Superior Broadcast Products v. Doud Media Group, L.L.C.

Opinion filed November 29, 2012
In The
Eleventh Court of Appeals
__________
No. 11-10-00376-CV
__________
SUPERIOR BROADCAST PRODUCTS, Appellant
V.
DOUD MEDIA GROUP, L.L.C., Appellee
On Appeal from the 104th District Court
Taylor County, Texas
Trial Court Cause No. 23479B
OPINION
Appellee, Doud Media Group, L.L.C., purchased a radio transmitter from appellant,
Superior Broadcast Products. Doud Media experienced problems with the transmitter and, later,
filed this suit against Superior. Doud Media alleged, among other things, that the transmitter was
defective and that Superior breached an express warranty requiring it to repair or to replace the
transmitter. The jury found in favor of Doud Media on its breach of warranty claim and awarded
it damages. The trial court entered a final judgment in accordance with the jury’s verdict.
Because we conclude that the evidence was legally insufficient to support the amount of
damages awarded by the jury to Doud Media, we reverse and remand for a new trial on liability
and damages.
Doud Media owns and operates two radio stations in Abilene, Texas. Doud Media
purchased the subject radio transmitter from Superior in 2003. Richard Doud, the managing
member of Doud Media, acted on behalf of Doud Media in connection with its purchase of the
radio transmitter from Superior. James Joynt owned Superior and acted on its behalf in
connection with the transaction. Elenos Broadcast Equipment Company was the manufacturer of
the transmitter. Superior installed the transmitter on Doud Media’s premises on April 18 and 19,
2003. Richard Doud and James Thompson, who was an engineer and an independent contractor
for Doud Media, were present during the installation. Joynt and Steven Benzer, who was an
independent contractor for Superior, were also present during the installation.
On April 18, 2005, Doud Media filed this suit against Superior and Elenos. At that time,
Doud Media was not represented by a licensed attorney. Instead, Richard Doud signed the
original petition in his capacity as managing member. In its petition, Doud Media alleged that
the transmitter was defective. It alleged claims for fraud, and it also alleged that the defendants
violated the Deceptive Trade Practices-Consumer Protection Act1 (DTPA) in various respects,
including the breach of implied warranties.
Doud Media did not serve its original petition on Superior until March 8, 2007. On
March 19, 2007, Superior, represented by counsel, filed a “Motion to Dismiss and for Attorneys
Fees as Sanctions.” Superior moved the trial court to dismiss the case on the ground that Richard
Doud’s representation of Doud Media violated the requirement that a corporation, such as Doud
Media, be represented by a licensed attorney. Superior requested the trial court to award it
$1,000 in attorney’s fees as sanctions against Doud Media.
Doud Media obtained licensed counsel to represent it and thereafter, on March 26, 2007,
filed its first amended original petition. In that petition, it continued to assert its DTPA and fraud
claims and also added claims for breach of oral and written agreements. Doud Media alleged
that the transmitter was defective, that it requested the defendants to remedy the defect, and that
the defendants “refused to honor the one-year express warranty provided with the transmitter and
repair or replace the transmitter in violation of the agreement entered into and in violation of
various implied warranties.” In the certificate of service to the amended petition, Doud Media’s
counsel of record certified that the amended petition had been served by certified mail, return
receipt requested, on Superior’s counsel of record.
1
TEX. BUS. & COM. CODE ANN. §§ 17.41–.63 (West 2011 & Supp. 2012).
2
On May 17, 2007, Superior filed a counterclaim in which it alleged that Doud Media failed
to pay it part of the purchase price for the transmitter. Specifically, Superior alleged that Doud
Media paid $20,500 toward the purchase of the transmitter but failed and refused to pay the
remaining balance due of $20,500. Superior sought to recover the alleged amount due and also
sought to recover its attorney’s fees. Further, on May 17, 2007, Superior filed an answer that
included affirmative defenses. Superior asserted as an affirmative defense that the applicable
two-year statute of limitations barred Doud Media’s DTPA claims. To support its limitations
defense, Superior alleged (1) that, because Richard Doud was not a licensed attorney, Doud
Media’s original petition “was fundamentally defective and did not properly invoke the
jurisdiction of the court”; (2) that Doud Media did not file a valid petition until it filed its
amended petition in March 2007; and (3) that, therefore, Doud Media did not file a valid petition
within the applicable two-year limitations period. As another affirmative defense, Superior
asserted that the doctrine of laches barred Doud Media’s claims.
On June 2, 2008, Doud Media filed a second amended petition; it continued to allege
claims for breach of oral and written agreements, DTPA violations, and fraud. Additionally, in
its second amended petition, Doud Media alleged that “[t]he Defendants have continued to refuse
to honor their express warranties.”
On September 3, 2009, Superior filed a traditional motion for summary judgment. In the
motion, Superior argued that all of Doud Media’s claims were barred by limitations. Superior
stated in the motion that “[t]his cause was filed on April 18, 2005, based on events that allegedly
occurred on April 18, 2003.” Superior asserted that Doud Media’s original petition, which was
filed on April 18, 2005, was “illegal and void as a matter of law” because Richard Doud was not
a licensed attorney. Superior also contended that the service of the original petition on it was
likewise “void.” Because the original petition was “void,” Superior contended that Doud Media
failed to file this suit within the two-year limitations period that is applicable to DTPA claims.
See TEX. BUS. & COM. CODE ANN. § 17.565 (West 2011).
Doud Media added its contract claims in its first amended original petition, which was
filed on March 26, 2007. Superior stated in its motion for summary judgment that “[t]he record
is clear that the breach of contract cause of action was not filed until March 28, 2007; three
years, 11 months and 10 days after the alleged incident.” Superior asserted that, with respect to
Doud Media’s first amended petition, “[n]o citation was issued and no service was attempted on
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[Superior].” Superior contended that Doud Media failed to use due diligence in serving it with
the first amended petition and that, therefore, Doud Media’s contract and fraud claims were
barred by the applicable four-year statutes of limitations.
The trial court held a hearing on Superior’s motion for summary judgment. Following
the hearing, the trial court granted Superior’s motion for summary judgment as to Doud Media’s
DTPA claims and entered a partial summary judgment dismissing the DTPA claims with
prejudice. The trial court denied Superior’s motion for summary judgment as to Doud Media’s
breach of contract and fraud claims.
Doud Media settled its claims against Elenos for $17,250 and nonsuited those claims; the
trial court entered an order dismissing those claims from the suit.
The case proceeded to a jury trial. The jury found in favor of Doud Media on its breach
of warranty and fraud claims, awarding damages to Doud Media in the amount of $231,000 on
its breach of warranty claim and in the amount of $500 on its fraud claim. In response to a
proportionate liability question, the jury found that Superior caused 60% of Doud Media’s
damages, that Elenos caused 30% of Doud Media’s damages, and that Doud Media caused 10%
of its damages.
In response to other questions, the jury found that Doud Media agreed to pay Superior
$37,500 for the radio transmitter and that Doud Media paid $16,000 to Superior for the
transmitter. The jury awarded Superior $6,000 in attorney’s fees.
Doud Media elected to recover the damages awarded by the jury on its breach of
warranty claim. The trial court entered a judgment in accordance with the jury’s verdict. In
arriving at an award for damages, the trial court reduced the $231,000 in damages found by the
jury on Doud Media’s breach of warranty claim by 10%, which was Doud Media’s percentage of
responsibility for its damages as found by the jury. The trial court also gave Superior a credit in
the amount of $17,250 for Doud Media’s settlement with Elenos, a credit of $21,500 for the
amount that the jury found Doud Media owed Superior for the transmitter, and a credit for
$6,000 for Superior’s attorney’s fees. The trial court ordered in its judgment that Doud Media
recover from Superior the amount of $163,150 in damages.
Superior presents four issues for review. In its first issue, Superior contends that all of
Doud Media’s claims were barred by limitations and laches and that, therefore, the trial court
erred when it denied its motion for summary judgment. In its second issue, Superior contends
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that the trial court erred when it submitted questions to the jury on Doud Media’s breach of
warranty claims. In its third issue, Superior contends that the trial court erred when it submitted
a question to the jury that allowed it to award consequential damages. In its fourth issue,
Superior challenges the legal sufficiency of the evidence supporting the damages awarded by the
jury to Doud Media.
Superior challenges the trial court’s denial of its motion for summary judgment on Doud
Media’s contract and fraud claims. Generally, appellate courts do not have jurisdiction to review
the denial of a motion for summary judgment. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d
623, 625 (Tex. 1996); Hines v. Comm’n for Lawyer Discipline, 28 S.W.3d 697, 700 (Tex.
App.—Corpus Christi 2000, no pet.); United Parcel Serv., Inc. v. Cengis Tasdemiroglu, 25
S.W.3d 914, 916 (Tex. App.—Houston [14th Dist.] 2000, pet. denied). When the trial court’s
denial of a motion for summary judgment is followed by a trial on the merits, the order denying
the summary judgment cannot be reviewed on appeal. Ackermann v. Vordenbaum, 403 S.W.2d
362, 365 (Tex. 1966); United Parcel Serv., 25 S.W.3d at 916; Carr v. Weiss, 984 S.W.2d 753,
760 (Tex. App.—Amarillo 1999, pet. denied). The issues in this case were tried on the merits.
We have no jurisdiction to review the trial court’s denial of Superior’s motion for summary
judgment. Therefore, we do not address Superior’s first appellate issue.
We note that Superior waived appellate review of its limitations and laches issues.
Limitations and laches are affirmative defenses. TEX. R. CIV. P. 94. A party asserting an
affirmative defense bears the burden to plead, prove, and secure findings on the defense.
Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988); Pitts & Collard, L.L.P. v.
Schechter, 369 S.W.3d 301, 325 (Tex. App.—Houston [1st Dist.] 2011, no pet.). In this case,
Superior did not present evidence that supported its limitations and laches defenses at trial. The
record does not show that Superior requested jury questions or instructions on its limitations and
laches defenses. The failure to request a jury instruction on an affirmative defense results in
waiver of that ground by the party relying on it unless the issue was conclusively established.
XCO Prod. Co. v. Jamison, 194 S.W.3d 622, 632 (Tex. App.—Houston [14th Dist.] 2006, pet.
denied). Accordingly, Superior waived appellate review of its affirmative defenses of limitations
and laches.
Even if Superior had preserved error on its affirmative defenses, the evidence would
support a finding that Doud Media filed suit on its breach of warranty and fraud claims, and
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served Superior with its suit on those claims, within the applicable limitations periods. The
statute of limitations period for a breach of warranty claim is four years. TEX. BUS. & COM.
CODE ANN. § 2.725(a), (b) (West 2009); PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd.
P’ship, 146 S.W.3d 79, 92–93 (Tex. 2004). Likewise, the statute of limitations period for a fraud
claim is four years. TEX. CIV. PRAC. & REM. CODE ANN. § 16.004(a)(4) (West 2002).
For the purpose of our analysis, we assume without deciding that the applicable four-year
statutes of limitations began to run on the date that Superior completed the installation of the
transmitter (April 19, 2003), instead of on a later date. See Section 2.725(b) (“[W]here a
warranty explicitly extends to future performance of the goods and discovery of the breach must
await the time of such performance the cause of action accrues when the breach is or should have
been discovered.”). Doud Media filed its first amended petition that contained the breach of
contractual warranty and fraud claims on March 26, 2007, which was within the four-year
limitations period.
The record shows that Superior made a general appearance in this case before Doud
Media filed its first amended petition. A party enters a general appearance in a case when it (1)
invokes the judgment of the court on any question other than the court’s jurisdiction, (2)
recognizes by its acts that an action is properly pending, or (3) seeks affirmative action from the
court. Exito Elecs. Co., Ltd. v. Trejo, 142 S.W.3d 302, 304 (Tex. 2004); Klingenschmitt v.
Weinstein, 342 S.W.3d 131, 134 (Tex. App.—Dallas 2011, no pet.). In this case, on March 19,
2007, Superior filed a motion to dismiss and for attorney’s fees as sanctions. In its motion,
Superior sought affirmative action from the trial court in the form of a dismissal of the suit and in
the form of an award of sanctions against Doud Media. By seeking such affirmative action,
Superior made a general appearance in the case. Klingenschmitt, 342 S.W.3d at 134; In re
G.L.A., 195 S.W.3d 787, 792 (Tex. App.—Beaumont 2006, pet. denied).
An appearance in a case has “the same force and effect as if the citation had been duly
issued and served as provided by law.” TEX. R. CIV P. 120; In re A.L.H.C., 49 S.W.3d 911, 916
(Tex. App.—Dallas 2001, pet. denied). Generally, service of citation is required only upon the
filing of an original petition or lawsuit and is not required when amended or supplemental
pleadings are filed. See TEX. R. CIV. P. 21, 99. Rule 21a of the Rules of Civil Procedure applies
to all pleadings required to be served under Rule 21 other than the original petition and except as
otherwise expressly provided in the rules. See TEX. R. CIV. P. 21a; In re E.A., 287 S.W.3d 1, 4
6
(Tex. 2009). Once Superior made a general appearance, Doud Media could properly serve its
amended petition by complying with the filing and service requirements of Rule 21a, which
provides that such pleadings may be served by delivering a copy to the other party’s attorney of
record. In the certificate of service to the first amended petition, Doud Media’s counsel certified
that it had served Superior’s counsel of record by certified mail. A certificate of service is prima
facie evidence of the fact of service. In re E.A., 287 S.W.3d at 5. The record supports the
conclusion that Doud Media filed and properly served its first amended petition within the four-
year limitations period for breach of warranty and fraud claims.
To invoke the equitable doctrine of laches, the moving party ordinarily must show (1) an
unreasonable delay by the opposing party in asserting its rights and (2) a good faith and
detrimental change in position by the moving party because of the delay. In re Laibe Corp., 307
S.W.3d 314, 318 (Tex. 2010) (orig. proceeding); Rogers v. Ricane Enters., Inc., 772 S.W.2d 76,
80 (Tex. 1989). “Generally in the absence of some element of estoppel or such extraordinary
circumstances as would render inequitable the enforcement of petitioners’ right after a delay,
laches will not bar a suit short of the period set forth in the limitation statute.” Caldwell v.
Barnes, 975 S.W.2d 535, 538 (Tex. 1998) (quoting Barfield v. Howard M. Smith Co. of
Amarillo, 426 S.W.2d 834, 840 (Tex. 1968)). Laches should not bar an action on which the
applicable statute of limitations has not run unless to allow the action “would work a grave
injustice” on the party asserting the laches defense. Culver v. Pickens, 176 S.W.2d 167, 170
(Tex. 1943); Brewer v. Nationsbank of Texas, N.A., 28 S.W.3d 801, 804 (Tex. App.—Corpus
Christi 2000, no pet.).
Superior did not present evidence supporting its laches defense. But, even if it had
preserved error on the issue, laches would not bar Doud Media’s suit.
The trial court submitted questions to the jury as to whether a warranty existed and, if so,
whether Superior breached the warranty. In Question No. 3 of the charge, the trial court asked
the jury: “Did [Superior] provide a warranty for the radio transmitter which was purchased by
[Doud Media]?” The jury answered Question No. 3: “Yes.” In Question No. 4, the trial court
asked the jury: “Was the failure, if any, of [Superior] to comply with a warranty, if any, a
producing cause of damages to [Doud Media]?” The trial court included in Question No. 4
definitions of “producing cause” and “failure to comply with a warranty.” The jury answered
Question No. 4: “Yes.”
7
In its second issue, Superior argues that the trial court erred when it submitted warranty
questions to the jury. First, Superior argues that the trial court dismissed Doud Media’s breach
of warranty claims when it dismissed the DTPA claims and that, because the warranty claims
were dismissed, the trial court erred when it submitted them to the jury. Second, Superior argues
that the trial court erred when it submitted warranty questions to the jury because there was no
evidence as to the specific nature of the alleged warranty.
Rule 278 of the Texas Rules of Civil Procedure requires that the trial court submit jury
questions that are supported by the written pleadings and the evidence. TEX. R. CIV. P. 278;
Union Pac. R.R. Co. v. Williams, 85 S.W.3d 162, 166 (Tex. 2002); Schrock v. Sisco, 229 S.W.3d
392, 393 (Tex. App.—Eastland 2007, no pet.). We review a challenge to a trial court’s jury
charge under an abuse of discretion standard. Tex. Dep’t of Human Servs. v. E.B., 802 S.W.2d
647, 649 (Tex. 1990); Schrock, 229 S.W.3d at 393.
Superior’s first argument is based on the premise that the trial court dismissed Doud
Media’s breach of warranty claims when it dismissed its DTPA claims. Under
Section 17.50(a)(2) of the DTPA, a consumer may maintain an action when the breach of an
express or implied warranty constitutes a producing cause of economic or mental anguish
damages. TEX. BUS. & COM. CODE ANN. § 17.50(a)(2) (West 2011). Doud Media alleged that
Superior violated the DTPA when it breached the implied warranty of fitness for a particular
purpose and the implied warranty of merchantability with respect to the transmitter. However,
Doud Media also alleged, independent of its DTPA claims, that Superior breached express
warranties relating to the transmitter. The DTPA does not provide the sole remedy for breach of
warranty claims. See PPG Indus., 146 S.W.3d at 89. Rather, it provides an additional remedy
that overlaps with common-law causes of action for breach of warranty. Id. In this case, Doud
Media could assert its breach of warranty claims as common-law claims, DTPA claims, or both.
Id.
In its partial summary judgment, the trial court dismissed Doud Media’s DTPA claims,
and we express no opinion on the merits of those claims. Based on the summary judgment,
Doud Media could not recover under the DTPA based on the breach of any warranty. The partial
summary judgment did not dispose of Doud Media’s non-DTPA breach of warranty claims. The
trial court did not dismiss Doud Media’s breach of express warranty claims. Because the trial
8
court did not dismiss those claims, Superior’s first argument is based on a false premise and must
fail.
Superior contends that Doud Media did not present any evidence as to the specific nature
of the alleged warranty. A trial court may refuse to submit a jury question only if no evidence
exists to warrant its submission. Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex. 1992); Sewing v.
Bowman, 371 S.W.3d 321, 339 (Tex. App.—Houston [1st Dist.] 2012, pet. filed). Conflicting
evidence presents a fact question for the jury to decide. Brown v. Goldstein, 685 S.W.2d 640,
641–42 (Tex. 1985); Sewing, 371 S.W.3d at 339.
Doud Media presented testimony and documentary evidence relating to the specific
nature of express warranties for the transmitter. Doud Media did not sign a written contract for
the purchase of the transmitter. Superior provided a “Sales Quotation” to Doud Media before
Doud Media purchased the transmitter. In the “Sales Quotation,” Superior stated that “[a]ll
Superior Transmitters have a one year warranty against defects in material and workmanship.”
Richard Doud testified that Joynt told him that Superior offered a one-year warranty; that Elenos
offered a two-year warranty; that Superior would honor Elenos’s two-year warranty; and that the
one- and two-year warranties covered parts that failed on the transmitter, replacement of those
parts, and service. Elenos provided a document entitled “General Terms of Sale” to Superior in
connection with Elenos’s sale of equipment to Superior. A “Warranty” section in the document
provided, in part, as follows:
The equipment supplied by Elenos srl is covered by 24 months warranty; the
warranty period starts on the date of purchase and the coverage extends both to
the original purchaser and to any subsequent buyers. The warranty covers all
faults caused by defective components.
Thus, Doud Media presented evidence that one-year and two-year express warranties existed
with respect to the transmitter.
In November 2005, Benzer sent an e-mail to a representative of Elenos. In the e-mail,
Benzer stated that he had contacted Richard Doud regarding “the repair of his failed Elenos
T31KW radio broadcast transmitter.” Benzer also stated that, based on a lengthy discussion that
he had had with Thompson, he was of the opinion “that the broadcast transmitter failure [that
Thompson] has described is the result of an incorrect assembly when the transmitter was initially
built.” Benzer also stated that Thompson had observed that “many critical fasteners in the power
amplifier cavity . . . had not been properly tightened.” Benzer further stated that the improper
9
assembly had led to “a catastrophic failure of certain of the PA cavity components, including the
thermionic vacuum tube socket contacts.” Benzer concluded that, “[i]f this [was] true, [he was]
also of the opinion that the repair of this transmitter should be covered under the terms and
conditions of the original warranty.” The evidence was undisputed that Superior did not repair
or replace the transmitter after Benzer sent this e-mail to the Elenos representative.
Joynt testified that Superior provided Doud Media a one-year warranty against defects in
material and workmanship, which Joynt said was a parts warranty, on the transmitter. Joynt said
that the warranty was not for service. He said that Superior never offered Doud Media a two-
year warranty from Elenos. Joynt initially said that Elenos did not offer Superior a two-year
warranty when it purchased the transmitter from Elenos. Joynt acknowledged in later testimony
that Elenos offered Superior a two-year parts warranty. Joynt then said that a customer, such as
Doud Media, would have a two-year parts warranty from Elenos. He said that “[t]he first year
the parts warranty would come through Superior” and that “[t]he second year the parts warranty
would come directly through Elenos.”
In summary, Richard Doud testified that one-year and two-year warranties existed on the
transmitter and that Superior agreed to honor the warranty the second year. Richard Doud said
that the warranties covered failed parts, replacement of those parts, and service. The
documentary evidence supported Doud Media’s claims that one- and two-year express
warranties existed. Joynt’s testimony about the nature of the warranties conflicted with Richard
Doud’s testimony. The conflicting evidence presented fact issues for the jury to decide. Brown,
685 S.W.2d at 641–42; Sewing, 371 S.W.3d at 339. Therefore, the trial court was required to
submit the warranty questions to the jury.
The trial court did not abuse its discretion when it submitted Question Nos. 3 and 4 to the
jury. Superior’s second issue is overruled.
Superior argues in its third issue that the trial court erred when it submitted a question on
consequential damages to the jury. In Question No. 5 of the charge, the trial court asked the
jury:
What sum of money, if any, if paid now in cash, would fairly and
reasonably compensate [Doud Media] for its damages, if any, that resulted from
such failure to comply with the warranty?
Consider the following elements of damages, if any, and none other.
10
A. Loss of use;
B. Lost profits, in the past;
C. Cost of Replacement of the subject transmitter;
D. Cost of the unsuccessful repairs and replacement
transistors;
E. Reasonable and necessary engineering or consulting
fees which were incurred in the unsuccessful effort to repair the
defective transmitters; and
F. Reasonable and necessary attorney’s fees.
Do not add any amount for interest on the damages, if any.
Answer in dollars and cents, if any.
Answer: _________
In its pleadings, Doud Media sought recovery of damages for the items listed in A through F of
Question No. 5. In response to Question No. 5, the jury awarded damages to Doud Media in the
amount of $231,000.
Consequential damages are those damages that result naturally, but not necessarily, from
a party’s breach of contract. Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., 348 S.W.3d
894, 901 (Tex. 2011); Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex.
1997). Consequential damages are not recoverable unless the parties contemplated, at the time
of contract formation, that such damages would be a probable result of the breach. Basic
Capital, 348 S.W.3d at 901; Mead v. Johnson Group, Inc., 615 S.W.2d 685, 687 (Tex. 1981).
Thus, to be recoverable, consequential damages must be foreseeable and directly traceable to the
breach and result from it. Basic Capital, 348 S.W.3d at 901; Stuart v. Bayless, 964 S.W.2d 920,
921 (Tex. 1998).
Superior states in its brief that “[t]he inclusion of the Jury Charge Question No. 5 on
consequential damages for the breach of the alleged warranty without a foreseeability
requirement was error.” Based on this statement, Superior may be arguing that the trial court
erred by failing to instruct the jury that it could only award damages that were a foreseeable
consequence of a breach of warranty. Or, Superior may be arguing that the trial court erred
11
when it submitted Question No. 5 to the jury because there was no evidence that the damages
were foreseeable.
Superior did not request the trial court to instruct the jury to consider damages that were a
natural, probable, and foreseeable consequence of the breach of warranty. See Mood v. Kronos
Prods., Inc., 245 S.W.3d 8, 12 (Tex. App.—Dallas 2007, pet. denied) (jury instructed to consider
lost profits that were the natural, probable, and foreseeable consequence of party’s failure to
comply with agreement). Rule 278 of the Rules of Civil Procedure provides that the “[f]ailure to
submit a definition or instruction shall not be deemed a ground for reversal of the judgment
unless a substantially correct definition or instruction has been requested in writing and tendered
by the party complaining of the judgment.” To preserve error, the complaining party must tender
a written request to the trial court for submission of the definition or instruction, which is in
substantially correct wording, and obtain a ruling on the request. Kennedy Ship & Repair, L.P. v.
Pham, 210 S.W.3d 11, 27 (Tex. App.—Houston [14th Dist.] 2006, no pet.). Because Superior
did not request an instruction as to the foreseeability of damages, it did not preserve a complaint
for appellate review that the trial court erred by failing to include such an instruction in the jury
charge.
Doud Media sought to recover the following “elements of damages”: loss of use
damages; past lost profits; the cost of replacing the subject transmitter; the costs of unsuccessful
repairs of the transmitter and of replacement transmitters; reasonable and necessary engineering
and consulting fees incurred in connection with efforts to repair the defective transmitter; and
reasonable and necessary attorney’s fees.
The evidence supported the trial court’s decision to submit a consequential damages
question to the jury. Joynt acknowledged during his testimony that a radio station owner’s
ability to earn money is directly connected to the station’s abilities to broadcast and to advertise.
Joynt testified that the owner of a radio station is “losing money” if the station is off the air. This
testimony demonstrated that it was foreseeable to Superior that Doud Media would lose money if
a defective transmitter prevented its station from being on the air and that it would continue to
lose money until the defective transmitter was repaired or replaced. Based on the evidence, we
conclude that lost profits to Doud Media constituted a foreseeable consequence of a breach of
warranty by Superior. It was also foreseeable that Doud Media would spend money to repair or
to replace a defective transmitter if Superior breached a warranty to repair or to replace it.
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Therefore, the costs incurred by Doud Media in attempting to repair the transmitter and in
replacing the transmitter were also foreseeable consequences of a breach of warranty by
Superior.
Because the types of damages Doud Media sought to recover were natural, probable, and
foreseeable consequences of a breach of warranty by Superior, the trial court did not err when it
submitted a consequential damages question to the jury. Superior’s third issue is overruled.
In its fourth issue, Superior argues that the evidence was legally insufficient to support
the jury’s damages award of $231,000. Specifically, Superior contends that there was no
evidence to support an award for lost profits damages. When we analyze a legal sufficiency
challenge, we must determine whether the evidence at trial would enable reasonable and fair-
minded people to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827
(Tex. 2005). We must review the evidence in the light most favorable to the challenged finding,
crediting any favorable evidence if a reasonable factfinder could and disregarding any contrary
evidence unless a reasonable factfinder could not. Id. at 821–22, 827. We may sustain a no-
evidence or legal sufficiency challenge only when (1) the record discloses a complete absence of
a vital fact, (2) the court is barred by rules of law or evidence from giving weight to the only
evidence offered to prove a vital fact, (3) the only evidence offered to prove a vital fact is no
more than a scintilla, or (4) the evidence conclusively establishes the opposite of a vital fact. Id.
at 810 (citing Robert W. Calvert, “No Evidence” and “Insufficient evidence” Points of Error, 38
TEXAS L. REV. 361, 362–63 (1960)); Pendergraft v. Carrillo, 273 S.W.3d 362, 366 (Tex. App.—
Eastland 2008, pet. denied).
Lost profits are damages for the loss of net income to a business and, broadly speaking,
reflect income from lost business activity, less expenses that would have been attributable to that
activity. Examination Mgmt. Servs., Inc. v. Kersh Risk Mgmt., Inc., 367 S.W.3d 835, 840 (Tex.
App.—Dallas 2012, no pet.); Bowen v. Robinson, 227 S.W.3d 86, 96 (Tex. App.—Houston [1st
Dist.] 2006, pet. denied). The calculation of lost profits must be based on net profits, not gross
revenues. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 n.1 (Tex. 1992); Examination
Mgmt. Servs., 367 S.W.3d at 840.
Recovery for lost profits does not require that the loss be susceptible of exact calculation.
ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010) (quoting Holt
Atherton, 835 S.W.2d at 84). However, the injured party must do more than show that it suffered
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some lost profits. Id. The amount of the loss must be shown by competent evidence with
reasonable certainty. Id. What constitutes reasonably certain evidence is a fact-intensive
determination. Id. 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. Id.
Doud Media offered limited testimony from Richard Doud in an attempt to support its
lost profits allegations. During direct examination, Richard Doud testified as follows:
Q. Okay. Let’s talk about how this radio transmitter and the repeated
serial failures of the radio transmitter has affected your business.
A. Okay.
Q. And let’s talk about the period from April 2003 to the purchase of the
new unit, and that was in 2005 or 2006?
A. Correct, one of the two. I don’t --
Q. You --
A. I don’t remember off the top of my head which year it was.
Q. Let’s use 2005.
A. Okay.
Q. As your E-mails and memos have demonstrated, you’re having power
outages during sweeps periods?
A. Not power outages, transmitter failures.
Q. And if you’re having a transmitter failure and those advertisers are
unhappy, they’re not going to advertise with you?
A. Correct.
Q. Do you have knowledge of, again, during that period the amount of
money which you lost, the amount of revenue which you lost?
A. Based on the ratings-to-revenue conversion, I can certainly give a
rough estimate.
Q. What is it?
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At this point, Superior’s counsel objected to further damages testimony from Richard Doud. The
trial court overruled the objection, and Richard Doud’s testimony continued as follows:
Q. Rich, I think we were asking you a few questions about estimations of
your damages?
A. Yes.
Q. And we’ve gone through repairs; we’ve gone through replacement; we
have that information. But what I’m trying to figure out now is during this three-
year period, how did it affect your business, and if you can quantify that and put a
number to it, let me know.
A. I can, and it was significant.
Q. Let me know. What’s the figure or the estimate?
A. $1,032,000.
Q. And tell this jury where that comes from.
A. That comes from a ratings-to-revenue conversion. In this market
usually one rating share is worth $100,000 worth of revenue. Our ratings
declined based on the amount of time that the transmitter was either off the air or
at low power. So if we started out, which we did when we installed the
transmitter, at an 8.5 share, by the time we had -- we actually changed frequency
in order to stop the bleeding, in order to stop the station from going off the air,
moved the station from 96.1 to 95.1 in order to save the listeners that we had left.
So when you’re talking about going from an 8.5 to a four, you’re looking within
the course of a couple of years losing $400,000 worth of revenue -- $450,000
worth of revenue within that time frame. So that’s where that information comes
from.
Richard Doud’s testimony was legally insufficient to establish an amount of lost profits
with reasonable certainty. He testified that he could give a “rough estimate” of the amount of
revenue that was lost. Lost revenue is not the correct measure of damages. Rather, lost net
profits is the correct measure of damages. Holt Atherton, 835 S.W.2d at 83 n.1; Examination
Mgmt. Servs., 367 S.W.3d at 840. Richard Doud provided no testimony as to Doud Media’s lost
profits. His “rough estimate” of $1,032,000 in lost revenues was based on a loss of ratings share
from 8.5 to 4. He provided no testimony as to when the ratings share began to decrease and the
rate that it decreased. Although he did not know when Doud Media replaced the transmitter, he
used the year 2005 to estimate lost revenues. He did not specify the month in 2005 that he used
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to make his calculation. Even if lost revenue was the correct measure of damages, Richard Doud
did not support his “rough estimate” of lost revenue with objective facts, figures, or data;
therefore, Doud Media failed to establish its lost revenues by competent evidence with
reasonable certainty. The evidence was legally insufficient to support an award of lost profits
damages. See Holt Atherton, 835 S.W.2d at 84.
Doud Media presented some evidence supporting awards on some elements of damages.
For example, Richard Doud estimated that Doud Media spent $25,000 in connection with
attempts to repair the transmitter that it purchased from Superior. He also testified that the cost
of the replacement transmitter was about $25,000. The evidence supported an award of some
damages on three of the elements of damages (C, D, and E) that the jury was instructed to
consider.
The jury’s damages award of $231,000 to Doud Media greatly exceeded the costs
incurred by Doud Media to repair and to replace the Superior transmitter. The jury’s award
necessarily included a substantial amount of money for lost profits damages. Because the
evidence was legally insufficient to support an award for lost profits damages, we sustain
Superior’s fourth issue.
Ordinarily, when there is legally insufficient evidence to support a finding, we reverse
and render. Holt Atherton, 835 S.W.2d at 86; Pendergraft, 273 S.W.3d at 368. However, in this
case, Question No. 5 of the charge did not require the jury to segregate the damages awarded for
the various elements of damages. Based on the record, we cannot determine how much money
the jury awarded Doud Media for lost profits damages or how much money, if any, the jury
awarded Doud Media for any of the other elements of damages. Therefore, we must remand the
case for a new trial on all damages issues. TEX. R. APP. P. 43.3; Pendergraft, 273 S.W.3d at 368;
Tex. Indus., Inc. v. Vaughan, 919 S.W.2d 798, 804 (Tex. App.—Houston [14th Dist.] 1996, writ
denied). Because we are remanding for a new trial on claims involving unliquidated damages,
we also remand for a new trial on liability. TEX. R. APP. P. 44.1(b); Pendergraft, 273 S.W.3d at
368; see Lucas v. Clark, 347 S.W.3d 800, 803 (Tex. App.—Austin 2011, pet. denied) (lost
profits are unliquidated damages); First Nat’l Bank of Irving v. Shockley, 663 S.W.2d 685, 689
(Tex. App.—Corpus Christi 1983, no writ) (unliquidated damages include, among other things,
lost profits and consequential damages).
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This Court’s Ruling
The judgment of the trial court is reversed, and this case is remanded to the trial court for
a new trial on liability and damages.
JIM R. WRIGHT
CHIEF JUSTICE
November 29, 2012
Panel consists of: Wright, C.J.,
McCall, J., and Hill.2
2
John G. Hill, Former Chief Justice, Court of Appeals, 2nd District of Texas at Fort Worth, sitting by assignment.
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