City of McAllen v. Dahlila Guerra Casso ( 2013 )

NUMBER 13-11-00749-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
CITY OF MCALLEN, Appellant,
v.
DAHLILA GUERRA CASSO, Appellee.
On appeal from the 92nd District Court
of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Rodriguez and Garza
Memorandum Opinion by Justice Garza
A Hidalgo County jury found appellant, the City of McAllen (the “City”), liable for
breach of contract and fraud in a lawsuit filed by appellee, Dahlila Guerra Casso. The
City was ordered to pay over $440,000 in damages and $150,000 in attorney’s fees,
and it was ordered to specifically perform its duties under the contract at issue. On
appeal, the City contends by twelve issues that the trial court erred in rendering
judgment on the jury’s verdict. We will affirm the judgment as modified.
I. BACKGROUND
Casso was appointed by the City in 1990 to be the presiding judge of its
municipal court. In 1991, she was diagnosed with systemic lupus erythematosus
(“Lupus”), an autoimmune disorder with no known cure. Casso was reappointed as
municipal judge several times, but decided to resign in 1999. At that time, she informed
the City that she believed her health condition had been aggravated by unsanitary
conditions at the building in which she worked. She indicated to City officials that she
would be amenable to releasing whatever claims she had against the City in exchange
for, among other things, continued health insurance coverage. Accordingly, Casso
negotiated an agreement with the City in which she promised to release the City “from
any type of claim, demand, and cause of action whatsoever arising out of her
employment or that could have been brought by her, relating to her employment or her
separation . . . .” The agreement further stated, in relevant part, as follows:
1. CONSIDERATION
In consideration for the promise made by Casso in this Agreement, the
City agrees to the following payments and/or benefits referred herein as
“Consideration”: a lump sum payment equal to Fifty Thousand Dollars
($50,000.00) plus an amount equal to the City’s total contributions to
Casso’s [Texas Municipal Retirement System] account as of the date of
the execution of this Agreement. In addition, the City will continue to pay
Casso’s health insurance premiums for Health Insurance coverage with
The City of McAllen throughout the period of time from the date of the
execution of this Agreement through June 2002.
....
2
5. NATURE OF CONSIDERATION
Casso understands and acknowledges that the settlement payments
hereunder are for the alleged mental anguish and physical sickness she
has claimed, associated with the aggravation of her physical disability,
Lupus. Casso understands that the City denies the claims she has
asserted.
....
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement, covenant, and
consideration between the parties. There was no reliance upon any other
representation, statement, consideration, covenant, promise, or
agreement not contained in the Agreement for the covenant made in these
documents.
17. REPRESENTATIONS BY CASSO
In return for the Consideration, Casso represents the following to the City:
(1) I am legally competent to execute this Agreement; (2) in making this
settlement and with respect to the Agreement, I have had the benefit of
advise [sic] of counsel chosen by me; (3) no promise or representation of
any kind has been made to me by the City, or by anyone acting for the
City, except as is expressly stated in the Agreement; . . . (7) I understand
that the Agreement represents and contains the entire agreement
between the parties hereto . . . .
Casso, acting on her own behalf and without independent legal counsel, executed the
release agreement along with the City’s attorney on April 12, 1999.
In accordance with the agreement, the City paid Casso $128,000,1 and it paid
her health insurance premiums until June 1, 2002. At that time, Casso began making
the monthly premium payments. The City believed, however, that it was not obligated
under the agreement to keep Casso enrolled indefinitely on its insurance plan, even if
Casso continued to make the premium payments. Instead, the City believed that Casso
1
This sum included the $50,000 lump sum and $78,000 representing the City’s contributions to
Casso’s retirement account.
3
would be eligible for 18 months of post-employment health insurance coverage through
COBRA, beginning in June 2002.2 In 2001, the City sent Casso a form entitled
“Enrollment/Change/Cancellation Form” and it asked that Casso sign it. Casso testified:
I was asked to come by the insurance department and talk to Becky and
another young lady that were there. I was told that I needed to sign that
form. And I was—I said, why. And I joked with them about never signing
a form that was blank. But I was told that was so that they could enroll me
on the new—I think they went from TML [Texas Municipal League] to
TASB [Texas Association of School Boards] or—there had been a change
in their third party—in their carrier or whatever they were called.[3] And it
seemed innocent enough to me. And then I did read the portion where I
signed and even that was an innocent—I joked with them. I said you want
me to sign so they can take money from my payroll—from my paycheck
but I wasn’t getting a paycheck from the City. So it really—you know, if I
was going to continue my insurance it didn’t make a difference to me
whether I signed that or not. It had—in my opinion it had no value. They
were asking me to sign something just so they could continue to process
my insurance and keep me current. And they had me sign something that
says I authorize the City of McAllen to take money from my paycheck or to
make a payroll deduction.
Casso signed the blank form on a signature line underneath the following statement: “I
authorize my employer to make the appropriate payroll deductions as a result of this
enrollment and/or change.” The City then forwarded the form to TASB, its third-party
claims administrator, along with a letter from Rebecca Ramirez, the City’s benefits
coordinator, explaining that Casso was enrolling in COBRA health insurance coverage.
The letter, which was admitted into evidence at trial, claimed that Casso is “eligible for
C[OBRA] benefits effective July 1, 2002 through December 31, 2003.” The form, as
2
“COBRA” refers to the Consolidated Omnibus Budget Reconciliation Act of 1985. See 42
U.S.C. §§ 300bb-1–300bb-8. Section 300bb-1(a) of COBRA applies to health insurance plans
maintained by state and local governmental units. Id. § 300bb-1(a). It requires that such plans permit
employees who lose coverage as a result of a “qualifying event,” such as termination of employment, to
elect to continue coverage for up to 18 months following the “qualifying event.” Id.
3
The evidence showed that the health insurance plan at issue was maintained by the City itself
and that there was no separate insurance “carrier.” The City did, however, use third-party
administrators—including, at various times, TML and TASB—to process claims under the plan.
4
sent to TASB, had the words “Cobra Coverage” handwritten on a line next to the words
“Qualifying Event.” Casso stated that she did not intend for the form to be used to enroll
her in COBRA, because she believed she was still entitled, under the agreement, to be
covered by the City’s insurance plan as long as she paid the premiums.4
Despite the fact that Casso continued to make the premium payments, the City
terminated her health insurance coverage at the end of December 2003. Casso later
sued the City, claiming that the City was obligated under the release agreement to keep
her on its health insurance plan until she turned 65, at which point she would be eligible
for Medicare. The trial court initially granted a plea to the jurisdiction in favor of the City,
but we reversed. Casso v. City of McAllen, No. 13-08-00618-CV, 2009 Tex. App.
LEXIS 2049, at *22–23 (Tex. App.—Corpus Christi 2009, pet. denied) (mem. op.)
(holding that “the City was performing a proprietary function in providing Casso with
health insurance coverage; therefore, the City is not entitled to governmental
immunity”).
At trial, Casso testified that, after the City terminated her coverage, she applied
for health insurance through the State Bar of Texas but was denied. She also made
several other unsuccessful attempts to obtain health insurance coverage. Casso stated
4
Eventually, Casso learned that she was ineligible for COBRA coverage as of June 1, 2002,
because more than 18 months had passed since the applicable “qualifying event”—i.e., the termination of
her employment. See id. § 300bb-2(2)(A)(i) (stating that, where the “qualifying event” is termination of
employment or reduced hours, the “maximum required period” of continued coverage is “the date which is
18 months after the date of the qualifying event”); § 300bb-3 (stating that a “qualifying event” means “any
of the following events which, but for the continuation coverage required under this subchapter, would
result in the loss of coverage of a qualified beneficiary: (1) The death of the covered employee[;] (2) The
termination (other than by reason of such employee’s gross misconduct), or reduction of hours, of the
covered employee’s employment[;] (3) The divorce or legal separation of the covered employee from the
employee’s spouse[;] (4) The covered employee becoming entitled to benefits under title XVIII of the
Social Security Act[;] (5) A dependent child ceasing to be a dependent child under the generally
applicable requirements of the plan.”). The City’s staff was mistaken in its belief that, under COBRA, the
“qualifying event” was the termination of Casso’s fully-paid health insurance coverage on June 1, 2002.
See id. § 300bb-3.
5
that she has gone without health insurance coverage since December 2003. She
identified evidence of several large medical bills she paid out-of-pocket since then.
Casso conceded on cross-examination that, if a City employee resigns, he or she
would not ordinarily be entitled to continued health insurance coverage beyond access
to COBRA. She also stated that she specifically negotiated certain terms of the
settlement agreement. In particular, Casso demanded that the agreement state that
she resigned her position and was not terminated; she demanded that the agreement
state that the compensation was for “aggravation” of her Lupus condition; and she
demanded that the agreement make no reference to her potential COBRA eligibility.
Casso agreed with the City’s counsel that the City had complied with the release
agreement’s express requirements that it (1) pay her $50,000, (2) pay her an amount
equal to the contributions made by the City to her retirement account, and (3) pay her
health insurance premiums up until June 2002. Casso argued, however, that the
agreement contained an additional implied term—namely, that the City was required to
maintain her eligibility to buy into the health insurance plan until such time as she
became eligible for Medicare—which the City violated by unilaterally terminating her
coverage at the end of December 2003.
Casso’s theory was that the agreement was ambiguous because, while it
specified the date upon which the City would stop paying her insurance premiums, it did
not specify the date upon which her ability to buy into the plan—that is, her ability to
maintain enrollment in the plan while paying her own premiums—would be terminated.
Casso urged that the ambiguity could be resolved by considering the circumstances
surrounding the formation of the agreement; in particular, she noted that, at the time of
6
the agreement, the City was fully aware of her medical condition and her need for
continuous health insurance coverage.
Casso also argued that the ambiguity could be resolved by referring to the City’s
2003 “Employee Benefit Plan” (the “Plan”). The Plan, which was entered into evidence,
defines four different categories of “participant”: (1) a regular full-time employee; (2) a
spouse or child of a participant; (3) a retired employee “who meets the requirements set
forth in this Plan”5; or (4) a COBRA participant. Casso reasoned that, because she was
no longer a full-time employee and because COBRA is legally available for only 18
months post-employment, she must have been covered as a “retiree” participant from
1999 until December 2003. She further claimed that, under the terms of the plan, a
“retiree” is entitled to buy in to coverage until the time he or she turns 65 years old and
becomes eligible for Medicare. She argued that the City breached the agreement by
terminating her access to coverage prior to age 65.
The City contended that the agreement was unambiguous and it filed a motion in
limine seeking to exclude, among other things, extraneous evidence regarding the
terms of the agreement. The City also filed a motion to exclude any evidence of an oral
agreement on parol evidence grounds. The trial court denied the motions, thereby
implicitly concluding as a matter of law that the agreement was ambiguous. See Anglo-
Dutch Petroleum Int’l, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 445, 451 (Tex. 2011)
5
The Plan defines a retiree “participant” as “[a] person who is an Eligible SB 404 Retiree of the
City who has: 1) 28 years of service, or 2) 25 years of service and age 50, or 3) 10 years of service and
age 60.” “Eligible SB 404 Retiree” apparently refers to Texas Local Government Code chapter 175,
which was originally enacted as Senate Bill 404. See Act of June 15, 1993, 73rd Leg., R.S., ch. 663, § 1,
1993 TEX. SESS. LAW . SERV. 2462, 2463–64 (amended 1995, 2009) (current version at TEX. LOC. GOV’T
CODE ANN. §§ 175.001–.007 (West Supp. 2011)). That chapter provides, among other things, that a
person who retires from a municipality with a population of 25,000 or more and is “entitled to receive
retirement benefits from a . . . municipal retirement plan” is entitled to purchase continued health
insurance coverage from the municipality. See TEX. LOC. GOV’T CODE ANN. §§ 175.001–.002.
7
(“Only where a contract is ambiguous may a court consider the parties’ interpretation
and ‘admit extraneous evidence to determine the true meaning of the instrument.’”)
(quoting David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450–51 (Tex. 2008) (per
curiam)).
After trial, the jury found that the City agreed to treat Casso as a “retiree” under
the City’s health plan and that the City failed to comply with that agreement. The jury
awarded damages as follows: $38,523.43 for medical costs incurred by Casso between
January 1, 2004 and the time of trial; $150,000 for medical costs incurred on or after
January 1, 2004 which the City’s insurance plan would have paid; $126,000 in past net
profits; and $126,000 in future net profits. The jury further found that the City committed
fraud against Casso and awarded an additional $126,000 in damages representing
future net profits.6 Casso filed a “Motion to Sign Judgment” in accordance with the
verdict. The trial court granted the motion and rendered final judgment awarding Casso
$440,523.43 in actual damages, $8,705.20 in court costs, $150,000 in attorney’s fees,
and pre- and post-judgment interest.7 The final judgment further stated:
[T]his Court also enters judgment on the equitable remedy of specific
performance and [the City] is hereby ordered to enroll [Casso] on its
current health insurance plan as a “Retiree Participant” within three (3)
6
A majority of the jury also found fraud by clear and convincing evidence and awarded Casso
$300,000 in exemplary damages. However, that finding was not unanimous and so judgment was not
rendered thereon. See TEX. CIV. PRAC. & REM. CODE ANN. § 41.003(e) (West Supp. 2011).
Moreover, the $126,000 in future net profits awarded as fraud damages was not included in the
final judgment, presumably because $126,000 in future net profits damages had already been awarded
pursuant to the breach of contract finding. This is despite the fact that the jury was instructed in the
damages questions as follows: “You shall not award any sum of money on any element if you have
otherwise, under some other element, awarded a sum of money for the same loss. That is, do not
compensate twice for the same loss, if any.”
7
Pre-judgment interest was awarded only on “$314,523.43 in past damages.” This amount
includes all of the damages awarded except those attributable to future net profits. Post-judgment
interest was awarded on the entire amount of damages, plus all fees, costs, and pre-judgment interest
awarded in the judgment, amounting to $659,460.38.
8
days of the date of this Judgment and [Casso] is ordered to pay monthly
premiums of $245 beginning the first day of the month following the date
of this Judgment. [Casso] shall remain on [the City]’s health insurance
Plan as a “Retiree Participant” until the earlier of the following dates: (a)
the date of [Casso]’s death; (b) the last day of the month in which [Casso]
turns 65; or (c) the last day of the month in which [Casso] fails to pay the
$245 monthly premium.
The City filed a motion for new trial as well as a motion to modify, correct, or
reform the judgment, both of which were overruled by operation of law. See TEX. R. CIV.
P. 329b(c). This appeal followed.
II. DISCUSSION
A. Breach of Contract Claim
By its first issue, the City contends that there was legally and factually insufficient
evidence to support the jury’s finding that it agreed to treat Casso as a “retiree” for
purposes of her post-employment health insurance coverage. By its second issue, the
City urges that there was legally and factually insufficient evidence to support the finding
that the City breached its obligations under any such agreement.
1. Standard of Review and Applicable Law
In evaluating the legal sufficiency of the evidence supporting a verdict, we
consider the evidence in the light most favorable to the verdict and indulge every
reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802,
822 (Tex. 2005). We will sustain a legal sufficiency challenge only if: (1) there is a
complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of
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 establishes conclusively the opposite of the vital fact. Id. at 810. In reviewing
9
factual sufficiency, we consider all the evidence in a neutral light and will set aside the
judgment only if it is so contrary to the overwhelming weight of the evidence as to be
clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).
Our primary concern when construing a written contract is to ascertain the true
intentions of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d
391, 393 (Tex. 1983); Heil Co. v. Polar Corp., 191 S.W.3d 805, 810 (Tex. App.—Fort
Worth 2006, pet. denied). If the language of a contract can be given a certain and
definite meaning, it is not ambiguous and the contract’s construction is a matter for the
court. Milner v. Milner, 361 S.W.3d 615, 619 (Tex. 2012) (citing Chrysler Ins. Co. v.
Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248, 252 (Tex. 2009) (per curiam)).
On the other hand, if the agreement is susceptible to more than one reasonable
interpretation, the agreement is ambiguous, creating a fact issue on the parties’ intent.
Id. (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003)). An
unambiguous contract will be enforced as written, and parol evidence cannot be
received for the purpose of creating an ambiguity or to give the contract a meaning
different from that which its language imports. Anglo-Dutch Petroleum Int’l, 352 S.W.3d
at 451. “Only where a contract is ambiguous may a court consider the parties’
interpretation and ‘admit extraneous evidence to determine the true meaning of the
instrument.’” Id. (quoting Haden, 266 S.W.3d at 450–51).
A trial court’s determination of whether a contract is ambiguous is a question of
law that we review de novo. Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 705
(Tex. 2008).
2. Analysis
10
The City argues that the agreement was unambiguous as a matter of law and
that parol evidence was, therefore, inadmissible to establish its terms. It contends that,
without such parol evidence, there was legally and factually insufficient evidentiary
support for the jury’s finding that the City breached its contract with Casso.
At trial, Casso advanced several arguments as to why the agreement was
ambiguous. First, she contended that because the City agreed to pay her the entire
amount it contributed to her retirement account, the City must therefore have intended
to treat her as a “retiree.”8 She notes that a City employee ordinarily must accrue at
least ten years of service before he or she is “vested” and eligible to receive the
retirement contributions previously made by the City, see TEX. GOV’T CODE ANN. §
854.202 (West Supp. 2011), but that, at the time Casso resigned, she had accrued only
nine years of service. Casso argued that the City’s advancement to her of benefits
ordinarily unavailable to non-retirees evinced an intent on the part of the City to treat her
as a “retiree” for purposes of health insurance coverage.
8
Casso’s live petition alleged that, under the terms of the Plan, health insurance “coverage for
retirees is not limited” in duration. In fact, the Plan does not explicitly state when a “retiree” participant
loses his or her eligibility for coverage. The section of the Plan regarding “Participant Termination” states
only as follows:
Participant Coverage shall automatically terminate upon the earliest of the following
dates:
1. Last day of Calendar Month coincident or next following date of termination of
employment of Participant. EXCEPT: This shall not apply to a person who qualifies
as a Participant due to being an Eligible Retiree; or
2. Date the Participant ceases to be eligible for coverage; or
3. Date the Participant fails to pay the required contribution for coverage; or
4. Date the Plan is terminated; the date of termination of such benefit; or
5. Date the City terminates coverage for Participant; or
6. Date the Participant dies.
11
Second, Casso points to various items of evidence extraneous to the agreement,
including: (1) the terms of 2003 Plan, which listed only four classes of participants:
employee, dependent, retiree, and COBRA; (2) invoices for Casso’s health insurance
premiums between June 2002 and December 2003, which referred to Casso as a
“retiree”; (3) correspondence between the City and Casso, in which the City referred to
Casso’s coverage as “retiree” status; and (4) testimony by Casso that the City agreed to
treat her as a “retiree” for purposes of health insurance coverage. Casso alleged that,
of the four types of participants defined in the Plan, the only possible category she could
have fit in was “retiree,” because the release agreement contemplated at least 38
months of coverage (i.e., from April 1999 to June 2002) and “[t]he only participants who
may have post-employment health coverage over 18 months are retirees.” She argued
that the terms of the Plan therefore required the City to treat her as a “retiree” for
purposes of health insurance eligibility.
Finally, Casso noted that both she and the City were fully aware of her chronic
health condition at the time the release agreement was executed. She contended that
both parties were also aware of the fact that, due to her condition, she would not be
able to obtain other private health insurance coverage if her City health insurance
coverage were to be terminated.
The City contends that evidence of Casso’s health condition and of the terms of
the Plan was inadmissible under the parol evidence rule. See Anglo-Dutch Petroleum
Int’l, 352 S.W.3d at 451; Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13
(Tex. App.—Houston [1st Dist.] 2005, pet. denied) (“The parol evidence rule is not a
mere rule of evidence, but a rule of substantive contract law. . . . Evidence violating the
12
parol evidence rule has no legal effect and merely constitutes proof of facts that are
immaterial and inoperative.”). But the parol evidence rule
does not prohibit consideration of surrounding circumstances that inform,
rather than vary from or contradict, the contract text. Those
circumstances include . . . the commercial or other setting in which the
contract was negotiated and other objectively determinable factors that
give a context to the transaction between the parties.
Houston Exploration Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462,
469 (Tex. 2011) (internal citations omitted).
Here, the release agreement at issue states that, in exchange for Casso’s
release of her potential claims against the City, the City would: (1) make a $50,000
lump sum payment to Casso; (2) make a payment to Casso equaling the City’s total
contributions to her retirement account; and (3) “continue to pay Casso’s health
insurance premiums for Health Insurance coverage with The City of McAllen throughout
the period of time from the date of the execution of this Agreement through June 2002.”
Because the City was obligated to pay Casso’s premiums until June 2002, the City was
also implicitly obligated to preserve Casso’s eligibility for health insurance coverage until
that date. However, the agreement does not address—either explicitly or implicitly—the
question of whether or when her eligibility for health insurance would be terminated. As
to health insurance eligibility post-June 2002, therefore, the agreement was susceptible
to two reasonable interpretations.9 It was ambiguous as to that particular issue. See
Milner, 361 S.W.3d at 619. Accordingly, we disagree with the City that the agreement
was unambiguous as a matter of law.
We also disagree with the City that evidence of Casso’s health condition and of
9
It is noteworthy that the City preserved Casso’s health insurance eligibility until December 2003,
even though the City’s position is that it was not obligated to preserve Casso’s eligibility beyond June
2002.
13
the terms of the Plan was inadmissible. The Austin Court of Appeals also considered
the question of ambiguity in an employment contract in Carr v. Christie, 970 S.W.2d 620
(Tex. App.—Austin 1998, pet. denied). In that case, the parties entered into an
employment agreement which stated in part that “[t]he term of this agreement shall
begin on the 1st day of August 1994 and shall continue for a period of one (1) year or
until termination as hereinafter provided.” Id. at 621. The contract also had a
paragraph entitled “Involuntary Termination” which listed various specific circumstances
under which the agreement “shall be deemed to be terminated and the employment
relationship . . . shall be deemed severed . . . .” Id. The employee, Carr, was fired
without cause after 18 months on the job, and he sued the employer, Christie, for
breach of contract. Id. Christie argued that Carr’s employment was at-will and that the
circumstances listed in the “Involuntary Termination” paragraph were not intended to be
exclusive. Id. at 622. Carr, on the other hand, argued that Christie breached the
contract “because the parties intended the quoted language to mean that Carr shall be
employed for a minimum of one year and thereafter might be discharged only for a
reason specified in [the ‘Involuntary Termination’] paragraph . . . .” Id. The trial court
granted summary judgment in favor of Christie, but the court of appeals reversed,
holding that the agreement was ambiguous because both Carr’s and Christie’s
interpretations of the provisions at issue were reasonable. Id.
In determining that Carr’s interpretation of the contract was reasonable, the court
of appeals noted that “Carr's interpretation [is not] inconsistent with the circumstances
under which the contract was written and executed.” Id. The court rejected Christie’s
contention that consideration of the “circumstances under which the contract was
14
written” would run afoul of the parol evidence rule. Id. at 622 n.2. The court noted that:
In interpreting contracts or clauses set forth in “clear and unambiguous”
language, the courts do not confine themselves to a mere inspection of
the document. Before committing themselves, the courts carefully
examine the surrounding circumstances, prior negotiations, and all other
relevant incidents bearing on the intent of the parties . . . .
Only after a careful and painstaking search of all the factors shedding light
on the intent of the parties, only after “turning signs and symbols into
equivalent realities” will the court conclude that the language in any given
case is “clear and unambiguous.”
Id. (quoting 4 W ILLISTON ON CONTRACTS § 600A (3rd ed. 1957) (internal citations
omitted)).
We find, consistent with Carr, that the parol evidence rule was not violated here.
Casso’s chronic health condition and the terms of the Plan constitute evidence of
“objectively determinable factors that give a context to the transaction between the
parties,” which is admissible for purposes of determining if a contract is “clear and
unambiguous.” See Houston Exploration Co., 352 S.W.3d at 469; Carr, 970 S.W.2d at
622 n.2. Considering that evidence, the trial court was justified in its implicit
determination that the contract was susceptible to more than one reasonable
interpretation. And, a reasonable juror could have concluded from that evidence that
the parties intended, by the 2003 settlement agreement, for Casso’s health insurance
eligibility to be preserved until such time as she obtained other health insurance or was
eligible for Medicare. See City of Keller, 168 S.W.3d 802 at 819 (“Jurors are the sole
judges of the credibility of the witnesses and the weight to give their testimony. They
may choose to believe one witness and disbelieve another. Reviewing courts cannot
impose their own opinions to the contrary.” (Internal citations omitted)).
The City further argues by its first issue that the trial court was prohibited by
15
statute from giving effect to any agreement to treat Casso as a “retiree” for purposes of
health insurance. Specifically, the City argues that sections 172.002 and 172.004 of the
Texas Local Government Code require that, if a political subdivision chooses to provide
health insurance benefits to employees, those benefits must be uniform as to all
employees. See TEX. LOC. GOV’T CODE ANN. § 172.002 (West 2008); id. § 172.004(a)
(West 2008) (“A political subdivision . . . directly or through a risk pool may provide
health and accident coverage for political subdivision officials, employees, and retirees
or any class of officials, employees, or retirees, and employees of affiliated service
contractors.”). The City also contends that ERISA,10 the federal statute governing
employee benefit plans, prohibits the enforcement of any agreement to treat Casso as a
“retiree.” See Greathouse v. Glidden Co., 40 S.W.3d 560, 567–68 (Tex. App.—Houston
[14th Dist.] 2001, no pet.) (“The policy behind the ‘written instrument’ clause in ERISA is
to prevent collusive or fraudulent side agreements between employers and
employees. . . . Therefore, ERISA precludes all oral modifications and written
modifications which do not purport to be formal amendments of a plan.”); see also 29
U.S.C. § 1102(a)(1) (“Every employee benefit plan shall be established and maintained
pursuant to a written instrument. . . .”). Again, we disagree. Nothing in the local
government code or ERISA prohibits a political subdivision from entering into
agreements in which continued access to health insurance coverage is granted in
exchange for the release of disputed claims. ERISA does require that every plan be
administered in accordance with its establishing instrument, see 29 U.S.C. § 1102(a)(1);
however, there is also nothing in the terms of the written Plan at issue that precludes
10
ERISA refers to the Employee Retirement and Income Security Act of 1974, which is codified in
chapter 18 of title 29 of the United States Code. See 29 U.S.C. §§ 1001–1453.
16
enforcement of the release agreement. In fact, the Plan states explicitly that “[t]he City
of McAllen shall have the authority, in its sole discretion, to make any and all factual
determinations, Plan interpretations, eligibility and/or other determinations that it deems
necessary . . . .” The Plan also provides that “the City reserves the right to amend,
suspend or terminate the Plan, in whole or in part, at any time.” The Plan therefore
appears to permit the City to enter into agreements such as the one at issue here. We
are not persuaded by the City’s argument that the agreement is unenforceable under
chapter 27 of the local government code and ERISA.
Finally, the City argues that any agreement to grant Casso health insurance
eligibility was unenforceable due to the statute of frauds. See TEX. BUS. & COM. CODE
ANN. § 26.01(a), (b)(6) (West 2009) (providing that “an agreement which is not to be
performed within one year from the date of making the agreement” is not enforceable
unless the “agreement, or a memorandum of it, is (1) in writing; and (2) signed by the
person to be charged with the promise or agreement or by someone lawfully authorized
to sign for him”). Assuming arguendo that the statute of frauds applies to the
agreement at issue, we find that the release agreement, which was written and was duly
signed by the City’s attorney, satisfies the statute’s requirements. The mere fact that
the release agreement was ambiguous as to Casso’s post-2002 health insurance
eligibility does not negate the agreement’s written character.
Considering the evidence in the light most favorable to the jury’s verdict, see City
of Keller, 168 S.W.3d at 822, we conclude that there was legally sufficient evidence
supporting the jury’s findings that (1) the City agreed to treat Casso as a health
insurance “retiree” participant until the age of 65, and (2) the City breached that
17
agreement. Additionally, considering the evidence in a neutral light, we find that the
evidence is factually sufficient to support those findings. The City’s first and second
issues are overruled.
B. Medical Costs Damages
By its third issue, the City contends the evidence was legally and factually
insufficient to support the award of medical cost damages corresponding to the breach
of contract claim.
Question 3 of the jury charge asked what sum of money, if paid now in cash,
would fairly and reasonably compensate Casso for damages resulting from the City’s
breach of contract. Subsection (a) of question 3 asked the jury to assess “[t]he medical
costs, if any, paid or incurred by Dahlila Guerra Casso between January 1, 2004 and
the present, less the sum that Casso would have paid in monthly premiums during that
period to obtain coverage under the City of McAllen, Texas health insurance plan.” The
jury answered “$38,523.43.” The City first contends by its third issue that there was
insufficient evidence of the difference between the medical costs incurred by Casso and
the sum she would have been required to pay for her health insurance coverage
between January 1, 2004 and the time of trial. The City specifically claims that no
attempt was made to show what the City’s insurance premium amounts were for retiree
participants between January 1, 2004 and the time of trial.
We find that the evidence was sufficient to support the jury’s answer to charge
question 3(a). Among the pieces of evidence before the jury were billing records from
various medical providers that treated Casso during the relevant time period. Those
bills reflected total medical costs of $58,306.19. The jury was also able to consider
18
several monthly invoices sent by the City between 2002 and 2003 asking Casso to pay
a monthly premium of $215.03. The jury additionally heard testimony from City
Manager Mike Perez that the current monthly premium for a retiree participant is $245.
The jury could have chosen to disbelieve Perez and instead to believe that the 2002–
2003 monthly invoices reflected the amount Casso would have been charged in monthly
premiums between 2004 and 2011. See id. at 819. We therefore conclude that the jury
could have reasonably found that Casso suffered $38,523.43 in damages, representing
the difference between the amount she paid or incurred in medical costs and the
amount she would have been required to pay in insurance premiums from January 1,
2004 to the time of trial.11
The City next argues by its third issue that the evidence was insufficient to
establish damages under question 3(b) of the jury charge, which asked the jury to
assess:
The medical costs, if any, that in reasonable probability, would have been
or will be incurred by Dahlila Guerra Casso on and after January 1, 2004
that would have been actually paid by the City of McAllen, Texas health
insurance plan, less the sum that Casso would have paid in monthly
premiums during that period to obtain coverage under the City of McAllen,
Texas health insurance plan.[12]
11
The amount could have been reasonably calculated as follows: $58,306.19 (Casso’s incurred
medical costs between 2004 and 2011) minus $19,782.76 ($215.03 per month for 92 months, between
January 2004 and August 2011) equals $38,523.43.
12
As noted, question 3(a) asked the jury to assess the medical costs incurred by Casso between
January 1, 2004 and the time of trial; whereas question 3(b) asked the jury to assess the amount that
“would have been” incurred or “will be incurred” by Casso “on and after January 1, 2004 that would have
been actually paid” by the City’s health insurance plan, less the amount Casso would have paid in
premiums. Question 3(b) therefore arguably invited the jury to award duplicate damages for medical
costs incurred by Casso between January 1, 2004 and the time of trial. However, as we noted supra at
note 6, the jury was specifically instructed not to award duplicate damages. Moreover, at the charge
conference, Casso’s counsel set forth his theory as to why the questions did not create a risk of double
recovery:
Number one [question 3(a)] is the actual out of pocket medical costs that [Casso] paid on
that charge of $58,000 that we showed the jury. The second one [question 3(b)] is the
19
The jury answered “$150,000.00.” The City contends that the evidence was insufficient
to establish that these medical costs “would have been or will be” incurred by Casso.
Casso’s primary care physician, Michael Jelinek, M.D., testified that he has
treated Casso for her Lupus condition since 1992. He stated that Lupus is an
autoimmune disease without a known cure, so treatment consists primarily of managing
a patient’s symptoms. According to Dr. Jelinek, Casso’s Lupus caused her to suffer
severe joint pain, the inability to walk, hair loss, and various infections. He testified that
he attempted to treat these symptoms by prescribing an immunomodulator, a
medication that suppresses the immune system. Dr. Jelinek testified that
immunomodulator therapy costs about $2,000 to $2,500 per infusion and that an
infusion should be administered every three to four weeks. For Casso’s treatment, Dr.
Jelinek prescribed Remicade, an immunomodulator that is administered intravenously.
Dr. Jelinek stated that Casso would need an infusion of Remicade—or, if Casso did not
respond to that medication, another immunomodulator—every three to four weeks for
the rest of her life.
The City notes that Casso suffered an adverse reaction to a Remicade infusion in
July 2003 and that it was not certain that she would have been able to continue
Remicade treatments beyond December 2003, when her health insurance eligibility was
measure of damages—the benefit of the bargain damages. The benefit of the bargain
damages are damages that are recoverable in a breach of contract case. And that is
what damages would put the Plaintiff in a position that the Plaintiff would have been [in]
had the contract been performed. Had the contract been performed she would have
received all of these Remicade treatments, for example, and the benefit of the bargain
measure is what is set forth there. It’s a description of these medical benefits that she
would have received had the contract been performed.
Although the City objected at the charge conference on the basis that the submission of question 3(b)
created a risk of double recovery, the City has not raised that issue on appeal.
20
terminated. The City also notes that Casso had not been prescribed Remicade until
2003 and was using less-expensive medication prior to that time.
We find the evidence sufficient to support the jury’s answer to question 3(b).
Although the City is correct in noting that Casso’s pre-2003 treatments were not as
expensive as the Remicade infusions, Dr. Jelinek testified that Casso’s condition
“deteriorated substantially since the expiry of her insurance coverage” and that “the
progression of her illness could have been controlled or slowed down if proper care had
been more forthcoming.” The jury could have therefore reasonably concluded that
Remicade or other immunomodulator treatment was necessary for Casso in the years
beyond 2003, even if it was not necessary for her before that time. Moreover, in
determining damages, the jury has discretion to award damages within the range of
evidence presented at trial. Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 566 (Tex.
2002). As Casso notes, the evidence presented at trial could have supported an award
of future medical damages exceeding $400,000, representing a $2,500 Remicade
treatment minus a $215.03 monthly premium payment every month from 2004 until
2018, when Casso will become eligible for Medicare.13 Of course, the evidence could
have also supported a conclusion that Casso’s future medical costs were zero because
she had suffered an adverse reaction to Remicade, and Dr. Jelinek could not say for
sure that post-2003 Remicade treatments would have been possible. But that is not
what the jury found—and we cannot and will not substitute our judgment for that of the
jury. Viewing the evidence in the light most favorable to the jury’s verdict, see City of
Keller, 168 S.W.3d at 822, we conclude that the evidence was legally sufficient to
13
That amount could be calculated as follows: $450,000 (representing monthly $2,500 Remicade
treatments over 180 months, from 2004 to 2018) minus $38,705.40 (representing monthly $215.03
premium payments over the same time period) equals $411,294.60.
21
support an award of $150,000 in medical cost damages under question 3(b). Viewing
the evidence in a neutral light, see Cain, 709 S.W.2d at 176, we find the evidence
factually sufficient.
The City additionally complains by its third issue that the trial court failed to
submit its requested instruction on mitigation of damages. The mitigation of damages
doctrine “prevents a party from recovering for damages resulting from a breach of
contract that could be avoided by reasonable efforts on the part of the plaintiff.” Great
Am. Ins. Co. v. North Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415, 426 (Tex. 1995)
(citing Walker v. Salt Flat Water Co., 128 Tex. 140, 96 S.W.2d 231, 232 (1936) (“Where
a party is entitled to the benefits of a contract and can save himself from the damages
resulting from its breach at a trifling expense or with reasonable exertions, it is his duty
to incur such expense and make such exertions.”)). A defendant claiming failure to
mitigate damages has the burden of proving lack of diligence on the part of the plaintiff,
and the amount by which the damages were increased as a result of the failure to
mitigate. Cocke v. White, 697 S.W.2d 739, 744 (Tex. App.—Corpus Christi 1985, writ
ref’d n.r.e.).
We find no error in the trial court’s refusal to submit a mitigation instruction.
Casso testified that, after learning that the City would terminate her health insurance
eligibility, she sought alternative health insurance coverage through the State Bar of
Texas but was denied. She also testified that she consulted with her insurance agent
as to the availability of private health insurance. According to Casso, her agent replied
“don’t bother. . . . I don’t know of anybody that’s going to insure you.” The City points to
testimony by Casso in which she appeared to acknowledge that she might qualify for
22
certain insurance coverage available on the internet, despite her pre-existing
condition.14 However, the City was under a burden to produce evidence that Casso
failed to show diligence in pursuing alternative health insurance. See id. The City failed
in that regard. Accordingly, the trial court did not err in refusing to instruct the jury on
mitigation of damages.
The City’s third issue is overruled.
C. Lost Profits Damages
By its fourth issue, the City argues that the evidence was insufficient to support
the award of lost profits damages pursuant to Casso’s breach of contract claim.15
The City first argues that lost attorney’s fees are not recoverable as a matter of
law because they are not a foreseeable consequence of the breach of an unrelated
contract. The City cites Stuart v. Bayless, where the Texas Supreme Court held that an
14
The City’s counsel asked Casso: “Isn’t it true . . . that you’ve become aware of an insurance
policy for which you can qualify?” Casso replied: “Am I aware that I can qualify? No. Some [insurance
policies] have been mentioned. And I found it very offensive that it was suggested by your client . . . that I
go out and secure some insurance off the internet so that the City doesn’t have to provide and keep their
obligation. . . .” Casso continued:
If that’s part of the national health care [act] that may be overturned next week or the
week after—if that’s what you’re referring to that one court finds unconstitutional and the
other upholds, I am not going to take care of—going to do the research because the City
has failed me and has breached the contract.
The parties are apparently referring to the federal Patient Protection and Affordable Care Act (“PPACA”),
which includes a “guaranteed issue” requirement barring insurers from denying coverage to any person
due to that person’s medical condition or history. See 42 U.S.C. §§ 300gg-1, 300gg-3, 300gg-4(a).
Although the United States Supreme Court has since upheld the portion of the PPACA containing this
requirement, Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2613 (U.S. 2012), we cannot fault
Casso’s confusion as to the status of the law at the time of trial.
15
Question 3(c) of the jury charge asked the jury to assess “[t]he net profits, if any, that Dahlila
Guerra Casso, in reasonable probability would have earned from January 2004 to the present had she
not lost the health benefits associated with having health insurance with the City of McAllen, Texas.” The
jury answered “$126,000.00.”
Question 3(d) asked the jury to assess “[t]he net profits, if any, that [Casso], in reasonable
probability would have earned in the future had she not lost the health benefits associated with having
health insurance with the City of McAllen, Texas.” The jury answered “$126,000.00.”
23
attorney plaintiff, who had sued a former client for failure to pay fees, could not recover
consequential damages for the loss of potential contingency fees in other unrelated
cases. 964 S.W.2d 920, 921–22 (Tex. 1998) (per curiam). The plaintiff argued that, as
long as his firm is able to collect an hourly-rate fee from clients, it can financially afford
to take on contingent fee cases, but that the defendant’s failure to pay resulted in the
firm’s inability to take on other contingent fee matters. Id. at 921. The Court rejected
that argument, noting that the loss of unrelated contingency fees was not reasonably
foreseeable. Id. (citing Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812,
816 (Tex. 1997)) (stating that consequential damages are those that “result naturally,
but not necessarily, from the defendant’s wrongful acts”). We find that Stuart does not
categorically preclude the recovery of attorney’s fees as lost profits; it only precludes the
recovery of such fees when their loss was not reasonably foreseeable. The defendant
in Stuart could not have reasonably foreseen that her failure to pay the hourly-rate fee
would have caused the plaintiff’s law firm to refuse other, unrelated contingency-fee
cases. See id. Here, in contrast, the City could have reasonably foreseen that
terminating Casso’s health insurance eligibility would have had a deleterious effect on
her earnings. The recovery of attorney’s fees as lost profits was therefore not barred as
a matter of law.
The City next contends by its fourth issue that the evidence adduced at trial was
insufficient to establish (1) a causal nexus between Casso’s loss of health insurance
coverage and her lost profits, or (2) the amount of such lost profits. In order to recover
lost profits, a party must produce sufficient competent evidence to enable the fact finder
to determine the net amount of the loss with reasonable certainty. Holt Atherton Indus.,
24
Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992); D/FW Commercial Roofing Co. v. Mehra,
854 S.W.2d 182, 187 (Tex. App.—Dallas 1993, no writ). The evidence relative to the
profits must not be uncertain or speculative. Mehra, 854 S.W.2d at 187 (citing Sw.
Battery Corp. v. Owen, 131 Tex. 423, 426, 115 S.W.2d 1097, 1098 (1938)). However, it
is not necessary that the lost profits be subject to exact calculation. Holt Atherton, 835
S.W.2d at 84.
What constitutes reasonably certain evidence of lost profits is a fact
intensive determination. As a minimum, opinions or estimates of lost
profits must be based on objective facts, figures, or data from which the
amount of lost profits can be ascertained. Although supporting
documentation may affect the weight of the evidence, it is not necessary
to produce in court the documents supporting the opinions or estimates.
ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010) (citations
omitted). Courts have held that a party seeking lost profits damages must show either a
history of profitability or the actual existence of future contracts from which lost profits
can be calculated with reasonable certainty. Allied Bank W. Loop, N.A. v. C.B.D. &
Assocs., Inc., 728 S.W.2d 49, 54–55 (Tex. App.—Houston [1st Dist.] 1987, writ ref’d
n.r.e.) (citing Sw. Battery Corp., 131 Tex. at 423, 115 S.W.2d at 1097).
To support her claim for lost profits damages, Casso introduced evidence of
profits from her law practice during the time she was insured, and evidence of her
profits during the time she was uninsured. When she left the City’s employment in
1999, Casso’s annual salary was $70,000. Casso’s 2002 federal income tax return
shows that she earned $71,938 in business income in that year, during which she was
still covered by the City’s health insurance. Other income tax returns showed: a loss of
$2,530 in 2004; a profit of $30,991 in 2005; a profit of $18,149 in 2006; a profit of
$6,904 in 2007; a loss of $8,343 in 2008; and a profit of $9,569 in 2009. Thus, Casso
25
earned an average annual profit of $9,123.33 during the years 2004 to 2009, during
which she did not have health insurance. The jury awarded $126,000 in past lost
profits, corresponding to years 2004 through 2011, and $126,000 in future profits,
corresponding to years 2012 through 2018, when Casso will become eligible for
Medicare.
The City urges that Casso’s evidence was insufficient because the only evidence
as to a “history of profitability” during the time she was covered by health insurance but
not employed by the City was her 2002 income tax return. See id. We disagree.
Casso also introduced evidence that she earned $70,000 in her final year of
employment as the City’s municipal judge. This evidence, along with the income tax
returns, constituted “facts, figures, or data from which the amount of lost profits can be
ascertained.” See ERI Consulting Eng’rs, 318 S.W.3d at 876. Moreover, the particular
amount awarded by the jury was supported by the evidence. As noted, the evidence
showed that Casso earned an average annual profit of $9,123.33 between 2004 and
2009, but that she earned an average of $70,969 in the years 1999 and 2002. The jury
could therefore have reasonably concluded that Casso suffered as much as
$61,845.6716 in annual lost profits as a result of the City’s breach. That annual amount
would result in damages of $494,765.3617 for years 2004 to 2011 and $432,919.6918 for
years 2012 to 2018. The jury’s award of $126,000 for each of those respective time
periods therefore did not exceed the amounts supported by the evidence. We further
16
$70,969 minus $9,123.33.
17
$61,845.67 per year for eight years.
18
$61,845.67 per year for seven years.
26
find that the evidence—including Dr. Jelinek’s testimony that Casso’s condition
deteriorated substantially after she lost health insurance—was legally and factually
sufficient to support the jury’s implicit conclusion that Casso’s lost profits resulted from
the City’s termination of her health insurance eligibility.
The City’s fourth issue is overruled.
D. Attorney’s Fees Award
By its fifth issue, the City argues that the award of $150,000 attorney’s fees to
Casso was erroneous because such fees were not recoverable from the City as a
matter of law.
The award of attorney’s fees in this case was based on section 38.001 of the civil
practice and remedies code, which provides that a “person may recover reasonable
attorney’s fees from an individual or corporation, in addition to the amount of a valid
claim and costs, if the claim is for . . . an oral or written contract.” TEX. CIV. PRAC. &
REM. CODE ANN. § 38.001(8) (West 2008). The question presented here is whether the
City is an “individual or corporation” for purposes of the statute. In 1986, the Texas
Supreme Court held that the predecessor statute to section 38.001 permitted the
recovery of attorney’s fees against a municipality where those fees were incurred in the
context of enforcing a contract made by the municipality in its proprietary capacity. See
Gates v. City of Dallas, 704 S.W.2d 737, 738–41 (Tex. 1986) (noting that the defendant
city “is a home rule municipal corporation” and that, when the city entered into the
underlying contract with plaintiff, it “acted in its proprietary role and was clothed with the
same authority and subject to the same liabilities as a private citizen”).
Apparently in response to that ruling, the Legislature enacted what is now section
27
5.904 of the local government code, which states: “A municipality may not be
considered a corporation under a state statute governing corporations unless the statute
extends its application to a municipality by express use of the term ‘municipal
corporation,’ ‘municipality,’ ‘city,’ ‘town,’ or ‘village.’” TEX. LOC. GOV’T CODE ANN. §
5.904(a) (West 2008); see id. § 5.904(b) (“It is the intent of the legislature that the
limitation provided by this section apply regardless of whether the municipality is acting
in a governmental or proprietary function.”). This statute effectively amends section
38.001 so that it no longer authorizes the award of attorney’s fees against a
municipality. See, e.g., City of Corinth v. NuRock Dev. Inc., 293 S.W.3d 360, 370 (Tex.
App.—Fort Worth 2009, no pet.) (noting that the language of section 38.001 “indicates a
clear legislative intent to exclude government entities from those against whom
attorney’s fees may be recovered under the statute”); City of Alton v. Sharyland Water
Supply Corp., 277 S.W.3d 132, 147 (Tex. App.—Corpus Christi 2009) (“[A]
municipality . . . is not considered a corporation even when it is acting in its proprietary
function.”), aff’d in part and rev’d in part on other grounds, Sharyland Water Supply
Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011); City of Dallas v. Arnett, 762 S.W.2d
942, 951 (Tex. App.—Dallas 1988, writ denied).
Casso argues that the City did not preserve this issue for review because its only
objection to the attorney’s fees question in the jury charge was based on chapter 271 of
the local government code. See TEX. R. APP. P. 33.1(a); Exxon Corp. v. Allsup, 808
S.W.2d 648, 655 (Tex. App.—Corpus Christi 1991, writ denied) (“An objection at trial
which is not the same as the objection urged on appeal presents nothing for appellate
review.”); see also TEX. LOC. GOV’T CODE ANN. ch. 271 (West 2005 & Supp. 2011)
28
(waiving governmental immunity for certain contract claims). However, prior to rendition
of the final judgment, the City filed a supplemental response to Casso’s “Motion to Sign
Judgment” in which it urged that “counties and cities are not individuals or corporations
and, as such, a party may not recover attorney’s fees against them under the statute.”
The City cited the relevant statutory and case law in advancing that argument. It also
made this argument in its “Motion to Modify, Correct or Reform Judgment” filed after the
final judgment was rendered.
We conclude that the issue has been preserved, see TEX. R. APP. P. 33.1(a), and
that it is meritorious. We therefore sustain the City’s fifth issue and modify the judgment
to delete the attorney’s fees award.
E. Pre-Judgment Interest
By its sixth issue, the City argues that the award of pre-judgment interest on the
award of medical cost damages pursuant to jury charge question 3(b) was
impermissible because the award was attributable in part to future medical costs. See
TEX. FIN. CODE ANN. § 304.1045 (“Prejudgment interest may not be assessed or
recovered on an award of future damages.”).
In response, Casso argues that the issue has not been preserved because the
City did not object to question 3(b) on the basis that two questions—one addressing
past medical costs and one addressing future medical costs—should instead be
submitted. Casso further contends that the issue lacks merit because the jury’s award
of $150,000 in medical cost damages in response to question 3(b) could have been
entirely attributable, under the evidence, to pre-trial medical costs.
29
We disagree that the issue has not been preserved. Texas Rule of Civil
Procedure 274 states: “A party objecting to a charge must point out distinctly the
objectionable matter and the grounds of the objection. Any complaint as to a question,
definition, or instruction, on account of any defect, omission, or fault in pleading, is
waived unless specifically included in the objections.” TEX. R. CIV. P. 274. At the
charge conference, the City objected to the submission of question 3(b) on the basis
that it permitted double recovery of medical cost damages incurred by Casso between
January 1, 2004 and the date of trial. The City’s counsel argued: “I think what the
Court needs to say is that the first one [question 3(a)] is medical costs paid or incurred
between January 2004 and the present. And the second one [question 3(b)] should say
the medical costs that will be incurred in reasonable probability from today forward . . . .”
In any event, the City is not, strictly speaking, challenging any element of the jury
charge by its sixth issue. It does not claim that question 3(b) should have been
bifurcated, and it does not claim that future damages should not have been submitted or
awarded. Instead, the City is merely claiming that the trial court should not have
awarded pre-judgment interest on an award of medical cost damages that
encompassed both past and future costs. Therefore, the more stringent preservation
requirements found in Rule 274 do not apply. Instead, to preserve the pre-judgment
interest issue, the City was required only to make a timely complaint to the trial court
that comports with its complaint on appeal. TEX. R. APP. P. 33.1(a); Exxon Corp., 808
S.W.2d at 655. And, the City specifically objected to the award of pre-judgment
interest—on the same basis as it now raises on appeal—in its post-trial “Motion to
30
Correct, Modify or Reform Judgment.” Accordingly, the issue has been preserved for
our review.
We further agree with the City that the trial court erred in awarding pre-judgment
interest on the amount awarded by the jury in response to charge question 3(b),
because past and future damages were not segregated. In Cavnar v. Quality Control
Parking, Inc., the Texas Supreme Court held that, because certain plaintiffs were
awarded damages for both their past and their future losses in lump sums and past
losses were not segregated from future losses, those plaintiffs were not entitled to
recover pre-judgment interest on those elements of damages. 696 S.W.2d 549, 556
(Tex. 1985).19 The same result holds here. Because past and future damages were
submitted to the jury but were not segregated in the damages question at issue, Casso
is not entitled to pre-judgment interest on the amount awarded pursuant to that
question. See id.; KMG Kanal-Muller-Gruppe Deutschland GmbH & Co. KG v. Davis,
175 S.W.3d 379, 396–97 (Tex. App.—Houston [1st Dist.] 2005, no pet.); Casteel v.
Crown Life Ins. Co., 3 S.W.3d 582, 596 (Tex. App.—Austin 1997), rev’d in part on other
grounds, 22 S.W.3d 378, 391 (Tex. 2000).
19
Cavnar has been superseded by statute in wrongful death, personal injury, and property
damage cases. KMG Kanal-Muller-Gruppe Deutschland GmbH & Co. KG v. Davis, 175 S.W.3d 379, 397
(Tex. App.—Houston [1st Dist.] 2005, no pet.); see TEX. FIN. CODE ANN. § 304.101 (West 2006).
Additionally, the Texas Supreme Court modified the common law pre-judgment interest rules set forth in
Cavnar to conform with the statute governing pre-judgment interest in wrongful death, personal injury,
and property damage cases. See Johnson & Higgins of Tex. v. Kenneco Energy, Inc., 962 S.W.2d 507,
528 (Tex. 1998). However, where damages are awarded for economic injury rather than for personal
injury, Cavnar still controls. Davis, 175 S.W.3d at 397. Moreover, the modifications made in Johnson &
Higgins do not affect the viability of Cavnar with regard to award of pre-judgment interest on damages
awards that are not segregated between past and future damages.
31
We sustain the City’s sixth issue and modify the judgment to delete the award of
pre-judgment interest on the $150,000 awarded as damages under jury charge question
3(b).
F. Specific Performance
By its seventh issue, the City argues that the trial court erred in commanding the
City to specifically perform the contract at issue by enrolling Casso on its health
insurance plan. The City urges that this remedy violated the one-satisfaction rule.
Again, we agree. Specific performance is an equitable remedy that may be awarded
upon a showing of breach of contract. Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d
530, 535 (Tex. App.—Dallas 2007, pet. denied). Specific performance is used as a
substitute for monetary damages when such damages would not be adequate. Id. The
one-satisfaction rule provides that a plaintiff is entitled to only one recovery for any
damages suffered. See Casteel, 22 S.W.3d at 390; Stewart Title Guar. Co. v. Sterling,
822 S.W.2d 1, 7 (Tex. 1991). The related doctrine of election of remedies bars a
plaintiff from recovering both damages for breach of a contract and specific
performance of the contract. See NRG Exploration v. Rauch, 905 S.W.2d 405, 410
(Tex. App.—Austin 1995, writ denied); Seegers v. Spradley, 522 S.W.2d 951, 957 (Tex.
Civ. App.—Beaumont 1975, writ ref’d n.r.e.); Redding v. Ferguson, 501 S.W.2d 717,
720 (Tex. Civ. App.—Fort Worth 1973, writ ref’d n.r.e.) (concluding that when party
obtains final judgment for damages, party can no longer demand specific performance
of contract).
Here, the final judgment awarded a total of $440,523.43 in actual damages. That
sum included $150,000 awarded pursuant to the jury’s answer to charge question 3(b),
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which asked the jury to assess all “medical costs . . . that in reasonable
probability . . . will be incurred by [Casso] on and after January 1, 2004 that would have
been actually paid by the [City’s] health insurance plan,” less the amount that Casso
would expend in premium payments. The provision of the final judgment commanding
the City to enroll Casso on its health insurance plan remedies exactly the same
damages—i.e., coverage of Casso’s medical costs, minus her premium payments,
through 2018. The award of specific performance was therefore in violation of the one-
satisfaction rule.20 We sustain the City’s seventh issue and modify the judgment to
delete the award of specific performance.
G. Fraud Claim
By its final five issues, the City argues that the trial court erred in rendering
judgment on the jury’s fraud verdict.21 Specifically, the City contends by its eighth issue
that that there was insufficient evidence to support the finding that the City committed
fraud; by its ninth issue that the trial court erred by considering the jury’s finding that
Casso was entitled to past lost profits as a result of the fraud; by its tenth issue that the
20
The City also claims by its seventh issue that specific performance was unavailable to Casso
because she did not establish: (1) that she was ready, willing, and able to perform her obligations under
the contract; or (2) that her remedy at law was inadequate. See DiGiuseppe v. Lawler, 269 S.W.3d 588,
593 (Tex. 2008) (“An essential element in obtaining the equitable remedy of specific performance is that
the party seeking such relief must plead and prove he was ready, willing, and able to timely perform his
obligations under the contract.”); City of Alton v. Sharyland Water Supply Corp., 277 S.W.3d 132, 147
(Tex. App.—Corpus Christi 2009) (“It is a fundamental rule of equity that a court will not grant specific
performance unless it is shown that an adequate remedy does not exist at law.”), aff’d in part and rev’d in
part on other grounds, Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011). We
need not address these sub-issues because of our conclusion that the award of specific performance
violated the one-satisfaction rule. See TEX. R. APP. P. 47.1.
21
We note that there appears to be some confusion as to what alleged fraud Casso attempted to
prove at trial. Casso’s live petition characterized her fraud claim as one for fraudulent inducement; she
alleged that she was induced into signing the agreement because “[t]he City represented to Casso that its
original COBRA proposal would not be part of the agreement after Casso expressly rejected that
proposal.” On the other hand, on appeal, both parties confine their arguments regarding the fraud claim
to the facts surrounding Casso’s execution of the blank “Enrollment/Change/Cancellation Form” at the
City’s request in 2001. We need not resolve the confusion because of our conclusion herein that any
error corresponding to the fraud judgment would not be reversible. See TEX. R. APP. P. 44.1(a), 47.1.
33
evidence of fraud was not clear and convincing; by its eleventh issue that there was
insufficient evidence supporting the award of exemplary damages 22; and by its twelfth
issue that the fraud claim was barred by limitations.
We need not address these issues because the only damages actually awarded
pursuant to the fraud verdict were past lost profit damages of $126,000, and this award,
as we have concluded, was also justified by the breach of contract finding. Accordingly,
even if we were to find error with respect to each of the City’s five issues regarding the
fraud verdict, those errors would not be reversible. See TEX. R. APP. P. 44.1(a) (stating
that, in a civil case, “[n]o judgment may be reversed on appeal on the ground that the
trial court made an error of law unless the court of appeals concludes that the error
complained of: (1) probably caused the rendition of an improper judgment; or (2)
probably prevented the appellant from properly presenting the case to the court of
appeals”); TEX. R. APP. P. 47.1 (“The court of appeals must hand down a written opinion
that is as brief as practicable but that addresses every issue raised and necessary to
final disposition of the appeal.”). The City’s eighth, ninth, tenth, eleventh, and twelfth
issues are overruled.
III. CONCLUSION
The judgment of the trial court is affirmed as modified herein. See TEX. R. APP.
P. 43.2(b).
DORI CONTRERAS GARZA,
Justice
Delivered and filed the
28th day of March, 2013.
22
As noted supra note 6, the final judgment did not contain an award of exemplary damages.
34