M.N. Dannenbaum, Inc. v. Brummerhop

Citation840 S.W.2d 624
Decision Date03 September 1992
Docket NumberNo. C14-91-01044-CV,C14-91-01044-CV
PartiesM.N. DANNENBAUM, INC., Appellant, v. Charles H. BRUMMERHOP, d/b/a Charles Brummerhop & Associates, and Charles H. Brummerhop, Inc., Appellees. (14th Dist.)
CourtCourt of Appeals of Texas

John C. Allen, Christy A. Hext, Houston, for appellant.

Andrew F. Spalding, Ileana M. Blanco, Houston, for appellees.

Before JUNELL, ROBERTSON and DRAUGHN, JJ.

OPINION

DRAUGHN, Justice.

M.N. Dannenbaum, Inc. appeals from a take nothing judgment rendered in its suit against appellees alleging, among other claims, fraud, wrongful appropriation of confidential information, conspiracy, and tortious interference with contractual and business relations. Appellant raises five points of error claiming the trial court erred (1) in disregarding the jury's findings of damages regarding stock fraud, (2) in granting a directed verdict on the claims of common law fraud, tortious interference, and breach of contract, and (3) in submitting an improper jury question on wrongful appropriation of confidential information. Appellees bring seven cross points. We affirm.

Charles Brummerhop was a stockholder and salesman for appellant, Dannenbaum, a process equipment sales company. By letter dated August 12, 1989, Brummerhop resigned from Dannenbaum. In that letter, Brummerhop asked for payment for his stock and of certain trust fund money. Brummerhop also asked that Dannenbaum not invoke the Buy-Sell Agreement, which provided that the corporation had the right of first refusal and if the corporation elected to buy back the stock, the stockholder would be paid five percent immediately and paid the balance over ten years at seven percent interest. Brummerhop received payment of at least part of his funds in the trust fund approximately one week after resigning.

On September 4 or 5, 1989, Brummerhop received a telephone call from his son, who also worked for Dannenbaum, asking Brummerhop to meet with three Dannenbaum employees for drinks. Brummerhop testified that these employees expressed dissatisfaction with Dannenbaum and asked Brummerhop to start a business competing with Dannenbaum.

On September 6, 1989, Brummerhop met with the two other co-owners of Dannenbaum, A.D. Muller and D.W. Burris. Brummerhop agreed to accept cash for eighty percent of his stock and a promissory note for the balance. Muller later called Brummerhop and asked him to sign a non-competition agreement in exchange for payment for the stock. Brummerhop refused to sign such an agreement, but he admitted that at one point during the conversation he may have orally agreed not to compete with Dannenbaum. Brummerhop contended that he did not agree not to compete in exchange for payment for his stock.

On September 6, 1989, Brummerhop received a check for $75,000.00 for 80 percent of his stock and a promissory note for the balance of approximately $18,900.00. On the same day, the three Brummerhop employees who had met with Brummerhop resigned from Dannenbaum. Later that day, Brummerhop contacted Gestra, one of Dannenbaum's suppliers and asked if Gestra would consider allowing Brummerhop to represent the Gestra line of products. Gestra asked for a business proposal from both Brummerhop and Dannenbaum. Gestra subsequently decided to award its business to Brummerhop and terminated its contract with Dannenbaum for cause. Dannenbaum's contract with Gestra allowed Gestra to terminate the relationship at any time upon thirty days notice or immediately for just cause. Gestra and Brummerhop executed a manufacturer's representative contract on September 25, 1989. Gestra let Brummerhop and his associates occupy office space at the Gestra facility on a temporary basis.

On October 17, 1989, Dannenbaum sued Brummerhop and obtained a temporary restraining order. After a hearing on October 31, 1989, the trial court dissolved this restraining order and denied Dannenbaum any injunctive relief. Before this hearing, however, Dannenbaum sent letters to approximately twenty of Gestra's largest customers informing them of the restraining order, of the possibility that a temporary injunction would soon be in effect, and of their legal counsel's advice that Brummerhop was in violation of his fiduciary duties to Dannenbaum. Brummerhop subsequently counterclaimed against Dannenbaum for malicious prosecution, wrongful temporary restraining order, defamation, breach of contract, tortious interference with business relationships, violations of DTPA and TEX.R.CIV.P. 13.

The case went to trial and after Dannenbaum rested, Brummerhop and Gestra moved for a directed verdict on all of plaintiff's claims. The trial court granted a directed verdict to Brummerhop on the claims of breach of contract, negligent misrepresentation, violation of the DTPA, violation of the Texas Business Opportunity Act, breach of fiduciary duty, conversion, tortious interference with contract and with business relations, quantum meruit, and common law fraud. The trial court refused to enter a directed verdict on the claims of stock fraud, wrongful appropriation of confidential information, and conspiracy. As to Gestra, the trial court granted a directed verdict on the claims of violation of the DTPA, fraud, tortious interference with contract and with business relations, negligent misrepresentation, breach of contract, violations of the Texas Business Opportunity Act and of TEX.BUS. & COM.CODE ANN. § 35.84, breach of fiduciary duty, and conversion. The trial court refused to grant Gestra a directed verdict on plaintiff's claims of wrongful appropriation of confidential information and conspiracy.

After Brummerhop rested, the trial court granted Dannenbaum's motion for instructed verdict as to all of the counterclaims, except for non-payment of the promissory note, which the court found had been established as a matter of law. After Gestra rested, the trial court granted an instructed verdict as to Gestra's counterclaim of groundless claims under the DTPA.

The jury found that Brummerhop committed fraud in the sale of stock and awarded Dannenbaum $100,000.00 in actual damages and $150,000.00 in punitive damages. The jury found no wrongful appropriation of confidential information by Brummerhop, his corporation, or by Gestra. Brummerhop then filed a motion to disregard the jury findings of actual and punitive damages, which the trial court granted.

Appellant challenges the trial court's grant of appellees' motion to disregard jury findings as to damages. Both appellant and appellees challenge the submission of certain jury issues and the trial court's grant of a directed verdict on certain claims and counterclaims. We turn first to the points of error regarding the jury findings on damages for stock fraud.

In point of error one, appellant claims the trial court erred as a matter of law in disregarding the jury's findings of damages regarding stock fraud and abused its discretion in granting a judgment n.o.v. For a trial court to disregard a jury's finding and to grant a motion to disregard jury findings or a motion for judgment n.o.v., the trial court must determine that there is no evidence to support the finding. Exxon Corp. v. Quinn, 726 S.W.2d 17, 19 (Tex.1987); Arch Constr., Inc. v. Tyburec, 730 S.W.2d 47, 51 (Tex.App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.). On appeal, we must consider all of the evidence in a light most favorable to the verdict. If we determine that some evidence supports the verdict, we must reverse and render judgment unless appellees assert cross-points establishing grounds for a remand for new trial. Basin Operating Co., Ltd. v. Valley Steel Prod. Co., 620 S.W.2d 773, 776 (Tex.Civ.App.--Dallas 1981, writ ref'd n.r.e.).

The trial court instructed the jury that "the measure of damages is the difference between the value of the stock as represented to the investor and the actual value of the stock at the time it was purchased." Appellant claims there was evidence of a representation as to value. In support of this assertion, appellant points to Brummerhop's resignation letter, in which Brummerhop asked Dannenbaum to calculate the value of his stock by standard bookkeeping methods. Appellant also notes Muller's testimony that Brummerhop accepted the total sum of $94,767.53 for the stock. Furthermore, appellant contends the stock had no value at the time it was purchased because the stock only had value if Brummerhop's representation that he would not compete was true.

Appellees, on the other hand, argue that there was no evidence Brummerhop made any representation of the value of the stock, as required by the court's instruction, and there was no evidence of damages to Dannenbaum. The evidence shows that Brummerhop's only representation regarding valuation of the stock was his suggestion in his resignation letter that appellant apply "standard bookkeeping methods, i.e., assets less liabilities equals equity with no consideration given to goodwill or other intangibles." There is, however, no evidence of a representation by Brummerhop that the value of the stock was $100,000.00.

Even if we were to find that the representation of a method of calculation was some evidence of a representation of value by Brummerhop, this representation would not support the jury's award unless there was also evidence showing that the stock actually had no value on the date Dannenbaum purchased it. Appellant contends there is evidence that Brummerhop breached the alleged oral promise not to compete and that this competition devastated the business. Appellant's expert, Al Birdwell, testified that the company went "into a tailspin" and was on the "lip of failure." This expert added that sales declined dramatically and the company had not sustained a profit since Gestra terminated the contract. We agree with appellant that this is some evidence that Brummerhop's competition caused Dannenbaum to fail. Furthermore, there...

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