Grant v. Laughlin Environmental, Inc. (Tex.App.- Houston [1st Dist.] Dec. 18, 2008)(Jennings)
(summary judgment evidence, conclusory affidavit, breach of contract, quantum meruit, fraud, negligent
misrepresentation)
AFFIRM TC JUDGMENT: Opinion by Justice Jennings
Before Chief Justice Radack, Justices Jennings and Bland
01-07-00227-CV Carroll Grant v. Laughlin Environmental, Inc.
Appeal from 164th District Court of Harris County
Trial Court Judge: Hon. Martha Hill Jamison
MEMORANDUM OPINION
Appellant, Carroll Grant, challenges the trial court's judgment, entered after a jury trial, in favor of appellee,
Laughlin Environmental, Inc. ("LEI"), in Grant's suit against LEI for breach of contract, fraud, negligent
misrepresentation, and quantum meruit. Grant presents seven issues for our review. In his sixth issue, Grant
contends that the evidence is legally and factually insufficient to support the jury's findings that he breached his
fiduciary duties to LEI, committed fraud against LEI, and engaged in inequitable conduct. In his fourth issue,
Grant contends that the evidence is legally and factually insufficient to support the jury's finding that LEI did not
owe him a pro-rata field-profit bonus because he had quit his job and LEI did not terminate his employment. In
his fifth and seventh issues, Grant contends that the trial court erred in granting LEI's motion to disregard the
jury's finding in his favor on his quantum meruit claim and in granting summary judgment in favor of LEI on his
fraud and negligent misrepresentation claims based upon "no evidence." In his first through third issues, Grant
contends that the trial court erred in not performing "its threshold duty to determine ambiguity of the parties'
contract," in "holding that the contract was ambiguous," and in "permitting parol evidence of the parties' intent to
construe their contract."
We affirm.
Factual and Procedural Background
In his fourth amended petition, Grant alleged that LEI failed to pay him a pro-rata field-profit bonus to which he
was entitled after he quit working for LEI. He asserted claims for breach of contract, quantum meruit, fraud,
negligent misrepresentation, and equitable estoppel.
In its ninth verified amended answer, LEI alleged that Grant was "not due any bonus due to the fact [that] he
had breached his duties," was "not due monies from [LEI] due to his breaching of covenants regarding his
employment such as loyalty and honesty," and "breached his duty of loyalty and fiduciary duty to [LEI] thereby
invalidating his rights, if any, to any benefits under his employment with [LEI]."
At trial, Grant testified that on January 22, 1995, he contracted to work for LEI as a project manager, and his
responsibilities included bidding on, obtaining, and managing projects. LEI hired Grant "to go out, get more work
and . . . bring some jobs in, bring some dollars in." Grant was the "primary estimator" for LEI, and he had a lot of
"[f]reedom" in conducting his day-to-day operations. Grant recognized that LEI placed its trust and confidence in
him, and he reported directly to Larry Thyssen, LEI's vice-president, and to Joe Laughlin, LEI's president.
The 1995 written contract provided that Grant was an employee at will with a $1,000 weekly salary and a five
percent "field-profit" bonus. The contract defined "field profit" as "gross sales less 10% of gross sales (as an
administrative charge) less field costs." Grant's field-profit bonus accrued "when payment for the services [was]
actually received by [LEI] from the respective customers," and the field-profit bonus was to "be paid to [Grant] at
the completion of each project upon final payment to [LEI] by the customer."
The contract also provided, under the header, "2. Duties of Employee,"
a. Duties. [Grant] is hired as Sales Representative/Estimator/Project Manager of [LEI] to market and perform
remediation services of [LEI] in the geographical area in which [LEI] currently performs services or in which [LEI]
has made specific plans for doing business in the immediate future. [Grant] agrees to devote all of [Grant's]
time, attention, and energy in the capacities designated above, subject to the direction and control of [LEI], and
shall to the best of [Grant's] ability make every effort to market the services of [LEI] in the territory described
above. [Grant] shall assist in the collection of all sums due from persons to whom the services of [LEI] are
rendered and in the adjustment of any complaints or disputes that may arise in connection with any services
rendered as a result of efforts of [Grant]. [LEI] reserves the right to change at any time in any manner
whatsoever in its sole discretion the geographical area assigned to [Grant].
b. Adherence to Rules. [Grant] at all times during the performance of this Agreement shall strictly adhere to and
obey all the rules and regulations now in effect or as subsequently modified governing the conduct of
employees at [LEI].The 1995 contract further provided, under the header, "3. Property Rights of the Parties,"
d. Noncompetition During Term of Employment. During the term of this Agreement, [Grant] shall not, directly or
indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any other individual or representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of [LEI].
As per the contract, Grant was not to compete against LEI for one year following his "termination" of
employment with LEI.
On May 1, 1999, Grant and Laughlin signed a "Proposed Compensation Package beginning May 1, 1999" (the
"Compensation Package"). (1) By its terms, the Compensation Package lasted for two years and governed
Grant's compensation for new work generated after May 1, 1999, while the 1995 contract's terms governed
Grant's compensation for work generated before May 1, 1999. The Compensation Package also increased
Grant's bonus to thirteen percent of the field profits. Grant further testified that, at the time that he left LEI, he
was managing for LEI the Tom Slick Creek Park ("Park") project, a "remediation" project in San Antonio which
had begun in approximately February of 2001; the Conrad Sauer project, a retention basin project in Houston
which had begun in approximately June of 1999; and the Bush Intercontinental Airport ("Airport") project, a fuel
farm renovation project in Houston which had begun in approximately April of 2000. Approximately one month
before he left LEI, Grant expressed his concern to Thyssen that he had not received enough of the field-profit
bonus from these projects. Thyssen replied that "[t]he jobs will be finished up pretty soon." Thus, still concerned
about obtaining his field-profit bonus, Grant had Tammy Marcontell, LEI's accountant, who worked directly for
Thyssen, provide him with the projects' invoices, which allowed him to calculate the projects' running costs.
Based on these invoices, after he left LEI in September of 2001, Grant calculated that LEI owed him a field-profit
bonus of approximately $130,000 to $140,000 from the Park, Conrad Sauer, and Airport projects.
Grant stated that, before he left LEI on July 26, 2001, Thyssen confronted him about charging concrete on LEI's
credit in order to install a driveway for Jeff and Loretta Fanning (the "Fannings"). Grant informed Thyssen that
the Fannings actually paid LEI approximately $1,026 on July 10, 2001 for the concrete. Grant conceded that, in
order to install the driveway, he used two LEI employees for approximately four hours on one day, took four LEI
employees off the Airport project for approximately six hours on another day, and used LEI's trailer. (2) Grant
also conceded that Thyssen had to tell him to record the cost so that LEI could deduct the cost off of his
field-profit bonus. Also, Grant agreed that, on June 7, 2000, he had used LEI's concrete and three LEI
employees for his personal use at his house, but he was "not sure if" he had to pay LEI back for using the
concrete.
Grant testified that, for many years, he had used LEI's credit to make personal purchases at Home Depot and
did not inform LEI about these charges until Thyssen confronted him. Grant conceded that he still had not
reimbursed LEI for expenses incurred on LEI's credit, totaling approximately $3,000 at Home Depot and
approximately $1,000 or more for his personal use. Grant further conceded that he had routinely used LEI's gas
card for personal expenses, even though the Compensation Package expressly noted that LEI provided Grant
with the card only for "business use." Although LEI had to confront Grant about these various personal
expenses, Grant explained that he did not hide his Home Depot personal purchases from LEI because he
marked these invoices with his "birth date" as a manner of informing LEI of his use of its credit for personal
purposes.
Grant explained that his use of LEI's credit for personal use was not "stealing" because it was a common
practice for LEI employees to do so, and LEI always deducted personal costs from his bonus after he had used
LEI's credit. He noted, for example, that Laughlin had previously used LEI's concrete, approximately seven LEI
employees from one of Grant's projects with the City of Houston, and LEI's equipment to install a carport and
walkway at his house. Also, Laughlin had used seven LEI employees from the Conrad Sauer project for
approximately seven days and LEI's equipment at his daughter's house to remove an old driveway and install a
new driveway in its stead. This new driveway was three times the size of the driveway that Grant had installed
for the Fannings. Grant added that Thyssen had previously used LEI's employees and equipment to install
"piping and stuff" at his bathhouse. Grant explained that, when Laughlin and Thyssen used employees from
Grant's projects, the cost of the employees' labor was charged to Grant's projects, which caused a decrease in
his field-profit bonus due to increased costs on the projects. Grant felt "entitled" to use LEI's labor and materials
for his personal use because he was the "number three man" at LEI. However, on cross-examination, Grant
conceded that no one at LEI had told him that he could use LEI's credit.
Grant also conceded that in late August or September of 2001, while employed by LEI, he helped GBS
Environmental, Inc. ("GBS") bid for a project with Science Applications International Corporation ("SAIC"), an
engineering firm that works with the United States Air Force. In the past, Grant had obtained five projects for LEI
from SAIC. Grant explained, however, that, LEI had broken a water line on a SAIC project in 1998 or 1999.
Laughlin, on behalf of LEI, decided not to fix the problem, and, thus, LEI and SAIC parted on unfriendly terms.
Grant explained that, on his own time, he helped Bryan Wierwille, GBS's president, bid for a project with SAIC
because, after the acrimonious breakup between LEI and SAIC, LEI was not invited to bid for projects with SAIC.
Grant, however, did not provide any further proof to support this assertion. Grant opined that he did not violate
any fiduciary duty to LEI because he solicited the bid for GBS on his own time, LEI did not have any connections
with SAIC, and GBS was not a competitor of LEI.
However, Grant conceded that he had only become familiar with SAIC after working for LEI. Grant also
conceded that, while working on the Park project in San Antonio, he attended a meeting with SAIC on behalf of
GBS and he had used LEI's company car and cellular telephone to communicate with SAIC. Grant, on
cross-examination, also conceded that he did spend at least one-half of an hour bidding on the SAIC contract
for GBS during business hours while he worked for LEI, he represented to SAIC that GBS employed him, and he
permitted GBS to list on its stationery a list of LEI jobs as references for obtaining the bid from SAIC. Grant
agreed that he did not disclose this bid to LEI and LEI had no way of discovering his bid with SAIC. Grant also
agreed that he did not use his utmost good faith and honesty with LEI and he had placed his own interests
above LEI's interests. Grant further agreed that he caused damages to LEI by bidding on the SAIC project for
GBS.
Grant further testified that, on September 17, 2001, because things were going badly for Grant with LEI and he
felt like he was not receiving his field-profit bonuses, Grant walked into Laughlin's office and quit his job. Grant
explained that, while quitting, he asked Laughlin for his pro-rata field-profit bonus, which Laughlin refused to
pay. However, Laughlin did offer Grant $10,000, which Grant refused.
Grant noted that, in 2001, he had approximately $30 million worth of jobs under contract for LEI that he was
managing. Grant could not remember making any bids on behalf of LEI from February of 2000 until he quit his
job, but explained that the economic environment was "slow." Grant also explained that he did "[n]othing" to help
LEI transition to a new project manager for the Park, Conrad Sauer, and Airport projects.
On January 2, 2002, Grant sent a letter to Laughlin, demanding $117,096.84 in unpaid field-profit bonuses for
the unfinished projects. Thyssen responded on January 21, 2002 for LEI, stating that LEI did not owe anything
to Grant because Grant resigned on his "own desire," and Grant owed LEI $13,029 for the labor and materials
that Grant had used for personal matters during his employment with LEI. On cross-examination, Grant
conceded that LEI often paid him a field-profit bonus without a "30% holdback," as called for in his
Compensation Package.
After leaving LEI, Grant went to work for one year at GBS, working on the SAIC project that he had previously
obtained for GBS when he was still employed by LEI. Grant stated that GBS paid him a $17,000 bonus for the
SAIC project.
Thyssen testified that, although he was Grant's direct supervisor, Grant managed the daily costs and
operations for each of his projects. Thyssen trusted Grant to act in the best interest of LEI and felt justified in
placing his trust in Grant because he "had the responsibility to hire and fire and to bind the company." Grant's
responsibility included approving charges for each of his projects. Thus, Thyssen disputed Grant's assertion
that, when he and Laughlin personally used LEI's labor and materials, they charged the costs to Grant's
projects.
Thyssen conceded that, by the end of the June 30, 2001 quarter, LEI would have owed Grant a field-profit
bonus. However, Thyssen stated that Grant was not entitled to his field-profit bonus because he had quit his job
and breached his fiduciary duties to LEI. Thyssen also conceded that LEI had previously deducted some of
Grant's personal purchases from his field-profit bonus and Thyssen was aware that Grant had purchased
concrete for his personal use. However, Thyssen explained that such personal charges were inappropriate.
It was not until after Grant quit his job that Thyssen learned about Grant's use of the concrete and nine LEI
employees to install a driveway for the Fannings over a three-day timespan. (3)
Grant never told Thyssen about the project nor did he reimburse LEI for his use of LEI's equipment and labor.
Thyssen estimated the use of LEI's equipment and labor at $9,500 and noted that LEI would have charged
$14,000 to install the driveway. Thyssen subsequently learned that Grant had also used LEI's employees to
install a driveway at his own house, costing LEI $4,500 for Grant's use of LEI's equipment and labor. LEI would
have customarily charged $6,000 for the installation of Grant's driveway. After Grant quit his job, Thyssen
received a telephone call from a LEI employee who explained that Grant was working on a project for SAIC in
San Antonio. Thinking that the timing was odd, Thyssen reviewed Grant's telephone records with LEI and
discovered that Grant had used LEI's cellular and company telephones, starting in April of 2001, to make
numerous calls to SAIC, presumably on GBS's behalf. Thyssen explained that, had he known of Grant's SAIC
bid on GBS's behalf while Grant worked with LEI, he would have terminated Grant's employment.
Laughlin testified that he felt justified in placing his trust in Grant because Grant had "the authority to spend all
of the money necessary to implement [a] project." However, Grant breached this trust when he was not fair and
honest with LEI. Laughlin explained that SAIC was LEI's customer when Grant bid for a SAIC project on GBS's
behalf. Grant made this bid without LEI's knowledge or permission. Also, Laughlin disputed Grant's testimony
that SAIC no longer accepted bids from LEI. Laughlin explained that, after LEI broke a water line while working
on a project for SAIC, both sides "mutually agreed" to terminate the job because "the plans were not accurate"
and no ill will existed between the parties. Laughlin added that he did not have any knowledge of the driveways
that Grant had installed for the Fannings and himself until after Grant quit working for LEI. Because Grant first
breached his fiduciary duty to LEI in June of 2000 when he used LEI's resources to install a driveway for himself,
Laughlin felt like Grant should pay LEI back every field-profit bonus payment that he had received since June of
2000.
Although Laughlin noted that Grant could use his company vehicle for personal matters, Laughlin explained that
it was "[a]bsolutely" against company policy for LEI's employees to use LEI's credit for their personal use. (4)
Laughlin did concede, however, that he had used LEI's assets to repair his beach house in 1998, for work at his
house, and for work at his daughter's house, but Laughlin explained that he did not bill these costs to Grant's
projects. When asked why "the value of the amount of [Grant's] improper behavior or outright thievery . . . [was]
not important to [him]," Laughlin replied, "It's a matter of indication of his integrity, and we do not know what else
he might have done or might have taken from us."
Laughlin also stated that when Grant quit working for LEI, Grant did not ask Laughlin for any field-profit bonus
payment. Grant surprised Laughlin by asking Laughlin for a field-profit bonus because it was "clear" to Laughlin
that Grant was not entitled to such a bonus. Also, Laughlin denied ever offering money to Grant when he quit
his job in order to settle any possible field-profit bonus which LEI owed to him.Jurisdiction
As a preliminary matter, LEI argues that we lack jurisdiction to consider Grant's appeal because, although Grant
timely filed his notice of appeal from the trial court's original final judgment, the trial court subsequently modified
that judgment, and Grant did not file another notice of appeal after the trial court modified its original final
judgment.
On February 8, 2007, the trial court signed its final judgment. On March 8, 2007, LEI filed a motion to modify the
judgment, asking the trial court to include "inadvertently omitted language" and correct a clerical error which
stated that the trial court signed the final judgment on February 8, 2006, rather than February 8, 2007. On
March 9, 2007, Grant filed his notice of appeal with the trial court. On March 19, 2007, the trial court granted
LEI's motion and modified its judgment. Grant did not file another notice of appeal.
A party perfects an appeal when the party files its notice of appeal with the trial court. Tex. R. App. P. 25.1(a).
Texas Rule of Appellate Procedure 27.3 further provides,
After an order or judgment in a civil case has been appealed, if the trial court modifies the order or judgment, or
if the trial court vacates the order or judgment and replaces it with another appealable order or judgment, the
appellate court must treat the appeal as from the subsequent order or judgment and may treat actions relating
to the appeal of the first order or judgment as relating to the appeal of the subsequent order or judgment.
Tex. R. App. P. 27.3.
Under Rules 25.1(a) and 27.3, Grant provided a timely notice of appeal. See Wohlfahrt v. Holloway, 172 S.W.3d
630, 633-34 (Tex. App.--Houston [14th Dist.] 2005, pet. denied) (holding that appellants properly perfected
appeal when appellants timely filed their notice of appeal after original final judgment, trial court modified final
judgment, and appellants did not file another notice of appeal from modified final judgment). Accordingly, we
hold that we have jurisdiction to consider Grant's appeal.
Sufficiency of the Evidence
In his sixth issue, Grant argues that the evidence is "legally and factually insufficient to sustain the jury's findings
that he breached a fiduciary duty relationship to LEI, committed fraud[,] or engaged in inequitable conduct"
because "the evidence established that [Grant], at all times, acted in accordance with company policy and was
open in dealing with LEI."
We will sustain a legal sufficiency or "no-evidence" challenge if the record shows one of the following: (1) a
complete absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight to the
only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a
scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. City of Keller v. Wilson, 168
S.W.3d 802, 810 (Tex. 2005). In conducting a legal sufficiency review, "a court must consider evidence in the
light most favorable to the verdict, and indulge every reasonable inference that would support it." Id. at 822. If
there is more than a scintilla of evidence to support the challenged finding, we must uphold it. Formosa Plastics
Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). "'[W]hen the evidence offered
to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the
evidence is no more than a scintilla and, in legal effect, is no evidence.'" Ford Motor Co. v. Ridgway, 135
S.W.3d 598, 601 (Tex. 2004) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). However, if
the evidence at trial would enable reasonable and fair-minded people to differ in their conclusions, then jurors
must be allowed to do so. Keller, 168 S.W.3d at 822; see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742,
751 (Tex. 2003). A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the
evidence falls within this zone of reasonable disagreement. Keller, 168 S.W.3d at 822.
In conducting a factual sufficiency review, we must consider, weigh, and examine all of the evidence that
supports or contradicts the jury's determination. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.
1989); London v. London, 192 S.W.3d 6, 14-15 (Tex. App.--Houston [14th Dist.] 2005, pet. denied). We may set
aside the verdict only if the evidence that supports the jury's finding is so contrary to the overwhelming weight of
the evidence as to be clearly wrong or unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Steinberg v.
Comm'n for Lawyer Discipline, 180 S.W.3d 352, 355 (Tex. App.--Dallas 2005, no pet.); Nip v. Checkpoint Sys.,
Inc., 154 S.W.3d 767, 769 (Tex. App.--Houston [14th Dist.] 2004, no pet.).
The term "fiduciary" generally applies "to any person who occupies a position of peculiar confidence towards
another," refers to "integrity and fidelity," and contemplates "fair dealing and good faith." Daniel v. Falcon
Interest Realty Corp., 190 S.W.3d 177, 185 (Tex. App.--Houston [1st Dist.] 2005, no pet.). "'[W]hen a fiduciary
relationship of agency exists between employee and employer, the employee has a duty to act primarily for the
benefit of the employer in matters connected with his agency.'" Id. (quoting Abetter Trucking Co. v. Arizpe, 113
S.W.3d 503, 510 (Tex. App.--Houston [1st Dist.] 2003, no pet.)). He owes his principal the duty not to compete
with the principal on his own account in matters relating to the subject matter of the agency. Id. A fiduciary also
has a duty to deal openly and to fully disclose to his employer information that affects his employer's business.
Id. In sum, an agent who serves as a fiduciary owes his principal the duty to deal fairly with the principal, and an
agent who uses his position to gain a business opportunity belonging to the employer commits an actionable
wrong. Id. Accordingly, in Daniel, we held that a project manager and on-site superintendent for a project who
was responsible for soliciting bids owed his employer a fiduciary duty. Id. at 185-86, 187.
In order to prove fraud, a party must show the following: (1) that a material representation was made; (2) the
representation was false; (3) when the representation was made, the speaker knew it was false or made it
recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the
representation with the intent that the other party should act upon it; (5) the party acted in reliance on the
representation; and (6) the party thereby suffered injury. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex.
2001).
Here, the jury found that Grant breached his fiduciary duties to LEI, committed fraud, and engaged in unlawful
or inequitable conduct. Viewing the evidence in the light most favorable to the verdict, Grant placed his interests
above LEI's interests and he did not exercise utmost good faith. The evidence shows that Grant used LEI's
equipment and labor to build driveways for the Fannings and for himself, used LEI's telephones to make calls on
behalf of a competitor (i.e., GBS), usurped a potential business opportunity for LEI by obtaining a bid for GBS,
used LEI's credit for personal gas and other purchases, and concealed these actions from LEI. Grant has not
reimbursed LEI for these expenses.
As a fiduciary, Grant had the duty to act primarily for the benefit of LEI, not himself, in matters connected with
his employment, and he also had the duty to deal fairly and openly with LEI and to fully disclose to LEI
information affecting LEI's business. See Daniel, 190 S.W.3d at 185. Grant did not abide by his fiduciary duties.
By breaching his fiduciary duties and committing fraud, Grant did not have "clean hands." See Gordin v. Shuler,
704 S.W.2d 403, 408 (Tex. App.--Dallas 1985, writ ref'd n.r.e.). Moreover, from Grant's self-dealing, a rational
jury could have found that Grant committed fraud based on the evidence that he knowingly represented to LEI
that he would act for the benefit of LEI and then knowingly charged personal expenses to LEI, competed against
LEI, and concealed his self-dealing; furthermore, the jury could have found that LEI relied upon Grant's
representations when it hired Grant and paid the bills that included Grant's concealed personal expenses. See
Cass v. Stephens, 156 S.W.3d 38, 65 (Tex. App.--El Paso 2004, pet. denied). Accordingly, we hold that the
evidence is legally sufficient to support the jury's findings that Grant breached his fiduciary duty to LEI,
committed fraud, and engaged in inequitable conduct.
Viewing all the evidence, although Grant testified that he was allowed to incur personal expenses on LEI's credit
and Marcontell, LEI's accountant, testified that it was an "accepted practice" for senior managers to incur
personal expenses on LEI's credit, Laughlin and Thyssen refuted Grant's and Marcontell's testimony that it was
acceptable for Grant to incur personal expenses on LEI's credit. Also, other than the credit card purchases at
Home Depot, Grant concealed personal expenses on LEI's credit. Grant has not reimbursed LEI for his personal
expenses, but he did assert that the expenses were supposed to be deducted from his bonus. Even though
Grant testified that he only obtained a bid for GBS because SAIC was not LEI's competitor, Laughlin and
Thyssen testified that SAIC was still LEI's customer. Accordingly, we hold that the evidence is factually sufficient
to support the jury's findings that Grant breached his fiduciary duty to LEI, committed fraud, and engaged in
inequitable conduct.
We overrule Grant's sixth issue.
Material Breach
In his fourth issue, Grant argues that the evidence is legally and factually insufficient to support the jury's finding
that LEI did not owe Grant a pro-rata field-profit bonus because Grant quit his job and LEI did not terminate his
employment. In his first issue, Grant argues that the trial court erred in not fulfilling its "threshold duty to
determine ambiguity" because "the trial court left open the question of whether the [trial] court would conclude
the contract was ambiguous and whether it would submit a jury issue on ambiguity." In his second and third
issues, Grant also argues that the trial court erred in determining that the Compensation Package was
ambiguous and permitting LEI to introduce parol evidence because "the contract language was not susceptible
to more than one reasonable interpretation."
LEI responds that any error in allowing parol testimony about the contract term was harmless because "even if
the trial court had found in favor of [Grant] on the issue of ambiguity . . . there would still have been more than
sufficient evidence to support [the] jury finding that Grant violated his contract and so was not entitled to any
bonus." Because the jury's findings support a material breach of contract by Grant, we hold that any error in the
admission of parol evidence was harmless.
"It is a fundamental principle of contract law that when one party to a contract commits a material breach of that
contract, the other party is discharged or excused from further performance." Mustang Pipeline Co. v. Driver
Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam) (citing Hernandez v. Gulf Group Lloyds, 875
S.W.2d 691, 692 (Tex. 1994)).
After hearing the evidence, the jury found as follows:
QUESTION 2
Did LEI fail to comply with the AGREEMENT?
Answer: No
QUESTION 6A
Did CARROLL GRANT engage in unlawful or inequitable conduct concerning the issue in dispute in Questions 5
and 6?
Answer: Yes
QUESTION 7
Did CARROLL GRANT fail to comply with the AGREEMENT?
Answer: Yes
QUESTION 8
Was CARROLL GRANT'S failure to comply excused?
Answer: No
QUESTION 10
Did a relationship of trust and confidence exist between LEI and CARROLL GRANT?
Answer: Yes
QUESTION 11
Did CARROLL GRANT comply with his fiduciary duty to LEI?
Answer: No
QUESTION 13
Did CARROLL GRANT commit fraud against LEI?
Answer: Yes
QUESTION 15
Do you find by clear and convincing evidence that the harm to LEI, found by you in your answer to Question 12,
resulted from fraud?
Answer: Yes
QUESTION 17
Do you find by clear and convincing evidence that the harm to LEI, found by you in your answer to Question 14,
resulted from fraud?
Answer: Yes
QUESTION 19
Did CARROLL GRANT, without LEI's consent, intentionally solicit, accept, or agree to accept any benefit from
another person on the agreement or understanding that the benefit would influence his conduct in relation to
the affairs of LEI?
A person acts with INTENT when it is his conscious objective or desire to engage in the conduct or cause the
result.
Answer: Yes
In its final judgment, the trial court ordered Grant to pay LEI $5,040 and court costs and interest.
The Texas Supreme Court has held that, even when a jury question asks if a party "fail[ed] to comply" with a
contract, a court can conclude, as a matter of law, that the party's failure to comply with the contract was also a
material one. Id. at 198-99. The Court, in Mustang Pipeline, used the following factors from the Restatement of
Contracts in determining whether a failure to perform was material:
(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he
will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of the
circumstances including any reasonable assurances; [and]
(e) 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.
Id. (quoting Restatement (Second) of Contracts § 281 (1981)).
Here, the 1995 contract provided that Grant was to "market" LEI's services, devote his "time, attention, and
energy" to his duties as a project manager, adhere to all of LEI's rules, and not "directly or indirectly" compete
against LEI. In addition to finding that Grant failed to comply with the contract, the jury found that Grant
committed fraud. The jury also found that Grant breached his fiduciary duty to LEI and engaged in unlawful
conduct.
Although the 1995 contract provided that Grant was to devote his energy to obtaining bids for LEI and
specifically prohibited him from participating indirectly or directly with a business in competition with LEI,
Grant--on behalf of GBS--bid for a SAIC project. Grant made successful bids for SAIC projects while working for
LEI. LEI did not discover Grant's SAIC bid on behalf of GBS until after Grant had quit his job, and LEI would
have fired Grant if it had known that Grant had submitted a bid on behalf of a competitor to one of LEI's current
customers.
Also, although the 1995 contract called for Grant to adhere to LEI's rules, Grant used LEI's equipment and labor
to install a driveway for himself and for the Fannings. LEI did not discover Grant's use of its equipment and
labor on the driveway for Grant and the Fannings until after Grant had quit his job, and LEI would not have
permitted Grant to engage in such a practice. Moreover, although Grant stated that his use of LEI's credit was a
permissible practice for LEI's senior managers, Grant conceded that LEI confronted him about his personal
charges in order to deduct them against his bonus, and Laughlin and Thyssen stated that such use of LEI's
credit by Grant was not permissible. Laughlin explained that the full extent of damages caused by Grant's
improper behavior was simply unknown.
Accordingly, we hold that, as a matter of law Grant committed a material breach of the contract; therefore, LEI
was discharged from its duties under the contract. See Mustang Pipeline, 134 S.W.3d at 200 (holding that, as
matter of law, party's material breach discharged other party from contractual duties); Graco Robotics, Inc. v.
Oaklawn Bank, 914 S.W.2d 633, 640-41 (Tex. App.--Texarkana 1995, writ dism'd) (concluding that bank
committed material breach by failing to pay plaintiff according to escrow agreement based on jury answer that
bank "fail[ed] to comply" with escrow agreement).
Having so held, we need not directly consider Grant's first through fourth issues (5) because a prior material
breach precludes a party from recovering on the contract. See Geotech Energy Corp. v. Gulf States
Telecomms. & Info. Sys., Inc., 788 S.W.2d 386, 391 (Tex. App.--Houston [14th Dist.] 1990, no writ) (reasoning
that material breach precludes recovery on contract).
We overrule Grant's first through fourth issues.
Quantum Meruit
In his fifth issue, Grant argues that the trial court erred in denying him quantum meruit relief by "asking the jury
to determine whether [Grant's] conduct constituted unclean hands." Grant also asserts that "a finding of
'unclean hands' does not preclude [his] recovery in equity."
A party may equitably recover in quantum meruit for goods or services provided absent a written contract. Vortt
Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990); Tricon Tool & Supply, Inc. v.
Thumann, 226 S.W.3d 494, 502 (Tex. App.--Houston [1st Dist.] 2006, pet. denied). Generally, a party may
recover under quantum meruit only when there is no express contract covering the services or materials
furnished. Vortt, 787 S.W.2d at 944; Tricon, 226 S.W.3d at 502; see Fortune Prod. Co. v. Conoco, Inc., 52
S.W.3d 671, 684 (Tex. 2000) ("Generally speaking, when a valid, express contract covers the subject matter of
the parties' dispute, there can be no recovery under a quasi-contract theory . . . ."). Here, the jury found that
Grant breached the written employment agreement made the basis of his claim. We have concluded that his
breach was material. Because an enforceable written contract existed between the parties that covered Grant's
compensation, the trial court did not err in entering a take-nothing judgment on Grant's quantum meruit claim.
We hold that the trial court did not abuse its discretion in denying Grant a quantum meruit recovery.
We overrule Grant's fifth issue.
Summary Judgment
In his seventh issue, Grant argues that the trial court erred in granting "LEI's 'no-evidence' summary judgment
motions on [Grant's] causes of action for fraud and negligent misrepresentation" because Grant "provided
sufficient evidence to raise a genuine issue of material fact regarding each element of his causes of action for
fraud and negligent misrepresentation."
LEI filed no-evidence summary judgment motions, arguing that it was entitled to summary judgment on Grant's
fraud and negligent misrepresentation claims because Grant proffered no evidence supporting any of the
elements of fraud and negligent misrepresentation. On January 5, 2005, in his response to LEI's no-evidence
summary judgment motions, Grant proffered his deposition testimony and his own affidavit.
On January 5, 2005, in his affidavit, Grant testified that, in order to calculate his bonus based on field profits,
Thyssen provided him with periodic statements, which showed the expenses and profits for the jobs that Grant
had managed. Grant stated,
Because these statements were given to me by [LEI's] [v]ice [p]resident, who had access to all of the company's
books, I relied upon the information provided to me as accurately showing the expenses and profits for the jobs I
managed, and the amount of bonus that was owed to me. . . . In the course of this lawsuit, I have learned that
the information that [LEI] provided to me was not correct, and under-reported the amount of bonus that was
owed to me. [LEI's] expert witness, who is the company's outside accountant, had to correct [LEI's] calculations
regarding the bonus owed to me. [LEI's] own expert says that the company still owes me a bonus I earned but
which has not been paid to me.
Grant also asserted in his response that he satisfied the elements of negligent misrepresentation.
On January 13, 2005, LEI filed a "Reply to [Grant's] Responses to [LEI's] Motions for Summary Judgment." LEI
asserted that Grant did not point to any specific intent to defraud. LEI also attached an excerpt from Grant's
deposition, during which the following exchange occurred:
[LEI]: Okay. So, my question to you is, is there anything specific, examples of something that Joe Laughlin said
or Larry Thyssen said that was untrue that you relied upon to your detriment when y'all were working on
calculating up the bonuses that were going to be due per this Exhibit A[,] [the Compensation Package,] while
you were employed there?
[Grant]: No. Let's just say no on this one here. . . .
[LEI]: Okay. But you're not alleging that they[,] [Thyssen or Laughlin,] negligently misrepresented any of the
contents of this[,] what costs go where on a particular job?
[Grant]: I--I can't answer that question. I mean--
[LEI]: Well, let me just ask you. I mean, do you know what "reckless" means?
[Grant]: No. Why don't you tell me what it means.
[LEI]: How about like carelessness? That's kind of close. Maybe it's not quite as--
[Grant]: Carelessness?
[LEI]: Reckless might be worse than careless but more or less the same.
[Grant]: Right.
[LEI]: Do you know of any specific acts of outright carelessness by [Marcontell] or [Laughlin] or [Thyssen] in
regards to the way they treated the accounting or the allocation of job costs?
[Grant]: I haven't seen the--the--the breakdown that [LEI] has sent to our office or sent to [my attorney].
[LEI]: Okay. Well, I'm not really concerned about reviewing stuff that we've produced. I'm just asking, you know,
your firsthand knowledge working there for eight years.
[Grant]: Uh-huh.
[LEI]: Did you feel that there was an ongoing pattern or ongoing culture at [LEI] to where they were reckless and
careless and would apply invoices incorrectly to wrong jobs and just let the chips fall where they may? They
didn't give a crud?
[Grant]: Oh, no, no, no. [Thyssen] was very astute about costs.
LEI also asserted that Grant presented no evidence of negligent misrepresentation.
To prevail on a no-evidence summary judgment motion, a movant must allege that there is no evidence of an
essential element of the adverse party's cause of action or affirmative defense. Tex. R. Civ. P. 166a(i); Fort
Worth Osteopathic Hosp., Inc. v. Reese, 148 S.W.3d 94, 99 (Tex. 2004). We review a no-evidence summary
judgment under the same legal sufficiency standard used to review a directed verdict. Gen. Mills Rests., Inc. v.
Tex. Wings, Inc., 12 S.W.3d 827, 832-33 (Tex. App.--Dallas 2000, no pet.). Although the non-moving party is
not required to marshal its proof, it must present evidence that raises a genuine issue of material fact on each
of the challenged elements. Tex. R. Civ. P. 166a(i); Ridgway, 135 S.W.3d at 600. A no-evidence summary
judgment motion may not be properly granted if the non-movant brings forth more than a scintilla of evidence to
raise a genuine issue of material fact on the challenged elements. Ridgway, 135 S.W.3d at 600. More than a
scintilla of evidence exists when the evidence "rises to a level that would enable reasonable and fair-minded
people to differ in their conclusions." Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997).
When reviewing a no-evidence summary judgment motion, we assume that all evidence favorable to the
nonmovant is true and indulge every reasonable inference and resolve all doubts in favor of the nonmovant.
Spradlin v. State, 100 S.W.3d 372, 377 (Tex. App.--Houston [1st Dist.] 2002, no pet.). Because the trial court's
order granting LEI's no-evidence summary judgment motion does not specify the grounds upon which the trial
court relied, we must affirm the summary judgment if any of the grounds in the summary judgment motion are
meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872-73 (Tex. 2000).
Conclusory statements in an affidavit are not proper summary judgment evidence. See Tex. R. Civ. P.
166a(f) (supporting affidavit must set forth such facts as would be admissible in evidence); see also Ryland
Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per curiam). A conclusory statement is one that
does not provide the underlying facts to support the conclusion. 1001 McKinney Ltd. v. Credit Suisse
First Boston Mortgage Capital, 192 S.W.3d 20, 27 (Tex. App.--Houston [14th Dist.] 2005, pet. denied). To serve
as competent summary judgment proof under Texas Rule of Civil Procedure 166a(c), an affidavit of an
interested party must be "clear, positive, direct, credible, free from contradiction, and susceptible of being
readily controverted." Haynes v. City of Beaumont, 35 S.W.3d 166, 178 (Tex. App.--Texarkana 2000, no pet.);
see Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997). An affidavit that makes self-serving,
conclusory statements without any underlying factual detail cannot support a summary judgment. Haynes, 35
S.W.3d at 178. Finally, an objection that an affidavit is conclusory is an objection to substance that may be
raised for the first time on appeal. Id.
As noted above, a fraud cause of action has six elements: (1) that a material representation was made, (2)
the representation was false, (3) when the representation was made, the speaker knew it was false or made it
recklessly without any knowledge of the truth and as a positive assertion, (4) the speaker made the
representation with the intent that the other party should act upon it, (5) the party acted in reliance on the
representation, and (6) the party thereby suffered injury. FirstMerit Bank, 52 S.W.3d at 758.
A negligent misrepresentation cause of action has four elements: (1) the representation is made by a
defendant in the course of his business, or in a transaction in which he has a pecuniary interest, (2) the
defendant supplies "false information" for the guidance of others in their business, (3) the defendant did not
exercise reasonable care or competence in obtaining or communicating the information, and (4) the plaintiff
suffers pecuniary loss by justifiably relying on the representation. Henry Schein, Inc. v. Stromboe, 102 S.W.3d
675, 686 n.24 (Tex. 2002).
Viewing Grant's summary judgment evidence in the light most favorable to Grant, Grant offers no evidence of
LEI's intent to falsify the statements which LEI provided Grant in order to prevent Grant from obtaining his
bonus. Also, Grant offers no evidence that LEI did not exercise reasonable care or competence when it
provided Grant with the periodic statements or that Grant justifiably relied on these statements. In his affidavit,
Grant made the conclusory statement that he relied on LEI. However, in his deposition testimony, Grant testified
that he did not rely upon anything that Laughlin or Thyssen provided him when calculating his bonuses from the
1999 contract. Grant also testified that LEI did not carelessly, knowingly, or recklessly falsify the periodic
statements which they provided him with in order to calculate his bonus. See Farroux v. Denny's Rests., Inc.,
962 S.W.2d 108, 111 (Tex. App.--Houston [1st Dist.] 1997, no pet.) (reasoning that, when only affirmative
evidence of claim is subsequent affidavit which contradicts earlier deposition testimony without explanation for
change of testimony, summary judgment is proper because affidavit "presents merely a 'sham' fact issue").
Accordingly, we hold that the trial court did not err in granting LEI's no-evidence summary judgment motions on
Grant's claims for fraud and negligent misrepresentation.
We overrule Grant's seventh issue.
Conclusion
We affirm the judgment of the trial court.
Terry Jennings
Justice
Panel consists of Chief Justice Radack and Justices Jennings and Bland.
1.
Both parties agreed that the 1995 contract and the Compensation Package must be read together and
construed as a single contract. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.
2000) (recognizing that courts may read separate documents that pertain to same transaction as one contract).
Both parties also agreed that, although the Compensation Package, which was written to last for two years,
expired on May 1, 2001, the Compensation Package's terms continued to govern Grant's compensation. See
Sieber & Calicutt, Inc. v. La Gloria Oil & Gas Co., 66 S.W.3d 340, 347 (Tex. App.--Tyler 2001, pet. denied)
(reasoning that when parties implicitly waive exact date of performance, the law will imply reasonable time for
duration of contract, and that extension of one term of contract extends all of its provisions).
2.
Kent Ducote, an employee for LEI, testified that Grant "had got something," i.e., side payments, for performing
his side jobs.
3.
Admire Kadenge, an employee for LEI, testified that he told Thyssen about how Grant, in July of 2001, had him
install a driveway for someone.
4. Tammy Marcontell, LEI's accountant, testified that LEI had an "accepted practice" of allowing senior
managers to incur personal expenses on LEI's credit, which the company then charged back to the senior
manager.
5.
In his first through fourth issues Grant contended that the evidence was legally and factually insufficient to
support the jury's finding that LEI did not owe Grant a pro-rata field-profit bonus because Grant quit his job, the
trial court erred in not performing its "threshold duty" to determine ambiguity "one way or another" before
submitting a question on ambiguity to the jury, the trial court erred in determining that the Compensation
Package was ambiguous, and the trial court erred in allowing LEI to introduce parol evidence.