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 1999-08

Robert Lindgren and Lauren Lindgren v. Richard Rogers And Damifino, Inc. And Franklyn Barker ( 1999 )


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  • TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN





    NO. 03-98-00532-CV

    Robert Lindgren and Lauren Lindgren, Appellants


    v.



    Richard Rogers and Damifino, Inc., Appellees







    FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT

    NO. 97-03062, HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING

    Robert Lindgren and Lauren Lindgren bring this restricted appeal complaining of the post-answer default judgment granted in favor of Richard Rogers and Damifino, Inc. The court awarded $75,000 in actual damages and $300,000 in exemplary damages against the Lindgrens and Franklyn Barker, who is not part of this appeal. The Lindgrens complain that the evidence does not support the judgment rendered. We will affirm the judgment in part and reverse and render in part.

    Because any error in a restricted appeal must be apparent from the face of the record, we will confine our discussion of the facts to evidence presented at trial. See Tex. R. App. P. 30; see also Norman Communications v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997). The evidence included several documents and Rogers's testimony. Rogers and Franklyn Barker (1)   formed Damifino in June 1996 to finance, sell, and service used cars. Originally Franklyn owned ninety percent of Damifino's stock and Rogers owned ten percent. Franklyn purported in November 1996 to convey his shares to Rogers for $2,000. Rogers testified that he never paid the $2,000 because Barker was vacillating between taking the money and taking a car from Damifino instead. In February 1997, Franklyn agreed to accept a car as his final compensation from Damifino. The title certificate to a 1991 Chevrolet Lumina shows that it was conveyed to Franklyn. The stock ledger in evidence, however, does not reflect that any stock transfer occurred.

    Franklyn, as secretary of the corporation, called an emergency stockholders' meeting at the car lot on March 6, 1997. Rogers testified that at the time, the corporation had at least $25,000 in cash in the bank and owned tools, computers, other office equipment, and several cars which brought the combined assets to more than $75,000. He said he thought the stock transfer would formally occur at this meeting. Instead, the Barkers and the Lindgrens were elected officers of Damifino, shutting Rogers out--literally. Rogers testified that the new officers told him he was no longer a shareholder and told him to leave the property or he would be forcibly removed, at gunpoint if necessary. Rogers testified that the Barkers and Lindgrens disposed of Damifino's assets and spent its money; he did not give a time frame for this activity. He said that Franklyn fled to Florida and Shannon filed Chapter 7 bankruptcy. Rogers testified that the events destroyed him financially, forced him to sell his home, and caused his wife severe depression.

    Rogers sued the Lindgrens and Barkers. His claims included conversion, fraud, assault and battery, and civil conspiracy. On March 13, 1997, he obtained a temporary order restraining them from disposing of Damifino's assets; that restraint continued under an agreed extension of the TRO, then by an agreed temporary injunction and order that permitted the sale of Damifino's vehicles on condition that the proceeds be used to pay corporate debts. Rogers and Damifino sought contempt sanctions against the Barkers and Lindgrens for failure to comply with this term of the agreed order. In June, the Lindgrens and Barkers responded to some interrogatories and requests for production. The clerk's record shows that, in June and July, Rogers twice sought and obtained sanctions against the Barkers for noncompliance with discovery requests; the Lindgrens were not similarly sanctioned. The Barkers' attorney, who withdrew from his initial representation of the Lindgrens because of conflicts with the Barkers, withdrew from representing the Barkers because Rogers named him as a witness. Rogers nonsuited Shannon on April 27, 1998. On the same date, he sent requests for admission to the Lindgrens by certified mail; they did not respond to his requests. (2) On June 22, 1998, he proceeded to trial against the Lindgrens and Franklyn. Neither appeared at trial.

    The court rendered judgment for Rogers and Damifino. The judgment contains findings that track the deemed admissions. The trial court awarded $75,000 in actual damages and $300,000 in exemplary damages. The Lindgrens did not file any post-judgment motions until their notice of restricted appeal, filed three months after the judgment was signed.

    Restricted appeals, which replaced writ of error appeals, are available to parties who neither participated in the hearing that resulted in the judgment nor timely filed a post-judgment motion, request for findings of fact and conclusions of law, or notice of appeal. Tex. R. App. P. 30. The error complained of must be apparent from the face of the record. Norman Communications, 955 S.W.2d at 270; see also Attorney Gen. v. Orr, 989 S.W.2d 464, 466 n.1 (Tex. App.--Austin 1999, no pet.) ("face of record" requirement applies to restricted appeals). Whether sufficient evidence supports the judgment is an appropriate inquiry on restricted appeal. See Comstock Silversmiths, Inc. v. Carey, 894 S.W.2d 56, 57 (Tex. App.--San Antonio 1995, no writ) (discussing writ of error appeal).

    The Lindgrens raise eight issues on appeal. They ask whether evidence proves they conspired with Franklyn to oust Rogers from his ownership in and control of Damifino "when they were not officers, directors, or stockholders." (3) They also question whether evidence showed that they were liable in any capacity to Rogers, that they proximately caused any of Rogers's damages, that they participated in the removal of funds from Damifino accounts, or that they received monetary benefits from the sale of Damifino assets. Finally, they question whether evidence showed Rogers owned ninety percent of Damifino stock or could recover exemplary damages from the Lindgrens.  

    Of the Lindgrens' eight issues on appeal, seven directly or indirectly challenge the sufficiency of the evidence to support the judgment. We will construe these as challenges to the legal and factual sufficiency of the evidence. In evaluating a no-evidence point of error, we review the evidence in the light most favorable to the judgment, considering only evidence and inferences that support the findings, and rejecting contrary evidence and inferences. Stedman v. Georgetown Sav. & Loan Ass'n, 595 S.W.2d 486, 488 (Tex. 1979). We must uphold the jury's finding if it is supported by more than a scintilla of evidence. Id. In reviewing a factual sufficiency point, we review all the evidence and can reverse only if we determine that the evidence supporting the jury's verdict is so weak as to make the verdict clearly wrong and the judgment unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

    The appellees rely heavily on deemed admissions. The now-repealed rule governing admissions provided the matter requested to be admitted



    is admitted without necessity of a court order unless, within thirty days after service of the request . . . the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter . . . . Any matter deemed admitted under this rule is conclusively established as to the party making the admission unless the court on motion permits withdrawal or amendment of the admission.



    Former Tex. R. Civ. P. 169. (4) The Lindgrens never responded to the following requests for admissions:



      1. You conspired with Franklyn Barker to oust Richard C. Rogers from his ownership in and control of Damifino, Inc.



      2. After the ouster of Richard C. Rogers from the ownership in and control of Damifino, Inc., you participated in the sale of assets owned by Damifino, Inc.



      3. You personally received monetary benefits from the sale of the assets owned by Damifino, Inc.



      4. At the time you conspired with Franklyn Barker to oust Richard C. Rogers from his ownership and control of Damifino, Inc., you were aware that Richard C. Rogers owned ninety percent (90%) of the stock in Damifino, Inc.



      5. On February 27, 1997, Richard C. Rogers owned ninety percent (90%) of the stock in Damifino, Inc.



      6. Subsequent to the ouster of Richard C. Rogers from his ownership and control of Damifino, Inc., you acted as a director of Damifino, Inc.



      7. You participated in the removal of funds from the corporate bank account of Damifino, Inc. subsequent to the ouster of Richard C. Rogers from his ownership in and control of the Damifino, Inc.



      8. Your conduct was a proximate cause of actual damages to Richard C. Rogers in an amount of $75,000.00.



      9. You are indebted to Richard C. Rogers in an amount of $75,000.



    10. There are no facts upon which you rely upon for a defense in this lawsuit.



    11. A reasonable and necessary attorney's fee for the services of Plaintiffs' attorneys in this case would be the sum of $25,000.



      The record contains no motion to withdraw or amend the admissions. The matters are admitted.

    The deemed admissions resolve six of the Lindgrens' issues on appeal. In admission two, the Lindgrens admit they conspired with Franklyn to oust Rogers from ownership and control of Damifino. This admission renders the existence or duration of their officer status irrelevant because they could conspire to oust Rogers from ownership and control without being officers. In admissions three, seven, and eight, the Lindgrens admit they removed money from Damifino accounts, sold corporate assets, and thereby proximately caused Rogers $75,000 in damages. The Lindgrens admitted in admission nine that they owed Rogers $75,000. Collectively, these admissions prove the Lindgrens' liability to Rogers. Concordantly, these admissions also either answer or render irrelevant the issue of whether the Lindgrens personally received money from the sale of Damifino assets; the Lindgrens admit they owe Rogers $75,000 and could be liable for conspiring to deprive him of those funds even if they did not receive those proceeds. Contrary to their argument that no evidence shows that Rogers owned ninety percent of Damifino, they admitted he did in admission five. This admission is not overcome by Rogers's testimony that the Barkers and Lindgrens told him at the March meeting that he owned no stock; their assertion that he owned nothing is not proof that he actually owned nothing and does not outweigh their deemed admission regarding his ownership. Given the evidence that Rogers owned some if not all of Damifino, he was entitled to recover if deprived of the value of that ownership interest; the dispute over the percentage of that interest is irrelevant because of the admission that the Lindgrens proximately caused Rogers $75,000 in damages. (5) The deemed admissions combine to substantiate the assessment of actual damages against the Lindgrens, thereby resolving issues two through seven against the Lindgrens.

    Further, there is no evidence of perjury by Rogers in the trial record on appeal. The Lindgrens point to discrepancies between his trial testimony and his deposition testimony. The deposition testimony, however, is not in the record on appeal and thus cannot show perjury apparent from the face of the record. None of the other asserted inconsistencies in his testimony shows perjury requiring reversal. We resolve issue one against the Lindgrens.

    Finally, the Lindgrens question whether Rogers should recover exemplary damages from them. The evidence against the Lindgrens is that they were officers, they conspired to oust Rogers, and they helped strip the company of its assets. These misdeeds are compensated through the actual damage award. Punitive damages are available only in exceptional cases. Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 16-17 (Tex.1994). They are levied only to punish defendants for "outrageous, malicious, or otherwise morally culpable conduct." Id. at 16. "Every tort involves conduct that the law considers wrong, but punitive damages are proper only in the most exceptional cases." Id. at 18. The trial court found the Lindgrens and Franklyn acted with malice. The legislature has defined "malice" in this context to mean:



    (A) a specific intent by the defendant to cause substantial injury to the claimant; or



    (B) an act or omission:



     (i) which when viewed objectively from the standpoint of the actor at the time of its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and



    (ii) of which the actor has actual, subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others.





    Tex. Civ. Prac. & Rem. Code Ann. § 41.001(7) (West 1997). When determining whether to award punitive damages, the fact finder must consider the nature of the wrong, the character of the conduct, the degree of culpability, the situation and sensibilities of the parties, the offensiveness of the conduct to a public sense of justice and propriety, and the size of an award needed to deter similar future conduct. See Alamo Nat'l Bank v. Kraus, 616 S.W.2d 908, 910 (Tex. 1981). The trial record shows that the Lindgrens conspired with the Barkers to deprive Damifino of $75,000 in cash and assets knowing that Rogers thought he owned the whole company, and owned at least ten percent of it. Rogers said their actions destroyed him financially and forced him to sell his house. (6)  

    We conclude that no evidence showed that the Lindgrens' conduct was exceptional, malicious, or outrageous enough to support the award punitive damages. Though Rogers testified that the Lindgrens knew "that Frank Barker had transferred his ownership interest in the company" to Rogers, there is no showing of ill will or spite by the Lindgrens toward Rogers or of a specific intent by the Lindgrens to cause Rogers substantial injury. See, e.g., Oni, Inc. v. Swift, 990 S.W.2d 500, 503 (Tex. App.--Austin 1999, no pet.). Though the Lindgrens were Damifino officers, there is no evidence of the degree of their involvement in planning the conspiracy or stripping the company. There is no evidence of how much of the proceeds of the conspiracy went to the Lindgrens. There is no showing that the Lindgrens knew the impact the stripping of Damifino would have on Rogers. There is no differentiation between the traumatic effects on Rogers of events that occurred before the Lindgrens' election (e.g., Shannon's alleged appropriation of Damifino's computer at gunpoint) and events that occurred during their involvement. We find no evidence in the record that the Lindgrens acted toward Rogers and Damifino with the malice requisite to support an award of punitive damages. We resolve the eighth issue in favor of the Lindgrens.

    We reverse the award of punitive damages against the Lindgrens and render judgment that Rogers and Damifino recover no punitive damages from the Lindgrens. This decision leaves intact the award of actual damages against the Lindgrens and Franklyn Barker, as well as the award of punitive damage against Franklyn Barker. We affirm the judgment in all other respects.





    Jan Patterson, Justice

    Before Chief Justice Aboussie, Justices Kidd and Patterson

    Affirmed in Part; Reversed and Rendered in Part

    Filed: August 12, 1999

    Do Not Publish

    1. Because Franklyn Barker's wife, Shannon Barker, was initially a party to this suit, we will refer to each Barker by first name when discussing them individually.

    2. The Lindgrens contend they did not answer because they did not receive the requests, both having moved from the address to which Rogers sent the requests. The Lindgrens include in the appendix to their appellate brief a letter to the trial court from Robert dated June 17, 1998, asserting that neither of the Lindgrens was served with the requests for admission; the letter was filed on the day of trial, June 22, 1998. This letter, which also states the Lindgrens knew of the trial date, is not part of the clerk's record on appeal.

    3. Unrefuted evidence shows that the Lindgrens were elected officers of the corporation on March 6, 1997. The documents attached to their brief showing that they resigned on March 11, 1997 were not in the trial record and therefore cannot be considered.

    4. Rule 169 was repealed effective January 1, 1999. These requests for admission were served on April 27, 1998. By operation of rule, they were deemed admitted well before the repeal became effective.

    5. Evidence that Rogers owned all of Damifino does not require reversal. If anything, that might indicate that he should recover more since he would suffer from all of Damifino's losses rather than just ninety percent of the losses.

    6. Rogers's assertion that the Lindgrens' conduct caused his wife to suffer mental problems from which she has not recovered is not probative because she is not a party to this suit and he does not assert how her illness injured him.

    fact finder must consider the nature of the wrong, the character of the conduct, the degree of culpability, the situation and sensibilities of the parties, the offensiveness of the conduct to a public sense of justice and propriety, and the size of an award needed to deter similar future conduct. See Alamo Nat'l Bank v. Kraus, 616 S.W.2d 908, 910 (Tex. 1981). The trial record shows that the Lindgrens conspired with the Barkers to deprive Damifino of $75,000 in cash and assets knowing that Rogers thought he owned the whole company, and owned at least ten percent of it. Rogers said their actions destroyed him financially and forced him to sell his house. (6)  

    We conclude that no evidence showed that the Lindgrens' conduct was exceptional, malicious, or outrageous enough to support the award punitive damages. Though Rogers testified that the Lindgrens knew "that Frank Barker had transferred his ownership interest in the company" to Rogers, there is no showing of ill will or spite by the Lindgrens toward Rogers or of a specific intent by the Lindgrens to cause Rogers substantial injury. See, e.g., Oni, Inc. v. Swift, 990 S.W.2d 500, 503 (Tex. App.--Austin 1999, no pet.). Though the Lindgrens were Damifino officers, there is no evidence of the degree of their involvement in planning the conspiracy or stripping the company. There is no evidence of how much of the proceeds of the conspiracy went to the Lindgrens. There is no showing that the Lindgrens knew the impact the stripping of Damifino would have on Rogers. There is no differentiation between the traumatic effects on Rogers of events that occurred before the Lindgrens' election (e.g., Shannon's alleged appropriation of Damifino's computer at gunpoint) and events that occurred during their involvement. We find no evidence in the record that the Lindgrens acted toward Rogers and Damifino with the malice requisite to support an award of punitive damages. We resolve the eighth issue in favor of the Lindgrens.

    We reverse the award of punitive damages against the Lindgrens and render judgment that Rogers and Damifino recover no punitive damages from the Lindgrens. This decision leaves intact the award of actual damages against the Lindgrens and Franklyn Barker, as well as the award of punitive damage against Franklyn Barker. We affirm the judgment in all other respects.