Tracy v. Annie's Attic, Inc.

• Decision Date: 27 July 1992
• Docket Number: No. 12-90-00313-CV,12-90-00313-CV
• Parties: Robert L. TRACY, Appellant, v. ANNIE'S ATTIC, INC., and Anita Gentry, Appellees.
• Court: Texas Court of Appeals

Page 527

840 S.W.2d 527

Robert L. TRACY, Appellant, v. ANNIE'S ATTIC, INC., and Anita Gentry, Appellees.

No. 12-90-00313-CV.

Court of Appeals of Texas,

Tyler.

July 27, 1992.

Rehearing Denied Oct. 8, 1992.

John H. Tull, Dallas, for appellant.

Michael G. Carroll, Tyler, for appellees.

SMITH, Justice. ^*

This is a suit based on allegations of breach of fiduciary relations, conversion, false representations, and fraud brought by Appellees, Annie's Attic, Inc., and Anita Gentry Potter, ¹ against Appellant, Robert L. Tracy, and others not involved in this appeal. Tracy cross-acted and sought damages against the two Appellees for breach of contract, conversion, and wrongful injunction.

Based on jury findings, the trial court entered judgment for Appellees against Tracy for $2,678,781.76 and granted injunctive relief. Tracy received no recovery on his cross-action. The court also severed that part of the Appellees' cause of action seeking imposition of a constructive trust on Tracy's property and the appointment of a receiver.

Because Anita Gentry Potter was referred to as Annie in the trial court, the record, and in the parties' briefs, we will do the same. Annie liked to draw designs and in about 1974-1975, she decided to go into the designing business. She drew designs of dolls, quilts, and many other items. These designs were made into printed patterns and marketed through her business name of Annie's Attic. She later incorporated the business as Annie's Attic, Inc. (AAI).

The business was almost an immediate success. Because Annie disliked the financial and marketing part of the business, her husband handled this function. As AAI prospered, it bought several houses in which a tea room, bed and breakfast quarters, and a gift shop were opened for business. In 1985, Annie and her husband obtained a divorce and she bought her husband's interest in AAI. When the handling of the business affairs of AAI became too onerous for Annie to handle, she hired Tracy as a consultant to the restaurant. She later hired Tracy as a consultant to help with the retail business of AAI.

As AAI continued to prosper, it grew into a multimillion dollar operation. Annie's trust and confidence in Tracy grew and she gave him a power of attorney to make decisions for AAI in her absence. She relied more and more upon his representations concerning investments, loans, etc., until her accountant brought certain matters, which he thought to be irregular, to her attention. At that time, AAI dismissed Tracy and this suit was filed by AAI and Annie individually. The details leading to Tracy's dismissal will be discussed under the various points of error.

The first four of Tracy's 36 points of error all complain of exclusion of evidence.

The admission or exclusion of evidence is a matter within the discretion of the trial court. The standard of review in determining whether a trial court erred in an evidentiary ruling is abuse of discretion. Jackson v. Van Winkle, 660 S.W.2d 807, 810 (Tex.1983). The test in determining whether an abuse of discretion has been One of Tracy's theories of the case was to compare the value of the work he had done at AAI, to that of his successor, John Sauer, and to show Sauer's relationship with Annie. Appellee's objection to each of Tracy's efforts to get this evidence to the jury was that it was irrelevant to any issue in this case. The court sustained the objections.

committed is, did the court act without reference to any guiding rules or principles. Stated another way, the test is whether the court's action was arbitrary or unreasonable. Downer v. Aqua Marine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985), cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986). The determination of whether a court abused its discretion is a matter of law. Jackson, 660 S.W.2d at 810.

The record shows that the Appellee's alleged that Tracy committed specific acts while with AAI that resulted in a breach of a fiduciary relationship, conversion of assets, false representations, and fraud. Sauer succeeded Tracy at AAI and his work record at AAI had nothing to do with the alleged wrongful acts of Tracy. AAI terminated Tracy and sought the injunction, not Sauer. As to Tracy's allegation that the issuance of the temporary injunction was wrongful, the record reflects that this was an agreed order. Therefore, the agreed injunction had no bearing on the exclusion or admission of the evidence by the trial court.

We are of the opinion that the excluded evidence was not relevant to any material issue in the case and was properly excluded by the trial court.

Appellant's first four points of error are overruled.

Tracy's fifth point of error contends that the trial court erred in admitting Annie's testimony that would vary the terms of the written house loan promissory note (the Tracy house transaction). Over Tracy's objection, the trial court permitted Annie to testify concerning her allegations of fraud in the inducement of the note.

Annie testified that Tracy told her that he had read a new thing about how a corporation could now lend an officer of the corporation money without charging interest, and he asked her for a house loan of $300,000.00. She said he told her it would be an interest free loan for three years, payable $100,000.00 each year. She recalled that he later brought a loan agreement for her to sign and told her "the agreement was strictly for the purpose of keeping the bank out of sight," and "these papers were just a formality; they were just for the bank's comfort." Annie stated that after he had told her these things, "I just signed the things, you know, he said to sign them, and I assumed they were okay--I trusted him."

The record shows that the promissory note that Annie signed was for $315,000.00, non-interest bearing, and payable over 30 years at $10,500.00 annually. It also shows that at a later date Jim Heffel, a CPA who was comptroller for AAI, spoke to Annie about the note. She then read the note for the first time. She stated that she was surprised. She was of the opinion that Tracy had not been loyal or showed good faith to her, and that he had concealed matters which influenced her to sign the loan papers. She explained that she had acted as a representative of AAI in the entire transaction.

It is well established that the extrinsic evidence rule ordinarily requires the exclusion of parole evidence that would add to, vary, or contradict the unambiguous terms of a written contract. Kuper v. Schmidt, 161 Tex. 189, 338 S.W.2d 948, 952 (1960). However, it is equally well established that extrinsic evidence is admissible to show fraud inducement to enter into a written contract. Paxton v. Spencer, 503 S.W.2d 637, 643 (Tex.Civ.App.--Corpus Christi 1973, no writ); Roy Klossner Co. v. McIntire, 301 S.W.2d 197 (Tex.Civ.App.--San Antonio 1957, writ ref'd n.r.e.).

We hold that the trial court did not err in admitting extrinsic evidence to show misrepresentations and concealment of material facts that induced the signing of the loan agreement.

Tracy's fifth point of error is overruled.

In 15 points of error, Tracy asserts that there is no evidence or insufficient evidence to support the judgment of the court or the jury findings. In four of these points of error, 10, 11, 12 and 13, Tracy alleges that there was no evidence or insufficient evidence to overrule his exceptions to question five, subdivisions one, three, and five, and to question six, subdivision one, three, and four. We have closely read the arguments set forth and can find no argument or reference whatsoever to the evidence or lack of evidence referred to in points of error 10, 11, 12 and 13. Points of error not briefed are waived. Paramount Nat'l. Life Ins. Co. v. Williams, 772 S.W.2d 255, 263 (Tex.App.--Houston [14th Dist.] 1989, writ denied); Texaco, Inc. v. Pennzoil, Co., 729 S.W.2d 768, 810 (Tex.App.--Houston [1st Dist.] 1987, writ ref'd n.r.e.), cert. denied, 485 U.S. 994, 108 S.Ct. 1305, 99 L.Ed.2d 686 (1988).

Tracy's points of error 10, 11, 12, and 13 are overruled.

In his point of error twenty, Tracy asserts that the trial court granted injunctive relief without supporting evidence or jury findings. He contends that no issue of fact was requested or submitted to the jury and therefore, it was error for the court to grant such relief. We agree that this is the general rule. State v. Texas Pet Foods, Inc., 591 S.W.2d 800, 803 (Tex.1979).

However, the record shows that when AAI first proffered the testimony of Annie to prove the necessity for injunctive relief, Tracy objected that such evidence was outside the pleadings and irrelevant to any issue in the case. This objection was sustained. If that ruling was error, then Tracy, having led the trial court into error, may not complain of it here. See Missouri K. & T. Ry. Co. of Texas v. Eyer, 96 Tex. 72, 70 S.W. 529, 530 (1902); See also Weaver v. Jock, 717 S.W.2d 654, 658 (Tex.App.--Waco 1986, writ ref'd n.r.e.).

Later, out of the presence of the jury, Annie testified that Tracy had a "violent" and "governmental" (sic) temper and that she was afraid of him. She stated she was afraid that he would harm or harass her or her employees. She stated that he had made calls to third parties which might interfere with her business but had not interfered with the business at the time of the trial.

The standard of review in injunction cases is whether the trial court's action constituted a clear abuse of discretion. Janus Films, Inc. v. City of Fort Worth, 163 Tex. 616, 358 S.W.2d 589 (1962); Hues v. Warren Petroleum Company, 814 S.W.2d 526, 529 (Tex.App.--Houston [14th Dist.] 1991, writ denied).

We hold that where a party objects to the admission of facts to a jury asserting that injunctive relief is not an issue to submit to a jury, and that issue is later determined by the court, based on evidence adduced without objection out of the jury's presence, the objecting party...