Rosa Santis v. Together We Rise Corporation ( 2023 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-21-00420-CV
Rosa Santis, Appellant
v.
Together We Rise Corporation, Appellee
FROM THE 98TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-20-001805, THE HONORABLE KARIN CRUMP, JUDGE PRESIDING
MEMORANDUM OPINION
In the underlying proceeding, appellee Together We Rise Corporation (TWR), a
nonprofit corporation, sued appellant Rosa Santis, alleging several claims arising out of a
commercial lease of a warehouse property owned by Santis. At the end of trial, the jury found
against TWR on all of its claims except for its breach of contract claim and awarded TWR actual
damages for amounts paid to Santis, out-of-pocket costs, certain other expenses, and lost
donations. The trial court signed a final judgment consistent with the jury verdict, and Santis
now brings this appeal, challenging only the legal sufficiency of the evidence supporting the
award of damages for lost donations. For the following reasons, we affirm the trial court’s
final judgment.
BACKGROUND
The underlying commercial landlord-tenant dispute arose from TWR’s attempts
to establish a physical presence in Austin, Texas. Founded in 2008, TWR is a national nonprofit
corporation that provides assistance and items to children in the foster-care system and
scholarships for children exiting foster care. TWR raises funds to support its charitable goals by
soliciting direct donations and hosting in-person events with local businesses and their
employees. TWR often holds those fundraising events at their own offices, such as their location
in Brea, California.
In late 2017, TWR began exploring the opening of another physical office in
Austin, Texas. TWR ultimately leased a warehouse property from Santis in May 2018. The
property was beset by numerous issues affecting its usability as a location to host events and
store donations—including roof leaks; asbestos remediation; and lack of electricity, gas, and
air-conditioning—and TWR eventually vacated the property in February 2020.
In March 2020, TWR informed Santis it was terminating its lease under one of the
provisions of the parties’ lease agreement, and TWR thereafter filed the present lawsuit. As of
TWR’s fourth amended petition (its live pleading at trial), TWR asserted numerous causes of
action, including breach of contract, and sought damages for, among other things, amounts paid
to Santis, out-of-pocket costs and expenses, moving costs, and lost donations suffered by TWR
because it was unable to use the property for fundraising and donation events.
The lawsuit proceeded to a multiday remote jury trial held in March 2021.
Relevant to this appeal, Danny Mendoza, the founder and CEO of TWR, testified that the
nonprofit was founded in 2008; assists approximately two- to three-thousand children in the
foster-care system each year; and has an office in Brea, California, and had attempted to
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establish an office in Austin, Texas. He explained that the nonprofit raises funds through cash
donations and by hosting events for foundations, corporations, and volunteers where donors may
sponsor items and volunteers help assemble or prepare items for giving to local foster youth.
Such events take place “all over, primarily Southern California and Central Texas,” with events
in California split between events held at TWR’s office and on-site events at donors’ offices.
Mendoza also testified that TWR sought to establish an Austin location only after
spending six months “reaching out to partners, foster agencies, and seeing what the need was and
we determined that there was a huge need” in Austin; he explained that he also reached out to
“[c]orporate partners and prominent families.” The purpose of having a physical location in
Austin was to not only provide office space for a permanent staff, but also receive, store, and
distribute donations and host volunteer events. He explained that hosting events at TWR’s own
facilities was important because potential donors often do not have the capacity to host events at
their own offices. He also testified that donors “want to give locally and while it does go locally,
it’s a different experience when the charity is local . . . so [our partners] had asked that we have a
local presence [in Austin] to continue to do more events with us.” 1 Mendoza testified TWR was
unable to hold events “suitable for our actual goal [of] creating an experience for people to give
back” because of the issues with the warehouse property. He described examples of cancelled
events, such as a planned Halloween event for foster youth that would have provided “a safe
place to trick or treat and create a haunted house.”
1 Erika Arambula, a TWR employee who works in fundraising with corporate partners,
reiterated this testimony that a local presence would ensure “[m]ore donations but also donations
that would target the community better” and that, with TWR lacking a local facility, any
corporate donor would instead need to host an event for their employees at their own offices.
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Mendoza testified that TWR estimated its lost donations arising from lacking the
local physical location at $390,303. Describing how TWR arrived at that amount, he stated that
the California office generated approximately $1,117,800 in donations in 2019. He adjusted that
figure down to approximately 41 percent (to approximately $458,000), based on the relative
population of Austin compared to the California location. Mendoza testified that he then
adjusted the figure down by another 20 percent (to approximately $366,000) because the Austin
location would be a new physical location “and we wouldn’t expect to do the exact same” as the
California location. When asked why he did not make a larger reduction for the newness of the
location, Mendoza testified that the organization itself was not new to Austin, held “a lot of
events here,” and had many corporate partners in Austin that also had offices in California where
TWR already had “a big presence.” He also explained that TWR was not “starting from
scratch,” had employees coming to Austin to help start the new location, and was already an
established multimillion-dollar national organization. Mendoza then took the estimated annual
returns, divided by twelve for a monthly figure, and then multiplied by eighteen for the total
number of months (October 2018 through March 2020) that TWR was seeking lost donations (to
approximately $549,000). That figure was then adjusted down by eight percent because TWR’s
historical funding distribution is “about 92 percent of each dollar goes directly to the program.
And then 8 percent is the over-heading and staffing,” and then he subtracted the $115,688 in
donations they actually received to reach the final estimated amount of $390,303. Mendoza
explained that he was reasonably certain of that number based on his thirteen years of experience
with TWR, TWR’s fundraising history, and his conversations with potential donors and other
partners in Austin.
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Mendoza confirmed that he founded TWR, had been working with the nonprofit
since 2008, and in his role was aware of both the donations received from various sources and
the books and financial resources of the nonprofit. Discussing the $1.1 million figure for the
California location, Mendoza explained that TWR keeps detailed records regarding every
donation received by the nonprofit, including providing “every donor an actual physical receipt,”
and that he received the financial numbers from his accountant. He also testified that he
manages the Brea location. Mendoza explained that the donations include “online donations for
that location, checks, money orders as well as actual goods, in-kind donations.” When asked
how TWR is able to know if any particular donation is from that specific location rather than
nationally, Mendoza explained donors specify the location they are directing their donation
towards. He also emphasized that while TWR is a national organization, it was important to
have a local presence because its donation partners “are big, big donors in the foster care space
. . . and wanted us to come to Austin so that their local employees can give back on the
local level.”
Victoria Moran, TWR’s office coordinator, later testified that she “handle[s] a lot
of the operations and all of the financials for the organization.” She stated that she helped in
calculating the damages sought in the lawsuit, and that she had reviewed the books and expenses
“to calculate just the amount that we had put forth into trying to make Austin work.” She
reiterated Mendoza’s testimony that the main focus of opening the Austin location was hosting
local volunteer events to “really get the community involved in Texas,” to “work with our larger
donors or our larger partnerships,” and to “get just as many donations as possible to local foster
youth.” She explained that TWR creates certain donation programs, that partners and
corporations decide “we want to donate this amount or this is what we want to put forth towards
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the community,” and then TWR gives opportunities and options to donate to those resources.
She said that the program and service activities usually involve cash donations, but that TWR
also receives in-kind donations such as clothing and toys. She explained that TWR has to keep
accurate records of donations received because persons donating to charitable organizations have
tax implications for the donations.
In calculating lost donations, Moran testified that she assisted in figuring out what
donations they expected to receive at the Austin location. She provided financial information
regarding donations at the California location and explained that the total was based on events
held at the California office. For 2019, she “calculated everything we did for the year as far as
donation goes [for events] held at that location” and excluded donations from non-location
events. She confirmed the $1.1 million amount of donations for the California location, and she
stated those donations constituted approximately one-sixth of the $6.15 million in donations
received by TWR nationwide that year. She also explained that the fair value of the in-kind
donations is determined based on information provided by the donating corporation, who
oftentimes provide donations of their own products, such as makeup, clothing, or socks. She
explained that the California location also received cash donations relating to service activities or
programs held at the location from “corporations or partners that wanted to have actual events at
our facility.” She stated that she was confident that the $1.1 million is accurate.
On cross-examination, Moran admitted that the California location had existed for
eleven years as of 2019 and that she did not believe the new location in Austin would have “the
same level of giving” in its first year as the California location. But she explained that “we took
into consideration just the location we were moving to and the idea that it was a new location,”
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and she testified that the nonprofit’s eleven years of experience meant “we have an idea of how
to do [things] and what we need to do to provide services where we were at.”
After further testimony and closing arguments, the jury rendered a verdict finding
Santis liable only for the breach of contract claim and awarding TWR $35,000 in amounts paid
to Santis; $47,130 for out-of-pocket costs; $1,250 for expenses arising from vacating the
property; and $125,000 for lost donations “that were a natural, probable, and foreseeable
consequence of Rosa Santis’s failure to comply.” On May 27, 2021, the trial court rendered
judgment for TWR and signed a final judgment consistent with the jury verdict. Santis filed a
motion to disregard or for partial new trial challenging the lost-donations damages, which was
denied by operation of law. This timely appeal followed.
STANDARD OF REVIEW
Evidence is legally insufficient only when “(1) there is a complete absence of
evidence of a vital fact, (2) the court is barred by rules of law or evidence from giving weight to
the only evidence offered to prove a vital fact, (3) the evidence for a vital fact is no more than a
mere scintilla, or (4) the evidence conclusively establishes the absence of a vital fact.”
Mid Continent Lift & Equip., LLC v. J. McNeill Pilot Car Serv., 537 S.W.3d 660, 664 (Tex.
App.—Austin 2017, no pet.) (citing City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005)).
Especially for jury findings, we must indulge “every reasonable inference” in favor of the jury’s
finding, “crediting favorable evidence if reasonable jurors could, and disregarding contrary
evidence unless reasonable jurors could not.” Id. “If there is more than a scintilla of evidence to
support the finding, the no evidence challenge fails.” Holt Atherton Indus., Inc. v. Heine,
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835 S.W.2d 80, 84 (Tex. 1992); accord Marshall v. Estate of Freeman, No. 03-20-00449-CV,
2022 WL 1273305, at *4 (Tex. App.—Austin Apr. 29, 2022, no pet.) (mem. op.).
The parties agree that TWR’s damages for “lost donations” are governed by the
same requirements as damages for lost profits. Such losses need not be “susceptible to exact
calculations.” Mid Continent, 537 S.W.3d at 664 (quoting Holt Atherton, 835 S.W.2d at 84).
However, recovery for lost profits does require a showing of the amount of lost profits “by
competent evidence with reasonable certainty.” Holt Atherton, 835 S.W.2d at 84. “What
constitutes reasonably certain evidence of lost profits is a fact intensive determination, but the
common thread running through [the] cases applying this standard is the necessity that the claim
of lost profits not be hypothetical or hopeful but substantial in the circumstances.”
Mid Continent, 537 S.W.3d at 665 (internal quotation marks omitted) (quoting Phillips
v. Carlton Energy Grp., 475 S.W.3d 265, 279 (Tex. 2015)). For example, lost-profits damages
are not available when the evidence is “largely speculative,” Horizon Health Corp. v. Acadia
Healthcare Co., 520 S.W.3d 848, 860 (Tex. 2017); “dependent upon uncertain and changing
conditions, such as market fluctuations,” Texas Instruments, Inc. v. Teletron Energy Mgmt., Inc.,
877 S.W.2d 276, 279 (Tex. 1994); or “from untested ventures or in unpredictable
circumstances,” Phillips, 475 S.W.3d at 280.
Lost-profits calculations must also be demonstrated with “competent evidence.”
Mid Continent, 537 S.W.3d at 665. That is, “[at] 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.” See Holt Atherton, 835 S.W.2d at 84. The amount “must be predicated on
one complete calculation,” id. at 85, and must reflect the lost “profits—the net of income or
revenues from a business activity less the expenses incurred in that activity,” Mid Continent,
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537 S.W.3d at 665. But “[t]here is no one proper method for determining lost profits as
damages,” DaimlerChrysler Motors Co. v. Manuel, 362 S.W.3d 160, 190 (Tex. App.—Fort
Worth 2012, no pet.), and a party is not mandated to follow “any specific accounting or
mathematical methodology for determining lost profits with a reasonable certainty,”
Mid Continent, 537 S.W.3d at 665.
DISCUSSION
In her only issue on appeal, Santis contends that the evidence is legally
insufficient because the $125,000 in lost-donation damages is not demonstrated by “competent
evidence with reasonable certainty.” Holt Atherton, 835 S.W.2d at 84. TWR responds that the
evidence supporting the lost-donation damages is consistent with past approaches for calculating
damages and more than a scintilla of evidence supports the jury’s finding. We agree with TWR.
In so many words, Santis argues that there is a lack of “competent evidence”
because TWR relied on only non-expert, testimonial evidence and failed to present corroborating
evidence supporting the 2019 donation figures for the California location. Mendoza, however, is
the founder and CEO of TWR and testified that he was aware of the books and financial records
of the nonprofit company and the donations received by TWR from various sources. The
testimony of the long-serving leader of TWR—aware of said donation information and
referencing donation data received from his accountant—is exactly the type of competent
evidence that may support a lost-profits analysis. See ERI Consulting Eng’rs, Inc. v. Swinnea,
318 S.W.3d 867, 876 (Tex. 2010) (concluding that long-time owner of small company was
competent to testify on estimated profit margin based on information from accountant); cf.
Bowen v. Robinson, 227 S.W.3d 86, 97 (Tex. App.—Houston [1st Dist.] 2006, pet. denied)
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(“Competent evidence of lost profits relating to property can be proved by the testimony of an
expert or the owner of the property.”). Nor did Mendoza’s testimony stand alone. Moran, who
assisted with TWR’s bookkeeping, also provided corroborating testimony about damages,
including calculating donation figures for the California location, corroborating the accuracy of
the California location figures, and describing the factors considered in estimating the Austin
location’s estimated donations. Santis complains that there was no corroborating documentation
supporting the $1.1 million donation figure for the California location besides testimony at trial,
but TWR is not required to present such documentation to support its request for lost donations.
See Holt Atherton, 835 S.W.2d at 84 (“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.”). Accordingly, the testimony presented by TWR satisfies the “competent
evidence” requirement for lost-profits calculations. See Mid Continent, 537 S.W.3d at 665.
Santis also argues that the lost-donations amount cannot be determined with
“reasonable certainty” because the calculation advanced by TWR is too speculative for the “new
and untested venture” in Austin. Although Santis is correct that the Austin office was a new
location for TWR, that does not mean TWR has undertaken a new and untested activity. Rather,
there was uncontested evidence that TWR had over a decade of experience in holding events and
soliciting donations directed towards assisting children in the foster-care system, and the
establishment of the Austin location was a continuation of that activity. See Texas Instruments,
877 S.W.2d at 280 (explaining that whether lost profits arose from something “new or
unestablished” focuses on “the experience of the persons involved in the enterprise and the
nature of the business activity, and the relevant market”). When the activity in question is well-
established—here, having a physical location as part of a nonprofit’s solicitation of donations—
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the fact that the Austin location was new does not preclude recovery. See America’s Favorite
Chicken Co. v. Samaras, 929 S.W.2d 617, 629 (Tex. App.—San Antonio 1996, writ denied) (“It
is the activity that is the enterprise, and if the activity is well-established, the fact that a newly
formed entity is engaging in the activity will not preclude recovery.”).
Here, TWR introduced evidence regarding the total annual amount of donations
(approximately $1.1 million) received at another, already established location of the same
charity. Cf. DaimlerChrysler, 362 S.W.3d at 190 (“Texas courts have accepted the yardstick
analysis specifically for determining lost profits from a new business by using a comparable
established business that is also owned and operated by the plaintiff, as in this case.”). This $1.1
million figure, and the veracity of the records kept by TWR to track the amount of donations
received, was supported by additional testimony from Moran, and Santis does not point us to any
evidence contradicting this starting figure. See ERI Consulting, 318 S.W.3d at 876–77.
Mendoza then walked through the specific adjustments made to the figure to calculate the
amount of donations TWR expected to receive at the Austin location, including controlling for
population differences, the relative age of the new location compared to the California location,
and TWR’s charitable funding allocation. See Holt Atherton, 835 S.W.2d at 85 (“Recovery of
lost profits must be predicated on one complete calculation.”). Finally, TWR also reduced its
lost-donations amount by the amount of donations TWR actually received arising from the
Austin location. Cf. Mid Continent, 537 S.W.3d at 665 (explaining lost-profits amount must not
include expenses).
Santis likens this calculation to the lost-profits calculation at issue in
Mid Continent, where this court found the evidence legally insufficient because it relied on a
“chain of inferences” that “requires speculation at multiple levels.” Id. at 669. That comparison,
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however, is unavailing. Mid Continent involved damages relating to lost rental income for a
specialized high-lift capacity forklift where the forklift owner failed to present any evidence “of
the frequency or duration of prospective rentals,” failed to elicit any testimony of a definitive
calculation as to the amount of net profits from rentals during the relevant time period, and relied
on the unsupported assumptions that the “piece of junk” equipment with a long history of
mechanical breakdowns and repairs would suddenly work without issue after some anticipated
repairs. Id. at 666–69. Furthermore, there was extensive testimonial evidence by an expert
(presented by the forklift owner) that directly undermined or contradicted the owner’s lost-profits
claim, including that the expert admitted his willingness to “undercut” the prospective rentals by
“‘as soon as I can find one, . . . buy a machine and replace [the forklift], and have my machine
rented’ instead.” Id. at 668.
Santis also complains that the lost-donations calculation does not rely on specific
types of evidence, such as identifying specific donations not made, charitable-contribution rates,
or charitable donations received from central Texas in previous years. See, e.g., ERI Consulting,
318 S.W.3d at 877 (“Contrasting revenue from a time period immediately before the period at
issue is an established method of proving revenue for a lost profit damages calculation.”); Holt
Atherton, 835 S.W.2d at 85 (concluding evidence lacked reasonably certainty because “bare
assertion that contracts were lost” was not accompanied by evidence regarding “which contracts
[were] lost, how many [were] lost, how much profit they would have had from the contracts, or
who would have awarded them contracts”). But there is not a single “right” method for
determining lost profits as damages, nor was TWR required to follow a specific “accounting or
mathematical methodology for determining lost profits with a reasonable certainty.”
Mid Continent, 537 S.W.3d at 665; see also DaimlerChrysler, 362 S.W.3d at 190.
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Considering all the evidence in the record and indulging every reasonable
inference in favor of the jury’s finding, Mid Continent, 537 S.W.3d at 664, TWR presented
“competent evidence with reasonable certainty” about its lost donations arising from its
unsuccessful attempt to establish a physical Austin location, see Holt Atherton, 835 S.W.2d at 84.
There is therefore more than a scintilla of evidence supporting the award, id., and the evidence
was legally sufficient. We overrule Santis’s only issue on appeal.
CONCLUSION
For the above reasons, we affirm the trial court’s final judgment.
__________________________________________
Darlene Byrne, Chief Justice
Before Chief Justice Byrne, Justices Triana and Smith
Affirmed
Filed: July 19, 2023
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