Formosa Plastics Corp., USA v. Presidio Engineers and Contractors, Inc.

• Decision Date: 02 November 1995
• Docket Number: No. 13-93-294-CV,13-93-294-CV
• Parties: FORMOSA PLASTICS CORPORATION, USA Formosa Plastics Corporation, Texas, Appellants, v. PRESIDIO ENGINEERS AND CONTRACTORS, INC., Appellee.
• Court: Texas Court of Appeals

Page 138

941 S.W.2d 138

FORMOSA PLASTICS CORPORATION, USA Formosa Plastics

Corporation, Texas, Appellants, v. PRESIDIO ENGINEERS AND CONTRACTORS, INC., Appellee.

No. 13-93-294-CV.

Court of Appeals of Texas,

Corpus Christi.

Nov. 2, 1995.

Rehearing Overruled Dec. 8, 1995.

Louis L. Bagwell, Robin E. Curtis, Kay M. Peterson, Baker & Botts, Houston, Mike A. Hatchell, Andy G. Navarro, Molly H. Hatchell, Ramey & Flock, Tyler, Lori M. Gallagher, Mariann Sears, Andrews & Kutch, Houston, Joe R. Greenhill, Bob E. Shannon, Joseph R. Knight, Baker & Botts, Austin, for appellants.

Robert P. Houston, Cynthia T. Sheppard, John Griffin, Jr., Houston, Marek & Griffin, Victoria, Christa L. Brown, Austin, for appellee.

OPINION

PER CURIAM.

This case involves allegations of fraud, breach of contract, and breach of the duty of good faith and fair dealing, arising from a construction contract and the representations made during pre-contractual bid negotiations. The case was tried before a jury, which found that both the appellants and the appellee were entitled to damages. The trial court rendered judgment in favor of the appellee for $10.9 million after remitting a portion of the appellee's actual damages and then offsetting the appellants' damage award. By thirty points of error, the appellants challenge the sufficiency of the evidence and the jury charge. By three cross-points, the appellee challenges the remittitur, the offset, and the method of calculating attorney's fees. We affirm the judgment of the trial court.

Appellants, Formosa Plastics Corporation, USA and Formosa Plastics Corporation, Texas (collectively "Formosa"), produce resins for use in plastic and other products. Appellee, Presidio Engineers and Contractors, Inc. ("Presidio"), is a commercial construction business.

In 1989, Formosa commenced construction to expand its facility in Point Comfort, Texas by adding twelve plants spread over 1860 acres. Formosa contracted with several construction contractors to complete the job. In June 1990, Presidio received a "bid package" from Formosa. The "bid package" contained an invitation to bid on a job involving the construction of some 300 concrete foundations. The "bid package" also contained specifications about the job and a copy of the proposed construction contract. Formosa made several express representations in the "bid package." Specifically, Formosa represented (i) that, although it would purchase the concrete and other materials, the contractor would have control of, and be responsible for, ordering, scheduling delivery, and storing the concrete materials, (ii) that the construction was scheduled to progress continuously from beginning to end, and (iii) that the job was scheduled to be completed in ninety days.

Presidio submitted a bid of $596,451.97, with an allowance for 120 days to complete the job. Formosa accepted the bid and awarded Presidio the contract.

Presidio commenced construction, but was unexpectedly hindered by numerous delays. Presidio blames Formosa for causing the delays and pinpoints two particular reasons: (1) Formosa frequently restricted Presidio's access to the work site because of scheduling conflicts with other contractors, and (2) Formosa changed its policy and procedure for ordering and scheduling delivery of concrete materials; as a result, the concrete materials were often unavailable when Presidio was ready to use them to pour foundations.

Presidio notified Formosa that, because of these numerous delays, it would not be able to complete the job by the scheduled completion date. Presidio further notified Formosa that it expected to be compensated for all of its delay expenses. In response, Formosa told Presidio that it would be compensated for its delay expenses.

Presidio completed the job approximately four months after the contracted completion date. Formosa subsequently paid Presidio the contract price of $596,451.97, but refused to pay Presidio's claim for $356,000 in delay expenses. Formosa, instead, offered to settle Presidio's claim for as much as $200,000. Presidio rejected Formosa's offer.

Presidio then filed suit, alleging that Formosa (i) committed fraud, (ii) breached the contract, and (iii) breached its duty of good faith and fair dealing. With respect to its fraud claim, Presidio alleged that Formosa fraudulently induced Presidio to enter into the contract by misrepresenting the job could be completed in ninety days and by failing to disclose material facts concerning restricted access to the job site and the new policy for ordering and scheduling delivery of concrete materials. Further, Presidio alleged that Formosa fraudulently induced Presidio to continue performance on the contract by misrepresenting that Formosa would fully compensate Presidio for its delay expenses.

Formosa filed a counterclaim, alleging that Presidio breached the contract by failing to pour several concrete foundations according to contract specifications.

At trial, the court submitted twelve questions to the jury. In answer to Question Nos. 1 and 2A, the jury found that Formosa committed fraud against Presidio, causing Presidio to incur $1,500,000 in actual damages. In answer to Question Nos. 3 and 4, the jury found that Formosa breached its duty of good faith and fair dealing, causing Presidio to incur $1,500,000 in actual damages. In Question Nos. 2B, 5, and 8, the jury found that, because Formosa committed fraud and breached its duty of good faith and fair dealing, Formosa should be assessed punitive damages in the amount of $10,000,000 to be awarded to Presidio. In Question Nos. 6 and 7, the jury found that Formosa breached the contract, causing Presidio to incur $1,267,000 in damages. In Question No. 9, the jury further found that, because Formosa breached the contract, Presidio should recover statutory attorney's fees equal to 40% of the breach of contract damages. Finally, in Question Nos. 10 and 11, the jury found that Presidio also breached the contract, thereby causing Formosa to incur $107,000 in damages.

Presidio elected the greater remedy of $1,500,000 in actual damages, which corresponded with either the fraud or breach of duty of good faith and fair dealing liability theories. The trial court subsequently remitted the lost profits component of the actual damage awards for all three liability theories, reducing each award by $800,000. Thus, the fraud and breach of good faith and fair dealing actual damage awards were reduced to $700,000, and the breach of contract actual damage award was reduced to $467,000. The court then offset Formosa's damages and rendered final judgment, awarding Presidio the sum of $10,920,998.03. This sum reflects $700,000.00 in actual damages, $10,000,000.00 in punitive damages, $160,562.05 in prejudgment interest, $186,800.00 in attorney's fees, and the $107,000.00 offset plus $19,364.02 in offset prejudgment interest. Formosa now appeals the trial court's judgment.

By point of error 9, Formosa challenges the legal and factual sufficiency of the evidence to support the finding that Formosa defrauded Presidio. In reviewing a legal sufficiency or "no evidence" point, we must view the evidence in a light that tends to support the jury's finding and disregard all evidence and inferences to the contrary. Weirich v. Weirich, 833 S.W.2d 942, 945 (Tex.1992); Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987). If there is some evidence to support the jury's finding, then Formosa's legal sufficiency challenge fails. Stafford, 726 S.W.2d at 16. In reviewing a factual sufficiency point, we must consider and weigh all the evidence and should set aside the verdict only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); Dyson v. Olin Corp., 692 S.W.2d 456, 457 (Tex.1985).

The elements of actionable fraud are: (1) that a material representation was made, (2) the representation was false, (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion, (4) the speaker made the representation with the intent that it should be acted upon by the party, (5) the party acted in reliance upon the representation, and (6) the party thereby suffered injury. Eagle Properties, Ltd. v. Scharbauer, 807 S.W.2d 714, 723 (Tex.1990); Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977). The jury was so instructed.

When one party enters into a contract with no intention of performing, that misrepresentation may give rise to an action in fraud. Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 597 (Tex.1992). Also, an expressed false opinion as to the happening of a future event may constitute fraudulent misrepresentation where the speaker purports to have special knowledge of facts that will occur or exist in the future. Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex.1983). Further, fraudulent misrepresentation may occur when a party conceals or fails to disclose a material fact with the intent to induce another party to take some action, and the party knows the relying party is ignorant of the concealed fact and does not have an equal opportunity to discover the truth. New Process Steel Corp. v. Steel Corp., 703 S.W.2d 209, 214 (Tex.App.--Houston [1st Dist.] 1985, writ ref'd n.r.e.); see also Custom Leasing, Inc. v. Texas Bank & Trust Co., 516 S.W.2d 138, 142 (Tex.1974). The jury was also instructed as to these legal principles.

Intent to defraud is a fact question uniquely within the realm of the trier of fact and depends upon the credibility of the witnesses and the weight to be given to their testimony. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex.1986). Although a party's intent is determined at the time the party made the representation, intent may be inferred from the party's subsequent acts after the representation is made. Id....