F.S. New Products, Inc. v. Strong Industries, Inc.

129 S.W.3d 606 (2004)

F.S. NEW PRODUCTS, INC. and Tesco American, Inc. d/b/a Tesco/Williamsen, Appellants,
v.
STRONG INDUSTRIES, INC. and Brooks Strong, Appellees.

No. 01-01-00086-CV.

Court of Appeals of Texas, Houston (1st Dist.).

February 5, 2004.

Carlton D. Wilde, Jr., Sheila M. Wollam, Jeffrey D. Meyer, Franklin, Cardwell & Jones, P.C., Laura P. Haley, Campbell, Harrison & Wright, Thomas C. Wright, Wright Law Firm, Houston, for Appellants.

Robert B. Dubose, Cook & Roach, LLP, Stephen G. Tipps, Baker & Botts, L.L.P., Houston, for Appellees.

Panel consists of Chief Justice RADACK and Justices ALCALA and HIGLEY.

OPINION ON MOTION FOR REHEARING

LAURA C. HIGLEY, Justice.

Appellant Tesco American, Inc. d/b/a Tesco/Williamsen ("Tesco") has filed a motion for rehearing and a motion for rehearing en banc. We deny rehearing, but withdraw our opinion and judgment of September 11, 2003 and issue this new opinion in its stead. Accordingly, we deny the motion for rehearing en banc as moot.^[1]

Appellees, Brooks Strong and Strong Industries, Inc. (collectively referred to as "the Strong Plaintiffs"), sued appellants, F.S. New Products, Inc. ("FSNP") and Tesco American, Inc. d/b/a Tesco/Williamsen ("Tesco"), for fraud, breach of contract, misappropriation of trade secrets, and conspiracy, alleging appellants had wrongfully obtained and used the Strong Plaintiffs' trade secrets related to the design and manufacture of dump truck trailing axles. FSNP and Tesco appeal from a judgment awarding the Strong Plaintiffs actual and punitive damages, attorney's fees, and permanent injunctive relief. FSNP and Tesco each filed individual briefs with numerous multi-pronged issues, which can be reduced to the following dispositive issues: (1) whether federal patent law preempts the Strong Plaintiffs' state law claims; (2) whether legally and factually sufficient evidence was presented to support the jury's finding that Tesco committed fraud; (3) whether Tesco preserved its objection to the trial court's failure to instruct the jury on the proper measure of fraud damages; (4) whether legally and factually sufficient evidence was presented to support the damage award against Tesco for fraud; (5) whether the Strong Plaintiffs were entitled to punitive damages against Tesco; (6) whether the breach of contract and misappropriation of trade secret damages awarded against FSNP were an impermissible "double recovery"; (7) whether the trial court erred in awarding attorney's fees against FSNP; and (8) whether the trial court erred in granting the Strong Plaintiffs permanent injunctive relief.

We affirm in part and reverse and render in part.

Factual and Procedural History

The Strong Plaintiffs

Strong Industries manufactures trailing axles for dump trucks. A trailing axle is a load-bearing axle that extends out visibly behind a truck. By increasing the truck's length and the number of tires that a truck has on the ground, the trailing axle enables a truck to carry an increased load, while still complying with federal weight restrictions.

Brooks Strong ("Brooks") began designing and manufacturing trailing axles in the mid-1980s. Brooks's first trailing axle, the "100 series," was a twin arm axle made for concrete trucks. In 1985, Brooks put a 100 series trailing axle on a dump truck. At that time, no other trailing axles were available for dump trucks on the open market, and no company had ever developed a dump truck trailing axle that had been successfully marketed for any length of time.

Between 1986 and 1989, Brooks engaged in research relating to the dump truck industry and trailing axles. In 1988, Brooks incorporated Strong Industries. Through Strong Industries, Brooks continued to develop a series of trailing axles known as the "Strong Arm." In 1989 and 1990, the Strong Plaintiffs developed and marketed the 200 series and 300 series. Unlike the 100 series, both the 200 and 300 series had a single arm rather than a twin arm. The 200 and 300 series also had other design features that were intended to be improvements over the 100 series. Even after the production of the 200 and 300 series, Strong Industries continued to develop the Strong Arm. In the early 1990's, Strong Industries developed and produced the 400 and 600 Strong Arm series.^[2] The 400 and 600 had design features that differed from the previous Strong Arm series. Each series, from the 100 through the 600, represented an evolutionary step for the Strong Arm.

A feature common to all of the series was that the trailing axle attached to the frame of the dump truck below the truck's load. Attaching the trailing axle to the frame destabilized the truck. The destabilization could be remedied by attaching a twin arm trailing axle to the bed of the truck above the load. However, such an attachment had never been successful because it resulted in the narrowing of the truck's bed, which in turn decreased the truck's carrying capacity. The Strong Arm 700 series solved this problem. In 1991, Brooks conceived of an idea to design a twin arm trailing axle that attached to the corner posts of the truck's bed, rather than the truck's frame. Because the attachment would be in-line with the sides of the bed, it would not detract from the width of the bed or adversely impact the load-carrying capacity of the truck. Brooks's idea later became the Strong Arm 700 series.

Tesco

Tesco manufactures dump beds for dump trucks. In early 1992, John Newburn, Tesco's general manager, approached Strong Industries about becoming a dealer of the Strong Arm trailing axle. On April 6, 1992, Bill Brugger, Tesco's president, signed a dealer agreement with Strong Industries. As required by the dealership agreement, Brugger, on behalf of Tesco, also signed a non-competition agreement that included a non-disclosure of information provision. The non-competition agreement was attached to the dealership agreement as "Exhibit A." The non-competition agreement provided in relevant part as follows:

1. Covenant Not to Disclose Confidential Information

A. [Tesco] acknowledges that, in and as a result of his [sic] association with [Strong Industries], he [sic] shall be making use of, acquiring and/or adding to confidential information of a special and unique nature and value relating to certain matters of [Strong Industries]. Such matters may include the procedures, manuals, purchasing information, pricing policies, financial information, confidential reports and lists of customers of [Strong Industries].

B. As a material inducement to [Strong Industries] to engage in business with [Tesco], [Tesco] agrees that he [sic] shall not, except with prior written consent of [Strong Industries], directly or indirectly, disclose, transfer or use, for any purpose whatsoever, any of such confidential information which has been obtained by or disclosed to him as a result of his association with [Strong Industries].

. . . .

2. Covenant Not to Compete

A. It is recognized and understood by the parties hereto that [Tesco], through his association with [Strong Industries], has acquired a considerable amount of knowledge and goodwill with respect to the business of [Strong Industries] which are extremely detrimental to [Strong Industries] if used by [Tesco] to compete with [Strong Industries]. It is therefore, understood and agreed by the parties hereto that, because of the nature of the business of [Strong Industries] and [Tesco], it is necessary to afford fair protection to [Strong Industries] from competition by [Tesco].

B. As a material inducement to [Strong Industries] to do business with [Tesco], [Tesco] agrees that for a period commencing with the date hereof and ending eighteen months after termination of business with [Strong Industries], he [sic] shall not engage directly, indirectly or in concert with any other person or entity, in the business of manufacturing, selling, or distributing any device of the type(s) in which [Strong Industries] engages, within the territorial jurisdiction of the United States.

At trial, Brooks provided the following explanation regarding why he required Tesco to sign a non-compete and non-disclosure agreement:

Q: Why is it that you wanted [Tesco] to enter into a dealership agreement and also a noncompetition agreement?

A: We had spent years and years developing trailing axles. We learned a lot—got a lot of education. We learned a lot over the years. We learned a lot of the dos and a lot of the don'ts. Like I explained to [Tesco], I am not going to hand you a gun to shoot me with.

Q: What does that mean?

A: That means I am not going to teach you all these things, which you would have to learn if you are a dealer, and then have you come back and compete with me. I wouldn't, under any circumstances, ever teach these people what they needed to know unless I had some protection. It would be insanity.

Q: It's just an arm and an axle behind a truck. It is not rocket science, is it?

A: Well ... not that it had never been done before, but every invention has a certain amount of evolution that it goes through. Each one that is done leads you to the next step and the next step and the next step. We had gone through a lot of steps, and that took years to do that.

Over the course of the dealership relationship, Strong Industries shared its confidential and proprietary information with Tesco. This included providing Tesco with a Strong Arm sales manual. The manual was stamped privileged and confidential; it contained information derived from the Strong Plaintiffs' many years of experience building trailing axles and included technical drawings of the Strong Arm. Strong Industries also taught Tesco how to build a "super dump," which is the industry term for a dump truck with a trailing axle. Brooks testified at trial that Strong Industries educated its dealers about the super dump manufacturing process because it believed a dealer could better market and sell a super dump if the dealer understood how the product was made.

FSNP

FSNP assists other companies in designing and patenting products. Less than three months after signing the non-compete agreement with Strong Industries, on June 29, 1992, Tesco contracted with FSNP to develop a trailing axle known as the "Maximizer." Fred Smith, an engineer employed by FSNP, worked on the Maximizer design. Around this same time, Tesco's president, Bill Brugger, approached Brooks Strong about producing the Maximizer. Brugger showed Brooks drawings of the Maximizer design and an engineer data book. The Maximizer design had a twin arm, which attached to the truck's frame. Without going into detail, Brooks informed Brugger that the Maximizer design would not work. Because of its flaws, Brooks did not consider the Maximizer to be a threat to his Strong Arm series. When Brugger said that someone may produce the Maximizer, Brooks responded that he hoped someone would. The Maximizer was never produced.

In early 1993, Tesco representatives began encouraging Brooks to hire Smith. Because he had always done his own design work, Brooks was reluctant to use Smith, but based on the recommendation of Tesco representatives, Brooks hired Smith to work on the Strong Arm 700 series. In July 1993, Brooks sent Smith a non-compete and non-disclosure agreement. Smith declined to sign the agreement but instead forwarded a different non-disclosure agreement to Brooks. Because he viewed it as "one-sided," Brooks refused to sign the non-disclosure agreement sent by Smith.

Smith came to Houston to meet with Brooks in August 1993. Brooks and Smith discussed the parameters of the work that Smith would do for Strong Industries. Smith worked on the Strong Arm 700 series for four or five months. The design for the 700 series was completed at the end of 1993. The first Strong Arm 700 series trailing axle was sold in March 1994.

Smith also assisted Strong Industries in filing a patent application for the 700 series in December 1993; the patent was granted in 1998. The 700 series had two features that distinguished it from previous trailing axles: the attachment of the axle to the corner posts of the bed and the location of the wheels. At trial, Brooks testified that both of these features had been thought of and sketched before Smith was hired to work on the 700 series. Brooks hired Smith to work out the technical details of the design and to perform a computer "finite element analysis." Such analysis allowed Smith to test the design without requiring Strong Industries to incur the expense of building a prototype of the new series.

The Maxle

FSNP, and Smith specifically, had been doing business with Tesco for a number of years before Smith was hired by Strong Industries to work on the 700 series. After the development and production of the Strong Arm 700 series, Smith continued to do work for Tesco. On October 23, 1996, FSNP and Tesco signed a contract regarding the development of another trailing axle. The contract recited that Tesco had "conceived" an idea for a trailing axle and that FSNP would develop the idea to make it marketable. The Tesco trailing axle was called "the Maxle." Smith worked on the project and drew the Maxle design for Tesco.

In August 1997, Tesco and FSNP contracted with Silent Drive, Inc. to manufacture the Maxle. Tesco began selling the Maxle in 1997. Between 1997 and 1999, Tesco sold 33 Maxles, and Silent Drive directly sold 12 Maxles to other customers. Under the terms of the August 1997 contract, Tesco and FSNP were entitled to receive royalties on the Maxles directly sold by Silent Drive.

Like the Strong Arm 700 series, the Maxle is a twin arm trailing axle that attaches to the truck bed, rather than the frame. Other than the Strong Arm 700 series and the Maxel, no other trailing axle has ever had such a design. At trial, the Strong Plaintiffs' expert witness, Tom Grubbs, a mechanical engineer, testified that the Maxle's design is "almost one for one derivative of the Strong Arm." After comparing the Strong Arm 700 series trailing axle with the Maxle, Grubbs concluded that the two were "incredibly similar." He stated, "If we were to do a DNA check on the two designs, we would find the father of both of them was Brooks Strong."

The Lawsuit

On October 18, 1998, counsel for the Strong Plaintiffs sent a letter to Tesco. The letter notified Tesco that it was in violation of the non-compete agreement and requested an accounting of all "non-Strong trailing axles" sold by Tesco.

On January 4, 1999, Strong Industries filed suit against Tesco for breach of contract. Brooks Strong later joined as a plaintiff and FSNP was later added as a defendant. In "Plaintiffs' Fifth Amended Original Petition," the live pleading at the time of trial, the Strong Plaintiffs asserted causes of action for fraud, breach of contract, misappropriation of trade secrets, and conspiracy against Tesco and FSNP. The Strong Plaintiffs also requested that Tesco, FSNP (and any other party acting in concert with them) be permanently enjoined from manufacturing the Maxle or any other product using the Strong Plaintiff's "confidential information." Tesco filed a counterclaim against Strong Industries alleging fraud, breach of contract, and tortious interference with contract. The case was tried and submitted to the jury on all theories of recovery asserted by the parties.

The jury made positive liability findings against Tesco on all causes of action and awarded the Strong Plaintiffs $700,000 for breach of contract, $675,000 for fraud, $1.2 million for misappropriation of trade secrets, and $1 million in exemplary damages associated with the fraud finding. With regard to the claims against FSNP, the jury made positive liability findings on the following causes of action: breach of contract, misappropriation of trade secrets, and conspiracy. The jury awarded the Strong Plaintiffs $250,000 for misappropriation of trade secrets and $65,000 for breach of contract against FSNP. The jury found no liability against Strong Industries with regard to Tesco's counterclaim.

The Strong Plaintiffs elected to have judgment rendered against Tesco on the jury's award for fraud and exemplary damages, and against FSNP based on the breach of contract award. In compliance with this request, the trial court rendered judgment awarding the Strong Plaintiffs (1) $675,000 in actual damages and $1,000,000 in exemplary damages against Tesco based on the jury's findings related to fraud, and (2) $65,000 in actual damages against FSNP based on the jury's breach of contract findings. The trial court also awarded $300,000 in reasonable attorney's fees for trying the case against Tesco. In addition, the trial court made the following award of reasonable attorney's fees against Tesco and FSNP jointly and severally: (1) $30,000 for trial, (2) $10,000 for an appeal to an appellate court, and (3) $5,000 for filing a petition for review with the Texas Supreme Court.

The judgment also ordered that Tesco, FSNP, and Silent Drive be permanently enjoined from designing and manufacturing trailing axles, including the Maxle, that are based on Strong Industries' trade secrets and from disseminating such trade secrets. The judgment further ordered that Tesco and FSNP turn over all information relating to the Strong Arm and the Maxle to Brooks Strong.

Both Tesco and FSNP appeal the trial court's judgment.

Discussion

A. Preemption by Federal Patent Law

In its fourth issue, FSNP contends that the Strong Plaintiffs' causes of action for breach of contract, misappropriation of trade secrets, and conspiracy to misappropriate trade secrets should be dismissed because they are preempted by federal patent law.^[3] FSNP argues that these causes of action are based on the Strong Plaintiffs' claims that the Maxle was a copy of the patented design of the 700 series.

According to the United States Supreme Court, "[S]tate regulation of intellectual property must yield to the extent that it clashes with the balance struck by Congress in our patent laws." Bonito Boats v. Thunder Craft Boats, 489 U.S. 141, 152, 109 S. Ct. 971, 978, 103 L. Ed. 2d 118 (1989). However, the Bonito Boats court expressly excepted state actions that do not directly interfere with federal patent law. 489 U.S. at 155, 109 S.Ct. at 979-80. The court determined that "state protection of trade secrets ... [does] not conflict with the federal patent law," because it advances "goals outside the contemplation of the federal patent scheme" in a manner "not aimed exclusively at the promotion of the invention itself." 489 U.S. at 166, 109 S.Ct. at 985. "Trade secret law is intended to prevent ideas from being directly stolen, rather than copied, and only applies to the small group of people privy to confidential information." Garth v. Staktek Corp., 876 S.W.2d 545, 550 (Tex. App.-Austin 1994, writ dism'd w.o.j.).

The Texas Supreme Court has also distinguished trade secret law from patent law:

If, as has been said in numerous cases, the equitable remedy of injunction to prevent one person from damaging another through an abuse of confidence in wrongfully appropriating trade secrets is a separate remedy and incident to a different right than that secured by a patent, it would seem that injunctive protection of the trade secret as against a licensee should not necessarily cease upon the issuance of a patent.

Hyde Corp. v. Huffines, 158 Tex. 566, 314 S.W.2d 763, 773 (1958).

Relying on the reasoning of Bonito Boats and Hyde, the Austin Court of Appeals, in Garth v. Staktek Corporation, also found no conflict between federal patent law and state laws protecting trade secrets that would require dismissal of the plaintiff's state law claims. 876 S.W.2d at 550. Likewise, we conclude no conflict exists between the Strong Plaintiffs' state law claims and federal patent law.

We overrule FSNP's fourth issue.

B. Tesco's Fraud

In its first issue, Tesco (1) challenges the legal and factual sufficiency of the evidence to support the jury's liability finding on the Strong Plaintiffs' fraud claim, (2) contends the trial court erred in failing to properly instruct the jury on fraud damages, (3) challenges the legal and factual sufficiency of the evidence to support the jury's award of fraud damages, and (4) complains of the punitive damage award.^[4]

1. Legal and Factual Sufficiency— Standards of Review

Because Tesco challenges the legal and factual sufficiency of the evidence related to several of the jury's liability and damages findings, we begin by setting out the applicable standards of review for these challenges.

When the party without the burden of proof challenges the legal sufficiency of the evidence, we consider all of the evidence in the light most favorable to the prevailing party, indulging every reasonable inference in that party's favor. Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex.1998); Ned v. E.J. Turner & Co., Inc., 11 S.W.3d 407, 408 (Tex.App.-Houston [1st Dist.] 2000, pet. denied). If there is more than a scintilla of evidence to support the finding, we must uphold it. Formosa Plastics Corp. USA v. Presidio Eng'rs, 960 S.W.2d 41, 48 (Tex. 1998). "When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence." Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983); Seideneck v. Cal Bayreuther Assocs., 451 S.W.2d 752, 755 (Tex.1970). However, if the evidence supplies some reasonable basis for differing conclusions by reasonable minds as to the existence of a vital fact, then there is some evidence. Kindred, 650 S.W.2d at 63.

By contrast, when the appellant challenges the factual sufficiency of the evidence on an issue on which it did not have the burden of proof, the appellant must demonstrate the evidence is insufficient to support the adverse finding. 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d 252, 258 (Tex.App.-Dallas 2002, pet. denied). In reviewing a factual insufficiency point, we consider, weigh, and examine all the evidence presented at trial. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We set aside a finding for factual insufficiency only if the evidence 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).

2. Fraud Liability Finding

When asked whether Tesco committed fraud against the Strong Plaintiffs, the jury answered "yes." Regarding this issue, the jury was instructed as follows:

"Fraud" occurs when:

a. A party makes a material misrepresentation.

b. The misrepresentation is made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion.

c. The misrepresentation is made with the intention that it should be acted on by the other party, and

d. The other party acts in reliance on the misrepresentation and thereby suffers injury.

"Misrepresentation" means

a. A false statement of fact, or

b. A promise of future performance made with an intent not to perform as promised.

The Strong Plaintiffs' fraud claim was based, at least in part, on Tesco's representation that it would adhere to, and perform in compliance with, the non-competition agreement. As the jury was instructed in this case, the Texas Supreme Court has held that a fraud cause of action requires "a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon, and which caused injury." Formosa Plastics, 960 S.W.2d at 47 (quoting Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex.1994)). A promise of future performance constitutes an actionable misrepresentation if the promise was made with no intention of performing at the time it was made. Formosa, 960 S.W.2d at 48. However, the mere failure to perform a contract is not evidence of fraud. Id. Rather, the Strong Plaintiffs had to present evidence that Tesco represented that it would comply with the non-compete and non-disclosure provisions with the intent to deceive and with no intention of performing as represented. See id.

While a party's intent is determined at the time the party made the representation, it may be inferred from the party's subsequent acts after the representation is made. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986). Intent is a fact question uniquely within the realm of the trier of fact because it depends on the credibility of the witnesses and the weight to be given their testimony. Id. Because intent to defraud is not susceptible to direct proof, it invariably must be proven by circumstantial evidence. Id. at 435. Slight circumstantial evidence of fraud, when considered with the breach of a promise to perform, is sufficient to support a finding of fraudulent intent. Id.

Considering the evidence in the light most favorable to the jury's finding, and applying the principles enunciated in Formosa and Spoljaric, we review the relevant evidence.

The evidence showed that John Newburn, Tesco's general manager, approached Brooks Strong about becoming a Strong Arm dealer in early 1992. Brooks insisted that Tesco sign a non-competition agreement. Newburn told Brooks that Bill Brugger, the owner of Tesco, did not like the non-competition agreement. Brooks testified as follows: "The noncompetition he didn't like. But no particular part of it. [Brugger] didn't like the whole thing." Ultimately, Tesco acquiesced; Brugger signed the dealership agreement and the accompanying non-competition agreement on April 6, 1992.

On appeal, Tesco contends that no evidence exists to establish Tesco's fraudulent intent at the time it signed the non-competition agreement. In its brief, Tesco asserts as follows:

[T]he sparse evidence of pre-contract negotiations was that Tesco did not want the non-compete provision in the contract, but signed it anyway. This cannot be any evidence that Tesco intended to breach the contract from the start. If it were, every party that gives up something in contract negotiation could be found to have committed fraud.

In addition to the evidence cited in Tesco's principal brief as being "no evidence" of fraud, the Strong Plaintiffs presented the following evidence probative of Tesco's intentions when it signed the non-competition agreement:

• The term of the dealership agreement between Tesco and Strong Industries was four years and would automatically continue for two additional two year terms. The non-competition agreement provided that Tesco could not compete with Strong Industries for 18 months "after termination of business with Strong Industries."

• On June 29, 1992, less than three months after signing the non-competition agreement with Strong Industries, Tesco entered into a contract with FSNP relating to the design and development of a trailing axle, the Maximizer.

• Tesco had been "involved with" Fred Smith and FSNP for 15 years at the time the parties signed the contract relating to the development of the Maximizer.

• The June 29 contract indicated that the idea for the Maximizer had been previously "conceived."

• Shortly after Tesco signed the non-competition agreement with Strong Industries, Newburn began calling Brooks Strong on almost a daily basis. Newburn was "picking [Brooks's] brain about how long the bed should be ... all the basic parameters for building a super dump."

• Newburn was giving the information he acquired from Brooks to Fred Smith. The engineer data book for the Maximizer, which Brooks saw in the summer of 1992, contained faxes from Newburn to Smith. The faxes contained the information that Brooks had given Newburn regarding the Strong Arm.

• Tesco did not purchase its first trailing axle from Strong Industries until May 1993.

• When Brooks reminded Newburn that Tesco was subject to a non-competition agreement, Newburn responded, "Those agreements are only as good as the people who sign them."

From this evidence the jury could have reasonably inferred that Tesco represented that it would comply with the provisions of the non-competition agreement with the intent to deceive and with no intention of performing as represented. After considering only the evidence and inferences that tend to support the jury's finding, disregarding all evidence and inferences to the contrary, we hold that the evidence was legally sufficient to support the jury's fraud finding.

We next turn to whether the evidence was factually insufficient to show that Tesco had the requisite intent to defraud the Strong Plaintiffs at the time Tesco signed the non-competition agreement. Tesco cites to evidence showing that, from 1993 until 1998, it sold 148 Strong Arm trailing axles, generating $2,353,200 in gross receipts for Strong Industries. Tesco also points to evidence that it assisted Strong Industries in marketing and promoting the 700 series. Tesco contends that its "efforts to perform under the agreement's terms show no fraudulent intent at the time the agreement was signed." This may be true, but, as discussed above, other evidence exists in the record from which a jury could reasonably infer such fraudulent intent. In spite of Tesco's contentions to the contrary, a jury weighed the testimony and found sufficient evidence of fraud. Examining all the evidence on the issue, we do not find the evidence supporting the jury's fraud finding to be so weak or contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust; thus, we hold it was factually sufficient.

3. Fraud v. Breach of Contract

As a corollary to its sufficiency challenge, Tesco also contends that the Strong Plaintiffs' fraud claim is the same as their breach of contract claim.

The supreme court has "repeatedly recognized that a fraud claim can be based on a promise made with no intention of performing, irrespective of whether the promise is later subsumed within a contract." Formosa, 960 S.W.2d at 46-47. In Crim Truck & Tractor Company v. Navistar International Transportation Corporation, the supreme court noted, "As a general rule, the failure to perform the terms of a contract is a breach of contract, not a tort. However, when one party enters into a contract with no intention of performing, that misrepresentation may give rise to an action in fraud." 823 S.W.2d 591, 597 (Tex.1992); accord Oliver v. Rogers, 976 S.W.2d 792, 805 (Tex.App.-Houston [1st Dist.] 1998, pet. denied). Under these same principles, the Spoljaric court held that a fraud claim could be maintained, under the particular facts of that case, for the breach of an oral agreement to pay a bonus because a "promise to do an act in the future is actionable fraud when made with the intention, design and purpose of deceiving, and with no intention of performing the act." 708 S.W.2d at 434.

Here, the Strong Plaintiffs asserted both a breach of contract claim and a fraud claim against Tesco. The jury made liability findings and awarded damages against Tesco on both causes of action. The damage award in the judgment was based on the jury's award of fraud damages.

The Strong Plaintiffs presented evidence at trial relating purely to their breach of contract claim, i.e., that Tesco breached its duty not to compete with Strong Industries or to disclose confidential information to third parties gained through the dealership relationship. However, as discussed above, the Strong Plaintiffs also presented sufficient evidence for the jury to infer that Tesco entered into the non-competition agreement with "the intention, design and purpose of deceiving," i.e., with the intent to obtain Strong's proprietary information related to the trailing axle design, and with no intention of abiding by the non-compete and non-disclosure terms of the agreement. Such evidence goes beyond showing a mere breach of contract. Contrary to Tesco's contention, we conclude that the Strong Plaintiffs' fraud claim was not the same as its breach of contract claim.

4. Jury Instruction on Fraud Damages

Tesco contends that jury question 13 was fatally defective because it did not contain an instruction on the proper measure of fraud damages. Question 13 read as follows: "What sum of money, if any, if paid now in cash, would fairly and reasonably compensate STRONG^[5] for its damages, if any, proximately caused by TESCO's fraud, if any?" The jury answered: "$675,000.00." No accompanying instruction was given on the proper legal measure of damages.

When the trial court fails to include instructions on the proper measure of damages, it is the complaining party's burden to object to the charge and to tender such instructions in substantially correct form. Willis v. Donnelly, 118 S.W.3d 10, 42, (Tex.App.-Houston [14th Dist.] 2003, no pet.); Campbell v. C.D. Payne, Geldermann Sec., 894 S.W.2d 411, 420 (Tex.App.-Amarillo 1995, writ denied); Jim Howe Homes, Inc. v. Rogers, 818 S.W.2d 901, 903 (Tex.App.-Austin 1991, no writ); Nat'l Fire Ins. Co. v. Valero Energy Corp., 777 S.W.2d 501, 508 (Tex.App.-Corpus Christi 1989, writ denied). The Texas Supreme Court has held that there is only one test for determining if a party has preserved error in the jury charge, and that is whether the party made the trial court aware of the complaint, timely and plainly, and obtained a ruling. State Dep't of Highways & Pub. Transp. v. Payne, 838 S.W.2d 235, 241 (Tex.1992); see also Alaniz v. Jones & Neuse, Inc., 907 S.W.2d 450, 451-452 (Tex.1995) ("[W]hile Payne does not revise the requirements of the rules of procedure [rule 273] regarding the jury charge, it does mandate that those requirements be applied in a common sense manner to serve the purposes of the rules, rather than in a technical manner which defeats them."). As required by Payne, we review the record to determine whether Tesco made the trial court aware of its complaint that question 13 lacked an instruction on the proper measure of fraud damages and also obtained a ruling.

On Friday, August 25, 2000, Tesco filed the following written instruction as a part of a complete charge requested by Tesco:

There are two measures of direct damages for common-law fraud: 1) the out-of-pocket measure and 2) the benefit-of-the bargain measure. The out-of-pocket measure computes the difference between the value paid and the value received, while the benefit-of-the-bargain measure computes the difference between the value as represented and the value received.

The trial court did not endorse any of Tesco's requested jury questions or instructions as "accepted" or "rejected," including the above-requested instruction.

On Monday, August 28, 2000, the formal jury conference was held before a visiting judge, the Honorable Katie Kennedy. At the beginning of the charge conference, Judge Kennedy stated as follows:

Let the record reflect that I'm Judge Katie Kennedy, and I'm sitting in for Judge Davidson today by assignment. Judge Davidson has been appointed to hear a disbarment case outside Harris County, and he's asked me to sit in to conclude the trial of this matter.

. . . .

All right. I understand that Judge Davidson had an extensive informal charge conference with the parties on Saturday, which lasted some, as I understand it, eight hours or more. So the parties have, as I understand it, worked with Judge Davidson extensively in an informal charge conference; and we're now ready to begin the formal charge conference.

Judge Kennedy then asked counsel if each had received sufficient time to examine the jury charge prepared by the court. Tesco's counsel responded affirmatively. The record reflects that on August 28, 2000, the day of the formal charge conference, Tesco filed its "Requested Jury Questions and Objections" related to the court's charge. In this filing, Tesco requested an instruction related to material breach of contract and objected to jury questions 6, 7, 10, 12, and 13.

At the formal charge conference, Judge Kennedy inquired whether Tesco had any objections to the court's charge. Consistent with its "Requested Jury Questions and Objections," Tesco responded as follows:

[Tesco's counsel]: Yes, Your Honor. On behalf of Tesco, Tesco has one request, which is to Question No. 1. In writing we have submitted to the Court and we ask for an instruction which reads: "A party commits a material breach of a contract, the non-breaching party is discharged or excused from any obligation to perform."

And, in addition, we object on the grounds that there's not a submission to the jury on Questions No. 6, No. 7, No. 10, No. 12, No. 13. And we object to those questions being submitted to the jury.

THE COURT: All right. Objection is overruled and the requested instruction [to question number one] will be refused. If you want to hand it up, I'll mark it "refused" at this time.

The record reflects that the trial court marked Tesco's requested instruction to jury question number one, relating to material breach of a contract, and Tesco's "no evidence" objections to jury questions 6, 7, 10, 12, and 13, as "rejected."

On appeal, Tesco asserts that it preserved its complaint regarding the trial court's failure to instruct the jury on the proper measure of fraud damages. Tesco acknowledges that it failed to secure the notation "rejected" or "refused" on its proposed instruction, but argues that such failure does not automatically result in a waiver of its complaint. We agree. See Dallas Mkt. Ctr. Dev. Co. v. Liedeker, 958 S.W.2d 382, 386-87 (Tex.1997) (concluding that trial court's statement on record that it would note its refusal on requests preserved error despite trial court's failure to endorse and sign requests), overruled in part on other grounds by Torrington Co. v. Stutzman, 46 S.W.3d 829, 840 (Tex. 2000); Rosell v. Central West Motor Stages, Inc., 89 S.W.3d 643, 657 (Tex.App.-Dallas 2002, pet. denied) (recognizing endorsement on proposed charge is not only means of obtaining ruling on requested jury instruction and holding that party's offer of instruction and objection to trial court's refusal to include instruction preserved error). Rather, to determine whether Tesco preserved its complaint, we apply the Payne preservation test. That is, we review the record to determine whether Tesco made the trial court aware of its complaint, timely and plainly, and secured a ruling. Payne, 838 S.W.2d at 241.

Tesco contends that, because it tendered the proposed fraud-damages instruction to the court, Judge Davidson was made aware of the existence of the instruction and of Tesco's complaint that the jury was not instructed on the proper measure of fraud damages. Tesco also claims that Judge Davidson implicitly denied the requested instruction by not including it in the court's charge. We conclude that the record does not support such inferences.

We begin by noting that no record was made of the informal charge conference with Judge Davidson. We find no indication in the record that Tesco made any attempt to draw the trial court's attention to its requested instruction, or its complaint that the charge failed to instruct the jury on the proper measure of fraud damages. The record does not reveal whether Judge Davidson disagreed with Tesco's proposed instruction and denied it, as claimed by Tesco, or whether he simply did not notice the requested instruction on the nineteenth page of a 25-page proposed charge. In any event, tendering an instruction within an entire proposed charge does not suffice to preserve error when, as here, the record does not show that the trial court ruled, orally or in writing, or was otherwise aware of the requested instruction. See Munoz v. Berne Group, Inc., 919 S.W.2d 470, 472 (Tex.App.-San Antonio 1996, no writ) (holding appellant failed to preserve error in case in which appellant tendered entire proposed charge to trial court that included proposed instruction on "safe place to work," but made no objection to failure to include such instruction, did nothing to bring trial court's attention to instruction, and failed to obtain ruling on tendered requested instruction).

Tesco also claims that its objection made at the formal charge conference preserved its complaint that the trial court failed to instruct the jury on the proper measure of fraud damages. Specifically, Tesco relies on the following objection: "[W]e object on the grounds that there's not a submission to the jury on Questions No. 6, No. 7, No. 10, No. 12, No. 13. And we object to those questions being submitted to the jury."

In a post-submission filing with this Court, Tesco stated,

When Judge Kennedy presented the charge to the parties for formal objections on the following Monday, Tesco brought the omission [of the proposed instruction] to Judge Kennedy's attention by counsel's objection that the question lacked a "submission." No one expressed any lack of understanding about the objection, and Judge Kennedy overruled the objection.

In other words, Tesco contends that the trial court understood Tesco's reference to a lack of "submission" to mean a lack of "instruction." Such a reading is neither plain nor obvious. Tesco's objection was made en masse to jury questions 6, 7, 10, 12, and 13.^[6] If we were to adopt Tesco's interpretation, then we would also understand the objection to mean that Tesco was objecting to a lack of instruction for not only question 13, but also for questions 6, 7, 10, and 12. Such an objection would not apply to these other questions. In particular, questions 6, 10, and 12 provided explanatory instructions to the jury.

As previously mentioned, Tesco filed separate, but identical, written objections to questions 6, 7, 10, 12, and 13 on the day of the formal charge conference. Tesco objected that no evidence supported the submission of questions six, seven, 10, 12, and 13. In light of these written objections, the more logical interpretation of Tesco's verbal objection to questions 6, 7, 10, 12, and 13 at the charge conference would be that Tesco was objecting to the "submission" of these questions because there was no evidence to support their submission.

In any event, applying the Payne preservation test, we conclude that Tesco's objection at the charge conference did not serve to make the trial court aware of its complaint that question 13 lacked an instruction on the proper measure of fraud damages. We hold that Tesco failed to preserve error on this point.

5. Sufficiency of Evidence—Fraud Damages

Tesco also attacks the legal and factual sufficiency of the evidence to support the award of $675,000 in fraud damages to the Strong Plaintiffs. Tesco complains that the evidence was legally and factually insufficient because the award was impermissibly based on evidence of Tesco's gross profits associated with the Maxle sales.

In support of its sufficiency of the evidence challenges, Tesco correctly states that Texas recognizes two measures of direct damages for common-law fraud: the out-of-pocket measure and the benefit-of-the bargain measure. Formosa Plastics, 960 S.W.2d at 49. The Formosa court concluded that a benefit-of-the-bargain measure can include lost profits, i.e., profits that would have been made if the bargain had been performed as promised. Id. at 50.

To support their damages claim, the Strong Plaintiffs offered the testimony of Phillip Levin, a certified public account. Levin testified that Tesco sold 33 Maxles and Tesco dump beds. According to Levin, Tesco's "ill-gotten gains" from the sales of these 33 units ranged from $325,000 to $957,000, depending on whether he calculated the amount using "gross margin" or "gross contribution" figures.^[7] Although not expressly stated, it appears that this damages model was offered to support the Strong Plaintiffs' breach of contract claim. The non-competition agreement between Strong Industries and Tesco contained a liquidated damages provision that stated if Tesco breached either the non-compete or confidentiality provisions of the agreement, Strong Industries would be entitled to "repayment of all profits, compensation, commissions, remunerations, or benefits which [Tesco] directly or indirectly has realized. . . ."

Tesco points out that the Strong Plaintiffs offered no evidence of lost "net profits." Tesco complains that evidence of Tesco's "gross profits" for the Maxle sales was legally and factually insufficient to support the jury's award of fraud damages because the correct legal measure of damages for lost profits is net profits, not gross profits. As a general proposition, this is true. See Holt Atherton v. Heine, 835 S.W.2d 80, 87 n. 1 (Tex.1992) (stating correct measure of lost profits is net profits, not gross profits); see also Turner v. PV Int'l Corp., 765 S.W.2d 455, 465 (Tex. App.-Dallas 1988), writ denied per curiam, 778 S.W.2d 865 (Tex.1989) (same); but see Stuart v. Bayless, 945 S.W.2d 131, 140-41 (Tex.App.-Houston [1st Dist.] 1996), rev'd on other grounds, 964 S.W.2d 920 (Tex. 1998) (recognizing that if defendant's breach of contract or fraud reduces volume of plaintiff's business, but creates no reasonable opportunity for plaintiff to reduce its general overhead expenses, then appropriate measure of damages is amount of lost revenue, without deduction for portion of the fixed overhead expenses); Houston Chronicle Publ'g Co. v. McNair Trucklease, Inc., 519 S.W.2d 924, 932 (Tex.Civ. App.-Houston [1st Dist.] 1975, writ ref'd n.r.e.) (same).

In support of its sufficiency challenges, Tesco complains that, as a result of the trial court's failure to instruct the jury on the proper measure of fraud damages, the trial court awarded damages that were not legally recoverable for fraud, i.e., "gross profits." Tesco contends that its sufficiency challenges on this basis were preserved by its post-verdict motions.^[8] We disagree.

Because the crux of its sufficiency complaint is premised on charge error, Tesco was required to preserve error by objecting to the lack of a damages instruction before submission to the jury when the trial court could have cured any error. See Holland v. Wal-Mart Stores, 1 S.W.3d 91, 94 (Tex.1999) (stating that if trial court has "to resolve a legal issue before the jury could properly perform its fact-finding role[,] ... a party must lodge an objection in time for the trial court to make an appropriate ruling without having to order a new trial."). A party who delays objecting to the lack of a damages instruction until after submission to the jury has waived its complaint because, at that point, the trial court cannot redress the error by adding an instruction. See Allen v. Am. Nat'l Ins. Co., 380 S.W.2d 604, 607-09 (Tex.1964).

Because Tesco failed to object to the lack of a jury instruction on the proper measure of damages, we conclude that Tesco waived its complaint that the trial court awarded fraud damages based on a legally-incorrect measure of damages. See Haskett v. Butts, 83 S.W.3d 213, 220 (Tex. App.-Waco 2002, pet. denied) (holding defendant waived complaint that evidence was legally and factually insufficient to show which of plaintiff's medical expenses may have been associated only with claims in the lawsuit because defendant did not object or request instruction requiring jury to segregate damages); Columbia/HCA Healthcare Corp. v. Cottey, 72 S.W.3d 735, 747 (Tex.App.-Waco 2002, no pet.) (determining that, because there was no objection to charge as submitted, defendants could not complain on appeal that jury awarded damages which would not otherwise be recoverable for fraudulent inducement); Tribble & Stephens Co. v. Consol. Servs., Inc., 744 S.W.2d 945, 949 (Tex. App.-San Antonio 1987, writ denied) (holding that defendant had waived right to complain on appeal that plaintiff had offered insufficient evidence of proper measure of damages because defendant had failed to point out to trial court that improper measure of damages was submitted to jury); Vaughn Bldg. Corp. v. Austin Co., 620 S.W.2d 678, 683 (Tex.Civ.App.-Dallas 1981), aff'd, 643 S.W.2d 113 (1982) (concluding sufficiency of the evidence challenge based on contention that erroneous measure of damages was submitted to jury was waived by defendant's failure to object on that basis in trial court); American Transfer & Storage Co. v. Reichley, 560 S.W.2d 196, 199-200 (Tex.Civ.App.-Amarillo 1977, writ ref'd n.r.e.) ("Unless a party objects to the charge on the ground that it submits an improper measure of damages, he waives the objection and cannot complain on appeal that the charge permitted the jury to find damages based on the wrong measure.").

To the extent that Tesco's complaint can be construed generally to say that no evidence was presented to support the jury's finding of fraud damages in the amount of $675,000, we are required to review the sufficiency of the evidence based upon the charge submitted, even if erroneous, not the charge which should have been submitted. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex.2000). It is undisputed that the jury's award of $675,000 in fraud damages was within the range of unobjected to damages evidence presented at trial by the Strong Plaintiffs. Accordingly, applying the appropriate standard of review, we hold the evidence was legally sufficient to support the award of fraud damages.^[9]See Stamp-Ad, Inc. v. Barton Raben, Inc., 915 S.W.2d 932, 936-37 (Tex.App.-Houston [1st Dist.] 1996, no writ) (holding evidence was legally and factually sufficient to support award of gross profits for breach of contract even though plaintiff did not present evidence of net profits in case in which jury was not instructed on proper measure of damages).

Tesco also contends that the Strong Plaintiffs' evidence of gross profits was insufficient because Tesco offered controverting evidence showing that its profits were actually lower than the range provided by Levin. We construe this contention to be offered in support of Tesco's factual sufficiency challenge to the award of fraud damages. Tesco's damages expert opined that Levin failed to analyze all of the data and information necessary to render an opinion on Tesco's profits. Tesco also presented evidence that the percentage of its profit margin was lower than that utilized by Levin in calculating the range of Tesco's profits from the Maxle sales. The jury obviously chose to believe Levin. We cannot substitute our conclusions for those of the jury, and it is not within the province of this Court to interfere with the jury's resolution of conflicts in the evidence or to pass on the weight or credibility of the witnesses' testimony. Leyva v. Pacheco, 163 Tex. 638, 358 S.W.2d 547, 549 (1962); Eberle v. Adams, 73 S.W.3d 322, 327 (Tex.App.-Houston [1st Dist.] 2001, pet. denied). Applying the appropriate standards of review, we further hold that the evidence was factually sufficient to support the jury's award of damages under the charge as given.

6. Punitive Damages

Tesco also challenges the legal and factual sufficiency of the evidence to support the jury's punitive damage award. Tesco correctly points out that the punitive damage award was predicated on the jury's fraud finding. Tesco contends that, because the Strong Plaintiffs were not entitled to a liability finding on fraud, or to fraud damages, they were also not entitled to punitive damages. See Tex. Builders v. Keller, 928 S.W.2d 479, 482 (Tex.1996) (recognizing punitive damages may not be awarded unless actual damages are found). Because we have held that the evidence was legally and factually sufficient to support such findings as discussed above, Tesco's challenge to the punitive damages award also fails.

For all of the foregoing reasons, we overrule Tesco's first issue.

C. Tesco's Remaining Issues

In its second and third issues, Tesco contends that insufficient evidence was presented to support the jury's findings of breach of contract and misappropriation of trade secrets. As previously mentioned, the Strong Plaintiffs elected to recover actual and punitive damages on their fraud cause of action. Accordingly, the trial court's judgment did not award the Strong Plaintiffs actual damages for either breach of contract or misappropriation of trade secrets. We have held that the evidence was legally and factually sufficient to support the trial court's award of damages under the Strong Plaintiffs' fraud theory. Tesco presented no appellate argument in its principal briefing that the injunctive relief awarded against Tesco could not be based on the Strong Plaintiffs' fraud claim. Moreover, to the extent that the trial court's judgment recites that it awarded attorney's fees against Tesco as a result of the jury's breach of contract finding, Tesco has made no appellate challenge to the trial court's award of attorney's fees; thus, any complaint regarding the attorney's fees award has been waived by Tesco. For these reasons, we need not address Tesco's second and third issues. We discuss Tesco's fourth issue together with FSNP's fifth issue, which both complain of the permanent injunction awarded by the trial court.

D. FSNP's Breach of Contract

In its first issue, FSNP complains of the $65,000 breach of contract damage award rendered against it on several grounds. One of these grounds is that, by awarding the Strong Plaintiffs fraud damages against Tesco and breach of contract damages against FSNP, the trial court gave the Strong Plaintiffs an impermissible "double recovery" of damages.^[10] We agree.

A party is entitled to sue and seek damages on alternative theories but is not entitled to recover on both theories; to do so is considered equivalent to a "double recovery." Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184 (Tex.1998); Birchfield v. Texarkana Mem'l Hosp., 747 S.W.2d 361, 367 (Tex.1987); Foley v. Parlier, 68 S.W.3d 870, 882-83 (Tex.App.-Fort Worth 2002, no pet.). In this context, a double recovery exists when a plaintiff obtains more than one recovery for the same injury. Waite Hill, 959 S.W.2d at 184; Foley, 68 S.W.3d at 882-83. The prohibition against double recovery is a corollary of the rule that a party is entitled to but one satisfaction for the injuries sustained by him. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7-8 (Tex.1991) (noting that courts have applied one satisfaction rule when defendants commit same act as well as when defendants commit technically differing acts that result in single injury).

Here, although Tesco and FSNP may have committed technically different acts, the Strong Plaintiffs incurred only a single financial injury—lost sales of the 700 series. At trial, the Strong Plaintiffs offered the following damages models: (1) Tesco's profits or "ill-gotten gains" from the sale of 33 Maxles; (2) the Strong Plaintiffs' lost profits resulting from the sale of 45 Maxles by Tesco and Silent Drive; and (3) the Strong Plaintiffs' investment and advertising costs.^[11] Regardless of which of these theories the jury applied in awarding damages against Tesco and FSNP, the damages awarded were to compensate the Strong Plaintiffs for the same loss.

At oral argument, the Strong Plaintiffs contended that awarding fraud damages against Tesco and breach of contract damages against FSNP was not a double recovery of damages. The Strong Plaintiffs argued that, when those two damage awards are added together, the total award is still within the range of evidence presented at trial. The Strong Plaintiffs have not cited, and we have not found, any authority to support such an exception to the prohibition against double recovery of damages. To the contrary, a party is entitled to only one remedy if that remedy makes it whole. JHC Ventures, L.P. v. Fast Trucking, Inc. 94 S.W.3d 762, 775 (Tex.App.-San Antonio 2002, no pet.); Hendon v. Glover, 761 S.W.2d 120, 122 (Tex.App.-Beaumont 1988, writ denied). Here, the award of fraud damages against Tesco made the Strong Plaintiffs whole. Thus, allowing the Strong Plaintiffs to recover an additional sum for contract damages against FSNP constituted a prohibited double recovery. We hold that the trial court erred in awarding the Strong Plaintiffs both fraud damages against Tesco and breach of contract damages against FSNP. Accordingly, we sustain FSNP's first issue on this basis and need not address the remaining grounds brought under this issue.

E. FSNP's Misappropriation of Trade Secrets

In its third issue, FSNP attacks the jury's liability and damages findings against it on the Strong Plaintiffs' misappropriation of trade secrets claim. Although the Strong Plaintiffs elected to have judgment against FSNP on their breach of contract damages, we review FSNP's third issue because, in cases in which the jury returns a verdict on two or more alternative theories, as in this case, the prevailing party may recover under an alternative theory if judgment on one theory is reversed on appeal. See Transport Ins. Co. v. Faircloth, 898 S.W.2d 269, 274 (Tex.1995).

As it did in its first issue with regard to the award of breach of contract damages, FSNP contends that, to award the Strong Plaintiffs fraud damages against Tesco and misappropriation of trade secret damages against FSNP, would result in an impermissible double recovery of damages for the Strong Plaintiffs. We agree. For the same reasons stated in our discussion of FSNP's first issue, we hold that awarding the Strong Plaintiffs damages against FSNP for misappropriation of trade secrets and against Tesco for fraud would also be an impermissible double recovery of damages. Accordingly, we sustain FSNP's third issue on this basis and need not address the remaining grounds brought under this issue.

F. Attorney's Fees Against FSNP

In its second issue, FSNP complains that the trial court erred in awarding attorney's fees against it because the Strong Plaintiffs failed to make a "presentment" of their claim under section 38.002(2) of the Civil Practice and Remedies Code. Tex. Civ. Prac. & Rem.Code Ann. § 38.002 (Vernon 1997). Section 38.001(8) of the Civil Practice and Remedies Code provides that a party may recover reasonable attorney's fees if the claim is for an oral or written contract. Id. § 38.001(8) (Vernon 1997). To recover attorney's fees under section 38.001, the prevailing party must have presented the claim to the opposing party and must show that payment was not made within 30 days of the claim's presentment. Id. § 38.002(2), (3) (Vernon 1997). The purpose of presentment is to allow the opposing party to pay a claim within 30 days, before becoming liable for attorney's fees. Jones v. Kelley, 614 S.W.2d 95, 100 (Tex.1981).

Here, the Strong Plaintiffs do not deny that they made no presentment to FSNP; rather, they contend that the jury's finding of liability for misappropriation of trade secrets allows recovery of attorney's fees without presentment. Regardless of whether the Strong Plaintiffs are correct, the trial court's judgment recites, "The Court further finds that STRONG is entitled to attorney's fees against both Tesco and FSNP as a result of the jury's findings that both TESCO and FSNP breached their contracts with Strong." Moreover, based on the Strong Plaintiffs' election of remedies, the trial court awarded damages to the Strong Plaintiffs based on breach of contract, not misappropriation of trade secrets. Thus, the Strong Plaintiffs were required to show presentment of their claim to be entitled to attorney's fees. Because no presentment was made, the award of attorney's fees against FSNP cannot stand. We hold the trial court erred in awarding $45,000 in attorney's fees against FSNP.

We sustain FSNP's second issue.

G. Injunctive Relief Against FSNP and Tesco

In Tesco's fourth issue and FSNP's fifth issue, Tesco and FSNP complain of the permanent injunctive relief awarded by the trial court.

With regard to the injunctive relief, the trial court's judgment provides as follows:

By agreement of the parties, the Court reserved determination of Plaintiffs' claims for injunctive relief, for a turnover order, and for reasonable and necessary attorney's fees. The Court submitted questions, definitions, and instructions to the jury on the remaining matters that were tried.

. . . .

The Court further orders [Tesco] and [FSNP], and their officers, agents, servants and employees, and everyone in active concert or participation with either of them, including but not limited to [Silent Drive] ... of Orange City, Iowa, who shall receive actual notice of this Order by personal service, or otherwise, are perpetually enjoined and restrained from designing, manufacturing, testing, selling, offering to sell, distributing, installing, repairing or altering (1) any trailing axle assembly whose design is based upon or derived from, in whole or in part, the Trade Secret Information of STRONG, including but not limited to the "MAXLE" trailing axle; (2) any accessories for dump trucks compatible with such trailing axle assemblies or whose design is based upon or derived from, in whole or in part, the Trade Secret Information of STRONG.... The Clerk is directed to issue a Writ of Injunction consistent with this Order.

The Court further orders that all rights, title, interest, ownership, and possession of all prototypes of, in and/or pertaining to the MAXLE TRAILING AXLE, which are owned, possessed, held or otherwise controlled by [Tesco] and [FSNP] be and are hereby assigned, granted and conveyed to BROOKS STRONG....

(Bolded emphasis in original; footnote omitted.)

FSNP first complains that the parties did not agree that the trial court could determine the permanent injunction and turnover order issues. FSNP acknowledges that the trial court's judgment recites that the parties had such an agreement. Recitals contained in a judgment are presumed to be true; such presumption is rebuttable when a conflict exists between the judgment and the record. See Alcantar v. Okla. Nat. Bank, 47 S.W.3d 815, 823 (Tex.App.-Fort Worth 2001, no pet.); MJR Fin., Inc. v. Marshall, 840 S.W.2d 5, 9 (Tex.App.-Dallas 1992, orig. proceeding). Here, FSNP points to no such conflict in the record; thus, we presume that the trial court's recitation in the judgment—that the parties agreed to have the trial court determine the injunctive relief issues—is true.

FSNP also contends that the "injunctive relief sought [sic]" exceeded the scope of the relief requested in the Strong Plaintiffs' fifth amended petition, the live pleading at the time of trial. The petition stated that the Strong Plaintiffs sought a permanent injunction against Tesco, FSNP, "and all others in connection or concert with either of them." The petition stated as follows:

Defendants and others in concert with them should be enjoined from participating in the manufacture, sale, and/or distribution of the MAXLE trailing axle, or any product based upon, utilizing or containing any confidential design information of STRONG, or derived therefrom, in whole or in part. There is no other adequate remedy at law for continued violations of the duties set forth herein.

"A petition is sufficient if it gives fair and adequate notice of the facts upon which the pleader bases his claim. The purpose of this rule is to give the opposing party information sufficient to enable him to prepare a defense." Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex.2000) (citing Roark v. Allen, 633 S.W.2d 804, 810 (Tex.1982)); see also Tex.R. Civ. P. 4-7 (providing that pleading setting forth claim for relief must contain short statement of cause of action sufficient to give fair notice of claim involved, statement that damages sought are within jurisdictional limits of court, and demand for judgment). Applying the "fair and adequate notice" standard, we conclude the relief requested in the Strong Plaintiffs' live pleading sufficiently encompassed the injunctive relief awarded by the trial court.

In one sentence, and without supporting argument, FSNP asserts the following in its brief: "[T]he injunctive relief sought was overbroad as not all parties needed for just adjudication were present because Silent Drive was not a party to this lawsuit, and vague and ambiguous as FSNP cannot determine precisely its obligations under the injunction." Without further argument or any citation to the record, FSNP has presented nothing for this Court to review on these grounds. Wheeler v. Methodist Hosp., 95 S.W.3d 628, 646 (Tex.App.-Houston [1st Dist.] 2002, no pet.); see also Tex.R.App. P. 38.1(h) (stating appellate brief must contain clear and concise argument for contentions made, with appropriate citations to authorities and record).

We next discuss, and reject, Tesco's and FSNP's contention that the injunctive relief awarded by the trial court was unnecessary because the Strong Plaintiffs have sufficient protection under federal patent law based on the patent issued on the 700 series. What Tesco and FSNP fail to recognize is that the Strong Plaintiffs sought injunctive relief not only to protect their property rights with respect to the 700 series, but also to protect the design knowledge that the Strong Plaintiffs gained through many years of trial and error in designing the entire Strong Arm series.

The trial court granted a permanent injunction to protect far more than the Strong Plaintiffs' design rights related to the 700 series. The injunction perpetually enjoins and restrains Tesco and FSNP from "designing, manufacturing, testing, selling, offering to sell, distributing, installing, repairing or altering (1) any trailing axle assembly whose design is based upon or derived from, in whole or in part, the Trade Secret Information of STRONG...." The judgment defines "Trade Secret Information" to

mean and include the design criteria developed by STRONG for designing and manufacturing trailing axle assemblies, the design criteria developed by STRONG for designing and fabricating accessories for dump trucks compatible with such trailing axle assemblies and the design criteria developed by STRONG for optimizing combinations of such trailing axle assemblies and compatible dump trucks.

Because the 700 series patent serves to protect only the Strong Plaintiffs' design rights related to the 700 series, utilizing federal patent law to enforce the property rights protected by the patent would not protect the Strong Plaintiffs' property rights related to their "Trade Secret Information." In other words, the Strong Plaintiffs cannot employ federal patent law to protect all of the property rights encompassed within the trial court's definition of "Trade Secret Information." Thus, a permanent injunction was necessary to protect those rights.

Citing Manning v. Wieser, Tesco and FSNP also contend that the trial court abused its discretion^[12] in awarding permanent injunctive relief because the Strong Plaintiffs failed to show a "probable right to permanent relief and probable injury." 474 S.W.2d 448, 449 (Tex.1971). However, Manning involved a challenge to a temporary injunction, not a permanent injunction. To be entitled to a temporary injunction, an applicant must plead a cause of action, show a probable right to recover on that cause of action, and show a probable injury in the interim. Sun Oil Co. v. Whitaker, 424 S.W.2d 216, 218 (Tex.1968); T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 23 (Tex.App.-Houston [1st Dist.] 1998, pet. dism'd). In comparison, to be entitled to a permanent injunction, as here, a litigant must plead and prove (1) a wrongful act; (2) imminent harm; (3) irreparable injury; and (4) no adequate remedy at law. Jordan v. Landry's Seafood Rest., Inc., 89 S.W.3d 737, 742 (Tex. App.-Houston [1st Dist.] 2002, pet. denied); see also Morris v. Collins, 881 S.W.2d 138, 140 (Tex.App.-Houston [1st Dist.] 1994, writ denied). The Strong Plaintiffs sought a permanent, not a temporary injunction. Therefore, the Strong Plaintiffs were not required to show a "probable right to permanent relief and probable injury"; Tesco's and FSNP's challenge to the permanent injunctive relief ordered by the trial court fails on this ground.

Lastly, Tesco provides this Court with two sentences of conclusory argument that the Strong Plaintiffs have an adequate remedy at law: an award of lost profits. In support of this point, Tesco provides no citation to the appellate record and provides no analysis demonstrating that the Strong Plaintiffs have an adequate remedy at law. Because Tesco's argument is wholly conclusory and provides no substantive analysis or discussion to support its contention, we conclude Tesco has failed to present this argument for appellate review. See Wheeler, 95 S.W.3d at 646; Tex. R.App. P. 38.1(h).

In similar fashion, FSNP contends that by bringing a claim for future damages, and by being awarded such damages, the Strong Plaintiffs failed to show that the injury they suffered was irreparable and that no adequate remedy existed at law. FSNP further contends that an award of future damages and injunctive relief is an impermissible double recovery. However, FSNP fails to show this Court where in the record the Strong Plaintiffs were awarded future damages and also fails to adequately develop its appellate argument on this point. As a result, FSNP has failed to preserve this contention for our review. See Wheeler, 95 S.W.3d at 646; Tex.R.App. P. 38.1(h).

We overrule Tesco's fourth issue and FSNP's fifth issue.

CONCLUSION

In accordance with this opinion, we affirm the portion of the trial court's judgment awarding actual and punitive damages against Tesco. We also affirm that portion of the judgment setting forth the injunctive relief ordered by the trial court. As to FSNP, we reverse and render a take-nothing judgment.

NOTES

[1] Hartrick v. Great American Lloyds Ins. Co., 62 S.W.3d 270, 272 (Tex.App.-Houston [1st Dist.] 2001, no pet.).

[2] Strong Industries designed a 500 series, but it never went into production.

[3] Because this issue is one involving jurisdiction, we address it first.

[4] In compliance with rule 38.1(e) of the Rules of Appellate Procedure, Tesco's brief lists 11 multi-pronged "Issues Presented." Tex.R.App. P. 38.1(e). The "Table of Contents" section of Tesco's brief, however, lists four broad and likewise multi-pronged additional arguments, each of which consists of several sub-arguments. Tesco has developed these four arguments rather than its "Issues Presented" in the "Argument" section of its brief. Although these four, broad arguments sometimes incorporate certain of the "issues presented," other "Issues Presented" listed lack any supporting argument whatsoever. See TEX.R.APP. P. 38.1(g). For these reasons, we will consider the four broad arguments and sub-arguments that Tesco has chosen to develop in the body of its brief as Tesco's issues presented for our review.

[5] "STRONG" was defined in the jury charge as Strong Industries and Brooks Strong collectively.

[6] The lack of clarity of Tesco's objection is highlighted by the fact that questions 6, 7, and 10 were unrelated to the Strong Plaintiffs' fraud claim against Tesco. Questions six and seven pertained to the Strong Plaintiffs' misappropriation of trade secrets claim against Tesco, and question 10 asked the jury whether Tesco was part of a conspiracy with FSNP. Only question 12 related to the Strong Plaintiffs' fraud claim against Tesco; it asked whether Tesco committed fraud against the Strong Plaintiffs.

[7] Levin also opined regarding the Strong Plaintiffs' lost profits related to the missed sales of the 700 series. Evidence was presented that 45 Maxles were sold: 33 by Tesco and 12 by Silent Drive. If Strong Industries had made these sales, Levin opined that the range of the Strong Plaintiffs' gross profits would have been between $379,000 and $450,000. However, this evidence would not support the jury's fraud damages award of $675,000.

[8] In its motion for judgment notwithstanding the verdict ("JNOV"), Tesco asserted, in relevant part, as follows:

The Court should set aside the $675,000 in actual damages the jury awarded to Plaintiff in its response to Question 13 for Tesco's fraud because: (a) there is no evidence supporting the damages awarded in that answer, and/or (b) there is no evidence of any causation of the damages found by the jury. Moreover, there was no instruction given on the measure of damages, thus the jury was provided no standard by which it could measure the Strong Plaintiffs' actual damages. In order to fairly submit the issue of damages, a question must enable a jury to determine the amount of damages in appropriate grounds and correct legal principles.

Similarly, in its motion for new trial, Tesco complained that question 13 lacked a fraud damages instruction and asserted that the jury's award of fraud damages was excessive and not supported by the evidence.

[9] Although it did not contain an instruction on the proper measure of fraud damages, question 13, as worded, did contain language that limited the amount of damages that the Strong Plaintiffs could recover. That is, the question instructed the jury to award only those damages that were proximately caused by Tesco's fraud. On appeal, Tesco asserts, without substantive analysis, that legally and factually insufficient evidence existed to show that Tesco's fraudulent conduct caused the Strong Plaintiffs to incur any damages. To the contrary, legally and factually sufficient evidence was presented to show that Tesco's fraudulent inducement caused the Strong Plaintiffs to share information with Tesco, which Tesco then used to design the Maxle. As a result of the sale of the Maxle, evidence was presented that the Strong Plaintiffs lost sales of Strong Arm 700 series, i.e., incurred damages. Apparently unwilling to concede that its fraud caused the Strong Plaintiffs any damages, Tesco does not complain that the amount of damages awarded by the jury in question 13 was not proximately caused by Tesco's fraud. Rather, Tesco limits its challenge to its contention that the jury awarded an improper measure of damages. Therefore, we do not determine whether sufficient evidence was presented to show that Tesco's fraud proximately caused the Strong Plaintiffs to incur $675,000 in damages.

[10] FSNP filed a motion for the Strong Plaintiffs to elect remedies. Such motion requested before judgment preserved FSNP's double-recovery complaint for appellate review. Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184 (Tex. 1998).

[11] Brooks Strong testified that he had invested approximately $2 million in developing his Strong Arm trailing axles; he stated that the money had been invested before he "hooked up" with either Tesco or FSNP and that he had spent $400,000 in advertising the 700 series over the years.

[12] The decision to grant or deny a permanent injunction is ordinarily within the sound discretion of the trial court if a bench trial has been conducted, and appellate review of the trial court's action is limited to the question of whether such action constituted a clear abuse of discretion. Crain v. Unauthorized Practice of Law Comm. of the Supreme Court of Tex., 11 S.W.3d 328, 332 (Tex.App.-Houston [1st Dist.] 1999, pet. denied).