Lawrence Edward Thompson v. James R. Mannix ( 1991 )

Thompson v. State

NO. 10-90-176-CV

IN THE

COURT OF APPEALS

FOR THE

TENTH DISTRICT OF TEXAS

AT WACO

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          LAWRENCE EDWARD THOMPSON,

                                                                                            Appellant

          v.

          JAMES R. MANNIX, ET AL,

                                                                                            Appellees

* * * * * * * * * * * * *

From 52nd Judicial District Court

Coryell County, Texas

Trial Court # 25249

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O P I N I O N

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          Lawrence Thompson, a prison inmate, filed a pauper's affidavit and a pro se petition alleging that James Mannix, Marie Faubin, R. Avants, Jane Doe, and James Collins, all employees of the Texas Department of Criminal Justice, wrongfully confiscated and converted his personal property. Relying on section 13.001 of the Civil Practice and Remedies Code, the court dismissed the suit before service of process on the ground that "the action's realistic chance of ultimate success is slight." See Tex. Civ. Prac. & Rem. Code Ann. § 13.001(b)(1) (Vernon Supp. 1991). Thompson claims that the court erred when it dismissed his action as frivolous and that the dismissal violated the "open court" provision of the Texas constitution. See Tex. Const. art. I, § 13. The dismissal order will be affirmed.

          Thompson first asserts that the court erred when it dismissed the action as frivolous. Section 13.001 and its federal counterpart authorize the dismissal of pro se suits by paupers if the court is satisfied that the action is frivolous. See Tex. Civ. Prac. & Rem. Code Ann. § 13.001 (Vernon Supp. 1991); 28 U.S.C.A. § 1915(d) (West 1966). The rationale behind these statutes is to prevent a pauper litigant from filing "frivolous, malicious, or repetitive lawsuits." Neitzke v. Williams, 490 U.S. 319, 109 S. Ct. 1827, 1834, 104 L. Ed. 2d 338 (1989). Judges can dismiss claims based on "indisputably meritless legal" theories as well as those whose "factual contentions are clearly baseless." Id. 109 S.Ct. at 1833.

          Thompson claimed in his suit that the defendants confiscated and converted the following items of personal property: five highlighters, an extension cord, four wooden 3x5 picture frames, a stainless steel pen and pencil set, a mirror, three hospital bracelets, and a fan. He sought to recover $30,000 compensatory damages, $10,000 exemplary damages from each defendant, court costs, attorney's fees, reimbursement for all incidental expenses, and pre- and post-judgment interest.

          A court has broad discretion when determining whether to dismiss a suit as frivolous. Johnson v. Lynaugh, 766 S.W.2d 393, 394 (Tex. App.—Tyler 1989, writ denied). Here, the court could have considered that the defendants, all state employees, were entitled to quasi-judicial immunity from damages. See Johnson v. Peterson, 799 S.W.2d 345, 347 (Tex. App.—Houston [14th Dist.] 1990, no writ). The court also could have concluded that the actual damages were de minimus. Furthermore, because "prison officials have broad administrative and discretionary authority over the institutions they manage and lawfully incarcerated persons retain only a narrow range of protected liberty interests," the court could have determined that the defendants were legally justified in confiscating Thompson's personal property. See Johnson v. Lynaugh, 800 S.W.2d 936, 938-39 (Tex. App.—Houston [14th Dist.] 1990, writ granted).

          Accordingly, we hold that the court did not abuse its discretion when it dismissed the claim as frivolous because it could have concluded that the suit had no arguable basis either in fact or law. Point one is overruled.

          Point two is that the dismissal before service of process violated Thompson's constitutional right to open access to the courts. He failed to make his constitutional challenge in the trial court. Rather than filing a motion to reinstate the suit in the trial court and raising the constitutional claim there, Thompson appealed the dismissal order and alleged for the first time on appeal that it violated his constitutional rights.

          A constitutional challenge must be made in the trial court unless the challenge presents fundamental error. Johnson, 800 S.W.2d at 939. Because Thompson's challenge does not raise fundamental error, his complaint that the dismissal violated his constitutional right is not properly before this court. See id.; Smiley v. Johnson, 763 S.W.2d 1, 4 (Tex. App.—Dallas 1988, writ denied) (holding that fundamental error occurs under limited circumstances such as when the court does not have jurisdiction or the public interest is directly and adversely affected). Accordingly, point two is overruled.

          All points have been overruled and the order of a dismissal is affirmed. Because the dismissal of Thompson's claim was without prejudice, he may bring this action again. If the trial court dismisses the subsequent suit before service of process, Appellant could file a motion to reinstate the suit, asserting the constitutional challenge, and, if denied, then on appeal his constitutional challenge would be properly before us.

 

                                                                                 BOB L. THOMAS

                                                                                 Chief Justice

Before Chief Justice Thomas and Justice Vance

          (Justice Cummings not participating)

Affirmed

Opinion delivered and filed July 25, 1991

Publish

"SR;595">.  The evidence is legally sufficient if it would enable reasonable and fair-minded people to reach the verdict under review.  Id. at 827.  We credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not.  Id.  If the evidence falls within a “zone of reasonable disagreement,” we cannot substitute our judgment for that of the trier-of-fact.  See id. at 822.

            In reviewing a factual sufficiency issue, we consider all the evidence, whether it supports or is contrary to the finding.  Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).  Reversal could occur because the finding was based on weak or insufficient evidence or because the proponent’s proof, although adequate if taken alone, is overwhelmed by the opponent’s contrary proof.  Checker Bag Co. v. Washington, 27 S.W.3d 625, 633 (Tex. App.—Waco 2000, pet denied) (citing William Powers, Jr. & Jack Ratliff, Another Look at “No Evidence” and “Insufficient Evidence,” 69 Tex. L. Rev. 515, 519 n.11 (1991)).  We set aside the finding based on factual insufficiency only if the evidence supporting the finding is so contrary to the overwhelming weight of the evidence as to be manifestly unjust and clearly wrong.  Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998).

We review the trial court’s conclusions of law de novo.  Dominguez, 163 S.W.3d at 325.  Under de novo review, the reviewing court exercises its own judgment and redetermines each legal issue.  Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998).

“AS IS” Agreement

            Proof of causation is essential for recovery on Flake’s DTPA and breach of warranty causes of action.  Tex. Bus. & Com. Code Ann. §17.50(a) (Vernon Supp. 2005).  Passat argues that the “as is” clause in the contract precludes Flake from proving Passat caused it harm.  Flake argues that Passat failed to plead the “as is” clause as an affirmative defense to its DTPA claims and therefore the issue is not before us.  Flake failed to cite any authority that requires an “as is” clause to be pled as an affirmative defense.  Regardless, the issue was tried by consent.  The “as is” clause is a significant issue because if the “as is” clause in the second contract is valid, legally sufficient evidence will not exist to show that Passat caused Flake damages and Flake will not recover on its DTPA and breach of warranty claims.  City of Keller, 168 S.W.3d at 820.

            “The validity of an ‘as is’ agreement is determined in light of the sophistication of the parties, the terms of the ‘as is’ agreement, whether the ‘as is’ clause is freely negotiated, whether it was an arm’s length transaction, and whether there was a knowing misrepresentation or concealment of a known fact.”  Larsen v. Langford, 41 S.W.3d 245, 252 (Tex. App.—Waco 2001, pet. denied) (citing Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 160-62 (Tex. 1995)).

            Throughout his career, Bob Montgomery has worked for two commercial laundry manufacturers and, at the time of negotiating the present contract, had approximately thirteen year’s experience selling commercial laundry equipment and negotiating sales.  Leon Flake is the CEO of Flake Industrial Services and testified that he had been in the laundry business for fifty years and had experience in negotiating equipment purchase agreements.  Further, the parties had experience negotiating with each other in the past.  Before negotiating the sale of the UT-45, Montgomery was involved in the sale of about a dozen pieces of equipment to Flake.  Both individuals had experience in the industry and with commercial laundry equipment.  There is evidence that the parties were similarly knowledgeable and sophisticated in this industry.

In Prudential, the court stated that in determining the validity of an “as is” clause, a reviewing court must also look to the terms of the agreement itself.  The terms of the agreement in Prudential stated that the purchaser agreed to take the property “as is” with any and all latent and patent defects.  Prudential, 896 S.W.2d at 160.  The Prudential agreement also stated that the purchaser acknowledged that it was relying upon its own examination of the property.  Id.  The terms of the present agreement state that the equipment was purchased and sold in an “AS IS” condition with no implied warranties of any kind, including, without limitation, any implied warranties of merchantability or fitness for a particular purpose.  It is not necessary that the terms of an “as is” agreement be as specific as the Prudential terms if the contract leaves no doubt exactly what the parties agreed to.  Larsen, 41 S.W.3d at 252. By signing the agreement with the “as is” language, agreeing to accept the equipment without any implied warranties, and signing the agreement with a merger clause which stated that the written contracts contained the entire understanding of the parties, this contract left no doubt that Flake intended to rely solely on the statements in the contract.

The evidence presented further shows that Montgomery and Flake actively negotiated the terms of the contract and conducted this transaction at arm’s length.  Handwritten changes were made to the agreement including changes to the express warranty provisions. Further, Montgomery testified that Leon Flake actively negotiated the contract.  Looking at the totality of circumstances, the evidence shows that Flake agreed to make its own appraisal of the bargain and accepted the risk that it might be wrong.  Prudential, 896 S.W.2d at 161.  We hold the agreement between the parties contained a valid “as is” clause which negates causation unless Flake established that it was fraudulently induced to enter the agreement.

Fraudulent Inducement

An otherwise valid “as is” agreement will not negate the causation element of a DTPA or a breach of warranty claim if the buyer can prove fraudulent inducement such as a knowing misrepresentation or concealment of a known fact.  Id. at 162.  In order to prove fraudulent inducement, evidence must exist for each element of a simple fraud claim.  Fletcher v. Edwards, 26 S.W.3d 66, 77 (Tex. App.—Waco 2000, pet. ref’d).  The elements of simple fraud are:

(1)  a material representation;

(2)   which is false;

(3)   which was known to be false when made or was made recklessly as a positive assertion without knowledge of its truth;

(4)   which was intended to be relied upon;

(5)   which was relied upon; and

(6)   which caused injury.

 

Id.  Flake argues Passat represented that the UT-45 had a life expectancy of fifteen to twenty years.  Montgomery testified that during negotiations with Leon Flake he stated that equipment of the nature of the UT-45 generally has a life expectancy of fifteen to twenty years.  Flake did not present evidence of the life expectancy of commercial laundry equipment to contradict this representation.  Further, Montgomery testified that to his knowledge his statement was correct at the time of the negotiations.  Flake has not presented evidence that Montgomery’s statements were false when made or made recklessly;[1] therefore, the “as is” clause in the agreement is valid and negates the causation element of Flake’s DTPA and breach of warranty claims.  We sustain issue one, in part.

Failure to Disclose

In its second issue, Passat challenges the factual sufficiency of the evidence to support the trial court’s finding that Passat failed to disclose the UT-45 was an experimental machine.  In viewing all the evidence, we must set aside this finding.  The first contract executed by the parties in December 1990 clearly stated that the UT-20 and its replacement were “prototypes.”  Further, Bob Montgomery testified that he “made it known to Flake” that the progression of the batch washer was to be larger capacity machines and referred to the replacement UT-45 as a “future model.” Coupled with Leon Flake’s significant experience in the industry, these facts indicate that Flake was aware that Passat viewed the UT-45 as an experimental machine.  Therefore, we sustain issue two and we must remand to the trial court the issue of whether the failure to disclose that the UT-45 was experimental fraudulently induced Flake to enter the agreement with Passat so as to negate the “as is” clause in the agreement.[2]

 

 

Alternative Findings

The fact that the trial court’s DTPA and breach of warranty findings are not supported by legally sufficient evidence does not end our inquiry.  When a party obtains favorable findings on alternative theories, it may obtain judgment on the theory entitling it to the greatest or most favorable relief.  Transport Ins. Co. v. Faircloth, 898 S.W.2d 269, 274 (Tex. 1995); Boyce Iron Works, Inc. v. Southwestern Bell Tel. Co., 747 S.W.2d 785, 787 (Tex. 1988).  If the judgment is reversed on appeal, the appellate court should consider all alternative theories and render judgment on the theory granting the next highest award of damages that can be rendered from the pleadings, evidence, and verdict.  Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 566 (Tex. 2002) (citing Birchfield v. Texarkana Mem’l Hosp., 747 S.W.2d 361, 367 (Tex. 1987)).  Thus, we will determine if Flake may recover under the trial court’s findings supporting a breach of contract.

Sufficiency of Breach of Contract Finding

            Passat asserts there is no legally or factually sufficient evidence to support the trial court’s finding that Passat breached the warranty provision of the sales contract.  The agreement provided that during the express warranty period, Passat would repair the UT-45 or provide replacement parts and diagnose problems with the machine. At trial, Flake presented evidence that Andy Baldwin, a Passat technician, inspected the UT-45 and determined that two of its compartments needed to be replaced.  The evidence showed that although this diagnosis was not indicated in Baldwin’s service report, it was made known to Passat by Flake.  Further, as early as August 1997 Passat was aware that the UT-45 was in need of repair or replacement parts.  As of December 1997, Passat had failed to provide repair or replacement parts.  We hold this evidence to be legally and factually sufficient to support the trial court's finding that Passat breached the warranty provision of the contract.  We overrule issue one as to this claim.

Damages

The general rule for measuring damages for breach of contract is “just compensation for the loss or damage actually sustained.”  Stewart v. Basey, 245 S.W.2d 484, 486 (1952).  Damages for breach of contract protect restitution interests, reliance interests, and expectation interests.  Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 889 (Tex. App.—Dallas 2004, pet. denied) (citing O’Farrill Avila v. Gonzalez, 974 S.W.2d 237, 247 (Tex. App.—San Antonio 1998, pet. denied)).  The most common interest protected is the expectation or benefit-of-the-bargain interest.  Id.  In this case, to protect the expectation interest, the measure of damages is the reasonable cost to repair the UT-45.  The trial court found that amount to be $50,000, which we find to be supported by legally and factually sufficient evidence.  Flake is also entitled to recover attorney’s fees, which the trial court found to be $29,317.50.  Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 1997).

We overrule issues three, four, and five. 

CONCLUSION

For the reasons stated, the judgment of the trial court is reversed, and we remand to the
trial court for further proceedings consistent with this opinion.

 

BILL VANCE

Justice

 

Before Chief Justice Gray,

Justice Vance, and

Justice Reyna

Reversed and rendered

Opinion delivered and filed March 15, 2006

[CV06]

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    [1]           We also believe that the reliance element fails.  The system had been in use by Flake for a year and a half and Flake had extensive experience with Passat’s equipment line.

 

    [2]           Passat challenges only the factual sufficiency and not the legal sufficiency of the failure-to-disclose finding.