Voskamp v. Arnoldy

• Decision Date: 12 November 1987
• Docket Number: No. 01-86-00048-CV,01-86-00048-CV
• Citation: 749 S.W.2d 113
• Parties: Peter S. VOSKAMP, the Estate of C.W. Bair, By and Through its Legal Representative, Mrs. C.W. Bair, and Jerry Amussen, Appellants, v. Roman F. ARNOLDY, John R. Arnoldy, and Triten Corporation, Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 113

749 S.W.2d 113

Peter S. VOSKAMP, the Estate of C.W. Bair, By and Through

its Legal Representative, Mrs. C.W. Bair, and Jerry Amussen, Appellants, v. Roman F. ARNOLDY, John R. Arnoldy, and Triten Corporation, Appellees.

No. 01-86-00048-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Nov. 12, 1987.

Rehearing Overruled Feb. 11, 1988.

Rehearing Denied March 29, 1988.

John M. O'Quinn, Gary M. Riebschlager, John M. O'Quinn & Associates (T. Gerald Treece, of counsel), William Fred Hagans (Hagans & Sydow, of counsel), Houston, for appellants.

Barry Abrams, William B. Allison, William E. Matthews, Sewell & Riggs, Houston, for appellees.

Before LEVY, DUGGAN and HOYT, JJ.

OPINION

LEVY, Justice.

The trial court granted a take-nothing judgment notwithstanding the verdict against appellants in this stock fraud case. We reverse and render.

During the late 1970's, Tapco International ("Tapco"), now Triten Corporation ("Triten"), was a closely-held corporation that manufactured valves for the oil industry. Roman F. Arnoldy ("Roman") was the majority shareholder, president, and chairman of the board of directors of Tapco. His son, John Arnoldy ("John"), was executive vice-president, a director, and stockholder. Appellant Peter S. Voskamp was employed by Tapco in 1968 and assumed a management position in its sales department. Appellant C.W. Bair also assumed a management position in Tapco's manufacturing plant in the early 1970's. Jerry Amussen was Tapco's controller. In 1972, Roman persuaded Voskamp and Bair to buy the stock of a retiring Tapco officer. In 1977, after Tapco sales had increased dramatically, Roman allegedly demanded that Bair and Voskamp sell a substantial portion of their stock to him at the same price that they had paid for it. Roman was allegedly upset that Bair and Voskamp had obtained their stock so cheaply and would now participate in the increased value of the company. Voskamp refused Roman's demand, but Bair sold back approximately 425 shares. After the sale, Voskamp and Bair together owned approximately 6,000 shares of the 33,000 outstanding shares. Tapco fired both in early 1978. Jerry Amussen owned 445 shares and was fired in February, 1979.

In late 1978, the Arnoldys began to search for a prospective purchaser for Tapco or one of its divisions. They hired a business broker who arranged a meeting with a prospective purchaser, General Signal, a large conglomerate on the New York Stock Exchange. In December of 1978, three General Signal executives, including its president of acquisitions, traveled to Houston to meet with the Arnoldys and tour Tapco's facilities. This meeting lasted one day, and included a tour of Tapco and its valve division. Financial and operational information was provided to the General Signal executives, and various methods of structuring a sale were discussed. At some point after this meeting, but before April, 1979, General Signal made an offer to buy Tapco's valve division, that was rejected by the Arnoldys. Neither the meeting nor this offer was ever disclosed to appellants.

In early 1979, Voskamp and Bair filed separate suits against Roman, alleging on behalf of all Tapco stockholders that Roman had mismanaged Tapco's affairs, failed to provide promised pension benefits, and enriched himself with periodic bonuses and inflated salaries. These suits were allegedly designed to force Tapco to offer to buy back Voskamp's and Bair's stock.

Mike Webb, attorney for Voskamp and Bair in the suits, met with John Arnoldy on numerous occasions between February, 1978, and April, 1979, in order to determine the value of his clients' stock. Webb negotiated a settlement of the suits that included the purchase of Bair's and Voskamp's stock by Tapco, at $100 per share, 10 percent being paid in cash and the remainder to be paid under the terms of a promissory note. Webb stated that at no time did the Arnoldys disclose that they intended to sell a portion of Tapco, that a prospective buyer had been located, or that an offer to buy had been made.

Jerry Amussen also sold his stock to Tapco for $100 a share without knowing the Arnoldys' intention to sell a portion of Tapco, and without knowing that a prospective buyer had been located and an offer made. Each appellant testified that if he had known of the Arnoldys' intent to sell and of the dealings with General Signal, he would not have sold his stock at that time or for that price.

In November, 1980, Tapco and General Signal finalized an agreement providing for General Signal's purchase of Tapco's valve division for $8.8 million dollars.

On April 28, 1982, appellants filed suit against Roman, John, and Tapco alleging common law fraud, stock fraud under Tex.Bus. & Com.Code Ann. sec. 27.01 (Vernon 1968), and breach of fiduciary duty. The case proceeded to trial, and the jury found that Tapco misrepresented or concealed material facts through its chairman, Roman, and its executive vice-president, John; that such misrepresentation or concealment was made to induce plaintiffs to sell their stock; that the misrepresentation or concealment involved a material fact known to defendants before plaintiffs sold their stock; that plaintiffs relied on the misrepresentation or concealment, and were thereby damaged; that the fair market value of appellants' stock was $220 per share on April 20, 1979; that appellants received $70 per share as consideration from Tapco; and that Tapco, Roman, and John willfully misrepresented or concealed material facts. The jury then awarded punitive damages to appellants in the following amounts against the respective appellees: for Voskamp: Tapco $800,000; Roman $400,000; and John $400,000; for Bair: Tapco $800,000; Roman $400,000; and John $400,000; for Amussen: Tapco $187,500; Roman $93,750; and John $93,750.

Appellants then filed a motion to enter judgment, and the appellees moved for judgment notwithstanding the verdict and to disregard certain jury findings. The trial court granted appellees' motion for judgment notwithstanding the verdict.

Appellants contend, in points of error one through four, that the court erred in rendering judgment notwithstanding the verdict, in disregarding the jury's findings, and in refusing to enter judgment in favor of the appellants. Appellees present five reply points, any one of which, if sustained, will prevent our reaching the merits of appellants' first four points of error. We accordingly discuss them first.

In reply point one, appellees contend that appellants failed to challenge the judgment on each ground asserted in the motion for judgment notwithstanding the verdict. The grounds asserted in the motion were release, settlement, res judicata, collateral estoppel, no evidence, defective charge, no duty to disclose as a matter of law, preliminary negotiations between General Signal and Tapco, and waiver.

We note that the trial judge did not specify in the judgment n.o.v. the ground upon which he based the granting of the motion. However, he drafted and filed a memorandum opinion discussing the grounds asserted in the motion and his reasons for granting it. The parties do not dispute that we may logically derive the grounds upon which the judgment n.o.v. was granted from this memorandum opinion. Clear Lake City Water Authority v. Winograd, 695 S.W.2d 632, 638 (Tex.App.--Houston [1st Dist.] 1985, writ ref'd n.r.e.). Although the trial judge discusses what he considers to be errors in the conduct of the trial, he states in his conclusion that, "I find no evidence to support submission of the issues nor to support the answers thereto." We must conclude that this is the sole ground upon which the judgment n.o.v. was granted. Thus, appellant is not required to challenge the judgment upon each ground asserted in the motion unless it was relied upon by the trial judge in entering the judgment. However, appellees may assert on appeal those grounds alleged in their motion for judgment n.o.v., but not relied upon by the trial judge in entering judgment, to attempt to vitiate the jury's verdict. Youth Camps, Inc. v. Comfort Indep. School Dist., 705 S.W.2d 333, 338 (Tex.App.--San Antonio 1986, no writ); Tex.R.Civ.P. 324(c).

Appellees' first reply point is overruled.

Appellees contend in reply point two that appellants' claims are barred by the settlement agreements, releases, and judgments from Voskamp's and Bair's previous suits. Amussen's claim is allegedly barred in the same way because the previous suits were brought in a representative capacity and settled on behalf of all the shareholders of Tapco.

We note initially that res judicata, collateral estoppel, and release are affirmative defenses upon which appellees have the burden of proof. Tex.R.Civ.P. 94. We have found no evidence in the record, or special issues requested and submitted to the jury, supporting appellees' affirmative defenses. In fact, appellees intentionally sought to exclude any evidence related to such allegations in the prior suits. Appellees have, therefore, failed to sustain their burden of proof.

Reply point number two is overruled.

Appellees contend in reply point five that the charge proposed by appellants and submitted to the jury is fatally defective and will not support a judgment favorable to appellants. Appellees first contend that special issue number one constitutes a disjunctive submission in violation of Tex.R.Civ.P. 277. The special issue reads as follows:

Did defendant, Tapco, through its chairman, Roman F. Arnoldy, and executive vice-president, John Arnoldy, misrepresent, or conceal any material facts concerning the subsequent sale of Tapco assets to General Signal when plaintiffs sold their Tapco stock back to Tapco in April, 1979?

Appellees claim that rule 277 authorizes disjunctive submission only when two issues are mutually exclusive and that concealment and misrepresentation are not mutually exclusive issues. See Parker v. Keyser, 540 S.W.2d 827 (Tex.Civ.App....