Rivas v. Cantu
| Decision Date | 21 December 2000 |
| Docket Number | No. 13-97-790-CV,13-97-790-CV |
| Citation | 37 S.W.3d 101 |
| Parties | (Tex.App.-Corpus Christi 2000) RUBEN RIVAS AND HAPPY YEARS, INC., Appellants, v. CASIMIRO (CASEY) CANTU, Appellee |
| Court | Texas Court of Appeals |
On appeal from the 139th District Court of Hidalgo County, Texas. [Copyrighted Material Omitted]
[Copyrighted Material Omitted] Before Chief Justice SEERDEN and Justices HINOJOSA and YANEZ.
Casimiro Cantu sued Happy Years, Inc. (an adult day-care business), Ruben Rivas, Josie Alvear, and Juan Guerra (shareholders of the corporation), and First State Bank of Mission (Rivas's employer), alleging causes of action, inter alia, for breach of contract and fraud. Guerra was non-suited after he filed for bankruptcy, First State Bank was dismissed from the suit before trial, and Alvear was dismissed from the suit before the charge was submitted to the jury. Only the causes of action against Happy Years and Rivas were submitted to the jury. The jury found that: (a) Happy Years had breached its contract with Cantu, (b) Cantu was entitled to Happy Years stock, and (c) Cantu had suffered damages for constructive dividends paid by the corporation to other shareholders. The jury also found that Rivas had committed fraud against Cantu and found actual and exemplary damages resulting from the fraud.
By six issues, Happy Years contends: (a) the evidence is legally and factually insufficient to support the jury's answers to Question Nos. 1 and 5; (b) the trial court erred in granting judgment in favor of Cantu because there is no evidence or insufficient evidence "to support the trial court's implied finding of Breach of Contract" and because there are no pleadings to support the judgment; and (c) appellee's claims are barred by the statute of frauds. By eleven issues, Rivas contends the evidence is legally and factually insufficient: (a) to support the jury's findings that Rivas committed fraud against Cantu; (b) to support the jury's award of actual damages for fraud; and (c) to support the award of exemplary damages and prejudgment interest. He further complains that Cantu's claims are barred by the statute of frauds. We affirm in part and reverse and remand in part.
The jury answered the following questions:
Question No. 1: Did Casimiro Cantu and Happy Years, Inc., agree: To employee [sic] Casimiro Cantu as executive director for a salary of $2,500.00 per month beginning in March 1990?
Question No. 2: Do you find that Casimiro Cantu complied with his end of the agreement in Question No. 1?
Question No. 3: Was Happy Years, Inc.'s failure to comply with the agreement in Question No. 1 excused?
Question No. 4: What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Casimiro Cantu for his damages, if any, that resulted from such failure to comply with the agreement in Question No. 1?
Do not add any amount for interest on past damages, if any.
Question No. 5: Did Casimiro Cantu and Happy Years, Inc., agree: To award Casimiro Cantu 25% of the Stock of Happy Years, Inc,. if he fulfilled his obligations under their agreement?
Question No. 6: Do you find that Casimiro Cantu complied with his end of the agreement in Question No. 5?
Question No. 7: Was Happy Years, Inc.'s, failure to comply with the agreement in Question No. 5 excused?
Question No. 8: What percentage (%) of ownership of Happy Years, Inc., if any, should be transferred to Casimiro Cantu?
Answer: Fifty -- 50% 1
Question No. 9: What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Casimiro Cantu for his damages, if any, that resulted from such failure to comply with the agreement in Question No. 5? Answer as to the Defendant listed below:
Consider the following elements of damages, if any, and no other. Lost economic benefits including profits that were a natural, probable and foreseeable consequence of Defendant HAPPY YEARS, INC. [sic] failure to comply.
Do not add any amount for interest on past damages, if any.
c. The misrepresentation is made with the intention that it should be acted on by the other party, and
d. The other party acts in reliance on the misrepresentation and thereby suffers injury.
Answer: YES.
What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Casimiro Cantu for his damages, if any, that resulted from such fraud on the part of Ruben Rivas. Consider the following elements of damages, if any, and none other.
Lost economic benefits including profits that were a natural, probable, and foreseeable consequence of Defendant Ruben Rivas's failure to comply.
The mental anguish sustained by Plaintiff:
Answer: $0.00
Question 12:
Did the Defendant Ruben Rivas act with actual malice? "Actual malice" means ill will, spite, evil motive, or purpose to injure another.
The verdict was unanimous.
Cantu elected his fraud remedy because it supported the finding of exemplary damages. After various post-judgment motions, the trial court entered an Amended Final Judgment ordering:
(a) Happy Years to immediately issue stock certificates transferring a twenty-five percent ownership interest to Cantu;
(b) that Cantu recover from Happy Years actual damages in the amount of $21,600.00,2 and prejudgment interest in the amount of $8,856.00; and
(c) that Cantu recover from Rivas actual damages of $86,569.00, prejudgment interest of $63,852.07, and exemplary damages of $100,000.00.
The record reflects that Cantu, Rivas, and Alvear testified at trial, as did Cantu's expert witness on damages. The following are summaries of their testimony.
Casimiro Cantu testified that he had been a social worker with the Texas Department of Human Services for many years. In 1988, Cantu realized that due to changes in the federal Medicaid program, there was a business opportunity in providing day-care services to certain elderly people with Medicaid coverage. In 1989, he compiled a feasibility study concerning the possible profitability of such an adult day-care center. At that time, there were approximately three such centers in the area. Cantu learned about the lengthy and complicated procedure involved in obtaining a state license to operate an adult day-care center, which includes a contract with the state to provide services to eligible Medicaid recipients.3
In 1989, Cantu entered into an agreement with Frank Flores to open an adult day-care center called "My Golden Years." Flores was to receive a sixty percent share of the business for providing the start-up money. Cantu was to receive a forty percent share of the business for providing the expertise to start the business and a salary of $2,000 per month to run it. He was paid this salary during the time he was setting up the business and obtaining the license. After Cantu obtained a state license for the business, the Flores/Cantu partnership ended after a dispute over ownership percentages and hiring decisions.
Cantu consulted local Small Business Administration (SBA) officials, who told him that before the SBA could consider him for a loan, he had to prepare a written proposal and try to obtain a loan from a bank. Cantu talked with Alvear, a licensed vocational nurse who worked at My Golden Years, about his plan. She then referred him to her "very close friend" Rivas, a loan officer with First State Bank. In February 1990, Cantu went to First State Bank seeking a start-up loan.
Rivas did not permit Cantu to fill out a loan application. He told Cantu that the Bank would not lend him the money because the idea was too risky and Cantu had no business experience and no collateral. Rivas instead proposed that he would finance Cantu's idea in exchange for fifty percent of the day-care business. Rivas stated that he had access to $250,000 and that they could open five or six centers. He pointed out that it would be better for Cantu to own fifty percent of six centers, rather than one hundred percent of one center. Cantu relied on Rivas's representations, and after several meetings, agreed to incorporate the business. Rivas and Cantu agreed that Rivas would receive a fifty percent ownership interest in the corporation in return for the financing, and Cantu would receive a fifty percent ownership interest in the corporation for his knowledge and expertise in obtaining the necessary license and starting up the business. Rivas and Cantu also agreed that Cantu would receive a salary of $2,500 per month (the same as his salary at DHS) to act as the executive director of the business.4 Cantu retained a local "legal assistant," Luis Ramirez, to handle the incorporation, and immediately began working to obtain the license.
Rivas later told Cantu he wanted Guerra, Rivas's business partner (whom Cantu had never met) included in the venture because of Guerra's business experience. Cantu objected, and Rivas "said that's okay."
Later, Rivas demanded that Alvear also be included as an owner because she could provide state-required nursing services to the business and contacts to referring physicians. As an employee, she could also be paid for her nursing services. Rivas "made it seem like . . take it or leave it."
When they met to sign the incorporation documents in April of 1990, Rivas told Cantu he had decided that Guerra would be a corporate owner:
to protect his interest . . you have to take it,...
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