Navistar Intern. Transp. Corp. v. Crim Truck & Tractor Co., 9753

• Decision Date: 22 May 1990
• Docket Number: No. 9753,9753
• Citation: 791 S.W.2d 241
• Parties: NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION, Appellant, v. CRIM TRUCK & TRACTOR CO., Travis Crim and Tim Farley, Appellees.
• Court: Texas Court of Appeals

Page 241

791 S.W.2d 241

NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION, Appellant, v. CRIM TRUCK & TRACTOR CO., Travis Crim and Tim Farley, Appellees.

No. 9753.

Court of Appeals of Texas Texarkana.

May 22, 1990.

Rehearing Denied June 20, 1990.

Stephen F. Fink, Thompson & Knight, Dallas, for appellant.

Ron Adkison, Wellborn, Houston, Adkison, Mann, Sadler & Colley, Henderson, for appellees.

BLEIL, Justice.

Navistar International Transportation Corporation appeals from a judgment rendered in favor of Crim Truck & Tractor Company, Travis Crim and Tim Farley, the plaintiffs below. The plaintiffs sued Navistar for breach of a franchise agreement, breach of fiduciary duty and conspiracy to convert the plaintiffs' assets to the benefit of Navistar. The jury found in favor of the plaintiffs on all questions and fixed actual damages in the amount of $1,600,000.00, and exemplary damages in the amount of $1,750,000.00. We conclude that there are several errors which require reversal.

We first address Navistar's contentions involving breach of a fiduciary duty. Navistar contends that as a matter of law no fiduciary relationship existed between the parties, and that if such a relationship could have existed, the evidence was insufficient to prove that it did exist or that it was thereafter willfully breached by Navistar.

A relationship between Navistar's predecessor, International Harvester, and Crim Truck & Tractor began in 1943 and continued until Navistar terminated that relationship on April 1, 1985. Crim Truck & Tractor was the distributor in Henderson for Navistar products. Travis Crim testified that he and his father had always done the things requested or suggested by Navistar, from building design to computer equipment. Travis Crim also testified that he trusted Navistar, based in part on the term of the franchise agreement which provided for "mutual confidence and trust," and that he would not have otherwise entered into the agreement in 1979.

Since a formal fiduciary relationship does not exist between the parties, we must determine whether one has been otherwise created. A fiduciary relationship may arise not only from a technical relationship, but also when a person occupies a position of peculiar confidence toward another, Gaines v. Hamman, 163 Tex. 618, 358 S.W.2d 557, 561 n. 3 (1962). A fiduciary relationship is based upon fair dealing and good faith rather than any legal obligation. Kinzbach Tool Co. v. Corbett-Wallace Corporation, 138 Tex. 565, 160 S.W.2d 509, 512 (1942). It includes those informal relationships where one person trusts in or relies on the other, whether the relationship is social, domestic, or personal. Texas Bank and Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex.1980); Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256 (1951). However, the fact that one businessman trusts another and relies on a promise to carry out a contract does not create a fiduciary relationship. Consolidated Gas & Equipment Co. v. Thompson, 405 S.W.2d 333, 337 (Tex.1966). Ordinarily, when a fiduciary relationship has been held to exist, the parties were acting as partners or joint venturers, thus creating a fiduciary relationship as a matter of law. Gaines v. Hamman, 358 S.W.2d at 560; Fitz-Gerald v. Hull, 237 S.W.2d at 264; Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786 (1938); O'Shea v. Coronado Transmission Co., 656 S.W.2d 557, 559 (Tex.App.-Corpus Christi 1983, writ ref'd n.r.e.). A fiduciary relationship may also arise informally from moral, social, domestic, or purely personal relationships if confidentiality, trust, and reliance are present. Thigpen v. Locke, 363 S.W.2d 247 (Tex.1962); Gonzalez v. City of Mission, 620 S.W.2d 918, 921 (Tex.Civ.App.-Corpus Christi 1981, no writ). The relationship between a franchisor and a franchisee, as here, is not a formal fiduciary relationship. Likewise, the relationship between Navistar and the plaintiffs is not one of a moral, social, domestic or purely personal relationship beyond that created through the contract itself.

The fact that a cordial arm's-length relationship had continued for a long period does not, without more, create a fiduciary relationship between the parties. Under the present circumstances, we hold that no informal fiduciary relationship between Navistar, the franchisor, and Crim Truck & Tractor, the franchisee, was created.

Our further review of the evidence reveals that the evidence is insufficient under the review standard of Pool v. Ford Motor Co., 715 S.W.2d 629 (Tex.1986), and In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661-62 (1951), to support a finding that such a duty existed. If it be determined that we are wrong in holding that as a matter of law no such relationship existed, we further hold that insufficient evidence exists to show a fiduciary relationship between Navistar and the plaintiffs. Thus, recovery based upon the tort of breach of fiduciary duty cannot stand.

We now turn to the arguments concerning the jury findings based upon breach of contract. Navistar contends that the trial court erred in submitting a jury question asking whether Navistar breached its contract with the plaintiffs, because the contract was not ambiguous. It is proper to ask a jury to determine whether the evidence proves that a party breached the terms of the contract. Briargrove Shopping Center v. Vilar, 647 S.W.2d 329, 333 (Tex.App.-Houston [1st Dist.] 1982, no writ); Cannan v. Varn, 591 S.W.2d 583 (Tex.Civ.App.-Corpus Christi 1979, writ ref'd n.r.e.). The trial court did not err in submitting a question asking whether Navistar breached the contract.

Navistar also maintains that there is no evidence to support the submission of a question to the jury asking whether Navistar had breached its contract. In reviewing a no evidence question, we consider only the evidence tending to support the finding, view it in the light most favorable to the finding, give effect to all reasonable inferences therefrom, and disregard all evidence to the contrary. Glover v. Texas General Indemnity Company, 619 S.W.2d 400 (Tex.1981). The franchise agreement provides that Navistar could unilaterally terminate the franchise only for specified reasons. Navistar determined in 1984 that in order to effectively compete, all of its dealerships needed to be linked by computer. The proposed system was called the Dealer Communication Network, and Navistar informed all of its dealers that execution of an agreement to join the network was mandatory. Crim did not sign the agreement. Navistar then informed Crim Truck & Tractor that it considered it to be in anticipatory breach of the franchise agreement because it did not attend the meeting at which the network had been explained and had not signed and returned the agreement. Navistar argues that Crim was in anticipatory breach because without the system it could not comply with parts and equipment order requirements, warranty information transfer, and inventory control.

However, a representative of Navistar testified that at the time of trial the computer system was still only functioning at about fifty percent of its dealerships and that the old written forms were still in widespread use. Other dealers still using paper forms had not been terminated. At least four years after termination Crim could still have fulfilled the requirements of the contract without the computer system. Crim had therefore not placed itself in such a position as to be unable to perform the agreement, and Navistar unilaterally terminated the contract without cause. Some evidence supports a finding that Navistar breached the contract by terminating Crim Truck & Tractor.

Navistar further asserts that there is no evidence, or insufficient evidence, to support the jury's findings on damages resulting from the breach. The jury provided damages for loss of profits, loss of investment, and loss of money from sale of the franchise after considering the difference between the value of the business with and without the franchise.

In order to recover for lost profits, it is not necessary that the loss be susceptible to an exact calculation. Southwest Battery Corporation v. Owen, 131 Tex. 423, 115 S.W.2d 1097, 1098 (1938). It is sufficient that the amount of loss be shown by competent evidence with reasonable certainty. Where there is an established business, pre-existing profits may be used to prove the amount of loss with reasonable certainty. In addition, while calculating the loss and profit, the normal increase in the business which might have been expected in the light of past developments and existing conditions may also be considered. White v. Southwestern Bell Telephone Co., 651 S.W.2d 260, 262 (Tex.1983).

The jury was asked to find what amount of damages, if any, were proximately caused by the breach. It found $150,000.00 damages for lost profits from the time of breach until trial.

Travis Crim testified that the company had net profits of $88,000.00 in 1982 and unspecified profits in 1983 and 1984. His partner, Tim Farley, testified that the overall company, which included the franchise operation, an agricultural operation, and a wood-hauling operation, earned a profit of approximately $200,000.00. Farley testified that the profit was at least $100,000.00. Navistar argues that the charge presented to the jury improperly allowed it to consider profits obtained from portions of the business other than the truck franchise. Farley's and Crim's testimony goes generally to the profits generated by the entire business entity. No evidence shows the amount of profit earned exclusively by the truck franchise in the preceding years. While there is some evidence which could be construed to apply only to the franchise, we find the evidence insufficient to prove the loss of profits with reasonable certainty.

Navistar further contends that the evidence is legally and factually insufficient to support the jury's finding that the value of the...