Opinion
No. 01-07-00227-CV
Opinion issued March 26, 2009.
On Appeal from the 164th District Court, Harris County, Texas, Trial Court Cause No. 2002-31315.
Panel consists of Chief Justice RADACK and Justices JENNINGS and BLAND.
MEMORANDUM OPINION ON REHEARING
We deny appellant's motion for rehearing. See Tex. R. App. P. 49.3. We withdraw our December 18, 2008 opinion, substitute this opinion in its place, and vacate our December 18, 2008 judgment.
Appellant, Carroll Grant, challenges the trial court's judgment, entered after a jury trial, in favor of appellee, Laughlin Environmental, Inc. ("LEI"), in Grant's suit against LEI for breach of contract, fraud, negligent misrepresentation, and quantum meruit. Grant presents seven issues for our review. In his sixth issue, Grant contends that the evidence is legally and factually insufficient to support the jury's findings that he breached his fiduciary duties to LEI, committed fraud against LEI, and engaged in inequitable conduct. In his fourth issue, Grant contends that the evidence is legally and factually insufficient to support the jury's finding that LEI did not owe him a pro-rata field-profit bonus because he had quit his job and LEI did not terminate his employment. In his fifth and seventh issues, Grant contends that the trial court erred in granting LEI's motion to disregard the jury's finding in his favor on his quantum meruit claim and in granting summary judgment in favor of LEI on his fraud and negligent misrepresentation claims based upon "no evidence." In his first through third issues, Grant contends that the trial court erred in not performing "its threshold duty to determine ambiguity of the parties' contract," in "holding that the contract was ambiguous," and in "permitting parol evidence of the parties' intent to construe their contract."
We affirm.
Factual and Procedural Background
In his fourth amended petition, Grant alleged that LEI failed to pay him a pro-rata field-profit bonus to which he was entitled after he quit working for LEI. He asserted claims for breach of contract, quantum meruit, fraud, negligent misrepresentation, and equitable estoppel.
In its ninth verified amended answer, LEI alleged that Grant was "not due any bonus due to the fact [that] he had breached his duties," was "not due monies from [LEI] due to his breaching of covenants regarding his employment such as loyalty and honesty," and "breached his duty of loyalty and fiduciary duty to [LEI] thereby invalidating his rights, if any, to any benefits under his employment with [LEI]."
At trial, Grant testified that on January 22, 1995, he contracted to work for LEI as a project manager, and his responsibilities included bidding on, obtaining, and managing projects. LEI hired Grant "to go out, get more work and . . . bring some jobs in, bring some dollars in." Grant was the "primary estimator" for LEI, and he had a lot of "[f]reedom" in conducting his day-to-day operations. Grant recognized that LEI placed its trust and confidence in him, and he reported directly to Larry Thyssen, LEI's vice-president, and to Joe Laughlin, LEI's president.
The 1995 written contract provided that Grant was an employee at will with a $1,000 weekly salary and a five percent "field-profit" bonus. The contract defined "field profit" as "gross sales less 10% of gross sales (as an administrative charge) less field costs." Grant's field-profit bonus accrued "when payment for the services [was] actually received by [LEI] from the respective customers," and the field-profit bonus was to "be paid to [Grant] at the completion of each project upon final payment to [LEI] by the customer."
The contract also provided, under the header, "2. Duties of Employee,"
a. Duties. [Grant] is hired as Sales Representative/Estimator/Project Manager of [LEI] to market and perform remediation services of [LEI] in the geographical area in which [LEI] currently performs services or in which [LEI] has made specific plans for doing business in the immediate future. [Grant] agrees to devote all of [Grant's] time, attention, and energy in the capacities designated above, subject to the direction and control of [LEI], and shall to the best of [Grant's] ability make every effort to market the services of [LEI] in the territory described above. [Grant] shall assist in the collection of all sums due from persons to whom the services of [LEI] are rendered and in the adjustment of any complaints or disputes that may arise in connection with any services rendered as a result of efforts of [Grant]. [LEI] reserves the right to change at any time in any manner whatsoever in its sole discretion the geographical area assigned to [Grant].
b. Adherence to Rules. [Grant] at all times during the performance of this Agreement shall strictly adhere to and obey all the rules and regulations now in effect or as subsequently modified governing the conduct of employees at [LEI].The 1995 contract further provided, under the header, "3. Property Rights of the Parties,"
d. Noncompetition During Term of Employment. During the term of this Agreement, [Grant] shall not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of [LEI].
As per the contract, Grant was not to compete against LEI for one year following his "termination" of employment with LEI.
On May 1, 1999, Grant and Laughlin signed a "Proposed Compensation Package beginning May 1, 1999" (the "Compensation Package"). By its terms, the Compensation Package lasted for two years and governed Grant's compensation for new work generated after May 1, 1999, while the 1995 contract's terms governed Grant's compensation for work generated before May 1, 1999. The Compensation Package also increased Grant's bonus to thirteen percent of the field profits. Grant further testified that, at the time that he left LEI, he was managing for LEI the Tom Slick Creek Park ("Park") project, a "remediation" project in San Antonio which had begun in approximately February of 2001; the Conrad Sauer project, a retention basin project in Houston which had begun in approximately June of 1999; and the Bush Intercontinental Airport ("Airport") project, a fuel farm renovation project in Houston which had begun in approximately April of 2000. Approximately one month before he left LEI, Grant expressed his concern to Thyssen that he had not received enough of the field-profit bonus from these projects. Thyssen replied that "[t]he jobs will be finished up pretty soon." Thus, still concerned about obtaining his field-profit bonus, Grant had Tammy Marcontell, LEI's accountant, who worked directly for Thyssen, provide him with the projects' invoices, which allowed him to calculate the projects' running costs. Based on these invoices, after he left LEI in September of 2001, Grant calculated that LEI owed him a field-profit bonus of approximately $130,000 to $140,000 from the Park, Conrad Sauer, and Airport projects.
Both parties agreed that the 1995 contract and the Compensation Package must be read together and construed as a single contract. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000) (recognizing that courts may read separate documents that pertain to same transaction as one contract). Both parties also agreed that, although the Compensation Package, which was written to last for two years, expired on May 1, 2001, the Compensation Package's terms continued to govern Grant's compensation. See Sieber Calicutt, Inc. v. La Gloria Oil Gas Co., 66 S.W.3d 340, 347 (Tex.App.-Tyler 2001, pet. denied) (reasoning that when parties implicitly waive exact date of performance, the law will imply reasonable time for duration of contract, and that extension of one term of contract extends all of its provisions).
Grant stated that, before he left LEI on July 26, 2001, Thyssen confronted him about charging concrete on LEI's credit in order to install a driveway for Jeff and Loretta Fanning (the "Fannings"). Grant informed Thyssen that the Fannings actually paid LEI approximately $1,026 on July 10, 2001 for the concrete. Grant conceded that, in order to install the driveway, he used two LEI employees for approximately four hours on one day, took four LEI employees off the Airport project for approximately six hours on another day, and used LEI's trailer. Grant also conceded that Thyssen had to tell him to record the cost so that LEI could deduct the cost off of his field-profit bonus. Also, Grant agreed that, on June 7, 2000, he had used LEI's concrete and three LEI employees for his personal use at his house, but he was "not sure if" he had to pay LEI back for using the concrete.
Kent Ducote, an employee for LEI, testified that Grant "had got something," i.e., side payments, for performing his side jobs.
Grant testified that, for many years, he had used LEI's credit to make personal purchases at Home Depot and did not inform LEI about these charges until Thyssen confronted him. Grant conceded that he still had not reimbursed LEI for expenses incurred on LEI's credit, totaling approximately $3,000 at Home Depot and approximately $1,000 or more for his personal use. Grant further conceded that he had routinely used LEI's gas card for personal expenses, even though the Compensation Package expressly noted that LEI provided Grant with the card only for "business use." Although LEI had to confront Grant about these various personal expenses, Grant explained that he did not hide his Home Depot personal purchases from LEI because he marked these invoices with his "birth date" as a manner of informing LEI of his use of its credit for personal purposes.
Grant explained that his use of LEI's credit for personal use was not "stealing" because it was a common practice for LEI employees to do so, and LEI always deducted personal costs from his bonus after he had used LEI's credit. He noted, for example, that Laughlin had previously used LEI's concrete, approximately seven LEI employees from one of Grant's projects with the City of Houston, and LEI's equipment to install a carport and walkway at his house. Also, Laughlin had used seven LEI employees from the Conrad Sauer project for approximately seven days and LEI's equipment at his daughter's house to remove an old driveway and install a new driveway in its stead. This new driveway was three times the size of the driveway that Grant had installed for the Fannings. Grant added that Thyssen had previously used LEI's employees and equipment to install "piping and stuff" at his bathhouse. Grant explained that, when Laughlin and Thyssen used employees from Grant's projects, the cost of the employees' labor was charged to Grant's projects, which caused a decrease in his field-profit bonus due to increased costs on the projects. Grant felt "entitled" to use LEI's labor and materials for his personal use because he was the "number three man" at LEI. However, on cross-examination, Grant conceded that no one at LEI had told him that he could use LEI's credit.
Grant also conceded that in late August or September of 2001, while employed by LEI, he helped GBS Environmental, Inc. ("GBS") bid for a project with Science Applications International Corporation ("SAIC"), an engineering firm that works with the United States Air Force. In the past, Grant had obtained five projects for LEI from SAIC. Grant explained, however, that LEI had broken a water line on a SAIC project in 1998 or 1999. Laughlin, on behalf of LEI, decided not to fix the problem, and, thus, LEI and SAIC parted on unfriendly terms.
Grant explained that, on his own time, he helped Bryan Wierwille, GBS's president, bid for a project with SAIC because, after the acrimonious breakup between LEI and SAIC, LEI was not invited to bid for projects with SAIC. Grant, however, did not provide any further proof to support this assertion. Grant opined that he did not violate any fiduciary duty to LEI because he had solicited the bid for GBS on his own time, LEI did not have any connections with SAIC, and GBS was not a competitor of LEI.
However, Grant conceded that he had only become familiar with SAIC after working for LEI. Grant also conceded that, while working on the Park project in San Antonio, he had attended a meeting with SAIC on behalf of GBS and he had used LEI's company car and cellular telephone to communicate with SAIC. Grant, on cross-examination, also conceded that he did spend at least one-half of an hour bidding on the SAIC contract for GBS during business hours while he worked for LEI, he represented to SAIC that GBS employed him, and he permitted GBS to list LEI jobs on its stationery as references for obtaining the bid from SAIC. Grant agreed that he did not disclose this bid to LEI and LEI had no way of discovering his bid with SAIC. Grant also agreed that he did not use his utmost good faith and honesty with LEI and he had placed his own interests above LEI's interests. Grant further agreed that he had caused damages to LEI by bidding on the SAIC project for GBS.
Grant further testified that, on September 17, 2001, because things were going badly for Grant with LEI and he felt like he was not receiving his field-profit bonuses, Grant walked into Laughlin's office and quit his job. Grant explained that, while quitting, he asked Laughlin for his pro-rata field-profit bonus, which Laughlin refused to pay. However, Laughlin did offer Grant $10,000, which Grant refused.
Grant noted that, in 2001, he had approximately $30 million worth of jobs under contract for LEI that he was managing. Grant could not remember making any bids on behalf of LEI from February of 2000 until he quit his job, but he explained that the economic environment was "slow." Grant also explained that he did "[n]othing" to help LEI transition to a new project manager for the Park, Conrad Sauer, and Airport projects.
On January 2, 2002, Grant sent a letter to Laughlin, demanding $117,096.84 in unpaid field-profit bonuses for the unfinished projects. Thyssen responded on January 21, 2002 for LEI, stating that LEI did not owe anything to Grant because Grant resigned on his "own desire," and Grant owed LEI $13,029 for the labor and materials that Grant had used for personal matters during his employment with LEI. On cross-examination, Grant conceded that LEI often paid him a field-profit bonus without a "30% holdback," as called for in his Compensation Package.
After leaving LEI, Grant went to work for one year at GBS, working on the SAIC project that he had previously obtained for GBS when he was still employed by LEI. Grant stated that GBS paid him a $17,000 bonus for the SAIC project.
Thyssen testified that, although he was Grant's direct supervisor, Grant managed the daily costs and operations for each of his projects. Thyssen trusted Grant to act in the best interest of LEI and felt justified in placing his trust in Grant because he "had the responsibility to hire and fire and to bind the company." Grant's responsibility included approving charges for each of his projects. Thus, Thyssen disputed Grant's assertion that, when he and Laughlin personally used LEI's labor and materials, they charged the costs to Grant's projects.
Thyssen conceded that, by the end of the June 30, 2001 quarter, LEI would have owed Grant a field-profit bonus. However, Thyssen stated that Grant was not entitled to his field-profit bonus because he had quit his job and breached his fiduciary duties to LEI. Thyssen also conceded that LEI had previously deducted some of Grant's personal purchases from his field-profit bonus, and Thyssen was aware that Grant had purchased concrete for his personal use. However, Thyssen explained that such personal charges were inappropriate.
It was not until after Grant had quit his job that Thyssen learned about Grant's use of the concrete and nine LEI employees to install a driveway for the Fannings over a three-day timespan.
Admire Kadenge, an employee for LEI, testified that he told Thyssen about how Grant, in July of 2001, had him install a driveway for someone.
Grant never told Thyssen about the project nor did he reimburse LEI for his use of LEI's equipment and labor. Thyssen estimated the use of LEI's equipment and labor at $9,500 and noted that LEI would have charged $14,000 to install the driveway. Thyssen subsequently learned that Grant had also used LEI's employees to install a driveway at his own house, costing LEI $4,500 for Grant's use of LEI's equipment and labor. LEI would have customarily charged $6,000 for the installation of Grant's driveway. After Grant quit his job, Thyssen received a telephone call from a LEI employee who explained that Grant was working on a project for SAIC in San Antonio. Thinking that the timing was odd, Thyssen reviewed Grant's telephone records with LEI and discovered that Grant had used LEI's cellular and company telephones, starting in April of 2001, to make numerous calls to SAIC, presumably on GBS's behalf. Thyssen explained that, had he known of Grant's SAIC bid on GBS's behalf while Grant worked with LEI, he would have terminated Grant's employment.
Laughlin testified that he felt justified in placing his trust in Grant because Grant had "the authority to spend all of the money necessary to implement [a] project." However, Grant breached this trust when he was not fair and honest with LEI. Laughlin explained that SAIC was LEI's customer when Grant bid for a SAIC project on GBS's behalf. Grant made this bid without LEI's knowledge or permission. Also, Laughlin disputed Grant's testimony that SAIC no longer accepted bids from LEI. Laughlin explained that, after LEI broke a water line while working on a project for SAIC, both sides "mutually agreed" to terminate the job because "the plans were not accurate" and no ill will existed between the parties. Laughlin added that he did not have any knowledge of the driveways that Grant had installed for the Fannings and himself until after Grant quit working for LEI. Because Grant first breached his fiduciary duty to LEI in June of 2000 when he used LEI's resources to install a driveway for himself, Laughlin felt like Grant should pay LEI back every field-profit bonus payment that he had received since June of 2000.
Although Laughlin noted that Grant could use his company vehicle for personal matters, Laughlin explained that it was "[a]bsolutely" against company policy for LEI's employees to use LEI's credit for their personal use. Laughlin did concede, however, that he had used LEI's assets to repair his beach house in 1998, for work at his house, and for work at his daughter's house, but Laughlin explained that he did not bill these costs to Grant's projects. When asked why "the value of the amount of [Grant's] improper behavior or outright thievery . . . [was] not important to [him]," Laughlin replied, "It's a matter of indication of his integrity, and we do not know what else he might have done or might have taken from us."
Tammy Marcontell, LEI's accountant, testified that LEI had an "accepted practice" of allowing senior managers to incur personal expenses on LEI's credit, which the company then charged back to the senior manager.
Laughlin also stated that when Grant quit working for LEI, Grant did not ask Laughlin for any field-profit bonus payment. Grant surprised Laughlin by asking Laughlin for a field-profit bonus because it was "clear" to Laughlin that Grant was not entitled to such a bonus. Also, Laughlin denied ever offering money to Grant when he quit his job in order to settle any possible field-profit bonus that LEI owed to him. Jurisdiction
As a preliminary matter, LEI argues that we lack jurisdiction to consider Grant's appeal because, although Grant timely filed his notice of appeal from the trial court's original final judgment, the trial court subsequently modified that judgment, and Grant did not file another notice of appeal after the trial court modified its original final judgment.
On February 8, 2007, the trial court signed its final judgment. On March 8, 2007, LEI filed a motion to modify the judgment, asking the trial court to include "inadvertently omitted language" and correct a clerical error which stated that the trial court signed the final judgment on February 8, 2006, rather than February 8, 2007. On March 9, 2007, Grant filed his notice of appeal with the trial court. On March 19, 2007, the trial court granted LEI's motion and modified its judgment. Grant did not file another notice of appeal.
A party perfects an appeal when the party files its notice of appeal with the trial court. Tex. R. App. P. 25.1(a). Texas Rule of Appellate Procedure 27.3 further provides,
After an order or judgment in a civil case has been appealed, if the trial court modifies the order or judgment, or if the trial court vacates the order or judgment and replaces it with another appealable order or judgment, the appellate court must treat the appeal as from the subsequent order or judgment and may treat actions relating to the appeal of the first order or judgment as relating to the appeal of the subsequent order or judgment.
Under Rules 25.1(a) and 27.3, Grant provided a timely notice of appeal. See Wohlfahrt v. Holloway, 172 S.W.3d 630, 633-34 (Tex.App. 2005, pet. denied) (holding that appellants properly perfected appeal when appellants timely filed their notice of appeal after original final judgment, trial court modified final judgment, and appellants did not file another notice of appeal from modified final judgment). Accordingly, we hold that we have jurisdiction to consider Grant's appeal.
Sufficiency of the Evidence
In his sixth issue, Grant argues that the evidence is "legally and factually insufficient to sustain the jury's findings that he breached a fiduciary duty relationship to LEI, committed fraud[,] or engaged in inequitable conduct" because "the evidence established that [Grant], at all times, acted in accordance with company policy and was open in dealing with LEI."
We will sustain a legal sufficiency or "no-evidence" challenge if the record shows one of the following: (1) a complete absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In conducting a legal sufficiency review, a "court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it." Id. at 822. If there is more than a scintilla of evidence to support the challenged finding, we must uphold it. Formosa Plastics Corp. USA v. Presidio Eng'rs Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). "`[W]hen the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence.'" Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). However, if the evidence at trial would enable reasonable and fair-minded people to differ in their conclusions, then jurors must be allowed to do so. Keller, 168 S.W.3d at 822; see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). "A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement." Keller, 168 S.W.3d at 822.
In conducting a factual sufficiency review, we must consider, weigh, and examine all of the evidence that supports or contradicts the jury's determination. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989); London v. London, 192 S.W.3d 6, 14-15 (Tex.App.-Houston [14th Dist.] 2005, pet. denied). We may set aside the verdict only if the evidence that supports the jury's finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong or unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Steinberg v. Comm'n for Lawyer Discipline, 180 S.W.3d 352, 355 (Tex.App. 2005, no pet.); Nip v. Checkpoint Sys., Inc., 154 S.W.3d 767, 769 (Tex.App.-Houston [14th Dist.] 2004, no pet.).
The term "fiduciary" generally applies "to any person who occupies a position of peculiar confidence towards another," refers to "integrity and fidelity," and contemplates "fair dealing and good faith." Daniel v. Falcon Interest Realty Corp., 190 S.W.3d 177, 185 (Tex.App.-Houston [1st Dist.] 2005, no pet.). "`[W]hen a fiduciary relationship of agency exists between employee and employer, the employee has a duty to act primarily for the benefit of the employer in matters connected with his agency.'" Id. (quoting Abetter Trucking Co. v. Arizpe, 113 S.W.3d 503, 510 (Tex.App. 2003, no pet.)). He owes his principal the duty not to compete with the principal on his own account in matters relating to the subject matter of the agency. Id. A fiduciary also has a duty to deal openly and to fully disclose to his employer information that affects his employer's business. Id. In sum, an agent who serves as a fiduciary owes his principal the duty to deal fairly with the principal, and an agent who uses his position to gain a business opportunity belonging to the employer commits an actionable wrong. Id. Accordingly, in Daniel, we held that a project manager and on-site superintendent for a project who was responsible for soliciting bids owed his employer a fiduciary duty. Id. at 185-87.
In order to prove fraud, a party must show the following: (1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001).
Here, the jury found that Grant breached his fiduciary duties to LEI, committed fraud, and engaged in unlawful or inequitable conduct. Viewing the evidence in the light most favorable to the verdict, Grant placed his interests above LEI's interests, and he did not exercise utmost good faith. The evidence shows that Grant used LEI's equipment and labor to build driveways for the Fannings and for himself, used LEI's telephones to make calls on behalf of a competitor (i.e., GBS), usurped a potential business opportunity for LEI by obtaining a bid for GBS, used LEI's credit for personal gas and other purchases, and concealed these actions from LEI. Grant has not reimbursed LEI for these expenses.
As a fiduciary, Grant had the duty to act primarily for the benefit of LEI, not himself, in matters connected with his employment, and he also had the duty to deal fairly and openly with LEI and to fully disclose to LEI information affecting LEI's business. See Daniel, 190 S.W.3d at 185. Grant did not abide by his fiduciary duties. By breaching his fiduciary duties and committing fraud, Grant did not have "clean hands." See Gordin v. Shuler, 704 S.W.2d 403, 408 (Tex.App. 1985, writ ref'd n.r.e.). Moreover, from Grant's self-dealing, a rational jury could have found that Grant committed fraud based on the evidence that he knowingly represented to LEI that he would act for the benefit of LEI and then knowingly charged personal expenses to LEI, competed against LEI, and concealed his self-dealing; furthermore, the jury could have found that LEI relied upon Grant's representations when it hired Grant and paid the bills that included Grant's concealed personal expenses. See Cass v. Stephens, 156 S.W.3d 38, 65 (Tex.App. 2004, pet. denied). Accordingly, we hold that the evidence is legally sufficient to support the jury's findings that Grant breached his fiduciary duty to LEI, committed fraud, and engaged in inequitable conduct.
Viewing all the evidence, Grant did testify that he was allowed to incur personal expenses on LEI's credit and Marcontell, LEI's accountant, testified that it was an "accepted practice" for senior managers to incur personal expenses on LEI's credit. However, Laughlin and Thyssen refuted Grant's and Marcontell's testimony that it was acceptable for Grant to incur personal expenses on LEI's credit. Also, other than the credit card purchases at Home Depot, Grant concealed personal expenses on LEI's credit. Grant has not reimbursed LEI for his personal expenses, but he did assert that the expenses were supposed to be deducted from his bonus. Even though Grant testified that he only obtained a bid for GBS because SAIC was not LEI's competitor, Laughlin and Thyssen testified that SAIC was still LEI's customer. Accordingly, we hold that the evidence is factually sufficient to support the jury's findings that Grant breached his fiduciary duty to LEI, committed fraud, and engaged in inequitable conduct.
We overrule Grant's sixth issue.
Material Breach
In his fourth issue, Grant argues that the evidence is legally and factually insufficient to support the jury's finding that LEI did not owe Grant a pro-rata field-profit bonus because Grant quit his job and LEI did not terminate his employment. In his first issue, Grant argues that the trial court erred in not fulfilling its "threshold duty to determine ambiguity" because "the trial court left open the question of whether the [trial] court would conclude the contract was ambiguous and whether it would submit a jury issue on ambiguity." In his second and third issues, Grant also argues that the trial court erred in determining that the Compensation Package was ambiguous and permitting LEI to introduce parol evidence because "the contract language was not susceptible to more than one reasonable interpretation." LEI responds that any error in allowing parol testimony about the contract term was harmless because "even if the trial court had found in favor of [Grant] on the issue of ambiguity . . . there would still have been more than sufficient evidence to support [the] jury finding that Grant violated his contract and so was not entitled to any bonus." Because the jury's findings support a material breach of contract by Grant, we hold that any error in the admission of parol evidence was harmless.
"It is a fundamental principle of contract law that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance." Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam) (citing Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692 (Tex. 1994)).
After hearing the evidence, the jury found as follows:
QUESTION 2
Did LEI fail to comply with the AGREEMENT?
Answer: No
QUESTION 6A
Did CARROLL GRANT engage in unlawful or inequitable conduct concerning the issue in dispute in Questions 5 and 6?
Answer: Yes
QUESTION 7
Did CARROLL GRANT fail to comply with the AGREEMENT?
Answer: Yes
QUESTION 8
Was CARROLL GRANT'S failure to comply excused?
Answer: No
QUESTION 10
Did a relationship of trust and confidence exist between LEI and CARROLL GRANT?
Answer: Yes
QUESTION 11
Did CARROLL GRANT comply with his fiduciary duty to LEI?
Answer: No
QUESTION 13
Did CARROLL GRANT commit fraud against LEI?
Answer: Yes
QUESTION 15
Do you find by clear and convincing evidence that the harm to LEI, found by you in your answer to Question 12, resulted from fraud?
Answer: Yes
QUESTION 17
Do you find by clear and convincing evidence that the harm to LEI, found by you in your answer to Question 14, resulted from fraud?
Answer: Yes
QUESTION 19
Did CARROLL GRANT, without LEI's consent, intentionally solicit, accept, or agree to accept any benefit from another person on the agreement or understanding that the benefit would influence his conduct in relation to the affairs of LEI?
A person acts with INTENT when it is his conscious objective or desire to engage in the conduct or cause the result.
Answer: Yes
In its final judgment, the trial court ordered Grant to pay LEI $5,040 and court costs and interest.
The Texas Supreme Court has held that, even when a jury question asks if a party "fail[ed] to comply" with a contract, a court can conclude, as a matter of law, that the party's failure to comply with the contract was also a material one. Id. at 198-99. The Court, in Mustang Pipeline, used the following factors from the Restatement of Contracts in determining whether a failure to perform was material:
(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of the circumstances including any reasonable assurances; [and]
(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
Id. (quoting Restatement (Second) of Contracts § 241 (1981)).
Here, the 1995 contract provided that Grant was to "market" LEI's services, devote his "time, attention, and energy" to his duties as a project manager, adhere to all of LEI's rules, and not "directly or indirectly" compete against LEI. In addition to finding that Grant had failed to comply with the contract, the jury found that Grant had committed fraud. The jury also found that Grant had breached his fiduciary duty to LEI and engaged in unlawful conduct.
Although the 1995 contract provided that Grant was to devote his energy to obtaining bids for LEI and specifically prohibited him from participating indirectly or directly with a business in competition with LEI, Grant — on behalf of GBS — made successful bids for SAIC projects while working for LEI. LEI did not discover Grant's SAIC bid on behalf of GBS until after Grant had quit his job, and LEI would have fired Grant if it had known that Grant had submitted a bid on behalf of a competitor to one of LEI's current customers.
Also, although the 1995 contract called for Grant to adhere to LEI's rules, Grant used LEI's equipment and labor to install a driveway for himself and for the Fannings. LEI did not discover Grant's use of its equipment and labor on the driveway for Grant and the Fannings until after Grant had quit his job, and LEI would not have permitted Grant to engage in such a practice. Moreover, although Grant stated that his use of LEI's credit was a permissible practice for LEI's senior managers, Grant conceded that LEI confronted him about his personal charges in order to deduct them against his bonus, and Laughlin and Thyssen stated that such use of LEI's credit by Grant was not permissible. Laughlin explained that the full extent of damages caused by Grant's improper behavior was simply unknown.
Accordingly, we hold that, as a matter of law Grant committed a material breach of the contract; therefore, LEI was discharged from its duties under the contract. See Mustang Pipeline, 134 S.W.3d at 200 (holding that, as matter of law, party's material breach discharged other party from contractual duties); Graco Robotics, Inc. v. Oaklawn Bank, 914 S.W.2d 633, 640-41 (Tex.App.-Texarkana 1995, writ dism'd) (concluding that bank committed material breach by failing to pay plaintiff according to escrow agreement based on jury answer that bank "fail[ed] to comply" with escrow agreement).
Having so held, we need not directly consider Grant's first through fourth issues because a prior material breach precludes a party from recovering on the contract. See Geotech Energy Corp. v. Gulf States Telecomms. Info. Sys., Inc., 788 S.W.2d 386, 391 (Tex.App.-Houston [14th Dist.] 1990, no writ) (reasoning that material breach precludes recovery on contract).
In his first through fourth issues, Grant contends that the evidence is legally and factually insufficient to support the jury's finding that LEI did not owe Grant a pro-rata field-profit bonus because Grant quit his job, the trial court erred in not performing its "threshold duty" to determine ambiguity "one way or another" before submitting a question on ambiguity to the jury, the trial court erred in determining that the Compensation Package was ambiguous, and the trial court erred in allowing LEI to introduce parol evidence.
We overrule Grant's first through fourth issues.
Quantum Meruit
In his fifth issue, Grant argues that the trial court erred in asking the jury to determine whether his conduct "constituted unclean hands" because the question presented an issue of law. He further argues that the trial court erred in denying him quantum meruit relief based on the doctrine of "unclean hands" because "a finding of `unclean hands' does not preclude Mr. Grant's recovery in equity."
In support of his argument that the trial court erred in submitting to the jury "an issue of law within the trial court's discretion," Grant does not cite us to any authority. Under Texas civil procedure, a jury may decide ultimate issues of fact, but it is the trial court which ultimately decides whether equitable relief is appropriate. See Indian Breach Prop. Owners' Ass'n v. Linden, 222 S.W.3d 682, 690 (Tex.App. 2007, no pet.). Contrary to Grant's assertion, whether an individual has engaged in unlawful or inequitable conduct is a fact question. See World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 668 (Tex.App.-Forth Worth 1998, pet. denied) (reasoning that whether "inequitable conduct" has occurred is "fact question"); City of Dallas v. Davis, 266 S.W. 544, 547 (Tex.Civ.App. 1924, no writ) (noting that whether "inequitable" or "unlawful" conduct has occurred is question of "fact"). Accordingly, we hold that the trial court did not err in asking the jury to determine whether Grant's conduct "constituted unclean hands."
Grant further argues that the trial court erred in denying his quantum meruit relief because the unclean hands doctrine "does not repel all sinners from a court of equity." See Norris of Houston, Inc. v. Gasfas, 562 S.W.2d 894, 897 (Tex.Civ.App. 1978, writ ref'd n.r.e.). Specifically, Grant asserts that "[w]here the harm done to the defendant is not serious and can be otherwise corrected, the unclean hands maxim should not be applied." See id. He emphasizes that the jury only awarded $5,020 in damages to LEI for Grant's fraud and breach of his fiduciary duty, while the trial court's decision to deny him equitable relief due to unclean hands denied him a $60,006 quantum meruit recovery.
The unclean hands doctrine provides that "a court acting in equity will refuse to grant relief to a plaintiff who has been guilty of unlawful or inequitable conduct with regard to the issue in dispute." Wynne v. Fishcer, 809 S.W.2d 264, 267 (Tex.App. 1991, writ denied); see Grohn v. Marquardt, 657 S.W.2d 851, 855 (Tex.App. 1993, writ ref'd n.r.e.). The doctrine will only be applied to "one whose own conduct in connection with the same matter or transaction has been unconscientious, unjust, or marked by a want of good faith, or one who has violated the principles of equity and righteous dealing." In re Jim Walter Homes, Inc., 207 S.W.3d 888, 899 (Tex.App.-Houston [14th Dist.] 2006, no pet.). The complaining party must also show an injury to himself arising out of the conduct. Id. A court should not apply the equitable doctrine of unclean hands when a defendant has not been seriously harmed and the wrong complained of can be corrected without applying the doctrine. Id. Here, the jury found that Grant committed fraud and breached his fiduciary duty to LEI.
Although not in the context of a party seeking quantum meruit equitable relief, courts have found that a party who commits fraud is not entitled to equitable relief. See Gordin, 704 S.W.2d at 408 (reasoning that fraud can prohibit party's entitlement to specific performance); cf. Rogers v. Rogers, 240 S.W. 1104, 1105 (Tex. 1922) ("Equity will leave the parties to [fraudulent transactions] in the position in which they have placed themselves, refusing all affirmative aid to either of the fraudulent participants."); De La Pena v. Elzinga, 980 S.W.2d 920, 923 (Tex.App. 1998, no pet.) (noting that "`courts will not aid a party in carrying out a fraud; and the court will not give a [plaintiff] . . . any relief from his own fraudulent act'" (quoting La Force v. Bracken, 141 Tex. 18, 21-22, 169 S.W.2d 465, 467 (Tex. 1943))). It has also been stated, "With respect to fraudulent transactions[,] the clean hands maxim is cognate with the principles that no action arises out of fraud or deceit; and that equity will not aid a fraud doer, . . . to permit him . . . to derive any benefit from the fraud." 30A C.J.S. Equity § 110 (2007).
In regard to Grant's claim that the "sharp disparity" between LEI's award for fraud and the jury's finding of compensable work for which he was not paid should not repel an equitable award, the evidence shows that there was not such a disparity and the further extent of Grant's fraudulent conduct was simply unknown. Thyssen testified that LEI would have customarily charged $14,000 for the driveway that Grant installed at the Fannings' house and $6,000 for the driveway that Grant installed at his house. LEI did not receive these proceeds. Grant testified that he earned $17,000 for the SAIC bid that he obtained for GBS while working for LEI. GBS was LEI's competitor, and SAIC had been LEI's customer, yet LEI did not receive these proceeds. Also, Grant conceded that he still owed LEI $4,000 for personal purchases on LEI's credit. Both Laughlin and Thyssen testified that Grant was not allowed to make personal purchases on LEI's credit. See City of Fredericksburg v. Bopp, 126 S.W.3d 218, 223 (Tex.App. 2003, no pet.) (noting that we defer to trial court on credibility issues). Grant also conceded that LEI had to confront him about such purchases before LEI deducted them from his field-profit bonus. Moreover, Ducote testified that Grant was making money on the side by using LEI's assets and credit. See Daniel, 190 S.W.3d at 185 (noting that agent has duty to account for profits arising out of employment).
LEI presented ample proof that Grant had engaged in unlawful or inequitable conduct. Accordingly, we hold that the trial court did not abuse its discretion in denying Grant a quantum meruit recovery.
We overrule Grant's fifth issue.
Summary Judgment
In his seventh issue, Grant argues that the trial court erred in granting "LEI's `no-evidence' summary judgment motions on [Grant's] causes of action for fraud and negligent misrepresentation" because Grant "provided sufficient evidence to raise a genuine issue of material fact regarding each element of his causes of action for fraud and negligent misrepresentation."
LEI filed no-evidence summary judgment motions, arguing that it was entitled to summary judgment on Grant's fraud and negligent misrepresentation claims because Grant proffered no evidence supporting any of the elements of fraud and negligent misrepresentation. On January 5, 2005, in his response to LEI's no-evidence summary judgment motions, Grant proffered his deposition testimony and his own affidavit.
On January 5, 2005, in his affidavit, Grant testified that, in order to calculate his bonus based on field profits, Thyssen provided him with periodic statements, which showed the expenses and profits for the jobs that Grant had managed. Grant stated,
Because these statements were given to me by [LEI's] [v]ice [p]resident, who had access to all of the company's books, I relied upon the information provided to me as accurately showing the expenses and profits for the jobs I managed, and the amount of bonus that was owed to me. . . . In the course of this lawsuit, I have learned that the information that [LEI] provided to me was not correct, and under-reported the amount of bonus that was owed to me. [LEI's] expert witness, who is the company's outside accountant, had to correct [LEI's] calculations regarding the bonus owed to me. [LEI's] own expert says that the company still owes me a bonus I earned but which has not been paid to me.
Grant also asserted in his response that he satisfied the elements of negligent misrepresentation.
On January 13, 2005, LEI filed a "Reply to [Grant's] Responses to [LEI's] Motions for Summary Judgment." LEI asserted that Grant did not point to any specific intent to defraud. LEI also attached an excerpt from Grant's deposition, during which the following exchange occurred:
[LEI]: Okay. So, my question to you is, is there anything specific, examples of something that Joe Laughlin said or Larry Thyssen said that was untrue that you relied upon to your detriment when y'all were working on calculating up the bonuses that were going to be due per this Exhibit A[,] [the Compensation Package,] while you were employed there?
[Grant]: No. Let's just say no on this one here. . . .
[LEI]: Okay. But you're not alleging that they[,] [Thyssen or Laughlin,] negligently misrepresented any of the contents of this[,] what costs go where on a particular job?
[Grant]: I — I can't answer that question. I mean —
[LEI]: Well, let me just ask you. I mean, do you know what "reckless" means?
[Grant]: No. Why don't you tell me what it means.
[LEI]: How about like carelessness? That's kind of close. Maybe it's not quite as —
[Grant]: Carelessness?
[LEI]: Reckless might be worse than careless but more or less the same.
[Grant]: Right.
[LEI]: Do you know of any specific acts of outright carelessness by [Marcontell] or [Laughlin] or [Thyssen] in regards to the way they treated the accounting or the allocation of job costs?
[Grant]: I haven't seen the — the — the breakdown that [LEI] has sent to our office or sent to [my attorney].
[LEI]: Okay. Well, I'm not really concerned about reviewing stuff that we've produced. I'm just asking, you know, your firsthand knowledge working there for eight years.
[Grant]: Uh-huh.
[LEI]: Did you feel that there was an ongoing pattern or ongoing culture at [LEI] to where they were reckless and careless and would apply invoices incorrectly to wrong jobs and just let the chips fall where they may? They didn't give a crud?
[Grant]: Oh, no, no, no. [Thyssen] was very astute about costs.
LEI also asserted that Grant presented no evidence of negligent misrepresentation.
To prevail on a no-evidence summary judgment motion, a movant must allege that there is no evidence of an essential element of the adverse party's cause of action or affirmative defense. Tex. R. Civ. P. 166a(i); Fort Worth Osteopathic Hosp., Inc. v. Reese, 148 S.W.3d 94, 99 (Tex. 2004). We review a no-evidence summary judgment under the same legal sufficiency standard used to review a directed verdict. Gen. Mills Rests., Inc. v. Tex. Wings, Inc., 12 S.W.3d 827, 832-33 (Tex.App. 2000, no pet.). Although the non-moving party is not required to marshal its proof, it must present evidence that raises a genuine issue of material fact on each of the challenged elements. Tex. R. Civ. P. 166a(i); Ridgway, 135 S.W.3d at 600. A no-evidence summary judgment motion may not be properly granted if the non-movant brings forth more than a scintilla of evidence to raise a genuine issue of material fact on the challenged elements. Ridgway, 135 S.W.3d at 600. More than a scintilla of evidence exists when the evidence "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997).
When reviewing a no-evidence summary judgment motion, we assume that all evidence favorable to the nonmovant is true and indulge every reasonable inference and resolve all doubts in favor of the nonmovant. Spradlin v. State, 100 S.W.3d 372, 377 (Tex.App. 2002, no pet.). Because the trial court's order granting LEI's no-evidence summary judgment motion does not specify the grounds upon which the trial court relied, we must affirm the summary judgment if any of the grounds in the summary judgment motion are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872-73 (Tex. 2000).
Conclusory statements in an affidavit are not proper summary judgment evidence. See Tex. R. Civ. P. 166a(f) (supporting affidavit must set forth such facts as would be admissible in evidence); see also Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per curiam). A conclusory statement is one that does not provide the underlying facts to support the conclusion. 1001 McKinney Ltd. v. Credit Suisse First Boston Mortgage Capital, 192 S.W.3d 20, 27 (Tex.App. 2005, pet. denied). To serve as competent summary judgment proof under Texas Rule of Civil Procedure 166a(c), an affidavit of an interested party must be "clear, positive, direct, credible, free from contradiction, and susceptible of being readily controverted." Haynes v. City of Beaumont, 35 S.W.3d 166, 178 (Tex.App.-Texarkana 2000, no pet.); see Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997). An affidavit that makes self-serving, conclusory statements without any underlying factual detail cannot support a summary judgment. Haynes, 35 S.W.3d at 178. Finally, an objection that an affidavit is conclusory is an objection to substance that may be raised for the first time on appeal. Id.
As noted above, a fraud cause of action has six elements: (1) that a material representation was made, (2) the representation was false, (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion, (4) the speaker made the representation with the intent that the other party should act upon it, (5) the party acted in reliance on the representation, and (6) the party thereby suffered injury. FirstMerit Bank, 52 S.W.3d at 758. A negligent misrepresentation cause of action has four elements: (1) the representation is made by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest, (2) the defendant supplies "false information" for the guidance of others in their business, (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information, and (4) the plaintiff suffers pecuniary loss by justifiably relying on the representation. Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n. 24 (Tex. 2002).
Viewing the summary judgment evidence in the light most favorable to Grant, there is no evidence that LEI intended to falsify the statements that it provided to Grant in order to prevent Grant from obtaining his bonus. Also, there is no evidence that LEI did not exercise reasonable care or competence in providing Grant with the periodic statements or that Grant justifiably relied on these statements. In his affidavit, Grant made the conclusory statement that he had relied upon LEI's statements. However, in his deposition testimony, Grant testified that he did not rely upon anything that Laughlin or Thyssen had provided him when calculating his bonuses from the 1999 contract. Grant also testified that LEI did not carelessly, knowingly, or recklessly falsify the periodic statements which they provided him with in order to calculate his bonus. See Farroux v. Denny's Rests., Inc., 962 S.W.2d 108, 111 (Tex.App. 1997, no pet.) ("A party cannot file an affidavit to contradict his own deposition testimony without any explanation for the change in the testimony, for the purpose of creating a fact issue to avoid summary judgment. . . . [Such an affidavit] presents merely a `sham' fact issue."). Accordingly, we hold that the trial court did not err in granting LEI's no-evidence summary judgment motions on Grant's claims for fraud and negligent misrepresentation.
We overrule Grant's seventh issue.
Conclusion
We affirm the judgment of the trial court.