Jackson v. Fontaine's Clinics, Inc.

• Decision Date: 11 July 1973
• Docket Number: No. B--3472,B--3472
• Citation: 499 S.W.2d 87
• Parties: Dr. Ruth JACKSON, Petitioner, v. FONTAINE'S CLINICS, INC., Respondent.
• Court: Texas Supreme Court

Page 87

499 S.W.2d 87

Dr. Ruth JACKSON, Petitioner, v. FONTAINE'S CLINICS, INC., Respondent.

No. B--3472.

Supreme Court of Texas.

July 11, 1973.

Rehearing Denied Oct. 10, 1973.

Burford, Ryburn & Ford, Logan Ford, David Ford Hunt, John F. Harrison, Dallas, for petitioner.

Jerry W. Biesel and George E. Flannigan, Dallas, for respondent.

McGEE, Justice.

Fontaine's Clinics, Inc., brought this suit against Dr. Ruth Jackson, Catherine Ward, Gwynne Gambrell, Margaret Hanson, and A.S.E. Dermatetics Clinic, Inc. Fontaine's is a corporation engaged primarily in the business of removing unwanted hair from the human body by means of electrolysis. Dr. Jackson, a former patient of Fontaine's, is the president of A.S.E., which is a corporation in competition with Fontaine's. Ward, Gambrell and Hanson were once employees of Fontaine's, but they left the employ of Fontaine's and became associated with A.S.E.

For cause of action Fontaine's alleged that the individual defendants conspired to commit acts and that the defendants jointly and individually committed acts designed to wrongfully damage the business and reputation of Fontaine's. Among the various overt acts charged against the defendants, it was specifically alleged that Ward, Gambrell and Hanson, while they were employees of Fontaine's but at the urging of Jackson, intentionally made false disparaging statements about the services received at Fontaine's to their patients for the purpose of inducing these patients to take their business to A.S.E. Fontaine's alleged further that Jackson and Ward (while an employee of Fontaine's) surreptitiously copied from Fontaine's files trade secrets consisting of the names and addresses of patients and confidential data pertaining to those patients, for the purpose of advertising to them the merits of A.S.E. Fontaine's prayed for judgment against all defendants jointly and severally.

The jury found that Jackson, Ward, Gambrell and Hanson conspired to damage Fontaine's business; that the conspiracy was accompanied by overt acts designed to accomplish the purpose of the conspiracy; and that Jackson, Ward and Gambrell were motivated by malice. The jury also found that the patient data, which was copied from Fontaine's files, constituted trade secrets and that Defendant Ward used such data to solicit business for A.S.E. As actual damages it was found that the sum of $25,000 would reasonably compensate Fontaine's for the injury received.

The trial court rendered judgment for Fontaine's as follows: against Ruth Jackson for $90,000 ($25,000 plus $65,000, which the jury awarded as exemplary damages against Jackson); against Catherine Ward for $1000, which the jury awarded as exemplary damages against Ward; and against Gwynne Gambrell for $250, which the jury awarded as exemplary damages against Gambrell. A.S.E.'s motion for judgment non obstante veredicto was sustained by the trial court. Defendant Ruth Jackson is the only party who appealed from the trial court's judgment.

The court of civil appeals affirmed the trial court's judgment against Jackson after reforming it to the extent of reducing the exemplary damages recovered against her by $32,500. 481 S.W.2d 934.

The special issue pertaining to actual damages was submitted as follows:

'What sum of money, if any, if paid now in cash, do you find from a preponderance of the evidence, will fairly and reasonably compensate Fontaine's Clinics for injury, if any, received by reason of the overt acts inquired about in Special Issue No. 3, if you have so found, and/or the use of the list of names compiled from plaintiffs' clientele cards, if you have so found?

'In answering this issue you are instructed that you may take into consideration the following matters or elements as you find are established by a preponderance of the evidence, and none other:

'(a) the reasonable cash value, if any, of the loss of Monetary reward from Fontaine's Clinics, Inc.'s business activities.'

'(b) you are further instructed that you will not allow any sum of money for loss of monetary reward from Fontaine's Clinics, Inc.'s business activities resulting from decreased advertising and time devoted to the preparation of this suit for submission to the jury, if either happened.' (Emphasis added)

Petitioner contends that this submission was reversible error because the issue is so broad and general that it permits the jury to speculate and to find losses not pleaded or not supported by evidence. We sustain this contention.

Damages must be measured by a legal standard, and that standard must be used to guide the fact finder in determining what sum would compensate the injured party. Fontaine's pleaded that the acts of the defendants 'would prevent plaintiff from deriving the normal pecuniary reward from its business activities that it otherwise would have been entitled to attain.' Although it is not entirely clear from a reading of Fontaine's pleadings, it appears from the foregoing quotation that Fontaine's sought recovery based on its loss of net profits. However, the jury was given no guideline for determining a loss of net profits. Manifestly, the phrase 'monetary reward' does not describe net profits, and no other instruction was given connecting that phrase with net profits or with any other recognized measure of damages.

We hold that this submission was fatally defective, because it simply failed to guide the jury to a finding on Any proper legal measure of damages. International-Great Northern R. Co. v. Casey, 46 S.W.2d 669 (Tex.Com.App.1932, holding adopted).

Although the above error alone requires reversal of the judgments below against Ruth Jackson, in view of possible retrial, we will briefly discuss other of petitioner's points on which the writ of error was granted.

Witnesses Sandor, Harrison and Travis who at the time of trial were employees of Fontaine's testified that patients of Fontaine's had told them that Defendants Ward, Gambrell and Hanson had made derogatory remarks about the services available at Fontaine's. Petitioner objected to the admissibility of this testimony on the ground that it was hearsay. The objections were overruled, and the respondent argues properly so because the testimony was offered merely to show that the defendants had made the remarks rather than to show the truth of the substance of the defendants' remarks. Respondent's own argument demonstrates that the witnesses' testimony was offered to prove the truth of what the patients told the witnesses, i.e., that the defendants made the derogatory remarks about Fontaine's. Thus, the testimony of the witnesses was clearly hearsay, and the objections should have been sustained.

Petitioner contends that certain of plaintiff's documentary evidence, exhibits 42--51, should not have been admitted because the exhibits were hearsay. The exhibits were admitted as exceptions to the rule of hearsay exclusion on the theory that they were business records or summaries of business records. Since the cause against petitioner must be reversed on points previously discussed, we will not treat this point at length. The summaries were offered to prove the acts, events or conditions recorded in original business records which the exhibits purported to summarize. We are not...