Shipley Brothers, Ltd v. Republic National Bank
(Tex.App.- Houston [1st Dist.] Jun. 11, 2009)(Jennings) (conversion, theft, and fraud, Texas Theft Liability Act,
election of remedies doctrine, remittitur of the exemplary damages, punitive exemplary damages)
REVERSE TC JUDGMENT AND REMAND CASE TO TC FOR FURTHER PROCEEDINGS:   
Before Judge Wilson, Justices Jennings and Bland. Opinion by Justice Terry Jennings  
01-07-00911-CV Shipley Brothers, Ltd., Shipley Brothers, Inc., Lone Star Investments, Kenneth Shipley and
Calvin Junek, Jr. v. Republic National Bank and Robert F. Larson
Appeal from County Civil Court at Law No 4 of Harris County
Trial Court Judge: Hon. Roberta A. Lloyd  
Concurring and Dissenting Opinion by Justice Bland  (subrogation, double recovery, election of remedies)

NOTE: This opinion was subsequently withdrawn on August 13, 2009 following a settlement
agreement reached by the parties. See Shipley Brothers, Ltd v. Republic National Bank II
(Tex.App.-Houston [1st Dist.] Aug. 13, 2009)(substituted opinion by Justice Jennings)  
--------------------------------------------------------------------------------

O P I N I O N

Appellants, Shipley Brothers, Ltd. ("Shipley Brothers"), Lone Star Investments ("Lone Star"), Kenneth Shipley,
and Calvin Junek, Jr. (collectively referred to as the "Shipley defendants"), challenge the trial court's final
judgment entered, after a jury trial, in favor of appellees, Robert F. Larson and Republic National Bank
("Republic"). The trial court awarded Larson actual damages of $19,000 and exemplary damages of $218,000
on his claims against the Shipley defendants for conversion, theft, and fraud. The trial court awarded
Republic actual damages of $39,000, additional damages of $1,000, and attorney's fees of $115,596 on
Republic's claims against the Shipley defendants for violations of the Texas Theft Liability Act. (1)

In their first issue, the Shipley defendants contend that they were divested of ownership of a manufactured
home, which was ultimately delivered to Larson "without notice or the opportunity to be heard" under Chapter
1201 of the Texas Occupations Code, (2) in violation of "the Due Course of Law Clause of the Texas
Constitution and the Due Process Clause of the United States Constitution." (3) In their second issue, the
Shipley defendants contend that Republic was not entitled to recover damages under the Texas Theft Liability
Act as it did not own the home in question and it was not entitled to damages for theft or conversion "merely
because it [had] a security interest" in the home. In their third issue, the Shipley defendants contend that the
evidence is legally insufficient to support the jury's fraud findings in favor of Larson. In their fourth issue, the
Shipley defendants contend that the evidence is legally insufficient to support the award of $218,000 in
exemplary damages and that the exemplary damages award is excessive and "violates state and federal due
process standards." In their fifth issue, the Shipley defendants contend that Republic may not recover
damages against them for conversion as Republic did not own the home in question and Larson may not
recover damages against them under the Texas Deceptive Trade Practices Act (4)

as his complaints against them "do not arise from a consumer transaction." In their sixth issue, the Shipley
defendants contend that Republic and Larson "should not be allowed to elect separate remedies as a means
of recovering both exemplary damages and attorney's fees when they pled, proved, and submitted the case
as if they were a joint victim of a single wrongful act" and "there is no evidence or jury finding to support an
award of separate attorney's fees to Republic only." In their seventh issue, the Shipley defendants contend
that the trial court erred in denying their motion to transfer venue.

We suggest a remittitur of the exemplary damages awards in favor of Larson and against Lone Star and
Shipley. If Larson files in this Court, within fifteen days from the date of this opinion, a remittitur to $57,000
with respect to each of the exemplary damage awards against Lone Star and Shipley, we will reform the trial
court's judgment and affirm it as reformed. Otherwise, we will reverse the judgment of the trial court, and
remand for a new trial.

Factual and Procedural Background

The Shipley defendants, who were engaged in the business of selling and financing manufactured homes,
purchased a home from Southern Energy, a manufacturer, and delivered the home to Sweet Mobile Homes, a
retailer of manufactured homes, pursuant to an informal consignment agreement that authorized Sweet to sell
the home to a third-party consumer. Larson purchased the home from Sweet to use as a "recreational
property" on a piece of rural land located in Lasalle County. Larson financed the purchase of his home
through his bank Republic, which, pursuant to a financing agreement, wired to Sweet the full purchase price
of $49,500, which included $10,500 as a down payment from Larson and $39,000 payment from Republic for
the remaining balance. After receiving payment in full, Sweet delivered the home and installed it on Larson's
property.

The Shipley defendants subsequently learned that Sweet had sold the home to a third-party customer, but
Sweet did not pay the Shipley defendants for the home in accord with the consignment agreement. After the
Shipley defendants learned that Larson had bought the home, they took the home from Larson's property
without Larson's knowledge or permission.

Upon learning that the Shipley defendants had taken Larson's home, Republic and Larson brought this suit,
asserting claims for fraud, conversion, and violations of the Theft Liability Act. Before trial, Republic and
Larson filed a summary judgment motion, seeking "summary judgment as to liability" on their conversion and
Theft Liability Act claims. The trial court granted Republic and Larson's summary judgment motion "as to
liability" on these claims. (5) The case then proceeded to a jury trial on the remaining claims.

At trial, Larson testified that Sweet delivered the home to his property on or about August 21, 2005, and
Sweet installed the home, which took about three days. Larson and his wife furnished the home with kitchen,
bathroom, and bedroom equipment, decorations, food, and other personal family items. Larson and his wife,
granddaughter, and father then stayed in the home for three nights over the Labor Day weekend. After
returning to their permanent home, Larson made a list of "some issues" that he had with the home, and he
faxed it to David Barrosso, the representative from Sweet who had sold Larson the home. Larson also called
Brad McGirt, service manager for Southern Energy. Larson explained that he had contacted both McGirt and
Sweet to determine who had the obligation to address the issues set forth on his list, Southern Energy as the
manufacturer or Sweet as the retailer. Larson was advised that McGirt would get back in touch with him.

That same day, a man, who identified himself as "Mike," contacted Larson by telephone and stated, "I
understand you're having some problems with a Southern Energy home that you purchased." Larson, who
was not aware of the Shipley defendants or of their claims to the home, responded, "That is an awfully fast
response from the factory." "Mike" then explained, "Well, I'm going to be in that area tomorrow and I'll be
looking at some other issues with some other homes. . . . I'd like to go by your place and take a look at it, if
you don't mind." Larson agreed, believing that he was receiving "same day service" from Southern Energy.
Larson gave "Mike" directions to his property and the combination to the gate to access his property. Larson
further offered "Mike" the key to his home, but Mike told him, "No, I've got a key to every home we sell."

Two days later, Larson telephoned "Mike," who answered the phone this time as "Cal [Junek]." Larson, who
was confused by "Mike's" name change, explained that he was calling because he had some "more issues" on
the home. To his complete surprise, Junek told Larson, "That won't make any difference . . . I took your home
this morning." Junek then told Larson to "[c]all the State of Texas, they have a recovery fund." Larson had no
idea to what Junek was referring or even who Junek was. Junek then told Larson that Kenneth Shipley, who
owns Lone Star, "owns the home," and Shipley had the Manufacturer's Certificate of Origin ("MCO"). Junek
also told Larson that Sweet had not paid Shipley for the home and that Shipley had instructed Junek to "get
[Larson's] home."

Larson explained that, in their first conversation, Junek, who represented himself as "Mike," had acted as if he
was a Southern Energy representative who was going to Larson's property to look at "warranty work." Larson
stated that he had only given Junek permission to enter his property to perform this warranty work and he had
not given Junek permission to enter his property to take the home.

Larson returned to his property the following Friday to find that his home had in fact been removed. Larson
learned that his home and personal belongings were being stored in Lytle, Texas, a significant distance from
LaSalle County, and he traveled there to retrieve his personal belongings, some of which had been damaged.
Larson explained that he was seeking, as part of his actual damages, his $10,500 down payment, and that
Republic was seeking, as damages, $39,000 as the balance of the home price. Larson also sought exemplary
damages, explaining that the Shipley defendants went on to his "private piece of property," he felt "violated,"
the incident had "crushed [his] seventy-nine year old dad," and his "granddaughter cried for two days."

Kenneth Shipley testified that Lone Star, which had purchased the home from Southern Energy, consigns
homes to retailers, like Sweet, for sale. Shipley stated that Shipley Brothers consigned the home, which was
titled in Shipley Brothers' name, with Sweet to sell. (6) Shipley explained that, prior to the removal of the home
from Larson's property, Junek, pursuant to Shipley's instructions, had visited Sweet's lot and saw that the
home was no longer on the lot. Barrosso, of Sweet, told Junek that the home had been sold, but Sweet did not
pay Shipley the amounts due. On further questioning, Shipley agreed that Barrosso had also told Junek that a
customer, who Barrosso would not identify, had paid for the home, but that Sweet did not have the money to
pay Shipley.

Shipley further testified that a few days after Junek's visit to Sweet, Southern Energy telephoned Shipley to
inform him that it had received a telephone call from Larson, who was complaining about a set-up that had not
been completed on a home that Larson had purchased from Sweet. Shipley explained that Southern Energy
had called Shipley because his name was on the MCO. Shipley, who knew that Larson had called Southern
Energy about warranty and set-up issues, then instructed Junek to call Larson, explaining that Southern
Energy had "directed" that they contact Larson. Shipley further instructed Junek to go onto Larson's property,
and, if the home look unoccupied, Shipley instructed Junek to take the home. Shipley agreed that the Shipley
defendants took the home without Larson's permission. Shipley also agreed that he, Junek, Lone Star, and
Shipley Brothers "made the decision" to take the home from Larson's property. Shipley conceded that one of
the reasons that he had Junek go onto Larson's property was to determine if Larson's home was in fact the
missing home for which they had not received payment from Sweet. Nevertheless, Shipley also maintained
that Junek was sent to Larson's property to look at the set-up and warranty issues about which Larson had
originally notified Southern Energy. Shipley agreed that because Southern Energy had informed him that
Larson's home had been purchased from Sweet, he, at the time that he sent Junek to Larson's property,
already knew that "there was a good chance" that it was the missing home.

Shipley further conceded that Larson did not have any reason to know of the existence of the Shipley
defendants or of any competing claims to the home's title. Shipley also agreed that a retailer, like Sweet, who
holds a home on consignment, has to be able to offer consumers, like Larson, clear and marketable title.
Shipley noted that Sweet had done everything right in the business arrangement except that it did not pay the
Shipley defendants after the sale to Larson was completed.

Junek testified that he worked for Kenneth Shipley and that he is employed by Lone Star. When Junek visited
Sweet, Sweet informed him that the home had been sold and that the customer had paid Sweet for the home.
Sweet would not identify the customer, but Junek subsequently received a telephone call from Shipley during
which Shipley informed Junek about the telephone call from Southern Energy. Junek then, pursuant to
Shipley's instructions, telephoned Larson and told Larson that he was calling about warranty work on the
home. Despite his representations to Larson, Junek conceded that he does not do warranty work for
Southern Energy. Junek knew that Larson had previously called Southern Energy about warranty work, and
he acquired Larson's gate combination "under the theory that he was going out to check on warranty issues."
When Junek went to Larson's property, he confirmed that the home was the missing home and telephoned
Shipley, who told Junek to take the home. Junek returned to Larson's property the next day with a work crew
and, without Larson's permission, took the home.

Junek agreed that Larson had given him permission only to do warranty work, Larson had not given him
permission to go onto Larson's property to take the home, and, despite his representations, Junek did not
perform any warranty work. Junek also agreed that he "had a feeling" that the Southern Energy telephone call
identifying Larson related to the missing home that had been consigned to Sweet. Junek conceded that when
he went to Larson's home, he had not even seen a copy of Larson's list of warranty issues. Junek also
conceded that if Larson had been involved in a scam with Sweet, it would not have made sense for Larson to
have telephoned Southern Energy to report the warranty problems. Although Junek contended that he would
not have taken the home had he known that Larson had paid for it, Junek never asked Larson if he had paid
for it. Moreover, Junek admitted that Sweet had told him that it had sold the home to a customer and that the
customer had in fact paid for it.

The trial court, in its final judgment, ordered that Larson recover from the Shipley defendants, jointly and
severally, actual damages on his conversion, theft, and fraud claims in the amount of $19,000. The trial court
further ordered that Larson recover exemplary damages in the total amount of $218,000, apportioned with
$100,000 against Shipley, $100,000 against Lone Star, $8,000 against Junek, and $10,000 against Shipley
Brothers. The trial court further ordered that Republic recover from the Shipley defendants $39,000 in actual
damages and $1,000 in additional damages under the Theft Liability Act and $115,596 in attorney's fees.

Constitutional Challenge

In their first issue, the Shipley defendants argue that because they were divested of ownership of the home
that was ultimately delivered to Larson by Sweet "without notice or the opportunity to be heard," Chapter 1201
of the Texas Occupations Code, as applied, "violate[d] the Due Course of Law Clause of the Texas
Constitution and the Due Process Clause of the United States Constitution." See U.S. Const. amend. XIV, § 1;
Tex. Const. art. I, § 19.

The Texas Constitution provides: "No citizen of this State shall be deprived of life, liberty, property, privileges
or immunities, or in any manner disfranchised, except by the due course of the law of the land." Tex. Const.
art. I, § 19. Likewise, the United States Constitution provides: "No State shall make or enforce any law which
shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any
person of life, liberty, or property, without due process of law; . . . " U.S. Const. amend. XIV, § 1. Texas's Due
Course of Law Clause and the federal Due Process Clause are textually different, but we generally construe
the Due Course of Law Clause in the same way as its federal counterpart. Tex. Workers' Comp. Com'n v.
Patient Advocates of Tex., 136 S.W.3d 643, 658 (Tex. 2004) (citing Univ. of Tex. Med. Sch. v. Than, 901
S.W.2d 926, 929 (Tex. 1995)). Accordingly, we rely on federal and Texas case law that addresses due
process issues in analyzing the Shipley defendants' constitutional challenge. See id.

A deprivation of personal property without due process violates both the United States and Texas
Constitutions. Id. (citing County of Sacramento v. Lewis, 523 U.S. 833, 846, 118 S. Ct. 1708 (1998)). Due
process at a minimum requires notice and an opportunity to be heard at a meaningful time and in a
meaningful manner. Id.

The Shipley defendants challenge the constitutionality of the version of section 1201.204 of the Texas
Occupations Code that was in effect at the time Larson purchased the home. This version of section
1201.204 provided,

§ 1201.204. Manufacturer's Certificate

(a) A manufacturer's certificate must show:

(1) on a form prescribed by the director or on another document, the original transfer of a manufactured
home from the manufacturer to the retailer; and

(2) on a form prescribed by the director, each subsequent transfer of a manufactured home between retailers
and from retailer to owner, if the transfer from retailer to owner involves a completed application for the
issuance of a statement of ownership and location.

(b) At the first retail sale of a manufactured home, a manufacturer's certificate automatically converts to a
document that does not evidence any ownership interest in the manufactured home described in the
document. A security interest in inventory evidenced by the manufacturer's certificate automatically converts
to a security interest in proceeds and cash proceeds.

(c) After the first retail sale of a manufactured home, the retailer may submit the manufacturer's certificate for
that home to the department.

Act of May 26, 2003, 78th Leg., R.S., ch. 338, 2003 Tex. Gen. Laws 1471, 1477 (amended 2007) (current
version at Tex. Occ. Code Ann. § 1201.204 (Vernon Supp. 2008)) (emphasis added) (referred to hereinafter
as "former section 1201.204").

The Shipley defendants focus their constitutional challenge on the language of former section 1201.204(b)
that provides that "[a]t the first retail sale of a manufactured home, a manufacturer's certificate automatically
converts to a document that does not evidence any ownership interest in the manufactured home described
in the document." See id. The Shipley defendants explain their constitutional challenge as follows:

When a party holding an MCO on a manufactured home sells to a consumer through a retailer on a
consignment basis, as long as the consignee is ethically responsible and financially capable of forwarding the
money to the rightful owner, there is no problem. And when the purchase of a manufactured home under
those circumstances is financed by an institution familiar with customary practices in the manufactured home
industry that require the surrender of the MCO before funding, there is no problem. But if the consignee does
not honor its commitment, and the lender is inexperienced in the manufactured home industry and fails to
follow customary practices, then [former section 1201.204] creates the problems that arose in this case.

The Shipley defendants assert that when, as in this case, former section 1201.204 allows a party, like them,
"who has paid for a manufactured home and retains the MCO [to] nevertheless lose title to the home without
notice or an opportunity to be heard," then they are deprived of their property without due process.

Here, Shipley testified that the Shipley defendants released possession of the home to Sweet pursuant to an
informal, one page, handwritten consignment agreement that was subsequently, verbally modified by adding
the home in question to the agreement "on the side." (7) However, regardless of the exact terms under which
the Shipley defendants released the home to Sweet, Shipley agreed that the Shipley defendants themselves
intended for Sweet to sell the home to a third-party consumer in a retail sale and that the consumer would
never be aware of Shipley's existence. (8) Shipley further testified that the Shipley defendants entered into
the agreement with Sweet knowing that consumers would be approaching Sweet to purchase the home and
obtain clear title from Sweet and that consumers would have no reason to know of competing claims to the
title from the Shipley defendants. Most importantly, Shipley knew, and expected, that Sweet would be offering
consumers, like Larson, clear title to the home. Shipley testified,

[Larson's counsel]: . . . [Y]ou know that Sweet has to make that same representation to anybody it sells one of
the homes on consignment, or otherwise. He has to make that representation that he is going to provide clear
and marketable title.

[Shipley]: That is right. Its his obligation.

[Larson's counsel]: It is his obligation to, correct?

[Shipley]: That's right.

[Larson's counsel]: And when you provide people like Sweet with a home to sell, you know that he has to
make that representation of warranty to the public. You know that?

[Shipley]: That is right.

[Larson's counsel]: So you know that any time that he is communicating to a consumer, he has to state that
he is going to provide clear and marketable title?

[Shipley]: Yes.

[Larson's counsel]: And in this case Sweet did everything he was supposed to do except pay you?

[Shipley]: That's right.

(Emphasis added).

Shipley's testimony establishes that the Shipley defendants gave Sweet possession of the home in exchange
for Sweet's promise to sell the home, with clear title, to a consumer. Shipley's testimony further establishes
that the Shipley defendants authorized Sweet to offer and convey to the consumer clear title to the home
upon purchase. It is undisputed that Larson paid Sweet for the home. Thus, based on Shipley's own
testimony, pursuant to the Shipley defendants' agreement with Sweet, when Larson purchased the home from
Sweet, Sweet transferred to Larson clear title to the home, unencumbered by any ownership interest
previously evidenced by the Shipley defendants' MCO. (9)

We conclude that the Shipley defendants were not deprived of due process as a result of the titling
procedures set forth in chapter 1201 of the Texas Occupations Code. Rather, the Shipley defendants
voluntarily released possession of the home to Sweet pursuant to an agreement that allowed Sweet to offer,
and transfer, clear title to the consumer who purchased the home. As Shipley himself testified, Sweet did
everything in accord with the parties' agreement, necessarily including Sweet's offering Larson clear title,
except to pay the Shipley defendants for the sale. Because Sweet offered clear title to Larson in accord with
the parties' agreement, and because ownership was transferred to Larson pursuant to this agreement,
Chapter 1201 did not deprive the Shipley defendants' of ownership of the home without notice or the
opportunity to be heard. Accordingly, we hold that Chapter 1201, as applied, did not violate the Due Course
of Law Clause of the Texas Constitution or the Due Process Clause of the United States Constitution.

We overrule the Shipley defendants' first issue.

Republic's Recovery Under Theft Liability Act

In their second issue, the Shipley defendants argue that Republic was not entitled to recover damages under
the Theft Liability Act because Republic did not own the home in question and Republic was not entitled to
damages for theft or conversion "merely because it [had] a security interest" in the home. Republic argues
that it, as an owner of a security interest in the home, had standing to sue under the Theft Liability Act
because it qualified as a "person who has sustained damages resulting from theft." See Tex. Civ. Prac. &
Rem. Code Ann. § 134.005 (Vernon 2005). Alternatively, Republic argues that it qualified as an "owner"
under the Penal Code because its right to possession of the home was superior to that of the Shipley
defendants.

Section 134.003 of the Texas Civil Practice and Remedies Code provides that "[a] person who commits theft
is liable for the damages resulting from the theft." Id. § 134.003(a) (Vernon 2005). Section 134.005(a)(1)
provides,

(a) In a suit under this chapter, a person who has sustained damages resulting from theft may recover:

(1) under Section 134.003(a), from a person who commits theft, the amount of actual damages found by the
trier of fact and, in addition to actual damages, damages awarded by the trier of fact in a sum not to exceed
$1,000; Id. § 134.005(a)(1) (emphasis added). "Theft," as used in the Theft Liability Act, is defined to mean
"unlawfully appropriating property or unlawfully obtaining services as described by" a number of Penal Code
sections, including section 31.03. Id. § 134.002(2) (Vernon 2005). Section 31.03(a) of the Penal Code
provides that "[a] person commits an offense if he unlawfully appropriates property with intent to deprive the
owner of property." Tex. Penal Code Ann. § 31.03(a) (Vernon Supp. 2008). Owner is defined in the Penal
Code as a person who "has title to the property, possession of the property, whether lawful or not, or a
greater right to possession of the property than the actor." Id. § 1.07(35)(A) (Vernon Supp. 2008).

The Shipley defendants do not challenge the trial court's summary judgment ruling, "as to liability," that they
committed theft by removing the home from Larson's property. Their only challenge is to Republic's standing
to sue for damages under the Theft Liability Act. However, the Act, by its plain terms, provides a remedy not
simply for "owners," as that term is defined in the Penal Code, but for "person[s] who [have] sustained
damages resulting from theft." Tex. Civ. Prac. & Rem. Code Ann. § 134.005(a)(1). Here, Republic presented
evidence that it wired Sweet $49,500 for the home, with Larson funding $10,500 of that amount as a down
payment and Republic funding the remaining balance of $39,000. Republic also presented evidence that
shortly after it had wired the money to Sweet, Larson obtained ownership and possession of the home and
the Shipley defendants' committed theft by taking the home from Larson's property. Republic also presented
evidence that the Shipley defendants never returned the home to Larson, even though the State of Texas
subsequently declared Larson to be the rightful owner of the home. Because Republic had loaned to Larson
$39,000, which was secured only by the home, Republic was necessarily damaged as a result of the theft of
the home. Accordingly, we hold that because Republic sustained damages in the amount of $39,000 as a
result of the Shipley defendants' theft, Republic was entitled to recover these damages under the Theft
Liability Act. (10)

We overrule the Shipley defendants' second issue.

Fraud

In their third issue, the Shipley defendants argue that the evidence is legally insufficient to support the jury's
fraud findings in favor of Larson because "[t]here [is] no evidence that any of [the Shipley defendants] made
fraudulent misrepresentations in connection with the removal of the manufactured home from Larson's
property." The Shipley defendants further assert that "[e]ven if there had been some evidence of fraud by
Junek, the other [Shipley] defendants would not have derivative liability."

We will sustain a legal sufficiency or "no-evidence" challenge if the record shows one of the following: (1) a
complete absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight to
the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a
scintilla, or (4) the evidence conclusively establishes the opposite of the vital fact. City of Keller v. Wilson, 168
S.W.3d 802, 810 (Tex. 2005). In conducting a legal sufficiency review, a court must consider the evidence in
the light most favorable to the verdict and indulge every reasonable inference that would support it. Id. at 822.
If the evidence allows only one inference, neither jurors nor the reviewing court may disregard it. Id. 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. Id. 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. Id.

To prove a fraud claim, a plaintiff must show that (1) a material representation was made; (11) (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); Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex. 1998).

Larson presented evidence that would enable a reasonable juror to conclude that Junek represented himself
as agent or representative of Southern Energy, the home's manufacturer, during Junek's and Larson's first
telephone conversation. Larson testified that he telephoned Southern Energy regarding a list of warranty
issues, and Southern Energy informed him that it would get back with him. Southern Energy then notified
Shipley that Larson had called it about Larson's warranty issues concerning the home that he had purchased
from Sweet. Shipley maintained that he felt "directed" by Southern Energy to call Larson, but the record
contains evidence that, after receiving this telephone call, the Shipley defendants already believed that
Larson had the missing home. Shipley then instructed Junek to telephone Larson. (12) Shipley and Junek
equivocated on the purpose of Junek's first call to Larson. However, a reasonable juror, based on Shipley's,
Junek's, and Larson's testimony, could have found that Junek called Larson not for the purpose of evaluating
Larson's warranty issues, but solely for the purpose of determining the location of the home in order to take it
from Larson's possession without his knowledge or permission. During his telephone conversation with
Larson, Junek represented himself as "Mike" and lead Larson to believe that he was speaking with the
"factory," i.e., Southern Energy, about warranty issues. At this point, Larson had no idea that the Shipley
defendants even existed, let alone that the Shipley defendants claimed ownership of Larson's home.

There is also evidence that, at the time of Junek's first telephone call to Larson, the Shipley defendants knew
that Sweet had sold the home to Larson and that Larson had paid for the home. Also, the Shipley defendants
had placed the home with Sweet, intended for Sweet to offer consumers like Larson clear title, and knew that,
under the existing law, the MCO did not need to be tendered for ownership to be transferred to Larson.
Finally, there is evidence that the Shipley defendants knew that Larson had no knowledge of their existence
or their competing claim to ownership.

The jury could have reasonably found that Junek intentionally deceived Larson about the purpose of his
telephone call and that Junek made misrepresentations to Larson during the call to gain access to Larson's
property and to take the home. As Larson testified, Junek, at the beginning of the telephone call, stated, "I
understand you're having some problems with a Southern Energy home that you purchased." When Larson
expressed his surprise at the fast response "from the factory," Junek continued his act, stating that he would
already be in Larson's area looking at "some other issues with some other homes" and offering to "go by
Larson's place and take a look" at Larson's warranty issues. Based upon Junek's misrepresentations, Larson
gave Junek directions to his property and the combination to the lock on his gate. At no time during this
conversation did Junek indicate that he was contacting Larson on behalf of the Shipley defendants about their
competing claim to ownership of Larson's home. At no time did Junek indicate that he was seeking access to
Larson's property to locate and take the home. Although Junek and Shipley testified that Junek went out to
Larson's property to take a look at Larson's warranty and set-up issues, their testimony on this point was
inconsistent, and the jury could have been suspect of the truthfulness of this testimony. A reasonable juror
could have discounted Junek and Shipley's alleged motivations and instead found that their purpose in
contacting Larson was ultimately to take the home away from Larson. Larson relied on these representations
by providing Junek with directions and the combination to the lock on the gate to his property. Larson was
damaged when the Shipley defendants returned to his property a second time, without his permission or
knowledge, and took the home from his property.

In regard to the Shipley defendants assertion that Shipley, Lone Star, and Shipley Brothers cannot be held
liable for Junek's misrepresentations, even assuming that the Shipley defendants agree that Junek was acting
as a Lone Star employee at the time that he made the misrepresentations, Larson still presented evidence
that Junek was instructed by Shipley to call Larson, inquire about the home, and go out to Larson's property
to take the home from Larson. Kenneth Shipley's testimony established that he and Junek were working on
behalf of both Lone Star and Shipley Brothers in making misrepresentations and taking the home from
Larson. For example, Shipley agreed that he, Junek, Lone Star, and Shipley Brothers collectively "made the
decision" to take the home from Larson. Shipley conceded that one of the reasons that he had sent Junek out
to Larson's property was to determine if Larson's home was the missing home. Moreover, the jury heard
evidence supporting a finding that, at the time Shipley instructed Junek to call Larson, the Shipley defendants
already knew that there was at least a "good chance" that Larson had the missing home.

Junek's testimony also supports a finding of liability against all of the Shipley defendants for Junek's
misrepresentations to Larson. Junek testified that he works for Kenneth Shipley and that he is employed by
Lone Star. Although Shipley had instructed Junek to return Larson's telephone call about the warranty issues
and go to Larson's property, Shipley had not provided Junek with a list of those issues and Junek had never
seen a list of the issues.

Accordingly, after reviewing all the evidence in the light most favorable to the jury's verdict, we hold that the
evidence is legally sufficient to support the jury's fraud findings against all of the Shipley defendants.

We overrule the Shipley defendants' third issue. (13)

Venue

In their seventh issue, the Shipley defendants argue that the trial court erred in denying their motion to
transfer venue of the case from Harris County, Texas to Hockley County, Texas because no substantial part
of the events giving rise to the claims occurred in Harris County.

An appellate court reviews a trial court's denial of a motion to transfer venue de novo. Killeen v. Lighthouse
Elec. Contractors, L.P., 248 S.W.3d 343, 347 (Tex. App.--San Antonio 2007, pet. denied) (citing Wilson v.
Texas Parks & Wildlife Dept., 886 S.W.2d 259, 260-62 (Tex. 1994)). In reviewing a venue decision, the
appellate court must conduct an independent review of the entire record, including, where applicable, the trial
on the merits, to determine whether any probative evidence supports the trial court's venue decision. Tex.
Civ. Prac. & Rem. Code Ann. § 15.064 (Vernon 2002); Killeen, 248 S.W.3d at 347; Chiriboga v. State Farm
Mut. Auto. Ins. Co., 96 S.W.3d 673, 677 (Tex. App.--Austin 2003, no pet.) (citing Ruiz v. Conoco, Inc., 868
S.W.2d 752, 758 (Tex. 1993)). "Courts review the evidentiary record in the light most favorable to the venue
ruling; however, no deference is given to the trial court's application of the law." Chiriboga, 96 S.W.3d at
677-78. "If there is any probative evidence supporting venue in the county where judgment was rendered, the
judgment must be affirmed." Id. at 678. Moreover, "[a] court shall determine the venue of a suit based on the
facts existing at the time the cause of action that is the basis of the suit accrued." See Tex. Civ. Prac. & Rem.
Code Ann. § 15.006 (Vernon 2002).

The parties agree that the general permissive venue statute applies. See id. § 15.002 (Vernon 2002). Section
15.002(a)(1) provides that venue is permissive in the county where "all or a substantial part of the events or
omissions giving rise to the claim occurred." Id. § 15.002(a)(1). Moreover, section 15.005 of the Texas Civil
Practice and Remedies Code provides that "[i]n a suit in which the plaintiff has established proper venue
against a defendant, the court also has venue of all the defendants in all claims or actions arising out of the
same transaction, occurrence, or series of transactions or occurrences." Id. § 15.005 (Vernon 2002).

Republic and Larson initially sued the Shipley defendants and Sweet for, among other things, fraud. In regard
to their claims against Sweet, Republic and Larson alleged that Sweet had made, in Harris County,
representations to them that it would deliver to them clear and marketable title to the manufactured home
upon purchase and that they had relied upon representations, in Harris County, made by Sweet. Republic
and Larson also sued the Shipley defendants for, among other things, conversion, asserting that after Larson
had obtained title to the home, the Shipley defendants took his home without his permission. Although the
conversion claims against the Shipley defendants were not expressly pleaded in the alternative to the fraud
claims against Sweet, the pleadings of Larson and Republic reveal that their fraud claims against Sweet were
dependent upon a possible finding, as the Shipley Brothers contended, that Larson never actually obtained
ownership or clear title of the home when he purchased it from Sweet. On the other hand, the conversion
claims against the Shipley defendants were based upon a finding that Larson had in fact obtained ownership
of the manufactured home from Sweet and, thus, the Shipley defendants committed conversion by taking the
home. (14)

The Shipley defendants filed a motion to transfer venue, arguing that the case should have been transferred
to Hockley County, Texas, the location of the principal office of the Shipley defendants. At that time, all of the
above claims, including those against Sweet, were live claims being pursued by Larson and Republic.
Republic and Larson filed a response and, citing Larson's affidavit, which is quoted below, they asserted that
the financial transaction entered into by Larson and Republic with Sweet occurred in Harris County and was
relevant for determining permissive venue because the transaction was the "genesis for all subsequent
damages flowing from the conduct of both [the Shipley defendants] and Sweet." Republic and Larson
attached to their response evidence showing that Sweet had purportedly provided the marketable title to
Republic in Houston and, based upon Sweet's representations to them in Houston, Republic and Larson had
purchased the manufactured home in Harris County. As Republic and Larson summarized in their response to
the motion to transfer venue, "Nothing could be more substantial to this transaction than the funding . . . for
the purchase of the [manufactured] home." Republic and Larson even noted that the Shipley defendants
consistently had defended the claims against them by contending that any purported transfer of ownership by
Sweet was invalid and that any title documents received by Larson and Republic in Harris County were
fraudulent.

In response to the motion to transfer venue, Larson testified in his affidavit as follows:

On or about August 10, 2005 [Sweet] sent to me in Houston, Harris County, Texas, a contract for the
purchase of the manufactured home. I made application for a loan with Republic in Houston, Harris County,
Texas. Republic notified Sweet that upon receipt of documentation to transfer title to the manufactured home
delivered to Republic in Houston, Harris County, Texas that Republic would wire transfer the proceeds of its
loan and the balance of the purchase price from Houston, Harris County, Texas to Sweet. A condition of the
loan was Republic obtaining a security interest in the manufactured home and Sweet was to deliver to
Republic in Houston, Texas the title transfer and lienholder designation to the manufactured home. Sweet
delivered to Republic in Houston, Harris County, Texas what purported to be the title transfer documents to
the manufactured home. All the documents concerning financing and security of the purchase of the
manufactured home were performable in Houston, Harris County, Texas. Sweet represented to Larson and
Republic in Houston, Harris County, Texas that Sweet would deliver clear and marketable title to the
manufactured home upon receipt of the purchase price to the Plaintiffs in Houston, Harris County, Texas.

There is also evidence in the record showing that Larson did business with Republic's office in Houston,
Harris County, Texas. The financing agreement, signed by Republic in Houston, established Republic's
interest in the home under which it brought suit. Republic also wired money for the purchase price of the
home from its Houston office to Sweet, and the record contains a letter from Republic to Sweet stating that
Republic agreed to finance Larson's home and wire the money upon receiving proof that title was transferred
to Larson. Based upon this evidence, the trial court denied the motion to transfer venue.

It is undisputed that at the time the Shipley defendants filed their motion to transfer venue and Larson and
Republic filed their responses, and at the time of the trial court's ruling denying the motion to transfer venue,
Republic and Larson's claims against Sweet in which they had alleged that Sweet had committed fraud in
Harris County remained pending. However, all parties agree that, approximately one week before trial, the trial
court granted summary judgment in favor of Larson and against the Shipley defendants on Larson's
conversion and theft claims. As the Shipley defendants concede in their briefing, based upon this ruling, the
court necessarily "determined that Larson owned the home at the time [the Shipley defendants] recovered it."
Moreover, as Larson and Republic note in their briefing, based upon this ruling, the trial court necessarily
"ruled that Sweet [had] in fact transferred title to Larson and so [Sweet] did not commit fraud that induced the
payment by Larson and Republic."

On appeal, Republic and Larson assert that the trial court's venue ruling should be sustained based upon the
record evidence that Republic relied upon documents and representations it received from Sweet in Harris
County. (15) Republic and Larson agree that the trial court, on the "eve before trial" in its summary judgment
ruling, concluded that Larson owned the home. Republic and Larson further agree that they effectively
dropped their fraud claims against Sweet, at least in part, for this reason. (16) However, Republic and Larson
assert that, even in light of this procedural development, the trial court's prior venue ruling had already
established proper venue in Harris County. In sum, Republic and Larson argue that because venue should be
"tested" at the time of suit, "the trial court's [venue] ruling [should] not be undone because [they] did not
[ultimately] take a judgment against Sweet for fraud."

We recognize that we must conduct an independent review of the entire record, including, in this instance, the
trial on the merits. See Tex. Civ. Prac. & Rem. Code Ann. § 15.064(b). However, the trial court's subsequent
summary judgment ruling in favor of Republic and Larson, which, in part, led Republic and Larson to drop
their claims against Sweet, did not void the trial court's prior venue ruling or destroy the venue evidence relied
upon by the trial court in making its venue ruling. As noted above, we review the evidentiary record in the light
most favorable to the venue ruling, looking for any probative evidence supporting venue in the county where
judgment was rendered. See Chiriboga, 96 S.W.3d at 677-78.

Here, in response to the Shipley defendants' motion to transfer venue, Larson provided affidavit testimony
that Sweet had made, in Harris County, representations to Larson and Republic that it would deliver clear title
to the manufactured home and that Larson and Republic relied upon these representations to their detriment.
The claims of Larson and Republic against Sweet and the Shipley defendants, although not pleaded
expressly in the alternative, arose from two possible fact scenarios. First, if the Shipley defendants succeeded
in defending some of the claims against them and establishing that they had maintained ownership of the
home, even after they had transferred possession of the home to Sweet under the consignment agreement,
and even after Sweet had sold the home to Larson, then Larson and Republic would maintain their claims
against Sweet for fraudulently representing in Harris County that it could convey clear title. Second, if Larson
and Republic succeeded in establishing that the Shipley defendants had converted the home after the sale
because title had been transferred to Larson (regardless of the fact that Sweet never paid the Shipley
defendants pursuant to their consignment agreement), then the focus of the claims of Larson and Republic
would necessarily shift to the Shipley defendants and away from Sweet.

We conclude that venue in Harris County was proper based upon Larson's evidence that Sweet had made
representations to him and Republic in Harris County because Sweet's representations constituted a
substantial part of events giving rise to the claims of Republic and Larson. See Tex. Civ. Prac. & Rem. Code
Ann. § 15.002(a)(1). Because venue was proper as to Sweet, it was also proper as to the Shipley defendants
because all of the claims arose out of the same series of transactions or occurrences. See id. § 15.005.

The Shipley defendants, without citation to any convincing authority, argue that venue in Harris County, even
if proper at one time during the suit, was destroyed because of the above events, which indisputably occurred
after the trial court's venue ruling. Although Republic and Larson subsequently elected not to pursue their
fraud claims against Sweet, their claims against Sweet were based upon their good-faith understanding of the
circumstances at the time. In fact, the Shipley defendants defended against the claims of Republic and Larson
by asserting that Larson did not obtain clear title from Sweet. The fact that the Shipley defendants have
always cast blame onto Sweet for the underlying events supported Republic and Larson's bringing the fraud
claim against Sweet. In sum, because the trial court had venue over the claims made by Republic and Larson
against Sweet, it also had venue over the claims made by Republic and Larson against the Shipley
defendants. Accordingly, we hold that the trial court did not err in denying the Shipley defendants' motion to
transfer venue. (17)

We overrule the Shipley defendants' seventh issue.

Exemplary Damages

In their fourth issue, the Shipley defendants contend that the evidence is legally insufficient to support the
award of $218,000 in exemplary damages and that the exemplary damages award is excessive and "violates
state and federal due process standards." The Shipley defendants note that "[a]lthough the trial court's
judgment awards Larson only $19,000 in actual damages, it awards him a total of $218,000 in exemplary
damages," with $100,000 apportioned against Shipley, $100,000 against Lone Star, $8,000 against Junek,
and $10,000 against Shipley Brothers. The Shipley defendants ask us to "reverse or substantially remit" the
award of exemplary damages.

In support of their legal sufficiency challenge, the Shipley defendants assert that (1) there is no evidence that
each of the Shipley defendants committed fraud, (2) they "had a good-faith belief that [they] had title to the
home and [were] entitled to recover it," and (3) even if there is evidence that Junek committed fraud, there is
no evidence to support an exemplary damages award against the other Shipley defendants. We have already
concluded that the evidence is legally sufficient to support the fraud findings against each of the Shipley
defendants, thus disposing of the Shipley defendants' first and third points. We also dispose of the second
point because, as previously noted, the jury was presented with ample evidence to find that the Shipley
defendants acted in bad-faith in removing Larson's home.

In regard to the Shipley defendants' complaint that the exemplary damages are excessive and their request
for remittitur, we review the factual sufficiency of the evidence to support the award. See Khorshid, Inc. v.
Christian, 257 S.W.3d 748, 767 (Tex. App.--Dallas 2008, no pet.). We may vacate the award of exemplary
damages or suggest a remittitur only if the evidence for the award is "so factually insufficient or so against the
great weight and preponderance of the evidence as to be manifestly unjust." Signal Peak Enters. of Tex., Inc.
v. Bettina Invs., Inc., 138 S.W.3d 915, 928 (Tex. App.--Dallas 2004, pet. struck) (citing Transp. Ins. Co. v.
Moriel, 879 S.W.2d 10, 30 (Tex. 1994)).

In determining if exemplary damages awards are reasonable, we consider the factors set forth in Alamo Nat'l
Bank v. Kraus, 616 S.W.2d 908, 910 (Tex. 1981). The Kraus factors include the nature of the wrong, the
character of the conduct involved, the degree of culpability of the wrongdoer, the situation and sensibilities of
the parties concerned, and the extent to which such conduct offends a public sense of justice and propriety.
Id. If, after conducing this review, we conclude that an award of exemplary damages is excessive, we may
suggest a remittitur. Tex. R. App. P. 46.3. If the remittitur is timely filed, we must reform and affirm the trial
court's judgment in accordance with the remittitur, but if the remittitur is not timely filed, we must reverse the
trial court's judgment. Id.

Here, the nature of the wrong and the character of the conduct involved the Shipley defendants' making
misrepresentations to gain access to Larson's property and taking Larson's home and personal belongings
without his permission. The Shipley defendants' conduct was particularly egregious because it involved the
taking of Larson's home and personal property and constituted a significant invasion of Larson's privacy. The
Shipley defendants entered Larson's home, took the home from Larson's property, boxed up Larson's
personal belongings, stored Larson's home and personal belongings, and transported the home and
personal belongings to a different town at a significant distance from Larson's property, all without notice to or
permission from Larson. Although the harm to Larson--the taking of his recreational weekend home and the
taking of his personal belongings--might be characterized as economic rather than physical, Larson suffered
a significant invasion of his privacy rights and his rights to be secure in his property.

As to the degree of culpability of the Shipley defendants, there is ample evidence that would have allowed the
jury to categorically reject the Shipley defendants' claims that they acted in good faith. Although it is
undisputed that the Shipley defendants were the owners of the home prior to Sweet's sale of the home to
Larson and that the Shipley defendants did not receive payment from Sweet, the Shipley defendants had
consigned the home to Sweet with the intention that Sweet would convey clear and marketable title to a third
party purchaser. Inexplicably, when Sweet failed to pay the Shipley defendants the amounts owed pursuant to
their agreement, the Shipley defendants unilaterally contacted Larson under false pretenses, made
misrepresentations to him to gain access to Larson's home and property, entered Larson's home, and took
Larson's home and personal belongings. In regard to the situation and sensibilities of the parties concerned,
we note that Larson was a consumer and the Shipley defendants conceded that Larson would have had no
way of knowing of their claims to ownership of the home when Larson agreed to purchase the home. The
Shipley defendants agreed that Larson was a purchaser in good faith.

Finally, in regard to the extent to which the conduct offends a public sense of justice and propriety, although
the home was not Larson's full-time residence, Larson stored personal belongings in the home, which the
Shipley defendants seized, boxed up, and shipped to an offsite location. The magnitude of the offensiveness
of the Shipley defendants' conduct is extreme.

We also consider the Shipley defendants' challenge to the exemplary damages award on due process
grounds. "While state law governs the amount properly awarded as exemplary damages, that amount is also
subject to an ultimate federal constitutional check for exorbitancy." Khorshid, Inc., 257 S.W.3d at 767 (citing
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 307 (Tex. 2006)). An assessment of a grossly excessive
exemplary damages award violates a party's substantive due process rights. BMW of N. Am., Inc. v. Gore, 517
U.S. 559, 568, 116 S. Ct. 1589, 1595 (1996); SAS & Assocs., Inc. v. Home Mktg. Servicing, Inc., 168 S.W.3d
296, 306 (Tex. App.--Dallas 2005, pet. denied); Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35,
45 (Tex. 1998); see also U.S. Const. amend. XIV, § 1 ("[N]or shall any State deprive any person of life, liberty,
or property, without due process of law"). In reviewing whether the exemplary damages award is
unconstitutionally excessive and, thus, violates the Shipley defendants' due process rights, we consider three
guideposts adopted by the United States Supreme Court: (1) the degree of reprehensibility of the defendant's
misconduct; (2) the disparity between actual and exemplary damages; and (3) a comparison of the exemplary
damages awarded and other civil or criminal penalties that could be imposed for similar misconduct. BMW of
N. Am., Inc. v. Gore, 517 U.S. at 574-75, 116 S. Ct. at 1599; Tony Gullo, 212 S.W.3d at 308.

The first guidepost, the degree of reprehensibility of the defendant's misconduct, is the most important. Gore,
517 U.S. at 575, 116 S. Ct. at 1599. In determining the degree of reprehensibility, we should consider whether
the harm was physical as opposed to economic; whether the conduct constituted an indifference to or a
reckless disregard of the health or safety of others; whether the target of the conduct was financially
vulnerable; whether the conduct involved repeated actions or was an isolated incident; and whether the harm
was the result of intentional malice, trickery, deceit, or mere accident. State Farm Mut. Auto. Ins. Co. v.
Campbell, 538 U.S. 408, 419, 123 S. Ct. 1513, 1521 (2003); Gore, 517 U.S. at 576, 116 S. Ct. at 1599. The
presence of any one of these factors may still not be enough to support an award of exemplary damages, and
the absence of all of these factors renders the award suspect. Campbell, 538 U.S. at 419, 123 S. Ct. at 1521
(citing Gore, 517 U.S. at 576-77, 116 S. Ct. at 1599)).

As noted above, although the harm to Larson was ultimately economic in nature, the Shipley defendants
entered Larson's home without his permission-- conduct that involves a significant danger and risk.
Additionally, this fact provides some evidence that the Shipley defendants's conduct evidenced a reckless
disregard for the health and safety of others. However, there is no evidence that Larson, as the target of the
Shipley defendants' conduct, was financially vulnerable. In regard to whether the harm involved repeated
actions or was an isolated incident, Shipley offered undisputed testimony that the Shipley defendants had
never engaged in the type of conduct at issue in the instant case, and Shipley testified that the Shipley
defendants would not repeat the conduct. Finally, although the Shipley defendants claimed a good-faith belief
that they owned the home, Larson presented evidence that the harm was the result of the Shipley defendants'
deceit and misrepresentations. In sum, although there is evidence of a high degree of reprehensibility in the
Shipley defendants' conduct, the absence of any evidence to support some of the other factors suggests that
the amount of the exemplary damages awarded is excessive.

In regard to the second guidepost, "we must consider the disparity between actual and exemplary damages."
Khorshid, Inc., 257 S.W.3d 768. Here, the jury found that Larson sustained actual damages of $19,000, and
then awarded Larson a total of $218,000 in exemplary damages, with $100,000 imposed against Shipley,
$100,000 against Lone Star, $8,000 against Junek, and $10,000 against Shipley Brothers. "The ratio of
actual to exemplary damages alone is not determinative of excessiveness." Id. Moreover, the United States
Supreme Court has "consistently rejected the notion that the constitutional line is marked by a simple
mathematical formula, even one that compares actual and potential damages to the punitive award." Gore,
517 U.S. at 582, 116 S. Ct. at 1602. However, the Supreme Court has indicated that "few awards exceeding a
single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due
process." Campbell, 538 U.S. at 425, 123 S. Ct. at 1524. Even more specifically, the Supreme Court has
stated, on several occasions, that "an award of more than four times the amount of compensatory damages
might be close to the line of constitutional impropriety." Id.

The Shipley defendants, citing, among other cases, Cass v. Stephens, 156 S.W.3d 38, 75 (Tex. App.--El
Paso 2004, pet. denied), assert that "[i]n cases involving multiple defendants, most courts have calculated the
ratio based on combined exemplary awards against the defendants compared to the plaintiff's actual
damages." However, our Court has recently held that "[b]ecause exemplary damages are awarded on an
individual basis and require separate jury findings as to each defendant, the proper method for reviewing the
constitutionality of exemplary damages is to compare the exemplary damages awarded against each
individual with the compensatory damages awarded against that individual." Huynh v. Phung, No.
01-04-00267-CV, 2007 WL 495023, at *13 (Tex. App.--Houston [1st Dist.] Feb. 16, 2007, no pet.) (mem. op.).
Accordingly, we compare the amount of exemplary damages awarded against each of the Shipley defendants
to the amount of actual damages awarded against the Shipley defendants jointly and severally. See id. Here,
we note that the $100,000 exemplary damage awards imposed against Shipley and Lonestar are within a
single digit ratio, but are more than 5 times the amount of actual damages awarded to Larson, whereas the
exemplary damages imposed against Junek and Shipley Brothers are less than the actual damages awarded
to Larson.

In regard to the third guidepost, we compare the exemplary damages awarded to civil or criminal penalties for
similar misconduct. Khorshid, Inc., 257 S.W.3d at 768. The Shipley defendants assert that the most
analogous civil penalty is in section 17.47(c)(1) of the Texas Business and Commerce Code under which the
attorney general is authorized to collect up to a $20,000 penalty for deceptive trade practices. See Tex. Bus.
& Com. Code Ann. § 17.47(c)(1) (Vernon Supp. 2008).

In considering all three guideposts, we hold that the exemplary damage awards of $100,000 imposed against
Shipley and Lone Star are excessive under the due process clause, but that the exemplary damages imposed
against Junek and the Shipley Brothers are not excessive under the due process clause. In addition, after
reviewing the record in this case respecting the Kraus factors, we conclude the jury's award of $100,000 in
exemplary damages against Shipley and Lone Star, while supported by some evidence, was so against the
great weight and preponderance of the evidence as to be manifestly unjust. A rational jury could not have
found that the nature of the wrong, the character of the conduct, the degree of culpability, the situation and
sensibilities of the parties, and the public's sense of justice and propriety required Lone Star and Shipley to
pay exemplary damages in amounts of $100,000 each. See SAS, 168 S.W.3d at 307-08.

However, because we conclude that there is factually sufficient evidence to support a lesser award of
exemplary damages, pursuant to rule 46.3 and the due process clause of the U.S. Constitution, we suggest a
remittitur of $57,000 for the award imposed against Lone Star and $57,000 for the award imposed against
Shipley. See id. These awards would represent an exemplary to actual damages ratio of three to one, which,
given the evidence in the record, is constitutionally permissible. See Cass, 156 S.W.3d at 77 (suggesting
remittitur and finding that "ratio of punitive to compensatory damages of three to one is constitutionally
permissible").

Accordingly, if Larson files in this Court, within fifteen days from the date of this opinion, a remittitur to
$57,000 with respect to the exemplary damage award against Lone Star and a remittitur to $57,000 with
respect to the exemplary damage award against Shipley, we will reform the trial court's judgment and affirm it
as reformed. See Tex. R. App. P. 46.3, 46.5. If the suggested remittitur is not timely filed, we will remand the
case to the trial court for a new trial on all issues. See id.; Tex. R. App. P. 44.1(b) (appellate court may not
order separate trial solely on unliquidated damages if liability is contested). We sustain the Shipley
defendants' fourth issue in part and overrule it in part.

Attorney's Fees

In their sixth issue, the Shipley defendants contend that Republic and Larson "should not be allowed to elect
separate remedies as a means of recovering both exemplary damages and attorney's fees when they pled,
proved, and submitted the case as if they were a joint victim of a single wrongful act" and that "there is no
evidence or jury finding to support an award of separate attorney's fees to Republic only."

Here, the jury was asked "what sum of money do you find is a reasonable and necessary fee for the services
of ROBERT LARSON and/or REPUBLIC NATIONAL BANK'S attorney in this case." The jury awarded Larson
"and/or" Republic $115,596 for trial court attorney's fees, $45,000 for fees for an appeal to this Court, and
$35,000 for fees for an appeal to the Texas Supreme Court. After trial, Larson elected his fraud theory in
order to recover his actual damages of $19,000 and his exemplary damages of $218,000, whereas Republic
elected its theft theory in order to recover its actual damages of $39,000, additional damages of $1,000, and
attorney's fees of $115,596. The parties agree that Larson, upon making his election, was not entitled to
recover attorney's fees. The parties also agree that William Powell, who provided the only testimony in
support of the request of Larson and Republic for attorney's fees, requested the attorney's fees jointly on
behalf of Larson and Republic and did not offer any testimony segregating fees by parties or causes of
action. Finally, the parties agree that the Shipley defendants did not object to Powell's testimony or to the
question in the jury charge asking the jury to award attorney's fees to Larson "and/or" Republic without
distinguishing by party or cause of action. However, the Shipley defendants assert that their failure to object
to the jury question was excused "under the unique circumstances of this case." The Shipley defendants
further assert,

Because of the nature of Mr. Powell's testimony, it would not have been proper to submit a question with
separate blanks, because there was no evidence that would enable the jury to make that determination.

Additionally, Shipley should not have been required to make an objection or a request because this question,
on its face, is not defective. Especially given the testimony that Powell was jointly engaged and the fees were
jointly incurred, submitting the question jointly was entirely consistent with the evidence. The question did not
become improper until Republic and Larson attempted to elect separate remedies, and Larson elected a
remedy that bars him from recovering attorney's fees.

It is well settled that "a party seeking to recover attorney's fees is required to segregate fees between claims
for which he can recover attorney's fees from claims for which he cannot." Hawkins v. Walker, 233 S.W.3d
380, 398 (Tex. App.--Fort Worth 2007, no pet.) (citing Tony Gullo Motors I, L.P., 212 S.W.3d at 313-14)).
However, the party opposing the recovery of attorney's fees must preserve for appellate review a contention
that the fee claimant failed to segregate the fees sought. McCalla v. Ski River Dev., Inc., 239 S.W.3d 374, 383
(Tex. App.--Waco 2007, no pet.) (citing Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 389 (Tex. 1997)); see also
K-2, Inc. v. Fresh Coat, Inc., 253 S.W.3d 386, 396 (Tex. App.--Beaumont 2008, pet. filed); Bencon Mgmt. &
Gen. Contracting, Inc. v. Boyer, Inc., 178 S.W.3d 198, 208 (Tex. App.--Houston [14th Dist.] 2005, no pet.). If
"no objection is made to the failure to segregate attorneys' fees, either at the time evidence of attorneys' fees
is presented or at the time of the charge, the error is waived." Holmes v. Concord Homes, Ltd., 115 S.W.3d
310, 313 (Tex. App.--Texarkana 2003, no pet.) (concluding that party opposing recovery of attorney's fees
had waived complaint that there was no segregation of fees among multiple parties and different causes of
action); see also Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 454 (Tex. App.--Houston [1st Dist.] 2007,
no pet.) (holding that objection to jury charge preserved segregation complaint).

Here, it is undisputed that the Shipley defendants did not object to Powell's testimony about the joint
attorney's fees or the question in the jury charge asking them to award Republic "and/or" Larson attorney's
fees jointly. The Shipley defendants assert that the jury question was not defective on its face and that
post-judgment events, specifically Larson's election, rendered the question improper. This argument lacks
merit. However, Powell testified, without objection, in support of a single amount of attorney's fees expended
in the suit. Powell did not distinguish between fees expended on behalf of the parties or the causes of action
those parties pursued. The jury was also asked, without objection, to award a single amount of attorney's
fees. The Shipley defendants did not request that the fees be segregated by party or cause of action. Thus,
contrary to the Shipley defendants' assertion, the jury question, before the complained-of post-judgment
events, permitted the award of non-segregated fees, encompassing multiple parties and causes of action,
and was objectionable on its face. The Shipley defendants were aware, from the beginning of trial, that both
Republic and Larson were seeking recovery on the basis of multiple causes of action, some of which
permitted the recovery of attorney's fees (Theft Liability Act) and some of which did not (fraud). The Shipley
defendants were not entitled to withhold this objection until post-judgment, when the parties made their
election of remedies. See Hawkins, 233 S.W.3d at 398 (holding that objections to failure to segregate in
post-verdict and post-judgment motions "came too late to preserve" segregation complaint for appellate
review). (18)

We overrule the Shipley defendants' sixth issue. (19)

Conclusion

We suggest a remittitur of the exemplary damages awards in favor of Larson and against Lone Star and
Shipley. If Larson files in this Court, within fifteen days from the date of this opinion, a remittitur of $57,000 for
the exemplary damage award against Lone Star and of $57,000 for the exemplary damage award against
Shipley, we will reform the trial court's judgment and affirm it as reformed. Otherwise, we reverse the judgment
of the trial court and remand for a new trial.

Terry Jennings

Justice

Panel consists of Justices Jennings, Bland, and Wilson. (20)





Justice Bland, concurring and dissenting.

1. See Tex. Civ. Prac. & Rem. Code Ann. § 134.001-005 (Vernon 2005).

2. See Act of May 26, 2003, 78th Leg., R.S., ch. 338, 2003 Tex. Gen. Laws 1471, 1477 (amended 2007)
(current version at Tex. Occ. Code Ann. § 1201.204 (Vernon Supp. 2008)).

3. U.S. Const. amend. XIV, § 1; Tex. Const. art. I, § 19.

4. Tex. Bus. & Com. Code Ann. § 17.41-.63 (Vernon 2002 & Supp. 2008).

5. The Shipley defendants have not challenged the trial court's summary judgment ruling as to liability on
these claims, but, on appeal, they assert that Republic was not a movant for summary judgment. However, the
summary judgment motion was filed on behalf of both plaintiffs and the portion of the motion regarding the
Theft Liability Act specifically references the plaintiffs that "paid for and/or financed the purchase" of the
home. The trial court signed an order granting the "plaintiffs' motion," without distinguishing between Larson
or Republic. Accordingly, we conclude that Republic did move for summary judgment and the trial court
granted both Republic and Larson summary judgment as to liability on these claims.

6. Shipley's testimony supported a finding that both Lone Star and Shipley Brothers were involved in the
consignment and subsequent seizure of the home and that Shipley and Junek acted on behalf of both
corporate Shipley defendants. Although the Shipley defendants, on appeal, argue that there is no evidence
that any of the Shipley defendants were agents of the other, the Shipley defendants, at trial, made no
significant effort to present evidence that they had separately engaged in the conduct at issue or that they did
not represent each other.

7. The written agreement, which was introduced into evidence, provides only a few terms, one of which states
"pay us before it leaves location." The agreement, which is illegible in parts, also states, "This is consignment"
and it generally refers to "title," but such references in the agreement are unclear and were not discussed in
depth at trial. And, as noted above, it is unclear if the home in question is even covered by the written
agreement or if it was released to Sweet pursuant to a verbal agreement "on the side," the terms of which are
unclear at best.

8. Shipley also stated that at the time the Shipley defendants released the home to Sweet in a retail sale, he
knew that the law in effect did not require that the MCO, which was in the Shipley defendants' possession, be
tendered to the State of Texas in order for ownership to be transferred to the consumer and for the consumer
to obtain a new ownership document referred to as a statement of ownership and location.

9. The fact that Sweet breached its agreement with the Shipley defendants did not affect the transfer of title
as the Shipley defendants expressly intended for clear title to be offered to a consumer and for clear title to
be transferred to the consumer pursuant to their agreement with Sweet. According to the terms of the
agreement, as provided by Shipley's testimony, the Shipley defendants' remedy, upon Sweet's breach, was
against Sweet, not Larson. The Shipley defendants even obtained an agreed judgment against Sweet for the
amounts allegedly owed pursuant to their agreement. We also note that former section 1201.204 provided the
Shipley defendants a security interest in the proceeds from Sweet's sale of the home to Larson. Act of May
26, 2003, 78th Leg., R.S., ch. 338, 2003 Tex. Gen. Laws 1471, 1477 (amended 2007).

10. We note that because Larson sought actual damages only for his down payment of $10,500 and Republic
sought actual damages only for the remaining balance of $39,000, Republic's recovery under the Theft
Liability Act did not present the risk of a double recovery.

11. We note that the jury charge further provided that "[f]raud also occurs when (a) a party fails to disclose a
material fact within the knowledge of that party, (b) the party knows that the other party is ignorant of the fact
and does not have an equal opportunity to discover the truth, (c) the party intends to induce the other party
to take some action by failing to disclose the fact, and (d) the other party suffers injury as a result of acting
without knowledge of the undisclosed fact." We need not consider this failure to disclose theory because we
hold below that there is evidence to support the jury's finding that the Shipley defendants made material
misrepresentations.

12. Again, at trial, the Shipley defendants did not present any evidence that Junek was acting on behalf of
only certain Shipley defendants.

13. Having held that Republic was entitled to recover under the Theft Liability Act and that the evidence is
legally sufficient to support the fraud findings against the Shipley defendants, we need not consider the
Shipley defendants' fifth issue, in which they contend, alternatively, that Republic could not recover for
conversion and Larson could not recover under the Texas Deceptive Trade Practices Act.

14. The Shipley defendants also asserted a cross-claim against Sweet for "breach of trust" and conversion on
the basis that Sweet had failed to tender the proceeds of the sale of the manufactured home to the Shipley
defendants in accordance with their consignment agreement. On July 6, 2006, the trial court entered an
agreed judgment against Sweet in favor of the Shipley defendants, finding that Sweet had wrongfully
converted proceeds from the sale to Larson.

15. Republic and Larson also assert that the trial court's venue ruling should be affirmed based upon
evidence that Junek made misrepresentations to Larson during Junek's telephone call to Larson while he was
at work in Harris County. The Shipley defendants dispute that there is such evidence in the record. The
record reveals evidence showing that Larson worked at a company in Harris County, Larson received Junek's
telephone call on the Tuesday after the Labor Day weekend, and that Larson received the telephone call
sometime during the "day," and, possibly even Larson's normal "work day." Nevertheless, in light of our
holding affirming the trial court's venue ruling on the ground that there is some evidence showing that Sweet
made representations to Republic and Larson in Harris County and that such evidence constituted a
substantial part of the events giving rise to Republic and Larson's claims, we need not directly address the
Shipley defendants' evidentiary dispute.

16. Republic and Larson also note in their post-submission briefing that Sweet refused to appear and defend
itself at trial. They assert that this fact, and a number of circumstances, led them "to pursue their fraud claims
against [the Shipley defendants], and not to pursue fraud charges that now seem[ed] weak against Sweet,"
which they describe as an "absent and insolvent defendant."

17. In support of their argument that venue was not destroyed, Larson and Republic cite McIntosh v.
Copeland, which provides that an appellate court's review of the entire record "is intended to strike a balance
between preserving the plaintiff's right to select and maintain suit in a county of proper venue and protecting
the defendant against fraud or inaccuracy at the pleading stage." 894 S.W.2d 60, 64 (Tex. App.--Austin 1995,
writ denied) (citations omitted) (emphasis added). The McIntosh court further stated that "the complete review
is designed to prevent a party from knowingly arguing invalid grounds to the trial court." Id. at 65 (emphasis
added). In conducting the complete review, an appellate court should consider evidence in the record
adduced after venue was decided, but only to determine if this evidence "destroys the prima facie proof on
which the trial court relied." Id. (citing Ruiz v. Conoco, Inc., 868 S.W.2d 752, 757 (Tex. 1993)). Here, contrary
to the Shipley defendants' assertion in their post-submission briefing, there is no evidence that Republic or
Larson, in bringing their claims against Sweet, committed fraud or inaccuracy in their pleading. Moreover,
although the trial court ultimately ruled that ownership of the home was transferred to Larson by Sweet, the
evidence presented at trial did not destroy the prima facia evidence relied upon by the trial court in making its
venue ruling.

18. We note that the Shipley defendants have not asserted a challenge as to whether Republic's attorney's
fee were reasonable or necessary under Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 819
(Tex. 1997).

19. In their sixth issue, the Shipley defendants alternatively argue that "Republic and Larson should not be
allowed to elect separate remedies" because allowing Larson to recover exemplary damages and allowing
Republic to recover attorney's fees "undermines the election of remedies doctrine." However, in their reply
brief, the Shipley defendants concede that under Texas law "each party can elect a remedy that awards it the
greatest recovery."

20. The Hon. Davie L. Wilson, retired Justice, Court of Appeals, First District of Texas at Houston,
participating by assignment.