Qwest Communications International, Inc. v. At&T Corp., 03-02-00030-CV.
| Decision Date | 12 June 2003 |
| Docket Number | No. 03-02-00030-CV.,03-02-00030-CV. |
| Citation | 114 S.W.3d 15 |
| Parties | Qwest Communications International, Inc.; Qwest Communications Corporation; and SP Constructions Services, Inc./AT&T Corp.; AT&T Communications of the Southwest, Inc.; CK Directional Drilling; and Charles Loyd Nelson, Appellants v. AT&T Corp.; AT&T Communications of the Southwest, Inc./Qwest Communications International, Inc.; Qwest Communications Corporation; SP Construction Services, Inc.; C&S Directional Boring Company, Inc.; CK Directional Drilling; and Charles Loyd Nelson, Appellees |
| Court | Texas Supreme Court |
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v.
AT&T Corp.; AT&T Communications of the Southwest, Inc./Qwest Communications International, Inc.; Qwest Communications Corporation; SP Construction Services, Inc.; C&S Directional Boring Company, Inc.; CK Directional Drilling; and Charles Loyd Nelson, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT NO. 97-13778, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING.
Before Justices B. A. Smith, Yeakel and Aboussie.*
Affirmed in Part; Reversed and Rendered in Part.
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Lee Yeakel, Justice.
Qwest Communications International, Inc., Qwest Communications Corp., and SP Construction Services, Inc. (together "Qwest") appeal a final judgment awarding economic and exemplary damages to AT&T Corporation and AT&T Communications of the Southwest, Inc. (together "AT&T") for damage to an AT&T fiber-optic cable. CK Directional Drilling and Charles Nelson (together "CK") and AT&T also appeal the final judgment, challenging the district court's calculation of damages. We will affirm in part and reverse and render in part.
In 1996 Qwest began the construction of a nationwide fiber-optic communication network to compete against AT&T and other communications companies.1 By the fall of 1997, with the permission of the Texas Department of Transportation, Qwest was laying fiber-optic cable in highway rights-of-way between Austin, San Antonio, and Houston. AT&T fiber-optic cables lay buried in the same rights-of-way. The rights-of-way also accommodate cables, pipes, and lines of various other utility companies. The rights-of-way's narrow width dictates that underground cables be buried near to one another. Qwest informed AT&T of its cable-laying operations, and AT&T had representatives at the various sites to aid in coordination, mark the AT&T cable, and avoid potential damage. This action involves Qwest's cable-laying operations along State Highway 21 between Austin and Seguin.
On September 16, 1997, Qwest severed an AT&T fiber-optic cable. The next month, CK, a subcontractor employed by C&S Directional Boring Company, Inc. ("C&S") to perform boring operations for Qwest, cut the cable a second time.2 Qwest had contracted with C&S to perform cable-laying operations, and C&S, in turn, had retained CK. A third cut occurred in December, when CK employees again cut the AT&T cable. AT&T filed suit against Qwest and C&S, seeking damages and an injunction to stop Qwest's cable-installation practices. AT&T obtained a temporary restraining order against Qwest; however, at the courthouse immediately before a scheduled temporary-injunction hearing, Qwest and AT&T reached an agreement (the "Agreement"), which they announced to the district court.
The Agreement embodied a nationwide cooperative plan regarding Qwest's fiber-optic-network installation.3 AT&T dictated the Agreement into the court record without objection. Later, AT&T filed a motion for contempt and sanctions, alleging that Qwest had violated the terms of the Agreement while conducting cable-laying operations in another state. Qwest then disputed the validity of the Agreement. At a district-court hearing, AT&T presented an "Agreed Order," which it asserted was the exact rendition of the Agreement previously read into the record. Qwest objected, arguing the order was incomplete as a rule 11 agreement. See Tex. R. Civ. P. 11 (agreement between parties enforced if in writing, signed, and filed as part of record, or agreement made in open court and entered of record). The district court signed the order and made findings of fact and conclusions of law that the Agreement was an enforceable rule 11 agreement.4
This Court dismissed Qwest's appeal of the order, holding it to be a nonappealable interlocutory order over which we lacked jurisdiction. Qwest Communications Int'l Inc. v. AT&T Corp., 983 S.W.2d 885
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(Tex. App.—Austin 1999). The supreme court reversed and remanded the cause to this Court, holding that the order was appealable because it granted a temporary injunction. Qwest Communications Corp. v. AT&T Corp., 24 S.W.3d 334 (Tex. 2000) (citing Act of April 2, 1997, 75th Leg., R.S., ch. 1296, § 1, 1997 Tex. Gen. Laws 4936, 4936-37 (amended 2001) (current provision at Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(4) (West 2003)). After remand, this Court dismissed the interlocutory appeal on the joint motion of the parties. Qwest Communications Int'l Inc. v. AT&T Corp., No. 03-98-111-CV (Tex. App.—Austin Oct. 19, 2000, no pet.) (not designated for publication). The case then proceeded to trial in the district court.5
The jury awarded economic damages to AT&T for all three cable cuts: for the first cut, the jury awarded $205,187.69 against Qwest, finding that Qwest acted with malice; for the second cut, the jury awarded $339,809.98 against CK; for the third cut, the jury awarded AT&T $143,583.83, with responsibility apportioned between Qwest (20%), C&S (30%), and CK (50%), and found that Qwest and C&S acted with malice. Additionally, the jury found Qwest had breached the Agreement and awarded $317,814 to AT&T. The jury found that at all times C&S was responsible for the conduct of CK, its subcontractor, and that Qwest was responsible for the conduct of C&S. The jury awarded AT&T $350 million in exemplary damages against Qwest and $51,000 in exemplary damages against C&S.6 After the verdict, the district court advised the parties that the calculation of exemplary damages would not include: (1) prejudgment interest, (2) breach-of-contract damages, or (3) damages resulting from the second cut; in addition, twenty percent of the damages found arising from the third cut would be included in calculating exemplary damages. The court also stated that prejudgment interest against CK began on May 5, 2000, the date AT&T amended its petition to name CK as a defendant. The final judgment employed the formula previously announced by the district court and, in addition, reduced the exemplary-damages award against Qwest to two times economic damages in accordance with the statutory cap on exemplary damages, resulting in exemplary damages of $467,808.91. The judgment did not toll the accrual of prejudgment interest as to CK's portion of the damages.
By four issues, Qwest challenges: (1) the legal and factual sufficiency of the evidence supporting the exemplary-damages award; (2) the existence of a rule 11 agreement; (3) the damages award for breach of the Agreement; and (4) Qwest's liability for the negligence of the independent contractors. AT&T, by two issues, argues that the district court miscalculated the exemplary damages and incorrectly calculated prejudgment interest. Finally, CK argues that the district court erred in failing to toll prejudgment interest as to the damages awarded against it.
I. The Exemplary-Damages Award
By its first issue, Qwest challenges the legal and factual sufficiency of the evidence supporting the jury's award of exemplary damages. The jury found that Qwest's actions were the result of its malice. Specifically, Qwest contends that AT&T did not meet the clear-and-convincing-evidence burden required for such a finding because: (1) a corporation cannot be liable for exemplary damages unless a managerial agent participates in the conduct and (2) there was no proof of malice. See Tex. Civ. Prac. & Rem. Code Ann. § 41.001 (West 1997).
Because AT&T's burden of proof at trial was by clear-and-convincing evidence, our legal-and-factual-sufficiency review must incorporate this heightened standard. In two recent opinions, the supreme court
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has articulated the standards for conducting a legal-and-factual-sufficiency review when the burden of proof at trial was by the clear-and-convincing standard. See In re J.F.C., 96 S.W.3d 256 (Tex. 2002), In re C.H., 89 S.W.3d 17 (Tex. 2002); see also Bently v. Bunton, 94 S.W.3d 561, 597 (Tex. 2002) (for purpose of proving actual malice in defamation action, evidence is clear and convincing if it supports firm conviction that fact to be proved is true).
In J.F.C. the supreme court held that the legal-sufficiency review "must take into consideration whether the evidence is such that a fact finder could reasonably form a firm belief or conviction about the truth of the matter on which the [plaintiff] bears the burden." 96 S.W.3d at 265-66. The court stated that the a reviewing court, in conducting a legal-sufficiency review, should "look at all the evidence in the light most favorable to the finding to determine whether a reasonable trier of fact could have formed a firm belief or conviction that its finding was true." Id. at 266. Deference to the fact finder's conclusion requires "looking at the evidence in the light most favorable to the judgment [which] means that a reviewing court must assume that the fact finder resolved disputed facts in favor of its finding if a reasonable fact finder could do so . . . a court should disregard all evidence that a reasonable fact finder could have disbelieved or found to have been incredible." Id. The court continued, stating:
This does not mean that a court must disregard all evidence that does not support the finding. Disregarding undisputed facts that do not support the finding could skew the analysis of whether there is clear and convincing evidence.
If, after conducting its legal sufficiency review of the record evidence, a court determines that no reasonable fact finder could form a firm belief or conviction that the matter that must be proven is true, then that court must conclude that the evidence is legally insufficient.
Id.
Regarding a factual-sufficiency review...
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