Andrew Maes v. Abraham Quintanilla, III, and Iron Tigga, LLC ( 2015 )

NUMBER 13-13-00005-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
ANDREW MAES, Appellant,
v.
ABRAHAM QUINTANILLA, III,
AND IRON TIGGA, LLC, Appellees.
On appeal from the 319th District Court
of Nueces County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Rodriguez and Longoria
Memorandum Opinion by Chief Justice Valdez
This case involves a suit between members of a popular band known as the
“Kumbia Kings.” Alexandro (“Alex”) and Rolando (“Rolando”) Ramirez, and Andrew Maes
(“Maes”) brought suit against Abraham Quintanilla III (“Quintanilla”), and his wholly owned
company, Iron Tigga LLC, for fraud, breach of contract, and breach of fiduciary duty,
among other claims. After a bench trial, the trial court entered judgment for Alex and
Rolando—collectively, “cross appellees”—for fraud and breach of fiduciary duty, and
assessed damages of $393,266.00 for each.1 The trial court ordered that Maes take
nothing. By two issues, which we reorganize as one, Maes, the appellant, argues that
the trial court erred when it ordered that he take nothing. By four cross-issues, which we
reorganize as two, Quintanilla, the cross-appellant, contends the following: (1) the
evidence is legally and factually insufficient to establish that he (a) intended to defraud
cross appellees, (b) stood in a fiduciary relationship with them, and (c) owes them the
amount of royalties and concert revenues assessed by the trial court; and (2) the
judgment erroneously assigns liability to Quintanilla in his individual capacity for what
should have been the exclusive corporate obligation of Iron Tigga, LLC. We affirm.
I. Background2
In 1998 and 1999, Quintanilla formed a musical group with cross appellees and
Maes, among others. During their first year, the band practiced and honed their style in
Quintanilla’s living room. According to Alex, during these early practice sessions,
Quintanilla, who had already achieved success in a previous musical group, huddled the
members, including cross appellees, together and told them that after he recouped his
initial investment in the band, the rest of the earnings would be for them. According to
Alex, Quintanilla also stated that he wanted to see the band members buy nice cars and
a house. Cross appellees testified that they understood these statements as a promise
1 Because the parties to this action have referred to Alex and Rolando as “cross appellees,” we
will also refer to them as such.
2 Because this is a memorandum opinion and the parties are familiar with the facts, we will not
recite them here except as necessary to advise the parties of the Court’s decision and the basic reasons
for it. See TEX. R. APP. P. 47.4.
2
by Quintanilla to share the band’s profits. Cross appellees testified that based on
Quintanilla’s promise, they continued rehearsing and decided to forgo other opportunities.
According to Alex, during these early practice sessions, the band played no shows and
earned no income.
After a whole year of rehearsing, the band moved their act out of Quintanilla’s living
room, called themselves the Kumbia Kings, and began showcasing their music to the
public. The band also released their first studio album, Amor, Familia Y Respeto. After
playing a couple of free promotional shows, it was not long before the band began to
achieve considerable recognition, popularity, and success. The testimony showed that
concert audiences grew larger, and album sales increased. Eventually, the cross
appellees were signing autographs and performing in front of 70,000 people at the
Houston Livestock Show and Rodeo.
For cross appellees, however, the band’s success did not translate into more
money. The testimony showed that Quintanilla paid cross appellees no more than $175
per show, with a small bonus for larger shows, even though the band charged no less
than $30,000 per show. When Alex brought the matter to Quintanilla’s attention,
Quintanilla told him to “just hang in there” and not to “worry about it [.]” Quintanilla also
stated: “money [is] coming soon” and “everybody is going to be taken care of.”
In November 2000, Quintanilla formed a company, Iron Tigga LLC, and contacted
cross appellees and Maes to have each sign band member agreements. The evidence
showed that, under the terms of these agreements, each member was entitled to receive
a .05 percent royalty interest for the band’s first three albums. Cross appellees testified
that Quintanilla wrote each of them a check as an advance royalty payment. After the
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contract signing, cross appellees noticed that Quintanilla bought a new car and a new
house. Quintanilla’s business partner, Crus Martinez, also bought a new house. Cross
appellees still had not been paid. Reacting to these new purchases, Alex told himself:
“[Quintanilla and Cruz] got theirs out of the way. Now it’s going to be our turn, you know.
They can’t just keep doing that. You know, sooner or later they’re going to say, you know,
let’s give these guys some. You know, they didn’t do this by themselves.” Alex testified
that, instead of paying him and Rolando, Quintanilla “just kept going and buying cars and
more houses.”
By October 2002, approximately two years after signing the royalty agreement,
Quintanilla still had not paid cross appellees or otherwise shared in the band’s earnings.
Before a photo shoot, cross appellees decided that it was time to confront Quintanilla
about the situation. According to Alex, during this meeting, Quintanilla again made
promises of payment and stated that he did not want cross appellees to leave the band.
Cross appellees decided to give him one more chance, and as soon as they agreed to
continue performing in the band, Quintanilla quickly hurried them over to do a photo shoot.
By February 2003, cross appellees had been performing in the band for
approximately five years, but Quintanilla still had not paid them what cross appellees
claim he promised or shared in the band’s earnings. Soon after the release of the band’s
fourth album, cross appellees became frustrated with the situation and decided to quit the
band. Rolando articulated the sentiment during this time: “[F]rustrated. [We weren’t]
getting paid what we should have been paid. . . [Y]ou’re promised all these things, you’re
stuck in the same spot.”
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Quintanilla testified in his defense at trial. When asked to explain why cross
appellees were never paid their share of the band’s earnings, Quintanilla testified that he
believed they had nothing to do with the band’s success because they did not write the
songs. He acknowledged that the band eventually enjoyed financial success, but stated
that he did not pay cross appellees because they quit before the band became “wealthy.”
However, Quintanilla presented no evidence to substantiate his claim that the band’s
“wealth” came after cross appellees left in February 2003.
Wayne Coleman, cross appellees’ expert, testified about the band’s earnings
during the time that cross appellees performed in the band. After adding up the band’s
album sales and concert income for the relevant timeframe, Coleman concluded that
Alex, Rolando, and Maes were each entitled to $393,266 of the band’s earnings.
After hearing all the evidence, the trial court entered judgment against Quintanilla
and Iron Tigga LLC for fraud and breach of fiduciary duty, and assessed damages in
accordance with Coleman’s calculation. However, the trial ordered that Maes take
nothing. This appeal followed, wherein Maes appeals the take-nothing judgment and
Quintanilla and Iron Tigga LLC appeal the judgment entered in favor of cross appellees.
II. Jurisdiction
As a threshold matter, we must determine whether we have jurisdiction to consider
Quintanilla and Iron Tigga LLC’s cross appeal. See TEX. R. APP. P. 42.3(a). An untimely
notice of appeal fails to invoke our jurisdiction and requires dismissal of the appeal.
Wilkins v. Methodist Health Care Sys., 160 S.W.3d 559, 564 (Tex. 2005).
1. Pertinent Procedural History
5
On November 14, 2012, at the end of trial, the court orally pronounced its
judgment. On November 21, 2012, before the trial court had the opportunity to reduce its
judgment to writing, Quintanilla filed for bankruptcy—an action that automatically stayed
further proceedings in the trial court. See 11 U.S.C.A. § 362 (2005) (automatic stay
provision generally). Nevertheless, on November 26, 2012, the trial court signed its
written judgment. On December 26, 2012, Maes filed his notice of appeal from the trial
court’s take-nothing judgment. On February 6, 2013, at the cross appellees’ request, the
federal court in which Quintanilla’s bankruptcy petition had been filed entered an order
annulling and retroactively lifting the automatic stay “for the purpose of validating and
entering the [November 26, 2012] judgment.” Specifically, the bankruptcy court’s order
provided the following:
“[T]he automatic stay is annulled and retroactively lifted for the purpose of
validating and entering the judgment in the case, Ramirez, et al v. Iron
Tigga, LLC, et al (Case No. 07-169-G; in the 319th Judicial District Court of
Nueces County, Texas). The Final Judgment is hereby recognized and
validated and is considered entered as of November 27, 2012, the date on
which it was signed by [the trial court].”
Following the bankruptcy court’s order, on February 18, 2013, Quintanilla and Iron
Tigga LLC filed a request for written findings of fact and conclusions of law in the trial
court.3 On May 7, 2013, Quintanilla and Iron Tigga LLC filed their notice of appeal.
2. Applicable Law and Analysis
3 The trial court did not enter written findings in response to this request, but the record shows that
Quintanilla did not file a proper request for past due findings. See TEX. R. CIV. P. 297 (requiring the party
requesting past due findings to “file with the clerk and serve on all other parties in accordance with Rule
21a a “Notice of Past Due Findings of Fact and Conclusions of Law”). As cross appellees point out in their
appellate brief, Quintanilla’s request for past due findings did not comply with Rule 297. See id.
6
Cross appellees challenge the timeliness of Quintanilla and Iron Tigga LLC’s notice
of appeal in light of the bankruptcy stay. We will address cross appellees argument as to
each party separately.
a. Quintanilla
Concerning Quintanilla, cross appellees argue that his notice of appeal, filed on
May 7, 2013, was untimely. Specifically, cross appellees contend that the bankruptcy
court’s order annulling the automatic stay on February 6, 2013 turned the once-existent
stay into a nullity—“as though it never happened.” Concerning the effect of this order,
cross appellees reason that, if the stay never existed, the usual rule requiring Quintanilla
to file a notice of appeal within thirty days of the trial court’s judgment applies. See TEX.
R. APP. P. 26.1 (providing that the appealing party must file a notice of appeal within thirty
days of entry of the judgment). Because Quintanilla failed to file a notice of appeal within
thirty days of the judgment, cross appellees argue, his notice of appeal was untimely. We
disagree.
The filing of a bankruptcy petition by a debtor operates to automatically stay the
“continuation of any judicial action or proceeding against the debtor. . . .” Black v. Shor,
443 S.W.3d 170, 179 (Tex. App.—Corpus Christi 2013, no pet.) (citing the automatic stay
provision contained in 11 U.S.C.A. § 362(a)). The automatic stay deprives state courts
of jurisdiction over proceedings against the debtor. Kalb v. Feuerstein, 308 U.S. 433, 439
(1940). Any action taken against the debtor while the stay is in place is void and without
legal effect. Id.; Howell v. Thompson, 839 S.W.2d 92 (Tex. 1992) (holding that an opinion
issued after the filing of bankruptcy proceedings was void). The period to file the notice
of appeal is also stayed by the imposition of an automatic stay. In re Hoffinger Industries,
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Inc., 329 F.3d 948, 953 (8th Cir. 2003) (concluding that “the filing of the notice of appeal
in state court is one aspect of a continuation of a judicial ‘proceeding against a debtor,’
and [is] thus stayed”) (citing 11 U.S.C.A. § 362(a)).
In appropriate cases, the bankruptcy court may grant relief from an automatic stay
“by terminating, annulling, [or] modifying” it. See 11 U.S.C.A. § 362(d). Bankruptcy courts
have the power to annul an automatic stay retroactively pursuant to section 362(d) in
order to rehabilitate stay violations. In re Hoffinger Industries, Inc., 329 F.3d at 953
(holding that annulment of stay was proper in order to rehabilitate notice of appeal that
had been filed during pendency of the stay). We strictly construe an order from the
bankruptcy court affecting an automatic stay. Stephens v. Hemyari, 216 S.W.3d 526, 529
(Tex. App.—Dallas 2007, pet. denied).
If a bankruptcy court grants relief from an automatic stay pursuant to section 362(d),
parties affected by the stay are entitled to a thirty-day grace period in order to meet any
applicable deadline fixed by state law—such as filing a notice of appeal—that had not
expired before the stay was imposed. See 11 U.S.C.A. § 108(c)(2).4 This thirty-day
grace period applies when a stay is annulled by the bankruptcy court. See In re Hoffinger
Industries, Inc., 329 F.3d at 954 (implicitly recognizing that section 108(c) (2)’s thirty-day
grace period applies to annulment orders).
In this case, the bankruptcy court’s February 6, 2013 order stated the following:
“[T]he automatic stay is annulled and retroactively lifted for the purpose of
validating and entering the judgment . . . The Final Judgment is hereby
4 Section 108(c) provides: “[I]f applicable [state law] . . . fixes a period for . . . continuing a civil
action in a [state] court . . . on a claim against the debtor . . . and such period has not expired before the
date of the filing of the [bankruptcy] petition, then such period does not expire until . . . 30 days after notice
of the termination or expiration of the stay under section 362. . ., as the case may be, with respect to such
claim.” 11 U.S.C.A. § 108(c).
8
recognized and validated and is considered entered as of November 27,
2012, the date on which it was signed by [the trial court].”
(Emphasis added). Strictly construing the language of this order, see Stephens, 216
S.W.3d at 529, we note that by its very terms, the order annulled the stay “for the purpose
of” retroactively validating the trial court’s judgment—a judgment which, up until the date
of the bankruptcy order, was void and without legal effect as having been entered in
violation of the bankruptcy stay.5 See Howell, 839 S.W.2d at 92. While the annulment
order retroactively validated the void judgment, we cannot conclude, as cross appellees
argue, that the order validated the existence of an appellate deadline that had previously
been stayed by the bankruptcy filing. Given the unique procedural circumstances of this
case, we are not convinced that the language of the order can be construed as serving a
purpose to effectively deprive Quintanilla of his right to appeal from the judgment for failing
to file a notice of appeal at a time when doing so would have been in violation of the
automatic stay. We decline to read into the bankruptcy court’s order a purpose that is not
explicitly stated. See Stephens, 216 S.W.3d at 529.
Having rejected cross appellees’ interpretation of the bankruptcy court’s order, we
now turn to the question of whether Quintanilla’s notice of appeal, filed on May 7, 2013,
was timely. After the bankruptcy court annulled the stay on February 6, 2013, Quintanilla
was afforded a thirty-day grace period within which to file his notice of cross appeal under
section 108(c)(2). See In re Hoffinger Industries, Inc., 329 F.3d at 954 (recognizing that
bankruptcy debtor’s notice of appeal was filed within thirty-day grace period provided
under section 108(c)(2)); see also id. (observing that section 108(c)(2)’s thirty-day grace
5Quintanilla filed for bankruptcy on November 21, 2012, and the judgment was entered on
November 26, 2012. The bankruptcy court’s order considers the judgment entered as of November 27,
2012. While we recognize this discrepancy, it does not affect our analysis.
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period would have allowed for filing of a notice of cross appeal within thirty days after the
date of the annulment); Raley v. Lile, 861 S.W.2d 102, 104 (Tex. App.—Waco 1993, writ
denied). Because Quintanilla filed a timely request for findings of fact and conclusions of
law within thirty days of the bankruptcy court’s order, his deadline to file a timely notice of
appeal was extended from thirty days to ninety days under Texas Rule of Appellate
Procedure 26.1(a)(4). See TEX. R. APP. P. 26.1(a)(4) (extending a party’s deadline to file
notice of appeal from thirty to ninety days when a request is made for findings of fact and
conclusions of law). The record shows that Quintanilla filed his notice of appeal on May
7, 2013, which fell on the ninetieth day after the bankruptcy court entered its February 6,
2013 order. Therefore, we conclude that Quintanilla’s notice of appeal was timely.
b. Iron Tigga LLC
We now turn to cross appellees’ argument that Iron Tigga LLC’s notice of appeal—
also filed on May 7, 2013—was untimely. Cross appellees assert that Quintanilla’s
bankruptcy did not stay Iron Tigga LLC’s deadline to file a notice of appeal because
Quintanilla and Iron Tigga LLC are not equally entitled to stay protection. We agree.
Absent “unusual circumstances,” only the bankruptcy debtor is afforded stay
protection. A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986); Marroquin v.
D & N Funding, Inc., 943 S.W.2d 112, 115 (Tex. App.—Corpus Christi 1997, no writ). As
such, an automatic stay does not extend to “separate legal entities such as corporate
affiliates, partners in debtor partnerships or to codefendants in pending litigation.” Patton
v. Bearden, 8 F.3d 343, 349 (6th Cir. 1993) (internal quotations omitted). A nondebtor,
however, can demonstrate that “unusual circumstances” exist to obtain stay protection
but must establish that: (1) there is such an identity between the debtor and the nondebtor
10
that the debtor could be said to be the true defendant, and a judgment against the
nondebtor would, in effect, be a judgment or finding against the debtor; or (2) extending
the stay for the benefit of the nondebtor would contribute to the debtor's rehabilitation
efforts. Marroquin, 943 S.W.2d at 115; Brashear v. Victoria Gardens of McKinney, L.L.C.,
302 S.W.3d 542, 547 (Tex. App.—Dallas 2009, no pet.).
Here, no showing has been made that Quintanilla and Iron Tigga LLC are one and
the same, or that a judgment against Iron Tigga LLC would be, in effect, a judgment
against Quintanilla. In fact, Quintanilla and Iron Tigga LLC argue exactly the opposite in
their appellate brief, wherein they assert that the judgment is, at best, only proper as to
Iron Tigga LLC because Quintanilla is separate from that entity. Additionally, no argument
has been made that extending stay protection to Iron Tigga LLC (the nondebtor) would
have contributed to Quintanilla’s rehabilitation efforts. Having found no evidence that Iron
Tigga LLC was entitled to benefit from Quintanilla’s stay protection, we conclude that,
unlike Quintanilla, Iron Tigga LLC’s deadline to file a timely notice of appeal was not
stayed by Quintanilla’s bankruptcy. See Brashear, 302 S.W.3d at 547 (employing the
same analysis to determine whether section 108(c) applied to extend claimant’s appellate
deadlines as to her claims against nondebtor codefendants); A.H. Robins Co., 788 F.2d
at 999. We therefore lack jurisdiction to consider Iron Tigga LLC’s appeal from the trial
court’s judgment. See TEX. R. APP. P. 26.1.
3. Conclusion
We conclude that section 108(c)(2) of the Bankruptcy Code applied to give
Quintanilla thirty days from the date of the bankruptcy court’s annulment order to file his
notice of appeal. Quintanilla filed a request for findings of fact and conclusions of law
11
within that time frame, which extended his deadline to file a notice of appeal from thirty to
ninety days. Quintanilla filed his notice of appeal on the ninetieth day—on May 7, 2013—
and therefore the notice was timely. We further conclude that section 108(c)(2) did not
extend Iron Tigga LLC’s deadline to file a notice of appeal because no showing has been
made that Iron Tigga LLC was entitled to obtain stay protection under Quintanilla’s
bankruptcy. We now address the merits of Quintanilla’s challenge to the trial court’s
judgment entered against him and in favor of cross appellees.
III. Quintanilla’s Cross Issues
1. Evidentiary Sufficiency
By his first issue, Quintanilla contends the evidence was legally and factually
insufficient to establish (1) that he intended to defraud cross appellees; (2) that he stood
in a fiduciary relationship with cross appellees; and (3) that he actually owed cross
appellees the amount of royalties and concert revenues assessed by the trial court.
a. Standard of Review
In considering a legal sufficiency issue brought by the party who did not bear the
burden of proof at trial, we view the evidence in the light most favorable to the verdict,
giving credit to favorable evidence if a reasonable factfinder could, and disregarding
contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 168
S.W.3d 802, 807 (Tex. 2005). If there is more than a scintilla of evidence proving the
element of the claim, the evidence is sufficient. St. Joseph Hosp. v. Wolff, 94 S.W.3d
513, 520 (Tex. 2002). Evidence does not exceed a scintilla if it is “so weak as to do no
more than create a mere surmise or suspicion” that the fact exists. Long v. Long, 196
S.W.3d 460, 464 (Tex. App.—Dallas 2006, no pet.) (internal quotations omitted). In
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reviewing a factual sufficiency issue, we consider and weigh all of the evidence and “set
aside the verdict only if the evidence that supports the finding is so weak as to be clearly
wrong and manifestly unjust.” Id. (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986)).
b. Intent to Defraud
Quintanilla contends there was legally and factually insufficient evidence that he
intended to defraud cross appellees when he promised to share the band’s earnings,
including royalties and concert revenue. When, as here, the intent to defraud involves a
promise to do a future act, there must be evidence that Quintanilla made the promise with
the “intention, design, and purpose of deceiving, and with no intention of performing the
act.” SEECO, Inc. v. K.T. Rock, LLC, 416 S.W.3d 664, 671 (Tex. App.—Houston [14th
Dist.] 2013, pet. denied) (citing Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434
(Tex. 1986)). “Intent is a fact question uniquely within the realm of the trier of fact because
it so depends upon the credibility of the witnesses and the weight to be given to their
testimony.” Spoljaric, 708 S.W.2d at 434. We measure intent not to perform at the time
Quintanilla made the promise; however, intent may be established through subsequent
acts after the promise was made. Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d
768, 774 (Tex. 2009) (per curiam). Because evidence of intent not to perform is usually
not susceptible to direct proof, it can be proven by circumstantial evidence. Id. at 789.
Quintanilla’s failure to perform a promise, standing alone, is not evidence of his
intent not to perform when the promise was made. Spoljaric, 708 S.W.2d at 435.
However, the failure to perform is a “circumstance to be considered with other facts to
establish intent.” Id. In addition, evidence that Quintanilla denied making a promise is
another factor that bears on his lack of intent to perform when he made the promise.
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Stone v. Williams, 358 S.W.2d 151, 155 (Tex. Civ. App.—Houston 1962, writ ref'd n.r.e.).
We may also consider evidence that Quintanilla made no attempt to perform on the
promise as evidence bearing on his lack of intent. Chicago, T. & M.C. Ry. Co. v.
Titterington, 84 Tex. 218, 223–24 (1892) (observing that “subsequent utter failure and
refusal to perform the promises or assurances,” when coupled with other evidence, tends
to show lack of intent to fulfill the promise at the time the speaker made the promise).
Here, there was evidence that Quintanilla promised to share the band’s earnings
with cross appellees and that he did not do so. There was also evidence that he did not
fulfil his promise to pay royalties under the band member agreement. Although failure to
perform under the contract is not sufficient, standing alone, to support a finding of fraud,
Spoljaric, 708 S.W.2d at 435, “[Quintanilla’s] breach of the contract, when coupled with
only ‘slight circumstantial evidence [of fraud],’ will be sufficient to support a finding of
fraudulent intent.” SEECO, Inc., 416 S.W.3d at 671 (quoting Spoljaric, 708 S.W.2d at
435). We conclude that, in this case, the circumstantial evidence supporting fraud was
more than “slight,” see Spoljaric, 708 S.W.2d at 435, as the evidence showed Quintanilla
lied to cross appellees that the band played six free concerts when, in fact, “it was later
discovered that . . . Quintanilla had charged and was paid approximately $30,000 for each
of the concerts.”
Moreover, as an explanation for his nonperformance, Quintanilla testified that
cross appellees prematurely quit the band before the band became financially successful,
thus implying that he would have kept his promise had they stayed longer. However,
there was overwhelming evidence that the band enjoyed a high degree of popularity and
financial success well before cross appellees departed in 2003; the evidence showed that
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the band sold 3,700,000 albums and generated $2,880,000 in concert revenue between
2000 and 2002. Other testimony showed that, during this time, Quintanilla purchased a
new house, a new car, and received $400,000 from the record label—all while cross
appellees financially struggled to make ends meet. Thus, the trial court, as the trier of
fact and judge of witness credibility, could have reasonably considered the contradictory
nature of Quintanilla’s testimony concerning the timing of the band’s financial success as
circumstantial evidence bearing on his lack of intent to perform the promise. See id. at
434 (recognizing that intent to defraud is a fact-intensive question that depends heavily
on the credibility of the witnesses and the weight to be given to their testimony).
Furthermore, the evidence showed that Quintanilla demonstrated a consistent
pattern of deception and nonperformance throughout cross appellees’ tenure in the band.
Alex testified that, every time he approached Quintanilla about the issue of nonpayment,
Quintanilla reassured him to “just hang in there . . . money [is] coming soon.” However,
after the band generated millions of dollars in album and ticket sales, cross appellees
finally had to quit out of “frustration” that Quintanilla never paid them what he promised.
Other portions of Quintanilla’s testimony further revealed his lack of intent to
perform. Quintanilla testified that, although cross appellees were a part of the band for
approximately five years, he believed they had nothing to do with the band’s eventual
success.6 The trial court could have reasonably inferred that Quintanilla would not have
promised to share profits with members whom he believed did not contribute to the band’s
6 Quintanilla testified: “[cross appellees] tried hard, just like every other musician that’s been in my
band, but it’s—the success are the songs, the hits.” In addition to song popularly, Quintanilla attributed the
band’s success to its lead singer, stating: “I would have to say the success [of the band] is with the lead
singer, D.J. Cane. That’s who the people follow, the vocal.” Notably, Quintanilla then admitted that D.J.
Cane also sued him for “the same thing we’re going through [in this case].”
15
success unless Quintanilla’s intention from the beginning was to string them along with
the promise of “big money” in order to continue profiting off of their performances for as
long as possible. At the very least, Quintanilla’s intent not to perform was supported by
more than a scintilla of evidence. See St. Joseph Hosp., 94 S.W.3d at 520.
On appeal, Quintanilla concedes that his company, Iron Tigga LLC, entered into a
royalty agreement with cross appellees. However, he denies that he ever promised to
share in concert revenues, noting there was no testimony that he orally promised to pay
“any specific dollar figure . . . or any percentage of concert revenue.” We disagree. Alex
testified that, during the band’s early practice sessions in 1998, Quintanilla told the
members that he just wanted to break even on his investment and the rest would be for
them. Quintanilla also told the members that he wanted to see them buy cars and a nice
house. Later, when Alex approached Quintanilla about the issue of pay, Quintanilla
stated: “money [is] coming soon” and “everybody is going to be taken care of.” We also
note that Quintanilla was asked on cross examination whether he promised to share in
the “band’s wealth,” and Quintanilla responded: “And [the wealth] did come, but they
didn’t stick around for that.” Rolando also testified that Quintanilla’s promises included a
share in the band’s revenue. The testimony showed that cross appellees were paid
between $150 and $175 per concert with a generally meager and insubstantial bonus for
larger-audience shows. Thus, there was some evidence that Quintanilla’s promise
included a share of concert revenues. Finally, absent any evidence to the contrary, it
was reasonable to infer that Quintanilla’s promise implied a 1/11 share of concert revenue
based on Coleman’s testimony that the band included eleven members during the
relevant timeframe. Under the appropriate standards, we cannot agree with Quintanilla
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that the evidence was legally and factually insufficient to support a finding that his promise
to share in the profits of the band excluded concert revenue. Thus, although Quintanilla
did not deny that he promised to pay royalties, he denied making a promise to share
concert revenues—a consideration which further supports a finding that he intended to
defraud. See Stone, 358 S.W.2d at 155.
Moreover, there is some evidence that Quintanilla made an advance royalty
payment to cross appellees in November 2000. However, there is no dispute that this
one-time payment, ranging from three to seven thousand dollars, was unverified and
constituted only a fraction of the total amount owed. Based on the amount of royalties
owed under the contract, we cannot say Quintanilla made any real attempt to perform his
obligations under the contract—another consideration which supports a finding of fraud.
See SEECO, 416 S.W.3d at 671. We find that there is sufficient evidence, both legally
and factually, to support the trial court's finding that Quintanilla intended to defraud cross
appellees.7
c. Advance Royalty
Quintanilla next complains that the evidence conclusively showed that cross
appellees were awarded an extra $10,000 in royalties without any justification.
Specifically, Quintanilla argues that, when Coleman calculated royalties owed, he failed
to deduct $7,000 that Alex allegedly admitted to having received in November 2000 as
an advance royalty and $3,000 that Rolando admitted to having received. Evidence is
said to be legally insufficient when it conclusively establishes the opposite of a vital fact.
7 Our disposition of this sub-issue obviates the need to address Quintanilla’s argument related to
the sufficiency of the evidence to support the existence of a fiduciary relationship with cross appellees. See
TEX. R. APP. P. 47.1
17
King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). We cannot conclude
that cross appellees’ testimony that they each received an advance royalty payment
conclusively establishes Quintanilla’s entitlement to a deduction—i.e., the opposite of a
vital fact. Although Alex and Rolando testified that they recalled getting paid an advance
royalty in November 2000, neither could remember the exact amount. The testimony was
not conclusive. Furthermore, Coleman testified that, in calculating royalties owed, he did
not deduct payment for alleged advance royalties because none of the parties provided
any kind of verification as to the amount that was actually paid, or the payment’s source.
Thus, the trial court, in finding the royalty calculation supported by the evidence, could
have reasonably relied on Coleman’s testimony that deference to accounting principles
dictated that a deduction was inappropriate for unsupported payments. We also
conclude that the evidence supporting damages for unpaid royalties is not against the
great weight and preponderance of the evidence. Long, 196 S.W.3d at 464.
d. Concert Revenue
Quintanilla also contends that the damage award for unpaid concert revenue was
“wholly speculative” and not supported by the evidence. In presenting this no-evidence
point, Quintanilla challenges the reliability of Coleman’s expert testimony concerning his
calculation of unpaid concert revenue. Because Quintanilla failed to object to the
admissibility of Coleman’s expert testimony at trial, we must first determine whether
Quintanilla preserved his no-evidence challenge. When a reliability challenge to expert
testimony would require an appellate court to evaluate the “underlying methodology,
technique, or foundational data” used by the expert, an objection must be timely made to
the trial court in order to preserve a no-evidence challenge. Coastal Transport Co., Inc.
18
v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 233 (Tex. 2004). However, no
objection is required “when the challenge is restricted to the face of the record—for
example, when expert testimony is speculative or conclusory on its face.” Id. Thus,
whether Quintanilla preserved his no-evidence challenge depends on whether he
challenges Coleman’s testimony as conclusory on its face or as unreliable.
In his brief, Quintanilla argues that Coleman’s calculation concerning unpaid
concert revenue was speculative and based on unreliable information. He provides the
following support for this assertion: (1) Coleman relied on a potentially unreliable factual
source, Paul Benavides, who, Quintanilla argues, had no actual knowledge of how many
concerts cross appellees performed in the band, or how much the band charged per
concert; and (2) Coleman never explained his basis for assuming that Quintanilla
promised to pay cross appellees a 1/11 share of concert revenues, less a management
fee.
In order to properly evaluate Quintanilla’s complaint, we would be required to
investigate the foundational data and methodology employed by Coleman to arrive at his
conclusion. For example, we would be required to investigate Benavides’ basis for
knowing that the band played seventy-eight concerts between 2000 and 2002, with fees
ranging from $30,000 to $60,000 per concert. We would also be required to determine
whether the band included eleven band members during the time that cross appellees
performed in the band and whether it is an accepted practice in the music industry to allot
each band member an equal share of concert revenues in the absence of a specific
agreement to the contrary. We find that this analysis would require us to explore the
“methodology, technique, or foundational data” underlying Coleman’s expert testimony.
19
Id. Because Quintanilla failed to object at trial, we decline to undertake the analysis for
the first time on appeal. Id. Thus, we conclude that Quintanilla waived his complaint that
Coleman’s testimony provided “no evidence” of unpaid concert revenues. Id.
Although Quintanilla has failed to preserve his no-evidence point by failing to object
at trial, to the extent that he confines his challenge to the face of the record, we find that
Coleman’s testimony was not speculative or conclusory. See id. (observing that “when
the challenge is restricted to the face of the record—for example, when expert testimony
is speculative or conclusory on its face—then a party may challenge the legal sufficiency
of the evidence even in the absence of any objection to its admissibility”). Damages need
only be proved with reasonable certainty—that is, damages must be “ascertainable in
some manner other than by mere speculation or conjecture, and by reference to some
fairly definite standard, established experience, or direct inference from known facts.”
Berry Contracting, Inc. v. Coastal States Petrochemical Co., 635 S.W.2d 759, 761 (Tex.
App—Corpus Christi 1982, writ ref'd n.r.e.).
Quintanilla argues on appeal that Coleman incorrectly calculated concert revenues
by relying on unreliable information supplied by Benavides and also by assuming the
existence of an agreement to share concert revenues without any proof that such an
agreement existed. However, the evidence showed that Benavides did have personal
knowledge about the band’s concert activity. For example, Rolando testified that
Benavides had “always been around most of the time,” he toured with the band “a couple
of times,” he worked with Cruz, who was Quintanilla’s close business partner in the band,
and he had knowledge of matters concerning the band about which Rolando was not
privy. Furthermore, Benavides, in his affidavit that was admitted into evidence, stated
20
that he had “personal knowledge” of the fact that the band charged $30,000 per concert
in 2000 and played a total of fifteen paid concerts in that year; charged $30,000 per
concert in 2001 and played a total of thirty concerts in that year; and charged $45,000 per
concert in 2002 and played a total of thirty concerts in that year. Benavides also had
personal knowledge that the band charged between $60,000 and $80,000 for each of
three concerts at the Houston Rodeo Show. Coleman, relying on these figures,
determined that concert revenue from 2000 to 2002 totaled $2,880,000.8 Coleman also
testified that, as a standard practice in the music industry, band managers were usually
entitled to receive 15% of the gross concert income as part of their compensation. After
accounting for this deduction, Coleman determined that the band brought in an adjusted
gross income of $2,448,000 between 2000 and 2002. Coleman then divided this figure
by eleven, based on the number of members in the band during the relevant timeframe.
Based on these facts, Coleman concluded that cross appellees were each entitled to
$222,545 in unpaid concert revenue. 9 In view of the forgoing, we cannot conclude that
there is no basis for Coleman’s calculation concerning concert revenues. See City of San
Antonio v. Pollock, 284 S.W.3d 809, 818 (Tex. 2009). The damage awarded for unpaid
8 We also note that although Quintanilla denied the accuracy of these figures, he presented no
witnesses or other evidence to controvert this evidence; instead, he testified that the documents he needed
in order to rebut cross appellees’ evidence concerning damages were “stolen” or had “disappeared.”
Recovery cannot be denied simply because the exact amount of damages cannot be ascertained. Vance
v. My Apt. Steak H. of San Antonio, Inc., 677 S.W.2d 480, 484 (Tex. 1984) (observing that “[i]f an injured
party has produced the best evidence available, and if it is sufficient to afford a reasonable basis for
determining his loss, he is not to be denied a recovery because the exact amount of the damage is
incapable of ascertainment”); O and B Farms, Inc. v. Black, 300 S.W.3d 418, 422 (Tex. App.—Hous. [14th
Dist.] 2009, pet. denied) (rejecting defendants’ argument that the damage award was speculative, even
though the amount of damages could not be calculated precisely because certain documents no longer
existed).
9 Quintanilla also challenges the inclusion of unpaid concert revenues in the damage assessment
on the ground that no evidence supported a finding that Quintanilla promised to pay cross appellees a share
of concert income. However, we have already concluded that Quintanilla’s representations included the
promise of shared concert revenues.
21
concert revenue was legally sufficient and not against the great weight and
preponderance of the evidence. Long, 196 S.W.3d at 464; City of Keller, 168 S.W.3d at
807. We therefore overrule Quintanilla’s first issue.
2. Personal Liability
By his second issue, Quintanilla contends he cannot be held personally liable for
fraud in his individual capacity because he acted as an agent for Iron Tigga, LLC—a
company wholly owned by him. However, it is well established that corporate agents can
be liable in their individual capacity for fraudulent or tortious acts committed while serving
their corporation. Kingston v. Helm, 82 S.W.3d 755, 758–59 (Tex. App.—Corpus Christi
2002, pet. denied); Miller v. Keyser, 90 S.W.3d 712, 717 (Tex. 2002) (“[A] corporate agent
is personally liable for his own fraudulent or tortious acts”). Because sufficient evidence
supports a finding that Quintanilla defrauded cross appellees, he may be held liable in his
individual capacity. Furthermore, the evidence showed that Quintanilla’s fraud was
independent and apart from any activity of Iron Tigga, LLC, as Alex testified that
Quintanilla’s false promises began during the band’s early practice sessions, in 1998 and
1999, and there is no indication that Iron Tigga, LLC existed at that time. Finally, Alex
testified that Quintanilla never qualified his false promises by stating that only Iron Tigga,
LLC was obligated to fulfill Quintanilla’s promises. Therefore, we overrule Quintanilla’s
second issue.
IV. Maes’ Issue
By two issues, which we recognize as one, Maes challenges the legal and factual
sufficiency of the evidence to support the trial court’s rejection of his fraud claim against
Quintanilla.
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1. Standard of Review
When, as here, the party with the burden of proof at trial brings a legal sufficiency
issue complaining of an adverse finding, the party must show that the evidence
conclusively establishes all vital facts in support of the finding sought by the party. Dow
Chemical Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001); Sterner v. Marathon Oil Co.,
767 S.W.2d 686, 690 (Tex. 1989). We first examine the record for evidence supporting
the adverse finding and ignore all evidence to the contrary. Dow Chem. Co., 46 S.W.3d
at 241; Sterner, 767 S.W.2d at 690. If no evidence supports the finding, we then examine
the entire record to determine if the contrary proposition is established as a matter of law.
Id. Evidence is conclusive “only if reasonable people could not differ in their conclusions,
a matter that depends on the facts of each case.” City of Keller, 168 S.W.3d at 816.
“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.” Id. at 827.
When a party with the burden of proof complains that an adverse finding is factually
insufficient, the party must demonstrate that the adverse finding is contrary to the great
weight and preponderance of the evidence. Dow Chemical, 46 S.W.3d at 242. We weigh
all the evidence, and can set aside a verdict “only 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. at 241.
2. Applicable Law and Analysis
To prevail on his fraud claim, Maes had the burden to prove that: (1) Quintanilla
made a material misrepresentation; (2) Quintanilla knew the representation was false or
made the representation recklessly without any knowledge of its truth; (3) Quintanilla
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made the representation with the intent that Maes would act on that representation or
intended to induce Maes’ reliance on the representation; and (4) Maes actually and
justifiably relied on the representation and suffered injury. Exxon Corp. v. Emerald Oil &
Gas Co., L.C., 348 S.W.3d 194, 217 (Tex. 2011).
Our analysis focuses on the fourth element—reliance. In rejecting Maes’ fraud
claim, the trial court implicitly found that Maes, the plaintiff, failed to carry his burden of
demonstrating that he actually and justifiably relied on Quintanilla’s promises.10 We must
first determine whether some evidence in the record supports the trial court’s finding that
Maes did not rely, while ignoring all evidence to the contrary. Dow Chem. Co., 46 S.W.3d
at 241. After carefully reviewing the record, we find no evidence that Maes did not rely
on Quintanilla’s promises. Thus, under the appropriate standard, we must examine the
entire record to determine whether evidence of Maes’ reliance was conclusively
established as a matter of law. Id.
Maes argues that, because Quintanilla made the promises to all three plaintiffs,
the trial court could not find the reliance element met as to Alex and Rolando without also
finding the same element met as to him. We disagree. The fact that Quintanilla made
promises to all three plaintiffs does not conclusively establish that each plaintiff acted in
reliance thereon. In other words, while Alex and Rolando unequivocally testified that they
continued performing for the band in reliance on Quintanilla’s promises, the evidence was
not conclusive that Maes continued performing for the same reason. It is quite possible
that Maes continued performing for reasons that had nothing to do with the expectation
that Quintanilla would keep his promise. For example, Maes may have been motivated
10 The trial court did not enter findings of fact and conclusions of law.
24
to continue performing for a myriad of reasons, including celebrity status, popularity,
increased exposure, or creative freedom. Furthermore, Maes did not appear for trial,
and the trial court heard no direct testimony concerning his reliance. We therefore cannot
conclude that the evidence conclusively establishes Maes’ reliance. See City of Keller,
168 S.W.3d at 816 (observing that evidence is conclusive “only if reasonable people could
not differ in their conclusions, a matter that depends on the facts of each case”); see also
id. at 827 (recognizing that “[t]he 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”).
In reaching this conclusion, we are not blind to the fact that some circumstantial
evidence supports a contrary proposition—i.e., that Maes did rely on Quintanilla’s
promises. See Dow Chem. Co., 46 S.W.3d at 241 (directing that the reviewing court must
examine the entire record to determine if the contrary proposition is established as a
matter of law). For example, Alex testified that he believed Maes relied on Quintanilla’s
promises; however, Alex did not explain the basis of his belief, and the trial court, as the
trier of fact, could have reasonably concluded that Alex was speculating. See Horner v.
Heather, 397 S.W.3d 321, 325 (Tex. App.—Tyler 2013, reh'g overruled) (noting that “the
trial court, as the trier of fact, is the sole judge of the credibility of the witnesses and the
weight to be given their testimony”). Also, Quintanilla, during cross examination,
acknowledged that Maes would have been entitled to trust him and rely on his statements;
however, Quintanilla never testified that Maes did rely on any promise he made in
connection with this case. The evidence also showed that Maes continued to perform
for the band after Quintnailla’s promises; however, as previously noted, this fact, standing
25
alone, does not conclusively establish that he continued to perform for the band with the
expectation that Quintanilla would keep his promises.
Viewing the evidence in the light most favorable to the trial court's implicit findings,
crediting favorable evidence if a reasonable fact-finder could and disregarding contrary
evidence unless a reasonable fact-finder could not, we conclude that the evidence did not
conclusively establish every element of Maes’ fraud claim. See Dow Chem. Co., 46
S.W.3d at 242. Furthermore, after considering and weighing all of the evidence, we
cannot conclude that the trial court's findings are against the great weight and
preponderance of the evidence. See id. Thus, the evidence was legally and factually
sufficient to support the trial court's adverse finding as to Maes. We overrule his sole
issue.
V. Conclusion
We affirm the judgment of the trial court.
/s/ Rogelio Valdez
ROGELIO VALDEZ
Chief Justice
Delivered and filed the
30th day of April, 2015.
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