Larson v. Cactus Utility Co.

• Decision Date: 01 April 1987
• Docket Number: No. C-5458,C-5458
• Citation: 730 S.W.2d 640
• Parties: Lew G. LARSON et al., Petitioners, v. CACTUS UTILITY COMPANY et al., Respondents.
• Court: Texas Supreme Court

Page 640

730 S.W.2d 640

Lew G. LARSON et al., Petitioners, v. CACTUS UTILITY COMPANY et al., Respondents.

No. C-5458.

Supreme Court of Texas.

April 1, 1987.

Rehearing Denied June 17, 1987.

James R. Harris (Harris, Cook, Browning, Jordan & Hyden), Corpus Christi, for petitioners.

Richard J. Hatch, Mahoney, Shaffer, Hatch & Layton, Corpus Christi, for respondents.

KILGARLIN, Justice.

Lew Larson won a jury verdict of $837,053 in his suit against Hoyt Gentry for accounting of corporate assets. Larson and Gentry were co-owners of Cactus Utility Company stock. The trial court's judgment upheld the verdict but ordered a remittitur. Gentry appealed the case, complaining in part of the admission of certain evidence during the trial. Larson, through a cross-point, urged error as to the remittitur. The court of appeals affirmed the judgment. 709 S.W.2d 709. We reverse the judgment of the court of appeals and remand this cause to that court for it to reconsider Larson's complaint as to remittitur.

Larson and Gentry each owned 48% of the stock of Cactus Utility Company; the corporation's attorney owned the remainder. When Larson and Gentry decided to terminate their business relationship, they began to negotiate an elaborate scheme by which Gentry would essentially buy out Larson's interest in the corporation. After a series of negotiations, Larson refused Gentry's offer, and filed suit to determine the value of the corporation and force a division. The jury found that Cactus Utility's fair market value was $2,053,325, and awarded Larson $787,053 as his share. The jury also awarded Larson legal fees of $20,000 and accounting fees of $30,000. Upon motion for new trial, the trial court, without stating a reason, ordered a remittitur of $350,000. The court of appeals affirmed the remittitur because, in its words, "[w]e cannot say ... that the trial court's order of remittitur was manifestly unjust and was an abuse of discretion." 709 S.W.2d at 718.

We granted writ in this case to clarify our holding in Pope v. Moore, 711 S.W.2d 622 (Tex.1986), and to consider the court of appeals' ruling that Gentry waived any error concerning the introduction into evidence of a certain agreement between the parties. In Pope, we held that a court of appeals, in ordering a remittitur, should do so on an insufficiency of the evidence, and not an abuse of discretion, standard. Today we reaffirm that principle as it applies to trial courts. Trial courts and courts of appeals should be subject to the same standard for a simple reason: no court is free to substitute its judgment for that of the jury. A court of appeals should uphold a trial court remittitur only when the evidence is factually insufficient to support the verdict. Wilson v. Freeman, 108 Tex. 121, 185 S.W. 993 (1916).

To review trial court remittiturs under a different standard and continue the "abuse of discretion" test conflicts with a system that allows juries to set damages. The abuse of discretion standard robs of its vitality the constitutionally mandated right of trial by jury. Under an abuse of discretion review, so long as a reduction does not rise to a level shocking the court of appeals' conscience, the trial judge can freely reduce jury awards. See Accent Builders Co., Inc. v. Southwest Concrete Systems, 679 S.W.2d 106 (Tex.App.--Dallas 1984, writ ref'd n.r.e.). Such review effectively allows jurists' determinations to be substituted for those of the jury, a practice condemned since Carter v. Carter, 5 Tex. 93 (1849). See also Choate v. San Antonio & A.P. Ry. Co., 91 Tex. 406, 44 S.W. 69 (1898); Harpold v. Moss, 101 Tex. 540, 109 S.W. 928 (1908); Pool v. Ford Motor Co., 715 S.W.2d 629, 633-35 (Tex.1986). Additionally, employing differing standards leads to the inconsistent result permitting trial court remittiturs to stand when the same orders would have been improper coming from a court of appeals.

The statement of law in Flanigan v. Carswell, 159 Tex. 598, 324 S.W.2d 835 (1959), is correct so far as it recognizes that the same rule for remittiturs applies to both courts of appeals and to trial courts. However, that case is overruled to the extent that it advocates a standard for remittiturs varying from that enunciated in Pope.

If a court of appeals holds that there is no evidence to support a damages verdict, it should render a take nothing judgment as to that amount. If part of a damage verdict lacks sufficient evidentiary support, the proper course is to suggest a remittitur of that part of the verdict. The party prevailing in the trial court should be given the option of accepting the remittitur or having the case remanded. Wilson v. Freeman, 108 Tex. at 126, 185 S.W. at 994. If a remand is ordered by the court of appeals, then, in doing so, it should detail and analyze the evidence as required by Pool v. Ford Motor Co.

Turning to Gentry's point of error before this court, one of the bases of Larson's suit was that the parties had agreed to use Cactus Utility's market value when dividing the assets, a proposition which Gentry denied. Through his motion in limine, Gentry sought to prevent introduction of the parties' Stock Purchase Agreement calling for a market valuation. Gentry contended that the parol evidence rule barred the introduction of the Stock Purchase Agreement since two later documents called for a division based upon the "net value" of the corporation.

At trial, when Larson tendered the agreement into evidence, Gentry did not recognize it and stated that he had no objection to its introduction. Before the jury learned of the exhibit's contents, however, Gentry discovered his error and renewed his pre-trial objection. After explaining his error to the trial court and asking the court to make findings that the jury had not learned of the document's contents, Gentry asked that he be given a running objection since the evidence was already admitted. The trial court told Gentry that the ruling regarding admissibility would not be changed, and granted the running objection.

In its opinion upon motion for rehearing, the court of appeals held that Gentry waived his objection because it was neither timely presented nor ruled upon. We agree with the court of appeals' holding as to waiver, but for a different reason. The evidence was admissible on the question of the ambiguity and vagueness of the later documents. Larson pleaded that the agreements calling for a net valuation were ambiguous and vague, allowing introduction of the Stock Purchase Agreement. R & P Enterprises v. LaGuarta,...