Grisel v. Everest Int'l
| Decision Date | 10 March 2022 |
| Docket Number | 02-19-00401-CV |
| Parties | Joe Grisel, David Morrison, HMCRT, LLC, Envisage Capital, LLC, Cyndex Services, LLC, Wanda J. Barreras, and C-7 Development Partners, LLC, Appellants v. Everest International, LLC, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 348th District Court Tarrant County, Texas Trial Court No. 348-282711-15
Before Sudderth, C.J.; Kerr and Birdwell, JJ.
Appellee Everest International, LLC supplied Creative Essentials, LLC (CE) with LapDesk products that CE sold to retailers. When CE started experiencing financial trouble, it brought in business consultant appellant Joe Grisel and his company appellant HMCRT, LLC, to help save CE. Grisel eventually involved other appellants in the project: David Morrison Envisage Capital, LLC; Cyndex Services, LLC; Wanda J Barreras; and C-7 Development Partners, LLC. From CE's perspective, the project failed, and CE never recovered financially.
Everest claims that while CE verged on financial collapse, Grisel and Morrison duped Everest into extending additional credit to CE, and that they conspired with HMCRT, Envisage, Cyndex, Barreras, and C-7 Development to defraud Everest. After a ten-day trial, a jury agreed and found for Everest on its fraud and negligent-misrepresentation claims against Grisel and Morrison and on its civil-conspiracy claim against Grisel, Morrison, HMCRT, Envisage, Cyndex, Barreras, and C-7 Development (collectively, "the Defendants"). The jury awarded Everest over $430, 000 in actual damages and over $1.3 million in exemplary damages against Grisel. The trial court reduced the exemplary-damage award in accordance with Texas law and signed a judgment on the verdict awarding Everest actual damages against the Defendants jointly and severally and exemplary damages against Grisel.
The Defendants have appealed and raise eight issues: (1) Everest lacked standing to sue the Defendants; (2) Everest lacked capacity to maintain this suit because it is a foreign entity not registered to do business in Texas; (3) Everest did not actually and justifiably rely on Grisel's and Morrison's alleged representations as a matter of law; (4) the evidence is insufficient to support the jury's fraud and negligent-misrepresentation findings against Morrison; (5) the evidence is insufficient to support the jury's civil-conspiracy finding against the Defendants; (6) regarding the jury's exemplary-damages predicate finding against Grisel, there is no clear and convincing evidence to support the jury's malice and gross-negligence findings, and the jury charge failed to properly define "fraud"; (7) some of Everest's comments during closing arguments were improper, incurable, and harmful; and (8) if we reverse the jury's conspiracy findings but affirm the fraud and negligent-misrepresentation findings, Grisel and Morrison cannot be held jointly and severally liable because Everest failed to request proportionate-liability findings from the jury. We will reverse and render in part on Everest's claims against Barreras and Cyndex and affirm the trial court's judgment in all other respects.
Everest-a logistics and import company-is a Florida LLC that does business in Texas. Everest is owned by Enoch Poon and Pat Sullins. Sullins's family friend of 25 years, Mike Jennings, owned Arlington-based CE.[1] For about 20 years, Everest had sourced and imported LapDesk products from overseas for CE to sell under its "LapGear" brand to retailers in the United States. Everest was CE's sole supplier.
Sometime in 2013, CE began experiencing financial difficulties, including mounting debt to lenders, lack of cash flow, and inability to pay its suppliers, including Everest. In September 2013, Grisel, a self-employed business consultant, was introduced to Jennings by a mutual friend. After Jennings and Grisel met several times, Grisel agreed to help CE. To that end, Grisel and Jennings agreed to a $25, 000 flat fee for Grisel's services from September 2013 through February 2014.
According to Grisel, he and his company HMCRT[2] are business "turnaround specialists." The acronym HMCRT represents a "group of people" who are experts in human resources, marketing, capital, raw materials, and technology. Grisel's plan to help CE included acquiring funds for CE and bringing in a group of individuals to help CE with integration, technology, automation, prototypes, and financial practices. Among others, Grisel eventually involved the following people and entities in the CE project:
Envisage eventually entered into an independent-contractor agreement with CE, and under this contract, Morrison worked on integrating multiple facets of CE's business into one software package, as well as prototyping, automation, and installing a new phone system. Barreras incorporated HMCRT in May 2014 and designated Cyndex as HMCRT's registered agent. Barreras and her husband also controlled the "C-7 Trust" account, which was opened to "manage whatever assets or money went in and out" of C-7 Development. According to Barreras, funds deposited into that account belonged to Grisel even though he was not an account holder or signatory on the account, and she and her husband held those funds "in trust" for Grisel's benefit. Barreras would eventually briefly work as an independent contractor for CE, assisting with updating the employment manual and obtaining insurance.
With Jennings's approval, Grisel also recruited Ken Fazende, Ray Yauk, Ben Grisel, and Dave Simcho to work for CE. All but Yauk had criminal backgrounds. Fazende-a former CPA and former special agent for the United States Treasury Department-had federal felony convictions for a "scheme to conceal and cover up material facts" and for the "production of sexually explicit depictions of a minor for importation into the United States." Fazende was hired to work as CE's financial manager and used an alias (Ken Phillips) while doing so. Grisel's younger brother Ben was an opioid addict and was under a federal indictment for conspiracy to distribute opioids while he was working at CE selling old inventory and "help[ing] with spreadsheets." Ben was in recovery and clean while working at CE but was later convicted of conspiracy to distribute. Simcho had been convicted of federal bank fraud and worked as Grisel's executive assistant under the alias Dave Marion.
By early 2014, CE's relationship with Everest-CE's sole supplier-had become financially strained because CE owed Everest $933, 000. On March 4, 2014, Sullins notified his long-time friend Jennings "with a heavy heart and great regret" that Everest would not ship any more goods or extend any more credit to CE. A few days later, Jennings asked Sullins to meet with Grisel.
On March 11, 2014, Sullins met with Grisel at CE's offices. According to Sullins, Grisel represented that he was a highly experienced and successful business-turnaround expert who had "turned around" many companies over the years. Grisel claimed to have a team of "experts" in human resources, management, technology, and capital, which he referred to as HMCRT. Grisel claimed that he and HMCRT were going to turn CE around, that they would "be in and out . . . in 30 to 60 days," and that Sullins "wouldn't even recognize the company when they were done."
Sullins testified that he understood that Grisel was "representing [his] company and his partner, and they were going to bring their group in and work with [CE] to make improvements, put some money in, and turn it around." Sullins further understood that Grisel was authorized to negotiate with him on CE's behalf and to work with Everest to re-establish credit.
During Grisel and Sullins's meeting, Grisel represented that Morrison was his partner in HMCRT and was ready to invest $500, 000 in CE immediately. Grisel also claimed that CE had been approved for an SBA loan but that he and HMCRT could help CE get more favorable loan terms because Morrison had agreed to invest $500, 000 in CE. Grisel further represented that some of the $500, 000 would be used to pay Everest. Grisel also asked Sullins if Everest would extend more credit to CE and share the interest costs of a bridge loan to cover CE until the SBA loan could be finalized. Sullins refused and left the meeting.
At Jennings's request, Sullins met with Grisel at CE again three days later. During this second meeting, Grisel repeated his representations from the first meeting, including Morrison's imminent $500, 000 cash infusion. Grisel further represented that because of his, Morrison's, and HMCRT's involvement and the money "going in," CE would be able to timely pay Everest in the future. Grisel also promised that CE would pay Everest the past-due amounts over the next three months and that if Everest would extend new credit to CE, CE would pay Everest "on time going forward." Grisel represented that Everest's extension of credit, along with Grisel and HMCRT's involvement, would cause CE's business to grow, which would in turn lead to more business for Everest.
Based on Grisel's representations, Sullins was satisfied that "this is a doable deal" that would get CE "turned around," and Everest thus reopened CE's credit in the form of processing a "huge chunk of purchase orders." Sullins also...
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