Anderson v. Durant

• Decision Date: 22 June 2018
• Docket Number: NO. 16–0842,16–0842
• Citation: 550 S.W.3d 605
• Parties: Andrew ANDERSON, Petitioner, v. Jerry V. DURANT, Jerry V. Durant, Inc. d/b/a Durant Toyota and d/b/a Jerry Durant Toyota, Jerry Durant Hyundai, LLC, Doyle Maynard, and Robert G. Cote, Sr., Gary Michael Deere, Jerry Rash, and Elliot "Scooter" Michelson, Respondents
• Court: Texas Supreme Court

550 S.W.3d 605

Andrew ANDERSON, Petitioner,

v.Jerry V. DURANT, Jerry V. Durant, Inc. d/b/a Durant Toyota and d/b/a Jerry Durant Toyota, Jerry Durant Hyundai, LLC, Doyle Maynard, and Robert G. Cote, Sr., Gary Michael Deere, Jerry Rash, and Elliot "Scooter" Michelson, Respondents

NO. 16–0842

Supreme Court of Texas.

Argued February 27, 2018

OPINION DELIVERED: June 22, 2018

Preston Randolph Mundt, John H. Cayce Jr., Hugh G. Connor II, Joseph "Joe" R. Greenhill III, Michael D. Anderson, for Andrew Anderson.

Jay K. Wieser, Albon O. Head Jr., Russell R. Barton, Tennessee Walker, Shelby J. White, Andrew D. Sims, for Jerry V. Durant, Jerry V. Durant, Inc. d/b/a Durant Toyota and d/b/a Jerry Durant Toyota, Jerry Durant Hyundai, LLC, Doyle Maynard, and Robert G. Cote, Sr., Gary Michael Deere, Jerry Rash, and Elliot "Scooter" Michelson.

Eva M. Guzman, Justice

After a decade of successful employment with Jerry Durant Auto Group, Andrew Anderson's employer offered him an oral deal to "buy in" to the business in exchange for undertaking management of two underperforming automobile dealerships. What seemed like the opportunity of a lifetime soon became Anderson's nightmare after he was falsely accused of taking illegal kickbacks on used-car acquisitions and lost his job. Rumors of Anderson's alleged misdeeds quickly spread in the closely connected auto industry, and Anderson, who was unemployed for months, was unable to obtain comparable employment. He sued his employer and several individuals for defamation, and because the buy-in transaction never came to fruition, he also sued his employer for breach of contract and fraudulent inducement.¹

The terms, but not the existence, of the buy-in offer were vigorously disputed. Anderson claimed the offer was firm and included a ten-percent interest in both dealerships and associated real-estate interests while his employer maintained the offer was contingent and limited to a ten-percent interest in only one of the dealerships. At the conclusion of a lengthy trial, the jury found Anderson's employer defrauded him and the defendants defamed him, but did not find that Anderson and his employer agreed to a buy-in deal that included interests in both the dealerships and their underlying real estate. The jury awarded Anderson $2.2 million in defamation damages, $383,150 in fraud damages based on a ten-percent ownership interest in both dealerships, and zero fraud damages for the value of a ten-percent interest in the real property. The trial court rendered judgment on the jury's verdict, but the court of appeals reversed and rendered a take-nothing judgment.²

The issues presented here are (1) whether the jury's failure to find that the parties agreed to the specific contract terms submitted in the contract question (dealership interests plus real-estate interests) precludes Anderson from recovering the value of the disputed dealership interests as benefit-of-the-bargain damages under a fraud theory that requires proof of an enforceable contract and (2) whether the evidence is legally sufficient to support the defamation damages the jury awarded. As to the first issue, we hold that the fraud liability question incorporated the required elements of a contract; the record contains legally sufficient evidence of an enforceable promise to provide Anderson a ten-percent ownership interest in the two dealerships in exchange for leaving a more secure management position; and no findings render the exchange unenforceable or otherwise conflict with the jury's fraud findings. As to the second issue, legally sufficient evidence supports the damages awarded for loss of reputation and mental anguish in the past, but no evidence supports the existence of future damages or a finding that the kickback allegations caused any lost-income damages. We therefore affirm the court of appeals' judgment in part, reverse in part, and remand the case to that court for further proceedings.

I. Background

Jerry Durant is the majority shareholder in Jerry Durant Auto Group, Inc., which owns five dealership entities including Jerry Durant, Inc., doing business as Durant Toyota and Jerry Durant Toyota (Durant Toyota), and Jerry Durant Hyundai, LLC (Durant Hyundai) (collectively Auto Group).³ Andrew Anderson began working for Auto Group in 2001 as a used-car manager and at all times was an at-will employee.

During the course of his decade-long tenure with the company, Anderson's career flourished. At the mid-way point, Anderson assumed the General Manager mantel at an Auto Group dealership in Weatherford, Texas and was appointed to Auto Group's board of directors. Five years later, in early 2011, Durant offered Anderson a deal to "buy in" and become part owner of the business. The buy-in agreement was never reduced to writing, and as often happens in such cases, the terms of the deal are disputed.

According to Anderson, Durant offered him the opportunity to be the "dealer owner/operator" of two dealerships in Granbury, Texas—Durant Toyota and Durant Hyundai. In exchange, Anderson would immediately receive a ten-percent ownership interest in those dealerships and the land on which they sit, with one caveat: Anderson would have to leave his relatively secure position in Weatherford and assume management responsibility for the historically struggling Toyota and Hyundai franchises.

Durant describes a different deal. Durant says he offered Anderson a general manager position at both Granbury dealerships and the opportunity to earn a ten-percent ownership interest in Durant Hyundai if—and only if—the store had a net profit of $400,000, a metric Durant considered "achievable" despite a $250,000 loss the previous year. As Durant tells it, this deal did not include any real-estate interests nor any interest in Durant Toyota and was subject to Hyundai's approval of Anderson becoming an owner. Around the same time, Durant made similar agreements with two other managers, both of which included a minimum-profit condition, did not include real-estate interests, and were reduced to signed writings.

Whatever the deal was, Anderson accepted it and moved to Granbury to begin managing the Hyundai and Toyota dealerships. Shortly after Anderson's arrival, a press release and marketing materials heralded him as a "partner/principle [sic]" of the "Jerry Durant Auto Group—Granbury Division." Durant disclaimed responsibility for these publications, but not contemporaneous knowledge of them. Yet Durant made no effort to correct any misunderstanding about Anderson's position, even though he and another Auto Group shareholder were both photographed with Anderson for the marketing materials. Anderson also alleges that Durant introduced him to a Toyota executive and asked the executive to begin separating the Granbury location from the Weatherford location so Anderson could acquire an interest in the Granbury Toyota dealership. But Anderson never acquired an interest in any Auto Group dealership and, within months, would be out of a job and under a cloud of suspicion.

Starting in December 2011, the events precipitating this lawsuit unfolded fast and furiously. In early December, Durant called a meeting of all managers and announced he had reached a deal in principle to sell his dealerships for $44 million. Durant said the managers with buy-in agreements would be "taken care of," but he did not explain what that meant, and Anderson did not ask. Days later, at the company Christmas party, Durant pulled the managers with buy-in agreements aside, told them the preceding twelve months had been the most profitable in Auto Group's history, and gave each of them a check for $75,000, Anderson included. The purpose of this payment is a matter of dispute. According to Durant, the $75,000 checks were in lieu of the managers' buy-in interests. Anderson, however, viewed the payments as Christmas bonuses and said neither Durant nor anyone else communicated that the checks were intended to compensate the managers for their buy-in interests.

Under Durant's version of the buy-in deal, Anderson should not have received a payment for his buy-in interest because the Hyundai dealership had not achieved the $400,000 net-profit required for a buy-in interest. But Durant said he included Anderson in the buy-out payments simply because he is "a generous man" who "tr[ies] to take care of [his] employees."

The spirit of generosity was short-lived. Within days, Durant assembled the used-car managers and salesmen and publicly accused Anderson of mismanaging inventory and buying cars directly from wholesalers rather than at auction as company policy mandated. Afterwards, Durant met privately with Anderson to reprimand him about buying cars from a particular wholesaler despite specific instructions not to do so. A company executive also informed Anderson that Durant asked him to review all of Anderson's car deals while at Granbury.

In a follow-up meeting just before the close of the year, Durant accused Anderson of taking kickbacks on fifteen cars purchased wholesale and claimed Auto Group had lost about $30,000 because of these transactions. Anderson denied taking kickbacks but offered to cover any losses. Because Anderson denied violating company policy, Durant asked Anderson to take a polygraph test.

The results of the polygraph test were inconclusive, but Anderson reported to Durant that his own investigation showed no losses on the transactions. Anderson therefore rescinded his offer to repay the alleged losses, stating "it's wrong, Boss. It's wrong." Durant replied, "if you think that's wrong, you can hit the dirt," which Anderson understood to mean he was fired. Anderson left and never returned to work. Durant later admitted he had suspicions but no evidence that Anderson ever took kickbacks, and Anderson subsequently passed a second polygraph test on the matter.

The car-selling industry being a small and close-knit community, rumors quickly spread about Anderson's termination and the...