Rubalcaba v. Pacific/Atlantic Crop Exchange, Inc.

• Decision Date: 07 March 1997
• Docket Number: No. 08-95-00293-CV,08-95-00293-CV
• Citation: 952 S.W.2d 552
• Parties: Juan Carlos RUBALCABA a/k/a Juan Carlos Ruvalcaba, Individually and d/b/a Empresas Ruvalcaba, S.A., and Empresas Ruvalcaba, S.A., Appellants, v. PACIFIC/ATLANTIC CROP EXCHANGE, INC., Michael Lawrence, and Tony Browning, from El Paso, Appellees.
• Court: Texas Court of Appeals

Page 552

952 S.W.2d 552

Juan Carlos RUBALCABA a/k/a Juan Carlos Ruvalcaba Individually and d/b/a Empresas Ruvalcaba, S.A. and Empresas Ruvalcaba, S.A., Appellants, v. PACIFIC/ATLANTIC CROP EXCHANGE, INC., Michael Lawrence, and Tony Browning, from El Paso, Appellees.

No. 08-95-00293-CV.

Court of Appeals of Texas El Paso.

March 7, 1997.

Rehearing Overruled Sept. 10, 1997.

Richard B. Perrenot, Roy R. Brandys, Mayfield & Perrenot, P.C., El Paso, for Appellants.

Stephen G. Peters, Mara Asya Blatt, El Paso, for Appellees.

Before BARAJAS, C.J., and McCLURE and CHEW, JJ.

OPINION

BARAJAS, Chief Justice.

This is an appeal from a default judgment rendered by the trial court against Appellants, jointly and severally, for actual damages in the amount of $126,705, and exemplary damages in the amount of $600,000. The case comes before this Court on writ of error from a default judgment. We reverse and remand in part and reverse and render in part the judgment of the trial court.

I. SUMMARY OF THE EVIDENCE

Appellant, Juan Carlos Rubalcaba, acting individually and as an agent for Empresas Ruvalcaba, called Appellee Browning, an agricultural commodities broker, and advised him that he was interested in exporting a quantity of peanuts to Mexico. Browning contacted Appellee Lawrence, another agricultural commodities broker, and through Lawrence, located the quantity of peanuts Rubalcaba had requested. Rubalcaba and Browning agreed that a trailer-load of peanuts would be shipped from western Canada to El Paso, Texas, where Empresas Ruvalcaba would pay for them and pick them up for export to Mexico. The peanuts were ultimately delivered to El Paso for a total price of $15,873.12.

After the peanuts arrived in the United States, the parties learned that United States Agriculture Department regulations required that Chinese peanuts, such as these, be shipped from Canada to Mexico by sea, rather than over land, as was erroneously done in this case by the Canadian broker, Werner Phillips. This violation of agricultural regulations placed pressure on Lawrence and Browning to get the peanuts out of the United States. Rubalcaba agreed to pick up the peanuts and get them out of the United States immediately.

Browning and Lawrence also arranged for another five trailers for a total price of $61,726.59 to be shipped, by Shah Trading Company Ltd., from eastern Canada to the Mexican port of Veracruz where Ruvalcaba would take possession of them. The Veracruz shipments were to be purchased under a method known as "cash against documents," under which, upon payment, a buyer is given necessary documents which would allow him to obtain possession of the product. The total price for this second shipment of "Veracruz" peanuts was $58,500, of which Appellees paid $13,500 in advance directly to Shah Trading Company, Ltd.

Soon after the peanuts arrived in Veracruz, Appellants reported to Appellees that the peanuts were in danger of deteriorating in the tropical heat, and requested that Appellees release them. Appellants offered to pay $39,000 of the $45,000 owed on the peanuts "simultaneously" with Appellees' release of goods. Rubalcaba sent a facsimile to Lawrence which purported to be a receipt for a wire transfer in the amount of $39,000 payable to Appellee Pacific Atlantic in partial payment for the Veracruz peanuts, this was indicated on the receipt from Banamex. Lawrence then authorized the release of the peanuts to Rubalcaba and Empresas Ruvalcaba. The record in the instant case shows that the actual wire transfer never arrived in the Pacific Atlantic account, contrary to the receipt's designated beneficiary, Pacific Atlantic Group Exchange.

Rubalcaba took possession of the Veracruz peanuts and eventually claimed that the peanuts were defective and unmarketable. Browning traveled to Mexico City, where Rubalcaba had taken the peanuts and tested them. Browning concluded that the shipment of peanuts was not defective, although he did state that there were approximately 80 bags of peanuts that were molding. Rubalcaba nonetheless continued to assert that the Veracruz peanuts were defective and refused to pay for the peanuts from El Paso because the money he had paid as a deposit on the Veracruz peanuts ($39,000) should be applied to the El Paso order.

Browning and Lawrence made arrangements to sell the Veracruz peanuts that Rubalcaba had shipped to Mexico City. However, on their arrival, they discovered that Rubalcaba had sold most of the shipment. The record establishes that Rubalcaba possessed invoices for these peanuts and was thus able to take possession of them, and had the right to sell them. Appellees sold what was left at a net return to Lawrence and Pacific Atlantic for the sum of $23,975.03. Lawrence and Pacific Atlantic nonetheless were forced to make good their guarantees to their suppliers and therefore were required to pay the sum of $64,099.71 to the two suppliers for the goods acquired by Rubalcaba and Empresas Ruvalcaba.

II. DISCUSSION

The Appellants attack the trial court's default judgment with eight points of error. The Appellants bring a direct attack from a default judgment before this Court under a writ of error.

A. Jurisdiction of the Court by Writ of Error from a Default Judgment

A party bringing a writ of error constitutes a direct attack on a default judgment. Sebastian v. Braeburn Valley Homeowner's Assoc., 872 S.W.2d 40, 41 (Tex.App.--Houston [1st Dist] 1994, no writ). In order to bring a writ of error to the court of appeals, a party must satisfy the following four essential elements:

(1) The writ must be brought within six months after the judgment is signed;

(2) by a party to the suit;

(3) who did not participate in the actual trial; and

(4) the error complained of must be apparent from the face of the record.

DSC Finance Corp. v. Moffitt, 815 S.W.2d 551 (Tex.1991); Stubbs v. Stubbs, 685 S.W.2d 643, 644 (Tex.1985); Brown v. McLennan County Children's Protective Services, 627 S.W.2d 390, 392 (Tex.1982).

Appellants' Point of Error Nos. One through Six deal with legal and factual sufficiency claims concerning both actual and exemplary damages. Legal and factual sufficiency of the evidence to support the judgment is an appropriate inquiry on writ of error. See Comstock Silversmiths, Inc. v. Carey, 894 S.W.2d 56, 57 (Tex.App.--San Antonio 1995, no writ); Herbert v. Greater Gulf Coast Enterprises, 915 S.W.2d 866, 870 (Tex.App.--Houston [1st Dist.] 1995, no writ). Where claims of legal or factual sufficiency concern damages, in a default judgment, the appellant is entitled to review of the evidence produced. Transport Concepts, Inc. v. Reeves, 748 S.W.2d 302 (Tex.App.--Dallas 1988, no writ), citing Rogers v. Rogers, 561 S.W.2d 172, 173-74 (Tex.1978).

We hold that Appellants meet the essential requirements for bringing a writ of error following a default judgment, and consequently, this Court has jurisdiction to entertain this action.

B. Fraud and Exemplary Damages

In Point of Error No. Eight, Appellants assert that the trial court erred in finding that Appellants committed fraud, thus entitling Appellees to exemplary damages because Appellees' actions were in substance for breach of contract and could not support recovery of exemplary damages. In Points of Error Nos. Four, Five and Six, Appellants claim the trial court erred in awarding exemplary damages to Appellees, Michael Lawrence, Pacific/Atlantic Crop Exchange, Inc., and Tony Browning in the total amount of $200,000 each because no evidence was offered in support of such damages. We agree.

We note at the outset that exemplary damages are not admitted by default. Sunrizon Homes Inc. v. Fuller, 747 S.W.2d 530, 534 (Tex.App.--San Antonio 1988, writ denied). In the instant case, the only tort Appellants are alleged to have committed is fraud, and absent the required proof to establish fraud, Appellees are left with only a claim for breach of contract. Exemplary damages cannot be recovered in an action for breach of contract. Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986); Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 745 (Tex.1986); Hamilton v. Texas Oil & Gas Corp., 648 S.W.2d 316, 324 (Tex.App.--El Paso 1982, writ ref'd n.r.e.).

The elements of fraud are:

(1) A material misrepresentation,

(2) which was false, and

(3) which was either known to be false when made or was asserted without knowledge of its truth (4) which was intended to be acted upon,

(5) which was relied upon, and

(6) which caused injury.

Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex.1994); DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990); State National Bank of El Paso v. Farah Mfg. Co., 678 S.W.2d 661, 668 (Tex.App.--El Paso 1984, writ dism'd agr.); Warner Communications, Inc. v. Keller 888 S.W.2d 586, 595 (Tex.App.--El Paso 1994, no writ).

In the Appellees' original petition filed below, they allege a cause of action for fraud and breach of contract. While Appellees are correct that a no-answer default judgment operates as an admission of all material facts alleged in the plaintiffs' petition, such is the case only in instances where facts have been properly pled. UNL Inc. v. Oak Hills Photo Finishing, Inc. et al, 733 S.W.2d 402, 407 (Tex.App.--San Antonio 1987, no writ), citing Stoner v. Thompson, 578 S.W.2d 679 (Tex.1979). In order to prevail on the actionable fraud cause of action, Appellees must satisfy all elements of the tort. Allen v. Allen, 751 S.W.2d 567, 574 (Tex.App.--Houston [14th Dist.] 1988, writ denied); Stephanz v. Laird, 846 S.W.2d 895, 903 (Tex.App.--Houston [1st Dist.] 1993, writ denied). Fraud is never presumed, and when it is alleged, the facts sustaining it must be clearly shown. Stephanz, 846 S.W.2d at 903.

In accordance with the above cases, all the elements of fraud and all facts constituting fraud must be properly pleaded to satisfy an allegation of fraud. As previously stated by ...