Matis v. Golden

• Decision Date: 16 May 2007
• Docket Number: No. 10-05-00311-CV.,10-05-00311-CV.
• Citation: 228 S.W.3d 301
• Parties: Tom MATIS and Gary Sorenson, Appellants, v. Mark GOLDEN, Brian Kosoglow and Jonathan Deming, Appellees.
• Court: Texas Court of Appeals

228 S.W.3d 301

Tom MATIS and Gary Sorenson, Appellants, v. Mark GOLDEN, Brian Kosoglow and Jonathan Deming, Appellees.

No. 10-05-00311-CV.

Court of Appeals of Texas, Waco.

May 16, 2007.

J. Paul Nelson, Henderson, for appellants.

Bill Youngkin, E.V. Adams, Bryan, for appellees.

Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.

OPINION

FELIPE REYNA, Justice.

Mark Golden, Brian Kosoglow, and Jonathan Deming recovered a judgment against Tom Matis and Gary Sorensen for fraud. Matis and Sorensen appeal on the following grounds: (1) the court erred by denying Matis's special appearance; and (2) the evidence is legally and factually insufficient to support the court's judgment. We affirm.

JURISDICTION

In point one, Matis contends that the court erred by denying his special appearance. The court signed the order denying Matis's special appearance on June 27, 2003. Matis did not file a notice of appeal until August 2005. An appeal of an order granting or denying a special appearance is an interlocutory appeal which must be perfected by filing a notice of appeal within twenty days after the ruling. See TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(a)(7) (Vernon Supp.2006); see also TEX.R.APP. P. 26.1(b); In re K.A.F., 160 S.W.3d 923, 927 (Tex.2005); Denton County v. Huther, 43 S.W.3d 665, 666-67 (Tex.App.-Fort Worth 2001, no pet.). Matis's attempted appeal from the denial of his special appearance is untimely, and we do not have jurisdiction to address it. Accordingly, we dismiss Matis's first point for want of jurisdiction. See In re S.R.O., 143 S.W.3d 237, 248 (Tex.App.-Waco 2004, no pet.).

LEGAL AND FACTUAL SUFFICIENCY

In point two, Matis and Sorensen challenge the legal and factual sufficiency of the evidence to support the court's finding that they committed fraud.

A legal sufficiency challenge requires consideration of "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). We "must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not." Id. This standard also applies to a court's findings made in a bench trial. See Bank of Am. v. Hubler, 211 S.W.3d 859, 862 (Tex. App-Waco 2006, pet. granted, judgm't vacated w.r.m.); see also Ludwig v. Encore Med., L.P., 191 S.W.3d 285, 294 (Tex.App.-Austin 2006, pet. denied); Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).

A factual sufficiency challenge to issues on which the appellant did not bear the burden of proof requires us to "consider and weigh all of the evidence." Checker Bag Co. v. Washington, 27 S.W.3d 625, 633 (Tex.App.-Waco 2000, pet. denied). We will reverse the "verdict only if it is so contrary to the overwhelming weight of the evidence that the verdict is clearly wrong and unjust." Id. On issues where the appellant "bears the burden of proof," we will reverse only if, "considering all the evidence, the finding is so contrary to the great weight and preponderance of the evidence as to be manifestly unjust." Id.

A fraud claim is comprised of the following elements:

(1) a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.

Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 211 n. 45 (Tex.2002) (quoting In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex.2001) (orig.proceeding)); Long v. Tanner, 170 S.W.3d 752, 754 (Tex. App.-Waco 2005, pet. denied).

In support of their legal and factual sufficiency challenges, Matis and Sorensen argue that: (1) Golden and Deming cannot recover for fraud because they learned of the investment through Kosoglow and neither appeared nor testified at trial; and (2) the evidence does not support a finding of materiality, falsity and/or recklessness, fraudulent intent, or reliance.

Failure to Appear and Testify

According to the record, Matis first learned of the investment through his friend Ron Weaver. The investment involved a company known as Waste Tech. Information regarding the investment then initially passed from Matis to Sorensen, from Sorensen to Kosoglow, and from Kosoglow to Golden and Deming. The specific information conveyed was that the investment would yield monthly returns or invested funds would be refunded. Kosoglow, Golden, and Deming each invested $25,000 in the investment. Invested funds were wired to the Emerald Noble Holding Trust and eventually transferred to Donald Richards, a California attorney responsible for preparing the investment documents. However, at no time did Kosoglow, Golden, and Deming receive any returns or refunds. Only Kosoglow provided live testimony at trial.¹ Because Golden and Deming were out of state and unable to appear and testify at trial, Matis and Sorensen contend that Golden and Deming cannot recover for fraud.

The Texas Supreme Court has specifically considered whether fraud requires a "direct relationship between the alleged fraudfeasor and a specific known person — commonly referred to in this context as `privity,'" and determined that such privity is not required. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 574, 580 (Tex.2001). Fraud "exists where the false representation was made with the intent of reaching and deceiving a third person and thereby caused that third party injury; privity is not required between the fraudfeasor and the person he is trying to influence." In re Enron Corp. Sec., 388 F.Supp.2d 780, 784 (S.D.Tex.2005) (citing Ernst & Young, 51 S.W.3d at 578-80). Accordingly, it is immaterial that a direct relationship does not exist between Golden, Deming, Matis, and Sorenson. See id; see also Ernst & Young, 51 S.W.3d at 578-80.

Furthermore, it makes sense that Golden and Deming could rely on Kosoglow's testimony as circumstantial evidence supporting their own fraud claims. "Fraud is usually not discernible by direct evidence and is usually so covert or attendant with such attempts at concealment as to be incapable of proof other than by circumstantial evidence." Cotten v. Weatherford Bancshares, Inc., 187 S.W.3d 687, 707 (Tex.App.-Fort Worth 2006, pet. denied). Kosoglow could properly testify to Matis's and Sorensen's representations. See TEX.R. EVID. 801(e)(2). He could also testify to the facts of the case. Additionally, Golden's deposition testimony was admitted at trial and the record contains documentary evidence pertaining to Golden and Deming's claims. Therefore, we cannot agree that Golden and Deming are not entitled to recover by virtue of being unable to appear and testify at trial.

Materiality

Actionable representations must involve material facts, not mere opinion or puffery. See Prudential Ins. Co. of Am. v. Jefferson Assocs., 896 S.W.2d 156, 163 (Tex.1995). "A representation is `material' if it is important to the party to whom it is made in making a decision regarding the particular transaction." Burleson State Bank v. Plunkett, 27 S.W.3d 605, 613 (Tex.App.-Waco 2000, pet. denied). "`Material means a reasonable person would attach importance to and would be induced to act on the information in determining his choice of actions in the transaction in question.'" Id. (quoting Beneficial Pers. Servs. v. Porras, 927 S.W.2d 177, 186 (Tex.App.-El Paso 1996, writ granted, judgm't vacated w.r.m.)).

"Whether a statement is an actionable statement of `fact' or merely one of `opinion' often depends on the circumstances in which a statement is made." Transport Ins. Co. v. Faircloth, 898 S.W.2d 269, 276 (Tex.1995). Relevant circumstances include "the statement's specificity, the speaker's knowledge, the comparative levels of the speaker's and the hearer's knowledge, and whether the statement relates to the present or the future." Id. Even an opinion may be actionable if: (1) it is "intertwined" with "direct representations of present facts;" (2) "the speaker has knowledge of its falsity;" (3) it is "based on past or present facts;" or (4) the speaker has "special knowledge of facts that will occur or exist in the future." Trenholm v. Ratcliff, 646 S.W.2d 927, 930-31 (Tex.1983). "When a speaker purports to have special knowledge of the facts, or does have superior knowledge of the facts—for example, when the facts underlying the opinion are not equally available to both parties—a party may maintain a fraud action." Paull v. Capital Res. Mgmt., Inc., 987 S.W.2d 214, 219 (Tex.App.-Austin 1999, pet. denied).

It appears from the record that Matis and Sorensen specifically represented that (1) invested funds were refundable; and (2) returns would be paid monthly, beginning shortly after the initial investment, and amount to one hundred percent for ten months. There is no doubt, given that no returns or refunds have been realized, that these representations were false. Yet, Matis and Sorensen contend that they were merely relaying information and that these representations are mere statements of opinion. We disagree.

These are not the type of representations that generally amount to mere puffery or opinion. See Paull, 987 S.W.2d at 218-19 (statements that an investment was "low risk" and would "produce large revenues for a long time" are merely "`puffing,' or `dealers' talk"); see also Faircloth, 898 S.W.2d at 276 (representing a settlement as "top dollar" is mere opinion); Prudential, 896 S.W.2d at 163 ("superb," "super fine," and "one of the finest little properties in the City of Austin" are not actionable statements). Nor were they presented as predictions or results contingent on the happening of some other event. These were specific statements of material fact regarding...