Holmes v. Jetall Cos., 01-15-00326-CV
| Decision Date | 07 July 2016 |
| Docket Number | NO. 01-15-00326-CV,01-15-00326-CV |
| Parties | DON ABBOTT HOLMES AND GAYLE EISER HOLMES, Appellants v. JETALL COMPANIES, INC., Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 127th District Court Harris County, Texas
Jetall Companies, Inc. sued Don Holmes and Gayle Holmes for breach of a contract to sell property. The jury found the Holmeses breached the contract and awarded damages for lost property value, lost profits, and attorneys' fees. In two issues on appeal, the Holmeses argue (1) the evidence is legally insufficient to support the jury's award of lost profits and (2) the trial court abused its discretion by denying Gayle's request for a jury question on anticipatory repudiation.
On April 7, 2016, we issued our original opinion in this case. Jetall filed a motion for rehearing. We deny the motion for rehearing, withdraw our prior opinion and judgment, and issue this opinion and a new judgment in their place. Our disposition remains the same.
We reverse and render.
The Holmeses own certain undeveloped property in Houston, Texas. Ali Choudhri is the owner of Jetall Companies, Inc. On October 28, 2011, Choudhri and Don Holmes entered into an agreement to sell the property to Jetall Companies. The agreement required Don to perform certain tasks before the sale was closed.
Before closing, a dispute arose concerning whether Don had sufficiently performed the tasks required for closing. The Holmeses did not appear on the closing date to sell the property to Jetall. Jetall brought suit against the Holmeses, alleging breach of contract and seeking lost profits.
The lot was platted for a single-residence home. Choudhri testified that he had intended to split the property in two and build two townhomes. He testified Jetall had "built successfully a number of homes inside the loop." This included two townhomes at some time in the past. Those townhomes had been very successfulwith a number of offers on the homes before construction was complete. In fact, due to the number of acceptable offers, Choudhri picked which offers to accept by picking the offers out of a hat.
Choudhri testified that he had intended to use the designs for those two townhomes for the Holmeses' property with some modifications. For the cost of construction, Choudhri testified that it would have cost at least $800,000 to build each townhome. He asserted that he used "numbers and calculations based on what the market price of materials, labor, everything else associated with construction." He explained that he had over 20 years' experience in the property business, buying his first property as a teenager. He testified that he expected to obtain $600,000 profit on each townhome.
Also during trial, Don testified that Choudhri was threatening to withhold up to $15,000 of the agreed price for the sale of the property based on the ground that the Holmeses had not satisfied certain pre-closing requirements. He testified that the money would be "held until Mr. Choudhri decided how much it was going to cost him" to complete what he alleged had not been completed. Don further testified that Choudhri said that he would sue Don if he did not close immediately.
During the jury charge conference, Gayle asked for an instruction on anticipatory repudiation based on Don's testimony about Choudhri's threats to withhold a portion of the purchase money. The trial court denied the request.
In their first issue, the Holmeses argue the evidence is legally insufficient to support the jury's award of lost profits.
"The final test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In performing a legal-sufficiency review, we must credit favorable evidence if reasonable fact finders could credit it and disregard contrary evidence unless reasonable fact finders could not disregard it. Id. A "no evidence" point of error must be sustained when (a) the record discloses a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence establishes conclusively the opposite of the vital fact. Id. at 810-11.
A legal sufficiency challenge of a finding fails when more than a scintilla of evidence supports the finding. Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386, 388 (Tex. 2005). "'More than a scintilla of evidence exists where the evidence supporting the finding, as a whole, rises to a level that would enable reasonable andfair minded people to differ in their conclusions."' Id. at 388 (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)).
"[L]ost profits can be recovered only when the amount is proved with reasonable certainty." Phillips v. Carlton Energy Group, LLC, 475 S.W.3d 265, 278 (Tex. 2015). "It is not necessary that profits should be susceptible of exact calculation, it is sufficient that there be data from which they may be ascertained with a reasonable degree of certainty and exactness." Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994) (internal quotations omitted). "What constitutes reasonably certain evidence of lost profits is a fact intensive determination." Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992).
For expert testimony and other evidence estimating lost profits, the evidence "must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained." Id. While admission of the supporting documentation can affect the weight of the evidence, "it is not necessary to produce in court the documents supporting the opinions or estimates." Id.
Many cases demonstrate what constitutes sufficient evidence of lost profits. In White, a florist sought lost profits for the incorrect listing of his phone number in an advertisement in the yellow pages—the business section—of the phone book.White v. Sw. Bell Tel. Co., Inc., 651 S.W.2d 260, 261-262 (Tex. 1983). To prove lost profits, the florist introduced evidence of gross sales for a seven-year period, including the year of the incorrect listing. Id. at 262. An accountant provided a linear regression showing what sales would have been. Id. Other evidence was presented showing wire service sales—untouched by the error—increased in the relevant time period. Id. The florist testified about what percentage of his sales were profit and about his expenses on sales. Id. at 262-63. The court held this was sufficient evidence of lost profits. Id. at 263.
In B & W Supply, homeowners sued the company they hired to remodel their home, and the company countersued for lost profits. B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 14 (Tex. App.—Houston [1st Dist.] 2009, pet denied). The jury found for the remodeling company. Id. at 14-15. The owner of the company testified about the process of setting a bid price, including how he anticipates profit in the bid. Id. at 18. The evidence showed the amount spent on the project before the breach and how much the homeowners had paid in that time. Id. An exhibit detailed the cost of labor and materials that would have been incurred without the breach. Id. The owner of the company explained what work remained and how much would have been spent in that process. Id. We held this was sufficient evidence of lost profits. Id.
In Barnett—a case relied upon by Jetall in its brief—the owners of a gymnastics business contracted with a builder to build a new gymnastics facility. Barnett v. Coppell N. Tex. Court, Ltd., 123 S.W.3d 804, 813 (Tex. App.—Dallas 2003, pet. denied). After the bank foreclosed on the property, the parties sued each other, and the jury found in favor of the gymnastics business. Id. Lewis, one of the owners of the gymnastics business and one of the instructors, testified about the business expanding over three years from 24 students to 1,400 students. Id. at 827. The business had been profitable each year, and the jury had evidence of the previous year's profit. Id. Lewis testified about how the business expected increased profits during the year in question based on the business's previous growth and based on the growth of the city in which the business was located. Id. at 827-28. The court determined that Lewis demonstrated his familiarity "with the business and that he based his estimate on the trend in the industry and the specific area where the business was located." Id. at 828. The court held this was sufficient evidence of lost profits. Id.
Other cases illustrate when evidence is insufficient to prove lost profits. In Phillips, a jury found that the defendant had tortiously interfered "with the owner's contract to convey an interest [in a coalbed methane prospect in Bulgaria] to the plaintiff." 475 S.W.3d at 269. A report was introduced at trial projecting the profits that could have been received from the prospect during the time in question. Id. at280-81. The report estimated the volume of methane in the ground, the amount recoverable, and the wellhead price. Id. It subtracted the cost of drilling, production, operation, and royalty payments to determine profit. Id. An expert estimated a lower amount that could be recovered, lowering the lost profit calculation. Id. at 281.
The court held that this was insufficient evidence of lost profits. Id. The court criticized the assumptions forming the basis for the calculation and found the lack of support for these assumptions rendered the calculations insufficient. Id. "Merely laying out the calculation, with its sweeping assumptions, demonstrates how completely conjectural it is." Id. The court criticized the lack of support for...
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