Isaacs v. Bishop

• Citation: 249 S.W.3d 100
• Decision Date: 10 January 2008
• Docket Number: No. 06-05-00092-CV.,06-05-00092-CV.
• Parties: John Leeman ISAACS and Susan Gail Isaacs, Appellants, v. Charles BISHOP and Hallsville Dragway, Inc., Appellees.
• Court: Court of Appeals of Texas

249 S.W.3d 100

John Leeman ISAACS and Susan Gail Isaacs, Appellants, v. Charles BISHOP and Hallsville Dragway, Inc., Appellees.

No. 06-05-00092-CV.

Court of Appeals of Texas, Texarkana.

Submitted July 18, 2007.

Decided January 10, 2008.

Rehearing Overruled March 14, 2008.

Carl David Adams, The Law Office of Carl David Adams, Dallas, TX, for appellants.

Marc S. Culp, Angela J. Hindman, Culp & Dyer, LLP, Denton, TX, for appellees.

Before MORRISS, C.J., CARTER and CORNELIUS,^* JJ.

OPINION

Opinion by Chief Justice MORRISS.

Using their wildest imagination, John and Susan Isaacs and Charles Bishop could not have predicted the unfortunate events which began when Isaacs contracted to sell the Hallsville Dragway to Bishop. That purchase contract was followed a few months later by a physical conflict which included Isaacs¹ and Bishop, a subsequent punitive campaign by Isaacs against Bishop, and ultimately a pecuniary collapse by Bishop. From the resulting lawsuit, no party walked away happy.

The initial events are clear. Bishop purchased real and personal property known as the Hallsville Dragway (the track) from Isaacs, with Isaacs providing purchase-money financing. Isaacs' attorney, R.G. Schleier, after negotiations between the parties, prepared the documents for the sale, including the promissory note that later became one focal point of the later dispute.

Six months after the sale, the Isaacs family—including father, mother, son, and daughter on this occasion—visited the track and were involved in a brawl with a handicapped track worker and his wife. The evidence shows that Bishop got involved in the melee in attempting to break it up. Bishop called the police, who arrested John Isaacs. When released from jail the next morning, John Isaacs reportedly called Bishop and attempted to get Bishop to change his version of events to shift blame away from John Isaacs.² That attempt was, reportedly, accompanied by threats of physical violence and fiscal destruction to Bishop; the jury found threats did indeed occur. There was also evidence that Isaacs paid two fight witnesses to testify "appropriately" and that, when one began to waver, Isaacs threatened that witness with physical violence.

When Isaacs began looking for a way to foreclose, he found violations of what turned out to be—to Bishop's surprise—a hair-trigger default provision in the promissory note. There is evidence that Schleier changed the promissory note at Isaacs' direction to insert that provision, a provision the jury later found to have been fraudulently added. Isaacs began foreclosure proceedings. Evidence suggested that the track had been making a profit for Bishop until Isaacs began his campaign to cause Bishop's fiscal ruin and that bankruptcy ultimately resulted from that campaign.

Lawsuits were filed and ultimately were combined into a single action. Bishop sued Isaacs in tort for threatening and actively seeking his harm, wrongful foreclosure efforts, fraud in the sale of the track, and intentional infliction of emotional distress en route. Bishop sued Schleier, alleging that Schleier had told Bishop he need not get his own counsel and that Schleier had changed the documents after they'd been agreed to, but before they were signed. Isaacs sued Bishop to accelerate the maturity of the note and foreclose on the track, seeking a judgment on the note balance. In response, Bishop sought to rescind the track purchase.

During the course of the litigation, because Bishop could not get alternative financing, Bishop created the corporation Hallsville Dragway, Inc. (hereinafter HDI), and transferred the track into it. HDI later filed for bankruptcy protection, and the bankruptcy court ordered the original note to be replaced with a "Replacement Note" containing less severe terms. Later, Bishop individually filed for bankruptcy protection as well.

The jury made various findings of fact: an attorney-client relationship existed between Schleier and Bishop; damages were attributable thirty percent to Bishop and seventy percent to Schleier; Isaacs committed fraud in the purchase and was seventy percent responsible, while Bishop was thirty percent responsible; damages from the fraud amounted to $171,000.00; Isaacs intentionally inflicted emotional distress on Bishop, entitling Bishop to $50,000.00; special damages, if the track were returned to Isaacs, would amount to $400,000.00 to Bishop; Bishop was due $171,000.00 for attorneys' fees for HDI's bankruptcy and for expenses in defending against Isaacs' attempt to accelerate the note and foreclose on the track; attorneys' fees recoverable by Bishop for prosecuting the fraud claim amounted to $200,000.00 for trial, $50,000.00 for appeal to this Court, and $35,000.00 for appeal to the Texas Supreme Court; court costs totaled $285,000.00.³

Bishop filed a motion seeking judgment on the verdict. He filed an election to rescind the purchase, with collateral damages as found by the jury and alternatively to recover for fraud. Isaacs filed a motion for judgment notwithstanding the jury's verdict.

The trial court's judgment did not match any request made by any party. The court awarded damages to Bishop based on fraud and intentional infliction of emotional distress. Based on the findings of damages, negligence, proportionate responsibility, and attorneys' fees, the judgment awarded Bishop actual damages of $169,700.00 plus attorneys' fees and "certain costs" of $250,000.00, without allocation to any specific cause of action. Bishop's total award was for $419,700.00, plus prejudgment interest in the amount of $22,130.74.

But the trial court also held that Isaacs remained entitled to recover under the Replacement Note, which had a total balance of $695,772.10, plus contractual attorneys' fees for collection in the amount of $2,500.00, for a total of $698,272.10. The trial court ordered a complete offset of the contractual amount due Isaacs against Bishop's tort recovery—subtracting the total award to Bishop from the total principal amount due Isaacs under the note, leaving a balance owed to Isaacs of $256,441.36. The court then ordered Bishop to pay the balance of the Replacement Note to Isaacs in monthly installments of $6,746.85, the monthly amount due under the terms of the original note. The trial court also ordered that no occurrence before the date of trial could justify any further acceleration or foreclosure effort. The trial court also denied the Isaacses' request to reduce Bishop's damages in fraud either by the percentage of responsibility assessed to Schleier, or by a dollar-for-dollar credit for settlement amounts paid by Schleier to Bishop post-verdict.

Both parties appeal.

Isaacs sets up a number of issues for review on appeal. He complains that the trial court erred by overruling the motion for judgment N.O.V.⁴ and by providing offsets and credits, that the court erred by refusing to allow acceleration of the balance due on the note, that the court erred by overruling the motion for judgment N.O.V. as to fraud because there was no evidence of fraud and no duty of disclosure, that the jury's finding that Bishop was negligent created a conflict between that answer and a finding of fraud by Isaacs, that the "duty to disclose" jury instruction is fatally incorrect, and that the court erred by overruling the motion for judgment N.O.V. and by awarding attorneys' fees because the alleged fraud was outside the scope of the fraud statute pled.

Bishop also raises issues. Bishop contends first that the trial court abused its discretion by denying his election to rescind the purchase, that the court abused its discretion by granting Isaacs a trial amendment post-verdict adding ratification as a defense, that (if we find against Bishop on the rescission issue) the trial court erred by reducing fraud damages based on Bishop's negligence, that it erred by offsetting his actual damages against the note, that the offset was error in how it was against future monthly installment payments, and that the court erred by failing to award all litigation costs as found by the jury and in failing to award any appellate attorneys' fees. Bishop also contends that, if we reverse for a new trial,⁵ we should also find that the trial court erred in granting a summary judgment dismissing Bishop's claim for lost profits and for damages for obstruction of justice.

We modify the judgment of the trial court in two respects—countermanding the ordered offset and adjusting the amounts of the awarded attorneys' fees and costs—and affirm the judgment as modified. We do so because we hold that (1) the trial court properly refused to submit an all-inclusive proportional responsibility issue across multiple causes of action, (2) denying rescission to Bishop was within the trial court's equitable discretion, (3) ordering Bishop's damages offset against Isaacs' note was error, (4) Bishop's recovery for intentional infliction of emotional distress was proper, (5) Bishop's recoveries based on fraud were proper, and (6) Bishop's recovery of attorneys' fees and costs must be modified.

(1) The Trial Court Properly Refused to Submit an All-Inclusive Proportional Responsibility Issue Across Multiple Causes of Action

Isaacs complains because attorney Schleier was not part of the percentage of responsibility determination made by the jury. Isaacs asserts that the charge should have directed the jury to determine the percentage of responsibility for all parties (including Schleier) in a single, global finding. He argues that all possible recoveries, on whatever basis, must be combined for a gross determination by the jury.

To support that argument, Isaacs relies on the language of the statute, TEX. CIV. PRAC. & REM.CODE ANN. § 33.003-33.017 (Vernon 1997 & Vernon Supp.2007). Citing no case authority, he correctly posits that the Code attempts to proportion responsibility for tortious acts, so that each individual plaintiff receives the...