Barker v. Eckman
| Decision Date | 01 December 2006 |
| Docket Number | No. 04-194.,04-194. |
| Citation | 213 S.W.3d 306 |
| Parties | Emzy T. BARKER, III and Ava Barker d/b/a Brushy Creek Brahman Center and Brushy Creek Custom Sires, Petitioners, v. Walter W. ECKMAN, Individually and as Nominee and Trustee, Eckman, Inc., and Larry Eckman, Respondents. |
| Court | Texas Supreme Court |
Richard P. Hogan Jr., Jennifer Bruch Hogan, Pillsbury Winthrop Shaw Pittman, L.L.P., J. Brett Busby, Mayer, Brown, Rowe, & Maw LLP, Houston, Richard N. Evans II, Beaumont, Mark Owen, Owen Bogart and Rogers, Elgin, for petitioners.
Robert L. Ketchand, Jennifer G. Black, Constance O'Doherty Barnes, Boyer & Ketchand, P.C., David Walter Eckman, Law Offices of David W. Eckman, Houston, for respondents.
P.M. Schenkkan, Graves Dougherty Hearon & Moody, P.C., Austin, Amicus Curiae for Texans for Lawsuit Reform.
We address two issues in this appeal from a suit for breach of a bailment agreement. The first is when the statute of limitations begins to run for breach of the agreement. The second is whether the case must be remanded for a new trial as to attorney's fees when the amount of actual damages is reduced on appeal because of trial court error. As to the first issue we hold that the statute of limitations runs from the date the agreement is breached. As to the second we hold that, subject to harmless error analysis, a reduction in actual damages requires the case to be remanded for a new trial on attorney's fees. Determining that the trial court committed error which was not harmless as to the award of attorney's fees, we reverse the court of appeals' judgment and remand the case to the trial court for further proceedings consistent with this opinion.
Emzy and Ava Barker owned Brushy Creek Custom Sires, a business that boarded and provided other services for Brahman bulls. Between 1981 and 1995 Walter Eckman owned interests in two bulls and in semen of a third that were boarded at Brushy Creek. Eckman, his co-owners, and Brushy Creek agreed that Brushy Creek would board the bulls, collect, store, and sell semen from the bulls, and then distribute the sales proceeds to Eckman and his co-owners according to their interests. As a result of disclosures in bankruptcy proceedings of a co-owner of one of the bulls, Eckman became convinced that Brushy Creek had breached its agreement as to sales, handling of proceeds from sales, and accounting for his shares of bull semen.
By a letter dated October 25, 1995, Eckman's attorney demanded that the Barkers deliver the semen owned by Eckman to a different storage facility, compensate Eckman properly for his share of prior sales and repay overcharges for storage of the semen. The Barkers delivered the semen as requested, but refused Eckman's monetary demands. Eckman and the Barkers signed a tolling agreement dated December 29, 1995 to see if Eckman's monetary claims could be resolved without litigation. Eckman was not satisfied with the accounting provided by the Barkers, however, and sued them.1 In his suit, Eckman alleged that the Barkers breached their bailment agreement at various times through the years by (1) collecting proceeds of sales without crediting him for his share; (2) delivering semen without collecting proceeds; (3) failing to notify him of delivery or sales of semen; (4) charging storage for units of semen that should have been sold; and (5) delivering inadequate, false, and misleading accounting for storage, sale, and shipment.
The Barkers defended, in part, on the basis that Eckman's claims were barred by the four year statute of limitations. See TEX. CIV. PRAC. & REM. CODE §§ 16.004(a)(3), 16.051. Their motion for summary judgment urging limitations was denied, as was a motion for directed verdict during trial.
Following trial the case was submitted to the jury by three questions: (1) did the Barkers fail to comply with a bailment agreement; (2) if so, what were Eckman's damages; and (3) what were Eckman's necessary attorney's fees. The jury answered the first question "Yes," found Eckman's damages to be $111,983.58, and found Eckman's attorney's fees for preparation and trial to be $222,000 with additional fees of $22,500 for appeal.
The Barkers moved for judgment notwithstanding the verdict on the basis that any of Eckman's damages based on events that took place more than four years before the tolling agreement were barred by the four-year statute of limitations. The trial court denied the motion for JNOV as well as the Barkers' motion for new trial, and the Barkers appealed.
The court of appeals held that Eckman's cause of action for each of the Barkers' separate breaches of the agreement accrued at the time of each breach. Thus the court of appeals held that damages for breaches such as failure to sell semen, failure to pay Eckman's share of proceeds to him, and excessive charges for storage of semen were barred if those actions took place more than four years before execution of the tolling agreement. The appeals court held that all but $16,180.14 of Eckman's damages were barred by limitations and reduced the compensatory damages accordingly. The attorney's fees award was not reduced. 213 S.W.3d 360, 2004 WL 163462.
Eckman and the Barkers filed petitions for review. Eckman complains that the court of appeals erred in reducing his damages on the basis of limitations because the cause of action for all his damages accrued at the time of his demand in October 1995. The Barkers urge that the court of appeals erred in affirming the award of attorney's fees to Eckman in light of the reduction in Eckman's damages.
In contending that the court of appeals erred by reducing his damages based on limitations, Eckman first asserts that the Barkers failed to preserve error on the issue. He then makes two arguments on the merits. By his first argument on the merits he asserts that the cause of action for breach of a bailment agreement does not accrue until a bailor makes demand or receives actual notice of a breach. By his second argument he urges that there was some evidence that the statute of limitations did not begin running immediately as to each individual breach as each breach occurred through the years because he did not receive notice of the breaches and because Eckman did not discover and could not, with reasonable diligence, have discovered the breaches. We conclude that the court of appeals correctly held that damages for breaches which took place more than four years before Eckman filed suit were barred by the statute of limitations and that it correctly reduced Eckman's damages accordingly.
Eckman asserts that the Barkers waived their limitations issue by failing to request findings of fact and conclusions of law with respect to the trial court's ruling on their limitations defense. But, fact findings are not necessary when the matters in question are not disputed. See Sullivan v. Barnett, 471 S.W.2d 39, 44 (Tex.1971) ().
Eckman's expert witnesses and trial exhibits identified specific dates and actions by the Barkers which Eckman contended were breaches of the bailment agreement. The Barkers made a motion for directed verdict based on limitations. Counsel for the parties and the trial court specifically discussed the limitations question prior to submission of the case to the jury. Eckman's counsel agreed with the trial court's stated understanding that the dates of the alleged breaches through the years were not disputed and that the trial court could decide the limitations question as a matter of law.
The Barkers were not required to obtain fact findings on the limitations issue to preserve error because the dates of the alleged breaches were not disputed.
Claims for breaches of bailment agreements generally can be brought as contract or tort claims depending on the particular facts of the case and the type of action the plaintiff chooses to assert. See Presley v. Cooper, 155 Tex. 168, 284 S.W.2d 138, 140-41 (1955) (); Elder, Dempster & Co. v. St. Louis Sw. Ry. Co., 105 Tex. 628, 154 S.W. 975, 987-88 (1913) (). Eckman pleaded, tried, and submitted his case to the jury as a breach of contract case. His claims and proof of damages were for specified actions taken or omitted by the Barkers through the years. Eckman's briefing affirms that the cause of action he asserted was for breach of a bailment agreement.
Eckman acknowledges the general rule that a breach of contract action accrues immediately upon breach. See Stine v. Stewart, 80 S.W.3d 586, 592 (Tex.2002) (). He contends, however, that the cause of action for breach of a bailment agreement does not accrue until (1) the bailor makes demand upon the bailee; or (2) if demand is nonexistent or ineffective, then when the bailor receives actual notice of conduct by the bailee which is inconsistent with the bailor's rights.
We agree with Eckman that a cause of action for breach of a bailment agreement can accrue when the agreement is breached by the bailee's refusal to comply with the bailor's rightful demand for return or disposition of the bailed property, or when the bailee takes action clearly inconsistent with the bailor's contractual rights. But, the rule that a cause of action may accrue upon such types of breach does not preclude accrual of a cause of action at an earlier time if the bailee at an earlier time breaches the agreement. The...
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