Schwartz v. Pinnacle Communications

• Decision Date: 27 March 1997
• Docket Number: No. 14-95-00943-CV,14-95-00943-CV
• Citation: 944 S.W.2d 427
• Parties: Kathryn C. SCHWARTZ, Appellant, v. PINNACLE COMMUNICATIONS and Kirk Daniels, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 427

944 S.W.2d 427

Kathryn C. SCHWARTZ, Appellant, v. PINNACLE COMMUNICATIONS and Kirk Daniels, Appellees.

No. 14-95-00943-CV.

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

March 27, 1997.

Timothy Mark Donoughue, Houston, for appellant.

Bruce M. Badger, Sugar Land, for appellees.

Before MURPHY, C.J., and ANDERSON and O'NEILL, JJ.

OPINION

ANDERSON, Justice.

Kathryn C. Schwartz, plaintiff below, appeals from a take nothing final judgment in favor of appellees, Pinnacle Communications, Inc. and Kirk Daniels. She challenges this judgment in six points of error attacking the legal and factual sufficiency of the trial court's findings of fact on the issues of conversion, fraud, and damages. We reverse and remand the trial court's judgment.

The Facts

In 1992, Kirk Daniels, representing Pinnacle, approached appellant's father, Newton B. Schwartz, and persuaded him to purchase telephones and voice mail equipment on appellant's behalf. Daniels proposed that the telephone systems be purchased as an investment, and suggested that, once purchased, the phones could subsequently be leased to Texas Gulf Industries, Inc. [TGI]. Newton testified that, in negotiating the sale and arranging the lease, Daniels made representations assuring him of TGI's creditworthiness. Newton claims he relied on these representations, purchased the equipment as an investment for his daughter, and leased it to TGI.

After paying an initial security deposit, TGI never made another payment under the lease. Newton's demands for payment failed, and he attempted to repossess the equipment, only to find that Daniels had moved some of the phones from TGI's offices to the offices of Eco-Environmental, Inc. [EEI]. The remaining equipment had been seized by the IRS under a federal tax lien against TGI. Newton eventually recovered much of his daughter's property but claims considerable damages due to the time and expense associated with the recovery effort.

Appellant sued Daniels and Pinnacle for fraud and conversion. The trial court entered a default judgment against Pinnacle for failure to answer, thus settling the question of liability as to Pinnacle and leaving only the amount of damages at issue. See Holt Atherton Industries, Inc. v. Heine, 835 S.W.2d 80, 83 (Tex.1992) (holding that default judgment operates as an admission of all facts alleged in plaintiff's petition and the only remaining issue to be resolved is the amount of unliquidated damages). Appellant's claims against Daniels were tried to the court, along with her claims for damages against both defendants. At trial, Newton testified for appellant, and Daniels was called to the stand as an adverse witness. Various documents were received into evidence in support of appellant's case. At the close of appellant's case, Daniels moved for a "directed verdict." ¹ Having found no liability or damages attributable to Daniels, the court granted the motion and entered a take-nothing judgment against appellant. In addition, the court found no damages attributable to Pinnacle.

In points of error one, three, and five, appellant challenges the legal sufficiency of the trial court's findings of fact pertaining to the conversion, fraud, and damages issues. Points of error two, four, and six challenge the factual sufficiency of the court's findings as to those same issues.

Standard of Review

In entering judgment at the close of the plaintiff's case, the trial judge, acting as fact finder, is presumed to have ruled not only on the legal sufficiency of the evidence, but also on the weight of the evidence and the credibility of the witnesses. Qantel Business Sys. v. Custom Controls, 761 S.W.2d 302, 303-305 (Tex.1988). Thus, after granting a motion for judgment, the trial judge may properly make findings of fact, as well as conclusions of law. Id. at 304. In a bench trial, factual and legal sufficiency challenges to the trial court's findings of fact are reviewable under the same standards that are applied in reviewing evidence supporting a jury's answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994).

We must review appellant's legal sufficiency points of error first. Lehmann v. Wieghat, 917 S.W.2d 379, 383 (Tex.App.--Houston [14th Dist.] 1996, writ denied). When a legal sufficiency challenge is raised by a party who bears the burden of proof on an issue, this court will reverse a trial court's finding of fact only if two hurdles are surmounted. ² Sterner v. Marathon Oil, 767 S.W.2d 686, 690 (Tex.1989). First, this court must examine the record for evidence and inferences supporting the challenged finding, ignoring all evidence to the contrary, to determine whether any evidence exists to support that finding. Id. If more than a scintilla of evidence of probative force supports the finding, we must reject a "no evidence" challenge to that finding. Lehmann, 917 S.W.2d at 383. However, if no evidence supports the court's finding, we must proceed to the second hurdle, which requires us to review the entire record to determine if the contrary proposition is established as a matter of law. Sterner, 767 S.W.2d at 690. We will sustain a legal sufficiency challenge only if the record reveals conclusive evidence supporting each element of the claim. Id.

We will apply this two step analysis to determine the legal sufficiency of the trial court's fact findings on appellant's conversion and fraud claims and on the question of damages. Appellant's factual sufficiency challenges need only be addressed if the trial court's findings are supported by legally sufficient evidence. Lehmann, 917 S.W.2d at 383; International Piping Sys. v. M.M. White & Assoc., 831 S.W.2d 444, 447 (Tex.App.--Houston [14th Dist.] 1992, writ denied).

Conversion

A claim for conversion requires the plaintiff to show (1) title, (2) right to possession, and (3) a demand for return of the property unless the possessor's acts manifest a clear repudiation of the plaintiff's rights. Whitaker v. Bank of El Paso, 850 S.W.2d 757, 760 (Tex.App.--El Paso 1993, no writ). The court below made an express factual finding on the third element of conversion only. However, we must presume factual findings in support of the trial court's judgment on the first and second elements of conversion. TEX.R.CIV.P. 299. Thus, before we may reverse the trial court's ruling on appellant's conversion claim, we must find the record totally devoid of any evidence supporting the express and presumed fact findings on each element of conversion.

We have reviewed the record in search of evidence that supports these findings, ignoring all evidence to the contrary, and we have found no supporting evidence. Daniels did not cross-examine any witness, put on a case, or otherwise establish a defense. ³ Although he took the stand at the behest of plaintiff, his testimony did not contradict any of the necessary elements of appellant's conversion claim. In other words, he presented no evidence refuting appellant's ownership or her right to possession of the equipment and no evidence rebutting her claim that he repudiated her possessory rights in the equipment when he moved the telephones. ⁴

Contending that some evidence does, in fact, support the trial court's findings, Daniels points to his testimony that, at the time he relocated the phones to EEI, he believed he was transporting them to a subsidiary of TGI at TGI's request. In support of this contention, he argues that because he drafted an invoice documenting this relocation, it would be an "incredible inference" to conclude that he was attempting to commit conversion. At best, these assertions suggest that Daniels was acting in good faith and with a legitimate purpose when he moved the phones. We find such testimony of no consequence. Because wrongful intent is not an element of this tort, even an innocent taker can be liable for conversion. Dolenz v. Continental Nat. Bank of Ft. Worth, 620 S.W.2d 572, 576 (Tex.1981) (holding that the trial court fairly submitted the issue of conversion to the jury where its charge included the instruction that wrongful intent is not an element of conversion); Lone Star Ford v. Hill, 879 S.W.2d 116, 122 (Tex.App.--Hous. [14th] 1994, no writ) (holding that conversion results even in the absence of wrongful intent); White-Sellie's Jewelry v. Goodyear Tire & Rubber, 477 S.W.2d 658, 662 (Tex.Civ.App.--Houston [14th Dist.] 1972, no writ) (holding that complete innocence and perfect good faith are no defense to a conversion action). Thus, evidence in the record suggesting that Daniels did not intend to do anything wrong or did not know that his actions were wrongful is not probative on any issue pertaining to whether or not Daniels converted appellant's property.

While we must affirm the legal sufficiency of a trial court's findings if any evidence supports them, the supporting evidence must be of probative value. Lehmann, 917 S.W.2d at 383. Thus, where wrongful intent is not an element of, or a defense to, the plaintiff's cause of action, evidence refuting wrongful intent is legally insufficient, standing alone, to support an adverse factual finding on the claim. Because we find no probative evidence in this record to support the trial court's adverse findings of fact on the conversion issue, we must now determine whether the record as a whole establishes the contrary proposition as a matter of law.

A fact issue is established as a matter of law when the evidence is undisputed and reasonable minds can arrive at but one conclusion. Id. at 382. Based on our review of the entire record, we find that appellant established the first two elements of conversion as a matter of law. Appellant introduced an invoice and a canceled check to prove up her ownership of the equipment. Her right to possession was proven by the terms of the lease dictating that the lessor could repossess the equipment or demand its return if the lessee defaulted on the lease. The record clearly shows TGI...