General Capital Group Beteligungsberatung GMBH v. AT & T

Affirm and Opinion Filed July 31, 2013
S
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-12-00446-CV
GENERAL CAPITAL GROUP BETELIGUNGSBERATUNG GMBH, Appellant
V.
AT&T, Appellee
On Appeal from the 101st Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-11-12856
OPINION
Before Justices Bridges and FitzGerald1
Opinion by Justice FitzGerald
This case arises from an alleged oral contract General Capital Group (“GC”) claims to
have had with AT&T (“ATT”). GC now appeals a summary judgment granted in favor of ATT.
In two issues, GC asserts the trial court erred in granting summary judgment on its fraud claim
and on its claim for quantum meruit. Concluding GC’s arguments are without merit, we affirm
the trial court’s judgment.
BACKGROUND
GC is a German investment firm with extensive contacts and experience in the
telecommunications industry. The seeds for the dispute were sown when GC approached ATT
1
The Honorable Mary L. Murphy was on the panel and participated in the submission of this case. Due to her resignation from this Court
on June 7, 2013, she did not participate in the issuance of this Opinion.
asserting that it could broker the acquisition of T-Mobile (“TM”) by ATT. GC made this
proposal to ATT during a January 2009 telephone conference. GC claims that during this
conversation, ATT agreed to allow GC to broker the TM deal and promised to pay it $780
million (2% of the $39 billion deal) on a contingent, success-fee basis. Thus, GC was to receive
compensation only if ATT was successful in acquiring TM. There was no written agreement, or
even a follow up email.
GC provided ATT with more written materials, and in May 2009, held a second
conference with ATT. ATT indicated it was not likely to proceed within the following months of
2009 and that it would contact GC when it was ready to proceed.
From May 2009 to May 2011, there was no communication between ATT and GC. In
March 2011, ATT announced that it intended to acquire TM. When GC approached ATT, ATT
denied that they had any agreement. Shortly thereafter, GC sued ATT for breach of contract.
In response to GC’s suit, ATT filed a plea to the jurisdiction, or alternatively, plea in
abatement, arguing GC’s claims were not ripe because they were contingent upon a successful
closing of the deal. The trial court abated the case for 120 days or until such time as the
transaction closed or was definitively abandoned.
Later, ATT announced that it had abandoned its bid for TM due to opposition from the
Department of Justice and the FCC. The abatement of this case was lifted, and ATT filed a
traditional motion for summary judgment on GC’s claims. ATT asserted that GC had no right to
recover on any of its claims because ATT did not successfully acquire TM.
After ATT filed its summary judgment motion, GC filed a fifth amended petition that
abandoned all claims except the claims for quantum meruit and fraud. In addition, since the TM
transaction did not successfully close, GC no longer argued that it was entitled to recover a $780
million success fee. Instead, it claimed it was entitled to recover “the reasonable value of its
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services” in the amount of $30 million. GC filed a response to the summary judgment, and then
ATT and GC both filed a reply and sur-reply, respectively. The trial court granted ATT’s motion
and entered a take-nothing judgment against GC. It is from this judgment that GC now appeals.
ANALYSIS
Standard of Review
ATT moved for a traditional summary judgment. See TEX. R. CIV. P. 166a(c). In a
traditional summary judgment, the party moving for summary judgment has the burden to
establish that there is no genuine issue of material fact and it is entitled to judgment as a matter
of law. TEX. R. CIV. P. 166a(c); Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 215–16
(Tex. 2003). If the movant satisfies its burden, the burden shifts to the nonmovant to preclude
summary judgment by presenting evidence that raises a genuine issue of material fact. Affordable
Motor Co., Inc. v. LNA, LLC, 351 S.W.3d 515, 519 (Tex. App.—Dallas 2011, pet. denied).
We review the trial court’s summary judgment decision de novo. Valance Operating Co.
v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
548 (Tex. 1985). In doing so, we take as true all evidence favorable to the nonmovant and
indulge every reasonable inference and resolve any doubts in favor of the nonmovant. Nixon, 690
S.W.2d at 548–49.
Fraud
In its first issue, GC contends the trial court erred in granting summary judgment on its
claim against ATT for fraud. ATT responds that GC’s own pleadings affirmatively negate at
least one of the elements of its cause of action. We agree with ATT.
The elements of common law fraud are “(1) that a material representation was made; (2)
the representation was false; (3) when the representation was made, the speaker knew it was false
or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the
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speaker made the representation with the intent that the other party should act upon it; (5) the
party acted in reliance on the representation; and (6) the party thereby suffered injury.”
Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009). Thus, recovery
for fraud requires proof that the defendant’s alleged false representation caused the plaintiff
injury. Formosa Plastics Corp., USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47
(Tex. 1998). Proof of causation includes proof that the defendant’s wrongful conduct was a
substantial factor “in bringing about an injury which would not otherwise have occurred.”
Prospect High Income Fund v. Grant Thornton, LLP, 203 S.W.3d 602, 618 (Tex. App. —Dallas
2006), rev’d in part on other grounds, 314 S.W.3d 913 (Tex. 2010). Proof that the conduct was a
substantial factor in bringing about the injury must be established “beyond mere conjecture,
guess, or speculation.” Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 781 (Tex.
App. —Houston [1st Dist.] 2009, pet. denied).
GC contends ATT committed fraud by denying the existence of a contract. ATT denies
that there was ever a contract. Nonetheless, ATT argues that even if we assume (1) ATT told GC
it would pay it a 2% contingency fee if ATT acquired TM, and (2) ATT never intended to pay
GC when it made the promise to do so, GC still has not been damaged because it is in the same
position it would have been if the representation had been true. In other words, regardless of
whether ATT promised to pay a 2% success fee and GC expended $30 million working on behalf
of the acquisition, GC would still recover nothing because there was no “success” — ATT did
not acquire TM. Therefore, even if ATT’s representation was false, it did not cause any injury to
GC.
GC’s pleadings and summary judgment evidence establish that its claimed losses could
not have been caused by ATT’s alleged representation. In the fifth amended petition, GC claims
it is entitled to recover out-of-pocket expenses for the work it performed to facilitate the TM
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acquisition. Specifically, GC states, “[b]ased upon [ATT’s] announcement and representation
that it is no longer pursuing any acquisition of T-Mobile, [GC] limits its actual damages claim to
its out-of-pocket or reliance damages.”
In response to ATT’s motion for summary judgment, GC submitted affidavits of
company representatives Phillip Schoeller, Christoph Bulfon, Walter Raizner, and Ralph
Seraphim. While the affidavits state that GC engaged in substantial activity to assure that TM
would be available for an acquisition, they also all affirm that payment for GC’s services was to
be contingent upon a successful transaction.2 It is undisputed that the transaction was not
successful — ATT did not acquire TM.
GC argues that its damages must be measured at the time the alleged fraud occurred, not
years later. According to GC, when ATT committed the alleged fraud in 2009, it caused GC to
expend $30 million in out-of-pocket damages. GC further contends that, measured at the time of
the fraud, GC’s interest had a real market value. In support of its argument, GC relies on Carlton
Energy Group v. Phillips, 369 S.W.3d 433, 454 (Tex. App.—Houston [1st Dist.] 2012, pet.
granted). Specifically, GC claims Carlton stands for the proposition that a contingent interest in a
transaction may have a market value, and the loss of that value is a compensable interest in tort.
We view Carlton, however, as distinguishable from the instant case.
Carlton is a tortious interference case involving an investor in a natural gas project who
contracted with the project owner to provide financing in exchange for a 38% interest in the
project. Id. at 438. The owner of the project subsequently breached its contract with the investor
and entered into an agreement with a group of companies that had approached the owner in an
attempt to remove the investor from the project. Id. at 439–40. The companies were ultimately
2
The affidavits do not describe what constitutes “substantial activity.” Instead, the affidavits contain a conclusory statement that “the
reasonable value of the services provided . . . would have been at least $30 million . . . .”
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found liable for tortious interference with the investor’s contract, and a jury awarded $31.16
million in actual damages. Id. at 441.
On appeal, the companies argued the evidence was insufficient to support the jury’s
determination that the fair market value of the investor’s interest was $31.16 million. Id. at 477.
Thus the focus was not whether the interest had value; rather, the argument pertained to how the
value was measured and whether the evidence was legally and factually sufficient to support the
jury’s damage award. In its examination of the sufficiency of the evidence, the court noted that
the loss of the investor’s 38% interest in the project was measured at the time of the tortious
interference, and the interest was an asset that had market value at the time it was taken. Id. at
454. The court further noted that one of the experts had testified that the project was “viable,”
and it is common for interests in ventures such as the gas project to be bought and sold before
there is any production. Id. After considering all of the evidence, the court concluded that the
investor was entitled to recover the fair market value of its interest at the time of the tortious
interference, and was not required to prove any “lost profits.” Id. at 454–55.
Conversely, the instant case involves allegations of fraud, not tortious interference. And
the purchase of an interest in a gas project in exchange for financing differs significantly from a
contract in which payment is contingent upon the successful completion of an acquisition.
Moreover, in Carlton, the investor lost the value of the interest in the project because of the
interferers’ tortious conduct, not because the project never came to fruition. Indeed, there was no
evidence in Carlton that something prevented the owner from drilling in the gas fields or that the
gas fields were dry. Here, even if we characterize GC’s expenditures as an “interest” in the TM
deal, GC was only to recover the value of that interest if the acquisition actually occurred.
Carlton is also distinguishable because it involved benefit-of-the bargain damages rather than the
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out-of-pocket losses GC claims to have incurred in this case. In short, Carlton adds nothing to
our analysis.
Because the evidence and GC’s pleadings establish that the alleged conduct of ATT did
not cause GC to suffer any damages, the trial court properly granted summary judgment in favor
of ATT on GC’s fraud claim. See Hartford, 287 S.W.3d at 781 (requiring proof that conduct was
substantial factor in causing injury). GC’s first issue is overruled.
Quantum Meruit
In its second issue, GC argues the trial court erred in granting summary judgment for
ATT on GC’s claim for quantum meruit. ATT responds that GC’s own allegations defeat the
claim.
Recovery in quantum meruit requires proof that services were performed under
circumstances reasonably notifying the defendant that the plaintiff expected to be paid. Vortt
Exploration Co., Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990). An essential
element of any claim for recovery in quantum meruit is that the plaintiff must expect to be
compensated for the services rendered. Id.; Smith v. Deneve, 285 S.W.3d 904, 915-16 (Tex.
App.—Dallas 2009, no pet.); Richter v. Wagner Oil Co., 90 S.W.3d 890, 895-96 (Tex. App.—
San Antonio 2002, no pet.); West Teleservices, Inc. v. Carney, 75 S.W.3d 455, 462 (Tex. App.—
San Antonio 2001, no pet.). The defendant must have the same expectation. Vortt Exploration,
787 S.W.2d at 944; Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992);
Myrex Indus., Inc. v. Ortolon, 126 S.W.3d 548, 551 (Tex. App.—Houston [14th Dist.] 2003, pet.
denied).
As set forth previously, GC’s summary judgment evidence conclusively established that
it did not expect to be paid unless ATT acquired TM. For example, one of the affidavits GC
submitted as summary judgment evidence states, in pertinent part:
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[GC] believed that a deal had been reached regarding compensation in the
January 2009 teleconference . . . all parties were aware that [GC] was not
being paid on an hourly basis for its work as it proceeded, but rather
would be paid on a success fee basis for enabling an acquisition agreement
of [TM] by [ATT] . . . [GC] demanded to be paid a success fee basis, but
would have accepted to be paid on an on-going basis . . .[ATT] knew that
if it would not commit to a success based fee then [GC] would have to be
paid on an on-going basis. Had an agreement as to payment not been in
place [GC] would have terminated all contact with ATT just as it had done
with [others] . . . .
GC insists there is no authority that the expectation of a contingent fee amounts to no
expectation of payment at all. In support of this argument, GC relies on Lamajak v. Frazin, 230
S.W.3d 786, 796 (Tex. App.—Dallas 2007, no pet.). GC’s reliance is misplaced because
Lamajak is distinguishable from the instant case.
Lamajak involved an alleged oral agreement for the plaintiff to receive payment for
services if the defendant company’s profits for the year 1998 exceeded $6 million. The evidence
showed that the company made over $10 million in profits during the year in question, “thus
meeting the condition for payment.” Id. at 795. Therefore, quantum meruit was a viable claim.
The court also concluded that the company’s statute of limitations defense had no merit because
the claim for quantum meruit did not accrue until the contingency had been met. Id. at 796. Thus,
unlike this case, Lamajak involved a contingency that was actually fulfilled.
The summary judgment evidence establishes that GC did not expect to be paid and ATT
did not expect to pay unless and until the acquisition of TM was actually consummated. The
transaction never occurred. Thus, there was no expectation of payment and therefore no basis for
GC to recover in quantum meruit. The trial court properly granted summary judgment in favor of
ATT on this claim. GC’s second issue is overruled.
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Having resolved all of GC’s issues against it, we affirm the trial court’s judgment.
/Kerry P. FitzGerald/
KERRY P. FITZGERALD
120446F.P05 JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
GENERAL CAPITAL GROUP On Appeal from the 101st Judicial District
BETELIGUNGSBERATUNG GMBH, Court, Dallas County, Texas
Appellant Trial Court Cause No. DC-11-12856.
Opinion delivered by Justice FitzGerald.
No. 05-12-00446-CV V. Justices Bridges and Murphy participating.
AT&T, Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellee AT&T recover its costs of this appeal from appellant
GENERAL CAPITAL GROUP BETELIGUNGSBERATUNG GMBH.
Judgment entered July 31, 2013
/Kerry P. FitzGerald/
KERRY P. FITZGERALD
JUSTICE
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