Samuel T. Houston v. Millennium Insurance Agency, Inc. and Mike Stroman

                             NUMBER 13-03-00235-CV

                         COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                         CORPUS CHRISTI B EDINBURG

SAMUEL T. HOUSTON, REBECCA R. JOHNSON,

AND STEVEN E. BURDETTE,                                                        Appellants,

                                                             v.

MILLENNIUM INSURANCE AGENCY, INC. AND

R. MICHAEL STROMAN,                                                                 Appellees.

     On appeal from the 127th District Court of Harris County, Texas.

                       MEMORANDUM OPINION

                  Before Justices Hinojosa, Yañez, and Garza

                         Memorandum Opinion by Justice Hinojosa

This case stems from a dispute over a business separation and the possession of certain insurance files.  Samuel T. Houston sued Millennium Insurance Agency, Inc. (AMillennium@) for unpaid commissions.  Appellees, Millennium and R. Michael Stroman,^[1] then sued Houston, Rebecca R. Johnson, and Steven E. Burdette for conversion, tortious interference, breach of fiduciary duty, and misappropriation of trade secrets.  The cases were consolidated and tried to a jury.  The jury returned findings (1) that Houston and Burdette were due unpaid compensation, and (2) in favor of Millennium and Stroman on all other claims.  After the trial court rendered judgment in accordance with the jury=s findings, this appeal ensued.  Houston challenges the trial court=s judgment in eight issues, and Burdette and Johnson challenge the judgment in six issues. Millennium and Stroman bring one cross-issue.  We reverse and remand for a new trial. 

                                                  A.  Relevant Background

Appellants, Houston, Burdette, and Johnson, were all employees of Millennium.  In July 2002, the business relationship between Houston, Johnson, and Stroman began to deteriorate.  On Monday, August 26, 2002, Houston learned that Stroman planned to fire him and lock him out of the office on Thursday, August 29, 2002. In response, late on the night of August 27, 2002 and into the early morning hours of August 28, 2002, Houston, Burdette, and Johnson removed Houston=s and Burdette=s files from Millennium=s offices. Houston, Burdette, and Johnson then resigned from Millennium and began servicing clients as Sam Houston & Associates.

The parties immediately filed competing petitions and requests for injunctive relief. On September 9, 2002, the trial court, Judge Martha Hill Jamison presiding, signed a temporary injunction order directing Houston and Burdette to return the disputed files within twenty-one days.  On October 4, 2002, Millennium filed a motion to show cause why Houston should not be held in contempt for violating the September 9 injunction order and asserted that Houston had only returned incomplete portions of the files.  On October 18, 2002, the trial court, Judge Sharolyn Wood presiding,^[2] signed a contempt judgment against Houston. Houston was fined $500, sentenced to three days in jail, and ordered to be held by the sheriff until certain documents were produced. 

However, on October 21, 2002, our sister court, the Fourteenth Court of Appeals, granted Houston=s request for emergency relief and petition for writ of habeas corpus.  See In re Houston, 92 S.W.3d 870, 875 (Tex. App.BHouston [14th Dist.] 2002, orig. proceeding).  On December 16, 2002, the Fourteenth Court of Appeals issued an opinion finding numerous deficiencies in the contempt proceedings, including that (1) the original September 9 injunction order was Avague in its description of what documents [Houston] was required to produce,@ and (2) Aneither the show cause motion nor the contempt judgment describe[d] the specific documents that [Houston was] alleged to have failed to return.@  Id. at 877.  The Fourteenth Court of Appeals concluded that the record did not contain sufficient proof Houston violated the injunction and held the contempt judgment signed by Judge Wood to be void.  See id. at 878.

A trial on the merits, however, was held before the Fourteenth Court of Appeals issued its opinion, and the trial court allowed appellees= counsel to ask Houston about the trial court=s contempt judgment and Houston=s incarceration.  Further, in closing argument, counsel for appellees stressed Houston=s Awillingness to go to jail@ instead of returning the files as ordered by the court.

                                                  B.  Admission of Evidence

In their first issues, appellants contend the trial court erred by admitting testimony and allowing argument concerning the trial court=s finding of contempt against Houston and Houston=s subsequent incarceration.  Appellants assert that even if such evidence was relevant, any probative value was Asubstantially outweighed by the danger of unfair prejudice.@  Tex. R. Evid. 403.

                                                          1.  Standard of Review

We review a trial court's evidentiary rulings for abuse of discretion.  Owens‑ Corning Fiberglass Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998).  A trial court abuses its discretion when it acts without regard for any guiding rules or principles.  Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).  A person seeking reversal of a judgment based on evidentiary error must show both that the trial court committed error and that the judgment turns on the particular evidence admitted or excluded.  City of Brownsville v. Alvarado, 897 S.W.2d 750, 753-54 (Tex. 1995).  For a judgment to be properly reversed, a party is not required to prove that Abut for the error a different judgment would necessarily have been rendered, but only that the error probably resulted in an improper judgment.@  Id. at 754; see Tex. R. App. P. 44.1(a).  AWe determine whether the case turns on the evidence admitted or excluded by reviewing the entire record.@  Alvarado, 897 S.W.2d at 754.

                                                                    2.  Analysis

Evidence is only relevant, and therefore admissible, if it has a tendency to make the existence of some fact that is of some consequence to an issue at trial more probable or less probable than it would be without the evidence.  Tex. R. Evid. 401, 402.  To determine relevancy, we look at the purpose for offering the evidence; there must be Asome logical connection either directly or by inference between the fact offered and the fact to be proved.@  Serv. Lloyds Ins. Co. v. Martin, 855 S.W.2d 816, 822 (Tex. App.BDallas 1993, no writ) (citing Tex. R. Evid. 401; 33 Steven Goode, Olin G. Wellborn III & M. Michael Sharlot, Guide to the Texas Rules of Evidence; Civil and Criminal ' 401.3, at 63 (Texas Practice 1988)).

Appellees argue that the evidence of Houston=s conviction of and incarceration for contempt was relevant both to impeach his prior testimony that he had returned everything that had been taken from Millennium=s offices and because it was probative regarding Houston=s malicious intent to keep the files long enough to cause Millennium harm. 

It is important to note that because Houston=s request for relief was still pending before the Fourteenth Court of Appeals at the time of trial, the contempt judgment was not final, and therefore was inadmissible against him under the Texas Rules of Evidence.  See Tex. R. Evid. 609(e) (APendency of an appeal renders evidence of a conviction inadmissible.@); U.S.A. Precision Machining Co. v. Marshall, 95 S.W.3d 407, 409-10 (Tex. App.BHouston [1st Dist.] 2002, pet. denied) (recognizing that for evidence of a conviction to be admissible, the conviction must be final; a conviction that is pending on appeal, that has been reversed, or for which a new trial has been granted does not constitute a final conviction); cf. Ex parte Sanchez, 703 S.W.2d 955, 957 (Tex. 1986) (recognizing that contempt proceedings are quasi‑criminal in nature and that the proceedings Ashould conform as nearly as practicable to those in criminal cases@).

However, appellees assert that none of the grounds upon which the Fourteenth Court of Appeals found the contempt judgment to be void have any pertinence to the issues for which they assert the evidence was relevant at trial.  In furtherance of this position, appellees argue that although the injunction and motion to show cause may have been too vague to support enforcement via contempt, nonetheless, the trial court=s expectations were made clear to Houston orally during pre-trial hearings, and Houston=s failure to comply with those expectations is a fact that is probative of his malicious intent and should be admissible regardless of the ultimate disposition of the judgment.  We disagree.

To assert that Houston was so determined to cause Millennium harm that he was willing to disobey the trial court=s orders and go to jail, appellees must argue that Houston knew what was required of him and consciously chose to act otherwise.  However, the Fourteenth Court of Appeals has already determined that the trial court=s injunction order was subject to more than one interpretation and was not clear regarding what duties and obligations were required of Houston in order to comply.  See In re Houston, 92 S.W.3d at 877.  The Fourteenth Court of Appeals further determined that Anot only did the show cause notice fail to advise [Houston] of the specific acts of contempt, it also failed to provide notice that criminal confinement and a criminal penalty would be sought as punishment.@  Id. at 877.

Any probative value gleaned by appellees at the time of trial was eliminated on appeal. That a conviction might be declared void on appeal, thereby altering its legal effect and probative value, is the very reason that rule 609(e) prevents its admission in the first place.  See Ringer v. State, 129 S.W.2d 654, 656 (Tex. Crim. App. 1939) (quoting Jennings v. State, 115 S.W. 587, 588 (Tex. Crim. App. 1909)).  We reject appellees= attempt to parse the contempt proceedings and circumvent the ultimate disposition of the contempt judgment.  We consider the decision of the Fourteenth Court of Appeals to be controlling as to the veracity of the pre-trial proceedings.  See Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003).^[3]  Because we conclude that evidence of the trial court=s finding of contempt and Houston=s resulting incarceration was not relevant to any issue in contention at trial, we hold the trial court erred in admitting such evidence.

After reviewing the entire record, we conclude that the trial court=s error probably resulted in an improper judgment.  Evidence creates the risk of unfair prejudice when it has Aan undue tendency to suggest a decision on an improper basis, commonly, though not necessarily, an emotional one.@  Mission Res., Inc. v. Garza Energy Trust, 166 S.W.3d 301, 323 (Tex. App.BCorpus Christi 2005, pet. filed) (citing Weidner v. Sanchez, 14 S.W.3d 353, 365 (Tex. App.BHouston [14th Dist.] 2000, no pet.)).  Further, it is well settled that in the context of a jury trial, Athe influence of the trial judge on the jury is necessarily and properly of great weight, and that his lightest word or intimation is received with deference, and may prove controlling.@  Blue v. State, 41 S.W.3d 129, 131 (Tex. Crim. App. 2000) (quoting Starr v. United States, 153 U.S. 614, 626 (1894)); see also In the Interest of M.S., 115 S.W.3d 534, 538 (Tex. 2003) (recognizing that comments on the weight of the evidence can take many forms and that admitted evidence should not indicate the opinion of the trial judge). While the trial judge did not directly comment on the contempt judgment or Houston=s incarceration,^[4] the evidence presented by appellees, revealing that the trial court had already chosen to punish Houston for some of the very actions they were being asked to evaluate, presented the jury with a clear indication of the judge=s opinion. Because there is too great a risk that this evidence irreparably influenced the judgment of the jury, we conclude the trial court=s error probably resulted in an improper judgment.

Appellants= first issues are sustained.  In light of our disposition of these issues, it is not necessary to address appellants= remaining issues, nor appellees= cross-issue.  See Tex. R. App. P. 47.1

The judgment of the trial court is reversed, and the case is remanded to the trial court for a new trial.

FEDERICO G. HINOJOSA

Justice

Memorandum Opinion delivered and filed

this the 20th day of April, 2006.      

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^[1] R. Michael Stroman is the president and sole shareholder of Millennium Insurance Agency, Inc. 

^[2] Judge Sharolyn Wood presided over the trial on the merits.

^[3] Under the law of the case doctrine, Aquestions of law decided on appeal to a court of last resort will govern the case throughout its subsequent stages.@  Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003).  AApplication of the doctrine lies within the discretion of the court, depending on the particular circumstances surrounding that case.@ Id.

 Appellees argue that the law of the case doctrine is inapplicable here because this appeal is not a Asubsequent trial and appeal of the same case,@ i.e., Houston=s original petition for habeas corpus.  While we acknowledge that this is not a direct appeal of Houston=s habeas corpus action wherein we would be asked to address the same issues determined in that action, appellees do not attempt to explain how or why this proceeding is not sufficiently related such that application of the law of the case doctrine is inappropriate.  Appellees have not cited, nor have we found, any authority limiting application of the law of the case doctrine to direct appeals.  It is our opinion that the present circumstance comports with the purposes of the doctrine to A[narrow] the issues in successive stages of the litigation [in order to] achieve uniformity of decision as well as judicial economy and efficiency.@  Id. 

^[4] We do not address the parties= arguments regarding whether the evidence admitted was the equivalent of judicial testimony in violation of Rule 605.  See Tex. R. App. P. 47.1; see also Tex. R. Evid. 605.