Pura-Flo Corp. v. Clanton

CourtCourt of Appeals of Texas
Citation609 S.W.3d 320
Docket NumberNO. 14-19-00479-CV,14-19-00479-CV
Parties PURA-FLO CORPORATION, Appellant v. Donald CLANTON, Appellee
Decision Date27 August 2020

609 S.W.3d 320

Donald CLANTON, Appellee

NO. 14-19-00479-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinions filed August 27, 2020
Rehearing En Banc Denied October 27, 2020

Jerry Zimmerer, Justice

Appellant Pura-Flo Corporation appeals from an adverse judgment in a breach of contract action brought by appellee Donald Clanton. In two issues Pura-Flo argues the trial court erred in failing to grant it judgment notwithstanding the verdict because Clanton produced legally insufficient evidence of future damages. We conclude the evidence is legally sufficient to establish Clanton's future losses as a result of Pura-Flo's actions and affirm the trial court's judgment.


In 1994 Misty Vanderzyden invested in water cooler rentals with Water Equipment Company ("WEC"), a manufacturer of water purification equipment. The parties entered into a Rental Income Agreement ("the Agreement") in which WEC agreed to sell Vanderzyden 50 "income producing water coolers rental customers (units)" for $49,280.31. According to the Agreement's terms it was based on 50 units at $985.61 each, rental income averages of $35.00 per month per unit, maintenance and administration costs of $12.00 per month per unit, and replacement units at $100.00 per relocation. WEC agreed to service all equipment, be responsible for invoicing and collecting all rental accounts, and repossess and replace units in the event a rental customer canceled. In exchange, WEC would pay Vanderzyden $1,750.00 per month minus the $12.00 per unit maintenance and administration fee and any fees for repossession and replacement of units. The $100.00 fee covered the cost of repossessing the individual water cooler from a rental customer who canceled their contract, and placing a water cooler with another customer in another location where the customer was paying rent.

The initial term of the Agreement was set at 60 months with Vanderzyden given the right to renew the agreement for an additional 36 months at the expiration of the original term. The Agreement further

609 S.W.3d 323

provided that, "Upon mutual agreement of both parties, said agreement may be renewed for an indefinite length of time." A proposal that accompanied the Agreement described the transaction as an investment. In the Agreement WEC insured that in the event a rental customer canceled its contract, WEC would replace the account with a new customer within 72 hours. Rocky Rasberry, president of WEC, and later Pura-Flo, testified that Vanderzyden was his only investor for this program.

On July 25, 2000, Pura-Flo notified Vanderzyden that if she did not renew the Agreement for another 36 months her water coolers would depreciate in value. A handwritten notation on the letter from Pura-Flo notes, "did renew—initial investment $50K."

In 2002, Clanton purchased the water cooler units and their future rental income from Vanderzyden. On June 25, 2002, Vanderzyden notified Pura-Flo that she "sold [her] ownership in fifty (50) units along with all future rental income pursuant to the March 1, 1994, agreement signed on February 28, 1994." Vanderzyden notified Pura-Flo that "effective immediately" all correspondence and payments should be forwarded to Clanton.

The expiration of the initial term of the Agreement caused Clanton to be concerned about the strength of the investment. To alleviate his concerns, Clanton sought a meeting with WEC, which by that time had changed its name to Pura-Flo. Clanton met with Vanderzyden and Rasberry to discuss whether the Agreement could be extended indefinitely after the expiration of the second term. Clanton testified that Rasberry "was very agreeable to transferring the ownership from [Vanderzyden] to [Clanton]." Clanton asked Rasberry if he could see the physical water coolers, and Rasberry responded, "Oh, no, they're rented. They're out in 50 locations."

Clanton asked Rasberry about the life of the water coolers and the indefinite term of the contract. Rasberry assured Clanton that the monthly maintenance fee kept the coolers sufficiently maintained and that each cooler's "life was indefinite." Clanton understood that by purchasing the water coolers and their rental customers he was "buying a stream of income," and that he was "stepping into [Vanderzyden's] shoes." Rasberry assured Clanton that his investment was not limited to the lifetime of each individual cooler.

Clanton subsequently sent a letter to Rasberry thanking Rasberry for meeting with him. Clanton enclosed three letters signed by Clanton and Vanderzyden regarding the sale of the water coolers and rental customers. One of the enclosures was a letter dated June 25, 2002, in which Vanderzyden states that she had sold her "ownership in fifty (50) units along with all future rental income pursuant to the March 1, 1994, agreement[.]" Vanderzyden's letter instructed Rasberry to forward all future correspondence and payments to Clanton.

Rasberry responded congratulating Clanton on his investment:

Congratulations on your new venture! I am happy to have you as one of our dealers.

I have enclosed your executed original document of your agreement. I noticed in the document you sent that the contract renewal letter and fee increases were not attached. I hope you were aware of them. I have enclosed a copy for your files. If you have any questions please do not hesitate to call.

Once you have had a chance to get a feel for the water business, you may want to increase your volume of customers. If
609 S.W.3d 324
so, please let me know and we will discuss further purchases.

Again, welcome to the Pura Flo family of dealers.

Attached to Rasberry's letter was the June 25, 2002 letter written by Vanderzyden notifying Pura-Flo that she sold her ownership in the water coolers and rental income (the "executed original document of your agreement"), a notice that the monthly maintenance fee had been raised to $17.00 per unit per month ("the contract renewal letter and fee increases"). Clanton agreed to the increased monthly maintenance fee and Pura-Flo sent monthly invoices and checks to Clanton per the Agreement until 2016.

Misty Jones, the chief financial officer for Pura-Flo, testified that she had been with Pura-Flo since 1996, two years after the original agreement with Vanderzyden. After Clanton purchased the Agreement, Jones was instructed by Harold Nedell, one of Pura-Flo's principals, to issue checks to Clanton monthly. Jones was also given a "gray book," which contained Pura-Flo's rental customers. In describing monthly payments to Clanton, Jones testified:

When [Nedell] instructed me about this whole monthly check to [Clanton], he said this is a list of quote, unquote customers that he's got. Every time one of these gets pulled, then you're supposed to put one of our rental customers that are getting rental income right here. That was the extent of it. I did this for years, years.

The record contains numerous invoices and checks dated between 2002 and 2017 reflecting payments made to Clanton consistent with Jones's testimony.

In July 2016, Pura-Flo notified Clanton that it would be raising the maintenance and administration fee to $24.50 per unit per month and the repossession and replacement fee to $175.00 per unit. Pura-Flo did not plan to raise the monthly rent on each of the coolers. Clanton notified Pura-Flo that the contract did not allow for unilateral increases, but Clanton wanted to try to continue his relationship with Pura-Flo. Rasberry did not respond to Clanton's notice, but also did not go forward with the fee increase.

Subsequently, when Jones was reconciling Pura-Flo's bank statements, she realized that a check sent to Clanton had not been cashed by Clanton. Seeing that the check had not cleared, Jones issued another check to Clanton, which Clanton cashed. Jones later learned that a third party had altered the first check and illegally cashed it for approximately $300.00. Jones sought to recoup Pura-Flo's $300.00 from the bank. The bank asked Jones to obtain an affidavit from Clanton stating that, among other things, the endorsement on the check was forged. Clanton, however, did not have personal knowledge of the forgery and refused to sign the affidavit as written. Clanton changed the wording of the affidavit Jones had presented to reflect that Clanton did not have personal knowledge of the incident, signed the affidavit, and returned it to Jones. The bank, however, would not accept the revised affidavit. Jones sent another affidavit to Clanton asking him to sign it, but Clanton refused. Clanton testified that after he refused to sign the bank's affidavit, Pura-Flo stopped sending monthly checks to him. Clanton received his last payment from Pura-Flo in December 2016.

In sorting out the forged check, Rasberry testified that he learned for the first time that Clanton had been receiving monthly checks from Pura-Flo since 2002. Until that time, Rasberry testified, "I had no idea we still had a contract with [Clanton], none whatsoever." Nedell, who originally instructed Jones about Clanton's

609 S.W.3d 325

monthly checks, had left Pura-Flo, and by the time of trial, had passed away. On January 17, 2017, Rasberry sent a letter to Clanton requesting a copy of the Agreement...

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2 cases
  • Pura-Flo Corp. v. Clanton
    • United States
    • Supreme Court of Texas
    • 19 Noviembre 2021
    ...and future damages of $50,000. Pura-Flo appealed, arguing only the insufficiency of the evidence supporting the future-damages award. 609 S.W.3d 320, 326 (Tex. App.—Houston [14th Dist.] 2020).A divided court of appeals affirmed. Id. at 329. Although the contract was terminable-at-will by ei......
  • Pura-Flo Corp. v. Clanton
    • United States
    • Supreme Court of Texas
    • 19 Noviembre 2021
    ...and future damages of $50, 000. Pura-Flo appealed, arguing only the insufficiency of the evidence supporting the future-damages award. 609 S.W.3d 320, 326 (Tex. App.-Houston [14th Dist.] 2020). A divided court of appeals affirmed. Id. at 329. Although the contract was terminable-at-will by ......

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