Haynes & Boone v. Bowser Bouldin, Ltd.

• Decision Date: 30 March 1995
• Docket Number: No. D-4448,D-4448
• Citation: 896 S.W.2d 179
• Court: Texas Supreme Court
• Parties: 38 Tex. Sup. Ct. J. 436 HAYNES & BOONE, Petitioner, v. BOWSER BOULDIN, LTD. et al., Respondents.

Page 179

896 S.W.2d 179

38 Tex. Sup. Ct. J. 436

HAYNES & BOONE, Petitioner, v. BOWSER BOULDIN, LTD. et al., Respondents.

No. D-4448.

Supreme Court of Texas.

Argued Dec. 13, 1994.

Decided March 30, 1995.

George H. Spencer, San Antonio, Michael A. Hatchell, Molly H. Anderson, Tyler, for petitioner.

Bernard William Fischman, Franklin D. Houser, San Antonio, Lawrence Fischman, Dallas, for respondents.

ENOCH, Justice, delivered the opinion of the Court, in which all Justices join.

Bowser Bouldin, Ltd. (Bouldin) recovered judgment for malpractice and violation of the Deceptive Trades Practices--Consumer Protection Act (DTPA), TEX.BUS. & COM.CODE §§ 17.41-.63, against its law firm Haynes & Boone for the firm's handling of Bouldin's suit with Blockbuster, Inc. Bouldin elected DTPA damages. The trial court awarded Bouldin damages for the loss of investment in a shopping center in which Blockbuster was a tenant, the deficiency balance Bouldin was obligated to pay when the center was foreclosed upon by its creditor, the cost of settlement of the Blockbuster litigation, lost rents from Blockbuster, and money paid to Haynes & Boone to conduct the Blockbuster litigation. Haynes & Boone objected to the submission of the loss of investment and deficiency damages to the jury. On appeal, the court of appeals suggested remittitur as to the lost rents and the amounts paid to settle the Blockbuster suit, which Bouldin satisfied, and then affirmed. ¹ 864 S.W.2d 662. We reverse the judgment of the court of appeals and remand the case to the court of appeals for reconsideration of the punitive damages.

I.

Bouldin is a strip shopping center developer. It completed the Highland View shopping center in Dallas in 1987 with Blockbuster as the "anchor" tenant.

To build the center, Bouldin obtained a construction loan. The construction loan had a short maturity that required Bouldin to either refinance or sell the property shortly after completion of construction. Bouldin's theory of damage is premised on the generally accepted business consideration by developers that a certain type of tenant, or "anchor tenant," is required to make a shopping center successful. These tenants are required because they are helpful in attracting financial backing to the project due to their own financial and commercial stability, and because their established record of attracting commercial traffic will attract other tenants. Blockbuster, Inc. is considered an "anchor" tenant, and Bouldin pre-leased space to Blockbuster in the shopping center.

After completion of the shopping center and three months into the lease, Blockbuster became dissatisfied with the location. Bouldin had leased the space above Blockbuster to Sparx, a nightclub, and early on, water leaked into Blockbuster causing a loss of $25,000 in videotapes. Additionally, customers of Sparx began causing parking congestion and various other problems for Blockbuster.

Although Blockbuster was successful in obtaining a temporary restraining order enjoining the use of valet parking by Sparx and reserving parking spaces for Blockbuster, it also initiated a suit against Bouldin seeking rescission of its lease. In support of its suit Blockbuster claimed that Bouldin breached the lease, breached the covenant of quiet enjoyment, and made fraudulent representations. At this point, Bouldin retained Richard Capshaw of Haynes & Boone to defend it. An early settlement attempt was unsuccessful.

Haynes & Boone does not contest that its associate Richard Capshaw mishandled the Blockbuster litigation. During the litigation, Capshaw failed to timely respond to certain discovery requests from Blockbuster. As a result the trial court sanctioned Bouldin by striking all of its pleadings. Capshaw, although bringing a successful motion to reconsider, thereafter failed to follow through with the trial court's reconsidered sanctions order that required Bouldin to pay $1,500 in attorney's fees to Blockbuster by July 19, 1988. Consequently, Bouldin's pleadings were again struck and a default judgment was rendered in favor of Blockbuster. Bouldin settled with Blockbuster on terms which permitted Blockbuster to cancel its lease on ninety days notice. According to Bouldin, this was an unfavorable settlement resulting from the procedural posture of the case. ²

During the period of litigation with Blockbuster, Bouldin received two offers to buy the shopping center. Bouldin also made efforts to obtain permanent financing for the shopping center in order to pay off the construction loans. In June of 1987, Bouldin was provided a $5.35 million earnest money contract for the sale of the shopping center. That deal fell through in January 1988. ³ In April 1988, Bouldin was offered a second earnest money contract for $4.4 million, but this was cancelled by the offeror in May 1988. The default judgment was entered in July 1988. Bouldin was unable to sell or to obtain refinancing and consequently, it defaulted on the construction note and lost the shopping center through foreclosure.

II.

While not contesting liability, Haynes & Boone argues that there is no evidence of a causal nexus between Capshaw's conduct and the damages awarded by the court of appeals and that the jury question submitted represents an improper measure of damages. In order to recover damages, a plaintiff must produce evidence from which the jury may reasonably infer that the damages sued for have resulted from the conduct of the defendant. McKnight v. Hill & Hill Exterminators, 689 S.W.2d 206, 209 (Tex.1985). This causal nexus requirement is met when a jury is presented with pleading and proof that establish a direct causal link between the damages awarded, the actions of the defendant and the injury suffered. Morgan v. Compugraphic Corp., 675 S.W.2d 729, 731-32 n. 2 (Tex.1984). Here the jury answered three separate questions in the affirmative finding that Haynes & Boone's actions were unconscionable, false, misleading, deceptive and a breach of its warranty. The jury determined that these actions were a "producing cause of damages to Bowser Bouldin." The jury then went on to answer a question with five subparts that requested the jurors to place values on the various elements of damages requested by Bouldin.

Bouldin, over the objection of Haynes & Boone, framed the loss of investment and deficiency damage issues in terms of damages resulting from the foreclosure. In order to recover these damages Bouldin must establish that the actions of Haynes & Boone were a producing cause of the foreclosure. Home Sav. Ass'n v. Guerra, 733 S.W.2d 134, 136 (Tex.1987). Producing cause is an "efficient, exciting, or contributing cause, which in the natural sequence, produced injuries or damages complained of, if any." Rourke v. Garza, 530 S.W.2d 794, 801 (Tex.1976). "There can be more than one producing cause." Id. Therefore, we must determine if there is any evidence of producing cause of the foreclosure....