees’ acknowledgements that monthly rent

20

was always due; (2) Appellees never claiming a set off for any alleged damages or

breach of the leases by Marinecorps; (3) continued operation of their businesses on

leased premises and their receipt of income; (4) continuing to request from the

landlord additional repairs and lighting; (5) continuing to work with the electrician

to obtain a permit; and (6) testimony by Miller (at 4 RR 135:24), which was

corroborated by Miller’s realtor (agent), Grady Tibbs (at 5 RR 8:13), that Miller

was not trying to get out of the lease agreements. 2

By continuing to operate under the lease agreements, rent became due with

each passing month, ultimately resulting in a total of $56,000 in rent in arrears for

Outlaw. Outlaw opted to continue business under its lease in spite of its

nonpayment of rent, ultimately resulting in its lock out by Marinecorp in January

of 2011.

It is a fundamental proposition of contract law that when one party breaches

its contract, the other party is put to an election of continuing or ceasing

performance, and any action indicating an intention to continue will operate as a

conclusive choice, not depriving the injured party of his cause of action for breach

which has already taken place, depriving him only of any excuse for ceasing

2

Such relevant testimony by Miller qualifies as a statement made by a party that is admissible

against that party This rule is known as “an admission by a party-opponent,” which is included

as statements not considered hearsay. See TexR.Evid. 801(e)(2).

21

performance on his own part. Bd. of Regents of the Univ. of Texas v. S & G

Constr. Co., 529 S.W.2d 90, 97 (Tex.Civ.App.-- Austin 1975, writ ref’d n.r.e.)

(citing Western Irr. Co. v. Reeves County Land Co., 233 S.W.2d 599

(Tex.Civ.App.-- El Paso 1950, no writ)). In Long Trusts v. Griffin, 222 S.W.3d

412 (Tex. 2006) (per curiam), the Supreme Court of Texas, citing Hernandez v.

Gulf Group Lloyds, 875 S.W.2d 691, 692 (Tex. 1994), held that "a party who

elects to treat a contract as continuing deprives himself of any excuse for ceasing

performance on his own part."

Since, as discussed above, the matter of who breached the subject lease

agreements first is wholly irrelevant, Marinecorp was entitled to damages that

resulted from the material breaches by Appellees of the express terms of the lease

agreements. Such an award of damages to Marinecorp is warranted in part in light

of the jury’s answer to Question No. 2, where it found that Outlaw failed to comply

with the agreement and that its failure was material.

Appellees waived their excuse for nonperformance, as explained in Long

Trusts, supra. Therefore, the Court should not have submitted jury Question No. 3

as to who breached the contract first. This error effectively prevented the jury

from answering the questions relating to Marinecorp's damages. Such appellate

error resulted in the rendition of an improper judgment, warranting reversal and

remand.

22

Issue 3: The trial court should have rendered judgment against Chopper

and Outlaw for damages for past and future lease payments, as ample

evidence existed of Marinecorp’s mitigation of damages.

The jury’s answers to Question No. 8 [where the jury found that Marinecorp

failed to exercise reasonable care and diligence to avoid or minimize its damages]

and Question No. 9 [where the jury found that Marinecorp would have suffered no

(zero damages) damages] are legally and factually insufficient and are against the

great weight and preponderance of the evidence and manifestly unjust.

The testimony of Marinecorp's real estate broker and its accountant, Ed

Wolochin, was the only testimony heard regarding the measure of damages for past

and future rentals. He established that with respect to Chopper, the past and future

damages, i.e., the lease payments, would be in the amount to $585,000.00, while

the past and future damages for Outlaw were valued at $1,172,000.00. Neither

Appellee offered any expert or other testimony or evidence to the contrary. Mr.

Wolochin testified positively regarding Marinecorp’s due diligence and its

reasonable efforts to re-lease the subject commercial premises through the date of

trial, yet such efforts had been unsuccessful.

Additional evidence of Marinecorp’s entitlement to delinquent rent and

future rent payments can be found at Pl-Ex. 38 (showing delinquent rents were

then due for $92,000), Pl. Ex. 39 (showing rent due for $15,814) and Pl. Ex. 40 (an

email from Appellees regarding rent payment delinquency).

23

In summary, no evidence or insufficient evidence was presented supporting

the jury’s answers to (1) Question No. 8 finding that Marinecorp failed to mitigate

its damages, and (2) Question No. 9 finding that Marinecorp would have suffered

no damages if it had mitigated its damages. Both findings are also against the

great weight and preponderance of the evidence and are manifestly unjust. For

these reasons, reversal is warranted.

Issue 4: Outlaw should not have been awarded damages as a result of not

being able to open its dance hall for business as a result of Marinecorp's

actions because the overwhelming evidence attributes causation of damages to

Outlaw preventing it from opening earlier due to its own actions or inactions.

Issue 5: The trial court committed harmful error by not submitting to the

jury an instruction and question regarding mitigation of damages as it relates

to Outlaw.

[Since Issues Nos. 4 and 5 are interrelated in that they deal

with the issue of damages, they will be argued together.]

A. Causation Not Supported by Sufficient Evidence & Applicable Standard of

Review.

The jury’s award of damages to Outlaw “that resulted from such failure to

comply” in response to Question No. 6 (CR 409) is against the great weight and

preponderance of the evidence and is manifestly unjust. Such damages are also

not factually supported by sufficient evidence. The standard for a request for

remittitur is factual insufficiency of the evidence. Pope v. Moore, 711 S.W.2d 622,

624 (Tex. 1986).

24

Even if Outlaw's electrical power would have been connected in November

of 2010, Outlaw could not have obtained an occupancy permit and could not have

opened for business until February 2011 (long after the power was connected) for

the following reasons:

a. On November 18, 2010, Outlaw, could not have opened for business

because on that date, it submitted for the first time a commercial permit

application with the City which was not approved. ( 9RR P Ex. 21);

b. On November 29, 2010, Outlaw could not have opened because its

electrician (which was also Marinecorp's electrician) was still working

for Outlaw installing wiring inside the building ( 9RR P Ex 22);

c. On December 3, 2010, Outlaw could not have opened for business

because on said date it was still getting quotes for the fire security work (

9RR, P Ex 24);

d. On December 27, 2010, Miller could not have opened for business

because on that date, he sent a text to a performer for the dance hall

stating that he couldn't even get an inspection scheduled with the City.

There is no mention that because of Marinecorp's failure to have the

electrical service connected, he was prevented from opening ( 9RR P Ex

25);

e. On February 10, 2011 Outlaw could not have opened because it had not

installed its refrigerator ( 9RR P Ex 28); and

f. Finally, even as late as February 26, 2011 (approximately a month after

the City approved the electrical service, Outlaw was still working to

obtain fire upgrades to meet City codes. ( 9RR P Ex 30 and P Ex 31)

This plethora of delaying factors, which were not directly attributable to

Marinecorp, caused repeated delays in Outlaw starting up its business.

25

The overwhelming evidence establishes that if in fact Outlaw was damaged

in this case, as found in response to Question No. 6, it resulted from its own failure

to comply, and not that of Marinecorp. This fact is highlighted by the

uncontroverted testimony of Marinecorp’s experienced and knowledgeable

Property Manager, Michael Mirza. He testified regarding the simple process that a

person or entity can go through to get a temporary construction permit (6 RR

10:9):

Q. Now, explain to the jury how he could have done that.

A. … It’s very simple process. If you’re doing a construction you have to

line out the things and you can apply for – it’s called a construction meter

and they come and right away and connect that to that property. And then

you can perform all that, the construction you need to do. And then they

come out and inspect and you will be a permanent meter.

(6 RR 10:11) He had been previously successful in obtaining the temporary permit

and electricity involving another property where the wiring has been stolen. (6 RR

10:11)

Mr. Mirza’s uncontroverted testimony serves as overwhelming evidence of:

(1) Outlaw’s cause of its own damages specifically attributed to what it did

and did not do; and

(2) Outlaw’s failure to mitigate its damages as a reasonable person would

have done under the same or similar circumstances.

26

The uncontroverted evidence established that Outlaw wholly failed to mitigate its

damages, making insignificant and not credible Outlaw’s contention that

Marinecorp’s alleged failure to have the electrical power connected the first part of

November was the cause of its damages. In fact, overwhelming evidence to the

contrary was presented that Outlaw was the cause of its own damages. In this

connection, Outlaw claims that it could not get its permit until the power was

connected by Marinecorp. However, Mr. Mirza, essentially testified that Outlaw

could have obtained a temporary construction meter and that in his experience

working with Harris County and Reliant Energy, these entities would have allowed

the temporary meter to be used for inspection purposes. Appellees were just as

capable as Marinecorp in obtaining a temporary construction meter and

construction permit in the manner described above.

Appellees opted not take the simple measures needed to get a temporary

construction meter and permit. Most compelling in this regard is the fact that

Miller testified that with regard to other properties, he had previously taken out

temporary meters and obtained temporary construction permits. (6 RR10:7) Since

the evidence was factually insufficient to support the causation element to jury

Question No. 6 as it relates to Marinecorp and Outlaw’s alleged damages, if any,

the finding of damages in this case should be set aside. Considering the evidence

discussed above, the jury’s finding of causation as to Marinecorp is so against the

27

great weight and preponderance of the evidence that it is manifestly unjust,

warranting reversal and a remand for a new trial.

B. Harmful error in the trial court refusing Marinecorp’s request for a jury

instruction and question regarding mitigation of damages relative to Outlaw.

Appellees failed to mitigate their damages by failing to utilize the simple

two day procedure to get electricity. While the trial court granted an instruction

and question directed at Marinecorp’s alleged failure to mitigate damages (See

Jury Question 8 at CR 411), the court committed error in refusing to allow

Marinecorp’s similar properly requested instruction and question directed at the

Appellees (See CR at 362 and 363), which related to the vital defense of mitigation

of damages and was supported by more than a scintilla of evidence.

For reversible error purposes, the submission should be considered as a

whole to determine whether the error was prejudicial. Briseno v. Martin, 561

S.W.2d 794, 796 (Tex. 1977); also see Tex.R.App.P. 44.1(a). The decision to

submit a particular instruction, question or definition is reviewed for an abuse of

discretion with the essential question being whether the instruction or definition

aids the jury in answering the questions. See Harris v. Harris, 765 S.W.2d 798,

801 (Tex. Civ.App.—Houston [14th Dist.] 1989, writ denied). A court should

submit a mitigation instruction [and question] whenever the evidence raises an

issue as to whether the plaintiff could have avoided, in whole or in part, his or her

28

losses. Alexander & Sorbus, Inc v. UHW Corp., 855 S.W.2d 771, 775 (Tex.App.--

El Paso 1993, writ denied). The standard is that of ordinary care, or what an

ordinary prudent person would have done under the same or similar circumstances.

Pinson v. Red Arrow Freight Lines, Inc., 801 S.W.2d 14, 16 (Tex.App.-- Austin

1990, no writ). The burden of proving whether the plaintiff failed to do so is on

the party who caused the loss. Alexander of Texas, Inc. v. Bacchus Indus., Inc.,

754 S.W.2d 252, 253-254 (Tex.App.-- El Paso 1988, writ denied).

The trail court’s failure to grant Marinecorp’s requested jury instruction and

question on Outlaw’s mitigation of damages likely resulted in the rendition of an

improper jury verdict and judgment. The jury was given no instruction as to how

Outlaw’s failure to mitigate could effectively reduce and even eliminate any

recovery of damages by Outlaw. Even more troubling is the fact that even though

strong failure to mitigate damages evidence was presented to the jury against

Outlaw, the jurors were not given an option by means of a jury question to redirect

fault away from Marinecorp, taxing Outlaw for essentially causing its own

damages. In fact, the way the charge reads in this case, the jury never even

considered Outlaw’s failure to mitigate its damages much less allowing the jury to

tax Outlaw monetarily for causing its own damages. This was an abuse of

discretion which likely resulted in the rendition of an improper judgment, thereby

warranting reversal.

29

Issue 6: Chopper and Outlaw’s claims constitute a breach of contract action

and not a DTPA violation.

Issue 7: Chopper and Outlaw’s claims for damages as a result of an alleged

wrongful eviction fail as a matter of law and do not constitute a DTPA

violation.

Issue 8: The evidence does not support the jury's answers to a violation of the

DTPA by Marinecorp because:

(a) There was no evidence or insufficient evidence to establish that

Marinecorp did not have an intention of fulfilling its promise when

made.

(b) There was no evidence or insufficient evidence that any

representation by Marinecorp was a producing cause of damages to

Chopper and Outlaw.

(c) There was no evidence or insufficient to establish that Marinecorp’s

actions were unconscionable.

(d) There was no evidence of insufficient evidence to establish that

Marinecorp breached an implied warranty, as the lease provisions

stated the tenants accepted the property in its “as-is” condition.

[Issues 6, 7 & 8 will be argued together because they relate

to Appellees’ DTPA/Breach of Warranty Causes of Action.]

The jury found in answer to Question No. 13 that Marinecorp engaged acts

or practices in violation of the DTPA. (CR 416) It also found that Marinecorp

failed to comply with a warranty that was a producing cause of damages. (See Jury

Question No. 14; CR 417) The jury also found that Marinecorp engaged in an

unconscionable act or course of action that was a producing cause of damages to

30

Appellees (Jury Question No. 15; CR 418) and that Marinecorp engagement in

prohibited conduct knowingly, awarding each Appellee $11,000 (Jury Question

No.s 17 & 18; CR 421-422).

(ISSUES 6 & 8(a))

A. The claims of Chopper and Outlaw sound in breach of contract.

B. Marinecorp had every intention of fulfilling its promise when initially

made.

The Outlaw lease contains a commencement date of November 1, 2010, and

it required Marinecorp to provide electrical service. See Outlaw Lease at Section

3.1: “electrical services shall remain at 1000 amps and installed by landlord.” (Pl.

Ex. 4). Since electricity was a requirement or obligation of Marinecorp that was

set forth in the lease, its duty to act arose out of a contract. The fact that

Marinecorp’s Property Manager made a representation about the electricity

requirement did not change the character or nature of the representation, as the fact

remains that its genesis was in the subject lease (contract). According to the Texas

Supreme Court in Crawford v. Ace Sign, Inc., 917 S.W.2d 13, 14-15 (Tex. 1996),

“a failure to fulfill a [contractual] promise is actionable only under a breach of

contract theory and not under the DTPA.” Id. The Court added, “the failure [to

perform] actually caused the [alleged harm], and that injury is governed by

contract law, not the DTPA.” Id. Accordingly, any breach of the subject

31

representation would have constituted a breach of contract. (Supp. RR Vol. 6-A at

11-12)

The distinction between a mere breach of contract and the violation of the

DTPA comes down to whether there was an intent not to perform when the

representation was made and whether the representation was false or misleading

when it was made. See Tony Gullo Motors LLP v. Chapa, 212 S.W.3d 299 (Tex.

2006). In the instant case, Marinecorp’s Property Manager made his representation

to provide electricity fully intending to fulfill his promise and his representation

was not false or misleading. No evidence to the contrary was presented at trial.

The evidence presented showed that Marinecorp's electrician, Hofelich, by

November 8, 2010, had invoiced Marinecorp for the 1000 amp service to Outlaw

(Pl. Ex. 20) and Marinecorp ordered the electrical supplies on or about October 21,

2010.

Finally, even though the claims of Appellees both sound in contract, no

evidence, or insufficient evidence, exists supporting the measure of damages that

they would have been entitled to upon meeting their burden, specifically proof of

lost profits.

32

(ISSUE 7)

C. Alleged wrongful eviction did not constitute a violation of the DTPA.

Appellees’ claims for damages as a result of an alleged wrongful eviction or

lockout, pursuant to Tex. Prop. Code §§93.002(g)(1) and 93.002(g)(2), fail and do

not constitute a DTPA violation. Appellees never specifically pled a cause of

action for wrongful eviction and they never proved up by a preponderance of the

evidence conduct by Marinecorp which rose to the level of an actionable violation

of the wrongful eviction provisions set out in the Texas Property Code. To the

contrary, Appellees and their legal counsel at trial were nonchalant in claiming that

Appellees had been “wrongfully evicted,” but anything short of evidence that there

had been a judicial finding of “wrongful eviction” cannot serve as the basis

supporting a violation of the DTPA. No evidence exists that any misrepresentation

was made or that Appellees relied on same to their detriment. Upon satisfying

their burden of proving up a wrongful eviction, which Appellees failed to do, the

Texas Property Code would have provided an array of remedies which would have

been available to the wronged commercial tenant.

The specific elements required to have a viable cause of action for

wrongful eviction were never alleged or proven in this case, See McKenzie v. A.C.

Carte, 385 S.W.2d 520, 528 (Tex.Civ.App.-- Corpus Christi 1964, writ ref’d

n.r.e.), and certainly such a complete cause of action was not contemplated by the

33

parties, their attorneys and the trial court when finalizing the Jury Charge at the

charge conference (Supp. RR Vol. 6-A).

Further, a party must submit a request for jury instruction, definition and

issue when it has the burden of proof, otherwise, the items never requested are

waived. See W.O. Bankston Nissan, Inc. v. Walters, 754 S.W.2d 127, 128 (Tex.

1988); Tex.R.Civ.P. 279. Since Appellees never requested any jury instruction,

definition and issue regarding a cause of action for wrongful eviction, such a cause

of action was completely waived and cannot serve as the basis for alleged DTPA

violations.

(ISSUE 8(b))

D. Statements and representations allegedly relied on by Appellees were not a

producing cause of any damages.

Provisions in the subject leases and oral representations made by

Marinecorp’s Property Manager in connection with these contractual provisions

regarding the provision of electricity were not a producing cause of DTPA

damages to Appellees. More specifically, such representations were not a

substantial factor in bringing about damages and any such damages would have

occurred with or without such representations. This is established in the evidence

more fully discussed immediately above under the discussion regarding Issues

Nos. 1, 4 and 7, supra, to wit:

34

1. Appellees are not entitled to damages from Marinecorp because they

failed to comply with material notice of default and cure lease provisions;

2. Appellees caused any damages which they may have sustained; and

3. An unpled or unproved wrongful eviction of Appellees did not violate the

DTPA.

Plaintiffs testified that Chopper was making a profit and Outlaw was breaking

even. There was no evidence of any act or omission by Marinecorp that affected

this net income. Appellees failed to meet this burden of proof relative to the

DTPA element of causation.

(ISSUE 8(c))

E. There was no evidence or insufficient evidence to establish that Marinecorp’s

actions were unconscionable or knowingly in violation of prohibited conduct

under the DTPA.

Unconscionable Action

There was insufficient evidence to establish that Marinecorp's actions were

unconscionable in that it grossly took advantage of Chopper and Outlaw’s

principal, Miller. (See answer to Jury Question No. 15 at CR 418) Section

17.50(a)(3) of the DTPA provides that a consumer may recover actual damages for

"any unconscionable action or course of action" that is the producing cause of

damages. Tex. Bus. & Com.Code § 17.50(a)(3). Section 17.45(5) of the DTPA

defines “unconscionable action or course of action” to mean “an act or practice

which, to a consumer’s detriment, takes advantage of the lack of knowledge,

35

ability, experience, or capacity of the consumer to a grossly unfair degree.” For

purposes of the definition of unconscionable action, the term “gross” should be

given its ordinary meaning of glaringly noticeable, flagrant, complete, and

unmitigated. Chastain v. Koonce, 700 S.W.2d 579, 583 (Tex. 1985).

To prove an unconscionable action or course of action, a plaintiff must show

that the defendant took advantage of his lack of knowledge and "`that the resulting

unfairness was glaringly noticeable, flagrant, complete and unmitigated.'" Id. The

relevant inquiry into an alleged unconscionable action or course of action under the

DTPA examines the entire transaction, not only a defendant’s intent. Bennett v.

Bank United, 114 S.W.3d 75, 82 (Tex.App.-- Austin 2003, no pet.).

Another relevant inquiry on appeal is what the consumer could have or

would have done if he or she had known about the information, and there also

needs to be some showing of the consumer’s knowledge, ability, experience, or

capacity. Daugherty v. Jacob, 187 S.W.3d 607, 616 (Tex.App.-- Houston [14th

Dist.] 2006, no pet.).

In the instant case, there is no evidence that Marinecorp took an unfair

advantage of Miller to a grossly unfair degree. Miller was a sophisticated

businessman with a wealth of business experience and knowledge. He was

previously involved in building large commercial strip malls and he had previously

been involved in projects similar to the Chopper and Outlaw projects. He

36

commonly dealt with lawyers, bankers, CPAs and realtors. He was experienced in

putting together business plans and he often dealt with fiduciary settings involving

trustees. Miller also owned and had been involved in corporations in the past.

These personal and professional traits of Miller demonstrate his great capacity and

ability in dealing with the matters that he was presented with.

Absent from the record is evidence that Miller lacked knowledge from

which Marinecorp could have taken advantage, as Miller was business savvy and

had a sophistication which was not common to the average consumer that the

DTPA was intended to protect. No evidence exists that Marinecorp took

advantage of Miller’s lack of knowledge. Moreover, no evidence exists in the

record suggesting that there was a resulting unfairness in the subject transaction

that was unfair to the extent of being glaringly noticeable, flagrant, complete and

unmitigated. In evaluating the transaction, the evidence establishes that the parties

negotiated the terms of the leases, which included the requirement that Miller

personally guarantee both leases.

Miller was fully aware of the condition of the buildings when Chopper and

Outlaw entered into the leases. This fact was even accounted for in the lease,

which expressly provided that the parties were leasing the buildings in an “as is”

condition, yet still expressly excluding various matters at page 29 of the lease that

would not be subject to this agreed to “as is” clause. Finally, it was certainly

37

within the realm of Miller’s experience and knowledge that a consequence of a

commercial tenant not paying its rent is ultimately a lockout. The focal transaction

here involves the connection of power to the Outlaw structure. This obligation was

placed on Marinecorp pursuant to the lease agreements. In spite of numerous and

severe theft incidents where thieves stole copper electrical wiring from both

buildings, Marinecorp never ceased its attempts to restore the power. Fact of the

matter is that Marinecorp had the power to both buildings restored months before

Chopper and Outlaw were locked out.

As established above, there is insufficient evidence to support the jury’s

finding of unconscionability under the DTPA. (CR 418)

“Knowing” DTPA Violation

Further, there was no evidence or insufficient evidence to establish that

Marinecorp’s alleged representations constituted an engagement in DTPA

prohibited conduct “knowlingly.” The jury found that Marinecorp engaged in such

knowing conduct as to both Appellees in answer to Question No. 17 (CR 421),

awarding Appellees $11,000 each for related damages in answer to Question No.

18 (CR 422).

The Texas Business & Commerce Code, Sec. 17.45(9) defines “knowingly”

as meaning actual awareness, at the time the act of practice complained of, of the

falsity, deception, or unfairness of the act or practice giving rise to the consumer’s

38

claim or, in an action brought under subdivision (2) of subsection (a) of Section

17.50, actual awareness of the act, practice, condition, defect, or failure

constituting the breach of warranty, but actual awareness may be inferred where

objective manifestations indicate that a person acted with actual awareness.

The evidence presented at trial established that Marinecorp’s property

manager represented to Appellees that the electricity would be connected the first

week of November. When this representation was made, he had no idea that the

electricity would not be connected at a later date. No evidence exists that when

made, the subject representation was made with actual awareness of falsity,

deception or unfairness, nor do objective manifestations to the contrary exist in the

record. Therefore, there was no intentional or knowing misrepresentation. More

evidence of the lack of a knowing violation is shown by the hiring of the

electrician who represented to the Appellees that he connected the electricity and

that he had been paid for his work.

(ISSUE 8(d))

F. No implied warranty was breached and the “as-is” lease provision.

There was no evidence or insufficient evidence to establish that Marinecorp

breached an implied warranty (See Jury’s answer to Question No. 15 at CR 417;

39

Supp. RR Vol. 6-A at 12-13) because of the lease provisions stating the tenants

accepted the property in its "as-is" condition

In the case of Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905 (Tex.

2007), the Texas Supreme Court held that the implied warranty of suitability may

be contractually waived by a tenant who enters into an “as is” clause in a

commercial lease. Underlying the Court’s holding was its recognition of strong

public policy encouraging parties the freedom to contract. Id. at 913. The Court

held that by agreeing to lease property "as is," a lessee agrees to make his own

appraisal of the bargain and accepts the risk that he may misjudge its value. Id. at

914 (citing Prudential Ins. Co. of Am. v. Jefferson Associates, Ltd., 896 S.W.2d

156, 161 (Tex. 1995)). The lessor gives no assurances, express or implied,

concerning the value or condition of the premises. Gym-N-I, 220 S.W.3d at 914.

Thus, an "as is" agreement precludes the lessee from proving that the lessor's

conduct caused harm. Id. The commercial tenant in Gym-N-I contractually

disavowed any reliance upon any representation by the landlord. Id. By agreeing

to lease the building "as is," the tenant agreed to make its own appraisal of the

physical condition of the premises. Id. Thus, the sole cause of the tenant’s injury,

by its own admission, was itself. Id. The Court, therefore, held that the "as is"

clause negated the tenant’s claim regarding causation as to causes of action for

40

negligence per se, gross negligence, violations of the Deceptive Trade Practices-

Consumer Protection Act, and fraud. See Id. at 913-914.

Similarly, in the instant case, by agreeing to commercial leases which

contained similar “as is” clauses, as a matter of law Appellees were precluded from

proving that Marinecorp’s conduct caused them harm. Appellees were free to

inspect the premises for defects. If in fact they were damaged because of the

conditions of the subject premises, causation lies directly on them and not on

Marinecorp.

In conclusion, reversal and remand is warranted for reasons set out above in

connection with Issues Nos. 6, 7 and 8.

Issue 9: The trial court should not have awarded Chopper and Outlaw

pre-judgment interest because the alleged damages were not definitely

determinable at a definite time.

In the trial court’s Modified Final Judgment (attached as Appendix "B"), the

trial judge awarded actual damages to each Appellee and then proceeded to award

prejudgment interest to Chopper for $21,776.71 and Outlaw for $30,072.60. As to

both Appellees, the trial court’s award of prejudgment interest was erroneous.

While prejudgment interest is recoverable as a matter of right where

damages are established as of a definite time and the amount thereof if definitely

determinable, Black Lake Pipe Line Co. v. Union Construction Co., Inc., 538

41

S.W.2d 80, 95-96 (Tex. 1976), in the instant case the damages awarded to

Appellees are not “definitely determinable” at a definite time and, therefore, the

award of pre-judgment interest on such damages should not have been awarded.

This constitutes fundamental error. There is simply no reasonable means of

calculating prejudgment interest on the damages awarded without a determined

date or definite time from which an interest calculation can be made. For these

reasons, there is no evidence, or insufficient evidence, in the record to support an

award of prejudgment interest on the damages awarded by the jury and, more

specifically, a “definitely determinable at a definite time” reference date from

when prejudgment interest calculations could be made. Accordingly, Appellant

requests an appropriate remittitur under the authority of Pope v. Moore, 711

S.W.2d at 624, or, alternatively, it requests a reversal and remand.

Issue 10: The trial court should have awarded Marinecorp damages for

Miller and Tones’ breach of the subject guaranty agreements.

The parties negotiated the terms of the Chopper and Outlaw leases. The

Chopper lease was personally signed and guaranteed by Miller whereas the Outlaw

lease was personally signed and guaranteed by Miller and Tones; therefore, if the

terms of these leases were not fulfilled, the signatories would be personally liable

for each tenant’s failure to fulfill the lease’s terms. (4 RR 18:2; 18:20, 18:21,

19:22; 20:5)

42

The jury found in answer to Question No. 2 (CR 404) that Outlaw failed to

comply with the lease agreement. In answer to jury Question No. 4 (CR 406-407),

the jury found that Outlaw’s failure to comply was not excused. However, in its

answer to Question No. 7 (CR 410), it declined to award any past or future rents to

Marinecorp as a result of Outlaw’s failure to comply.

Reversal is warranted and Marinecorp prays that the Court render judgment

in its favor for Outlaw’s past and future rents or, alternatively, that the Court

reverse the above-referenced finding and enter an order directing the trial court to

enter judgment accordingly or, in the final alternative, that the Court reverse and

grant Marinecorp a new trial.

ISSUE 11: The trial court should not have rendered judgment for cumulative

damages for concurrent causes of action arising out of the same acts.

In the trial court’s Modified Final Judgment, the trial judge awarded

$210,000 in actual damages to Chopper and $290,000 in actual damages to

Outlaw. These damages were awarded by the court under the DTPA theory of

recovery alleged by Appellees. These actual damage awards were made up of two

43

damage components awarded by the jury in their answer to Question No. 16 [CR

419-420]3, namely:

--For Chopper: $110,000 for expenses and $100,000 for loss of use, and

--For Outlaw: $150,000 for expenses and $140,000 for loss of use.

The award of these damages cumulatively in the final judgment is contrary

to Texas’ “one satisfaction rule,” which provides that there can be but one recovery

for one injury; and the fact that there may be more than one theory of liability does

not modify the rule. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 303

(Tex. 1991). The award of these damages also constitutes an impermissible double

recovery.

Included in the jury charge were definitions for the different measures of

damage which the Appellees sought to recover under the DTPA and for breach of

contract. The following table summarizes these definitions:

3

Note that the loss of benefit of the bargain damages that the jury awarded Appellees with

regard to the breach of contract and DTPA causes of action were ultimately omitted by the trial

44

Element of Damages Breach of Contract (Q. #6 DTPA (Q. #16 [CR 419-420])

[CR 409])

Loss of benefit of the bargain Difference, if any, between the Difference, if any, in the value

value of the premises as of the premises as received

agreed and the value of the and the value it would have

premises as provided by had if it had been represented.

Marinecorp.

Remedial damages/ Remedial damages: Expenses: The expenses

Expenses Reasonable and necessary cost incurred by Chopper in

to reimburse Chopper or constructing and equipping the

Outlaw for the loss of lease premises in order to

investment in construction and operate.

equipment costs.

Loss of income/Loss of use Loss of income: Loss of net Loss of use: The reasonable

income for the time Chopper value of the lease premises for

or Outlaw was unable to the time Chopper was unable

operate due to Marinecorp’s to operate due to Marinecorp’s

conduct. conduct.

Note that while different labels for the categories of damages listed above may

have been used in the jury charge, “remedial damages” and “expenses” are

essentially defined as the same measure of damages. Likewise, the jury charge’s

terms “loss of income” and “loss of use” are defined as the very same measure of

damages.

Plaintiffs cannot recover the same damages for the same injury, regardless of

Plaintiffs’ theories. Even Leyendecker & Associates, Inc. v. Wechter, 683 S.W.2d

369, 373 (Tex. 1984) prevents plaintiffs from recovering more than once for the

same injury.

court. (See CR 589).

45

The one satisfaction rule also applies to prevent a plaintiff from obtaining more

than one recovery for the same injury, even if caused by different acts. Stewart

Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991), holding modified by

Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006). Appellate

courts have applied the one satisfaction rule when the defendants commit the same

act as well as when defendants commit technically differing acts which result in a

single injury. Stewart Title, 822 S.W.2d at 7. The Stewart Title court cited

American Baler Co. v. SRS Systems, Inc., 748 S.W.2d 243, 246 (Tex.App.--

Houston [1st Dist.] 1988, writ denied) with approval of that court’s conclusion that

the same wrongful act or misrepresentations connected with the sale of equipment

related to causes of action for fraud, breach of contract, negligent

misrepresentation and DTPA, thereby requiring the plaintiffs to elect a remedy.

Stewart Title, 822 S.W.2d at 7 (citing American Baler, 748 S.W.2d at 246).

Whether Appellees contend that Marinecorp made misrepresentations about

making repairs and the provision of power or its alleged actual failure to make

repairs and provide power, the resulting consequence would have been the same,

i.e., their inability to generate revenue. The trial court’s Modified Final Judgment

awarded Chopper and Outlaw damages for “expenses” and “loss of use” under a

DTPA theory, however, Appellees should not be entitled to both types of damages

because the wrongful conduct alleged against Marinecorp would have resulted in

46

the same consequence of Appellees’ inability to generate revenue. Plaintiffs

should not be allowed to recover twice (i.e., damages for expenses and for loss of

use) for the same resulting injury which was the consequence of the same

complained of act. The trial court’s Modified Final Judgment awarding both

measures of damages cannot stand under Texas law.

Finally, it is important to note that in jury Question No. 16’s definition of the

terms “expenses” and “loss of use” (CR 419), which incidentally was submitted by

the Appellees, Outlaw is selectively excluded and, therefore, by written instruction

from the Court these measures of damages only relate to Chopper and otherwise

selectively exclude Outlaw from recovering such these elements of damages.

Most disturbing is the fact that the jury obviously disregarded the express

instructions given to them by the trial court, as against the court’s directive they

proceeded to award Outlaw $150,000 for “expenses” and $140,000 for “loss of

use” in response to Question Nos. 16b and 16c (CR 420).

Marinecorp contends that the legal consequence is that Outlaw effectively

elected its remedy under the DTPA cause of action.

The appellate error discussed above warrants that the Court reduce the

damages awarded in the trial court’s Modified Final Judgment. Pope v. Moore,

711 S.W.2d at 624. Alternatively, Marinecorp asks that the Court to vacate said

Judgment, reverse and order a new trial of this matter.

47

Issue 12: The trial court should have entered judgment against Miller for the

full amount of principal and interest owing on the promissory note executed

by him and payable to Marinecorp.

The jury found by answering Question No. 10 that Tony Miller failed to

comply with the terms of the Promissory Note (CR 413) and proceeded to award

Marinecorp damages in answer to Question No. 11 for $15,000. (CR 414)

The jury’s award of only $15,000 to Marinecorp for Miller’s breach of the

subject promissory note (CR 414) is against the great weight and preponderance of

the evidence and is manifestly unjust. No evidence or insufficient evidence

supports the jury’s award of a mere $15,000 for damages attributed to Miller’s

failure to comply. Instead, the undisputed and only evidence is that the balance on

the promissory note payable to Marinecorp was $53,000 (5 RR 96:15), not

$15,000.

Issue 13: The evidence does not support the jury's answers awarding

Chopper and Outlaw damages for loss of the benefit of the bargain; remedial

damages; expenses; loss of income; loss of use; and wrongful eviction because

there was no evidence or insufficient evidence to support these findings of

damages.

A. Standard of Review

The legal and factual sufficiency of the evidence standards of appellate

review set out above under Issue 1 apply here, as well as the great weight and

preponderance of the evidence standard. The standard for a request for remittitur

is factual sufficiency of the evidence. Pope v. Moore, 711 S.W.2d at 624. To

48

better understand Issue 13 challenging the jury’s award of damages in this case,

Marinecorp requests that the Court review with a critical eye the “evidence”

presented to the trial court by Appellees in support of their claims for damages.

After all, Appellees had the burden of proof at trial. In their effort to prove up

damages, Appellees relied upon their bank statements, Chopper Px-75 and Outlaw

Px-76, respectively, along with documents called "weekly reports." However,

Marinecorp will show that this evidence was completely unreliable to serve as the

basis of damages awarded, in violation of the standard set out in James L. Gang &

Associates, Inc. v. Abbott Labs, Inc., 198 S.W.3d 434, 443 (Tex.App.-- Dallas

2006, no pet.), where it was held that a Plaintiff must have facts and figures to

support its claims; mere allegations of expenses without objective facts, figures, or

data do not amount to any evidence of out of pocket damages.

B. Breach of Contract Damages (Jury Question No. 6 [CR 409])

In answering Question No. 6, the jury awarded Appellees breach of contract

damages for: (1) loss of the benefit of the bargain 4, (2) remedial damages, and (3)

loss of income. Question No. 6 instructs the jury to consider the following

elements of damages and none other. (Id.).

4

This award of damages [Q. 6a at CR 409] as to each Appellee was omitted by the trial

court in its Modified Final Judgment. However, the jury awarded these damages by ignoring the

court’s unambiguous definition of this measure of damages.

49

1. Remedial Damages

Question No. 6 defined “remedial damages” as the “reasonable and

necessary cost to reimburse Chopper and Outlaw for the loss of investment in

construction and equipment costs.” (CR 409) The jury ignored this definition and

Appellees failed to produce credible and reliable evidence entitling Appellees to an

award of such damages. Appellees, through Miller, testified at trial that evidence

of money spent in construction equipment costs was contained in bank statements

and weekly reports (4 RR 86, line 10), however, this proof promised by Appellees

simply does not exist in the record. Further undermining Appellees’ claim for

“remedial damages” is the fact that absent from the record is evidence that the

alleged costs were reasonable and necessary. (CR 409) Nevertheless, the jury

proceeded to award Chopper and Outlaw remedial damages for $110,000 and

$150,000, respectively (Id.). The jury did not even account for the $194,994.54 in

build-out costs paid to Outlaw in connection with the Outlaw lease property, for

which Marinecorp was entitled to a credit. Not surprisingly, Outlaw never

included this amount in its accounting and calculations and the jury simply ignored

Marinecorp’s undisputed evidence that such monies were paid out.

Appellees sought to prove their entitlement to remedial damages by relying

on Miller’s shoddy and incomplete accounting records which had no backup or

corroborating documentation. He submitted to the jury commingled records, as he

50

did not as much as separate “loss of investment” documentation related to the two

separate business ventures of Chopper and Outlaw, presumably leaving it to the

jury to sift through and figure out on its own.

Further confusing the issue of damages was the vacillating and inconsistent

testimony of Miller. He initially testified to investing half-million dollars. His

credibility was then placed into serious doubt when he subsequently testified that

he and Tones spent over $550,000 (CR 3, p. 162, line 19), yet still he would later

testify that they had invested over one million in the building alone (CR 4, p. 73,

line 3). He would once again change his testimony testifying that his operating

expenses were $2,455,000. None of this testimony was ever supported by

corroborating or credible evidence. Bank statements introduced into evidence

reveal no such capital investments or deposits in the referenced amounts.

Testimony was elicited that Miller and Tones were withdrawing monies from the

bank accounts on a regular basis, however, Miller testified that he had no idea why

the withdrawals were made (CR 4, p. 87 and p. 18). Appellees presented no

evidence from experts or other witnesses explaining the contents of the financial

records presented. Instead, Appellees passed on the burden of proof on to the jury

and left it to grapple with and try to make sense of the confusing, incomplete, and

contradictory documents introduced. This made it virtually impossible for the jury

to have awarded specific damages based on this “evidence.”

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2. Loss of Income

In Question No. 6, the jury was provided with the definition of “loss of

income” as “loss of net income for the time Chopper or Outlaw was unable to

operate due to Marinecorp’s conduct.” (emphasis added) The jury proceeded to

award breach of contract damages for loss of income in the amounts of $100,000

for Chopper and $140,000 for Outlaw. However, at no time was evidence of “net

income,” gross income and operating expenses presented, nor was the jury

provided with financial data that would have enabled it to make this calculation

and ultimately find that Appellees experienced a loss of income attributed to the

acts and/or omissions of Marinecorp. Both Chopper and Outlaw operated their

businesses throughout the applicable periods of time in 2010 and all of 2011.

Miller testified that Chopper was always making a profit and Outlaw was about

breaking even. (4 RR82:17)

Each business had its income and expenses. However, well aware that they

carried the burden of proof, Appellees fell short in this task by failing to produce

an accounting as to the amount of gross income each business received and their

related operating expenses, which would have allowed the “net” calculation to be

made. Bank reports and weekly reports presented by the Appellees had no

separation of the monies spent for equipment and making improvements and the

monies spent in the ordinary course of conducting business and the money

52

contributed as capital. Although it was his burden, Miller never explained which

of the expenses were operating expenses, which were for the construction and

equipment, and which were capital contributions. Nevertheless, the jury awarded

loss of income damages to both Appellees. There is no evidence or insufficient

evidence to support the jury’s award of such damages.

As set forth in El Dorado Motors, Inc. v. Koch, 168 S.W.3d 360, 366-

367(Tex.App.-- Dallas 2005, no pet.), at a minimum, opinions or estimates of lost

profits must be based on objective facts, figures, or data from which the amount of

lost profit can be ascertained. Mere conclusions are incompetent and do not

amount to any evidence at all. See Id. Further, the Texas Supreme Court held in

Holt Atherton Industries v. Heine, 835 S.W.2d 80 (Tex. 1992), the testimony was

legally insufficient because it did not provide any indication how they determined

what their lost profits were. See Id. at 84-86; also see Texas Instruments, Inc. v.

Teletron Energy Mgt., Inc., 877 S.W.2d 276, 279-280 (Tex. 1994) (holding that

while modern business methods have cost a relaxation of the rigid rule entitling

one to recover lost profits, the law still demands proof with a degree of certainty.).

The jury in the instant case had no basis for determining loss of income damages

with reasonable certainty. Its award of such damages was based on pure

speculation and mere conclusions. Miller’s testimony that Chopper was always

53

making a lot of money and that Outlaw was about breaking even further justifies

no recovery of damages for loss of income and a reversal of the verdict.

C. DTPA Damages (Jury Question No. 16 [ CR 419])

In answering Question No. 16, the jury awarded Appellees DTPA damages

similar to those it awarded them for breach of contract under Question No. 6, supra

(CR 409). Specifically, the damages awarded were for: (1) loss of the benefit of

the bargain 5, (2) expenses, and (3) loss of use. Importantly, note that the

definitions the jury was given in Question No. 16 for “expenses” and “loss of use”

damages were strikingly similar to those give to the jury in Question No. 6 for

“remedial damages” and “loss of income,” respectively. For this reason, the jury

considered identical measures of damages in answering Questions Nos. 6 and 16.

1. Expenses

In answer to Question No. 16 (CR 419), the jury awarded Chopper and

Outlaw $110,000 and $150,000, respectively, in “expenses.” (CR 419-420) The

trial court defined the “expenses” measure of damages as “The expenses incurred

by The Chopper Group in Constructing and equipping the lease premises in order

5

This award of damages [Q. 16a at CR 419] as to each Appellee was omitted by the trial

court in its Modified Final Judgment. However, the jury awarded these damages by ignoring the

court’s unambiguous definition of this measure of damages.

54

to operate.” (CR 419) (emphasis added) The jury obviously ignored the trial

court’s limited definition of expenses incurred only by Chopper, as in spite of this

limiting language it awarded Outlaw $150,000 in expenses. This award is also not

supported by sufficient evidence in the record.

A remittitur of the $150,000 awarded to Outlaw for expenses is warranted

because it is contrary to the express instructions and definitions provided in the

Court’s Jury Charge. Furthermore, Marinecorp paid Outlaw $194,994 in build-out

costs to get the premises business ready. Allowing Outlaw to recover an additional

$150,000 in “expenses”, i.e., expenses incurred in constructing and equipping the

premises in order to operate, would be the equivalent of compensating Outlaw

twice for the same costs that Marinecorp previously paid in build-out costs

pursuant to the lease agreement. Not surprisingly, Outlaw’s accounting and

calculations do not account for the build-out costs paid by Marinecorp as an offset

or credit.

Appellees failed to produce competent evidence entitling them to expenses

as damages. In challenging the jury’s $110,000 expenses damage award to

Chopper (CR 420), Marinecorp would show that the Chopper lease was signed in

April 18, 2010 and said Appellee opened its doors for business approximately three

months later in the middle of July 2010 (3 RR 142:12). Therefore, it would follow

that all checks identified by Chopper after this opening date were not for

55

construction costs but rather were for operating costs. Miller testified that he has

receipts for all expenses (4 RR 86:10) and he further testified that his proof is in

the check books (4 RR at p. 82). However, a review of Chopper’s bank statements

(Chopper Px-75) and weekly reports discloses that corroborating evidence of these

expenses was never produced, are not part of the record, and were never

considered by the jury in answering Question No. 16.

Miller never testified that any of the company checks issued during the time

period in question represented monies spent on construction costs. In fact, Miller

never even mentioned any repairs made to the Chopper leased premises. Chopper

did not have to do many repairs on the Chopper leased premises because the

premises were previously occupied by a Mexican restaurant, so the premises were

already built-out for Chopper’s business purposes as a biker’s restaurant and bar.

For this reason, the Chopper lease did not provide for any build-out allowance of

monies to be advanced. Finally, reviewing Chopper’s bank statement for the from

the April 18, 2010, discloses that lease signing through Chopper’s opening for

business in mid-July 2010, at best very few checks were cut on the Chopper bank

account during this short time period and the checks that were issued were for very

small amounts, nowhere near the $110,000 in expenses awarded by the jury to

Chopper.

56

With regard to Outlaw, any expense documents relied on by the jury in

awarding Outlaw $150,000 in expenses damages in answer to Question No. 16

should have included a credit for the build-out allowance paid early on to Outlaw

by Marinecorp.

Weekly reports and bank statements introduced into evidence by Chopper

and Outlaw were wholly unreliable. Accounting and record-keeping produced by

Appellees did not separate Miller’s personal investments from the separate

Chopper and Outlaw investments. All records were commingled without there

ever being a separation from which the jury could have determined construction

and equipping the premises expenses needed to calculate recoverable expenses.

Equally problematic here was the lack of Miller’s credibility, with him

testifying to four significantly different values of his investment without

corroborating proof or evidence.

In spite of falling short of meeting their burden of proof, the jury awarded

Chopper and Outlaw expense damages for $13,000 and $80,000, respectively. Not

surprisingly, however, no credit was provided in Outlaw’s accounting and record

keeping for the $194,994 paid by Marinecorp for build-out.

Bank statements and weekly reports produced by Appellees did not prove up

any capital investment made or deposits into the bank in connection with the

Chopper and Outlaw investments. Evidence showed frequent bank account

57

withdrawals by Miller and Tones without ever providing an explanation behind the

withdrawals. The burden of proof in this case was always with the Appellees. It

was their burden to prove up their entitlement to damages for expenses which

specifically related to constructing and equipping the leased premises in order to

operate.

Appellees did not fulfill their burden of proof in that they failed to isolate for

the jury’s consideration “expenses,” as defined in jury Question Nos. 6 and 16.

More specifically, the financial records submitted by Appellees as evidence of

“expenses,” at best, accounted for comingled expenses and costs, some for

operating costs and perhaps others for constructing and equipping the premises in

order to operate. From what was presented to the jury, neither the jurors nor

witnesses with expertise in accounting could have isolated from Appellees’ proof

“remedial damages” or “expenses” contemplated under jury Question Nos. 6 and

16. Therefore, even if liability rests with Marinecorp, the Appellees wholly failed

to satisfy their burden of proof by failing to present competent and clear evidence

of “remedial damages” and/or “expenses, as expressly defined by the trial court in

its jury charge. In this regard, the jury clearly ignored the definition of “expenses”

set out in the jury charge, as no evidence or, alternatively, insufficient evidence

supports the jury’s award of “remedial damages” and/or “expenses in connection

with jury Question Nos. 6 and 16.

58

In attempting to prove their alleged damages, Chopper and Outlaw relied

upon their bank statements and "weekly reports," which were totally unreliable, in

violation of the minimum proof standard set out in James L. Gang & Associates,

Inc. v. Abbott Labs, Inc., 198 S.W.3d 434, 443 (Tex.App.-- Dallas 2006, no pet.),

where the court held that a Plaintiff must have facts and figures to support its

claims; mere allegations of expenses without objective facts, figures, or data do not

amount to any evidence of out of pocket damages. They are inaccurate,

incomplete, contradictory and meet no known accounting standards. Appellees

claim they represent expenses paid, but many of the expenses they are claiming are

supported by only invoices for which no evidence established that they were ever

paid. In addition, many entries were merely for "cash," leaving us to wonder cash

for what?

Marinecorp directs the Court to Section “D” (i), (ii) and (iii), infra, detailing

the unreliability of bank statements, accountings and weekly reports upon which

Appellees relied on as evidence supporting their claims for damages.

Neither Miller nor any expert ever explained the numbers in the bank

statements and weekly reports. The numerical content of these records were never

categorized or itemized in detail for each income amount and source of income,

and expenses were at no time itemized or otherwise explained. Appellees' attorney

never argued that their claims for damages were supported by any specific detailed

59

analysis. It was like throwing receipts in a shoe box and telling the jury "here's my

evidence." It was impossible for the jury to have understood the weekly reports

and the bank statements without explanation by somebody.

3. Loss of Use

The Court instructed the jury in Question # 16 (CR 419) that they could

consider:

"The reasonable value of the leased premises for the time the Chopper

Group was unable to operate due to Marinecorp's conduct."

(emphasis added). Outlaw did not request the court to insert a jury question as to

the reasonable value of the leased premises for time it was unable to operate due to

Marinecorp's conduct. Therefore, the court instructed the jury they could only

consider the reasonable value of the lease premises for the time Chopper was

unable to operate due to Marinecorp's conduct. However, the jury ignored the

court's instructions and proceeded to award Outlaw $140,000.00 for its alleged loss

of use damages. It awarded Chopper $100,000 for similar damages. A remittitur

of these damages for $140,000 awarded to Outlaw is warranted, as it is contrary to

the express instructions and definitions provided in the Court’s Jury Charge.

Further, insufficient evidence supports loss of use damage awarded to each

Appellee.

The evidence clearly established that Chopper was always able to operate

and that Marinecorp's conduct did not inhibit this ability. Appellees never failed to

60

open their doors because of any alleged problems caused by Marinecorp. In this

regard Miller testified that Chopper was always making a profit and Outlaw was

about breaking even. (4 RR82:17) There was no evidence presented as to the

reasonable value of the Chopper and Outlaw leased premises at any time. It was

therefore impossible for the jury to calculate any such reasonable value as to both

Appellees. For these reasons, remittitur or, alternatively, reversal as to loss of use

damages for both Chopper and Outlaw is warranted.

D. Bank Statements and Weekly Reports relied on By Chopper and Outlaw

to prove up damages were unreliable, not based on objective facts, accurate

figures and data, and were without support of corroborating evidence.

Miller tesitified that the weekly reports and their totals represented his

damages. He testified that he has a copy of a receipt in the weekly reports for

every expense claimed (4 RR 86:10). He further testified, “It’s all in the bank

statements.” Contrary to Miller’s representation, an untold number of receipts and

proof of payment do not exist to corroborate Appellees’ claims for damages. The

following discussion explains the major flaws in the primary form of proof that

served as the basis of damages awarded to both Chopper and Outlaw (i.e.,

Appellees’ bank statements and weekly reports).

61

i. Outlaw’s actual expenses and claimed expenses do not add up.

Weekly reports relied on by Appellees in their effort to prove damages in

this case were rife with claimed expenses that were false, uncorroborated and

simply not supported by credible evidence. While this evidentiary problem was

extensive and permeated the documents that purportedly supported Appellees’

claim for damages, a few examples of this extensive evidentiary shortfall follow:

Jim Hofelich: Outlaw claims that it paid Mr. Hofelich $37,121.15 for

property expenses, yet the only checks in the bank statement total $9,845.00

(Check Nos. 1004, 1186 & 114 at Outlaw Px-76), falling short $27,275.15 never

proven or corroborated with competent evidence.

Redhawk: Outlaw claims that it paid Redhawk $38,189.41 for Outlaw for

property related expenses, however, the only check in the bank statement for

expense payments to Redhawk was for $5,000 (Check No. 1025 at Outlaw Px-76,

), falling short $33,189.00 in claimed expenses which Outlaw was never able to

corroborate with competent evidence.

CRS: Outlaw claims that it paid CRS $34,783 for its property expenses.

However, only checks accounted for in the Outlaw bank account payable to CRS

total $13,541.25 (Check Nos. 1035, 1037, 1059, 1099 and 1141 at Outlaw Px-76),

falling short $21,242.72 in claimed expenses never proven or corroborated with

competent evidence.

62

The above represents merely a few examples totaling $81,708.28 worth of

claimed expenses which were never corroborated with competent evidence.

Further examination of the financial records produced by the Appellees will exhibit

even more ambiguity which poisons the record as a whole with uncorroborated,

unverified, unreliable and questionable “evidence” which Appellees claim support

the jury’s award of “expense” or “remedial” damages. Outlaw’s expenses

damages should, therefore, be reduced or taken away as a whole.

ii. Discrepancies between bank statements and accountings of Appellees

Outlaw bank statements from October 10, 2010 through March 11, 2011,

disclose checks processed during this period in the amount of $389,014.78. This

figure would necessarily include operating expenses for Outlaw through March 11,

2011. During this same period of time, checks from this same account were made

payable to Miller, Tones, Karen Miller and Art Kunzeman in the amount of

$71,740.00. In stark contrast, during this same period of time, Outlaw’s

accounting claimed expenses in the amount of $664,838.43, however, this figure

does not represent solely “expenses,” but, instead, includes unrecoverable

operating expenses. However, note that Miller submitted a separate Outlaw

“Expense Report” claiming expenses for $620,655.69. In any event, such huge

discrepancies between alleged expenses and the total checks processed, supra,

63

make highly questionable and unreliable Outlaw’s accounting and its Expense

Report with regard to expenses claimed.

As expected, Outlaw never credits Marinecorp for checks it paid to build-out

costs totaling $194,994.00. The inclusion of this amount omitted from checks

processed results in a discrepancy of approximately $400,000 from what Outback

is claiming in expenses and that which is supported by competent corroborating

evidence. Chopper’s bank account from May to August of 2011 reports expenses

in the amount of $45,875.08, however, it is claiming $231,241.97.00 in expenses.

As a consequence of the unreliability of the financial records presented by

Appellees, Marinecorp asks that all damages awarded to the Appellees based on

this “evidence” be stricken and taken away from the Appellees. In the alternative,

Appellees’ recovery of damages should be reduced to the extent that such damages

are not supported by competent, clear and credible evidence in satisfaction of the

burden of proof placed on the Appellees.

iii. Outlaw’s Weekly Reports are unreliable without objective facts, accurate

figures, or supporting data.

On appeal, Marinecorp challenges the veracity, reliability and competency of

Outlaw’s Weekly Reports as they serve as nothing more than evidence of Miller

and Outlaw’s slipshod business bookkeeping/recordkeeping, accounting and

management. They hardly serve as competent evidence of the numerous expense

64

transactions which they purport to represent. At the heart of these Weekly Reports

are significant accounting problems, which include:

1. They purport to be a summary of all expenses incurred, however, many of

the documents attached are only invoices or quotes with no evidence of

payments;

2. They are not accurate, for every item listed under “payment” states “cash.”

Unaccounted for are payments made by credit card or by check;

3. “Mexican Labor” entries have no backup whatsoever;

4. Lists “payroll” or “labor” with no backup whatsoever;

5. Lists no credit for income;

6. Do not account for build-out payments made by Marinecorp.

The following table entitled, “Outlaw Weekly Report Review,” sets out in detail

transactions which Outlaw sought to qualify as costs and expenses in support of the

damage claims:

65

Outlaw Weekly Report Review

Week Content-- Alleged Defects

payments, costs and expenses

1 Claim expenses of --Only one paid receipt for

$34,504.05….. $104.05

--$5,500 cash payments to

labor noted, however, no

payment receipts

--$25,000 cash payment to

Canon Enterprises, but no

supporting documents

2 Expense entitled “Deposit” for --No supporting documents

$13,289.25

--No explanation where

money went

“ Expense for “rent” for Rent not an expense for

$10,539.76 construction or cost of

equipping premises

4 Numerous cash payments for No documentation evidencing

“Mexican labor” and other money ever paid

labor

5 Electrician expense for “

$8,796.15

6 “Cash” payment to electrician Only have invoice from

for $6,000.00 electrician, which is not

evidence of payment

“ “Cash” payment to Wrap Stars No supporting documentation

for $5,775

7 Several thousand dollars in “

cash payments to laborers

“ Cash payment for hardwood “

66

floors for $3,292.50

“ Cash payment to Farley “

Specialities for $2,104.66

7B Payment to Hajjis Restaurant No evidence of payment; only

Solutions for $14,505.50 note advising Miller to make

check

“ Expense to Wrap Stars for Total owed was $10,166.50,

$8,324 so payment of $1,842.50 was

made. No evidence $8,324

balance ever paid

“ Wrap Stars expense for $6,522 No evidence of payment

“ Wrap Stars expense for “

$38,400

“ Expense to Catalyst Design Is an invoice and quote, but

for $6,000 directed to Chopper, not

Outlaw.

“ Expense for payment to Merely a quote for products

Musician’s Friend for with no evidence of payment

$10,399.09

8 Cash payment to Red Hawk Only have a quote from Red

for $15,298.34 Hawk to sell products for

referenced amount; no

evidence of payment.

” Cash payment to Quality Air Only have document

Care for $2,976.88 requesting payment of

referenced amount.

“ Thousands of dollars in No supporting documentation.

alleged cash payments to

laborers

9 Cash payment to Deerwood Only document is an invoice

A/C & Heating for $10,312.90 for referenced amount.

67

12 Cash payment to Esi, Inc. for Only have quote from

$3,939 company

“ Cash payments for thousands No supporting documentation

of dollars to laborers of payments.

13 Cash payment to Quality Air Only have invoice showing

Car for $1,976.88 amount due, yet no evidence

of payment

14 Over $5,000 for cash No supporting documentation

payments to laborers

15 Cash payments to electrician Only have invoice, but no

for $8,820 evidence of payment

16 Cash payment to Houston No supporting documentation

Security for $3,425 other than invoice.

“ Cash payment to Hajjis No supporting documents

Restaurant for $6,845

“ Cash payment to Crs for “

$5,000

17 Over $18,000 in cash “

payments made to various

vendors

19 Cash payments to laborers for “

approximately $10,000

“ Over $6,000 in cash payments “

to various vendors

20 Payment of payroll by Miller No evidence of payment

for $7,635

21 $5,000 loan to Juan Gorde Not an expense or cost

“ Expenses in total of No documentation of payment

$39,306.52-- payments to

laborers

68

“ Invoices for liquor sales, and No evidence of payment

sale of cleaning supplies,

office supplies and invoices to

Outlaw

22 Cash payment to ASCAP for Only have invoice advising

$10,260 that referenced amount is due.

No evidence of payment.

“ Cash payment to electrician Only have invoice advising

for $5,430 that referenced amount due.

“ Cash payment to Miller for No supporting documentation.

$6,900

23 Cash payment for $20,000 for “

liquor for resale

“ Payroll payment for “

$13,927.77

“ Two claims for payment to “

Miller for $4,879 and

$15,361.68

“ Cash payment to Red Hawk “

for $19,534.26

25 Approx. $15,000 in cash “

payments for laborers

(including Miller)

“ Thousands of dollars in “

smaller invoices

26 Expenses for $8,875 “

69

Marinecorp contends on appeal that the damages awarded to the Appellees

based on defective, faulty, and inadequate claims of costs and expenses serves as a

basis for reversal and/or remittitur.

CONCLUSION AND PRAYER

The jury ignored overwhelming evidence that neither Appellee

complied with conditions precedent in both commercial lease agreements requiring

that Appellant be given written 30-day’s written notice to cure alleged defects of

default in the terms of the lease agreement. The Appellees were also not excused

from ceasing to perform under the leases, as they treated the leases as continuing

and, therefore, continued under the law to own Appellant rents due under the lease

agreements. The trial court erred in refusing to render judgment for Appellant

against Appellees for past and future lease payments. This failure is inconsistent

with the jury’s finding that Appellee Outlaw breached its lease without excuse.

Overwhelming evidence also existed of Appellee Chopper’s breach of its lease

agreement without excuse. Overwhelming evidence also existed of Appellee

Chopper’s breach of its lease without excuse, yet error was committed in failing to

award Appellant past and future lease payments.

The overwhelming evidence was that Appellant mitigated damages, yet this

evidence was ignored by the jury and trial judge. By comparison, any damages

70

sustained by Appellee Outlaw are attributable to its own action of inactions. In this

connection, the trial court erred in failing to approve a jury instruction and question

which related to Appellees’ failure to mitigate damages. As a consequence, the

jury was not allowed an opportunity to reduce damages awarded to Appellees for

their failure to mitigate.

The jury’s award of DTPA damages was improper as Appellee Outlaw’s

damage claim sounds in contract, not in DTPA. Lacking with respect to

Appellees’ DTPA claim was sufficient evidence of causation of damages,

unconscionable conduct, and a knowing violation of the DTPA. Further, it was

reversible error to allow Appellees to base their DTPA claim on claims that

Appellant wrongfully evicted the Appellees without first proving the elements of

such a cause of action and demonstrating a judicial finding of a wrongful eviction.

“As-is” lease provisions legally precluded Appellees from asserting an

implied warranty claim and, therefore, the award of DTPA damages was improper.

The trial court’s award of prejudgment interest on damages awarded to Appellees

in the Modified Final Judgment was improper and erroneous in that the alleged

damages were not definitely determinable at a definite time. Error exists in the

trail court’s failure to award Appellant damages against Miller and Tones for their

breach of personal guaranty agreements that they approved and signed. Texas’

71

“one satisfaction rule” was violated by the jury and trial court awarding Appellees

cumulative damages for concurrent causes of action arising out of the same alleged

acts . Damages awarded in this regard were excessive and not supported by the

evidence.

Error also existed in the court below failing to award Appellant judgment

against Miller and the Harlesses for the principal and interest owed pursuant to a

promissory note executed by them which was due and payable to Appellant for

rent in arrears. Finally, the record is rife with examples demonstrating how the

jury flat out ignored specific written instructions given to them in connection with

this case. For instance, when the trial court in the jury charge authorized, upon

sufficient supporting evidence, the award of expenses and loss of use damages only

as to Appellee Chopper, it ignored this instruction and proceeded to award

Appellee Chopper $290,000 in such damages, which has no support, or inadequate

support, in the evidence. The Appellees failed to prove damages with adequate,

competent, and clear evidence but, rather, opted to submit to the jury comingled

and confusing financial records that fell well short of the required level of proof to

recover damages.

For the reasons stated in this Brief, Appellant Marinecorp asks the Court to

sustain the legal sufficiency issues and render judgment for Appellant. If the Court

72

overrules the legal sufficiency challenges to the evidence, Appellant Marinecorp

requests that the court reverse and remand based on the factual sufficiency issues

of error. In the alternative, Appellant Marinecorp asks the Court to modify its

judgment and delete damages which the Appellees were not entitled to under the

law and evidence presented. In the final alternative, Appellant asks that the Court

to enter a remittitur for the complained of damages. Finally, Appellant asks the

Court for such other and further relief which the Court may deem appropriate.

Respectfully submitted,

THE STROTHER LAW FIRM

/s/ Macon D. Strother_______

MACON D. STROTHER

State Bar No. 19420000

4306 Yoakum Blvd., Suite 560

Houston, Texas 77006

(713) 557-9238 (Telephone)

mstrother@strotherlawfirm.com

ATTORNEY FOR APPELLANT

MARINECORP INTERNATIONAL,

LTD.

CERTIFICATE OF SERVICE

I hereby certify that Appellant’s Brief was e-filed by utilizing the Court’s

official e-filing system on this 30th day of October, 2015, which system should

also forward a true and correct copy via e-mail to all attorneys of record in this

case, including:

73

Brock C. Akers

The Akers Firm

3401 Allen Parkway, Suite 101

Houston, Texas 77019

bca@akersfirm.com

Stephen R. Cochell

The Cochell Law Firm, PC

5555 W. Loop South, Suite 200

Bellaire, Texas 77401

srcochell@gmail.com

I further certify that on this same date, a true and correct copy of Appellant’s

Brief was sent via First Class U.S. Mail, Certified Delivery, Return Receipt

Requested, to:

Lee Harless

Dawn Marie Harless

11435 Log Cabin Dr.

Tomball, TX 77375

CM/RRR 7013 0600 0001 1817 8599

/s/ Macon D. Strother__________

MACON D. STROTHER

CERTIFICATE OF COMPLIANCE WITH TEX.R.APP.P. 9.4(i)(3)

Relying on the word count function in the word processing software used to

produce this document, namely MS Word Version 7, I certify that the number of

words in this Appellant’s Brief, excluding any parts exempted by Tex.R.App.P.

9.4(i)(1), is 14,759.

/s/ Macon D. Strother__________

MACON D. STROTHER

74

No. 01-14-00707-CV

IN THE

FIRST COURT OF APPEALS

at HOUSTON, TEXAS

MARINECORP INTERNATIONAL, LTD.

Appellant,

V.

THE CHOPPER GROUP, LLC, AND

OUTLAW COUNTRY, LLC

Appellees

APPELLANT'S APPENDIX

LIST OF DOCUMENTS

A. Charge of the Court ...................................................... TAB A

B. Modified Final Judgment, signed July 31, 2014...................TAB B

C. Standard Lease Contract by and between Marinecorp as

Landlord and Outlaw as tenant.......................................TAB C

D. Standard Lease Contract by and between Marinecorp

as Landlord and Chopper as tenant.................................TAB D

75

ORIGINAL

CAUSE NO. 2012-23983

c'l

cl

THE CHOPPER GROUP, LLC AND § IN THE DISTRICT COURT OF

OUTLAW COUNTRY, LLC §

El

§

VS. § HARRIS COUNTY, T S,,

H

§

§

MARINECORP INTERNATIONAL, LTD. § 80TH JUDICIAL DISTRICT

CHARGE OF THE COURT

Members of the Jury:

After the closing arguments, you will go to the jury room to decide the case, answer the

questions that are attached, and reach a verdict. You may discuss the case with other jurors Only

when you are all together in the jury room.

Remember my previous instructions: Do not discuss the case with anyone else, either in

person or by any other means. Do not do any independent investigation about the case or

conduct any research. Do not look up any words in dictionaries or on the Internet. Do not post

information about the case on the Internet. Do not share any special knowledge or experiences

with the other jurors. Do not use your phone or any other electronic device during your

deliberations for any reason.

Any notes you have taken are for your own personal use. You may take your notes back

into the jury room and consult them during deliberations, but do not show or read your notes to

your fellow jurors during your deliberations. Your notes are not evidence. Each of you should

rely on your independent recollection of the evidence and not be influenced by the fact that

another juror has or has not taken notes.

You must leave your notes with the bailiff when you are not deliberating. The bailiff will

give your notes to me promptly after collecting them from you. I will make sure your notes are

kept in a safe, secure location and not disclosed to anyone. After you complete your

deliberations, the bailiff will collect your notes. When you are released from jury duty, the

bailiff will promptly destroy your notes so that nobody can read what you wrote.

Here are the instructions for answering the questions.

1. Do not let bias, prejudice, or sympathy play any part in your decision.

2 Base your answers only on the evidence admitted in court and on the law that is in

these instructions and questions. Do not consider or discuss any evidence that was not admitted

in the courtroom.

3. You are to make up your own minds about the facts. You are the sole judges of the

1

credibility of the witnesses and the weight to give their testimony. But on matters of law, you

must follow all of my instructions.

4. If my instructions use a word in a way that is different from its ordinary meaning, use

the meaning I give you, which will be a proper legal definition.

5. All the questions and answers are important. No one should say that any question or

answer is not important.

6. Answer "yes" or "no" to all questions unless you are told otherwise. A "yes" answer

must be based on a preponderance of the evidence. Whenever a question requires an answer

other than "yes" or "no," your answer must be based on a preponderance of the evidence.

The term "preponderance of the evidence" means the greater weight of credible evidence

presented in this case. If you do not find that a preponderance of the evidence supports a "yes"

answer, then answer "no." A preponderance of the evidence is not measured by the number of

witnesses or by the number of documents admitted in evidence. For a fact to be proved by a

preponderance of the evidence, you must find that the fact is more likely true than not true.

7. Do not decide who you think should win before you answer the questions and then

just answer the questions to match your decision. Answer each question carefully without

considering who will win Do not discuss or consider the effect your answers will have.

8. Do not answer questions by drawing straws or by any method of chance.

9. Some questions might ask you for a dollar amount. Do not agree in advance to decide

on a dollar amount by adding up each juror's amount and then figuring the average.

10. Do not trade your answers. For example, do not say, "I will answer this question

your way if you answer another question my way."

11. Unless otherwise instructed, the answers to the questions must be based on the

decision of at least 10 of the 12 jurors. The same 10 jurors must agree on every answer. Do not

agree to be bound by a vote of anything less than 10 jurors, even if it would be a majority.

As I have said before, if you do not follow these instructions, you will be guilty of juror

misconduct, and I might have to order a new trial and start this process over again. This would

waste your time and the parties' money, and would require the taxpayers of this county to pay for

another trial. If a juror breaks any of these rules, tell that person to stop and report it to me

immediately.

A fact may be established by direct evidence or by circumstantial evidence or both. A

fact is established by direct evidence when proved by documentary evidence or by witnesses

who saw the act done or heard the words spoken. A fact is established by circumstantial

evidence when it may be fairly and reasonably inferred from other facts proved.

2

401

Do not increase or reduce the amount in one answer because of your answer to any other

question about damages. Do not speculate about what any party's ultimate recovery may or may

not be. Any recovery will be determined by the court when it applies the law to your answers at

the time of judgment.

3

402

QUESTION NO. 1

Did MarineCorp International fail to comply with the agreements with The Chopper

Group or Outlaw Country?

A failure to comply must be material. The circumstances to consider in

determining whether a failure to comply is material include:

I. the extent to which the injured party will be deprived of the benefit which he

reasonable expected;

2. the extent to which the injured party can be adequately compensated for the

-part of the benefit of which he will be deprived;

3. the extent to which the party failing to perform or to offer to perform will

suffer forfeiture,

4. the likelihood that the party failing to perform or to offer to perform will cure

his failure, taking into account the circumstances including any reasonable assurances;

5. the extent to which the behavior of the party failing to perform or to offer to

perform comports with standards of good faith and fair dealing.

Answer "Yes" or "No" as to each agreement

Chopper agreement: Outlaw agreement______________

MA

QUESTION NO. 2

Did The Chopper Group or Outlaw Country fail to comply with the agreement?

A failure to comply must be material. The circumstances to consider in

determining whether a failure to comply is material include -

]. the extent to which the injured party will be deprived of the benefit which he

reasonable expected;

2. the extent to which the injured party can be adequately compensated for the

part of the benefit of which he will be deprived;

3. the extent to which the party failing to perform or to offer to perform will

suffer forfeiture;

4. the likelihood that the party failing to perform or to offer to perform will cure

his failure, taking into account the circumstances including any reasonable assurances;

5. the extent to which the behavior of the party failing to perform or to offer to

perform comports with standards of good faith and fair dealing.

Answer "Yes" or "No" as to each agreement.

Chopper agreement: 4&.0 Outlaw agreement 1J2L

5

0

If you answered "Yes" to any portion of both Question No. 1 and Question No. 2, then

answer Question No. 3. Otherwise, do not answer Question No. 3.

QUESTION NO. 3

Who failed to comply with the agreement first?

Answer "MarineCorp International" or "Chopper" or "Outlaw"

Answerv

pf~L~

-w

405

-

If your answer to any portion of Question No. 2 is Yes," then answer the following

question. Otherwise, do not answer the following question.

QUESTION NO. 4

Was Chopper or Outlaw's failure to comply excused?

Failure to comply by Chopper or Outlaw is excused by MarineCorp International's

previous failure to comply with a material obligation of the same agreement. Failure to comply

is also excused by fraud of MarineCorp International.

Fraud occurs when—

a. a party makes a material misrepresentation, and

b. the misrepresentation is made with knowledge of its falsity or made

recklessly without any knowledge of the truth and as a positive assertion,

and

C. the misrepresentation is made with the intention that it should be acted on

by the other party, and

d. the other party relies on the misrepresentation and thereby suffers injury.;

or

Fraud occurs when—

a. a party makes a false promise to do an act,

b. the promise is material,

C. the promise is made with the intention of not fulfilling it,

d. the promise is made to a person for the purpose of inducing that person to

enter into a contract, and

e that person relies on the promise in entering into that contract

"Misrepresentation" means:

• false statement of fact, or

• promise of future performance made with an intent, at the time the promise was made,

not to perform as promised.

7

M .

Failure to comply by Chopper or Outlaw is also excused if compliance is waived by MarineCorp

International.

Waiver is an intentional surrender of a known right or intentional conduct inconsistent with

claiming the right.

Answer "Yes" or "No" as to each agreement.

Chopper agreement:

I

Outlaw agreement ni V

U

M

407

If your answer to Question No. I is "Yes," then answer the following question.

Otherwise, do not answer the following question.

QUESTION NO. 5

Was MarineCorp International, Ltd's failure to comply excused?

Failure to comply by MarineCorp International, Ltd is excused by The Chopper

Group, LLC's previous failure to comply with a material obligation of the same

agreement.

Failure to comply by MarineCorp International, Ltd is also excused if compliance

is waived by The Chopper Group, LLC. Waiver is an intentional surrender of a known

right or intentional conduct inconsistent with claiming the right.

Failure to comply by MarineCorp International, Ltd is also excused if The

Chopper Group, LLC ratified MarineCorp International, Ltd failure to comply A party's

conduct includes conduct of others that the party has ratified. Ratification may be

express of implied. Implied ratification occurs if a party, though he may have been

unaware of unauthorized conduct taken on his behalf at the time it occurred, retains the

benefits of the transaction involving the unauthorized conduct after he acquired full

knowledge of the unauthorized conduct. Implied ratification results in the ratification of

the entire transaction

Answer "Yes" or "No"

Answer:

I,]

EM

If your answer to Question No. 5 is "No," then answer the following question. Otherwise,

do not answer the following question.

QUESTION NO. 6

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate

Chopper and/or Outlaw for its damages, if any, that resulted from such failure to comply?

Consider the following elements of damages, if any, and none other.

Loss of the benefit of the bargain

The difference, if any, between the value of the premises as agreed and the

value of the premises as provided by MarineCorp International.

Remedial damages

The reasonable and necessary cost to reimburse Chopper or Outlaw for the

loss of investment in construction and equipment costs.

Loss of income

Loss of net income for the time Chopper or Outlaw was unable to operate

due to MarineCorp's conduct.

Do not add any amount for interest on damages, if any.

Answer separately in dollars and cents for damages, if any.

a. Loss of benefit of the bargain.

Answer for Chopper:jflQQ

Answer for Outlaw4

/

00

b. Remedial damages.

Answer for Chopper4 1 0 ) OOO

Answer for Outlaw: 4 I b0 1 gD

C. Loss of income.

Answer for Chopper j twD

Answer for Outlaw: !A 140 ?0Ô

10

III!I

If your answer to Questions 3 or 4 is "No", then answer the following question.

Otherwise, do not answer the following question.

QUESTION NO. 7

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate

MarineCorp International, Ltd for its' damages, if any, that resulted from such failure to

comply?

Consider the following elements of damages, if any, and none other:

Rents owed to MarineCorp International, Ltd under the Chopper Group, LLC

Lease Agreement.

Rents owed to MarineCorp International, Ltd under Backwoods Country Club,

LLC d/bla Outlaw Country Lease Agreement.

Do not add any amount for interest on damages, if any. Answer in dollars and cents for

damages, if any.

Answer for Chopper:

1. Rents sustained in the past.

Answer: -0

2. Rents that,in reasonable probability, will be sustained in the future.

Answer:

Answer for Outlaw:

1. Rents sustained in the past.

Answer: 0

2. Rents that, in reasonable probability, will be sustained in the future.

Answer 0

11

410

If you have answered Question No. 7, then answer the following question. Otherwise, do

not answer the following question.

QUESTION NO. 8

Do you find from a preponderance of the evidence that MarineCorp international failed

to exercise reasonable care and diligence to avoid or minimize its damages, if any?

In connection with this question, you are instructed that a person is required to exercise

reasonable care and diligence to avoid loss and to minimize the consequences of damages.

If with reasonable care and diligence he can do so, he must protect himself from the

injurious consequences of the act of another. And if he fails to do so and by reason of his

failure, his damages become aggravated, he may not recover for such part of the damages

as may be attributed to his omission to take preventive measures and his recovery will be

limited only to those damages that would have resulted had he fulfilled his duty.

Answer "Yes" or "No"

Answer: u fe5

12

411

If you have answered "Yes" to Question No. 8, answer the following question.

Otherwise do not answer the following question.

QUESTION NO. 9

What amount, if any, would have been the damages, if any, suffered by MarineCorp

International if it had exercised reasonable care and diligence to avoid or minimize its

damages?

Answer in dollars and cents, if any.

Answer: $

13

412

If you have answered "No" to Question No. 4, or if you have answered "Yes" to Question

No. 2, then answer the following question. Otherwise, do not answer the following question.

QUESTION NO. 10

Did Tony Miller fail to,, complJth the terms of the Promissory Note?

Answer: __________

Ij

14

If your answer to Question No. 10 is "Yes," then answer the following question.

Otherwise, do not answer the following question.

QUESTION NO. Ii

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate

MarineCorp International, Ltd for its damages, if any, that resulted from such failure to

comply?

Consider the following elements of damages, if any, and none other:

The total amount Tony Miller agreed to pay under the Promissory Note less any

payments.

Do not add any amount for interest on damages, if any.

Answer in dollars and cents for damages, if any.

Answer: $I 5 , OD D

15

414

S *

If you answered "Yes" to Questions 2 and 4, then answer the following question.

Otherwise, do not answer the following question.

QUESTION NO. 12

What is a reasonable fee for the necessary services of MarineCorp International, Ltd 's

attorney, stated in dollars and cents?

Answer with an amount for each of the following:

a. For preparation and trial.

Answer: $

b. For an appeal to the Court of Appeals

Answer: $_______________

C. For an appeal to the Supreme Court of Texas.

Answer. $ 0

16

415

4 *

QUESTION NO. 13

Did MarineCorp International engage in any false, misleading, or deceptive act or

practice that The Chopper Group or Outlaw Country relied on to its detriment and that was a

producing cause of damages?

"Producing cause" means a cause that was a substantial

factor in bringing about the damages, if any, and without which the

damages would not have occurred. There may be more than one

producing cause.

"False, misleading, or deceptive act or practice" means any

of the following:

• Representing that goods or services had or would have sponsorship,

characteristics, uses or benefits that they did not have, or

• Representing that goods or services are or will be of a particular standard,

quality or grade if they were of another, or

• Advertising services with intent not to sell them as advertised, or

• Representing that an agreement confers or involves rights or remedies that

it did not have or involve, or

Breach of implied warranty,

• Failing to disclose information about goods or services that was known at

the time of the transaction with the intention to induce The Chopper Group

into a transaction it otherwise would not have entered into if the

information had been disclosed

Answer "Yes" or "No" as to each party

Answer for Chopper: Les Answer for Outlaw:

0

17

416

QUESTION NO. 14

Was the failure, if any, of MarineCorp International to comply with a warranty a

producing cause of damages to Chopper or Outlaw?

"Producing cause" means a cause that was a substantial

factor in bringing about the damages, if any, and without which the

damages would not have occurred. There may be more than one

producing cause.

"Failure to comply with a warranty" means the failure to

provide commercial lease premises that are suited for their

intended commercial purposes

Answer "Yes" or "No" as to each party

Answer for Chopper: Answer for Outlaw:

417

. V

QUESTION NO. 15

Did MarineCorp International engage in any unconscionable action or course of action

that was a producing cause of damages to Chopper or Outlaw?

"Producing cause" means a cause that was a substantial

factor in bringing about the damages, if any, and without which the

damages would not have occurred. There may be more than one

producing cause.

An unconscionable action or course of action is an act or

practice that, to a consumer's detriment, takes advantage of the

lack of knowledge, ability, experience, or capacity of the consumer

to a grossly unfair degree.

Answer "Yes" or "No" as to each party

Answer for Answer for Outlaw:

19

01

U 11

If your answer to any portion of Questions 13, 14 or 15 is "Yes," then answer the

following question. Otherwise, do not answer the following question.

QUESTION NO. 16

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate

Chopper or Outlaw for their damages, if any, that resulted from such conduct?

Consider the following elements of damages, if any, and none other.

Loss of the benefit of the bargain

The difference, if any, in the value of the premises as received and the

value it would have had if it had been as represented.

Expenses

The expenses incurred by The Chopper Group in constructing and

equipping the lease premises in order to operate.

Loss of use

The reasonable value of the lease premises for the time The Chopper

Group was unable to operate due to MarineCorp's conduct.

Rental and other payments

Rental and other payments made by The Chopper Group to MarineCorp

International.

In answering questions about damages, answer each question separately. Do not increase

or reduce the amount in one answer because of your answer to any other question about

damages. Do not speculate about what any party's ultimate recovery may or may not be. Any

recovery will be determined by the court when it applies the law to your answers at the time of

judgment. Do not add any amount for interest on damages, if any.

Answer separately in dollars and cents for damages, if any.

a. Loss of benefit of the bargain.

Answer for Chopper: $I Answer for Outlaw: $ 2b

20

419

0

b. Expenses.

Answer for Chopper: $ 1)01 ODD Answer for Outlaw:

C. Loss of use.

Answer for Chopper: $____________ Answer for Outlaw: $ /4 )b

d. Rental and other payments.

Answer for Chopper: $ 0 Answer for Outlaw: $ 0 -

21

13g'-/ '5

If your answer to any portion of Questions)or Wis "Yes," then answer the

following question. Otherwise, do not answer the following question.

QUESTION NO. 17

Did MarineCorp International engage in any such conduct knowingly?

"Knowingly" means actual awareness, at the time of the

conduct, of the falsity, deception, or unfairness of the conduct in

question or actual awareness of the conduct constituting a failure to

comply with a warranty. Actual awareness may be inferred where

objective manifestations indicate that a person acted with actual

awareness.

In answering this question, consider only the conduct that you have found was a

producing conduct of damages to Chopper or Outlaw.

Answer: "Yes" or "No"

Answer for Chopper: Answer for Outlaw:

22

421

U

If your answer to any portion of Question No. 17 is "Yes," then answer the following

question. Otherwise, do not answer the following question.

QUESTION NO. 18

What sum of money, if any, in addition to actual damages, should be awarded to Chopper

and/or Outlaw against MarineCorp International because MarineCorp International's conduct

was committed knowingly?

Answer in dollars and cents, if any.

Answer for Chopper: $ I /

Answer for Outlaw:

23

422

If you answered "Yes" to any portion of Questions 1, 4, 13,14 or 15, then answer the

following question. Otherwise, do not answer the following question.

QUESTION NO. 19

What is a reasonable fee for the necessary services of Chopper and Outlaw's attorney,

stated in dollars and cents?

Answer with an amount for each of the following:

a. For representation in the trial court and trial.

Answer for Chopper: $o4, / a/8 S-Z)

Answer for Outlaw: $_______________

b. For representation through appeal to the court of appeals.

Answer for Chopper: 0

$_______________ Answer for Outlaw: $ D

C. For representation at the petition for review stage in the Supreme Court of

Texas.

Answer for Chopper: $________________ Answer for Outlaw: $ 0

d. For representation at the merits briefing stage in the Supreme Court of

Texas.

Answer for Chopper: $ 0 Answer for Outlaw: $ 0

e. For representation through oral argument and the completion of

proceedings in the Supreme Court of Texas.

Answer for Chopper: $______________ Answer for Outlaw: $_________

24

423

.,

When you go into the jury room to answer the questions, the first thing you will need to

do is choose a presiding juror.

Presiding Juror

The presiding juror has these duties:

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