Language People, Inc. and Deaf Nation Enterprises, Inc. v. Joel Barish, Jed Barish, and DeafNation, Inc.C. ( 2019 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-18-00538-CV
Language People, Inc. and Deaf Nation Enterprises, Inc., Appellants
v.
Joel Barish, Jed Barish, and DeafNation, Inc., Appellees
FROM THE 126TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-16-000042, THE HONORABLE KARIN CRUMP, JUDGE PRESIDING
MEMORANDUM OPINION
This dispute arises from a proposed corporate merger gone awry. Appellants
Language People, Inc. and Deaf Nation Enterprises, Inc. (Enterprises)1 challenge the district
court’s final judgment adopting the jury’s findings of fraud and breach of contract and awarding
damages and attorneys’ fees to appellees Joel Barish, Jed Barish, and DeafNation, Inc.
1
Although Enterprises is named as an appellant in the notice of appeal, it makes no
independent arguments on appeal. Indeed, the jury’s liability findings and the district court’s
damages award were against Language People, not Enterprises—Enterprises was named in the final
judgment only in the context of a declaration that appellees’ agreement with appellants was void and
of no effect, in a provision related to a pretrial sanctions award made against both appellants, and
in provisions addressing appellate attorney’s fees in the event of an unsuccessful appeal by one or
both appellants. Further, although the brief is filed on behalf of both Language People and
Enterprises, in contesting liability, the arguments largely assert that Language People cannot be held
liable for contractual obligations undertaken by Enterprises. With regard to the pleadings and
arguments asserted, we will refer to appellants collectively as “Language People” and will only
distinguish between the two entities when it is necessary to do so.
Appellants dispute the jury’s findings and assert that the district court made multiple mistakes of
law. We will affirm the district court’s judgment.
BACKGROUND
Language People is a California corporation that provides commercial
interpretation and translation services, and Enterprises is a wholly owned subsidiary of Language
People. DeafNation is a Texas corporation jointly owned by brothers Joel and Jed Barish.
DeafNation produces “Expos,” conventions held throughout the United States for individuals
with hearing impairments. In January 2015, Language People entered into a Memorandum of
Understanding (Memorandum) with the Barishes and DeafNation under which Language People
agreed that it would purchase most of DeafNation’s assets and that it would create Enterprises, a
new subsidiary. The parties also agreed that the Barishes would serve as officers of Enterprises
“or one of the other anticipated newly formed subsidiary corporations as deemed appropriate,”
each receiving $100,000 a year and “the same benefits as Executives are offered at Language
People, Inc. at this time.” Under the Memorandum, which was signed by Language People and
the Barishes on behalf of DeafNation, “[t]he rights to the assets of sale by DeafNation shall
belong to Language People and it will ultimately put those assets into” Enterprises. In April
2015, Enterprises, Joel Barish as CEO of DeafNation, and the Barishes as individuals signed a
Purchase Agreement setting out the specifics of Enterprises’ purchase of DeafNation’s assets.
Also in April 2015, Enterprises and the Barishes signed separate Employment Agreements
providing each brother a $100,000 base salary and other compensation and benefits. We will
refer to the four contracts collectively as the Agreement.
2
According to the Barishes, Language People promptly created the Enterprises
entity. It also applied for a trademark of the DeafNation logo, listing itself as owner, without
telling the Barishes or DeafNation. The Barishes testified that Jed moved to California to begin
working for Language People while Joel remained in Texas to continue coordinating the Expos
and to oversee the transfer of DeafNation’s assets to Enterprises. Language People, however,
never completed its purchase of DeafNation’s assets or compensated the Barish brothers. Jed
resigned after three months in California, at which point Language People notified him that he
was in breach of his contract and threatened to enforce a non-compete clause against him.
Appellants alleged that the Barish brothers commingled personal and corporate
assets and diverted tens or hundreds of thousands of dollars from the corporate bank accounts for
personal use; never provided the financial documents necessary to proceed with the Agreement;
and refused to allow Language People to participate in the Expos. Language People threatened
to pursue claims for breach in August of 2015, asserting that the Barishes had removed corporate
property from the Austin offices and that Jed Barish was planning to start a new competing
entity. Language People’s executives instructed Joel to discontinue any communication with his
brother regarding Language People, Enterprises, and DeafNation.
After a year passed with no significant progress under the Agreement, the Barish
brothers and DeafNation filed suit in Travis County, seeking damages and declaratory relief,
alleging claims for fraudulent inducement and breach of the Agreement. Language People
countered with claims sounding in contract, tort, and equity. The case was tried to a jury with
3
the assistance of several American Sign Language translators.2 The jury found Language People
liable for breach and fraud and found no liability on the part of the Barish brothers or
DeafNation. Based on the jury’s findings and appellees’ election of remedies, the district court
rescinded the contract, awarding appellees over $150,000 in restitution damages and
$334,741.25 in attorneys’ fees. Language People now appeals.
DISCUSSION
Language People argues that there is no evidentiary support for the adverse jury
findings against it and that the district court made a number of erroneous rulings. We will
consolidate the arguments for discussion. See Tex. R. App. P. 47.1; Gene Hamon Ford, Inc. v.
David McDavid Nissan, Inc., 997 S.W.2d 298, 304 n.9 (Tex. App.—Austin 1999, pet. denied).
Denial of Continuance
We first address Language People’s argument that the district court improperly
denied its request for continuance of trial. We will not disturb an order denying a motion for
continuance unless the trial court has committed a clear abuse of discretion. Joe v. Two Thirty
Nine Joint Venture, 145 S.W.3d 150, 161 (Tex. 2004). A trial court abuses its discretion when it
“reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of
law.” Id. In deciding whether a trial court has abused its discretion in denying a motion for
continuance related to discovery, we consider the length of time the case was on file, the
2
Both Joel and Jed have significant hearing loss and communicate primarily through ASL.
4
materiality and purpose of the discovery sought, and whether the party had exercised due
diligence to obtain the discovery. Id.
On February 20, 2018, Language People filed a motion for continuance, its
second,3 seeking delay of a February 26, 2018 trial setting. Language People asserted that in a
December 2017 hearing, the district court had orally denied Language People’s motion to
compel but had not yet signed an order to that effect. Language People stated that it intended to
seek review of that ruling through mandamus in this Court and that a continuance was necessary
because it could not “proceed to trial or effectively pursue appellate review of the [district
court’s] rulings in the absence of a signed and duly entered Order on its Motion to Compel.” On
February 22, two separate orders were signed by different trial judges—one ruling on the motion
to compel, and the other denying Language People’s second motion for continuance.4 On
February 26, Language People filed a third motion for continuance, asserting that a continuance
was warranted because it had filed in this Court a petition for writ of mandamus related to the
verbal rulings on the motion to compel.5 At a pretrial hearing held that same day, the district
court denied Language People’s third motion for continuance, stating that counsel should have
contacted the court to get a signed order on the motion to compel; that the order on the motion to
3
Language People had already received a continuance of a January 2018 trial setting.
4
Under Travis County’s revolving docket system, the judge who heard the motion for
continuance was not the judge who had heard and ruled on the earlier motion to compel. See Travis
County Loc. R. 3.1.
5
Language People was apparently unaware that an order on the motion to compel had been
signed on the same day as the order denying its second motion for continuance. We denied
Language People’s petition for writ of mandamus, see In re Language People, Inc., No. 03-18-
00112-CV, 2018 WL 1056710 (Tex. App.—Austin Feb. 26, 2018, orig. proceeding) (mem. op.), and
Language People does not challenge the denial of its motion to compel in this appeal.
5
compel signed on February 22 was the same order that counsel for both sides had signed as to
form; that this Court had denied Language People’s petition for writ of mandamus that morning;
and that the rulings on the motion to compel appeared to be correct. Based on this record,
Language People has not shown that the district court abused its discretion in denying the second
and third requests for continuance. See id. We overrule the issue.
Findings of Liability
Language People contends that the district court erred in entering judgment
against it, relying largely on an argument that the contracts obligate Enterprises—not Language
People—to purchase DeafNation’s assets and to pay the Barishes.
“Under generally accepted principles of contract interpretation, all writings that
pertain to the same transaction will be considered together, even if they were executed at
different times and do not expressly refer to one another.” Burlington Res. Oil & Gas Co. v.
Texas Crude Energy, LLC, 573 S.W.3d 198, 208 (Tex. 2019) (quoting DeWitt Cty. Elec. Coop.,
Inc. v. Parks, 1 S.W.3d 96, 102 (Tex. 1999)). That rule may apply even if the various contracts
are not between the same parties. Jones v. Kelley, 614 S.W.2d 95, 98 (Tex. 1981); Miles v.
Martin, 321 S.W.2d 62, 66 (Tex. 1959); Great Atl. Life Ins. Co. v. Harris, 723 S.W.2d 329, 333
(Tex. App.—Austin 1987, writ dism’d).
There is no genuine dispute here that the Memorandum, the Purchase Agreement,
and the Employment Agreements all pertain to the same transaction—i.e., Language People’s
purchase of DeafNation’s assets—and, indeed, Language People asserts that the Memorandum,
the Purchase Agreement, and the two Employment Agreements are the “four agreements that
6
formed the transaction.” Instead, Language People argues that clauses in the Purchase
Agreement and Employment Agreements extinguish any other obligations to which Language
People might be held and that “well established rules pertaining to the construction of multiple
contracts that comprise a transaction dictate that the [Purchase Agreement] and Employment
Agreements control to the extent of any conflict” with the terms of the Memorandum.
The Purchase Agreement states, “This Agreement . . . supersede[s] all prior
discussions and agreements between the parties with respect to the subject matter hereof and
thereof, and contain the sole and entire agreement between the parties hereto with respect to the
subject matter hereof and thereof.” The Employment Agreements similarly provide, “Unless
expressly provided hereunder, this Agreement constitutes the total and complete agreement of
the parties regarding Employee’s employment and supersedes all prior understandings and
agreements, and there are no other representations, understandings or agreements.” However,
Language People was not party to either the Purchase Agreement or the Employment
Agreements—Enterprises executed those contracts pursuant to the terms of the Memorandum.
Thus, those clauses bind Enterprises but do not extinguish Language People’s obligations under
the Memorandum.
To the extent that Language People relies on the merger doctrine, which provides
that “prior or contemporaneous agreements between the same parties, concerning the same
subject matter, are absorbed into a subsequent agreement,” Springs Window Fashions Div., Inc.
v. Blind Maker, Inc., 184 S.W.3d 840, 869 (Tex. App.—Austin 2006, pet. granted, judgment
vacated w.r.m.), under that doctrine, the latter contract “must be between the same parties as the
first, must embrace the same subject matter, and must have been so intended by the parties,”
7
Fish v. Tandy Corp., 948 S.W.2d 886, 898-99 (Tex. App.—Fort Worth 1997, writ denied); see
Spring Windows, 184 S.W.3d at 869. As noted, Language People was not party to the later three
contracts containing the merger clauses, nor do the four contracts comprising the Agreement
conflict so that Language People’s obligations in the Memorandum may not be enforced. See
The Courage Co. v. The Chemshare Corp., 93 S.W.3d 323, 333 (Tex. App.—Houston [14th
Dist.] 2002, no pet.) (in construing multiple documents together, courts may “in appropriate
instances” construe documents as if “part of a single, unified instrument,” and later contract will
prevail “to the extent that they are inconsistent”; portions of first contract that do not conflict
with second may be enforced).
In executing the Memorandum, signatories Language People, DeafNation, and the
Barishes “acknowledge[d] and agree[d] that all of the terms contained in this [Memorandum] are
binding and enforceable” against each party. The Memorandum sets forth the essential terms of
the asset purchase and the Barishes’ employment and expressly anticipates the execution of the
Purchase Agreement and the Employment Agreements. Language People was bound to comply
with the Memorandum’s contractual provisions, which specifically describe Language People’s
obligations with regard to the Barishes and DeafNation. We overrule Language People’s
assertions that its liability was extinguished by the merger clauses contained in the three later
agreements to which it was not a party.
Sufficiency of the Evidence
Language People next contends the evidence is legally and factually insufficient
to support the jury’s findings: 1) that Language People breached the Agreement; 2) that
8
Language People committed statutory and common law fraud; and 3) that DeafNation and the
Barishes were not unjustly enriched at Language People’s expense.
“When a party attacks the legal sufficiency of an adverse finding on an issue on
which it did not have the burden of proof, it must demonstrate on appeal that no evidence
supports the adverse finding.” Graham Cent. Station, Inc. v. Peña, 442 S.W.3d 261, 263
(Tex. 2014) (per curiam). With respect to findings on issues on which the party had the burden
of proof at trial, it must “demonstrate that the evidence establishes, as a matter of law, all vital
facts in support of the issue.” Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). In
conducting our legal-sufficiency review, “we credit evidence that supports the verdict if
reasonable jurors could have done so and disregard contrary evidence unless reasonable jurors
could not have done so.” Peña, 442 S.W.3d at 263 (quoting Akin, Gump, Strauss, Hauer & Feld,
L.L.P. v. National Dev. & Research Corp., 299 S.W.3d 106, 115 (Tex. 2009)). “The final test
for legal sufficiency must always be whether the evidence at trial would enable reasonable and
fair-minded people to reach the verdict under review.” City of Keller v. Wilson, 168 S.W.3d 802,
827 (Tex. 2005). As for factual sufficiency, if the party did not have the burden of proof, it must
show that there is insufficient evidence to support the adverse finding. In re Estate of
Matthews III, 510 S.W.3d 106, 117 (Tex. App.—San Antonio 2016, pet. denied). If it had the
burden of proof, the party must demonstrate that the adverse finding is against the great weight
and preponderance of the evidence. Dow Chem., 46 S.W.3d at 242. We consider all the
evidence and will only reverse “if the evidence is so weak or if the finding is so against the great
weight and preponderance of the evidence that it is clearly wrong and unjust.” Id.
9
Sufficiency as to the Breach of Contract Claims
Language People asserts that there is no evidence to support the jury’s finding
that it breached the Agreement with DeafNation and the Barish brothers. See Peña, 442 S.W.3d
at 263. A party breaches a contract when it fails or refuses to do something it has promised to
do. Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.—Houston [14th Dist.] 2006, pet. denied).
The jury answered “yes” when asked:
Do you find that the Memorandum of Understanding, the Asset Purchase and the
Employment Agreements together constitute an [A]greement for:
(1) Language People, Inc. to purchase the assets of DeafNation, Inc;
(2) Language People, Inc. to employ Joel Barish and Jed Barish, each at
an annual salary of $100,000; and
(3) DeafNation, Inc. to transfer certain assets and properties to Language
People, Inc on agreed upon price terms?
The jury then answered “yes” when asked whether Language People had failed to comply with
the Agreement.
Language People argues that these questions must be answered in the negative
because only Enterprises was required to purchase DeafNation’s assets and employ the Barishes,
insisting that “the agreements unambiguously placed” those obligations on Enterprises, not on
Language People. However, as explained above, Language People cannot use the merger
clauses in the Purchase Agreement and Employment Agreements to relieve itself of the
obligations it undertook in the Memorandum.
Aside from its merger-clause arguments, Language People does not assert that
there is no evidence that it breached the Memorandum’s provisions that it would, among other
things, pay $300,000 in exchange for DeafNation’s assets; pay the Barishes base salaries of
10
$100,000 a year, along with “the same benefits as Executives are offered at Language People,”
for a period of at least five years; and assume DeafNation’s lease payments. The closest such
statement is an assertion in its argument against the jury’s findings of fraud that “if Appellees are
now suggesting that [Language People] did not do something [it] promised to do in the written
agreements, then there is no evidence in the record or valid finding showing [Language People]
failed to perform a promise it made in the written agreements.” However, even if Language
People had argued against the sufficiency of the evidence, on this record, we would hold that
legally and factually sufficient evidence supports the jury’s findings of breach: the Barishes
testified that they never received the salaries, benefits, or stock options promised them and that
Language People never paid the bulk of the $300,000 asset purchase price or assumed payment
of DeafNation’s lease, and financial documents and email correspondence submitted as evidence
corroborate this testimony. A reasonable juror could have determined that Language People
failed to honor its promises, and we cannot say there is “no evidence” of Language People’s
breach. See Peña, 442 S.W.3d at 263.
We overrule Language People’s challenge to the jury’s finding that it breached
the Agreement.
Sufficiency as to the Fraud Claims
We next consider Language People’s challenge to the jury’s findings that
Language People committed fraud. At trial, DeafNation and the Barish brothers argued that
Language People’s misrepresentations, including statements in the Memorandum,
fraudulently induced them to enter into the Agreement, and the jury determined that Language
People had committed statutory and common-law fraud. Under both statute and the common
11
law, a finding of fraud is predicated on the aggrieved party’s justifiable reliance on a material
misrepresentation. Allen v. Devon Energy Holdings, L.L.C., 367 S.W.3d 355, 386
(Tex. App.—Houston [1st Dist.] 2012, pet. granted, judgm’t vacated w.r.m.); see Tex. Bus. &
Com. Code § 27.01(a) (defining statutory fraud); JPMorgan Chase Bank, N.A. v. Orca Assets
G.P., 546 S.W.3d 648, 653 (Tex. 2018) (defining common-law fraud). Language People
challenges the evidence supporting this element, arguing that DeafNation and the Barishes could
not justifiably rely on any representations that Language People would purchase the
DeafNation’s assets or hire the Barishes because “the written agreements expressly and
unambiguously state that [Enterprises] (not [Language People])” would purchase the assets and
hire the brothers.
“Justifiable reliance usually presents a question of fact” unless the circumstances
establish as a matter of law that reliance could not be justified. Orca Assets, 546 S.W.3d at 654.
Language People contends that “no reasonable person could read the written agreements and
plausibly believe any alleged representations” that Language People would pay the Barishes’
salaries and benefits, purchase DeafNation’s assets for $300,000, make DeafNation’s RV
payments, or “take care of other vague, indefinite, undefined and unidentified ‘financial
obligations,’ ‘networking resources,’ or ‘resources.’”6 However, this argument relies on
Language People’s insistence that it is not liable under the Agreement—an argument we have
already decided against it. We therefore overrule Language People’s challenges related to the
jury’s findings of fraud.
6
DeafNation and the Barishes also provided evidence that Language People had promised
to continue sponsoring the Expos, to help find additional sponsors, and to assume loan payments on
the Expo RV; that they relied on those promises in entering into the Agreement; and that after the
parties executed the Agreement, Language People used DeafNation’s intellectual property without
permission, ceased paying for its Expo sponsorship, and began interfering with the Expos.
12
Sufficiency as to Language People’s Claim of Uncompensated Benefits
Language People challenges the jury’s response of “no” when asked whether
Language People had provided uncompensated benefits to the Barishes or DeafNation, an issue
on which it had the burden of proof. See Dow Chem., 46 S.W.3d at 241-42 (describing legal-
and factual-sufficiency review when party had burden of proof). Quantum meruit is an equitable
remedy based upon an implied promise to pay for beneficial services rendered by the
complaining party. Hill v. Shamoun & Norman, LLP, 544 S.W.3d 724, 732 (Tex. 2018).
The purpose of the doctrine is to “prevent a party from being unjustly enriched by retaining the
benefits of the performance without paying anything in return.” Id. (cleaned up). To recover
under quantum meruit, a plaintiff must prove that: 1) it provided valuable services or materials to
the defendant; 2) the defendant enjoyed the benefits of those services or materials; and 3) under
the circumstances, the defendant should reasonably have known the plaintiff expected payment
for those services or materials. Id. at 732-33.
Language People’s entire appellate argument on this issue reads as follows:
In response to [jury questions related to whether Language People should recover
for unjust enrichment], the jury failed to return findings that [Language People]
performed work for Appellees for which it was not compensated. The evidence
proves conclusively that [Language People] performed such work and that it had
a value of over $300,000. Alternatively, the jury finding was against the great
weight and preponderance of the evidence. The Court should therefore reverse
and render, or reverse and remand for a new trial if it does not reverse and render
that Appellees take nothing.
(Record citations omitted.)
Language People cites as support to Defense Exhibit 57, a typewritten list of
eleven Language People employees and the “amount of time spent on [DeafNation],” and to
testimony from Lisa Wrench, Language People’s chief executive. However, while Exhibit 57
13
might constitute evidence of the value of time and services expended related to the failed
merger,7 it provides no evidence of how those services inured to the benefit of DeafNation or the
Barishes. Nor does Wrench’s testimony demonstrate how these services benefitted DeafNation.
“To recover in quantum meruit, the plaintiff must show that his efforts were
undertaken for the person sought to be charged; it is not enough merely to show that his efforts
benefitted the defendant.” LTS Grp., Inc. v. Woodcrest Capital, L.L.C., 222 S.W.3d 918, 921
(Tex. App.—Dallas 2007, no pet.). “The expectation of a future business advantage or
opportunity cannot form the basis of a cause of action for quantum meruit.” Id. A fair-minded
juror could have reasonably concluded that Language People undertook the asserted efforts
primarily for its own benefit and that any services provided were of little or no value to
appellees. The evidence is legally and factually sufficient to support the jury’s finding. See
Dow Chem., 46 S.W.3d at 242. We overrule Language People’s challenge to the jury’s adverse
finding on Language People’s claim that it was entitled to compensation for work performed on
behalf of appellees.
Error in the Judgment
Finally, Language People challenges the declaratory relief awarded in the
judgment and contends the district court erred by rescinding the contract and in its calculation of
restitution damages and attorneys’ fees.
7
Exhibit 57 states that Wrench spent 50% of her time on the merger for twelve consecutive
months and, based on her salary, estimates a value of $45,000 for this work. The exhibit also lists
expenses for “interpreters,” “legal fees,” travel expenses, and “$$$ into [DeafNation],” for a total
estimated value of $338,340.00. Wrench said in reference to Exhibit 57, “These are all my hundred
thousand dollar people [sic] and they all put in all this time . . . in anticipation of we were going to
get this big contract and everything was going really well and there was going to be a lot of money.”
14
Declaratory Relief
Language People disputes the district court’s declarations that Language People
“failed to comply with the parties’ [A]greement,” “committed common law fraud,” “committed
statutory fraud with respect to the Agreement,” and “failed to pay consideration owed under the
Agreement.” See Tex. Civ. Prac. & Rem. Code § 37.004(a) (describing when declaratory relief
may be sought). Specifically, it argues that the “total lack of any valid supporting jury findings
require[s] reversal of the declarations.” We have already rejected Language People’s arguments
regarding the jury’s findings underlying these declarations, and it has not identified any other
alleged error in the declaratory relief provided by the district court. We overrule Language
People’s issues related to the district court’s granting of declaratory relief.
Rescission
Language People also challenges the district court’s rescission of the Agreement.
“Rescission is an equitable remedy that extinguishes legally valid contracts that must be set aside
because of fraud, mistake, or other reasons in order to avoid unjust enrichment.” Cantu v.
Guerra & Moore, Ltd., 328 S.W.3d 1, 8 (Tex. App.—San Antonio 2009, no pet.). Language
People argues that “the unambiguous contract terms and a total lack of any valid supporting jury
findings require reversal” of the rescission order. But as explained above, the record reflects
sufficient evidence to support the disputed jury findings. The jury returned a finding that
Language People committed fraud, and thus accepted DeafNation’s arguments regarding
fraudulent inducement of the Agreement. A fraudulently induced contract is generally voidable
by the aggrieved party. See Neese v. Lyon, 479 S.W.3d 368, 380 & n.6 (Tex. App.—Dallas
2015, no pet.) (discussing doctrine and gathering authorities). Having prevailed on the claim of
15
fraudulent inducement, DeafNation and the Barishes were entitled to seek rescission of the
Agreement, and the district court did not err in granting it.
Monetary Award
DeafNation and the Barishes elected to recover damages for rescission and
restitution for fraud rather than for breach of the Agreement. See Italian Cowboy Partners, Ltd.
v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 345 (Tex. 2011) (describing election of remedies
for party prevailing on claims of fraudulent inducement). Among other sums, the jury found that
Language People was liable to the Barishes for $111,073.20 for salaries and health insurance,
$52,695.74 as “the sums agreed to be turned over to Joel Barish and Jed Barish from the
DeafNation, Inc. bank account,” and $25,000 in unpaid Expo sponsorship fees. The district
court awarded appellees $156,797.15 in damages, and Language People contends that in making
that award, the court conflated damages caused by Language People’s non-performance under
the Agreement with restitution damages available as a remedy for fraud.
“Rescission is an equitable remedy and, as a general rule, the measure of damage
is the return of the consideration paid, together with such further special damage or expense as
may have been reasonably incurred by the party wronged on account of the contract.” Id. at 345.
“Complete and full justice is a fundamental doctrine of equity jurisprudence, and if damages, as
well as rescission, are essential to accomplish full justice, they will both be allowed.” Ginn v.
NCI Bldg. Sys., Inc., 472 S.W.3d 802, 843 (Tex. App.—Houston [1st Dist.] 2015, no pet.)
(quoting Holland v. West Bank & Tr. Co., 118 S.W. 218, 218 (Tex. App.—Austin 1909, no
writ)). “The principle that underlies the remedy of restitution is the avoidance of unjust
enrichment,” and we must ensure that the defendant does not keep benefits that in equity and
16
good conscience it should not be allowed to keep. City of Harker Heights v. Sun Meadows Land,
Ltd., 830 S.W.2d 313, 317 (Tex. App.—Austin 1992, no writ) (quoting Dan B. Dobbs, Remedies
§ 4.1, at 224 (1973)). Special damages are those foreseeable damages that are the natural result
of the defendant’s wrongful acts. See Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., 348
S.W.3d 894, 901 (Tex. 2011); Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812,
816 (Tex. 1997); Wong Grocery Co. v. Lambkin, No. 04-16-00831-CV, 2018 WL 3369955, at *8
(Tex. App.—San Antonio July 11, 2018, pet. filed) (mem. op.).
Because appellees opted for rescission, their available damages are not based on
what would have been due under the contract, but rather what would make them whole for their
reliance on the contract, restoring them to the position they would have been in had they not
entered into the contract. See Italian Cowboy, 341 S.W.3d at 345. The jury’s efforts to restore
the status quo resulted in a remedy supported by the evidence: $25,000 in unpaid Expo
sponsorship fees, $111,073.20 for the Barishes’ salaries and health insurance, and $52,695.74 for
other expenditures by the Barishes made for Enterprises’ benefit.
Joel Barish testified that before entering into the Agreement, Language People
agreed to be a Platinum Sponsor for DeafNation’s Expos. After entering into the Agreement,
however, Language People decided it was no longer obliged to make $25,000 of those payments,
related to the five events held in the second half of 2015. It apparently justified its refusal to
fulfill its preexisting obligation by pointing to the new contractual relationship between it and
DeafNation. Joel testified that despite Language People’s refusal to pay for its sponsorship of
the remaining Expos, Language People continued to be given “top sponsorship” because “[w]e
had left it to continue as normal for the public’s eye.”
17
Language People does not dispute the $25,000 sum and instead argues that
because the Agreement did not impose an obligation to pay such costs, its breach of the
Agreement did not result in the unpaid Expo fees. However, because there was evidence that
Language People justified its failure to fulfill its preexisting sponsorship agreement because of
the Agreement, which the jury determined it then breached, the evidence supports the jury’s
finding that Language People should pay as restitution damages the sponsorship fees that it
would have paid but for entering into the Agreement. The evidence thus supports the jury’s
finding that Language People should pay appellees $25,000 in unpaid Expo sponsorship fees.
Further, under the Agreement, Joel and Jed Barish were to work for Enterprises in
exchange for annual salaries of $100,000 plus insurance benefits, and the Barishes testified that
after signing the Agreement and leading up to their respective resignations, they both worked on
behalf of Enterprises. Although Joel testified that he and Jed had been paying themselves
salaries before agreeing to sell DeafNation to Language People, that fact is not relevant to our
consideration—our inquiry asks not whether they would have received salaries through
DeafNation if they had never entered into the Agreement but whether their efforts after signing
the Agreement benefitted Language People rather than DeafNation. See id. at 345-47.
In Italian Cowboy, the supreme court affirmed an award of damages for labor
expended by the plaintiff’s owner, saying, “Certainly a business owner’s time and effort have
value, and we see no reason why the trial court could not measure that value against the cost of
hiring someone else instead.” Id. at 346-47. The evidence supports a determination that the
Barishes’ work after April 2015 was to the benefit of Enterprises, and therefore to Language
People, and Language People acknowledged through the Agreement that the Barishes’ expertise
18
and efforts were worth $100,000 a year plus benefits.8 Joel testified that Language People never
paid those salaries or benefits and instead that he and his brother paid them from separate
DeafNation funds—which were supposed to be excluded from the transaction—expecting to be
reimbursed by Language People.9 Under a restitution standard, the Barishes should be
compensated for their work on behalf of Enterprises in reliance on the breached contract, and
sufficient evidence supports the jury’s award of $111,073.20 for their salaries and insurance in
that regard. See id.
Finally, Joel testified that DeafNation incurred $52,695.74 in credit-card charges
on behalf of Enterprises, including travel expenses, office expenses, Expo costs, and business-
insurance costs.10 He explained that the credit-card bills were paid from DeafNation funds, with
an unfulfilled expectation that they would be repaid by Language People. He further testified
that the DeafNation credit card was never used for personal expenses. Although the jury
question may have been inartfully drafted, Language People did not object to its wording.11 The
8
Although the Barishes may have expressed frustration or even uncertainty with their new
roles and the influence they were able to exert, both brothers testified that they were employed as
CEOs—Joel of Enterprises and Jed of a new Language People entity called LP
Communications—and both testified about their attempts to work within the new entities. Both
brothers also testified that they shifted their focus from DeafNation to Enterprises and Language
People and only “restarted” or went back to “doing business as” DeafNation after their resignations.
9
Joel was asked, “Did you ever receive any salary payments from the resources of Language
People as opposed to your own money?” He answered, “No, never.”
10
For instance, Joel testified that he was directed by Lisa Wrench to go to a rally in the
Summer of 2015 in Washington, D.C., despite his concerns about the costs. He further stated that
although Wrench told him to pay for insurance related to putting on the Expos from DeafNation
funds and that Language People would repay him, “I was never reimbursed.”
11
The question asked how much the Barishes should be awarded for “the sums agreed to
be turned over to Joel Barish and Jed Barish from the DeafNation, Inc. bank account.” Because
Language People did not object, we consider the evidence in light of the jury charge, even if it is not
entirely correct. See Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 727 (Tex. 2001); R & R Res.
Corp. v. Echelon Oil & Gas, L.L.C., No. 03-07-00636-CV, 2010 WL 5575919, at *10 (Tex.
19
jury determined that appellees were entitled to repayment of the Enterprises-related expenses set
forth on the credit-card bills that were paid from DeafNation funds, and the evidence is sufficient
to support that finding. See Southwest Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 713
(Tex. 2016) (jury generally has discretion to award damages within range of evidence).
Because sufficient evidence supports three jury determinations that together total
more than the damages awarded by the district court, we need not consider Language People’s
arguments related to DeafNation’s lease or RV payments. We overrule Language People’s
challenge to the sufficiency of the evidence supporting the damages award.
CONCLUSION
Having overruled Language People’s arguments on appeal, we affirm the district
court’s judgment.
__________________________________________
Jeff Rose, Chief Justice
Before Chief Justice Rose, Justices Kelly and Smith
Concurring and Dissenting Opinion by Justice Smith
Affirmed
Filed: October 9, 2019
App.—Austin Jan. 14, 2011, pet. denied) (mem. op.). The question can be fairly read as asking what
sums were paid from DeafNation funds for the benefit of Enterprises and Language People, aside
from salaries, insurance, lease payments, and RV payments, all of which were specifically asked
about in the charge.
20