Roberts v. Whitfill

• Decision Date: 22 March 2006
• Docket Number: No. 10-04-00030-CV.,10-04-00030-CV.
• Citation: 191 S.W.3d 348
• Parties: Dan E. ROBERTS d/b/a ExpresTel, Appellant, v. Debra WHITFILL d/b/a Total Access Communication, Appellee.
• Court: Texas Court of Appeals

191 S.W.3d 348

Dan E. ROBERTS d/b/a ExpresTel, Appellant, v.Debra WHITFILL d/b/a Total Access Communication, Appellee.

No. 10-04-00030-CV.

Court of Appeals of Texas, Waco.

March 22, 2006.

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Richard G. Ferguson, Waco, for appellant.

Keith Bradley, Bradley & Cain, LLC, Cleburne, Leigh W. Davis, Fort Worth, for appellee.

Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.

OPINION

BILL VANCE, Justice.

Dan Roberts and Debra Whitfill were business partners in Cleburne.After their partnership dissolved and they became competitors, Whitfill sued Roberts for antitrust violations, fraud, and breach of fiduciary duty.Aided by a spoliation instruction, Whitfill prevailed before a jury, which found for her on all three claims and assessed damages of $110,000 in compensatory damages against Roberts and $50,000 in punitive damages.The damages were trebled, and along with attorney's fees, a judgment awarding over $750,000 in compensatory damages and $50,000 in punitive damages was entered by the trial court.We will reverse the judgment and render judgment that Whitfill take nothing on her antitrust claim and remand the cause to the trial court.

Background

John Hayward, who is not a party to this appeal, had developed telecommunications software called "Superphone" that he was trying to market when he ran into Roberts, an old high-school friend, in 1997.They developed a plan to create a business that would provide various telecommunication services, including Superphone, which was a way for consumers to save on long distance charges.Using Superphone, a consumer in Cleburne could save money when making a long distance call—without incurring a long distance fee—to Dallas by calling a local number and entering some codes and the Dallas number.Depending on the number of calls made, the consumer would pay a monthly flat rate fee of $15 to $35, resulting in sizeable savings in long distance charges.

Roberts set up the business—ExpresTel—in the summer of 1997 to sell the Superphone service (among other services).He obtained a physical location in Cleburne, installed a computer and other hardware, and arranged and paid for telephone lines.Roberts and Hayward made an oral agreement: in exchange for allowing Roberts to use the Superphone software and for giving Roberts a forty-year exclusivity right in the North Texas area, Hayward was to receive fifty percent of ExpresTel's profits.Roberts hired Whitfill to market ExpresTel and to provide customer service, paying her a set-up fee for each new account she opened.In 1999, Hayward moved to California, and his percentage of profits was renegotiated to one-third because Roberts took over the technical troubleshooting that Hayward had previously done.

By 1999, Whitfill had become dissatisfied with her ExpresTel income and began exploring options with Hayward for a separate system.In March 2000, she obtained a lawyer, asserted that she was Roberts's partner instead of an ExpresTel employee, and demanded a partnership agreement.Roberts and Whitfill signed an Interim Standstill Agreement on March 10, 2000, after which Whitfill had no involvement with ExpresTel's operations.

Later in 2000, Whitfill sued Roberts, alleging that they were equal partners in ExpresTel and that Roberts had breached their partnership agreement, breached his fiduciary duty, converted property, and defrauded her.Hayward got involved in settlement negotiations, making two proposals to Whitfill: (1)she would pay Hayward $7,500 (with a payout arrangement) to set up her own Superphone business on her computer with her own phone lines and be charged $4.50 per customer for the use of Superphone and Hayward's expertise; or (2) pay Hayward $7 per customer, have her business "hosted" through ExpresTel's computer and phone lines, and use Hayward's expertise.The second proposal would relieve Whitfill of equipment repairs and system failures and the need to obtain and negotiate phone line prices.

In November 2000, Roberts, Hayward, and Whitfill settled with the following key terms: (1) Roberts and Hayward waived Roberts's exclusivity for North Texas so that Whitfill could use Superphone in the same geographical area; (2) Roberts and Whitfill released all claims against each other; (3) Whitfill agreed to pay Roberts $22,500 for loans made in the course of their business arrangement; (4) Whitfill would get half (about 651) of ExpresTel's customers and compete with ExpresTel with her own Superphone business, Total Access, which would be hosted by ExpresTel's computer and phone lines; (5) Hayward would provide ExpresTel and Total Access with Superphone software and his expertise; (6) the cost of Roberts's phone lines would be shared by all three equally; and (7) Hayward's compensation would switch from a profit percentage to a monthly per-customer fee that he would charge Roberts and Whitfill separately.The settlement was essentially the second of Hayward's two proposals.

But about six weeks after the settlement agreement was signed, Whitfill amended her petition, adding claims for breach of the agreement and fraud in the inducement of the agreement.The parties appeared to resolve the remaining differences, and Whitfill's suit was dismissed with prejudice.The parties signed a "Closing Agreement" that again released all claims between Whitfill and Roberts.

Whitfill began doing business as Total Access Communication in December 2000, and Roberts continued doing business as ExpresTel.Except for ExpresTel's hosting of Total Access, they were separate businesses.They had the same rates for customers at that time, although Roberts provided services other than Superphone to about 150 customers.Hayward's own business, HCS Telecom, leased Superphone software to ExpresTel and Total Access.HCS separately billed ExpresTel and Total Access each month.Whitfill paid HCS $7.00 per customer, and Roberts ultimately paid HCS $2 per customer.The $5 difference came from a $2.50 "hosting" fee collected from Whitfill as part of her $7.00 charge and credited by Hayward to Roberts off of his $4.50 charge to compensate Roberts for (1) the benefits to Hayward from Roberts's allowing Whitfill to use Roberts's system (because Hayward made money from Total Access through ExpresTel's hosting of Total Access), and (2) Roberts's maintaining the system (handling the phone lines and troubleshooting).

In other words, Hayward paid Roberts a $2.50 hosting fee so that Hayward could use Roberts's system for Whitfill and Total Access, but Hayward also charged Whitfill to recompense this expense.Without the $2.50 hosting fee, Roberts and Whitfill both would have been paying Hayward $4.50 per customer.Whitfill would later testify that, at the time of the settlement of the first lawsuit, she knew nothing of the $2.50 hosting fee, and that Hayward told her she and Roberts would pay the same charge per customer.The difference in charges was the principal basis of her second lawsuit.

By the early summer of 2001, Whitfill was dissatisfied with Total Access's revenue, so in June 2001, she severed her relationship with Roberts and ExpresTel, setting up Total Access on the computer and phone lines at Digitex.Her arrangement with Hayward was essentially the first proposal that he had made the year before: she would pay Hayward $7,500 (with a payout arrangement) to set up her own Superphone business on Digitex's computer and phone and be charged $4.50 per customer for the use of Superphone and Hayward's expertise.Hayward began billing Total Access $4.50 per customer, instead of $7.00, because the $2.50 hosting fee credit to Roberts was no longer justified as ExpresTel was no longer hosting Total Access.Whitfill was paying Digitex for that service.

Because Whitfill was still not making as much money as she expected in relation to ExpresTel, she became suspicious that she was being charged more per customer than ExpresTel was.In a May 2001 phone conversation with Hayward (which Whitfill secretly recorded), he made a statement that she believed indicated that Hayward and Roberts had previously agreed that she would pay $7.00 per customer; Whitfill testified that she had not known of this agreement, nor of what Hayward was charging Roberts per customer.She also had been unable to open the QuickBooks (ExpresTel's customer billing software program) data disks that she had gotten from Roberts in the settlement, and thus she could not ascertain the income and expense information between ExpresTel and Hayward.

Whitfill filed a second suit in August 2001, suing Roberts and Hayward and alleging state antitrust claims of preferential pricing and restraint of trade under the Texas Free Enterprise and Antitrust Act.SeeTEX. BUS. & COM.CODE ANN. § 15.01 et seq.(Vernon 2002).She also asserted claims for breach of the settlement agreement and for fraud and breach of fiduciary duty in negotiating the settlement.

The suit was tried on Whitfill's antitrust, fraud, and breach of fiduciary duty claims.The jury charge included a spoliation instruction that Roberts had intentionally destroyed QuickBooks data and the jury should presume the destroyed data was unfavorable to Roberts concerning Whitfill's damages, whether Roberts breached a fiduciary duty to Whitfill, and whether Roberts contracted to unreasonably restrain trade or commerce.

The jury answered the following questions pertinent to this appeal:

1.Roberts and Hayward contracted to create an unreasonable restraint on trade or commerce.

2.As a proximate result, Whitfill suffered injury in her business or property.

3.Roberts breached a fiduciary duty to Whitfill.

4.Hayward knowingly participated in Roberts's breach of fiduciary duty.

5.Roberts defrauded Whitfill.

6.Hayward defrauded Whitfill.

7.Whitfill's damages from Roberts's conduct referred to in Questions 2, 3, or 5 were $110,000.

8.Whitfill's damages from...