Columbia Medical Center of Denton Subsidiary, L.P. D/B/A Denton Regional Medical Center v. DFW Super Group II, L.L.C.

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00507-CV
COLUMBIA MEDICAL CENTER OF APPELLANT
DENTON SUBSIDIARY, L.P. D/B/A
DENTON REGIONAL MEDICAL
CENTER
V.
DFW SUPER GROUP II, L.L.C. APPELLEE
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FROM THE 211TH DISTRICT COURT OF DENTON COUNTY
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MEMORANDUM OPINION1
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Following a lease dispute, Appellee DFW Super Group II, L.L.C. as lessee
filed suit against Appellant Columbia Medical Center of Denton Subsidiary, L.P.
d/b/a Denton Regional Medical Center as lessor, asserting claims for breach of
lease, indemnification, conversion, and fraud. The trial court granted a partial
1
See Tex. R. App. P. 47.4.
summary judgment for the Medical Center, and DFW II’s remaining claims for
indemnification and breach of quiet enjoyment for damages proceeded to trial.
The trial court granted a directed verdict on DFW II’s indemnification claim. A
jury found for DFW II on the quiet enjoyment claim, rejected the Medical Center’s
justification defense, and found damages in the amount of $100,000. The trial
court entered judgment on the jury’s verdict and awarded $110,000 in attorney’s
fees to DFW II. The Medical Center perfected this appeal, raising five issues.
The Medical Center’s fourth issue complains that the evidence is legally
insufficient to support the jury’s damage award of $100,000. The Texas
Supreme Court has explained the evidence necessary to support lost-profits
damages:
Recovery for lost profits does not require that the loss be
susceptible of exact calculation. White v. Southwestern Bell Tel.
Co., 651 S.W.2d 260, 262 (Tex. 1983); Southwest Battery Corp. v.
Owen, 131 Tex. 423, 115 S.W.2d 1097, 1098 (1938). However, the
injured party must do more than show that they suffered some lost
profits. The amount of the loss must be shown by competent
evidence with reasonable certainty. White, 651 S.W.2d at 262;
Southwest Battery, 115 S.W.2d at 1098. 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. See, e.g., Pena v.
Ludwig, 766 S.W.2d 298, 304 (Tex. App.—Waco 1989, no writ);
Frank B. Hall & Co. v. Beach, Inc., 733 S.W.2d 251, 258 (Tex.
App.—Corpus Christi 1987, writ ref’d n.r.e.); Keller v. Davis, 694
S.W.2d 355, 357 (Tex. App.—Houston [14th Dist.] 1985, writ ref’d
n.r.e.); Automark of Texas v. Discount Trophies, 681 S.W.2d 828,
830 (Tex. App.—Dallas 1984, no writ). Although supporting
documentation may affect the weight of the evidence, it is not
necessary to produce in court the documents supporting the
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opinions or estimates. See, e.g., Pena, 766 S.W.2d at 304; Keller,
694 S.W.2d at 357.
The Heines’ testimony was the only evidence presented
concerning their lost profits and can be divided into two segments.
First, Mr. Heine was examined by his counsel. Then, the trial judge
questioned both Heines.
When Mr. Heine was examined by his counsel, only one
question was asked which touched on lost profits. The relevant
question and answer are:
Q. Now as a result of the defendant keeping the dozer for
eight months, did you lose out on $200,200 in lost income during
that time period?
A. Yes, sir, I did.
Even if this testimony were otherwise sufficient, lost income is not
the correct measure of damages. See supra note 1. Further, this
testimony is legally insufficient because it does not provide any
indication of how the Heines determined what their lost profits were.
See, e.g., Village Square, Ltd. v. Barton, 660 S.W.2d 556, 559–60
(Tex. App.—San Antonio 1983, writ ref’d n.r.e.) (testimony stating
only total amount of lost profits held legally insufficient); Frank B.
Hall & Co.,733 S.W.2d at 259 (same). The court does not have any
basis for determining whether the damages were established with
reasonable certainty or were based on pure speculation. This
question and answer are legally insufficient to prove lost profits.
Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992); see also ERI
Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 878 (Tex. 2010) (explaining
that plaintiff bears burden of providing evidence supporting a single complete
calculation of lost profits); Glattly v. Air Starter Components, Inc., 332 S.W.3d
620, 635 (Tex. App.––Houston [1st Dist.] 2010, pet. denied) (holding evidence of
lost profits damages legally insufficient to show ―any amount of reasonably
certain lost profits, based on objective facts, figures, or data‖); Texaco Inc. v.
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Phan, 137 S.W.3d 763, 773 (Tex. App.––Houston [1st Dist.] 2004, no pet.)
(holding evidence of lost profits damages legally insufficient because ―the
Owners failed to meet their burden of proving net profits, from which expenses
had been subtracted‖ to arrive at lost profits).
Here, the only evidence in the record concerning lost profits consists of
Lana Ralston’s testimony and Plaintiff’s exhibit number 20. Ralston testified as
follows:
Q. I’m going to show you what’s been marked as Plaintiff’s
Exhibit 20. Just a minute while I zoom out here. Do you recognize
Exhibit 20?
A. Yes.
Q. It’s the Quickbooks printout, and it’s a – it’s a lot of
documents. It talks about the profits and losses of the Savannah
Clinic, which is also – which is DFW Group’s clinic. Right?
A. Yes, sir.
....
Q. Before I conclude, Ms. Ralston, based on the totality of the
circumstances starting at about February 15th or 16th of 2008, can
you tell the jury what your lost profits would have been on a monthly
basis[?]
....
Q. Just the number.
A. Probably $50,000 a month in expenses - - or gross.
Q. So $50,000 a month in lost profits?
A. Yes.
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Q. Okay. And if we start in February 2008, we’re February
2012, that’s four years, so on a yearly basis $50,000 a month would
be $600,000 a year. Right?
A. Yes.
Q. Times four years would be $2.4 million. Right?
A. Yes.
Plaintiff’s Exhibit 20 consists of forty-two pages of documents. The
documents include multiple ―custom summary reports‖ showing a month-by-
month breakdown of income and expenses and net income for a six-month
period. They include multiple ―summary balance sheets‖ showing assets and
liabilities for a particular month. There are pages of ―transactions by account‖ for
several months. A document labeled ―Profit and Loss,‖ dated March 1, 2008
through May 19, 2009, shows a month-by-month breakdown, but none of the
months show a $50,000 loss.
In determining whether there is legally sufficient evidence to support the
jury’s finding of $100,000 in lost profits, we must consider evidence favorable to
the finding if a reasonable factfinder could and disregard evidence contrary to the
finding unless a reasonable factfinder could not. Cent. Ready Mix Concrete Co.
v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson, 168 S.W.3d
802, 807, 827 (Tex. 2005). The evidence does not support a single complete
calculation of lost profits. See ERI Consulting Eng’rs, Inc., 318 S.W.3d at 878.
Considering the evidence favorable to the finding––Lana Ralston’s testimony and
Plaintiff’s Exhibit 20––this evidence provides no indication of how DFW II
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determined what its lost profits were.2 See, e.g., Heine, 835 S.W.2d at 84;
Glattly, 332 S.W.3d at 635; Texaco Inc., 137 S.W.3d at 773. Consequently, the
evidence is legally insufficient to support the jury’s finding of $100,000 in lost
profits damages. See, e.g., Heine, 835 S.W.2d at 84; Glattly, 332 S.W.3d at 634;
Texaco Inc., 137 S.W.3d at 773. We sustain the Medical Center’s fourth issue.
Having sustained the Medical Center’s fourth issue, we need not address
any of the Medical Center’s other issues.3 See Tex. R. App. P. 47.1 (requiring
2
The Medical Center complains in its third issue that the trial court erred by
failing to exclude all of DFW II’s evidence of damages because DFW II failed to
timely disclose the ―method of calculating economic damages‖ as required by
rule 194.2(d) of the rules of civil procedure. See Tex. R. Civ. P. 194.2(d). The
Medical Center objected at trial, arguing that although DFW II disclosed the
amount of its claimed damages—$50,000 per month—because it did not disclose
the method of calculating such lost profits nor timely supplement its disclosures,
all evidence of damages was automatically excluded. See Tex. R. Civ. P.
193.6(a) (prohibiting introduction of evidence not timely disclosed in discovery
unless trial court finds good cause or lack of unfair surprise). The trial court ruled
that DFW II could introduce what it had disclosed—$50,000 per month in lost
profits—but could not introduce evidence on how that amount was calculated
because it did not timely disclose its method of calculation. DFW II did not
attempt to show good cause or lack of unfair surprise for not timely providing
information on its method of calculating lost profits, and it has not raised an issue
on appeal challenging the trial court’s failure to permit it to elicit testimony from
Ralston concerning how the $50,000-per-month-lost-profits figure was calculated.
See Tex. R. Civ. P. 193.6(b) (providing that burden of establishing good cause or
lack of unfair surprise or prejudice is on party seeking to introduce evidence).
3
The trial court awarded DFW II attorney’s fees pursuant to the lease
between the parties based on the jury’s finding that the Medical Center as lessor
had breached the covenant of quiet enjoyment it owed to DFW II as lessee.
Because no evidence exists supporting the jury’s damage award, DFW II is not
entitled to attorney’s fees. See Intercont’l Grp. P’ship v. KB Home Lone Star
L.P., 295 S.W.3d 650, 652 (Tex. 2009) (holding plaintiff who obtained favorable
jury findings but no damages was not entitled to attorney’s fees under contractual
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appellate court to address only issues necessary to disposition of appeal).
Because legally insufficient evidence exists concerning the only element of
damages submitted to the jury, we reverse the trial court’s judgment and render a
judgment that DFW II take nothing.
SUE WALKER
JUSTICE
PANEL: LIVINGSTON, C.J.; GARDNER and WALKER, JJ.
DELIVERED: October 17, 2013
language––like that contained in paragraph 21.1 of the lease here––entitling a
prevailing party to such fees).
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