![](3D"http://www.1stcoa.courts.state.tx.us/opinions/070227f/seal.gif"=20)
Opinion issued =
March 26,=20
2009
We deny=20
appellant's motion for rehearing. See Tex. R. App. P. =
49.3. We=20
withdraw our December 18, 2008 opinion, substitute this opinion in =
its=20
place, and vacate our December 18, 2008=20
judgment. In his=20
fourth amended petition, Grant alleged that LEI failed to pay him =
a=20
pro-rata field-profit bonus to which he was entitled after he quit =
working=20
for LEI. He asserted claims for breach of contract, quantum =
meruit, fraud,=20
negligent misrepresentation, and equitable estoppel. In its=20
ninth verified amended answer, LEI alleged that Grant was "not due =
any=20
bonus due to the fact [that] he had breached his duties," was "not =
due=20
monies from [LEI] due to his breaching of covenants regarding his=20
employment such as loyalty and honesty," and "breached his duty of =
loyalty=20
and fiduciary duty to [LEI] thereby invalidating his rights, if =
any, to=20
any benefits under his employment with [LEI]." At trial,=20
Grant testified that on January 22, 1995, he contracted to work =
for LEI as=20
a project manager, and his responsibilities included bidding on,=20
obtaining, and managing projects. LEI hired Grant "to go out, get =
more=20
work and . . . bring some jobs in, bring some dollars in." Grant =
was the=20
"primary estimator" for LEI, and he had a lot of "[f]reedom" in =
conducting=20
his day-to-day operations. Grant recognized that LEI placed its =
trust and=20
confidence in him, and he reported directly to Larry Thyssen, =
LEI's=20
vice-president, and to Joe Laughlin, LEI's president. The 1995=20
written contract provided that Grant was an employee at will with =
a $1,000=20
weekly salary and a five percent "field-profit" bonus. The =
contract=20
defined "field profit" as "gross sales less 10% of gross sales (as =
an=20
administrative charge) less field costs." Grant's field-profit =
bonus=20
accrued "when payment for the services [was] actually received by =
[LEI]=20
from the respective customers," and the field-profit bonus was to =
"be paid=20
to [Grant] at the completion of each project upon final payment to =
[LEI]=20
by the customer." The=20
contract also provided, under the header, "2. a. b. d. As per the=20
contract, Grant was not to compete against LEI for one year =
following his=20
"termination" of employment with LEI. On May 1,=20
1999, Grant and Laughlin signed a "Proposed Compensation Package =
beginning=20
May 1, 1999" (the "Compensation Package"). Grant stated that, =
before he=20
left LEI on July 26, 2001, Thyssen confronted him about charging =
concrete=20
on LEI's credit in order to install a driveway for Jeff and =
Loretta=20
Fanning (the "Fannings"). Grant informed Thyssen that the Fannings =
actually paid LEI approximately $1,026 on July 10, 2001 for the =
concrete.=20
Grant conceded that, in order to install the driveway, he used two =
LEI=20
employees for approximately four hours on one day, took four LEI =
employees=20
off the Airport project for approximately six hours on another =
day, and=20
used LEI's trailer. Grant testified =
that, for=20
many years, he had used LEI's credit to make personal purchases at =
Home=20
Depot and did not inform LEI about these charges until Thyssen =
confronted=20
him. Grant conceded that he still had not reimbursed LEI for =
expenses=20
incurred on LEI's credit, totaling approximately $3,000 at Home =
Depot and=20
approximately $1,000 or more for his personal use. Grant further =
conceded=20
that he had routinely used LEI's gas card for personal expenses, =
even=20
though the Compensation Package expressly noted that LEI provided =
Grant=20
with the card only for "business use." Although LEI had to =
confront Grant=20
about these various personal expenses, Grant explained that he did =
not=20
hide his Home Depot personal purchases from LEI because he marked =
these=20
invoices with his "birth date" as a manner of informing LEI of his =
use of=20
its credit for personal purposes. Grant explained =
that his use=20
of LEI's credit for personal use was not "stealing" because it was =
a=20
common practice for LEI employees to do so, and LEI always =
deducted=20
personal costs from his bonus after he had used LEI's credit. He =
noted,=20
for example, that Laughlin had previously used LEI's concrete,=20
approximately seven LEI employees from one of Grant's projects =
with the=20
City of Houston, and LEI's equipment to install a carport and =
walkway at=20
his house. Also, Laughlin had used seven LEI employees from the =
Conrad=20
Sauer project for approximately seven days and LEI's equipment at =
his=20
daughter's house to remove an old driveway and install a new =
driveway in=20
its stead. This new driveway was three times the size of the =
driveway that=20
Grant had installed for the Fannings. Grant added that Thyssen had =
previously used LEI's employees and equipment to install "piping =
and=20
stuff" at his bathhouse. Grant explained that, when Laughlin and =
Thyssen=20
used employees from Grant's projects, the cost of the employees' =
labor was=20
charged to Grant's projects, which caused a decrease in his =
field-profit=20
bonus due to increased costs on the projects. Grant felt =
"entitled" to use=20
LEI's labor and materials for his personal use because he was the =
"number=20
three man" at LEI. However, on cross-examination, Grant conceded =
that no=20
one at LEI had told him that he could use LEI's credit. =
Grant also =
conceded that in=20
late August or September of 2001, while employed by LEI, he helped =
GBS=20
Environmental, Inc. ("GBS") bid for a project with Science =
Applications=20
International Corporation ("SAIC"), an engineering firm that works =
with=20
the United States Air Force. In the past, Grant had obtained five =
projects=20
for LEI from SAIC. Grant explained, however, that LEI had broken a =
water=20
line on a SAIC project in 1998 or 1999. Laughlin, on behalf of =
LEI,=20
decided not to fix the problem, and, thus, LEI and SAIC parted on=20
unfriendly terms. Grant explained =
that, on his=20
own time, he helped Bryan Wierwille, GBS's president, bid for a =
project=20
with SAIC because, after the acrimonious breakup between LEI and =
SAIC, LEI=20
was not invited to bid for projects with SAIC. Grant, however, did =
not=20
provide any further proof to support this assertion. Grant opined =
that he=20
did not violate any fiduciary duty to LEI because he had solicited =
the bid=20
for GBS on his own time, LEI did not have any connections with =
SAIC, and=20
GBS was not a competitor of LEI. However, Grant =
conceded that=20
he had only become familiar with SAIC after working for LEI. Grant =
also=20
conceded that, while working on the Park project in San Antonio, =
he had=20
attended a meeting with SAIC on behalf of GBS and he had used =
LEI's=20
company car and cellular telephone to communicate with SAIC. =
Grant, on=20
cross-examination, also conceded that he did spend at least =
one-half of an=20
hour bidding on the SAIC contract for GBS during business hours =
while he=20
worked for LEI, he represented to SAIC that GBS employed him, and =
he=20
permitted GBS to list LEI jobs on its stationery as references for =
obtaining the bid from SAIC. Grant agreed that he did not disclose =
this=20
bid to LEI and LEI had no way of discovering his bid with SAIC. =
Grant also=20
agreed that he did not use his utmost good faith and honesty with =
LEI and=20
he had placed his own interests above LEI's interests. Grant =
further=20
agreed that he had caused damages to LEI by bidding on the SAIC =
project=20
for GBS. Grant further =
testified=20
that, on September 17, 2001, because things were going badly for =
Grant=20
with LEI and he felt like he was not receiving his field-profit =
bonuses,=20
Grant walked into Laughlin's office and quit his job. Grant =
explained=20
that, while quitting, he asked Laughlin for his pro-rata =
field-profit=20
bonus, which Laughlin refused to pay. However, Laughlin did offer =
Grant=20
$10,000, which Grant refused. Grant noted that, =
in 2001,=20
he had approximately $30 million worth of jobs under contract for =
LEI that=20
he was managing. Grant could not remember making any bids on =
behalf of LEI=20
from February of 2000 until he quit his job, but he explained that =
the=20
economic environment was "slow." Grant also explained that he did=20
"[n]othing" to help LEI transition to a new project manager for =
the Park,=20
Conrad Sauer, and Airport projects. On January 2, =
2002, Grant=20
sent a letter to Laughlin, demanding $117,096.84 in unpaid =
field-profit=20
bonuses for the unfinished projects. Thyssen responded on January =
21, 2002=20
for LEI, stating that LEI did not owe anything to Grant because =
Grant=20
resigned on his "own desire," and Grant owed LEI $13,029 for the =
labor and=20
materials that Grant had used for personal matters during his =
employment=20
with LEI. On cross-examination, Grant conceded that LEI often paid =
him a=20
field-profit bonus without a "30% holdback," as called for in his=20
Compensation Package. After leaving LEI, =
Grant=20
went to work for one year at GBS, working on the SAIC project that =
he had=20
previously obtained for GBS when he was still employed by LEI. =
Grant=20
stated that GBS paid him a $17,000 bonus for the SAIC project. =
Thyssen testified =
that,=20
although he was Grant's direct supervisor, Grant managed the daily =
costs=20
and operations for each of his projects. Thyssen trusted Grant to =
act in=20
the best interest of LEI and felt justified in placing his trust =
in Grant=20
because he "had the responsibility to hire and fire and to bind =
the=20
company." Grant's responsibility included approving charges for =
each of=20
his projects. Thus, Thyssen disputed Grant's assertion that, when =
he and=20
Laughlin personally used LEI's labor and materials, they charged =
the costs=20
to Grant's projects. Thyssen conceded =
that, by=20
the end of the June 30, 2001 quarter, LEI would have owed Grant a=20
field-profit bonus. However, Thyssen stated that Grant was not =
entitled to=20
his field-profit bonus because he had quit his job and breached =
his=20
fiduciary duties to LEI. Thyssen also conceded that LEI had =
previously=20
deducted some of Grant's personal purchases from his field-profit =
bonus,=20
and Thyssen was aware that Grant had purchased concrete for his =
personal=20
use. However, Thyssen explained that such personal charges were=20
inappropriate. It was not until =
after Grant=20
had quit his job that Thyssen learned about Grant's use of the =
concrete=20
and nine LEI employees to install a driveway for the Fannings over =
a=20
three-day timespan. Grant never told =
Thyssen=20
about the project nor did he reimburse LEI for his use of LEI's =
equipment=20
and labor. Thyssen estimated the use of LEI's equipment and labor =
at=20
$9,500 and noted that LEI would have charged $14,000 to install =
the=20
driveway. Thyssen subsequently learned that Grant had also used =
LEI's=20
employees to install a driveway at his own house, costing LEI =
$4,500 for=20
Grant's use of LEI's equipment and labor. LEI would have =
customarily=20
charged $6,000 for the installation of Grant's driveway. After =
Grant quit=20
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.=20
Thinking that the timing was odd, Thyssen reviewed Grant's =
telephone=20
records with LEI and discovered that Grant had used LEI's cellular =
and=20
company telephones, starting in April of 2001, to make numerous =
calls to=20
SAIC, presumably on GBS's behalf. Thyssen explained that, had he =
known of=20
Grant's SAIC bid on GBS's behalf while Grant worked with LEI, he =
would=20
have terminated Grant's employment. Laughlin testified =
that he=20
felt justified in placing his trust in Grant because Grant had =
"the=20
authority to spend all of the money necessary to implement [a] =
project."=20
However, Grant breached this trust when he was not fair and honest =
with=20
LEI. Laughlin explained that SAIC was LEI's customer when Grant =
bid for a=20
SAIC project on GBS's behalf. Grant made this bid without LEI's =
knowledge=20
or permission. Also, Laughlin disputed Grant's testimony that SAIC =
no=20
longer accepted bids from LEI. Laughlin explained that, after LEI =
broke a=20
water line while working on a project for SAIC, both sides =
"mutually=20
agreed" to terminate the job because "the plans were not accurate" =
and no=20
ill will existed between the parties. Laughlin added that he did =
not have=20
any knowledge of the driveways that Grant had installed for the =
Fannings=20
and himself until after Grant quit working for LEI. Because Grant =
first=20
breached his fiduciary duty to LEI in June of 2000 when he used =
LEI's=20
resources to install a driveway for himself, Laughlin felt like =
Grant=20
should pay LEI back every field-profit bonus payment that he had =
received=20
since June of 2000. Although Laughlin =
noted that=20
Grant could use his company vehicle for personal matters, Laughlin =
explained that it was "[a]bsolutely" against company policy for =
LEI's=20
employees to use LEI's credit for their personal use. Laughlin also =
stated that=20
when Grant quit working for LEI, Grant did not ask Laughlin for =
any=20
field-profit bonus payment. Grant surprised Laughlin by asking =
Laughlin=20
for a field-profit bonus because it was "clear" to Laughlin that =
Grant was=20
not entitled to such a bonus. Also, Laughlin denied ever offering =
money to=20
Grant when he quit his job in order to settle any possible =
field-profit=20
bonus that LEI owed to =
him.Jurisdiction As a preliminary =
matter, LEI=20
argues that we lack jurisdiction to consider Grant's appeal =
because,=20
although Grant timely filed his notice of appeal from the trial =
court's=20
original final judgment, the trial court subsequently modified =
that=20
judgment, and Grant did not file another notice of appeal after =
the trial=20
court modified its original final judgment. On February 8, =
2007, the=20
trial court signed its final judgment. On March 8, 2007, LEI filed =
a=20
motion to modify the judgment, asking the trial court to include=20
"inadvertently omitted language" and correct a clerical error =
which stated=20
that the trial court signed the final judgment on February 8, =
2006, rather=20
than February 8, 2007. On March 9, 2007, Grant filed his notice of =
appeal=20
with the trial court. On March 19, 2007, the trial court granted =
LEI's=20
motion and modified its judgment. Grant did not file another =
notice of=20
appeal. A party perfects =
an appeal=20
when the party files its notice of appeal with the trial court. =
Tex. R.=20
App. P. 25.1(a). Texas Rule of Appellate Procedure 27.3 further =
provides,=20
After an order or =
judgment=20
in a civil case has been appealed, if the trial court modifies the =
order=20
or judgment, or if the trial court vacates the order or judgment =
and=20
replaces it with another appealable order or judgment, the =
appellate court=20
must treat the appeal as from the subsequent order or judgment and =
may=20
treat actions relating to the appeal of the first order or =
judgment as=20
relating to the appeal of the subsequent order or =
judgment. Tex. R. App. P. =
27.3.=20
Under Rules =
25.1(a) and=20
27.3, Grant provided a timely notice of appeal. See Wohlfahrt =
v.=20
Holloway, 172 S.W.3d 630, 633-34 (Tex. App.--Houston [14th =
Dist.]=20
2005, pet. denied) (holding that appellants properly perfected =
appeal when=20
appellants timely filed their notice of appeal after original =
final=20
judgment, trial court modified final judgment, and appellants did =
not file=20
another notice of appeal from modified final judgment). =
Accordingly, we=20
hold that we have jurisdiction to consider Grant's =
appeal. In his sixth =
issue, Grant=20
argues that the evidence is "legally and factually insufficient to =
sustain=20
the jury's findings that he breached a fiduciary duty relationship =
to LEI,=20
committed fraud[,] or engaged in inequitable conduct" because "the =
evidence established that [Grant], at all times, acted in =
accordance with=20
company policy and was open in dealing with LEI." We will sustain a =
legal=20
sufficiency or "no-evidence" challenge if the record shows one of =
the=20
following: (1) a complete absence of evidence of a vital fact, (2) =
rules=20
of law or evidence bar the court from giving weight to the only =
evidence=20
offered to prove a vital fact, (3) the evidence offered to prove a =
vital=20
fact is no more than a scintilla, or (4) the evidence establishes=20
conclusively the opposite of the vital fact. City of Keller v. =
Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In conducting a =
legal=20
sufficiency review, a "court must consider evidence in the light =
most=20
favorable to the verdict, and indulge every reasonable inference =
that=20
would support it." Id. at 822. If there is more than a =
scintilla=20
of evidence to support the challenged finding, we must uphold it.=20
Formosa Plastics Corp. USA v. Presidio Eng'rs & =
Contractors,=20
Inc., 960 S.W.2d 41, 48 (Tex. 1998). "'[W]hen the evidence =
offered to=20
prove a vital fact is so weak as to do no more than create a mere =
surmise=20
or suspicion of its existence, the evidence is no more than a =
scintilla=20
and, in legal effect, is no evidence.'" Ford Motor Co. v.=20
Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (quoting Kindred =
v.=20
Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). However, if =
the=20
evidence at trial would enable reasonable and fair-minded people =
to differ=20
in their conclusions, then jurors must be allowed to do so.=20
Keller, 168 S.W.3d at 822; see also King Ranch, Inc. =
v.=20
Chapman, 118 S.W.3d 742, 751 (Tex. 2003). "A reviewing court =
cannot=20
substitute its judgment for that of the trier-of-fact, so long as =
the=20
evidence falls within this zone of reasonable disagreement."=20
Keller, 168 S.W.3d at 822. In conducting a =
factual=20
sufficiency review, we must consider, weigh, and examine all of =
the=20
evidence that supports or contradicts the jury's determination.=20
Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 =
(Tex.=20
1989); London v. London, 192 S.W.3d 6, 14-15 (Tex. =
App.--Houston=20
[14th Dist.] 2005, pet. denied). We may set aside the verdict only =
if the=20
evidence that supports the jury's finding is so contrary to the=20
overwhelming weight of the evidence as to be clearly wrong or =
unjust.=20
Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); =
Steinberg v.=20
Comm'n for Lawyer Discipline, 180 S.W.3d 352, 355 (Tex. =
App.--Dallas=20
2005, no pet.); Nip v. Checkpoint Sys., Inc., 154 S.W.3d =
767, 769=20
(Tex. App.--Houston [14th Dist.] 2004, no pet.). The term =
"fiduciary"=20
generally applies "to any person who occupies a position of =
peculiar=20
confidence towards another," refers to "integrity and fidelity," =
and=20
contemplates "fair dealing and good faith." Daniel v. Falcon =
Interest=20
Realty Corp., 190 S.W.3d 177, 185 (Tex. App.--Houston [1st =
Dist.]=20
2005, no pet.). "'[W]hen a fiduciary relationship of agency exists =
between=20
employee and employer, the employee has a duty to act primarily =
for the=20
benefit of the employer in matters connected with his agency.'" =
Id.=20
(quoting Abetter Trucking Co. v. Arizpe, 113 S.W.3d =
503, 510=20
(Tex. App.--Houston [1st Dist.] 2003, no pet.)). He owes his =
principal the=20
duty not to compete with the principal on his own account in =
matters=20
relating to the subject matter of the agency. Id. A =
fiduciary=20
also has a duty to deal openly and to fully disclose to his =
employer=20
information that affects his employer's business. Id. In =
sum, an=20
agent who serves as a fiduciary owes his principal the duty to =
deal fairly=20
with the principal, and an agent who uses his position to gain a =
business=20
opportunity belonging to the employer commits an actionable wrong. =
Id.=20
Accordingly, in Daniel, we held that a project =
manager and=20
on-site superintendent for a project who was responsible for =
soliciting=20
bids owed his employer a fiduciary duty. Id. at=20
185-87. In order to prove =
fraud, a=20
party must show the following: (1) that a material representation =
was=20
made; (2) the representation was false; (3) when the =
representation was=20
made, the speaker knew it was false or made it recklessly without =
any=20
knowledge of the truth and as a positive assertion; (4) the =
speaker made=20
the representation with the intent that the other party should act =
upon=20
it; (5) the party acted in reliance on the representation; and (6) =
the=20
party thereby suffered injury. In re FirstMerit Bank, =
N.A., 52=20
S.W.3d 749, 758 (Tex. 2001). Here, the jury =
found that=20
Grant breached his fiduciary duties to LEI, committed fraud, and =
engaged=20
in unlawful or inequitable conduct. Viewing the evidence in the =
light most=20
favorable to the verdict, Grant placed his interests above LEI's=20
interests, and he did not exercise utmost good faith. The evidence =
shows=20
that Grant used LEI's equipment and labor to build driveways for =
the=20
Fannings and for himself, used LEI's telephones to make calls on =
behalf of=20
a competitor (i.e., GBS), usurped a potential business opportunity =
for LEI=20
by obtaining a bid for GBS, used LEI's credit for personal gas and =
other=20
purchases, and concealed these actions from LEI. Grant has not =
reimbursed=20
LEI for these expenses. As a fiduciary, =
Grant had=20
the duty to act primarily for the benefit of LEI, not himself, in =
matters=20
connected with his employment, and he also had the duty to deal =
fairly and=20
openly with LEI and to fully disclose to LEI information affecting =
LEI's=20
business. See Daniel, 190 S.W.3d at 185. Grant did not =
abide by=20
his fiduciary duties. By breaching his fiduciary duties and =
committing=20
fraud, Grant did not have "clean hands." See Gordin =
v.=20
Shuler, 704 S.W.2d 403, 408 (Tex. App.--Dallas 1985, writ =
ref'd=20
n.r.e.). Moreover, from Grant's self-dealing, a rational jury =
could have=20
found that Grant committed fraud based on the evidence that he =
knowingly=20
represented to LEI that he would act for the benefit of LEI and =
then=20
knowingly charged personal expenses to LEI, competed against LEI, =
and=20
concealed his self-dealing; furthermore, the jury could have found =
that=20
LEI relied upon Grant's representations when it hired Grant and =
paid the=20
bills that included Grant's concealed personal expenses. See =
Cass v.=20
Stephens, 156 S.W.3d 38, 65 (Tex. App.--El Paso 2004, pet. =
denied).=20
Accordingly, we hold that the evidence is legally sufficient to =
support=20
the jury's findings that Grant breached his fiduciary duty to LEI, =
committed fraud, and engaged in inequitable conduct. Viewing all the =
evidence,=20
Grant did testify that he was allowed to incur personal expenses =
on LEI's=20
credit and Marcontell, LEI's accountant, testified that it was an=20
"accepted practice" for senior managers to incur personal expenses =
on=20
LEI's credit. However, Laughlin and Thyssen refuted Grant's and=20
Marcontell's testimony that it was acceptable for Grant to incur =
personal=20
expenses on LEI's credit. Also, other than the credit card =
purchases at=20
Home Depot, Grant concealed personal expenses on LEI's credit. =
Grant has=20
not reimbursed LEI for his personal expenses, but he did assert =
that the=20
expenses were supposed to be deducted from his bonus. Even though =
Grant=20
testified that he only obtained a bid for GBS because SAIC was not =
LEI's=20
competitor, Laughlin and Thyssen testified that SAIC was still =
LEI's=20
customer. Accordingly, we hold that the evidence is factually =
sufficient=20
to support the jury's findings that Grant breached his fiduciary =
duty to=20
LEI, committed fraud, and engaged in inequitable =
conduct. We overrule =
Grant's sixth=20
issue. In his fourth =
issue, Grant=20
argues that the evidence is legally and factually insufficient to =
support=20
the jury's finding that LEI did not owe Grant a pro-rata =
field-profit=20
bonus because Grant quit his job and LEI did not terminate his =
employment.=20
In his first issue, Grant argues that the trial court erred in not =
fulfilling its "threshold duty to determine ambiguity" because =
"the trial=20
court left open the question of whether the [trial] court would =
conclude=20
the contract was ambiguous and whether it would submit a jury =
issue on=20
ambiguity." In his second and third issues, Grant also argues that =
the=20
trial court erred in determining that the Compensation Package was =
ambiguous and permitting LEI to introduce parol evidence because =
"the=20
contract language was not susceptible to more than one reasonable=20
interpretation." LEI responds that =
any error=20
in allowing parol testimony about the contract term was harmless =
because=20
"even if the trial court had found in favor of [Grant] on the =
issue of=20
ambiguity . . . there would still have been more than sufficient =
evidence=20
to support [the] jury finding that Grant violated his contract and =
so was=20
not entitled to any bonus." Because the jury's findings support a =
material=20
breach of contract by Grant, we hold that any error in the =
admission of=20
parol evidence was harmless. "It is a =
fundamental=20
principle of contract law that when one party to a contract =
commits a=20
material breach of that contract, the other party is discharged or =
excused=20
from further performance." Mustang Pipeline Co. v. Driver =
Pipeline=20
Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam) (citing=20
Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692 (Tex. =
1994)). After hearing the =
evidence,=20
the jury found as follows: QUESTION=20
2 Did LEI fail to =
comply with=20
the AGREEMENT? Answer: =
No QUESTION=20
6A Did CARROLL GRANT =
engage in=20
unlawful or inequitable conduct concerning the issue in dispute in =
Questions 5 and 6? Answer: Yes =
QUESTION=20
7 Did CARROLL GRANT =
fail to=20
comply with the AGREEMENT?
Answer: =
Yes QUESTION=20
8 Was CARROLL =
GRANT'S failure=20
to comply excused? Answer: =
No QUESTION=20
10 Did a relationship =
of trust=20
and confidence exist between LEI and CARROLL GRANT? Answer: =
Yes QUESTION=20
11 Did CARROLL GRANT =
comply=20
with his fiduciary duty to LEI? Answer: =
No QUESTION=20
13 Did CARROLL GRANT =
commit=20
fraud against LEI? Answer: =
Yes QUESTION=20
15 Do you find by =
clear and=20
convincing evidence that the harm to LEI, found by you in your =
answer to=20
Question 12, resulted from fraud? Answer: =
Yes QUESTION=20
17
Do you find by =
clear and=20
convincing evidence that the harm to LEI, found by you in your =
answer to=20
Question 14, resulted from fraud?
Answer: Yes =
QUESTION=20
19
Did CARROLL GRANT, =
without=20
LEI's consent, intentionally solicit, accept, or agree to accept =
any=20
benefit from another person on the agreement or understanding that =
the=20
benefit would influence his conduct in relation to the affairs of=20
LEI? A person acts with =
INTENT=20
when it is his conscious objective or desire to engage in the =
conduct or=20
cause the result.
Answer: =
Yes In its final =
judgment, the=20
trial court ordered Grant to pay LEI $5,040 and court costs and =
interest.=20
The Texas Supreme =
Court has=20
held that, even when a jury question asks if a party "fail[ed] to =
comply"=20
with a contract, a court can conclude, as a matter of law, that =
the=20
party's failure to comply with the contract was also a material =
one.=20
Id. at 198-99. The Court, in Mustang Pipeline, =
used the=20
following factors from the Restatement of Contracts in determining =
whether=20
a failure to perform was material: (a) the extent to =
which the=20
injured party will be deprived of the benefit which he reasonably=20
expected; (b) the extent to =
which the=20
injured party can be adequately compensated for the part of that =
benefit=20
of which he will be deprived; (c) the extent to =
which the=20
party failing to perform or to offer to perform will suffer=20
forfeiture; (d) the likelihood =
that the=20
party failing to perform or to offer to perform will cure his =
failure,=20
taking account of the circumstances including any reasonable =
assurances;=20
[and] (e) the extent to =
which the=20
behavior of the party failing to perform or to offer to perform =
comports=20
with standards of good faith and fair dealing.
Id. =
(quoting=20
Restatement (Second) of Contracts =A7 241 (1981)). Here, the 1995 =
contract=20
provided that Grant was to "market" LEI's services, devote his =
"time,=20
attention, and energy" to his duties as a project manager, adhere =
to all=20
of LEI's rules, and not "directly or indirectly" compete against =
LEI. In=20
addition to finding that Grant had failed to comply with the =
contract, the=20
jury found that Grant had committed fraud. The jury also found =
that Grant=20
had breached his fiduciary duty to LEI and engaged in unlawful =
conduct.=20
Although the 1995 =
contract=20
provided that Grant was to devote his energy to obtaining bids for =
LEI and=20
specifically prohibited him from participating indirectly or =
directly with=20
a business in competition with LEI, Grant--on behalf of GBS--made=20
successful bids for SAIC projects while working for LEI. LEI did =
not=20
discover Grant's SAIC bid on behalf of GBS until after Grant had =
quit his=20
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=20
customers. Also, although the =
1995=20
contract called for Grant to adhere to LEI's rules, Grant used =
LEI's=20
equipment and labor to install a driveway for himself and for the=20
Fannings. LEI did not discover Grant's use of its equipment and =
labor on=20
the driveway for Grant and the Fannings until after Grant had quit =
his=20
job, and LEI would not have permitted Grant to engage in such a =
practice.=20
Moreover, although Grant stated that his use of LEI's credit was a =
permissible practice for LEI's senior managers, Grant conceded =
that LEI=20
confronted him about his personal charges in order to deduct them =
against=20
his bonus, and Laughlin and Thyssen stated that such use of LEI's =
credit=20
by Grant was not permissible. Laughlin explained that the full =
extent of=20
damages caused by Grant's improper behavior was simply unknown.=20
Accordingly, we =
hold that,=20
as a matter of law Grant committed a material breach of the =
contract;=20
therefore, LEI was discharged from its duties under the contract. =
See=20
Mustang Pipeline, 134 S.W.3d at 200 (holding that, as matter =
of law,=20
party's material breach discharged other party from contractual =
duties);=20
Graco Robotics, Inc. v. Oaklawn Bank, 914 S.W.2d 633, =
640-41=20
(Tex. App.--Texarkana 1995, writ dism'd) (concluding that bank =
committed=20
material breach by failing to pay plaintiff according to escrow =
agreement=20
based on jury answer that bank "fail[ed] to comply" with escrow=20
agreement). Having so held, we =
need not=20
directly consider Grant's first through fourth issues We overrule =
Grant's first=20
through fourth issues. Quantum=20
Meruit In his fifth =
issue, Grant=20
argues that the trial court erred in asking the jury to determine =
whether=20
his conduct "constituted unclean hands" because the question =
presented an=20
issue of law. He further argues that the trial court erred in =
denying him=20
quantum meruit relief based on the doctrine of "unclean hands" =
because "a=20
finding of 'unclean hands' does not preclude Mr. Grant's recovery =
in=20
equity." In support of his =
argument=20
that the trial court erred in submitting to the jury "an issue of =
law=20
within the trial court's discretion," Grant does not cite us to =
any=20
authority. Under Texas civil procedure, a jury may decide ultimate =
issues=20
of fact, but it is the trial court which ultimately decides =
whether=20
equitable relief is appropriate. See Indian Breach Prop. =
Owners' Ass'n=20
v. Linden, 222 S.W.3d 682, 690 (Tex. App.--Houston [1st =
Dist.] 2007,=20
no pet.). Contrary to Grant's assertion, whether an individual has =
engaged=20
in unlawful or inequitable conduct is a fact question. See =
World Help=20
v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 668 (Tex. =
App.--Forth=20
Worth 1998, pet. denied) (reasoning that whether "inequitable =
conduct" has=20
occurred is "fact question"); City of Dallas v. Davis, =
266 S.W.=20
544, 547 (Tex. Civ. App.--Waco 1924, no writ) (noting that whether =
"inequitable" or "unlawful" conduct has occurred is question of =
"fact").=20
Accordingly, we hold that the trial court did not err in asking =
the jury=20
to determine whether Grant's conduct "constituted unclean=20
hands." Grant further =
argues that=20
the trial court erred in denying his quantum meruit relief because =
the=20
unclean hands doctrine "does not repel all sinners from a court of =
equity." See Norris of Houston, Inc. v. Gasfas, 562 =
S.W.2d 894,=20
897 (Tex. Civ. App.--Houston [1st Dist.] 1978, writ ref'd n.r.e.). =
Specifically, Grant asserts that "[w]here the harm done to the =
defendant=20
is not serious and can be otherwise corrected, the unclean hands =
maxim=20
should not be applied." See id. He emphasizes that the =
jury only=20
awarded $5,020 in damages to LEI for Grant's fraud and breach of =
his=20
fiduciary duty, while the trial court's decision to deny him =
equitable=20
relief due to unclean hands denied him a $60,006 quantum meruit=20
recovery. The unclean hands =
doctrine=20
provides that "a court acting in equity will refuse to grant =
relief to a=20
plaintiff who has been guilty of unlawful or inequitable conduct =
with=20
regard to the issue in dispute." Wynne v. Fishcer, 809 =
S.W.2d=20
264, 267 (Tex. App.--Dallas 1991, writ denied); see Grohn v.=20
Marquardt, 657 S.W.2d 851, 855 (Tex. App.--San Antonio 1993, =
writ=20
ref'd n.r.e.). The doctrine will only be applied to "one =
whose=20
own conduct in connection with the same matter or transaction has =
been=20
unconscientious, unjust, or marked by a want of good faith, or one =
who has=20
violated the principles of equity and righteous dealing." In =
re Jim=20
Walter Homes, Inc., 207 S.W.3d 888, 899 (Tex. App.--Houston =
[14th=20
Dist.] 2006, no pet.). The complaining party must also show an =
injury to=20
himself arising out of the conduct. Id. A court should =
not apply=20
the equitable doctrine of unclean hands when a defendant has not =
been=20
seriously harmed and the wrong complained of can be corrected =
without=20
applying the doctrine. Id. Here, the jury found that =
Grant=20
committed fraud and breached his fiduciary duty to LEI. =
Although not in =
the context=20
of a party seeking quantum meruit equitable relief, courts have =
found that=20
a party who commits fraud is not entitled to equitable relief. =
See=20
Gordin, 704 S.W.2d at 408 (reasoning that fraud can prohibit =
party's=20
entitlement to specific performance); cf. Rogers v.=20
Rogers, 240 S.W. 1104, 1105 (Tex. 1922) ("Equity will leave =
the=20
parties to [fraudulent transactions] in the position in which they =
have=20
placed themselves, refusing all affirmative aid to either of the=20
fraudulent participants."); De La Pena v. =
Elzinga, 980=20
S.W.2d 920, 923 (Tex. App.--Corpus Christi 1998, no pet.) (noting =
that=20
"'courts will not aid a party in carrying out a fraud; and the =
court will=20
not give a [plaintiff] . . . any relief from his own fraudulent =
act'"=20
(quoting La Force v. Bracken, 141 Tex. 18, 21-22, 169 =
S.W.2d 465,=20
467 (Tex. 1943))). It has also been stated, "With respect to =
fraudulent=20
transactions[,] the clean hands maxim is cognate with the =
principles that=20
no action arises out of fraud or deceit; and that equity will not =
aid a=20
fraud doer, . . . to permit him . . . to derive any benefit from =
the=20
fraud." 30A C.J.S. Equity =A7 110 (2007). In regard to =
Grant's claim=20
that the "sharp disparity" between LEI's award for fraud and the =
jury's=20
finding of compensable work for which he was not paid should not =
repel an=20
equitable award, the evidence shows that there was not such a =
disparity=20
and the further extent of Grant's fraudulent conduct was simply =
unknown.=20
Thyssen testified that LEI would have customarily charged $14,000 =
for the=20
driveway that Grant installed at the Fannings' house and $6,000 =
for the=20
driveway that Grant installed at his house. LEI did not receive =
these=20
proceeds. Grant testified that he earned $17,000 for the SAIC bid =
that he=20
obtained for GBS while working for LEI. GBS was LEI's competitor, =
and SAIC=20
had been LEI's customer, yet LEI did not receive these proceeds. =
Also,=20
Grant conceded that he still owed LEI $4,000 for personal =
purchases on=20
LEI's credit. Both Laughlin and Thyssen testified that Grant was =
not=20
allowed to make personal purchases on LEI's credit. See City =
of=20
Fredericksburg v. Bopp, 126 S.W.3d 218, 223 (Tex. App.--San =
Antonio=20
2003, no pet.) (noting that we defer to trial court on credibility =
issues). Grant also conceded that LEI had to confront him about =
such=20
purchases before LEI deducted them from his field-profit bonus. =
Moreover,=20
Ducote testified that Grant was making money on the side by using =
LEI's=20
assets and credit. See Daniel, 190 S.W.3d at 185 (noting =
that=20
agent has duty to account for profits arising out of=20
employment). LEI presented =
ample proof=20
that Grant had engaged in unlawful or inequitable conduct. =
Accordingly, we=20
hold that the trial court did not abuse its discretion in denying =
Grant a=20
quantum meruit recovery. We overrule =
Grant's fifth=20
issue. Summary=20
Judgment In his seventh =
issue, Grant=20
argues that the trial court erred in granting "LEI's 'no-evidence' =
summary=20
judgment motions on [Grant's] causes of action for fraud and =
negligent=20
misrepresentation" because Grant "provided sufficient evidence to =
raise a=20
genuine issue of material fact regarding each element of his =
causes of=20
action for fraud and negligent misrepresentation." LEI filed =
no-evidence=20
summary judgment motions, arguing that it was entitled to summary =
judgment=20
on Grant's fraud and negligent misrepresentation claims because =
Grant=20
proffered no evidence supporting any of the elements of fraud and=20
negligent misrepresentation. On January 5, 2005, in his response =
to LEI's=20
no-evidence summary judgment motions, Grant proffered his =
deposition=20
testimony and his own affidavit. On January 5, =
2005, in his=20
affidavit, Grant testified that, in order to calculate his bonus =
based on=20
field profits, Thyssen provided him with periodic statements, =
which showed=20
the expenses and profits for the jobs that Grant had managed. =
Grant=20
stated, Because these =
statements=20
were given to me by [LEI's] [v]ice [p]resident, who had access to =
all of=20
the company's books, I relied upon the information provided to me =
as=20
accurately showing the expenses and profits for the jobs I =
managed, and=20
the amount of bonus that was owed to me. . . . In the course of =
this=20
lawsuit, I have learned that the information that [LEI] provided =
to me was=20
not correct, and under-reported the amount of bonus that was owed =
to me.=20
[LEI's] expert witness, who is the company's outside accountant, =
had to=20
correct [LEI's] calculations regarding the bonus owed to me. =
[LEI's] own=20
expert says that the company still owes me a bonus I earned but =
which has=20
not been paid to me. Grant also =
asserted in his=20
response that he satisfied the elements of negligent=20
misrepresentation. On January 13, =
2005, LEI=20
filed a "Reply to [Grant's] Responses to [LEI's] Motions for =
Summary=20
Judgment." LEI asserted that Grant did not point to any specific =
intent to=20
defraud. LEI also attached an excerpt from Grant's deposition, =
during=20
which the following exchange occurred: [LEI]: Okay. So, =
my question=20
to you is, is there anything specific, examples of something that =
Joe=20
Laughlin said or Larry Thyssen said that was untrue that you =
relied upon=20
to your detriment when y'all were working on calculating up the =
bonuses=20
that were going to be due per this Exhibit A[,] [the Compensation=20
Package,] while you were employed there? [Grant]: No. Let's =
just say=20
no on this one here. . . . [LEI]: Okay. But =
you're not=20
alleging that they[,] [Thyssen or Laughlin,] negligently =
misrepresented=20
any of the contents of this[,] what costs go where on a particular =
job? [Grant]: I--I =
can't answer=20
that question. I mean-- [LEI]: Well, let =
me just ask=20
you. I mean, do you know what "reckless" means? [Grant]: No. Why =
don't you=20
tell me what it means. [LEI]: How about =
like=20
carelessness? That's kind of close. Maybe it's not quite as--=20
[Grant]:=20
Carelessness? [LEI]: Reckless =
might be=20
worse than careless but more or less the same. [Grant]:=20
Right. [LEI]: Do you know =
of any=20
specific acts of outright carelessness by [Marcontell] or =
[Laughlin] or=20
[Thyssen] in regards to the way they treated the accounting or the =
allocation of job costs? [Grant]: I haven't =
seen=20
the--the--the breakdown that [LEI] has sent to our office or sent =
to [my=20
attorney]. [LEI]: Okay. Well, =
I'm not=20
really concerned about reviewing stuff that we've produced. I'm =
just=20
asking, you know, your firsthand knowledge working there for eight =
years. [Grant]:=20
Uh-huh. [LEI]: Did you =
feel that=20
there was an ongoing pattern or ongoing culture at [LEI] to where =
they=20
were reckless and careless and would apply invoices incorrectly to =
wrong=20
jobs and just let the chips fall where they may? They didn't give =
a=20
crud? [Grant]: Oh, no, =
no, no.=20
[Thyssen] was very astute about costs. LEI also asserted =
that Grant=20
presented no evidence of negligent misrepresentation. To prevail on a =
no-evidence=20
summary judgment motion, a movant must allege that there is no =
evidence of=20
an essential element of the adverse party's cause of action or =
affirmative=20
defense. Tex. R. Civ. P. 166a(i); Fort Worth Osteopathic =
Hosp., Inc.=20
v. Reese, 148 S.W.3d 94, 99 (Tex. 2004). We review a =
no-evidence=20
summary judgment under the same legal sufficiency standard used to =
review=20
a directed verdict. Gen. Mills Rests., Inc. v. Tex. Wings, =
Inc.,=20
12 S.W.3d 827, 832-33 (Tex. App.--Dallas 2000, no pet.). Although =
the=20
non-moving party is not required to marshal its proof, it must =
present=20
evidence that raises a genuine issue of material fact on each of =
the=20
challenged elements. Tex. R. Civ. P. 166a(i); Ridgway, =
135 S.W.3d=20
at 600. A no-evidence summary judgment motion may not be properly =
granted=20
if the non-movant brings forth more than a scintilla of evidence =
to raise=20
a genuine issue of material fact on the challenged elements.=20
Ridgway, 135 S.W.3d at 600. More than a scintilla of =
evidence=20
exists when the evidence "rises to a level that would enable =
reasonable=20
and fair-minded people to differ in their conclusions." =
Merrell Dow=20
Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. =
1997). When reviewing a =
no-evidence=20
summary judgment motion, we assume that all evidence favorable to =
the=20
nonmovant is true and indulge every reasonable inference and =
resolve all=20
doubts in favor of the nonmovant. Spradlin v. State, 100 =
S.W.3d=20
372, 377 (Tex. App.--Houston [1st Dist.] 2002, no pet.). Because =
the trial=20
court's order granting LEI's no-evidence summary judgment motion =
does not=20
specify the grounds upon which the trial court relied, we must =
affirm the=20
summary judgment if any of the grounds in the summary judgment =
motion are=20
meritorious. FM Props. Operating Co. v. City of Austin, =
22 S.W.3d=20
868, 872-73 (Tex. 2000). Conclusory =
statements in an=20
affidavit are not proper summary judgment evidence. See =
Tex. R.=20
Civ. P. 166a(f) (supporting affidavit must set forth such facts as =
would=20
be admissible in evidence); see also Ryland Group, Inc. v. =
Hood,=20
924 S.W.2d 120, 122 (Tex. 1996) (per curiam). A conclusory =
statement is=20
one that does not provide the underlying facts to support the =
conclusion.=20
1001 McKinney Ltd. v. Credit Suisse First Boston Mortgage=20
Capital, 192 S.W.3d 20, 27 (Tex. App.--Houston [14th Dist.] =
2005,=20
pet. denied). To serve as competent summary judgment proof under =
Texas=20
Rule of Civil Procedure 166a(c), an affidavit of an interested =
party must=20
be "clear, positive, direct, credible, free from contradiction, =
and=20
susceptible of being readily controverted." Haynes v. City of=20
Beaumont, 35 S.W.3d 166, 178 (Tex. App.--Texarkana 2000, no =
pet.);=20
see Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 =
(Tex.=20
1997). An affidavit that makes self-serving, conclusory statements =
without=20
any underlying factual detail cannot support a summary judgment.=20
Haynes, 35 S.W.3d at 178. Finally, an objection that an =
affidavit=20
is conclusory is an objection to substance that may be raised for =
the=20
first time on appeal. Id. As noted above, a =
fraud=20
cause of action has six elements: (1) that a material =
representation was=20
made, (2) the representation was false, (3) when the =
representation was=20
made, the speaker knew it was false or made it recklessly without =
any=20
knowledge of the truth and as a positive assertion, (4) the =
speaker made=20
the representation with the intent that the other party should act =
upon=20
it, (5) the party acted in reliance on the representation, and (6) =
the=20
party thereby suffered injury. FirstMerit Bank, 52 S.W.3d =
at 758.=20
A negligent misrepresentation cause of action has four elements: =
(1) the=20
representation is made by a defendant in the course of his =
business, or in=20
a transaction in which he has a pecuniary interest, (2) the =
defendant=20
supplies "false information" for the guidance of others in their =
business,=20
(3) the defendant did not exercise reasonable care or competence =
in=20
obtaining or communicating the information, and (4) the plaintiff =
suffers=20
pecuniary loss by justifiably relying on the representation. =
Henry=20
Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n.24 (Tex.=20
2002). Viewing the =
summary judgment=20
evidence in the light most favorable to Grant, there is no =
evidence that=20
LEI intended to falsify the statements that it provided to Grant =
in order=20
to prevent Grant from obtaining his bonus. Also, there is no =
evidence that=20
LEI did not exercise reasonable care or competence in providing =
Grant with=20
the periodic statements or that Grant justifiably relied on these=20
statements. In his affidavit, Grant made the conclusory statement =
that he=20
had relied upon LEI's statements. However, in his deposition =
testimony,=20
Grant testified that he did not rely upon anything that Laughlin =
or=20
Thyssen had provided him when calculating his bonuses from the =
1999=20
contract. Grant also testified that LEI did not carelessly, =
knowingly, or=20
recklessly falsify the periodic statements which they provided him =
with in=20
order to calculate his bonus. See Farroux v. Denny's Rests.,=20
Inc., 962 S.W.2d 108, 111 (Tex. App.--Houston [1st Dist.] =
1997, no=20
pet.) ("A party cannot file an affidavit to contradict his own =
deposition=20
testimony without any explanation for the change in the testimony, =
for the=20
purpose of creating a fact issue to avoid summary=20
judgment. . . . [Such an affidavit] presents merely =
a=20
'sham' fact issue."). Accordingly, we hold that the trial court =
did not=20
err in granting LEI's no-evidence summary judgment motions on =
Grant's=20
claims for fraud and negligent misrepresentation. We overrule =
Grant's seventh=20
issue. We affirm=20
the judgment of the trial court.
Terry =
Jennings Justice Panel consists of =
Chief=20
Justice Radack and Justices Jennings and Bland. 1. 2. 3. 4. 5.