Prudential Ins. Co. of America v. Jefferson Associates, Ltd.

Decision Date12 August 1992
Docket NumberNo. 3-90-217-CV,3-90-217-CV
Citation839 S.W.2d 866
PartiesPRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. JEFFERSON ASSOCIATES, LTD. & F.B. Goldman, Appellees.
CourtTexas Court of Appeals

John Hill, Jr., Liddell, Sapp, Zivley, Hill & La Boon, Austin, for appellant.

Douglass D. Hearne, Don W. Kothmann, Hearne, Knolle, Lewallen, Livingston & Holcomb, Austin, for appellees.

Before CARROLL, C.J., and ABOUSSIE and KIDD, JJ.

KIDD, Justice.

This case arises from the sale of the Jefferson Building, a four-story commercial office building in Austin, Travis County, Texas. In late 1983, the Prudential Insurance Company of America (Prudential), after becoming, through foreclosure, the owner of the Jefferson Building, proposed to sell it to Jefferson Associates, a limited partnership, and F.B. Goldman (collectively, Goldman). Two years after the sale was consummated, Goldman discovered that the building contained asbestos. Alleging that the presence of asbestos significantly depreciated the value of the building, Goldman brought suit against Prudential. Following a jury verdict and judgment awarding Goldman actual and exemplary damages, Prudential brings this appeal. We affirm.

THE CONTROVERSY

The Jefferson Building was constructed in 1972 and was situated in a prime neighborhood in Austin, Texas, suitable for medical office buildings. It commanded high rents and experienced favorable occupancy rates. In 1976 Prudential, having provided construction financing, acquired the building through foreclosure. In late 1983, Prudential decided to sell the Jefferson Building. Goldman successfully bid on the building. Before the purchase was completed, Goldman inspected the property himself. In May 1984, he signed a contract to purchase the Jefferson Building "as is" for $7,150,000.

In 1986, after the purchase, Goldman discovered that the building contained asbestos, which lowered the building's market value. Goldman filed suit against Prudential for misrepresentation under the Deceptive Trade Practices--Comsumer Protection Act (DTPA), Tex.Bus. & Com.Code Ann. §§ 17.41-.63 (1987 & Supp.1992), fraudulent concealment, and other grounds related to the nondisclosure of the asbestos. 1 Trial to a jury included several weeks of testimony. Upon conclusion of the evidence, the parties agreed to submit liability in the case on a general charge. Therefore, the liability issue was submitted in one question:

Question: Do you find from a preponderance of the evidence that the plaintiffs should be entitled to recover damages from the defendant as the result of any wrongful conduct by the defendant?

Answer: We do.

The jury also found: (1) Prudential engaged in wrongful conduct; (2) Goldman sustained actual damages in the amount of $6,023,993.03; (3) Prudential's wrongful conduct was done with conscious indifference to Goldman's rights, with gross negligence, and with actual awareness that such conduct was wrongful; and (4) Goldman was entitled to exemplary damages of $14,300,000. The district court rendered final judgment, including prejudgment interest and attorney's fees, on the verdict.

Prudential appeals by nine points of error. In five points, Prudential attacks the legal and factual sufficiency of the evidence to support the jury's verdict. Prudential also attacks, in single points, the admission of certain evidence, the trial court's failure to grant a remittitur, and, in its final two points, the awarding of prejudgment interest and attorney's fees.

DISCUSSION
Liability--Wrongful Conduct

In points of error one and two, Prudential attacks the jury's liability finding that Prudential engaged in wrongful conduct. In point one, Prudential contends that there is no evidence to support the jury finding; in point two, Prudential contends that the finding is "against the great weight and preponderance of the evidence." 2 The standards of review are well settled for reviewing jury findings. In reviewing a "no evidence" challenge, we consider only the evidence and reasonable inferences drawn therefrom which, when viewed in their most favorable light, support the jury's finding. The appellate court must disregard all evidence and inferences to the contrary. Alm v. Aluminum Co. of Am., 717 S.W.2d 588, 593 (Tex.1986); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). Any probative evidence supporting the finding is sufficient to overrule the point of error. See also Robert Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex.L.Rev. 361, 364 (1960).

We will sustain a challenge that the finding is factually insufficient to support the verdict only if, after reviewing the entire record, the evidence is too weak to support the finding or the finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. See, e.g., Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). See Powers and Ratliff, supra, at 525.

We note at the outset that the parties agreed to submit the liability portion of this case on a general charge. Thus, in reviewing the evidence, we are required to uphold the jury's liability finding if there is sufficient proof on any theory of recovery pleaded by Goldman.

A. Events Leading to the Sale of the Jefferson Building

Goldman introduced evidence that, in the late 1970's, Prudential's corporate headquarters determined that asbestos was a dangerous material which should not be used in the fireproofing of any of Prudential's buildings. Because of this knowledge, Prudential's Director of Architecture, A.E. Zielinski, testified that Prudential would not accept plans or specifications for any of Prudential's buildings if the plans and specifications included asbestos fireproofing. By 1978, Prudential became concerned about asbestos in its existing buildings. In 1979, Mr. Arnold F. Rebholz, 3 who was in charge of the leasing and management of Prudential's real-estate portfolio at corporate headquarters, became aware of an asbestos issue involving one of Prudential's office buildings in Jacksonville, Florida. IBM, the anchor tenant, objected to the presence of asbestos in the building and eventually vacated the premises. In a confidential memo to his corporate division, Rebholz compared the economic consequences of asbestos contamination with those following the outbreak of Legionnaires' Disease in a downtown Philadelphia hotel.

In the early 1980's, Prudential began a survey of all of its properties to determine if any of the buildings had used asbestos in its fireproofing. These surveys were performed by reviewing the plans and specifications for the type of materials to be used in the structures. By 1984, Prudential had a demonstrated concern about asbestos and recognized it as an economic issue regarding both the sale of property and tenant occupancy in its buildings. Goldman contended that Prudential began selling those properties containing asbestos while continually worrying about the public relations problems associated with the existence of asbestos in its commercial-building portfolio. In one instance in the spring of 1984, Prudential attempted to sell the Gibraltar Building to the Newark Board of Education. One of Prudential's employees made full disclosure of the asbestos building materials used in the Gibraltar Building and the Newark Board refused to buy the building. Goldman argues that, from that point forward, Prudential, being aware of the economic consequences of full disclosure, set upon a course of concealing any information concerning asbestos from prospective purchasers. Prudential contended that any prior knowledge of asbestos was acquired by the corporate headquarters and not the real estate sales division. Prudential officials testified that asbestos information was not shared among the various divisions.

In the spring of 1984, Goldman and Prudential entered negotiations concerning the possible sale of the Jefferson Building. Goldman's employees and experts conducted investigations and attempted careful inspection of the building. In March of 1984, before execution of the contract, Mr. Tim Don Kirk, a maintenance supervisor for Goldman, met with Prudential's on-site manager, Ms. Donna Buchanan, to inspect the building. During the course of his inspection, Mr. Kirk asked Ms. Buchanan if the building "had any defects or problems." Ms. Buchanan represented to Mr. Kirk that the building had no defects and that it only had one problem--a concrete floor in the mechanical room, which had been corrected. Mr. Kirk also asked Ms. Buchanan for the drawings, plans and specifications for the building; however, she told him that Prudential had only tenant as-built drawings, that no other plans or specifications were available. Goldman contended at trial that Prudential purposely and intentionally withheld the building plans and specifications. He contended that those plans and specifications listed a fireproofing material with the trade name MonoKote, a product which sometimes contained asbestos. 4 Prudential, on the other Goldman introduced additional evidence to show that, before the sale of the Jefferson Building, Prudential had developed a sophisticated concealment strategy to prevent prospective buyers from discovering asbestos in its buildings. He introduced evidence that a prospective buyer on routine inspection would not be able to determine by visual examination whether asbestos materials were present. Prudential's Corporate Vice President, Mr. Rebholz, conceded that by 1983 he knew that the presence of asbestos had an adverse affect on the marketability of buildings and was therefore a "subject of extreme importance" to Prudential. Prudential's Corporate Vice President and Senior Portfolio Manager, Mr. Charles Lightner, knew that asbestos removal was expensive and that appropriate appraisal practice and policy required discounting a building to...

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