Dominic Marrocco v. Mark Hill ( 2015 )

Appellee’s Motion for Rehearing Overruled; Appellee’s Motion for En Banc
Consideration Denied as Moot; Memorandum Opinion of August 27, 2015
Withdrawn; Reversed and Rendered and Substitute Memorandum Opinion
filed December 22, 2015.
In The
Fourteenth Court of Appeals
NO. 14-14-00137-CV
DOMINIC MARROCCO, Appellant
V.
MARK HILL, Appellee
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2010-05438
SUBSTITUTE MEMORANDUM OPINION
We overrule appellee’s motion for rehearing, deny appellee’s motion for en
banc reconsideration as moot, withdraw our opinion of August 27, 2015, and issue
this substitute memorandum opinion.
In this case involving a failed business arrangement, appellant Dominic
Marrocco appeals the trial court’s judgment on a jury verdict awarding appellee
Mark Hill damages and attorney’s fees on a quantum meruit claim. In nine issues,
Marrocco challenges the legal and factual sufficiency of the evidence supporting
each element of quantum meruit, the damages awarded, and the trial court’s award
of attorney’s fees to Hill based on affidavits submitted after trial. Concluding that
Hill presented no evidence of the reasonable value of his services or materials
furnished to support the damages award, we reverse and render a take-nothing
judgment for Marrocco.
FACTUAL BACKGROUND
Marrocco is a founder and part owner of Idesta Solutions, Ltd., a United
Kingdom company (“Idesta UK”). Idesta UK owns certain logistics software that it
commercialized in Europe, which is used in tracking and billing for members of a
mobile workforce. Idesta UK modified the software for the United States market
and attempted to market it through a U.S.-based company called “Rapid
Workforce.” That effort failed, however, and Rapid Workforce went out of
business.
The former president of Rapid Workforce introduced Hill to Marrocco. In
July 2007, Marrocco and Hill began discussing the idea of trying to modify and
sell the software Rapid Workforce developed through iDesta USA, a company to
be owned by Hill. The parties contemplated that Idesta UK would license the
Rapid Workforce software to iDesta USA and provide technical support. Hill
would provide the “sweat equity” by promoting the software to potential clients.
On November 23, 2008, Hill met with Marrocco in Las Vegas. At the
meeting, Hill presented Marrocco with a draft partnership agreement showing Hill
and Marrocco individually as the contracting parties. The document recited that
Marrocco would invest $510,000 in iDesta USA and receive fifty-one percent of its
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shares. Marrocco objected to entering into any contract in his individual capacity
and insisted that Hill revise the draft agreement to show Idesta UK as the
contracting party in place of Marrocco individually. Hill agreed to remove any
obligation for Marrocco to fund or invest in iDesta USA and any obligation by
Marrocco to be liable for Hill’s compensation.
The parties did not have time that day to revise the entire agreement to
reflect Idesta UK as the contracting party because Hill had to leave for the airport
and fly back to Texas. Marrocco nevertheless signed a signature page in a
representative capacity on behalf of Idesta UK, with the understanding that Hill
would generate a revised agreement reflecting Idesta UK as the contracting party
and attach the signed signature page to the revised version. On December 1, 2008,
Hill emailed Marrocco a revised partnership agreement showing Idesta UK as the
contracting party in the body of the document and attaching the signature page
signed by Marrocco on November 23. Hill later claimed that the signature page
was mistakenly attached to the revised version and that Marrocco never signed any
revised version of the purported partnership agreement. Hill maintained that the
operative agreement between them was the one Marrocco signed on November 23,
reflecting Marrocco individually as the contracting party. 1
Hill testified that he devoted his time to promoting the iDesta USA software,
but in early 2008 he began emailing Marrocco concerning the need for funding to
move iDesta USA forward. Idesta UK employees contacted Hill several times
offering technical support and assistance with securing funding, but Marrocco did
not provide any funding himself. Hill complained that he had brought in five
1
Although Hill maintained that his contract claim was based on the version of the
partnership agreement Marrocco signed on November 23, he acknowledged that the signature
page attached to document, which reflected that Marrocco was signing in a representative
capacity for Idesta UK, was inconsistent with the body of the document, which contemplated an
agreement between Hill and Marrocco individually.
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potential clients but was unable to reach an agreement with any of them because
Marrocco failed to provide the resources needed to get the business operations
going. On March 4, 2009, Hill emailed Marrocco asking to “unwind” the deal, and
on May 1, 2009, Hill asked Marrocco to pay him $402,706.78 to compensate him
for the work he had done and his expenses. Marrocco did not respond.
In January 2010, Hill sued Marrocco individually for breach of contract and
quantum meruit. In his petition, Hill claimed that Marrocco breached the purported
partnership agreement by failing to fund iDesta USA and pay Hill’s anticipated
executive salary, and he was seeking breach-of-contract damages of not less than
$2 million. Hill also sought quantum meruit damages for his past executive
services totaling $750,000.00. Marrocco, a U.K. citizen and Nevada resident,
answered the lawsuit subject to a special appearance. The trial court denied the
special appearance and this court affirmed the trial court’s ruling. See Marrocco v.
Hill, No. 14-10-01077-CV, 2011 WL 5009489 (Tex. App.—Houston [14th Dist.]
Oct. 20, 2011, pet. denied) (mem. op.).
Back in the trial court, a jury trial was held over the course of three days in
October 2013.2 Hill’s case primarily focused on enforcing the version of the
purported partnership agreement between Hill and Marrocco individually and
signed by Marrocco on behalf of Idesta UK (“Plaintiff’s Exhibit 2”). Plaintiff’s
Exhibit 2 recited that “Mr. Hill has performed services for [iDesta USA] since July
1, 2007” and “has received no compensation as of the date of execution” of the
agreement. Plaintiff’s Exhibit 2 also provided that as president, CEO, and
managing director of iDesta USA, Hill was entitled to a draw of $5,000.00 per
month from funds invested in the company, certain reimbursable expenses, and a
2
Both Hill and Marrocco were present at the start of trial; however, after Hill testified,
the jury was informed that Marrocco had become ill and would not return. Marrocco testified by
deposition during the defense case.
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salary of $250,000 once the company achieved a monetary milestone. It was
undisputed that no funds were invested and the milestone was never achieved.
The jury found that Hill and Marrocco did not agree to Plaintiff’s Exhibit 2,
but awarded Hill $76,873.45 on his alternative quantum meruit theory. After the
trial, Hill submitted evidence of his attorney’s fees by affidavit. On December 9,
2013, the trial court signed a final judgment awarding Hill $76,873.45, plus pre-
and post-judgment interest and attorney’s fees of $171,333.34. Marrocco filed a
motion for new trial and a motion for judgment notwithstanding the verdict, which
were overruled by operation of law.
ANALYSIS OF MARROCCO’S ISSUES
On appeal, Marrocco contends that Hill cannot recover in quantum meruit
for services Hill allegedly performed for his own start-up company. Marrocco also
challenges the legal and factual sufficiency of the evidence supporting each
element of Hill’s quantum meruit claim and the $76,873.45 the jury awarded as the
reasonable value of Hill’s services. As to the attorney’s fees awarded, Marrocco
contends that Hill waived his claim for attorney’s fees by failing to present any
evidence or request a jury question regarding attorney’s fees, and by failing to
obtain a Rule 11 agreement allowing him to submit attorney’s fees affidavits post-
trial. Finally, Marrocco contends that the evidence is legally and factually
insufficient to support the award of attorney’s fees.
A. Standard of Review
In a legal sufficiency review, we view the evidence in the light most
favorable to the verdict. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex.
2014) (per curiam). A legal sufficiency challenge will be sustained when the record
confirms either: (a) a complete absence of evidence of a vital fact, (2) the court is
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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, or (4) the evidence conclusively establishes the opposite of the vital
fact. Id. In evaluating a factual sufficiency challenge, we consider and weigh all
the evidence in a neutral light and will set aside the finding only if the evidence is
so weak or the finding is so against the great weight and preponderance of the
evidence that it is clearly wrong and unjust. See Pool v. Ford Motor Co., 715
S.W.2d 629, 635 (Tex. 1986).
B. No Evidence Supports Hill’s Recovery of $76,873.45 on his
Quantum Meruit Claim
Quantum meruit is an equitable theory of recovery based on an implied
agreement to pay for benefits received. Heldenfels Bros., Inc. v. City of Corpus
Christi, 832 S.W.2d 39, 41 (Tex. 1992). Generally, a party may recover under
quantum meruit only when there is no express contract covering the services or
materials furnished. Vortt Exploration Co., Inc. v. Chevron U.S.A., Inc., 787
S.W.2d 942, 944 (Tex. 1990). The elements of a quantum meruit claim include
proof that: (1) valuable services were rendered or materials furnished; (2) for the
person sought to be charged; (3) which services and materials were accepted by the
person sought to be charged, used and enjoyed by him; (4) under such
circumstances a reasonably notified the person sought to be charged that the
plaintiff in performing such services was expecting to be paid by the person sought
to be charged. Bashara v. Baptist Mem’l Hosp. Sys., 685 S.W.2d 307, 310 (Tex.
1985) (citing City of Ingleside v. Stewart, 554 S.W.2d 939, 943 (Tex. Civ. App.—
Corpus Christi 1977, writ ref’d n.r.e.)).
The plaintiff must also introduce evidence on the correct measure of
damages to recover on quantum meruit, which is the reasonable value of work
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performed and the materials furnished. LTS Group, Inc. v. Woodcrest Capital,
L.L.C., 222 S.W.3d 918, 920–21 (Tex. App.—Dallas 2007, no pet.); M.J. Sheridan
& Son Co., Inc. v. Seminole Pipeline Co., 731 S.W.2d 620, 624–25 (Tex. App.—
Houston [1st Dist.] 1987, no writ). Providing specific testimony about the amount
of compensation to which a party would be entitled for the services rendered
satisfies the burden to produce evidence on the correct measure of damages. Four
Points Bus., Inc. v. Rojas, No. 01-12-00413-CV, 2013 WL 4676314, at *4 (Tex.
App.—Houston [1st Dist.] Aug. 27, 2013, no pet.) (mem. op.); see Insignia Capital
Advisors, Inc. v. Stockbridge Corp., No. 08-01-00119-CV, 2002 WL 1038805, at
*2 (Tex. App.—El Paso May 23, 2002, pet. denied) (mem. op., not designated for
publication) (stating that evidence supporting the reasonable value of services may
include evidence of what others received for similar services, or opinion testimony
of witnesses who are familiar with the value of such services, including the opinion
of the person performing the service and possibly even the person benefitting).
A quantum meruit claim does not proceed on the contract for a contract
price, but proceeds independently of the contract to recover the value of the
services rendered or materials furnished. Air Conditioning, Inc. v. L.E. Travis &
Sons, Inc., 578 SW.2d 554, 556 (Tex. Civ. App.—Austin 1979, no writ). Evidence
of the anticipated benefits of a contract, without more, will not support the
recovery of damages for a quantum meruit claim. Green Garden Packaging Co.,
Inc. v. Schoenmann Produce Co., Inc., No. 01-09-00924-CV, 2010 WL 4395448,
at *7 (Tex. App.—Houston [1st Dist.] Nov. 4, 2010, no pet.) (mem. op.) (“The
only evidence offered in the trial court by Green Garden concerning its damages on
its quantum meruit claim was its anticipated profits under the HISD contract. This
amount of damages, which, if awarded, would grant Green Garden the full value of
the HISD contract, is not a proper measure of damages for a quantum meruit
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claim.”); M.J. Sheridan & Son Co., 731 S.W.2d at 625 (no evidence supported the
reasonable value of the work performed by construction contractor when
supporting calculations “represented damages for breach of contract, not for
quantum meruit”).
In his sixth issue, Marrocco contends that Hill presented no evidence or
insufficient evidence that the reasonable value of Hill’s services to Marrocco was
$76,873.45. Hill’s appellate brief contains no response to this issue. A review of
the record reveals that Hill testified that he worked to promote iDesta USA without
a salary and paid the majority of his expenses. Hill’s May 1 email to Marrocco
included a request for reimbursement of expenses totaling $6,873.45, but Hill
presented no evidence related to these expenses or their reasonableness. Further,
neither Hill nor any other witness provided any testimony whatsoever about the
reasonable value of the services Hill provided. Hill merely requested that the jury
“enforce the provisions of [Plaintiff’s Exhibit 2].” Absent any evidence of the
reasonable value of Hill’s services or materials provided, there is no evidence to
support the jury’s award of $76,871.45. See Green Garden Packaging Co., 2010
WL 4395448, at *6–7 (evidence of lost profits from anticipated contract was no
evidence of reasonable value of plaintiff’s services); Insignia Capital Advisors,
Inc., 2002 WL 1038805, at *2 (testimony that plaintiff’s efforts had some “benefit”
and some “value” to defendant was no evidence of reasonable value); M.J.
Sheridan & Son Co., 731 S.W.2d at 625 (additional costs incurred by company that
contracted to construct pipeline were no evidence of reasonable value of work
performed); Air Conditioning, Inc., 578 SW.2d at 556 (testimony that reasonable
value of mechanical painting was $10,000.00 was no evidence to support jury
award of $23,465.00).
Because Hill provided no evidence to support the award of damages, we
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sustain Marrocco’s sixth issue and do not reach Marrocco’s other issues
concerning the sufficiency of the evidence to support the elements of quantum
meruit. We reverse the trial court’s judgment and render judgment that Hill take
nothing on his quantum meruit claim. Because Hill has not prevailed on his sole
basis for an award of attorney’s fees, we also reverse the award of attorney’s fees. 3
CONCLUSION
We reverse the trial court’s judgment and render judgment that Hill take
nothing on his claim for quantum meruit and his claim for attorney’s fees.
/s/ Ken Wise
Justice
Panel consists of Justices Christopher, Donovan, and Wise.
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Attorney’s fees are recoverable under chapter 38 of the Civil Practice and Remedies
Code in quantum meruit actions. Bluelinx Corp. v. Tex. Constr. Sys., Inc., 363 S.W.3d 623, 630
n.4 (Tex. App.—Houston [14th Dist.] 2011, no pet.). To recover attorney’s fees under section
38.001, a party must: (1) prevail on a cause of action for which attorney’s fees are recoverable
and (2) recover damages. See Tex. Civ. Prac. & Rem. Code § 38.001; Green Int’l, Inc. v.
Solis, 951 S.W.2d 384, 390 (Tex. 1997).
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