Ward v. Sinclair

• Decision Date: 27 July 1990
• Docket Number: No. 05-89-01149-CV,05-89-01149-CV
• Citation: 804 S.W.2d 929
• Parties: Aaron L. WARD, et al., Appellants, v. Clifford Ray SINCLAIR, Appellee.
• Court: Texas Court of Appeals

Page 929

804 S.W.2d 929

Aaron L. WARD, et al., Appellants, v. Clifford Ray SINCLAIR, Appellee.

No. 05-89-01149-CV.

Court of Appeals of Texas Dallas.

July 27, 1990.

Rehearing Denied Sept. 10, 1990.

Gary D. Jackson, Gloria A. Jackson, Dallas, for appellants.

Bill Boyd, McKinney, for appellee.

Before ENOCH, C.J., and HOWELL and ROWE, JJ.

OPINION

ENOCH, Chief Justice.

Aaron L. Ward and James E. Ward, individually, and as successors to JADA, a Texas general partnership, sued Clifford Ray Sinclair alleging that Sinclair conspired to defraud the Wards in connection with conveyances of a tract of land. ¹ The Wards received a favorable jury verdict; however, the trial court granted Sinclair's motion for judgment notwithstanding the verdict, from which the Wards now appeal. Finding no merit in the Wards' first and second points of error, we affirm the trial court's judgment.

JADA, a partnership owned 60% by the Wards, 20% by Danny Ray Todd, and 20% by Alan Wilson, contracted to buy a 4.896-acre tract of land (the tract) from LINJAC Colorado Corporation for investment purposes. JADA extended the closing date under the contract by the payment of additional earnest money. Eventually, the Wards allege, Todd falsely represented that no buyers or lenders could be found and that it would be more prudent to forfeit the earnest money they had already paid than to make another deposit of earnest money to, again, extend the closing, but then run the risk of forfeiting this greater sum. The Wards followed the advice of Todd and forfeited the earnest money; however, they later discovered that Todd and Wilson, in fact, purchased the tract for approximately $245,260.40 and immediately sold it for $535,746 to Mike Faldmo (who worked for Sinclair), as trustee. Wilson and Todd received $169,538.68 from the sale. Faldmo divided the tract and conveyed the property in two transactions to Sinclair; the two tracts sold for a total of $867,746. Sinclair then sold the two pieces of property for $853,079 each. The Wards sued Sinclair and others alleging that they conspired to deprive the Wards of their share of the tract's value. ²

In their first and second point of errors, the Wards assert that the trial court erred in granting Sinclair's motion for judgment notwithstanding the verdict because the evidence conclusively established, as a matter of law, Sinclair's liability for the tortious conduct and conspiracy of which the Wards complained, or alternatively, that the jury verdict is supported by factually sufficient evidence in their favor. The Wards assert that Sinclair and Wilson conspired to contribute the tract to the overall scheme to defraud Empire and that they have proved the elements of the conspiracy against them. The Wards concede that the primary conspiracy was the conspiracy to defraud Empire; however, they explain that "[l]ike a cesspool that overflows and contaminates nearby waters," Sinclair's scheme to defraud lenders engulfed Wilson and Todd and gave them an opportunity for profit on the tract that they could seize only by defrauding their partners, the Wards. Relying on Bourland v. State, 528 S.W.2d 350, 354 (Tex.Civ.App.--Austin 1975, writ ref'd n.r.e.), the Wards assert that it is not essential that each conspirator have knowledge of the details of the conspiracy or be shown to have acted in concert with the co-conspirators prior to or during each transaction. Moreover, the Wards maintain that a civil action will lie if the natural and necessary consequence of the acts of the conspirators is the oppression of an individual. Great Nat'l Life Ins. Co. v. Chapa, 377 S.W.2d 632, 635 (Tex.1964). Thus, although the Wards concede that the acts of Wilson and Sinclair in utilizing the tract in the condominium scheme were directed primarily at the lenders and only incidentally at the Wards, they argue that the act of Wilson which defrauded and injured the Wards was committed in furtherance of the conspiracy to defraud Empire. The Wards claim, therefore, that Sinclair is liable for the consequences of the unlawful acts of his fellow conspirator, Wilson.

In order for a trial court to disregard a jury's findings and to grant a motion notwithstanding the verdict, it must determine that there is no evidence upon which the jury could have relied for its findings. Exxon Corp. v. Quinn, 726 S.W.2d 17, 19 (Tex.1987). In reviewing the granting of a motion for judgment notwithstanding the verdict, this Court must consider the evidence in the light most favorable to the party against whom the judgment was rendered, and every reasonable inference must be indulged in that party's favor. Navarette v. Temple Indep. School Dist., 706 S.W.2d 308, 309 (Tex.1986); Dowling v. NADW Marketing, Inc., 631 S.W.2d 726, 728 (Tex.1982). If there is more than a scintilla of competent evidence to support the jury's findings, then the judgment notwithstanding the verdict will be reversed. Navarette, 706 S.W.2d at 309.

Applying this standard, we must review the evidence in order to determine whether there is more than a scintilla of competent evidence to support the jury's finding that Sinclair joined in a conspiracy which defrauded the Wards. An actionable civil conspiracy is a combination by two or more persons to accomplish an unlawful purpose by unlawful means. Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex.1983). The elements of a conspiracy are: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or courses of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result. Id. A conspiracy requires a meeting of the minds on the object or course of action, and some mutual mental action coupled with an intent to commit the act which results in injury; there must be a preconceived plan and unity of design and purpose. Zervas v. Faulkner, 861 F.2d 823, 836 (5th Cir.1988), citing Schlumberger Well Surveying Corp. v. Nortex Oil & Gas Corp., 435 S.W.2d 854, 857 (Tex.1968). Thus, for a defendant to be liable for civil conspiracy to defraud, it must be shown not only that there was such a conspiracy but that the particular defendant charged agreed with one or more of the other conspirators on the claimed illegal object of the conspiracy and intended to have it brought about. Zervas, 861 F.2d at 836. An alleged conspirator is not liable for an act not done in pursuance of the common purpose of the conspiracy. Carroll v. Timmers Chevrolet, Inc., 592 S.W.2d 922, 928 (Tex.1979). Moreover, proof that an individual had some collateral involvement in a transaction, and had good reason to believe that there existed a conspiracy among other parties to it, is insufficient of itself to establish that the defendant was a conspirator. Id., citing Schlumberger, 435 S.W.2d at 857. The rationale behind this policy is based on the theory that holding a passive conspirator liable in tort for injuries outside the purpose of the common design would make him liable for results not proximately caused by his wrongful conduct. See Rembert, An Actionable Civil Conspiracy Must Be Directed Toward the Injured Party and the Injury Must Be a Natural or Necessary Consequence of the Agreement, 2 HOUS.L.REV. 146, 147-48 (1964).

Absent a finding of Sinclair's participation in a conspiracy to defraud the Wards, Sinclair may still be liable for the damages arising from the conspiracy if the complained...