First Bank v. DTSG, Ltd.

• Decision Date: 28 May 2015
• Docket Number: NO. 14–13–00694–CV,14–13–00694–CV
• Citation: First Bank v. DTSG, Ltd., 472 S.W.3d 1 (Tex. App. 2015)
• Parties: First Bank, Appellant v. DTSG, Ltd. and Richard Brumitt, Appellees
• Court: Texas Court of Appeals

472 S.W.3d 1

First Bank, Appellant

v.DTSG, Ltd. and Richard Brumitt, Appellees

NO. 14–13–00694–CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed May 28, 2015

Rehearing Overruled September 22, 2015

Donald L. Turbyfill, Deborah Colleen Simm Riherd, Houston, TX, for Appellant.

Daniel O. Goforth, Michael A. Moriarty, Richard A. Sheehy, Houston, TX, for Appellee.

Panel consists of Chief Justice Frost and Justices Donovan and Brown.

OPINION

Kem Thompson Frost, Chief Justice

In this lender-liability case, a company that sought to purchase the stock of another company sued a bank alleging the bank failed to provide promised financing for a stock-purchase transaction.Both the company and the owner of the stock asserted various claims against the bank.The jury answered liability and damages questions in favor of the company and the stockowner based on each claimant's breach-of-contract and negligent-misrepresentation claims, and the trial court rendered judgment on the jury's verdict.On appeal, we conclude that (1)the trial court abused its discretion by allowing the stockowner's lead trial counsel to testify as an expert as to the company's attorney's fees; (2) none of the bank's other arguments challenging the breach-of-contract claims of the company or the stockowner have merit; and (3) the company and the stockowner may not recover under a negligent-misrepresentation claim because, as a matter of law, neither party showed an injury independent from economic losses recoverable under a breach-of-contract claim.Accordingly, we modify the trial court's judgment to delete the award of (a) attorney's fees to the company, and (b) negligent-misrepresentation damages and exemplary damages to the company and the stockholder.We affirm the trial court's judgment as modified.

I.FACTUAL AND PROCEDURAL BACKGROUND

In September 2007, Don Oprea, President of DTS Group, LLP approached appellant/defendant First Bank seeking to obtain a United States Small Business Administration ("SBA") loan to provide funds to be used to purchase the stock of two companies from appellee/intervenorRichard Brumitt.Oprea, who had a banking relationship with First Bank, met with Tim Duffy, who was then the president of First Bank's SBA loan group.Later, DTSG¹ decided that it would seek to purchase the stock of only one these companies—Southway Systems, Inc.According to Oprea, on various occasions, First Bank promised to fund a loan for the purchase of the stock, with the proposed loan amount varying.According to Oprea, Duffy made the promises in oral statements, in emails, and in three commitment letters.First Bank never funded any loan to DTSG.DTSG did not obtain a loan from any other lender nor purchase any of Southway's stock.And, Brumitt never sold the Southway stock.

In October 2009, DTSG sued First Bank asserting various claims, including breach of contract and negligent misrepresentation.Brumitt intervened and asserted various claims against First Bank, including negligent misrepresentation and breach of contract as a third-party beneficiary of the alleged contracts between DTSG and First Bank.Following a trial, the jury answered liability and damages questions in favor of DTSG and Brumitt based on each claimant's breach-of-contract and negligent-misrepresentation claims.The jury also found the amount of reasonable and necessary attorney's fees for DTSG and Brumitt.After finding that the harm to DTSG and Brumitt resulted from First Bank's gross negligence, the jury assessed exemplary damages against First Bank and in favor of DTSG and Brumitt.

The trial court denied First Bank's motion for judgment notwithstanding the verdict and rendered judgment on the jury's verdict, awarding each claimant actual damages and attorney's fees based upon the breach-of-contract claim, actual damages based upon the negligent-misrepresentation claim, and exemplary damages.On appeal, First Bank challenges the legal sufficiency of the evidence supporting various jury findings.

II.ANALYSIS

When conducting a legal-sufficiency review, we consider the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it.City of Keller v. Wilson,168 S.W.3d 802, 823(Tex.2005).We must credit favorable evidence if a reasonable jury could and disregard contrary evidence unless a reasonable jury could not.Seeid. at 827.We must determine whether the evidence at trial would enable reasonable and fairminded people to find the facts at issue.Seeid.The jury is the only judge of witness credibility and the weight to give to testimony.Seeid. at 819.

A.Did the trial court err in submitting the question of DTSG's damages to the jury because the evidence of DTSG's damages allegedly should not have been admitted into evidence?

In its first issue, First Bank asserts the trial court abused its discretion by submitting questions regarding DTSG's damages to the jury because DTSG's evidence of damages was subject to the exclusionary rule contained in Texas Rule of Civil Procedure 193.6(a).SeeTex. R. Civ. P. 193.6(a).First Bank argues that, because DTSG failed to disclose certain matters that it was required to disclose by applicable discovery rules, the trial court had no discretion except to exclude any evidence of DTSG's damages.First Bank states that it objected during trial to various attempts by DTSG to offer evidence of damages other than evidence of the value of DTSG as of December 31, 2007, and that the trial court sustained various objections by First Bank to evidence regarding DTSG's damages.Though the trial court sustained these objections, First Bank argues that the trial court erroneously rejected its complaints that no question regarding DTSG's damages should be submitted to the jury because evidence of such damages was inadmissible.²

We presume, without deciding, the following: (1) First Bank preserved error regarding these complaints;³(2) upon timely objection, the trial court should have excluded all evidence of DTSG's damages due to DTSG's failure to comply with applicable discovery rules; and (3) if First Bank had made a timely evidentiary objection to all evidence of DTSG's damages offered at trial, the trial court could have determined that no question regarding DTSG's damages should be submitted to the jury or that any answer to such a question should be disregarded.⁴

First Bank does not assert, and the record does not reflect, that (1) First Bank obtained a running objection to the admission of any evidence of DTSG's damages based on these complaints, or (2) First Bank timely objected to all trial evidence of DTSG's damages.⁵Under its first issue, First Bank does not assert that the trial evidence is legally insufficient to support the jury's damages findings regarding DTSG's claims.Even under the above presumptions, the trial court did not err in submitting damage questions to the jury over these complaints or in refusing to disregard the jury's damage findings based on these complaints if First Bank failed to timely object to all trial evidence of DTSG's damages.SeeGrohman v. Kahlig,318 S.W.3d 882, 888(Tex.2010)(noting that Texas Rules of Civil Procedure require the submission of jury questions raised by the pleadings and the trial evidence and that a court may refuse to submit a question if there is no trial evidence warranting the submission of a question);Bay Area Healthcare Group, Ltd. v. McShane,239 S.W.3d 231, 235(Tex.2007)(noting that any error in the admission of evidence is waived if the complaining party allows the evidence to be introduced without objection).Accordingly, we overrule First Bank's first issue.

B.Did the trial court abuse its discretion in allowing Brumitt's lead trial lawyer to testify as an expert regarding DTSG's attorney's fees?

Under its second issue, First Bank asserts the trial court abused its discretion by allowing Brumitt's lead trial counsel to testify as an expert as to DTSG's attorney's fees.

At trial, DTSG attempted to call its lead trial counsel as an expert witness to testify as to what a reasonable fee would be for the necessary services of DTSG's attorneys.First Bank objected that DTSG had not designated any expert witness as to attorney's fees in response to First Bank's request for disclosure.The trial court noted that DTSG had not designated an expert witness for attorney's fees.Brumitt had designated his lead trial counsel as an expert regarding Brumitt's attorney's fees, and First Bank objected to the sufficiency of Brumitt's disclosure regarding this expert's opinions.After the trial court indicated that it would overrule First Bank's objection to Brumitt's expert and allow him to testify as to Brumitt's attorney's fees, DTSG asked the trial court to allow DTSG to call Brumitt's lead counsel as an expert regarding DTSG's attorney's fees.DTSG noted that it had sent its attorney's fees invoices to First Bank.DTSG also relied upon a statement in its expert designations that DTSG claimed was sufficient to designate the experts of all other parties as experts for DTSG.

First Bank admitted receiving the invoices a couple of days before trial.Nonetheless, First Bank stated that (1) DTSG did not designate an attorney's fees expert or provide any information regarding any expert's opinions and (2) First Bank did not know what amount DTSG was claiming to be a reasonable fee for the necessary services of DTSG's attorneys.After the trial court first indicated that it would allow Brumitt's counsel to testify only as to a reasonable fee for the necessary services of Brumitt's attorneys, the trial court then stated it would allow Brumitt's counsel to testify as to what DTSG disclosed to First Bank.

Brumitt's counsel then testified regarding the contents of the attorney's fees invoices to DTSG.DTSG offered these invoices into evidence, but the trial court sustained First Bank's objection, and these invoices were never...