Chase Commercial Corp. v. Datapoint Corp.

• Decision Date: 27 June 1989
• Docket Number: No. 05-88-01303-CV,05-88-01303-CV
• Citation: 774 S.W.2d 359
• Parties: 9 UCC Rep.Serv.2d 1048 CHASE COMMERCIAL CORPORATION, Appellant, v. DATAPOINT CORPORATION, Appellee.
• Court: Texas Court of Appeals

Page 359

774 S.W.2d 359

9 UCC Rep.Serv.2d 1048

CHASE COMMERCIAL CORPORATION, Appellant, v. DATAPOINT CORPORATION, Appellee.

No. 05-88-01303-CV.

Court of Appeals of Texas,

Dallas.

June 27, 1989.

Rehearing Denied Aug. 8, 1989.

David M. Pruessner, Mark R. Randall, Dallas, for appellant.

Robert L. Knebel, Jr., John B. Gessner, Dallas, for appellee.

Before STEWART, BAKER and WHITTINGTON, JJ.

BAKER, Justice.

Chase Commercial Corporation appeals from an adverse judgment in a suit in which Chase alleged that Datapoint Corporation committed fraud and breach of contract. We sustain, in part, Chase's first and fifth points of error, reverse the trial court's judgment, and remand this cause for a new trial.

Chase sued Datapoint, alleging that Datapoint breached an agreement governing assignments of equipment leases and that Datapoint committed fraud. Datapoint had leased computer equipment to a company referred to as NTD and later assigned the two leases to Chase. Chase complained that Datapoint failed to disclose to Chase the fact that NTD had gone into bankruptcy. The trial was before the court. After Chase rested, Datapoint moved for a directed verdict (in substance, a motion for judgment), which the trial court granted.

In its first point of error, Chase contends that the trial court erred in granting the motion for judgment because Chase proved as a matter of law each element of its causes of action for breach of contract and fraud. Chase argues in its fifth point of error that the trial court erred in granting the motion for judgment because Chase properly proved its damages.

Initially, we must determine the standard of appellate review that applies to this case. Datapoint contends that we must review only the factual sufficiency of the evidence supporting the trial court's judgment, relying on the recent case of Qantel Business Systems, Inc. v. Custom Controls Co., 761 S.W.2d 302 (Tex.1988). In Qantel, the supreme court overruled longstanding rules governing appellate review of a trial court's grant of a motion for judgment in a nonjury trial. See Qantel, 761 S.W.2d at 304-05. Chase maintains that it would be unfair to apply the new rules announced in Qantel in this case. Chase notes that at the time of this trial, the supreme court had not yet rendered the Qantel decision.

We must determine if the supreme court's decision in Qantel should be applied retroactively. The operative rules prior to Qantel originated in 1943, when it was held that the granting of a motion for judgment in a nonjury trial is the legal equivalent of the granting of a directed verdict in a jury trial. Qantel, 761 S.W.2d at 303; see Lorino v. Crawford Packing Co., 169 S.W.2d 235, 240 (Tex.Civ.App.--Galveston) (op. on reh'g), aff'd, 142 Tex. 51, 175 S.W.2d 410 (1943). Since those two actions were deemed equivalent, the appellate standard for reviewing the propriety of a directed verdict granted in a jury trial was held to be equally applicable to review of a granted motion for judgment in a nonjury trial. See Rhinetubes, Inc. v. Norddeutscher Lloyd, 335 S.W.2d 269, 274 (Tex.Civ.App.--Houston [1st Dist.] 1960, writ ref'd n.r.e.); Burkhardt v. Harris, 200 S.W.2d 445, 446-47 (Tex.Civ.App.--Austin 1947, no writ). That familiar standard of review requires that the evidence be considered in the light most favorable to the party against whom judgment was rendered, disregarding all contrary evidence and inferences. If there is any evidence raising material fact issues, the judgment must be reversed. See Collora v. Navarro, 574 S.W.2d 65, 68 (Tex.1978).

When this standard of review was applied to an appeal from the grant of a motion for judgment in a nonjury trial, the appellate court had to reverse and remand if the record contained any evidence that would support a judgment in favor of the party against whom judgment was rendered. See Stegman v. Chavers, 704 S.W.2d 793, 794-95 (Tex.App.--Dallas 1985, no writ). In other words, the trial judge in a nonjury trial could grant a motion for judgment at the close of the plaintiff's case only when there was no evidence to support the plaintiff's cause of action. Qantel, 761 S.W.2d at 304. The trial judge was not authorized to rule on the factual sufficiency of the plaintiff's evidence. Moreover, the trial judge was not authorized to make findings of fact, and any purported findings were of no legal significance on appeal. See Qantel, 761 S.W.2d at 304; Charter Int'l Oil Co. v. Tolson Oil Co., 720 S.W.2d 165, 167 (Tex.App.--Austin 1986, no writ); Yarbrough v. Phillips Petroleum Co., 670 S.W.2d 270, 272 (Tex.App.--Houston [1st Dist.] 1983, writ ref'd n.r.e.).

The supreme court noted in Qantel that these longstanding rules had been severely criticized because they fostered judicial inefficiency. The trial judge who was unpersuaded by the plaintiff's evidence, but could find some evidence supporting the plaintiff's claim, was required to hear the defendant's portion of the case. Only thereafter could the trial judge make a factual sufficiency ruling concerning the plaintiff's case. See Qantel, 761 S.W.2d at 304. The supreme court agreed with the criticisms of the old rules, overturned them, and adopted new rules. The court stated:

When a plaintiff rests, he indicates that he does not desire to put on further evidence, except by rebuttal testimony, and that he has fully developed his case. The defendant should not be forced to put on a defense on the chance that he will prove the plaintiff's claim. No useful result obtains by having the court hear the defendant's evidence when the judge, as trier of fact, is unpersuaded by the plaintiff's case. A more judicially efficient and economical procedure is to allow the trial judge, sitting as trier of fact and law, to rule on both the factual and legal issues at the close of the plaintiff's case and to make factual findings at that time if requested by a party.

Qantel, 761 S.W.2d at 304. The court remanded the Qantel case to the court of appeals for consideration of the factual sufficiency point of error which had not been addressed. Qantel, 761 S.W.2d at 305.

In the present case, Chase does not question the authority of Qantel, but it urges that retroactive application of Qantel to this case would be inequitable. The general rule is that a decision of the supreme court is to be retrospective in its operation. Sanchez v. Schindler, 651 S.W.2d 249, 254 (Tex.1983). However, there are recognized exceptions when considerations of fairness and policy preclude full retroactivity. Determination of the issue turns primarily on the extent of reliance on the former rule and the foreseeability of a change in the law. Sanchez, 651 S.W.2d at 254. Procedural rules in effect at the time of trial have been held applicable on appeal. See, e.g., Coker v. Mitchell, 535 S.W.2d 175, 175-76 (Tex.1976) (per curiam).

We hold that Qantel should not be retroactively applied to the present case. The trial judge granted what she referred to as defendant's motion for directed verdict on September 15, 1988, almost three months before the supreme court's decision in Qantel. See Qantel, 761 S.W.2d 302. The trial court apparently treated the motion as a motion for directed verdict, although it was actually a motion for judgment. See Qantel, 761 S.W.2d at 303. In any case, the grant of either kind of motion received identical appellate review prior to Qantel. Also, under pre-Qantel law, each had to be based on a finding that there was no evidence supporting the plaintiff's claims. We find it difficult to believe that the trial judge or either party thought otherwise. In its argument in support of its motion, Datapoint used language appropriate under the pre-Qantel rules. Datapoint argued that Chase had "failed to present any evidence" and had "completely failed to meet their [sic] burden of proof." The trial court, in its judgment, found that Datapoint's motion was "well taken and should be granted."

Presumably, Chase did not request findings of fact because at all relevant times it was not entitled to such findings. During oral argument, Chase represented to this Court that it did not request factual findings because of its reliance on pre-Qantel law. We are of the opinion that Datapoint presented its motion based on the ground that Chase had failed to present any evidence in support of its claims. Unless the trial judge was clairvoyant, we think that she granted the motion on that ground, since it was the only appropriate basis at the time.

The pre-Qantel rules, although criticized, had been routinely followed since 1943. See Qantel, 761 S.W.2d at 304. We are aware that the supreme court stated in Qantel that "[u]nder this opinion, the trial judge is presumed to have ruled on the sufficiency of the evidence." Qantel, 761 S.W.2d at 305. We think that this statement is entirely proper when applied to the Qantel case and to trial court rulings rendered after the decision in Qantel. However, under the authority of rules announced by the supreme court, we decline to apply Qantel retroactively to the present case. Although the prior law was criticized, we are of the view that its longstanding nature weighed in favor of the relative unforeseeability of a change in the law. In short, we think that it would be unfair to apply Qantel to this case. See Sanchez, 651 S.W.2d at 254; Ex parte Hovermale, 636 S.W.2d 828, 835-36 (Tex.App.--San Antonio 1982, no writ). In this case, the rules in effect at the time of the trial court's ruling should apply. See Coker, 535 S.W.2d at 175-76.

We therefore consider the evidence in the light most favorable to Chase, discarding all contrary evidence and inferences. If there is any evidence that would support a judgment in Chase's favor, we must reverse the trial court's judgment. See Collora, 574 S.W.2d at 68; Stegman, 704 S.W.2d at 795.

We first consider Chase's breach of contract cause of action in the context of Chase's points of error numbered...