Commercial Escrow Co. v. Rockport Rebel, Inc.

• Decision Date: 31 August 1989
• Docket Number: No. 13-89-004-CV,13-89-004-CV
• Citation: 778 S.W.2d 532
• Parties: COMMERCIAL ESCROW COMPANY and James De Mik, Appellants, v. ROCKPORT REBEL, INC., Appellee.
• Court: Texas Court of Appeals

Page 532

778 S.W.2d 532

COMMERCIAL ESCROW COMPANY and James De Mik, Appellants, v. ROCKPORT REBEL, INC., Appellee.

No. 13-89-004-CV.

Court of Appeals of Texas,

Corpus Christi.

Aug. 31, 1989.

Rehearing Denied Oct. 12, 1989.

Alan Mask, Dallas, for appellants.

Colin K. Lineberry, Robert W. Johnson, Jr., Matthews & Branscomb, Corpus Christi, for appellee.

Before UTTER, SEERDEN, and BENAVIDES, JJ.

OPINION

UTTER, Justice.

Rockport Rebel, Inc., appellee, brought suit against the Commercial Escrow Company and James De Mik, appellants, alleging that appellants had disbursed funds they were holding in escrow for appellee without appellee's prior authorization. A jury found appellants guilty of deceptive trade practices, negligence, and a breach of fiduciary duty and found that Commercial Escrow was the alter ego of James De Mik. Based on the jury's findings, the trial court ordered Rockport Rebel recover from appellants, jointly and severally, the total amount of $46,002.00 plus pre- and post-judgment interest. We affirm the judgment of the trial court.

On or about July 10, 1986, Rockport Rebel entered into a contract to sell The Best Western Rockport Rebel Motel to the TDL Development Company (TDL). However, because of TDL's inability to pay $25,000.00 in earnest money, Rockport Rebel agreed to put that amount into an escrow account pursuant to the Addendum to Contract to Purchase Best Western ("Addendum") to facilitate the sale of the motel. The Addendum was executed between Rockport Rebel and TDL on July 18, 1986 and provided that if the sale of the motel did not close, the earnest money would be refunded in full to Rockport Rebel. Hanco Properties, Rockport Rebel's real estate agent, subsequently delivered a $25,000.00 cashier's check and a copy of the Addendum to Commercial Escrow, who in turn, deposited the check into an escrow account.

On July 21, 1986, Commercial Escrow issued an escrow receipt improperly showing that the money had been received from TDL. Rockport Rebel notified Commercial Escrow of its error around the end of July. However, on August 13, 1986, Commercial Escrow released the money to Citywide Financial Services (Citywide), the party with whom TDL filed an application for financing the purchase of the motel. A corrected escrow receipt was subsequently issued on August 22, 1986. Rockport Rebel learned about September 19, 1986 that the money had been released to Citywide. Since that time, Citywide has ceased to exist and the sale of the motel was not completed. Commercial Escrow, however, refused to return the $25,000.00 in accordance with the Addendum. Appellee subsequently filed this suit.

Appellants challenge the sufficiency of the evidence by fifteen points of error. In considering a "no evidence", "insufficient evidence" or "against the great weight and preponderance of the evidence" point of error, we will follow the well-established test set forth in Pool v. Ford Motor Co., 715 S.W.2d 629 (Tex.1986); Dyson v. Olin Corp., 692 S.W.2d 456 (Tex.1985); Glover v. Texas General Indemnity Co., 619 S.W.2d 400 (Tex.1981); Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); Allied Finance Co. v. Garza, 626 S.W.2d 120 (Tex.App.--Corpus Christi 1981, writ ref'd n.r.e.); and Calvert, No Evidence and Insufficient Evidence Points of Error, 38 Texas L.Rev. 361 (1960).

By their first through third points of error, appellants challenge the legal and factual sufficiency of the evidence to support the jury's answers to special issues twelve through fourteen. Special issues twelve through fourteen asked the jury what sums of money would reasonably compensate Rockport Rebel for the damages caused by appellants' deceptive trade practices, negligence, and breach of fiduciary duties. The jury answered $25,000.00 as to each cause of action. Appellants contend that the evidence fails to show that Bruce Stark was acting in his representative capacity as president of Rockport Rebel when he placed the $25,000.00 in escrow or that Rockport Rebel was otherwise involved in or suffered a loss from the transactions in question. Appellants argue that Bruce Stark was the true party in interest and that this suit was actually prosecuted by the wrong plaintiff.

Bruce Stark testified that he is the president and chief operating officer of Rockport Rebel, a corporation which owns the Best Western Motel. Rockport Rebel is composed of six shareholders who collectively make the decisions for the corporation. Stark further testified that since Rockport Rebel was having difficulty obtaining long-term financing for the motel, they decided to sell the motel if they could find a buyer. TDL subsequently offered to purchase the property and sought financing through Citywide. Citywide, however, required a $25,000.00 loan commitment fee be placed in escrow with the Commercial Escrow Company before they would proceed. TDL was unable to put up that amount. Since Rockport Rebel needed to sell the motel, they began "considering, as the seller, putting up the twenty-five thousand dollars," and subsequently agreed "if they would put it into an escrow account where we could control it ... that would be the only way we would accept it."

An escrow agreement was drawn up and signed which was entitled "Addendum to Contract to Purchase the Best Western Rockport Rebel" and lists the seller as "Bruce Stark, et al." The Addendum further states that "seller will deposit into an escrow account ... the sum of $25,000.00 as required in this contract ... [and] that if this contract is not completed (funded, closed, consummated), then this money will be fully refunded to seller ..." (emphasis added). The cashier's check for $25,000.00 which was accepted and deposited by Commercial Escrow lists "Best Western Rebel Rockport" as remitter. Lastly, when asked on cross-examination whether he had done anything to put the name of Bruce Stark in the file of the Commercial Escrow Company, Stark expressly stated that "Bruce Stark was not doing this transaction. Rockport Rebel, Inc., was doing this transaction."

We conclude that there is sufficient evidence to show that Rockport Rebel suffered the damages the jury found in special issues twelve through fourteen. Cf. Aztec Management & Investment Co. v. McKenzie, 709 S.W.2d 237, 238 (Tex.App.--Corpus Christi 1986, no writ). We overrule appellants' first through third points of error.

By their fourth point of error, appellants challenge the legal and factual sufficiency of the evidence to support the trial court's implied finding that appellee was a consumer as defined by the Deceptive Trade Practices Act.

Whether or not plaintiff is a consumer under the DTPA is a question of law to be determined by the trial court from the evidence. First Federal Savings & Loan Association v. Ritenour, 704 S.W.2d 895, 898 (Tex.App.--Corpus Christi 1986, writ ref'd n.r.e.); Reed v. Israel National Oil Co., 681 S.W.2d 228, 233 (Tex.App.--Houston [1st Dist.] 1984, no writ). Tex.Bus. & Comm.Code Ann. § 17.45(4) (Vernon 1987) describes a "consumer" as a "corporation ... who seeks or acquires by purchase or lease, any goods or services...." A plaintiff establishes its standing as a consumer in terms of its relationship to a transaction, not by a contractual relationship with the defendant. Birchfield v. Texarkana Memorial Hospital, 747 S.W.2d 361, 366 (Tex.1987); March v. Thiery, 729 S.W.2d 889, 896 (Tex.App.--Corpus Christi 1987, no writ). The only requirement is that the goods or services sought or acquired by the plaintiff form the basis of its complaint. Kennedy v. Sale, 689 S.W.2d 890, 892-93 (Tex.1985); Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 707 (Tex.1983).

The record reflects that Rockport Rebel sought and acquired escrow services from Commercial Escrow to facilitate its sale of a motel to TDL. The record further reflects that TDL was seeking financing to purchase that motel from Citywide and that the escrow services were actually paid for by Citywide pursuant to a master escrow agreement between Commercial Escrow and Citywide.

Rockport Rebel was not required to show that it somehow actually paid for the escrow services itself. Martin v. Lou Poliquin Enterprises, Inc., 696 S.W.2d 180, 183-85 (Tex.App.--Houston [14th Dist.] 1985, writ ref'd n.r.e.); Reuben H. Donnelley Corp. v. McKinnon, 688 S.W.2d 612, 616 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.); Waters v. Hollie, 642 S.W.2d 90, 92 (Tex.App.--Fort Worth 1982, no writ). Rather, Rockport Rebel's relationship to the transaction as a whole established its consumer status. We conclude that the escrow services sought and acquired from Commercial Escrow form the basis of Rockport Rebel's complaints and that Rockport Rebel was a consumer under the DTPA. We overrule appellants' fourth point of error.

By their fifth through tenth points of error, appellants challenge the legal and factual sufficiency of the evidence to support the jury's answers to special issues four through six. These issues asked the jury whether appellants, by the issuance of a corrected escrow receipt (PX-4), represented (1) that their services had characteristics, uses or benefits which they did not have; (2) that their services were of a particular standard or quality when they were of another; and (3) that work or services had been performed when the work or services had not been performed. These issues further asked whether each of the above representations was a producing cause of Rockport Rebel's damages. Additionally, appellants argue that since these special issues were narrowly submitted and only inquired whether the issuance of the corrected escrow receipt (PX-4) made various representations that were the producing cause of Rockport Rebel's damages, our review is limited in scope to that document. We disagree. PX-4 was merely an "escrow receipt" which appellants issued indicating that they had, in fact, received the $25,000.00 from Bruce Stark for the Rockport Rebel Best...