Endsley Elec., Inc. v. Altech, Inc.

Citation378 S.W.3d 15
Decision Date07 August 2012
Docket NumberNo. 06–11–00124–CV.,06–11–00124–CV.
PartiesENDSLEY ELECTRIC, INC., d/b/a Industrial Power Systems or Industrial Power Systems, Inc., et al., Appellants v. ALTECH, INC., Appellee.
CourtCourt of Appeals of Texas

OPINION TEXT STARTS HERE

Troy A. Hornsby, Miller, James, Miller & Hornsby, LLP, Texarkana, TX, for Appellant.

Lisa McPherson, Brent M. Langdon, Langdon * Davis, Texarkana, TX, for Appellee.

Before MORRISS, C.J., CARTER and MOSELEY, JJ.

OPINION

Opinion by Justice CARTER.

I. Procedural History

Altech, Inc., a general contractor, contracted to build an intermediate school for the Pleasant Grove Independent School District (the Project). Endsley Electric, Inc., doing business as Industrial Power Systems or Industrial Power Systems, Inc., entered into a subcontract with Altech to provide the electrical and fire alarm work on the Project. In April 2010, shortly after the Project was completed, Altech filed a breach of contract suit against Endsley Electric 1 in the County Court at Law of Bowie County, Texas. The suit also named as defendants Endsley Electric's corporate officers Karen Endsley and Brad Endsley, each individually and doing business as Industrial Power Systems (IPS). Altech asked for damages based on allegations that it paid Endsley's suppliers $59,333.83 and that the owner removed $31,890.00 from its contractual pay to cover work that Endsley failed to do.

After a bench trial, where Endsley Electric and Karen appeared pro se, the court determined that Endsley Electric and Karen and Brad, individually, were all jointly and severally liable and rendered judgment in favor of Altech for damages of $91,223.83, attorney's fees of $7,961.00, and prejudgment interest of $6,210.72.

On appeal, Endsley Electric and Karen and Brad contend that: (1) the pleadings do not allege or support individual liability; (2) there is legally and factually insufficient evidence supporting the trial court's finding of individual liability; (3) there is legally and factually insufficient evidence to support $31,890.00 in damages; and (4) there is legally and factually insufficient evidence to support the award of attorney's fees because Altech failed to segregate its attorney's fees.

We reverse the judgment, rendering part and remanding in part, because: while the pleadings may allege individual liability, there is legally insufficient evidence to support individual liability; there is legally insufficient evidence that the defendants are liable for $31,890.00 of the damages that were awarded; and Altech failed to segregate its damages.

II. Facts

Karen is the president and sole stockholder of Endsley Electric. Brad is the vice president, but, according to Karen's testimony, he

has gone off on his own. He's no longer part of the company at all. He has his own tax ID number and everything, so he never even—he's not even an electrician. He didn't have anything to do with this job whatsoever.

Karen signed the contract with Altech as president of IPS. IPS, with Karen listed as the president and chairman of the board of directors, merged with Endsley Electric in 2004, and since then has been one of Endsley's assumed names. Prior to the merger, Karen and her late husband operated IPS and Endsley Electric as two separate corporations, having two different tax identification numbers, with one company doing work in Arkansas and the other doing work in Texas. According to Karen, her late husband decided “to combine them because one set of books was easier to keep than two sets.” 2

Altech alleged that it had to pay Endsley Electric's suppliers $59,333.83 for materials provided on the Project. Altech also claimed that Endsley Electric failed to remove and relocate power lines and that due to its failure, the school district issued a change order and directly paid $31,890.00 to another electrical contractor to perform the work and reduced Altech's contractual pay by the same amount. Altech also alleged that it wrote joint checks to Endsley Electric and its suppliers and that it was directly paying its workforce.

Endsley Electric denied being liable for any of the claimed damages. Karen denied refusing to pay any supplier and testified that all the suppliers had been paid. She claimed that the joint checks for the suppliers were agreed to “up front” and that the funds Altech directly paid to Endsley Electric's workforce “would all come out of the draw” that would have been paid to Endsley Electric anyway. Karen said, “When it worked, everything was going great until we got to the end of the job and that's when things went crazy.” Endsley Electric filed a motion for new trial and notice of appeal. No findings of fact or conclusions of law were entered, though a request was made, and Endsley failed to file a reminder.

III. Pleading Requirement

In its first point of error, Endsley Electric argues that the pleadings do not support liability against Karen and Brad as corporate officers. Specifically, Endsley Electric contends that the pleadings fail to allege individual liability and likewise fail to allege a theory of individual liability.

Whether a judgment is supported by the pleadings is a question of law that we review de novo. See Barber v. Corpus Christi Bank & Trust, 506 S.W.2d 254, 257–58 (Tex.Civ.App.-Corpus Christi 1974, no writ); see also Fed. Underwriters Exch. v. Craighead, 168 S.W.2d 699, 700 (Tex.Civ.App.-Fort Worth 1943, writ ref'd w.o.m.).

Altech contends that the allegations in its amended petition sufficiently support individual liability. In the alternative, Altech argues that the issue was tried by consent and that Endsley waived any objections to the individual liability allegations because Endsley failed to object, specially except, or file a verified denial under Rule 93 of the Texas Rules of Civil Procedure. 3

After examining the pleadings and the record, we need not determine whether the pleadings support individual liability. As further explained below, we find that even if the pleadings support the judgment's finding of individual liability, there is legally insufficient evidence to support the finding.

IV. Evidence of Individual Liability

In its second point of error, Endsley Electric argues that there is legally and factually insufficient evidence of individual liability on the part of Karen and Brad.

When no findings of fact or conclusions of law are requested or filed, we presume that the trial court made all findings necessary to support its judgment and we affirm if there is any legal theory sufficiently raised in the evidence in support of the judgment. Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 52 (Tex.2003); Moore v. Jet Stream Invs., Ltd., 315 S.W.3d 195, 203 (Tex.App.-Texarkana 2010, pet. denied) (citing Worford v. Stamper, 801 S.W.2d 108, 109 (Tex.1990)). When a reporter's record is filed, however, these implied findings are not conclusive and an appellant may challenge them by raising both legal and factual sufficiency of the evidence issues. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.2002). When such issues are raised, the applicable standard of review is the same as that to be applied in the review of jury findings or a trial court's findings of fact. Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex.1989) (per curiam).

In determining whether the evidence is legally sufficient, we must view the evidence in the light most favorable to the verdict, crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168 S.W.3d 802 (Tex.2005). We may not substitute our judgment for that of the trial court, and we will affirm its findings so long as the evidence falls within the zone of reasonable disagreement. Id. at 822.

An assertion that the evidence is factually insufficient to support the judgment means that the evidence supporting the judgment is so weak or against the great weight and preponderance of the evidence that it should be set aside and a new trial ordered. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965); Gnerer v. Johnson, 227 S.W.3d 385, 389 (Tex.App.-Texarkana 2007, no pet.). We are required to consider all of the evidence in the case in making this determination, not just the evidence that supports the finding. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406–07 (Tex.1998); Gnerer, 227 S.W.3d at 389–90. In reviewing the evidence, we accord due deference to the trial court which, as the trier of fact presented with conflicting testimony, is the sole judge of the credibility of the witnesses and the weight to be given their testimony. Sw. Bell Media, Inc. v. Lyles, 825 S.W.2d 488, 493 (Tex.App.-Houston [1st Dist.] 1992, writ denied). As the sole trier of fact, the trial court is free to believe one witness and disbelieve others; the court may resolve inconsistencies in a witness' testimony. Id.

We must determine whether there is sufficient evidence that Karen and/or Brad, individually, breached the contract, that they were individually negligent, and/or whether there is sufficient evidentiary basis to disregard the corporate fiction and hold either or both of them liable as corporate officers or shareholders.

A. Breach of Contract

It is undisputed that Altech entered into a written contract with IPS. Altech's president, Billy Roy, admitted that “this subcontract [is] just with Industrial Power Systems.” It is also undisputed that Karen signed the contract in her capacity as a corporate officer.4 There is no evidence that either Karen or Brad, in their individual capacities, entered into or breached any contract with Altech. Therefore, Altech's claim for breach of contract against Karen and Brad, individually, must fail.

B. Negligence

As a prerequisite to asserting a claim of negligence, there must be a violation of a duty imposed by law independent of any contract. Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex.1991); Anthony Equip....

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