Ed Rachal Foundation v. D'Unger

• Citation: 117 S.W.3d 348
• Decision Date: 29 August 2003
• Docket Number: No. 13-00-335-CV.,13-00-335-CV.
• Parties: The ED RACHAL FOUNDATION and Paul Altheide, Appellants, v. Claude D'UNGER, Appellee.
• Court: Court of Appeals of Texas

117 S.W.3d 348

The ED RACHAL FOUNDATION and Paul Altheide, Appellants, v. Claude D'UNGER, Appellee.

No. 13-00-335-CV.

Court of Appeals of Texas, Corpus Christi-Edinburg.

August 29, 2003.

Rehearing Overruled October 9, 2003.

Chester Joseph Makowski, San Antonio, Myra K. Morris, Ralph F. Meyer, Corpus Christi, Nathan Wesely, Houston, Royston, Rayzor, Vickery & Williams, L.L.P., for appellants.

Andrew M. Greenwell, James R. Harris, Harris & Greenwell, Corpus Christi, for appellee.

Before the Court en banc.

OPINION

Opinion by Justice RODRIGUEZ.

This is an employment case. Appellee, Claude D'Unger, filed suit against appellants, the Ed Rachal Foundation (the Foundation), D'Unger's former employer, and Paul Altheide, the Foundation's chief executive officer (CEO). D'Unger claimed breach of contract and wrongful termination against the Foundation and tortious interference with a contract against Altheide. After a jury verdict and judgment entered in favor of D'Unger, this appeal ensued. By thirteen issues, appellants generally contend: (1) the evidence was insufficient to support the jury's findings of breach of contract, wrongful termination, tortious interference, and damages; (2) attorney's fees should not have been awarded; (3) there was charge error; (4) certain testimony and unproduced documents were admitted in error; and (5) the trial subpoena of a non-party was error. We affirm, in part, and reverse and render, in part.

I. Background

The Foundation, a non-profit charitable organization, is an operating foundation. In order to maintain its tax-exempt status, the Foundation must use its assets for non-exempt purposes; it is required to distribute five percent of the market value of its assets each year to charities. At the time of the incidents that form the basis of this lawsuit, Altheide was employed by the Foundation as Chief Financial Officer, and D'Unger had been hired as Vice-President of Exempt Activities for the Foundation. In addition to being operation employees, Altheide and D'Unger were elected officers of the Board, CEO and secretary, respectively.

The Galvan Ranch (the Ranch) in Webb County, Texas, is one of the Foundation's assets. The Ranch extends over 67,000 acres and is bordered along a five-mile frontage by the Rio Grande River. The crossing of ranch property by non-United States citizens is a common occurrence. Corpses of transients who had succumbed to the harsh environment had been found in the vicinity of the Ranch.

Beginning in January of 1998, D'Unger reported details of a September 17, 1997 handcuffing incident on the Ranch, and his fears for the well-being of three teenage transient non-United States citizens, to nine separate local, state, and federal agencies and officials. In his communications, D'Unger also expressed his concerns about Altheide's alleged self-dealing¹ and other suspect activities of the Foundation.² D'Unger's communications with outside entities regarding the Foundation's activities were against Altheide's express instructions not to do so.

In April, Altheide learned of D'Unger's actions, and on April 13, 1998, Altheide suspended D'Unger's employment with the Foundation. The suspension, however, did not affect D'Unger's status as a Board member. His compensation continued. Throughout the suspension, D'Unger also continued to communicate with law enforcement and other agencies about the Foundation's activities, and about what he contended were efforts to include him in a conspiracy to cover up criminal and illegal conduct.

On August 10, 1998, Altheide asked D'Unger to resign. When D'Unger refused, Altheide fired him. D'Unger decided not to submit his name for re-election as a director. The minutes of a special meeting held by the Board on August 11, 1998, reflect that the Board unanimously: (1) appointed operating officers, including Altheide as CEO but not including D'Unger in any capacity; (2) amended the Foundation's by-laws to decrease the number of directors from five to four; and (3) ratified the scope of Altheide's duties as chief executive officer. D'Unger was no longer a director, officer, or employee of the Foundation.

II. Employment Contract Claim

In its first issue, the Foundation asserts that the evidence is legally insufficient or, in the alternative, factually insufficient to support the jury's finding that the Foundation agreed to an employment contract that limited its right to terminate D'Unger.

A. Standard of Review

1. Legal Sufficiency Challenge

Reviewing a legal sufficiency challenge, we consider only the evidence and inferences that support the finding. Lenz v. Lenz, 79 S.W.3d 10, 19 (Tex.2002); Raw Hide Oil & Gas, Inc. v. Maxus Exploration Co., 766 S.W.2d 264, 276 (Tex.App.-Amarillo 1988, writ denied). We disregard all evidence and inferences to the contrary. Lenz, 79 S.W.3d at 19; Maxus, 766 S.W.2d at 276. Because the Foundation did not bear the burden of proof at trial on modification of D'Unger's at-will status, Larson v. Family Violence & Sexual Assault Prevention Ctr. of S. Tex., 64 S.W.3d 506, 518 (Tex. App Corpus Christi 2001, pet. denied); Rios v. Tex. Commerce Bancshares, Inc., 930 S.W.2d 809, 814-15 (Tex.App.-Corpus Christi 1996, writ denied), we analyze the Foundation's legal-sufficiency challenge as a no-evidence issue. Gooch v. Am. Sling Co., Inc., 902 S.W.2d 181, 183 (Tex.App.-Fort Worth 1995, no writ). The Foundation must show that the record presents no probative evidence to support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983).

The evidence is no more than a scintilla and, in legal effect, is no evidence "[w]hen the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence." Kindred v. Con/Chem., Inc., 650 S.W.2d 61, 63 (Tex.1983). Conversely, more than a scintilla exists when the evidence "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex.1994). We reverse and render judgment when we sustain a legal-sufficiency point. Vista Chevrolet, Inc. v. Lewis, 709 S.W.2d 176, 177 (Tex.1986) (per curiam); Heritage Res., Inc. v. Hill, 104 S.W.3d 612, 619 (Tex.App.-El Paso 2003, no pet. h.).

2. Factual Sufficiency Challenge

Unlike legal-sufficiency challenges, factual-sufficiency issues concede that the record presents conflicting evidence on an issue. Maxus, 766 S.W.2d at 275. Like legal-sufficiency challenges, the standard of review on factual-sufficiency issues depends on the burden of proof at trial. Id. at 275. The party attacking a finding on which an adverse party bore the burden of proof must show that the record presents "insufficient evidence" to support the finding. Gooch, 902 S.W.2d at 184. In reviewing an insufficient-evidence issue, we examine and consider all of the evidence, not just the evidence that supports the verdict, to see whether it supports or undermines the finding. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex.1998). We set aside the finding for factual insufficiency if the "evidence adduced to support the vital fact, even if it is the only evidence adduced on an issue, is factually too weak alone to support it." See Ritchey v. Crawford, 734 S.W.2d 85, 86-87 n. 1 (Tex.App.-Houston [1st Dist.] 1987, no writ) (quoting Robert W. Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex. L.Rev. 361, 366 (1960)).

In attacking for factual insufficiency an adverse finding on which it bore the burden of proof at trial, a party must show that the finding is against the "great weight and preponderance of the evidence." Maxus, 766 S.W.2d at 275; Ritchey, 734 S.W.2d at 86-87 n. 1. In that event, we set aside a finding so against the overwhelming weight of the evidence as to be manifestly unjust and clearly wrong. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996) (per curiam).

If we reverse a trial court's judgment on factual-sufficiency grounds, we detail all of the evidence relevant to the issue and articulate why the finding is factually insufficient. Mar. Overseas Corp., 971 S.W.2d at 407. We reverse and remand for a new trial when we sustain a factual-sufficiency point. Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401 (Tex. 1981) (per curiam); Heritage Res., 104 S.W.3d at 619.

B. Analysis

All employment relationships in Texas are presumed at will. Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex.1998). "[A]bsent a specific agreement to the contrary, employment may be terminated by the employer or employee, for good cause, bad cause, or no cause at all." Id. Any modification of at-will employment must be based on an unequivocal statement by the employer not to terminate the employee except under clearly specified circumstances. Byars v. City of Austin, 910 S.W.2d 520, 523 (Tex. App.-Austin 1995, writ denied). One cannot imply the modification; it must be express. Midland Judicial Dist. Cmty. Supervision & Corr. Dep't v. Jones, 92 S.W.3d 486, 487 (Tex.2002)(per curiam); Brown, 965 S.W.2d at 503-04. The agreement must directly limit, in a "meaningful and special way," the employer's right to discharge the employee without cause. Larson, 64S.W.3d at 518. It is the burden of the discharged employee who asserts that the parties have contractually agreed to limit the employer's right to terminate the employee to prove an express agreement or written representation to that effect. Id. at 518; Rios, 930 S.W.2d at 814-15.

As with all contracts, the parties to an employment agreement must negotiate and agree to its essential terms for the agreement to be enforced. See Larson, 64 S.W.3d at 519; see also Smith v. SCI Mgmt. Corp., 29 S.W.3d 264, 268 (Tex.App.-Houston [14th Dist.] 2000, no pet.) ("We find that such a general discussion about an employee's annual compensation does not raise a fact issue as to whether the parties agreed to limit in a `meaningful and...