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Switzer Petroleum Products, Inc. v. Siv Houa Chung ( 2002 )


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  • NO. 12-01-00339-CV



    IN THE COURT OF APPEALS



    TWELFTH COURT OF APPEALS DISTRICT

    TYLER, TEXAS



    SWITZER PETROLEUM

    PRODUCTS, INC.,

    §
    APPEAL FROM THE 173RD

    APPELLANT



    V.

    §
    JUDICIAL DISTRICT COURT OF



    SIV HOUA CHUNG,

    APPELLEE

    §
    HENDERSON COUNTY, TEXAS



    Appellant Switzer Petroleum Products, Inc. ("Switzer") appeals from an adverse judgment awarding Appellee Siv Houa Chung ("Chung") damages for breach of a merchandise consignment agreement. Switzer Petroleum raises three issues on appeal. We conditionally affirm.

    Factual and Procedural Background   (1)

    On or about April 15, 1996, Chung purchased a convenience store and entered into a merchandise consignment agreement (the "agreement") with Switzer for a term of ten years. The agreement provided that Switzer would deliver gasoline to Chung and would own the gasoline and all of the equipment associated with the sale of the gasoline, including the pumps, underground storage tanks, and the canopy over the pumps. Chung was obligated to sell the delivered gasoline at her store and to deposit the cash from each day's gasoline sales into a special bank account designated by Switzer. In exchange for allowing the gasoline to be sold on her premises and for depositing the cash from the sales, Chung would receive fifty percent of the gross profits (2) from the sale of Switzer's gasoline. Switzer agreed to send Chung a profit and loss statement at the end of each month that reflected her share of the gross profits for that month and also agreed to send a monthly income statement that showed the revenues and expenses from that month's sale of gasoline at Chung's store. Chung further agreed that in the event she ever decided to sell her business, Switzer would have the right of first refusal to purchase the property.

    In December of 1996, Chung complained to Switzer that repairs needed to be made to the canopy and pumps. In February of 1998, Chung again notified Switzer that the gas pumps were not in good operating condition and that although Switzer had made efforts to repair the pumps, those efforts were unsuccessful. In March, Chung wrote another letter to Switzer, telling him that the pumps were not in good operating condition and still needed repair.

    In September of 1998, Chi Heang Seng ("Seng"), the manager of Chung's store, learned that sellers of gasoline had to comply with certain T.N.R.C.C. standards regarding the underground storage tanks and that those tanks had to be in compliance with the new standards by December 22, 1998. Seng contacted E.W. Switzer, the owner of Switzer Petroleum Products, Inc., and told him about the new compliance standards.

    In early December, Switzer sent a crew to Chung's store to install the equipment necessary for compliance with the regulations, but the installation was unsuccessful because the equipment was not properly connected to a power source. On December 22, 1998, Seng stopped selling Switzer's gasoline because he feared that he would be levied a fine by the T.N.R.C.C. since the equipment necessary to bring the store into compliance with the regulations was not operating. On December 24, 1998, Switzer attempted to deliver gasoline to Chung's store; however, Seng refused to allow the delivery because the deadline for complying with the regulations had passed.

    Although the repairs and equipment upgrades were not completed, Switzer charged Chung $42,840.00 as "laid-in costs" for one-half of the repair and equipment upgrading required to comply with the new T.N.R.C.C. standards. The laid-in costs were applied against Chung's share of the gross profits for September, October, November and December of 1998; therefore, Chung did not receive any of the gross profits for those months.

    In January of 1999, Chung sued Switzer, claiming that Switzer breached the agreement by allowing the equipment to deteriorate and by failing to keep the equipment in compliance with T.N.R.C.C. regulations. Chung also alleged that Switzer misrepresented (1) the extent to which the equipment was out of compliance and (2) the cost of bringing the equipment into compliance. Switzer answered and asserted a counterclaim against Chung, alleging that Chung breached the agreement by refusing to allow Switzer (1) to come onto the property, (2) to bring the equipment into compliance with the T.N.R.C.C. regulations, and (3) to comply with the terms and conditions of the agreement.

    The case was tried on August 30, 2000 without a jury. Almost a year later, on August 3, 2001, the court entered a judgment awarding Chung (1) actual damages of $54,000.00, (2) termination of the agreement, (3) the removal of Switzer's equipment and fixtures from Chung's premises, and (4) post-judgment interest and costs of court. On August 15, 2001, Switzer requested findings of fact and conclusions of law. The trial court did not make any findings or conclusions. Switzer then filed a Notice of Past Due Findings of Fact and Conclusions of Law on September 7. The trial court entered its findings of fact and conclusions of law on October 19. On October 29, Switzer filed its notice of appeal.



    Findings of Fact and Conclusions of Law  

    In its first issue, Switzer argues that the trial court erred in failing to make findings of fact and conclusions of law and that such failure was harmful; therefore, the trial court's judgment should be reversed. We first note that the record reflects that the court entered its findings of fact and conclusions of law on October 19, 2001.

    Switzer filed its request for findings of fact and conclusions of law on August 15, 2001; therefore, the trial court should have filed its findings and conclusions by September 4, 2001. Tex. R. Civ. P. 297 (mandating that a trial court file its findings of fact and conclusions of law within twenty days after a timely request). When the court did not file its findings within twenty days, Switzer filed its notice of past due findings of fact and conclusions of law on September 7, 2001. Once Switzer filed its notice, the deadline for the court to file its findings and conclusions was extended to September 24, 2001. Id. (extending the time for the trial court to file findings of fact and conclusions of law to forty days from the date of the original request once the court is put on notice of the past due findings of fact and conclusions of law). The court filed its findings of fact and conclusions of law on October 19, 2001. Neither party requested that the court make additional, specific or amended findings of fact and conclusions of law. Tex. R. Civ. P. 298.

    When properly requested, a trial court has a mandatory duty to file findings of fact and conclusions of law. Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex. 1989). The trial court's failure to respond to a timely request is presumed harmful unless the record before the appellate court affirmatively shows that the complaining party has suffered no harm. Id. The test for determining harm in such a case is whether the circumstances of the particular case would force an appellant to guess the reason or reasons that the trial court ruled against it. Humphrey v. Camelot Retirement Community, 893 S.W.2d 55, 61 (Tex. App.- Corpus Christi 1994, no writ). Despite the time limits in the rules of civil procedure, nothing expressly prevents a trial court from filing its original findings and conclusions late. Robles v. Robles, 965 S.W.2d 605, 611 (Tex. App.- Houston [1st Dist.] 1998, pet. denied); Jefferson County Drainage Dist. No. 6 v. Lower Neches Valley Auth., 876 S.W.2d 940, 959-60 (Tex. App.- Beaumont 1994, writ denied). As is the case when a trial court fails to file any findings or conclusions, a late filing is not reversible error unless the complaining party shows that the error caused harm. Robles, 965 S.W.2d at 611. When the trial court's reasons for its judgment are apparent from the record, the presumption of harm is rebutted. See Guzman v. Guzman, 827 S.W.2d 445, 447 (Tex. App.- Corpus Christi 1992), writ dism'd, improv. granted, 843 S.W.2d 486 (Tex. 1992). Because the trial court filed its findings of fact and conclusions of law, albeit untimely, we consider Switzer's issue as an assertion that the late filing caused harm and is reversible error.
    Switzer contends that it was harmed because it had to guess the reasons why the court awarded damages to Chung since there was no basis for such an award in the testimony or the evidence presented to the court. We conclude that Switzer suffered no harm in the present case. Switzer did not raise an issue in its brief complaining that the untimely filing of the findings and conclusions prevented it from presenting issues on appeal. See Tex. R. App. P. 44.1(a)(2). Although the supplemental record (requested by Switzer) containing the court's findings and conclusions was filed after his brief, Switzer never requested an opportunity to file an amended brief addressing the findings and conclusions. See Tex. R. App. P. 38.7. Furthermore, Switzer challenges the legal and factual sufficiency of Chung's evidence and fully briefs those issues, apparently without the benefit of the trial court's findings of fact and conclusions of law. Switzer argues that Chung (1) failed to present to the trial court any provision of the agreement that Switzer breached, (2) did not satisfy all conditions precedent to the agreement, (3) continued to comply with the agreement and therefore waived any complaint she had regarding the agreement, and (4) materially breached the agreement. The trial court's late filing of its findings of fact and conclusions of law did not deprive Switzer of its ability to properly present its case on appeal. Switzer's first issue is overruled.



    Breach of Contract

    In its second and third issues, Switzer argues that the evidence presented at trial was legally and factually insufficient to support the trial court's conclusion that Switzer breached the agreement and caused Chung's damages. (3) Switzer also contends that the trial court should have rendered judgment in its favor on its counterclaims because the undisputed testimony at trial established that Chung breached the agreement by (1) failing to give Switzer notice of any breach, (2) refusing to sell gasoline, (3) failing to allow Switzer on Chung's property to upgrade the facilities and equipment, and (4) failing to allow Switzer the right of first refusal to purchase Chung's property. Therefore, Switzer maintains, it should be entitled to its damages under the agreement.

    Findings of fact in a case tried to the court are reviewable for legal and factual sufficiency of the evidence by the same standards as are applied in reviewing the legal and factual sufficiency of the evidence supporting a jury's findings. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). The findings of fact are not conclusive when, as here, a complete reporter's record is part of the appellate record. Tucker v. Tucker, 908 S.W.2d 530, 532 (Tex. App.- San Antonio 1995, writ denied). Therefore, we are not bound by the trial court's findings. Id.   

    Condition Precedent  

    Switzer maintains that Chung failed to give it notice of any breach; therefore, Chung failed to comply with a condition precedent under the agreement. We disagree.

    The provision in the agreement that addresses notice is found in one of the definitions of "material breach:" "(b) continuation of any circumstance or condition amounting to a breach by SWITZER for more than thirty (30) days after written notice thereof and demand to cure . . . ."

    The record reflects that on November 30, 1998, Chung's attorney sent Switzer a letter in response to Switzer's assertion that Chung was responsible for half of the upgrade costs. In the letter, Chung's counsel stated that:



    [a]ccording to the terms of the lease agreement, which you prepared, you are responsible for such expenses. The language in the lease is clear and unambiguous and your attempt to transfer the obligation for the expenses' payment is a violation of the lease.



    I have been instructed to notify you that the Dealer is giving you the required notice to cancel the lease unless you withdraw your demand that she pay the upgrade expenses.



    The agreement called for Switzer to furnish gasoline to Chung, pay her one-half of the gross profits, and maintain the equipment. This duty was absolute. Neither Switzer's duty nor Chung's right to seek damages for breach of the agreement is conditioned on notice of any kind. See Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877, 893-94 (Tex. App.- San Antonio 1996, writ denied). However, assuming, arguendo, that the notice provision was a condition precedent to Chung's recovery of damages for breach of contract, we hold that the notice Chung gave on November 30 was sufficient notice of Switzer's breach of the agreement. Switzer's argument regarding notice as a condition precedent to Chung's recovery of damages is overruled.

    Legal Sufficiency  

    In reviewing a legal sufficiency or no evidence complaint, the appellate court must consider only the evidence and inferences tending to support the challenged findings and disregard all evidence and inferences to the contrary. If there is more than a scintilla of evidence to support the challenged findings, the legal sufficiency challenge fails. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). We may only sustain a "no evidence" point when the record discloses one of the following: (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or evidence 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 mere scintilla of evidence, or (4) the evidence establishes conclusively the opposite of a vital fact. See Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). It is not within our province to second guess the factfinder unless only one inference can be drawn from the evidence. See Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 461 (Tex. 1992). If the evidence furnishes some reasonable basis for differing conclusions by reasonable minds about a vital fact's existence, more than a scintilla of evidence exists. Burroughs Wellcome v. Crye, 907 S.W.2d 497, 499 (Tex. 1995); Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983).

    The elements of breach of contract are (1) the existence of a valid contract, (2) the performance or tendered performance by the claimant, (3) a breach of the contract by the defendant, and (4) damages resulting from that breach. Southwell v. University of Incarnate Word, 974 S.W.2d 351, 354-55 (Tex. App.- San Antonio 1998, pet. denied). In the case at bar, it is undisputed that Switzer and Chung entered into a valid contract. The evidence also demonstrates that Chung performed her duties under the agreement by selling the gasoline and depositing the proceeds from the sales in a separate bank account for Switzer. Mr. Switzer testified that since the inception of the agreement, he had never encountered any problems with Chung's depositing the funds from the sale of gasoline at her store.

    Seng testified that Switzer breached the agreement by withholding Chung's share of the gross profits from the sale of gasoline. The agreement states that "Switzer shall be responsible for any expenses, not covered by insurance, related to site pollution cleanup and timely upgrading of equipment to meet T.N.R.C.C. standards as part of the laid-in cost as set forth herein." (4) Seng's testimony, along with the expense statement admitted into evidence, showed that Switzer applied Chung's share of the gross profits toward the cost of the equipment upgrade although Switzer was responsible for bearing the costs associated with the "upgrading of equipment to meet T.N.R.C.C. standards." Seng also testified that in 1996 one of Switzer's income statements for Chung showed that Switzer charged Chung $3,000.00 for "insurance expense." Seng testified that he did not know what that charge was for. When Mr. Switzer testified, he stated that the charge was for a site pollution test required by the T.N.R.C.C. and that the charge was included in Chung's income statement because he did not have any category in the statement to account for such an expense. He also admitted on cross-examination that he should not have charged Chung for the entire amount. Switzer alleged, as part of his counterclaim, that Chung breached the agreement when she decided to stop selling Switzer's gasoline. The evidence adduced at trial established that in the fall of 1998, Seng learned that the T.N.R.C.C. was requiring that all gasoline pumps be upgraded to meet certain standards and that those upgrades must be installed by December 22, 1998. (5) Seng testified that although the cathodic protection was installed, it was inoperable because it had not been connected to an electrical source. Seng also testified that none of the other upgrades had been installed by December 22. Since none of the mandated upgrades had been made by Switzer, Seng refused to sell gasoline after December 22 because he was afraid that if he did, he would be fined by the T.N.R.C.C. Switzer attempted to deliver gasoline to Chung's store on December 24, but Seng would not accept the delivery because the pumps were not in compliance with the T.N.R.C.C. standards. In a letter to Chung dated December 29, Switzer acknowledged that Chung could not sell gasoline because the upgrades had not been installed and that she should not sell gasoline until the upgrades were complete. In that letter, Switzer also told Chung that the installation of those upgrades should take place on January 6, 1999. On January 14, Switzer called Seng to tell him that Switzer was coming to install the modifications and a crew arrived later that day to complete the installation of the cathodic protection. Seng advised Switzer not to come to install the upgrades and did not allow the crew onto the property. Because Switzer did not install the upgrades before the December 22 deadline, Seng did not allow Switzer onto the property based on his attorney's advice as a result of Switzer's failure to comply with the December 22 deadline.

    A fundamental principle of contract law is that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from any obligation to perform. Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692 (Tex. 1994). The agreement defined a material breach as follows:



    (a) any act of [sic] failure to act on the part of SWITZER which renders or is calculated to render continuation of this Agreement by DEALER impossible, (b) continuation of any circumstance or condition amounting to a breach by SWITZER for more than thirty (30) days after written notice thereof and demand to cure (provided that, if such breach cannot be cured within thirty (30) days, if SWITZER immediately commences curative action and diligently prosecutes same to completion within a reasonable time, same shall not be considered a material breach), or (c) the occurrence of more than two (2) non-material breaches during any two-month period.



    Seng testified that because Switzer withheld all of Chung's profits to apply toward the cost of the upgrades, Chung was going to have to shut down her business because she could not make a profit. Switzer also failed to timely install the upgrades by the deadline prescribed by the T.N.R.C.C., which forced Chung to stop selling the gasoline because it would have been illegal for her to continue since the equipment was not in compliance. Switzer's failure to complete the upgrade by the T.N.R.C.C. deadline and its withholding of Chung's share of the gross profits rendered the continuation of the agreement by Chung impossible. Therefore, we hold that the trial court did not err in finding that Switzer materially breached the agreement and overrule Switzer's contention that there was less than a scintilla of evidence to establish that Switzer breached the agreement.

    In her pleadings and at the trial of this case, Chung sought her lost profits as damages for Switzer's breach of the agreement. To support the final element of her breach of contract claim, Chung called Don Kinney ("Kinney"), a certified public accountant, to testify to the amount of damages Chung suffered because of Switzer's breach of the agreement. Kinney testified that he had been Chung's accountant since she bought the store and that he was responsible for recording Chung's share of the gasoline profits in her accounting records. At Chung's counsel's request, Kinney prepared a statement showing the total amount Switzer paid Chung, the number of months Switzer had paid Chung her share of the gross profits, and a calculation of the average monthly share of the gross profits Chung received from the date she entered into the agreement until August 31, 1998, the day before Switzer started charging Chung for the costs of the equipment upgrades. The statement also showed that Chung had not sold gasoline for twenty months (from January 1, 1999 to August 31, 2000). Kinney testified that, in total, Chung lost $36,440.00 in gross profits from the sale of gasoline and that he reached this number by multiplying Chung's average monthly share of the gross profits by the number of months that Chung did not sell gasoline.

    The well-established rule for recovering lost profits is



       [t]he amount of the loss must be shown by competent evidence with reasonable certainty. Where the business is shown to have been already established and making a profit at the time when the contract was breached or the tort committed, such pre-existing profit, together with other facts and circumstances, may indicate with reasonable certainty the amount of profits lost. It is permissible to show the amount of business done by the plaintiff in a corresponding period of time not too remote, and the business during the time for which recovery is sought.



    Cal-Tex Lumber Co. v. Owens Handle Co., 989 S.W.2d 802, 816 (Tex. App.- Tyler 1999, no writ) (citing Southwest Battery Corp. v. Owen, 131 Tex. 423, 426-427, 115 S.W.2d 1097, 1098-1099 (1938)). The supreme court later noted that in dealing with proof of lost profits, "reasonable certainty" is intended to be flexible enough to accommodate the various circumstances in which claims for lost profits arise. See Texas Instruments v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994). At a minimum, however, opinions or estimates of lost profits must be based upon objective facts, figures, or data from which the amount of lost profits can be ascertained. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992). Recovery of lost profits must be predicated on one complete calculation. Id.  

    Kinney, who was responsible for recording Chung's share of the gross profits in her accounting records, estimated Chung's lost profits based on the objective facts and data he obtained from Chung's records of prior receipts. His calculation was objective and complete. Therefore, we disagree with Switzer's argument that Chung's evidence of lost profits was legally insufficient.

    The evidence adduced by Chung in support of each element of her breach of contract claim amounts to more than a mere scintilla of evidence; therefore, the evidence was legally sufficient to support the finding that Switzer breached the agreement and caused Chung's damages.

    Factual Sufficiency  

    When conducting a factual sufficiency review, this court must consider all of the evidence, including any evidence contrary to the verdict. Plas-Tex. Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We must reverse on the basis of factual insufficiency if the court's finding is so against the great weight and preponderance as to be manifestly unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986). Findings of fact are the exclusive province of the factfinder. Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 744 (Tex. 1986). This court is not a factfinder and may not pass on the credibility of the witnesses or substitute its judgment for that of the trier of fact, even if a different conclusion could be reached on the evidence. See Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988); Clancy v. Zale Corp., 705 S.W.2d 820, 826 (Tex. App.- Dallas 1986, writ ref'd n.r.e.). When a party without the burden of proof on an issue challenges the factual sufficiency of the evidence, the question is whether the evidence in support of the complained-of finding is insufficient. Gooch v. Am. Sling Co., 902 S.W.2d 181, 184 (Tex. App.- Fort Worth 1995, no writ). An assertion that the evidence is "insufficient" to support a fact finding means that the evidence supporting the finding is so weak or the evidence to the contrary is so overwhelming that the finding should be set aside and a new trial ordered. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965). When a party challenges the factual sufficiency of the evidence on an issue where that party has the burden of proof, the question is whether the factfinder's failure to make a finding is against the great weight and preponderance of the evidence. Gooch, 902 S.W.2d at 184.

    The evidence that can be considered contrary to the verdict in this case is the evidence adduced in support of Switzer's counterclaim: the undisputed fact that Chung would not let Switzer onto her property to deliver gasoline. Although Chung did not allow Switzer onto her property, she was justified in doing so because the evidence demonstrated that Switzer had committed material breaches of the agreement when he (1) erroneously deducted a $3,000.00 "insurance expense" from Chung's share of the gross profits, (2) erroneously deducted the cost of upgrading the equipment from Chung's share of the gross profits and (3) did not complete the required equipment upgrades. Therefore, the trial court's finding that Switzer breached the agreement was not against the great weight and preponderance of the evidence.

    We now address the factual sufficiency of Chung's evidence of lost profits to support the final element of Chung's breach of contract claim. The trial court awarded Chung damages in the amount of $54,000.00. After a thorough search of the record, the only evidence showing the amount of lost profits is Kinney's testimony and records which showed that Chung lost $36,440.00 in profits. This amount was not contested by Switzer. An award of $54,000.00 is contrary to the great weight and preponderance of the evidence; therefore, Switzer's challenge to the factual sufficiency of the trial court's damage award is sustained.

    If a court of appeals holds that there is no evidence to support a damages verdict, it should render a take nothing judgment as to that amount. Larson v. Cactus Utility Co., 730 S.W.2d 640, 641 (Tex. 1987). If part of a damage verdict lacks sufficient evidentiary support, the proper course is to suggest a remittitur of that part of the verdict. Id. The party prevailing in the trial court should be given the option of accepting the remittitur or having the case remanded. Id. If the remittitur is timely filed, the court must reform and affirm the trial court's judgment in accordance with the remittitur. Tex. R. App. P. 46.3. If the remittitur is not timely filed, the court must reverse the trial court's judgment. Id.



    Conclusion  

    We hold that Chung gave notice of Switzer's breach of the agreement and that the evidence is legally and factually sufficient to support the trial court's judgment that Switzer materially breached the agreement. We further hold that the evidence is legally sufficient to support an award of damages in this case; however, the evidence is factually insufficient to support an award of $54,000.00. If Chung remits the difference between the damages proven and the damages awarded, we will reform and affirm the trial court's judgment. If Chung fails to remit the difference within thirty days of the date of this opinion and judgment, we will reverse the trial court's judgment and





    remand the case for a new trial.

    The judgment of the trial court is conditionally affirmed.



    LOUIS B. GOHMERT, JR.   

    Chief Justice

    Opinion delivered October 2, in the Year of our Lord 2002.

    Panel consisted of Gohmert, Jr., C.J., Worthen, J., and Griffith, J.

























































      

    (DO NOT PUBLISH)

























        

    ORDER



    October 2, in the Year of our Lord 2002



    NO. 12-01-00339-CV



    SWITZER PETROLEUM PRODUCTS, INC.,

    Appellant

    V.

    SIV HOUA CHUNG,

    Appellee



      

    Appeal from the 173rd Judicial District Court

    of Henderson County, Texas. (Tr.Ct.No. 99A-029)



    THIS CAUSE came to be heard on the appellate record and briefs filed herein, and the same being inspected, it is the opinion of this Court that there was error in the judgment of the trial court below insofar as the award of $54,000.00 was excessive, and that in order to obtain an affirmance of said judgment, Appellee Siv Houa Chung must file a remittitur in the amount of $17,560.00 within 30 days from the date of this order; otherwise, the judgment of the court below will be reversed and the cause will be remanded for a new trial.

    Louis B. Gohmert, Jr., Chief Justice.

    Panel consisted of Gohmert, Jr., C.J., Worthen, J., and Griffith, J.  



    THE STATE OF TEXAS

    M A N D A T E

    TO THE 173RD JUDICIAL DISTRICT COURT OF HENDERSON COUNTY, GREETINGS:



    Before our Court of Appeals for the 12th Court of Appeals District of Texas, on the 2nd day of October, 2002, the cause upon appeal to revise or reverse your judgment between



    SWITZER PETROLEUM PRODUCTS, INC., Appellant



    NO. 12-01-00339-CV and Tr. Ct. Case Number 99A-029



    Opinion by Chief Justice Louis B. Gohmert, Jr.



    SIV HOUA CHUNG, Appellee



    was determined; and therein our said Court made its order in these words:

    THIS CAUSE came to be heard on the appellate record and briefs filed herein, and the same being inspected, it is the opinion of this Court that there was error in the judgment of the trial court below insofar as the award of $54,000.00 was excessive, and that in order to obtain an affirmance of said judgment, Appellee Siv Houa Chung must file a remittitur in the amount of $17,560.00 within 30 days from the date of this order; otherwise, the judgment of the court below will be reversed and the cause will be remanded for a new trial.



       WHEREAS, YOU ARE HEREBY COMMANDED to observe the foregoing order of said Court of Appeals for the Twelfth Court of Appeals District of Texas in this behalf, and in all things have it duly recognized, obeyed, and executed.



    WITNESS, THE HONORABLE LOUIS B. GOHMERT, JR., Chief Justice of said Court of Appeals for the Twelfth Court of Appeals District, with the Seal thereof affixed, at the City of Tyler, this the ______ day of __________________, 200_.



    CATHY S. LUSK, CLERK





    By:_______________________________

    Deputy Clerk

    1. Switzer was required to cite to the record in support of its arguments. Tex. R. App. P. 38.1(h). Although Switzer cited to the record in its Statement of Facts, it made no reference to the record in any of its arguments to the court. Such a failure constitutes waiver of the issues on appeal. See Labrador Oil Co. v. Norton Drilling Co., 1 S.W.3d 795, 802-03 (Tex. App.- Amarillo 1999, no pet.) and Barnum v. Munson, Munson, Pierce & Cardwell, P.C., 998 S.W.2d 284, 287 (Tex. App.- Dallas 1999, pet. denied). However, in the interest of justice, this court has discerned Switzer's arguments after a thorough review of its brief and the record and will address those arguments accordingly.

    2.

    The agreement defined "gross profits" as "retail price minus laid-in costs." "Laid-in costs" is defined in the agreement as "the sum of Switzer's cost of maintaining and repairing the gasoline equipment and the gross cost of the consigned product at the gross dealer tank wagon price plus personal property taxes, and oil company charges, insurance, freight costs, and equipment modifications required by the E.P.A. [Environmental Protection Agency] or the T.N.R.C.C. [Texas Natural Resource Conservation Commission]."

    3.

    In its argument in support of its second issue, Switzer generally argues that there was "insufficient evidence" of a breach and damages but does not expressly state in the issue presented whether he is challenging the legal or factual sufficiency of the evidence to support the trial court's findings. In its third issue, Switzer maintains that judgment should have been rendered in its favor because Chung admitted breaching the agreement; however, Switzer argues that the evidence was legally and factually insufficient to support the trial court's judgment. We conclude that Switzer is challenging the judgment on both legal and factual sufficiency grounds; therefore, we will address both issues. Tex. R. App. P. 38.9.

    4.

    The parties disagree over the meaning of this sentence in the contract. Switzer contends that the expenses for upgrading the equipment are included in "laid-in costs;" therefore, Chung should be responsible for half of those

    Footnote continued.

    expenses. Chung argues that Switzer is solely responsible for the costs of upgrading the equipment. However, neither party raises the issue of ambiguity on appeal. Moreover, a person seeking to establish the defense of ambiguity of a written contract must affirmatively plead it, or it is waived. See Tex. R. Civ. P. 94; Gulf & Basco Co.

    v. Buchanan, 707 S.W.2d 655, 656 (Tex. App.- Houston [1st Dist.] 1986, writ ref'd n.r.e.). Neither party pleaded that an ambiguity existed; therefore, Switzer and Chung have waived any issue regarding whether this portion of the contract is ambiguous.

    5.

    The record is unclear as to exactly what upgrades or modifications were to be made to the pumps, except that a "red jacket," a "tank overspill," and "cathodic protection" were required. "Cathodic protection" was defined as a method of protecting the underground gasoline storage tanks from corrosion.