Natural Soda LLC and Enirgi Group Corporation v. Bunnett & Co., Inc. Energy Feeds International, LLC And William E. Bunnett

NUMBER 13-17-00558-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
NATURAL SODA LLC AND
ENIRGI GROUP CORPORATION, Appellants,
v.
BUNNETT & CO., INC, ENERGY FEEDS
INTERNATIONAL, LLC AND WILLIAM
E. BUNNETT, Appellees.
On appeal from the 200th District Court
of Travis County, Texas.
MEMORANDUM OPINION
Before Justices Benavides, Perkes, and Tijerina
Memorandum Opinion by Justice Tijerina
Appellants and cross-appellees, Natural Soda LLC and Enirgi Group Corp.
(collectively “Natural Soda”) appeal the trial court’s judgment in favor of appellees and
cross-appellants, Energy Feeds (“Energy”), Bunnett & Co., Inc., and William Bunnett
(collectively “Bunnett”). By seven issues, which we have renumbered and reorganized,
Natural Soda contends that: (1) the evidence is insufficient to support the jury’s findings
on several questions of fact (issues one through five); (2) Bunnett’s damages for future
lost profits are barred as a matter of law (issue six); and (3) the trial court improperly
instructed the jury that “Natural Soda materially failed to comply with the Agreement on
December 2, 2015, by terminating the Agreement in violation of the (10) ten-day
provision” (issue seven). 1
By three issues, cross-appellant, Energy contends that: (1) the trial court erred by
failing to submit a question to the jury regarding Energy’s “claim against Natural Soda for
participating in breach of fiduciary duty”; 2 (2) the trial court improperly implicitly granted a
directed verdict in favor of Natural Soda regarding Energy’s breach of fiduciary claim; and
(3) the trial court materially misstated Texas law by instructing the jury “that it was not a
breach of fiduciary duty for the general manager while still employed to take active steps
to compete with his employer and secretly do so in concert with his employees.”
By six issues, which we have reorganized and renumbered, Bunnett contends that:
(1) the “express contract rule” bars Natural Soda’s quasi-contract claim (issue one); (2)
the evidence is insufficient to support the amount of damages awarded to Natural Soda
on its quasi-contract claim (issue two); (3) the trial court misstated Texas law in the jury
charge 3 (issue three); and (4) the trial court erred by (a) requiring Bunnett to elect its
1This case is before this Court on transfer from the Third Court of Appeals in Austin pursuant to a
docket equalization order issued by the Supreme Court of Texas. See TEX. GOV’T CODE ANN. § 73.001.
2 Energy did not have a contract with Natural Soda. Energy’s claims against Natural Soda arose
from Energy’s accusation that Natural Soda impacted Energy’s contract with its supplier of palm oil,
Wawasun.
3 In its brief, Bunnett has adopted and incorporated Energy’s third issue as its third issue.
2
damages, (b) reducing Bunnett’s exemplary damages, and (c) refusing to award
exemplary damages to Bunnett, (issues four and five). We affirm in part and reverse and
render in part.
I. BACKGROUND
Natural Soda, a Colorado company, produces sodium bicarbonate (bicarb), which
is used for, among other things, animal feed. Bunnett distributes bicarb to end users, who
mainly use it for animal feed supplements. Energy distributes bypass fat referred to by
the parties as palm oil, which is also used for animal feed supplements. William Bunnett,
the founder of Bunnett, is the president of Bunnett & Co., Inc. and Energy. William’s son,
J.J. Bunnett, is the chief operations officer of Bunnett.
Natural Soda and Bunnett first entered into a contract for the supply and sale of
bicarb in 2005 (the “Agreement”). The Agreement provided that Bunnett was the exclusive
sales representative for soliciting orders of bicarb in fifteen states. Bunnett contracted
with its customers and collected payment directly from them. After the customers paid
Bunnett, Bunnett paid Natural Soda. The Agreement automatically renews every year
unless one of the parties notifies the other of its intent to terminate ninety days prior to
the annual expiration. Under certain circumstances, the Agreement permitted Natural
Soda to terminate it by providing Bunnett ten days’ notice. In either instance of
termination, the Agreement required for Natural Soda to accept bicarb orders from
Bunnett for ninety days, and Bunnett was required to pay for those orders.
Apparently, the parties continued renewing the Agreement, without issues. In April
2010, according to the parties, they executed an amendment to the Agreement extending
its term to September 8, 2016. On October 23, 2015, one of Bunnett’s sales associates,
3
Frank Dores, resigned. A few days later, two other sales associates, Ray Gearhart and
John Franklin, also resigned from Bunnett. 4
On December 2, 2015, Natural Soda terminated the Agreement early, claiming that
Bunnett had breached the Agreement. Natural Soda continued to supply Bunnett with
bicarb after the termination pursuant to the Agreement’s terms. According to Natural
Soda, Bunnett refused to pay for the post-termination supply in the amount of $3.4 million.
Bunnett sued Natural Soda for breach of contract and tortious interference with business
relationships, among other things. Natural Soda countersued for breach of contract and
quantum meruit, among other things. The case proceeded to a jury trial.
The jury awarded Bunnett damages for both its breach of contract and tortious
interference with business relations claims. Bunnett elected to collect its damages for
breach of contract, which the trial court rendered in its judgment. The jury found that
Bunnett breached the contract after Natural Soda terminated the Agreement on
December 2, 2015; however, it found that Bunnett’s breach was excused. The jury
awarded damages to Natural Soda for its quantum meruit claim. This appeal followed.
II. SUFFICIENCY OF THE EVIDENCE
By its first through third issues, Natural Soda contends the evidence is insufficient
to support the jury’s findings that (a) Bunnett did not breach the contract first, (b) Natural
Soda’s breaches caused Bunnett harm, and (c) Bunnett is entitled to lost profits. 5
A. Standards of Review
4 Bunnett alleges that Natural Soda encouraged the resignations.
5 We note that all parties conceded in the trial court that Colorado law applies to the breach of
contract claims. Accordingly, where appropriate, we will apply Colorado law to those issues relating to the
breach of contract claim.
4
A legal sufficiency challenge will be sustained when the record shows: (1) the
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 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. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). The
test for legal sufficiency is “whether the evidence at trial would enable reasonable and
fair-minded people to reach the verdict under review.” Id. at 827. We review the evidence
in the light most favorable to the verdict, crediting any favorable evidence if a reasonable
fact-finder could and disregarding any contrary evidence unless a reasonable fact-finder
could not. Id. at 821–22, 827. In our review, we are mindful that the jury remains the sole
judge of witnesses’ credibility and the weight to be given to their testimony. Id. at 819–20.
Moreover, in our legal sufficiency review, we must show deference to the jury’s resolution
of conflicts in the evidence, and we must presume that the jury resolved all conflicts in
favor of the verdict. Id. at 820–21.
A party who challenges the legal sufficiency of the evidence to support an issue
upon which he did not have the burden of proof at trial must demonstrate on appeal that
there is no evidence to support the adverse finding. Luce v. Interstate Adjusters, Inc., 26
S.W.3d 561, 566 (Tex. App.—Dallas 2000, no pet.) (citing Croucher v. Croucher, 660
S.W.2d 55, 58 (Tex. 1983)). When reviewing a “no evidence” point, we determine
“whether the evidence at trial would enable reasonable and fair-minded people to reach
the verdict under review.” City of Keller, 168 S.W.3d at 827. A “no evidence” or legal
insufficiency point is a question of law challenging the sufficiency of the evidence to
support a particular fact finding. In re Estate of Livingston, 999 S.W.2d 874, 879 (Tex.
5
App.—El Paso 1999, no pet.).
When a party attacks the legal sufficiency of an adverse finding on an issue on
which that party has the burden of proof at trial, the complaining party must demonstrate
on appeal that the evidence establishes, as a matter of law, all vital facts in support of the
issue. Up Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam). We
review a matter of law challenge by first examining the record for evidence that supports
the adverse finding, while ignoring all evidence to the contrary. Id. If we do not find
evidence to support the finding, we will then examine the entire record to determine if the
contrary proposition is established as a matter of law. Id. “The point of error should be
sustained only if the contrary proposition is conclusively established.” Id.
We examine the entire record, considering both the evidence in favor of, and
contrary to, the challenged finding in our factual sufficiency review. Maritime Overseas
Corp. v. Ellis, 971 S.W.2d 402, 406–07 (Tex. 1998). In reviewing a factual-sufficiency
challenge to a finding on an issue on which the appellant did not have the burden of proof,
we will set aside the verdict “only if it 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) (per curiam). “In reviewing a factual-sufficiency challenge to a jury finding on an
issue on which the appellant had the burden of proof, the appellant must show that ‘the
adverse finding is against the great weight and preponderance of the evidence.’” Editorial
Caballero, S.A. de C.V. v. Playboy Enter., Inc., 359 S.W.3d 318, 329 (Tex. App.—Corpus
Christi–Edinburg 2012, pet. denied) (citing Dow Chem. Co., 46 S.W.3d at 242).
The fact-finder is the sole judge of the witnesses’ credibility and may choose to
believe one witness over another. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d
6
757, 761 (Tex. 2003). We may not substitute our own judgment for that of the jury, even
if we would reach a different answer based on the evidence. GTE Mobilnet of S. Tex. Ltd.
P’ship v. Pascouet, 61 S.W.3d 599, 616 (Tex. App.—Houston [14th Dist.] 2001, pet.
denied) (citing Maritime Overseas Corp., 971 S.W.2d at 407).
B. Bunnett Did Not Breach the Contract Before Natural Soda
By its first issue, Natural Soda contends that because the evidence established
that Bunnett breached the contract first prior to December 2, 2015, the evidence is legally
and factually insufficient to establish that Natural Soda committed the first material breach
by terminating the Agreement early on December 2, 2015. Thus, Natural Soda argues its
breach was excused. Specifically, Natural Soda challenges the evidence to support the
jury’s answer to Question No. 3, asking: “Was Natural Soda’s failure to comply with the
[Agreement] excused because [Bunnett] first failed to comply with a material obligation of
the [Agreement] prior to December 2, 2015.” The jury answered, “No.”
At trial, Natural Soda had the burden of proof on its claim that it was excused from
its breach of the Agreement because Bunnett “failed to comply with a material obligation
of the” Agreement prior to December 2, 2015. See Dow Chem., 46 S.W.3d at 241. Natural
Soda argues it did so because the evidence shows that Bunnett breached the Agreement
first by: (1) “Losing 100% of its sales force”; (2) “Ruining its relationships with sodium
bicarbonate customers, harming Natural Soda’s goodwill”; (3) “Failing to pay Natural
Soda for product within 45 days of shipment”; (4) “Failing to keep Natural Soda informed
regarding its sales negotiations or providing the quotations provided to customers”; and
(5) “Taking commissions exceeding the contract rates.”
1. “Losing 100% of Its Sales Force”
7
It is undisputed that in October 2015, three of Bunnett’s sales associates resigned.
Natural Soda argues that the Agreement required that Bunnett “maintain adequate
personnel to ensure competent and thorough coverage of the Sales Territory” and “[b]y
any measure, when a distributor loses all of its sales representatives at the peak of the
sales season, the distributor has failed to maintain an adequate sales force”; thus, the
jury should have found that Bunnett breached the Agreement when the three sales
associates resigned. 6
Bunnett responds that although three of its sales representatives resigned in
October 2015, nonetheless, the evidence showed that it had an adequate sales force.
We agree with Bunnett. The jury heard evidence that William had a lot of contacts in the
industry and was experienced selling bicarb and dealing with customers. There is
evidence that J.J. also sold bicarb and “had a lot of experience managing sales teams.”
One of Bunnett’s employees, Mike Nolan, testified that J.J.
conducts sales calls pretty much every week, tracks how our sales are
progressing throughout the month. Provides mentorship where it’s needed
and provides clear objectives to our sales people and one thing we’ve been
doing a little bit differently is we have very clear objectives on what we need
to do and we establish strategy on how to accomplish those goals.
In addition, Bunnett presented evidence that its other employees, Nolan and Conni
Waddle, each had experience selling bicarb and that Bunnett had hired several new sales
associates to help with sales. Bunnett also presented evidence that the Agreement
required for Bunnett to sell 40,000 tons of bicarb in 2015, the year that Natural Soda
terminated the Agreement, and Bunnett had surpassed the requirement by selling 90,000
tons in 2015. Moreover, the Agreement did not allow for termination unless Bunnett failed
6 This is the extent of Natural Soda’s argument.
8
to reach the quarterly goals for two consecutive quarters, which had not occurred. From
this evidence, the jury could have reasonably concluded that Bunnett maintained an
adequate sales force, and we must assume that the jury resolved any conflicts in the
evidence in favor of Bunnett. See City of Keller, 168 S.W.3d at 820–21. Therefore, based
on the evidence presented, we conclude that there is legally sufficient evidence to support
the jury’s finding that Bunnett maintained an adequate sales force, and we conclude that
Natural Soda did not prove as a matter of law that Bunnett failed to comply with the
Agreement by “losing 100% of its sales force.”
2. “Ruining its relationships with sodium bicarbonate customers,
harming Natural Soda’s goodwill”
Natural Soda claims that the jury should have found that Bunnett failed to “maintain
good working relationships with Natural Soda’s customers” in violation of the “good will
provision” of the Agreement. To support its position, Natural Soda cites evidence that
some of Bunnett’s customers complained about Bunnett’s customer service and some
customers stated that they were unwilling to do business with Bunnett due to a variety of
reasons. Bunnett responds that the evidence was, at best, conflicting regarding when the
customers lodged their complaints about Bunnett.
First, Natural Soda cites testimony from Vincent Cline of Pacific Elements that
Bunnett’s customer service was “horrible.” However, when asked if Pacific Elements
would now “refuse to do business” with Bunnett, Cline stated “No” and stated that Pacific
Elements had continued to do business with Bunnett after experiencing such “horrible”
service. Notably, Cline did not state that Pacific Elements believed that Natural Soda’s
reputation had been affected by Bunnett’s “horrible” customer service. In addition, Cline
did not clarify when Bunnett’s customer service was “horrible.” And, most importantly,
9
Cline was not asked and did not state that he informed anyone at Natural Soda of
Bunnett’s alleged “horrible” customer service prior to Natural Soda’s termination of the
Agreement on December 2, 2015. Thus, the jury could have reasonably found that
because Cline never informed Natural Soda of its concerns, those concerns could not
have been the basis of Natural Soda’s termination of the Agreement.
Next, Natural Soda cites evidence that another of Bunnett’s customers, Animal
Nutrition Systems, “would rather not do business with Bunnett.” Rosemarie Burgos-
Zimbelman, the chief operating officer of Animal Nutrition Systems, testified that on
December 1, 2015, she sent an email to Natural Soda stating that Animal Nutrition
Systems did not want to continue purchasing bicarb from Bunnett. However, Burgos-
Zembelman also testified that Animal Nutrition Systems was willing to buy the bicarb
directly from Natural Soda. Thus, although this evidence supports a finding that Animal
Nutrition Systems no longer wished to conduct business with Bunnett, this evidence does
not support a finding that Natural Soda’s goodwill had been affected. Moreover, evidence
was presented that Natural Soda’s employee, Sara Schaeffner had already drafted the
termination letter prior to December 1, 2015 and was holding it until then. Thus, the jury
could have reasonably found that Burgos-Zimbelman’s complaint did not support a finding
that Bunnett failed to maintain a good relationship with its customers or affected Natural
Soda’s reputation and goodwill.
Next, Natural Soda cites testimony from Todd Gearhart, an employee with J.D.
Heiskell and customer of Bunnett, that “I don’t want to have any dealings to do with [the]
Bunnetts anymore.” However, when asked if he ever complained about the quality of
Bunnett’s service to Natural Soda, Gearhart replied, “No.” Moreover, Gearhart explained
10
that he no longer wanted to purchase bicarb from Bunnett because Gearhart was upset
when Bunnett “had cut [him] off on palm” oil, and he had to buy the palm oil on the open
market. Gearhart did not attribute his unwillingness to conduct business with Bunnett on
any other basis. In fact, Gearhart testified that he would have purchased bicarb from
Bunnett depending on the price, timeframe, and offers from other companies. In addition,
Gearhart contracted to buy bicarb directly from Natural Soda, like Animal Nutrition
Systems, after it ceased purchasing bicarb from Bunnett. Thus, the jury could have
reasonably found that Gearhart’s complaint did not support a finding that Bunnett
breached the Agreement.
Natural Soda also cites testimony from Brian D’Ewart, an employee with Dewco
and Bunnett’s customer, that Dewco no longer wanted to conduct business with Bunnett.
D’Ewart did not specify the reason Dewco no longer wanted to do business with Bunnett.
And, he testified that he did not recall any problems with Dewco’s supply of bicarb in 2015.
D’Ewart never stated that he told Natural Soda of his unwillingness to purchase bicarb
from Bunnett. Thus, the jury could have reasonably found that Dewco’s desire to stop
buying bicarb from Bunnett could not have been the reason Natural Soda terminated the
Agreement as there is no evidence that Natural Soda was aware of D’Ewart’s
unwillingness to conduct business.
Finally, Natural Soda cites Natural Soda’s employee Jackie Deiter’s testimony that
several of Bunnett’s customers called her and were “very upset” and the “accounts were
in jeopardy.” Deiter did not elaborate on the reason that the customers were upset or why
the accounts were in “jeopardy.” Deiter explained that when she contacted Bunnett about
these customers, she was told “[t]hat everything was fine.” Natural Soda also cites
11
Deiter’s testimony regarding her receipt of a spreadsheet, invoices, and customer
contracts sent to her on November 17, 2015. Natural Soda does not explain how this
testimony establishes that Bunnett failed to protect Natural Soda’s goodwill and maintain
good customer relationships, and we cannot discern the connection of this testimony to
that issue. See TEX. R. APP. P. 38.1(i). Accordingly, the jury could have reasonably found
that this testimony did not support such a finding.
Therefore, based on the evidence presented, we conclude that the evidence is
legally sufficient to support the jury’s finding that Bunnett did not breach the Agreement,
and Natural Soda did not prove as a matter of law that Bunnett failed to maintain good
relationships with its customers or damaged Natural Soda’s good will.
3. “Failing to pay Natural Soda for product within 45 days of shipment”
Natural Soda argues that Bunnett breached the Agreement by failing to make
timely payments prior to December 2, 2015. Bunnett responds that the breach was not
material because the delay in payments was inherent in the way the parties had
conducted business over many years.
At trial, Waddle testified that due to the nature of Bunnett’s business practices, she
sometimes sent payments to Natural Soda more than forty-five days after receiving the
invoices. She elaborated that “some weeks we were a little off.” According to Waddle,
although Bunnett received daily invoices from Natural Soda, she paid all invoices on
Friday by wiring money to Natural Soda. Waddle explained that she had paid the invoices
in this fashion for the fifteen years she worked at Bunnett. Waddle stated that
“occasionally” she received requests from Natural Soda for an extra payment at the end
of the quarter, and she would make the extra payment. However, Natural Soda never
12
requested that Bunnett pay the invoices daily, which Waddle stated would be impractical.
The jury was instructed that: “A material term of an agreement goes to the root of
the matter or essence of the agreement”; and “Materiality must be assessed in the context
of the expectations of the parties at the time the agreement was formed.” The charge
further instructed, “You should consider the importance or seriousness of the failure to
comply with the agreement and the likelihood that the other party will still receive
substantial performance despite the failure to comply with the agreement.” Under
Colorado law, “a breach that is material ‘goes to the root of the matter or essence of the
contract and renders substantial performance under the contract impossible.’” See
Interbank Invs., L.L.C. v. Vail Valley Consol. Water Dist., 12 P.3d 1224, 1229 (Colo. App.
2000) (quoting 6 W. Jaeger, Williston on Contracts § 842 at 165 (3d ed.1962)). Thus, the
jury was instructed of the definition of materiality pursuant to Colorado law.
Here, Bunnett’s occasional late payments did not render substantial performance
under the Agreement impossible. See id. More importantly, evidence was presented that
it was Natural Soda’s practice to accept late payments from Bunnett for the entire fifteen
years that Waddle worked at Bunnett. Accordingly, giving deference to the jury, we
conclude that there is some evidence to support the jury’s finding that Bunnett’s late
payments were not a material breach of the Agreement. See Coors v. Sec. Life of Denver
Ins. Co., 112 P.3d 59, 64 (Colo. 2005) (“The trier of fact should consider the importance
or seriousness of the breach and the likelihood that the injured party will nonetheless
receive substantial performance.”); Interbank Invs., LLC, 12 P.3d at 1229.
4. “Failing to keep Natural Soda informed regarding its sales
negotiations or providing the quotations provided to customers”
Natural Soda claims that Bunnett breached the Agreement by failing to provide
13
certain sales information to Natural Soda. Bunnett responds that there is evidence that
when Schaeffner requested the reports containing the complained-of information on
November 9, 2015, Bunnett provided the information to her on November 17, 2015.
The evidence is undisputed that Bunnett provided the complained-of information
to Natural Soda on November 17, 2015. Furthermore, on cross-examination, Dieter
claimed to have created a spreadsheet based on her “SWAG” or “Strategic Wild Ass
Guess” system. Upon comparison of the November 17, 2015 spreadsheet and Dieter’s
SWAG spreadsheet, Dieter admitted that the numbers matched for seventeen of the
twenty categories. Dieter claimed that her SWAG system was very effective and stated
that she was proud that she did such a great job at guessing the amounts for the
categories on the spreadsheet. Dieter consistently maintained that she made the
spreadsheet without any data from Bunnett. Nonetheless, the jury could have reasonably
found Dieter’s testimony unbelievable and could have found that because Dieter’s
spreadsheet so accurately matched the spreadsheet provided by Bunnett, she had not
relied on her SWAG system but had relied on information provided by Bunnett. See Scott
v. Gibson Oil Co., 471 S.W.2d 924, 926 (Tex. Civ. App.—Tyler 1971, no writ) (“It was
within the jury’s province to judge the credibility of the witnesses and the weight to be
given their testimony, and to resolve conflicts and inconsistences in the testimony of any
one witness as well as the testimony of different witnesses.”).
Moreover, the jury could have reasonably found that Bunnett did not breach the
Agreement because it provided the requested information on November 17, 2015. 7
7Natural Soda generally asserts that the information provided by Bunnett was inaccurate or
incomplete. However, as previously stated, Dieter testified that her spreadsheet was almost identical to the
14
Finally, as explained above, the jury was instructed that a breach is not material unless
the breach renders substantial performance under the contract impossible. See Interbank
Invs., LLC, 12 P.3d at 1229. Natural Soda does not contend that this breach, if any,
rendered substantial performance under the contract impossible, and here, there is no
evidence supporting a conclusion that Bunnett’s alleged failure to provide the requested
information did so. See id. And, as previously stated, Bunnett did provide the information
on November 17, 2015. Accordingly, giving deference to the jury, we conclude that there
is sufficient evidence to support the jury’s finding that Bunnett did not breach the
Agreement in this manner.
5. “Taking commissions exceeding the contract rates”
Finally, Natural Soda contends that the jury should have found that Bunnett
breached the Agreement because the evidence established that in November 2015,
Bunnett was “routinely” “taking commissions exceeding the contract rates.” Specifically,
Natural Soda claims that although the Agreement limited Bunnett to commissions of 10%
or ten dollars, there is evidence that Bunnett “took more than 10% or ten dollars
commissions for over 30 different types of customer orders.” The provision of the
Agreement cited by Natural Soda states the following: “Distributor shall earn a
commission equal to the greater of either $10 per ton or ten percent (10%) of the Net
Sales Price on sales of product procured by Distributor.” Natural Soda cites a
spreadsheet, provided by Bunnett and admitted at trial, showing that in a column labeled
“Comm. %,” there are various percentages listed between five and twenty-one percent.
spreadsheet provided by Bunnett. Accordingly, the jury was not required to find that the spreadsheet
provided by Bunnett was inaccurate or incomplete.
15
This is the extent of Natural Soda’s argument.
At trial, William testified that Natural Soda “went around” Bunnett and “would take
$7.50 a ton when it should have been like $15 a ton . . . but they said we will make this
up to you on other accounts, so, you’ll get a dollar or two more on the others. . . .” William
said “[I]t evened out to where you had a ten percent, or, you know, some cases, we would
lose some money but not argue with them because the business was growing. . . .”
William stated that, for example, with the J.D. Heiskell account, Natural Soda required
that Bunnett receive a commission of seven dollars per ton; however, Natural Soda
agreed to make up that loss by allowing Bunnett to receive a larger commission on other
accounts. Dores testified that the president of Natural Soda would tell Bunnett the amount
of commission it should charge its customers. Bunnett asked, “And sometimes he
demanded that you take less than a ten percent commission in order to get the price that
he thought was the right price for the customer?” Dores replied, “Yeah.” Dores explained
that the larger customers would be charged a lower percentage of commission and then
Natural Soda would “try to make it up for the smaller customers having a higher margin.
But because of the volume, you know, it would offset it.” Bunnett asked, “And why do you
say that?” Dores responded, “Well because they would try to guarantee a ten percent,
but it would have to be on a margin—I mean, the average margin, because the large
accounts you can’t get the same margins as you can the smaller accounts.” Dores agreed
that this practice continued with Natural Soda “for a number of years.”
Based on the evidence presented, the jury was free to believe the claims of William
and Dores that Natural Soda required that Bunnett take a smaller commission on some
sales and then offset that smaller commission by allowing Bunnett to charge a larger
16
commission on other sales. Moreover, as the evidence showed that Natural Soda
encouraged this practice, the jury could have reasonably found that Bunnett’s acts were
not material breaches of the Agreement. Accordingly, giving deference to the jury, we
conclude that there is sufficient evidence to support the jury’s finding that Bunnett did not
breach the Agreement in this manner.
6. Summary
We conclude that Natural Soda has not shown as a matter of law that Bunnett
breached the agreement first. Moreover, we conclude that the verdict is not so contrary
to the overwhelming weight of the evidence as to be clearly wrong and unjust. We overrule
Natural Soda’s first issue.
C. Natural Soda’s Breaches Caused Bunnett Harm
By its second issue, Natural Soda contends there is no evidence to support the
jury’s finding that its breach caused Bunnett harm. Specifically, Natural Soda argues that
under Colorado law, to prevail on its breach of contract claim, Bunnett was required to
prove that Natural Soda’s breaches caused it damages. See W. Distrib. Co. v. Diodsio,
841 P.2d 1053, 1058 (Colo. 1992); see also Strock v. USA Cycling, Inc., No. 00-CV-2285-
JLK, 2006 WL 1223151, at *6 (D. Colo. May 8, 2006) (mem. op.) (“To prove causation in
Colorado, ‘the plaintiff must show by a preponderance of the evidence that the injury
would not have occurred but for the defendant’s . . . conduct.’” (citing Kaiser Found.
Health Plan of Colo. v. Sharp, 741 P.2d 714, 719 (Colo. 1987))).
When the opposing party fails to object to the charge, we measure the sufficiency
of the evidence by the charge actually submitted to the jury and not some other law not
identified in the charge. Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). Here, the jury
17
was asked and found that Natural Soda failed to comply with the Agreement by (1) selling
bicarb in Bunnett’s exclusive sales territory from December 2, 2015 to December 12, 2015
and (2) terminating the Agreement without cause on December 2, 2015. The charge
asked, “What sum of money, if any, if paid now in cash, would fairly and reasonably
compensate [Bunnett] for its damages, if any, that resulted from Natural Soda’s failure to
comply with the [Agreement]” and instructed that it should calculate Bunnett’s damages
as follows:
a. Lost profits during the contract period
[Bunnett’s] lost profits, if any, during the time between Natural Soda’s
material failure to comply with the [Agreement] on December 2, 2015
and the expiration of the Agreement on September 8, 2016.
b. Future lost profits after expiration of the contract period
[Bunnett’s] future lost profits, if any, are its lost revenue resulting from
Natural Soda’s failure to comply, less the expenses [Bunnett] saved
by not performing the work of selling Natural Soda’s [bicarb], after
the expiration of the [Agreement] on September 8, 2016.
Natural Soda did not submit or request a question asking whether Natural Soda’s
breaches caused Bunnett’s damages under Colorado law, and it did not object to the
charge’s failure to include such a question. See Morales v. Morales, 98 S.W.3d 343, 346
(Tex. App.—Corpus Christi−Edinburg 2003, pet. denied) (“If the complaint concerns an
omission, the party must request and tender a substantially correct instruction in writing.”
(citing TEX. R. CIV. P. 278)). Thus, the jury was not asked to determine causation pursuant
to Colorado law. In addition, Natural Soda has not complained on appeal of the omission
in the charge of a question regarding causation under Colorado law. Because we evaluate
the sufficiency of the evidence against the charge as submitted and Natural Soda did not
submit a request under Colorado law, Natural Soda’s contention that there is no evidence
18
showing that its breaches caused Bunnett’s damages under Colorado law is irrelevant to
the jury’s finding that Bunnett’s damages “resulted from Natural Soda’s failure to comply
with the [Agreement].” (Emphasis added).
Here, the jury found that Natural Soda’s selling bicarb in Bunnett’s exclusive sales
territory and termination of the Agreement without cause resulted in Bunnett’s lost profits.
However, on appeal, Natural Soda does not specifically challenge these jury findings. In
other words, Natural Soda does not argue that there is no evidence to support the jury’s
findings that Bunnett suffered damages as a result of Natural Soda’s selling bicarb in
Bunnett’s exclusive sales territory or as a result of Natural Soda’s termination of the
Agreement. TEX. R. APP. P. 38.1(i);see also Tristan v. C.A. Walker, Inc., No. 13-01-410-
CV, 2003 WL 21212342, at *5 (Tex. App.—Corpus Christi–Edinburg May 27, 2003, pet.
denied) (mem. op.).
Instead, Natural Soda only argues that in order to prove causation under Colorado
law, Bunnett was required to present evidence that it had another supplier and that
“customers wanted to continue purchasing from Bunnett.” Natural Soda cites no authority,
and we find none, supporting such a conclusion. Thus, even if Natural Soda is correct
that Bunnett did not prove it had another supplier and that “customers wanted to continue
purchasing” from it, Natural Soda has not explained, with legal support, why the lack of
such evidence in the record prevented the jury from finding that Natural Soda’s selling
bicarb in Bunnett’s exclusive sales territory and unexcused early termination of the
Agreement caused Bunnett’s lost profit damages. See TEX. R. APP. P. 38.1(i). We overrule
19
Natural Soda’s second issue. 8
D. Future Lost Profits
By its sixth issue, Natural Soda contends that there is no evidence to support the
amount of future lost profit damages awarded to Bunnett. 9
First, Natural Soda argues that future lost profits are never assumed and must be
established under a reasonable-certainty standard. Bunnett, on the other hand, argues
that we must review the sufficiency of the evidence under Colorado law. We make no
determination regarding which standard properly applies because, as further explained
below, Bunnett relied on speculative expert testimony.
The charge instructed that “Bunnett’s future lost profits, if any, are its lost revenue
resulting from Natural Soda’s failure to comply, less the expenses [Bunnett] saved by not
performing the work of selling [bicarb], after the expiration of the [Agreement] on
September 8, 2016.” Bunnett claimed that Natural Soda failed to comply with the
Agreement by wrongfully terminating it early and by selling bicarb prior to the expiration
of the Agreement in Bunnett’s exclusive territory. Thus, the only theory which applies to
Bunnett’s future lost profits is the former: Natural Soda’s breach of the Agreement by
8 We need not address whether the evidence established that Natural Soda’s breaches caused
Bunnett’s future lost profits because as further explained below, Bunnett was not entitled to future lost
profits.
9 In this section of its brief, Natural Soda does not specify if it is challenging the jury’s award of lost
profits during the contract period or after the expiration of the contract on September 8, 2016. Natural Soda
generally states in this section of its brief that “Bunnett’s damages awards are entirely unsupported
(Questions Nos. 4 and 17).” Question No. 4 related to Bunnett’s breach of contract claim, and Question No.
17 related to its tortious interference with relationships claim. Nonetheless, in another section of its brief,
Natural Soda clarifies that it is challenging future lost profits, which spanned beyond the expiration date of
the Agreement and requests that we vacate the jury’s award of future lost profits. Thus, it does not appear
that Natural Soda is challenging the award of lost profits during the contract period. Accordingly, to the
extent that Natural Soda intends to do so, we conclude that issue is not adequately briefed. See TEX. R.
APP. P. 38.1(i).
20
wrongfully terminating it early.
At trial, Bunnett’s expert witness, Jeff Balcombe, testified that in order to calculate
Bunnett’s future lost profits he assumed the following:
[B]ut for the alleged wrongful termination of the [Agreement], Bunnett
would have had a sufficient interval to arrange for a continuing supply of
animal feed, [bicarb] following the end of the current [Agreement] and by
either, A, renewing its contract with Natural Soda on similar terms as it had
done on multiple prior occasions or by entering a similar distribution
agreement with one or more of Natural Soda’s competitors.
Additionally, [Bunnett] would have continued at least the same
volume of [bicarb] with any of the losses of customers through the normal
course of business being offset by gains in other customers.
Also in this analysis, this scenario, my actual world estimates that
Bunnett will be unable to enter—obtain an alternative supply of bicarb. In
other words, they are no longer able to sell bicarb.
Balcombe indicated that he based these assumptions on findings that the jury could
reasonably make. Balcombe testified that his assumptions were reasonably based on
“generally accepted methodologies, applying principles of [his] profession.” Balcombe
calculated damages of future lost profits for a period of ten years after the expiration of
the Agreement because according to Bunnett, its relationships with the customers “date
back decades,” it had been purchasing bicarb from Natural Soda since 1993, and
Balcombe’s “statistical analysis of the customer relationship indicate the long life
associated with them.”
In order to prevail on its claim for future lost profits, the evidence needed to show
that Natural Soda would continue its relationship with Bunnett after the Agreement
expired in September 2016. However, the undisputed evidence shows that although the
Agreement automatically renewed for one-year periods, either party had the right to
terminate it by notifying the other party of its intent to terminate ninety days prior to the
21
expiration date. It is undisputed that Natural Soda did not intend to renew at the expiration
of the Agreement, and it terminated the Agreement early. Thus, the undisputed evidence
establishes that Natural Soda would not have renewed the Agreement in September
2016.
Next, in the alternative, as supporting a claim for future lost profits, Balcombe
assumed that Bunnett would have entered “a similar distribution agreement with one or
more of Natural Soda’s competitors.” However, the evidence shows that Bunnett had not
found an alternate supplier in the fourteen months after Natural Soda terminated the
agreement on December 2, 2015.
To recover future lost profits, a party must do more than show that it has suffered
a loss. Horizon Health Corp. v. Acadia Healthcare Co., Inc., 520 S.W.3d 848, 859 (Tex.
2017). The party must show with reasonable certainty the amount of future lost profits,
which is a fact intensive determination. Id. at 859−60. “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. at 860 (quoting and citing ERI Consulting
Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010)). Thus, “[a] party’s bare
assertion that a contract was lost does not establish lost profits with reasonable certainty.”
Id. “Rather, ‘the general rule is that recovery of lost profits as damages is allowed ‘where
it is shown that a loss of profits is the natural and probable consequence of the act or
omission complained of, and their amount is shown with sufficient certainty.’” Id. (quoting
Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994)).
Future lost profits cannot be based on “uncertain and changing conditions, such
as market fluctuations, or the chances of business, or where there is no evidence from
22
which they may be intelligently estimated.” Id. Instead, “[t]he law is wisely skeptical of
claims of lost profits from untested ventures or in unpredictable circumstances, which in
reality are little more than wishful thinking.” Id. (quoting Phillips v. Carlton Energy Grp.,
LLC, 475 S.W.3d 265, 280 (Tex. 2015)). Future lost profits have not been established
with reasonable certainty if the supporting evidence is largely speculative or a mere hope
for success. Id.
In Horizon Health Corp. v. Acadia Healthcare Co., Inc., the Texas Supreme Court
explained that the evidence was legally insufficient to support the jury’s finding that the
plaintiff was entitled to future lost profits. Id. The court stated that a plaintiff seeking
damages based on lost profits from future business opportunities must “adduce evidence
establishing that prospective customers would have done business with the plaintiff
absent the defendant’s misconduct.” Id. at 861. The court noted that to be entitled to future
lost profits from a contract with a prospective customer, the plaintiff needed to present
evidence showing that the prospective customer would have entered into a contract with
it. Id. However, the plaintiff had not done so. Id. Although the plaintiff presented expert
testimony of the amount of future lost profits, the court concluded the expert merely
assumed that the plaintiff would have “won” the contract with the prospective customer if
not for the defendants’ wrongful conduct. Id. In fact, the plaintiff’s expert stated that he
did not have an opinion regarding whether the prospective customer would have
contracted with the plaintiff. Id. Thus, the court concluded that the expert’s opinion was
insufficient to support a finding that the plaintiff would have contracted with the
prospective customer if not for the defendant’s wrongful conduct. Id.
Here, Balcombe stated, “[T]here are disputed facts regarding whether or not
23
[Bunnett] will be able to find an alternative supply and if so when and those are your [the
jury] judgments, so, my job is to perform analysis to provide you with information so that
when you’re asked to review the facts and come to your decision, you have information
to do so.” However, Natural Soda objected, and the trial court sustained the objection
instructing the jury that it should disregard that statement. And as previously stated,
Balcombe merely assumed that Bunnett would have entered a similar contract with one
of Natural Soda’s competitors based on Bunnett’s unsupported assertions. Balcombe was
unable to state which of Natural Soda’s competitors would have offered a contract to
Bunnett and what the duration of such a contract would be. Thus, Balcombe based his
opinion of future lost profits on unpredictable and unsupported circumstances. Moreover,
on cross-examination, Balcombe testified that he was not stating that his assumptions
were reasonable. Accordingly, we conclude that Balcombe’s assumptions are speculative
and do not support the award of future lost profits with reasonable certainty. See id; see
also AZZ Inc. v. Morgan, 462 S.W.3d 284, 290 (Tex. App.—Fort Worth 2015, no pet.)
(explaining that “‘reasonable certainty’ is not demonstrated when the profits claimed to be
lost are largely speculative or a mere hope for success, as from an activity dependent on
uncertain or changing market conditions, on chancy business opportunities, or on
promotion of untested products or entry into unknown or unproven enterprises”). Having
found that Balcombe’s factual basis for his computation was merely speculative, we
conclude that there is no evidence that Bunnett is entitled to future lost profits. See
Horizon Health Corp., 520 S.W.3d at 860; see also Luce, 26 S.W.3d at 566. We sustain
Natural Soda’s sixth issue.
24
III. UNJUST ENRICHMENT
By its first issue, Bunnett contends that the express contract defense bars Natural
Soda’s unjust enrichment counterclaim as a matter of law. Natural Soda claims Bunnett
waived this issue.
A. Waiver
As a preliminary matter, Natural Soda argues that Bunnett waived its express
contract defense by failing to plead and prove it. Bunnett responds that it did not waive it
because it is undisputed that a contract existed between the parties, and the jury found
that Bunnett failed to comply with a contract.
The express contract defense is an affirmative defense that a defendant must
plead and prove, or it is waived. See Tricon Tool & Supply, Inc. v. Thumann, 226 S.W.3d
494, 502 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) (citing Fortune Prod. Co. v.
Conoco, Inc., 52 S.W.3d 671, 685 (Tex. 2000)). However, a party need not plead and
prove its express contract defense if it is undisputed that the damages are covered by a
contract. See Christus Health v. Quality Infusion Care, Inc., 359 S.W.3d 719, 723 (Tex.
App.—Houston [1st Dist.] 2011, no pet.) (explaining that the plaintiff invoked its rights
under the contract in its live pleadings and that the jury answered the breach of contract
and excuse questions affirmatively, which necessarily referred to the existence of a
contract).
In its pleadings and at trial, Natural Soda claimed that, pursuant to the Agreement,
it provided bicarb to Bunnett prior to and after termination of the Agreement on December
2, 2015, and Bunnett failed to pay for that bicarb. Thus, Natural Soda sued Bunnett for
breach of contract. In the alternative, Natural Soda sued Bunnett for unjust enrichment
25
for the same damages. Throughout its case, Natural Soda maintained that the Agreement
required for it to provide bicarb to Bunnett for ninety days after termination and that
Bunnett was required to pay for it within forty-five days of the invoices. For example, in its
objections to the trial court’s proposed charge, Natural Soda stated: (1) “The evidence
shows that, after termination and pursuant to Section 9.4 [of the Agreement], Natural
Soda shipped $3.4 million worth of product to [Bunnett], which [Bunnett] readily accepted
(and sold to customers)”; and (2) “The evidence also showed that [Bunnett] has refused
to pay for that product, despite its order and acceptance of the product and despite its
unequivocal obligation to pay for the product under Section 9.4 [of the Agreement.]”
Natural Soda objected to the charge on the basis that “as currently structured, [the charge]
does not allow the jury to award Natural Soda damages for [Bunnett’s] undisputed breach
of the Agreement in the amount of $3.4 million, since that breach occurred after the date
of termination on December 2, 2015.” 10
As set out above, pursuant to the Agreement, Natural Soda invoked its rights to its
damages caused by Bunnett’s alleged non-payment of bicarb after the early December
2, 2015 termination. At trial, Natural Soda proceeded under both theories of breach of
contract and unjust enrichment and requested that both theories be submitted to the jury.
Thus, the jury heard evidence on both theories and made affirmative findings on the
question of breach and excuse. As stated above, Natural Soda consistently claimed that
its suffered damages after the December 2, 2015 termination as a result of Bunnett’s
10 Natural Soda also objected to the trial court’s omission to a question on unjust enrichment. The
trial court included Natural Soda’s proposed question regarding its unjust enrichment claim as follows: “Did
Natural Soda perform compensable work for [Bunnett] for which it was not compensated after termination
of the [Agreement].” The jury answered, “Yes.”
26
failure to pay for the bicarb as required by the Agreement. The jury found that Bunnett
breached the Agreement, but it also found, however, that Bunnett’s breach was excused.
These findings that Bunnett breached the Agreement after termination and that Bunnett
was nonetheless excused from its breach necessarily refer to and support that the jury
found the existence of a contract. See Christus Health, 359 S.W.3d at 723 (citing TEX. R.
CIV. P. 279; Valero Mktg. & Supply Co. v. Kalama Int’l, 51 S.W.3d 345, 351 (Tex. App.—
Houston [1st Dist.] 2001, no pet.) (noting that the existence of a contract is essential
element of action for breach of contract)). Accordingly, we conclude that under these
circumstances, Bunnett was not required to allege an express contract defense as it is
undisputed that the Agreement governed the sought-after damages by both parties. 11
See id. (concluding that it was unnecessary for the defendant to plead and prove the
express contract defense because the plaintiff invoked the contract and the jury found
that a contract existed by finding that the defendant breached it).
B. Entitlement to Unjust Enrichment Damages
“Unjust enrichment is an implied-contract theory stating one should make
restitution when it would be unjust to retain benefits received.” Christus Health, 359
S.W.3d at 722–23. Quantum meruit “is founded in the principle of unjust enrichment.”
Bashara v. Baptist Mem’l Hosp. Sys., 685 S.W.2d 307, 310 (Tex. 1985). Unjust
enrichment and quantum meruit are based upon the promise implied by law to pay for
beneficial services rendered and knowingly accepted. Christus Health, 359 S.W.3d at
11 Natural Soda also argues that Bunnett should have requested a jury question asking whether
the express contract defense applies, and because it did not do so, it cannot assert the defense. We
disagree because as explained above, it is undisputed that the Agreement governed the damages Natural
Soda sought; thus, Bunnett had no duty to request such an instruction.
27
723. “[A]n express contract between the parties precludes a plaintiff from recovering for
services rendered in quantum meruit if the contract covers those services . . . .” Id. Thus,
under those circumstances, the party seeking to recover from unjust enrichment may only
pursue the legal remedy of breach of contract. Id. However, the existence of an express
contract does not preclude recovery in quantum meruit for the reasonable value of work
performed and accepted which is not covered by an express contract. Hill v. Shamoun &
Norman, LLP, 544 S.W.3d 724, 737 (Tex. 2018)
“When the evidence shows that no contract covers the service at issue, then the
question of whether a party may recover in quantum meruit is for the trier of fact.” Christus
Health, 359 S.W.3d at 723. The question of whether an express contract covers the
services at issue is a legal question reviewed de novo. Hill, 544 S.W.3d at 737.
Citing Ryland Enter., Inc. v. Weatherspoon, No. 01-10-00715-CV, 2012 WL
6754966, at *11 (Tex. App.—Houston [1st Dist.] Dec. 28, 2012, no pet.) (mem. op.),
Natural Soda argues that the Agreement was rescinded; thus, it was entitled to damages
under its quantum meruit claim. 12 However, neither party sought rescission of the
Agreement. Thus, this remedy has no bearing on our analysis. Moreover, in Ryland, the
court specifically stated that the plaintiff sought recovery pursuant to quantum meruit
because there was no contract for the services. Id. The court noted that the plaintiff could
not have pursued a quantum meruit claim “had a valid contract governed this aspect” of
the plaintiff’s relationship with the defendant. Id. (citing Fortune Prod. Co. v. Conoco, Inc.,
52 S.W.3d 671, 684 (Tex. 2000) and noting “that ‘[g]enerally speaking, when a valid,
12 “Rescission is an equitable remedy that may be granted upon a number of possible grounds,
such as fraud or breach of an executory contract in a material part.” Boyter v. MCR Const. Co., 673 S.W.2d
938, 941 (Tex. App.—Dallas 1984, writ ref’d n.r.e.).
28
express contract covers the subject matter of the parties’ dispute, there can be no
recovery under a quasi-contract theory’ such as quantum meruit”).
Therefore, because it is undisputed that Natural Soda sought recovery of the
reasonable value of the same goods as expressly provided for in the Agreement under
its unjust enrichment and breach of contract theories and a contract existed governing
those damages, we must reverse. 13 The only proper claim under these circumstances is
a breach of contract claim. 14 Accordingly, we sustain Bunnett’s first issue. 15
IV. CHARGE ERROR
By its seventh issue, Natural Soda contends that the trial court improperly
instructed the jury that “Natural Soda materially failed to comply with the Agreement on
December 2, 2015, by terminating the Agreement in violation of the (10) ten-day
13 Natural Soda correctly states that a party may allege both a breach of contract theory and a
quantum meruit or unjust enrichment claim. See Johnson v. Wells Fargo Bank, NA, 999 F. Supp. 2d 919,
929 (N.D. Tex. 2014) (“A party can plead legal and equitable claims in the alternative, but only when one
party disputes the existence of a contract governing the dispute.”); see also Cooper v. Gates, No. 3:16-CV-
2630-L, 2017 WL 3209452, at *4 (N.D. Tex. Mar. 7, 2017) (mem. op.) (stating that a party can plead legal
and equitable claims in the alternative only when one party disputes the existence of a contract governing
the dispute). However, if the jury determines that a contract exists for the materials and services provided,
the complaining party is limited to collection of those damages for the breach of contract and not entitled to
collect those same damages under a quantum meruit theory. Christus Health v. Quality Infusion Care, Inc.,
359 S.W.3d 719, 723 (Tex. App.—Houston [1st Dist.] 2011, no pet.); see Ryland Enter., Inc. v.
Weatherspoon, No. 01-10-00715-CV, 2012 WL 6754966, at *11 (Tex. App.—Houston [1st Dist.] Dec. 28,
2012, no pet.) (mem. op.) (noting that the plaintiff could not have pursued a quantum meruit theory of
recovery had a valid contract existed); see also Glass v. Gilbert, No. 01-14-00643-CV, 2015 WL 3905907,
at *5 (Tex. App.—Houston [1st Dist.] June 25, 2015, no pet.) (mem. op.) (explaining that although a fact
issue existed as to the plaintiff’s unjust enrichment claim, it was only an alternative theory of recovery
available if the plaintiff did not prevail on its breach of contract claim). In other words, the plaintiff may only
recover under an unjust enrichment theory if there is no contract. Christus Health, 359 S.W.3d at 723. And,
here the jury necessarily found that a contract existed. See id.
14Unfortunately for Natural Soda, the jury also found that Bunnett was excused from its breach;
thus, awarding no damages to Natural Soda for Bunnett’s breach. Natural Soda does not challenge that
finding.
15Having concluded Natural Soda was not entitled to damages under its unjust enrichment theory
as a matter of law, we need not address Bunnett’s second issue contending that there is no evidence to
support the amount of damages awarded to Natural Soda for unjust enrichment as it is not dispositive. See
TEX. R. APP. P. 47.1.
29
provision.” By its first issue, Energy contends that the trial court erred by failing to submit
a question to the jury regarding Energy’s “claim against Natural Soda for participating in
breach of fiduciary duty.” Energy and Bunnett contend in their third issue that the trial
court materially misstated Texas law by instructing the jury “that it was not a breach of
fiduciary duty for the general manager while still employed to take active steps to compete
with his employer and secretly do so in concert with his employees.”16
A. Standard of Review
Texas Rule of Civil Procedure 278 requires the submission of jury questions that
are supported by the written pleadings and the evidence. Union Pac. R.R. Co. v. Williams,
85 S.W.3d 162, 166 (Tex. 2002). An instruction is proper if it (1) assists the jury, (2)
accurately states the law, and (3) finds support in the pleadings and evidence. Id.
We review an allegation of jury charge error for an abuse of discretion. Tex. Dep’t
of Human Servs. v. E.B., 802 S.W.2d 647, 649 (Tex. 1990). A trial court abuses it
discretion if its acts are arbitrary, unreasonable, or without consideration of guiding
principles. Walker v. Gutierrez, 111 S.W.3d 56, 62 (Tex. 2003).
B. Instruction No. 1
Natural Soda contends that the Agreement’s ten-day notice provision did not apply;
thus, the trial court improperly instructed the jury that it had violated the Agreement’s ten-
day termination notice provision. 17
16 Bunnett has adopted and incorporated in its brief Energy’s third issue and supporting argument.
However, the complained-of instruction did not apply to Energy. Therefore, we will address this issue for
simplicity’s sake as Bunnett’s issue.
17 Specifically, Natural Soda states that the ten-day notice provision only applied if it violated section
9.2 of the Agreement. According to Natural Soda, Bunnett breached the Agreement first by violating
sections 6.3 and 5.2 of the Agreement, which were not listed in section 9.2. Thus, according to Natural
Soda, it had no obligation to provide ten days’ notice to Bunnett prior to terminating the Agreement.
30
Instruction No. 1 in the charge states: “You are instructed that Natural Soda
materially failed to comply with the Distribution Agreement on December 2, 2015, by
terminating the agreement in violation of the (10) ten-day notice provision.” During the
charge conference, Natural Soda objected to this instruction arguing to the trial court that
a question of fact existed concerning whether its failure to provide the ten-day notice
constituted a material breach. Natural Soda stated to the trial court that although the trial
court had found in its partial summary judgment “that we didn’t provide the ten day
notice . . . there’s still a fact question on who materially breached the contract first.”
Natural Soda then requested the following instruction and question: “You’re instructed
that Natural Soda didn’t give the ten days’ notice. Was that a material breach[?]” In its
written proposed jury charge, Natural Soda requested that the charge include the
following: (1) “Did Natural Soda materially breach the Animal Feed Distribution
Agreement by not providing Bunnett & Co. with 10 days advance written notice of
termination on December 2, 2015?”; and (2) Was Natural Soda’s lack of 10 days advance
written notice of termination of the Animal Feed Distributor Agreement to Bunnett & Co.
on December 2, 2015, excused by any of the following?” 18 Thus, in the trial court, Natural
Soda conceded that it did not provide the ten-days’ notice as required by the Agreement.
Natural Soda did not argue to the trial court, as it does on appeal, that the ten-day notice
provision did not apply. 19 Therefore, Natural Soda’s appellate argument was not
preserved and does not comport with its request for the trial court to instruct the jury that
18 Natural Soda listed excuses as follows: (1) prior material breach; (2) repudiation; (3) waiver; and
(4) estoppel.
19 Natural Soda does not cite the record wherein it made this argument, and we have not found
such an argument or objection in this voluminous record.
31
it “didn’t give ten days’ notice.” Natural Soda makes no other arguments to support a
conclusion that the trial court improperly instructed the jury that Natural Soda materially
failed to comply with the Agreement by not providing the required ten-days’ notice.
Moreover, only disputed issues of fact must be submitted to the jury. Triplex
Commc’ns, Inc. v. Riley, 900 S.W.2d 716, 718 (Tex. 1995); Wright Way Const. Co., Inc.
v. Harlingen Mall Co., 799 S.W.2d 415, 422 (Tex. App.—Corpus Christi–Edinburg 1990,
writ denied) (“A litigant is entitled to have controlling questions of fact submitted to the
jury if they are supported by ‘some evidence.’”); see also Bedell v. State, No. 03-16-
00328-CV, 2017 WL 6756996, at *4 (Tex. App.—Austin Dec. 19, 2017, no pet.) (mem.
op.). In its partial summary judgment, the trial court determined as a matter of law that
Natural Soda had not provided the required ten-days’ notice and only reserved for trial
whether that failure constituted the first material breach. Thus, Natural Soda’s failure to
provide the ten-days’ notice was not at issue in the trial to the jury. 20 Therefore, we
conclude that the trial court did not abuse its discretion, and we overrule Natural Soda’s
seventh issue. 21
C. Omission of Proposed Questions
By its first issue, Energy contends that the trial court improperly refused to include
a question regarding whether Dores complied with his fiduciary duty to Energy. Energy
requested this question because it claimed that Natural Soda aided and abetted Dores in
20 On appeal, Natural Soda does not challenge the trial court’s partial summary judgment.
21 By what appears to be a sub-issue to its seventh issue, Natural Soda argues in two sentences,
without substantive legal analysis, that the “notice provision was not material” because Bunnett testified
during the trial that he did not know the purpose of the ten-day notice provision. See TEX. R. APP. P. 38.1(i).
We conclude that this issue is inadequately briefed. See id.
32
failing to comply with his fiduciary duty to Energy. 22
1. Pertinent Facts
At the charge conference, Energy informed the trial court that the charge did not
mention Energy regarding its breach of fiduciary duty claim against Natural Soda. Energy
argued that
Mr. Dores breached his fiduciary duty. That’s the underlying claim under
Texas Law in order to recover joint and several liability against a
coconspirator, aider or abettor, which is Natural Soda and so there has been
no summary judgment on the claim that he owed a fiduciary duty to Energy
Feeds. And so that should be included here in this question as: Did a
relationship of trust exist between either Bunnett & Company or Energy
Feeds or both. However you want to do it, but Mr. Dores’ plan was to breach
his duty to both companies at the same time and so the first thing we have
to prove is whether or not he breached his duty to both companies, and the
second thing we have to prove a couple questions in is whether or not
Natural Soda participated in that breach and we can talk about the
testimony that’s come in. Ms. Schaeffner testified just a couple hours ago
that she knew how critical it was to get both the bicarb and the fat being
sold by the same person. She said it three or four times on the stand. If you
look at her contemporaneous e-mails with her boss and Mr. Dores, and her
notes—she says, we want these sales guys selling both bicarb for us and
bypass fats at the same time and the reason that she wanted that as she
testified she knew she needed to be able to send sales reps out there who
could sell both products at the same time so when Mr. Dores is breaching
his duty to both companies by—by sinking [Energy] and sinking Bunnett &
Company at the same time, Natural Soda participated in both of those
breaches and that’s why both entities need to be included in the instruction
and, again, we’ll get to the damage.
The trial court asked what evidence specifically exists that supports a finding that Natural
Soda did anything related to Energy and opined that Natural Soda’s desire for Dores to
work there would not be enough evidence as to Energy.
Energy responded:
It’s because the employees, Mr. Dores and his two subordinates could not
22 Question No. 14 asked, “Did [Natural Soda] aid and abet Frank Dores’ failure to comply with his
fiduciary duty, if any, to Bunnett & Co.?” The jury answered, “No.”
33
leave Bunnett & Company if they didn’t also leave—I’m sorry. I’m saying
that backwards. Mr. Dores couldn’t leave [Energy] if he didn’t also leave
Bunnett & Company, which is why the breach of fiduciary duty is the same
thing, so, when Natural Soda is encouraging him and assisting him and
offering to pay him under the table if he unlawfully competes against
Bunnett & Company, that was a necessary part of the assurance that Mr.
Dores needed to leave because he could not leave just one entity. Legally
speaking, he was the general manager of both. He couldn’t leave just one
and so what he did was—and, again, we have evidentiary rulings but he
reached out to Wawasan and said you’re going to cover me on the bypass
fats side, right, and he reached out to Natural Soda and said, you’re going
to cover me on the bicarb side and it took him six months to do it because
what happens is he actually reaches out to Wawasan in March and gets
assurances from them, oh, absolutely, we’ll totally hire you. He doesn’t do
anything for six months/seven months until October because he was
waiting. He needed assurance for both sides. It was not enough. It would
not have been enough because Mr. Dores is the reason that Sara
Schaeffner believes that she can’t sell bicarb without bypass fat and so Mr.
Dores was never going to leave these two companies unless he had
assurances that he could sell both products at the same time.
The trial court asked, “But is it a breach of fiduciary duty to talk to another employee?”
Energy replied that as manager, Dores could not conspire with his subordinates to leave
Energy. The trial court informed Energy that it would revisit the issue after it heard all the
evidence and it would make a ruling on Energy’s objection then.
At the conclusion of the evidence, the trial court denied Energy’s proposed
questions regarding whether Dores failed to comply with his fiduciary duty to Energy and
whether Natural Soda aided and abetted Dores in doing so. 23
23 In its brief, Energy suggests that either the trial court granted a directed verdict in favor of Natural
Soda on its breach of fiduciary duty claim or it committed charge error by excluding the questions
concerning its breach of fiduciary claim. Thus, Energy requests that we apply either a directed verdict
standard of review or charge error standard of review. After reviewing the record, clearly the trial court
declined to include Energy’s proposed questions in the jury charge, and we have not found a ruling by the
trial court in this voluminous record granting a directed verdict against Energy on its breach of fiduciary duty
claim against Natural Soda. Accordingly, we will review the issue as charge error, and we overrule Energy’s
second issue complaining that the trial court improperly granted a directed verdict in favor of Natural Soda.
See TEX. R. APP. P. 47.1.
34
2. Discussion
Energy states that there is ample evidence that Natural Soda encouraged Dores
to quit working at Energy and claims, without citing the record in its brief, “numerous
emails and notes from telephone calls” exist supporting this finding. 24 Energy also states,
“Natural Soda further aided Dores’ breach of fiduciary duty by concealing from Bunnett
and [Energy] that Dores was intending to resign from the companies.” However, Energy
does not claim that Dores breached his fiduciary duty to Energy by either planning to
resign or by resigning. 25 Thus, even assuming without deciding the evidence shows that
24 In its reply brief, Energy states that Natural Soda’s employee, “Schaeffner’s notes from October
1, 2015, show that Dores informed [Natural Soda] that he was contemplating resigning from [Energy] and
Bunnett,” and the notes show that the sales representatives would like to sell bicarb for Natural Soda and
would also be “repping bypass fat company.” However, the notes do not mention Energy and only refer to
Bunnett. Energy also cites in its reply brief a portion of the record where Natural Soda documented that
Bunnett’s employees approached Natural Soda seeking to sell bicarb for Natural Soda and Natural Soda’s
desire to hire those employees when they terminated their employment with Bunnett. Energy cites no
authority, and we find none, even suggesting that by offering to hire employees who are employed by
another company, the hiring company has aided and abetted the employee’s breach of fiduciary duty to its
employer. Moreover, as further explained below, Energy cannot show harm because the jury heard this
same cited evidence regarding Bunnett’s claim that Natural Soda aided and abetted Dores’s breach of
fiduciary duty, and it found that Natural Soda did not do so.
25 Instead, Energy claims that Dores breached his fiduciary duty by:
• Soliciting his employers’ exclusive distributors, Natural Soda and Wawasan;
• Soliciting Ray Gearheart and John Franklin and organizing their resignations in
unison;
• Forming a competing enterprise at the same time that he claimed to his employers
that he was too sick to work and was taking paid sick leave;
• Reaching an agreement with Bunnett’s exclusive distributor, Natural Soda to sell
product for Natural Soda independent of Bunnett;
• Reaching an agreement with [Energy’s] exclusive distributor, Wawasan, to sell
product for Wawasan independently of [Energy] and receiving under the table
compensation for his efforts; and
• Failing to disclose any of the foregoing to [Energy].
Energy does not cite evidence supporting a finding that Natural Soda aided and abetted Dores in performing
any of the above-stated alleged breaches of fiduciary duty. Thus, even if the evidence showed that Dores
35
Natural Soda knew that Dores intended to resign from Energy, such evidence does not
support a finding that Natural Soda aided and abetted Dores’s breach of fiduciary duty.
In addition, Energy cites no authority, and we find none, supporting a conclusion that an
employee breaches its fiduciary duty by either planning to resign or resigning.
Next, Energy states that Natural Soda “[(1)] had extensive discussions with Dores
and the other former sales representatives prior to their resignations[,] . . . [(2)] agreed to
pay Dores’ attorneys’ fees in the event . . . [Energy] brought a lawsuit against him, and
[(3)] after the lawsuit was filed[,] . . . asserted a common interest privilege with Dores (and
in fact, actually paid Dores’ litigation defense costs).” Energy further claims that Natural
Soda assured Dores that it “would do business with” him and his sales team and not with
Bunnett if Dores and his sales team resigned and “spread[] disparaging rumors” to [its]
customers . . . undermining customer confidence . . . .” Finally, Energy alleges Natural
Soda promised to terminate its Agreement with Bunnett if Dores resigned. 26
Energy does not provide any citation to the record wherein any evidence was
admitted at trial to support the above-stated claims. See TEX. R. APP. P. 38.1(h). With this
voluminous record, we have “no duty—or even a right—to perform an independent review
performed all of those acts, the trial court’s refusal to include a question concerning Dores’s alleged
breaches did not harm Energy because it has not shown that Natural Soda participated in those breaches.
Energy also claims that Dores “[s]olicit[ed] at least one customer on behalf of Natural Soda and in
concert with Natural Soda before he resigned.” Energy generally cites two pages in the record, without
citing the specific evidence that supports such a conclusion. In those two pages, we are unable to locate
evidence that supports this assertion.
26 Energy does not specify whether Natural Soda allegedly promised to terminate the Agreement
with Bunnett if Dores resigned from Energy. If the promise was that it would terminate based on Dores’s
resignation from Bunnett, this alleged act would not have affected Energy.
Energy also complains that Dores provided the phone number of one of Bunnett’s customers to
Natural Soda, and Natural Soda contacted that customer to discuss the purchase of bicarb while Dores
was still an employee of Bunnett. However, this act, even if true, would not have affected Energy because
Energy does not sell bicarb and the customer belonged to Bunnett.
36
of the record to determine whether error exists, because to do so would constitute an
abandonment of our role as a neutral adjudicator and a transition to party advocate.”
Calvillo v. Carrington Mortg. Servs., 487 S.W.3d 626, 630 (Tex. App.—El Paso 2015, pet.
denied). Accordingly, Energy has not shown that the trial court erred by denying its
proposed questions. 27
Even assuming that the trial court erred in failing to include a question asking if
Dores breached his fiduciary duty to Energy, Energy does not explain how it was harmed
by the trial court’s failure to do so because the jury answered “No” to Question No. 14
asking if Natural Soda aided and abetted Dores’s failure to comply with his fiduciary duty
to Bunnett. And, Energy does not explain why the jury would have found that Natural
Soda did not aid and abet Dores in breaching his fiduciary duty to Bunnett but find that
Natural Soda aided and abetted Dores in breaching his fiduciary duty to Energy. Thus,
we cannot conclude that the trial court’s error, if any, in omitting Energy’s proposed
question was harmful. See Island Recreational Dev. Corp. v. Republic of Texas Sav.
Ass’n, 710 S.W.2d 551, 555 (Tex. 1986) (“Alleged error will be deemed reversible only if,
when viewed in the light of the totality of these circumstances, it amounted to such a
denial of the rights of the complaining party as was reasonably calculated and probably
27Energy states in its brief that Natural Soda “knew that Dores’ plan would injure both [Energy] and
Bunnett and that to proceed with the plan, Dores would have to breach his fiduciary duties to both [Energy]
and Bunnett.” Energy neither states which evidence supports a finding that Natural Soda knew that Dores’s
plan would injure Energy or cause him to breach his fiduciary duty to Energy nor cites the record wherein
such evidence was admitted.
Energy makes many vague claims, without citation to the record, that Natural Soda knew Dores’s
scheme and plans. However, Energy does not connect Natural Soda’s acts to any of the alleged ways
Dores breached his fiduciary duty to Energy. In order to conclude that the charge required a question asking
whether Natural Soda aided and abetted Dores in his breach of fiduciary duty, Energy was required to
explain to the trial court and us, citing specific evidence, exactly how Natural Soda aided and abetted
Dores’s breaches, which it has failed to do. See TEX. R. APP. P. 33.1, 38.1(i).
37
did cause the rendition of an improper judgment.”). We overrule Energy’s first issue.
D. Question No. 13
By its third issue, Bunnett contends that the trial court misstated Texas law by
instructing the jury as follows: “An at-will employee may properly plan to go into
competition with his employer and may take active steps to do so while still employed and
may secretly do so with other employees, without disclosing his plans to his employer.”
Specifically, Bunnett argues that the instruction “misled the jury by erroneously instructing
them not to consider when reaching a verdict much of the conduct that was most relevant
to [Bunnett’s] claims against [Natural Soda].”
At the charge conference, Natural Soda requested an instruction in the jury charge
stating that an employee does not breach a fiduciary duty “by merely leaving employment
with [a] company.” Specifically, in its proposed questions, Natural Soda requested
inclusion of the following: “An at-will employee may properly plan to go into competition
with his employer and may take active steps to do so while still employed and may
secretly do so with other employees, without disclosing his plans to his employer.”
Bunnett and Energy did not object to Natural Soda’s proposed instruction. 28 The next day,
Bunnett informed the trial court that it had “a couple of comments on the charge” and
stated
In particular, there’s just a few on the breach of fiduciary duty. The
instruction is lawful for Mr. Dores to coordinate with subordinates in
departing that is contrary to Averitt Trucking.[ 29] Um, we’ve got the Texas
Law that says you can’t do that. The instruction says it is not a breach of
fiduciary duty to coordinate with cohorts when leaving.
28 Bunnett, however, requested a definition of fiduciary duty pursuant to the pattern jury charge,
which the trial court subsequently granted.
29 Neither party has provided a citation to a case with the style “Averitt Trucking,” and we are not
able to find such a case.
38
Natural Soda replied, “that language that we proposed is straight out of caselaw. I think
its verbatim.” Later, after the trial court presented its final charge to the parties, Bunnett
objected to the instruction on the basis that the case law relied upon by the trial court “is
not about a manager.” Bunnett made no other arguments to the trial court regarding this
instruction.
Question No. 13 states the following:
Did Frank Dores fail to comply with his fiduciary duty to Bunnett & Co.?
Frank Dores complied with his fiduciary duty if during his employment with
Bunnett & Co.:
1. The way Frank Dores interacted with Bunnett & Co. and their
customer and suppliers was fair and equitable to Bunnett & Co.; and
2. Frank Dores made reasonable use of the confidence that Bunnett &
Co. placed in him; and
3. Frank Dores acted in the utmost good faith and exercised the most
scrupulous honesty toward Bunnett & Co.; and
4. Frank Dores placed the interests of Bunnett & Co. before his own
and did not use the advantage of his position to gain any benefit for
himself at the expense of Bunnett & Co.; and
5. Frank Dores fully and fairly disclosed all important information to
Bunnett & Co. concerning his interactions with Bunnett & Co., and
their customers and suppliers.
An at-will employee may properly plan to go into competition with his
employer and may take active steps to do so while still employed and may
secretly do so with other employees, without disclosing his plans to his
employer. An at-will employee does not breach any fiduciary duties to his
employer by merely leaving employment with the employer.
Answer “Yes” or “No”: _____
The jury answered, “Yes.”
First, Bunnett argues that “the inaccurate statement of law and unduly narrow
39
definition of the ways Dores could have breached his obligations resulted in an inaccurate
and unduly narrow understanding by the jury of the ways [Natural Soda] could have aided
in those breaches” and “went to the very heart of the liability theory presented against
them.” At trial, Bunnett objected to the instruction on the basis that the caselaw which the
trial court relied upon did not involve a manager, “[t]he instruction is lawful for Mr. Dores
to coordinate with subordinates in departing that is contrary to Averitt Trucking,” and
Texas law does not allow employees to “coordinate with cohorts when leaving.” 30 Thus,
the basis of Bunnett’s argument centered on its claim that the instruction was a
misstatement of Texas law. Bunnett did not specifically object on the basis that “the
instruction was an unduly narrow definition of the ways Dores could have breached his
obligations”; therefore, error on that basis, if any, is waived. See Saenz-Guerrero v.
Gardner, 587 S.W.3d 191, 194 (Tex. App.—Houston [14th Dist.] 2019, no pet.)
(explaining that the “objecting party must clearly designate the alleged error and
specifically explain the basis of its objection” and “[o]bjections to the charge and requests
for instructions must comport with the arguments made on appeal” (citing Burbage v.
Burbage, 447 S.W.3d 249, 256–58 (Tex. 2014))). Moreover, Bunnett has not shown that
the instruction is an inaccurate statement of the law as it is directly quoted from Johnson
v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 201 (Tex. 2002). The instruction correctly
sets out the law as stated in Johnson that an employee does not breach a fiduciary duty
to an employer by taking active steps to compete while still employed and secretly doing
so with other employees without informing the employer. Id.
Next, Bunnett argues that the trial court erred by failing to provide “any clarification
30 This is the extent of Bunnett’s argument to the trial court.
40
to the instruction” and “essentially instructed the jury that Dores could take active steps
to compete without any qualification or limitation.” As we understand it, Bunnett complains
that the trial court improperly omitted limiting or qualifying language as stated in Johnson.
Id. at 202. However, Bunnett did not present a written request asking the trial court to
include the proposed qualifying or limiting language it now claims was needed in the jury
charge. 31 Thus, error, if any, is waived. 32 See Gilgon, Inc. v. Hart, 893 S.W.2d 562, 565–
66 (Tex. App.—Corpus Christi–Edinburg 1994, writ denied) (explaining that rule 278
“specifically addresses two additional requirements for preserving error in the failure to
submit a definition or instruction:” (1) “the party complaining of the judgment must have
presented a written request that the omitted definition or instruction be included in the
charge”; and (2) the complaining party “must have also tendered the proposed definition
or instruction in substantially correct wording”).
Finally, Bunnett argues that as the general manager, Dores “is subject to a higher
fiduciary standard than a mere employee.” In support of this argument, quoting Abetter
Trucking Co. v. Arizpe, Bunnett states: “‘If the nature of a [fiduciary’s] preparation to
compete is significant, it may give rise to a cause of action for breach of fiduciary duty.’”
See 113 S.W.3d 503, 510 (Tex. App.—Houston [1st Dist.] 2003, no pet.). This is the
31 Specifically, Bunnett argues that the jury charge should have also included the following: “An
employer may not (1) appropriate company trade secrets; (2) solicit the former employer’s customers while
still working for his employer; (3) solicit the departure of other employees while still working for his employer;
or (4) carry away confidential information.” See Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 202
(Tex. 2002).
32 Energy states in its reply brief that it did not waive this issue because it provided the trial court
with a correct proposed jury charge. However, the proposed jury charge Energy submitted to the trial court
does not include the above-stated language. Therefore, Energy and Bunnett’s argument complaining of the
trial court’s omission of the above-stated language is waived because they failed to present a written
request asking that the omitted instruction be included in the charge. See Gilgon, Inc. v. Hart, 893 S.W.2d
562, 565–66 (Tex. App.—Corpus Christi–Edinburg 1994, writ denied).
41
extent of Bunnett’s argument. Bunnett does not explain with substantive legal analysis
why the nature of Dores’s preparation to compete was significant and how his “significant”
preparation to compete barred the trial court’s instruction, which is an accurate statement
of the law. See Johnson, 73 S.W.3d at 201. And, although Bunnett generally cites Abetter
Trucking Co., 113 S.W.3d at 510, it does not explain how this case applies to the facts
here. 33 See TEX. R. APP. P. 38.1(i). Accordingly, we cannot conclude that Bunnett has
met its burden of showing that the trial court’s inclusion of the instruction in the jury charge
was arbitrary, unreasonable, or without consideration of guiding principles. 34
Nonetheless, Bunnett claims it was harmed by inclusion of the complained-of
instruction because the jury was deprived from finding that Dores: (1) solicited Bunnett’s
customers; (2) solicited Bunnett’s exclusive suppliers; (3) solicited Bunnett’s sales
representatives; (4) engaged in behavior that went beyond mere preparations to compete;
and (5) engaged in a course of conduct designed to hurt Bunnett. We disagree.
All of these alleged acts fit squarely within the charge’s instruction. These acts
support a finding that Dores breached his fiduciary duty to Bunnett because (1) he did not
place the interests of Bunnett before his own, (2) used his position to gain any benefit for
himself at the expense of Bunnett, and (3) did not fully and fairly disclose all important
information to Bunnett concerning his interactions with Bunnett and their customers.
33 Abetter Trucking Co. v. Arizpe, does not concern an improper jury charge instruction. See 113
S.W.3d 503, 510 (Tex. App.—Houston [1st Dist.] 2003, no pet.). In addition, nothing in Abetter supports a
conclusion that the complained-of instruction was an inaccurate statement of the law or erroneous. See id.
Instead, it appears that Bunnett’s real complaint is that the trial court omitted the exceptions to the general
rule that an employee does not breach his fiduciary duty by planning on competing, making preparations
to compete, and secretly doing so with other employees without informing its employer. Johnson, 73 S.W.3d
at 202. However, as further discussed above, neither Bunnett nor Energy submitted a written request for
the exceptions to be included in the charge. See Gilgon, Inc., 893 S.W.2d at 565–66.
34 We note that despite the complained-of instruction’s inclusion in the jury charge, as previously
stated, Bunnett prevailed on the question.
42
Evidence that Dores solicited Bunnett’s customers, exclusive suppliers, and sales
representatives shows that Dores used his position to gain a benefit for himself at the
expense of Bunnett and did not fully and fairly disclose all important information to Bunnett
concerning his interactions with Bunnett and their customers. In addition, assuming for
the sake of argument the evidence shows that Dores engaged in behavior that went
beyond mere preparation to compete and was designed to hurt Bunnett, that evidence
obviously supports a finding that Dores did not place the interests of Bunnett before his
own. Moreover, the jury implicitly made such findings when it found that Dores breached
his fiduciary duty to Bunnett. We conclude that Bunnett has not shown on appeal that the
error, if any, probably caused the rendition of an improper judgment or prevented it from
properly presenting its case on appeal. See Gunn v. McCoy, 554 S.W.3d 645, 675 (Tex.
2018). Accordingly, even assuming error, we cannot conclude that Bunnett was harmed.
See id. We overrule Bunnett’s third issue. 35
V. ELECTION OF DAMAGES
By its fourth issue, Bunnett contends that the trial court erred in requiring it to elect
its damages. Although it prevailed on its tort claim, Bunnett elected to collect damages
under breach of contract. Bunnett argues that because Natural Soda engaged in two
separate acts of (1) terminating the Agreement and (2) disparaging Bunnett to its
customers, it is entitled to separate recoveries under both a breach of contract theory and
tortious interference with relationships theory. Natural Soda responds that Bunnett would
receive double recovery for the same injury of lost profits if Bunnett did not elect damages.
35 Although not affected by the inclusion of Question No. 13, we overrule Energy’s third issue
arguing that the complained-of instruction was erroneous and caused it harm for the same reasons as set
out above.
43
We agree with Natural Soda.
A party may sue and seek damages on alternative theories of liability. If a
plaintiff pleads alternate theories of liability, a judgment awarding damages
on each alternate theory may be upheld if the theories depend on separate
and distinct injuries and if separate and distinct damages findings are made
as to each theory. “Under the one-satisfaction rule, [however,] a plaintiff is
entitled to only one recovery for any damages suffered because of a
particular injury.” Although the traditional “one satisfaction” principle applies
to cases in which an injured plaintiff is wholly compensated by settling
defendants or other third parties, as described in Utts . . . , other Texas
Supreme Court authorities use the term to describe the process by which
the trial court elects the remedy which affords an injured plaintiff the most
favorable relief against a single defendant when multiple theories of liability
cause an indivisible injury. The latter rule applies when a defendant commits
technically different acts that result in a single injury. “When a party tries a
case on alternative theories of recovery and a jury returns favorable findings
on two or more theories, the party has a right to a judgment on the theory
entitling him to the greatest or most favorable relief.”
Madison v. Williamson, 241 S.W.3d 145, 158–59 (Tex. App.—Houston [1st Dist.] 2007,
pet. denied).
At trial, Bunnett relied on the same evidence to support its claim for lost profits
under both theories of recovery. Under its breach of contract theory, Bunnett sought the
profits it claimed it lost in projected sales to all its customers in 2015; while in its tortious
interference with relationships claim, it sought the profits it claimed it lost in projected
sales to five customers in 2015. The damages awarded by the jury for breach of contract
included Bunnett’s lost profits from those same five customers. Thus, if the trial court had
not required Bunnett to elect its damages, Bunnett would have been compensated twice
for the same injury—lost profits from the five companies. See id. at 159.
Moreover, it was Bunnett’s burden at trial to distinguish between the damages it
suffered as a result of Natural Soda’s breach of contract and tortious interference with
relationships with Bunnett’s customers. See Saden v. Smith, 415 S.W.3d 450, 467 (Tex.
44
App.—Houston [1st Dist.] 2013, pet. denied). On appeal, Bunnett does not cite where the
evidence showed its damages for its breach of contract claim were separate and apart
from its damages for its tortious interference with relationships claim. See id.; see also
TEX. R. APP. P. 38.1(i). In addition, Bunnett does not cite where in the record it attempted
to segregate damages attributable to Natural Soda’s breach of the parties’ Agreement
from any other damages that somehow may have been attributable to Natural Soda’s
separate interference with Bunnett’s relationships with its customers. See Saden, 415
S.W.3d at 467. To prevail on appeal, Bunnett must show that the way this case was
presented, tried, and charged to the jury, the actual evidence showed separate and
distinct injuries resulting in separate and distinct lost profits. See id. However, Bunnett
has failed to do so. See TEX. R. APP. P. 38.1(i). Accordingly, we overrule Bunnett’s fourth
issue. 36
VI. EXEMPLARY DAMAGES
By its fifth issue, Bunnett contends that although it elected to receive its breach of
contracts damages, it was not prohibited by the one satisfaction rule from collecting its
exemplary damages. Natural Soda replies that it is obvious that exemplary damages can
only be recovered if the party elects to collect its damages in tort.
Bunnett seeks to collect exemplary damages awarded by the jury for Natural
36 By its fourth issue, Natural Soda contends in the event that Bunnett’s contract claim is invalidated,
there is no evidence to support the jury’s finding that it tortiously interfered with the relationships with J.D.
Heiskell, Mission Ag. Resources, LLC, Nutrius LLC, Pacific Elements, or Hi-Pro Feeds, which are
customers and prospective customers of Bunnett. Specifically, Natural Soda challenges each element of
the tortious interference claim arguing there is no evidence that: (1) there was a reasonable probability that
Bunnett would have entered into a business relationship with the above-listed customers; (2) Natural Soda
intentionally interfered with those relationships; (3) Natural Soda’s conduct was independently tortious or
unlawful; (4) the interference proximately caused Bunnett’s injury; and (5) Bunnett suffered actual damages
or loss as a result. By its fifth issue, Natural Soda challenges the jury’s award of exemplary damages.
However, this issue is not dispositive, as we have concluded that Bunnett was required to elect its damages
and chose to do so under its contract claim. See TEX. R. APP. P. 47.1.
45
Soda’s tortious conduct even though it elected to collect damages pursuant to its breach
of contract claim. Bunnett argues that as exemplary damages are meant to punish and
deter parties from wrongful conduct, it should be allowed to collect them even though it
did not choose to receive damages for Natural Soda’s tortious conduct. However, it is
well-settled that a party cannot recover exemplary damages or mental anguish for a
breach of contract claim. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 304 (Tex.
2006). As there is no authority directly on point supporting Bunnett’s argument, and the
case law clearly states that exemplary damages are not recoverable for breach of
contract, we decline to reach such a conclusion. See id. We overrule Bunnett’s fifth
issue. 37
VII. CONCLUSION
We reverse the portions of the judgment awarding Natural Soda damages for
quantum meruit and awarding Bunnett damages for future lost profits, and we render a
take-nothing judgment on those damages. We affirm the judgment in all other respects.
JAIME TIJERINA,
Justice
Delivered and filed the
23rd day of April, 2020.
37 Bunnett argues that the exemplary damages calculation should have included “the entire
economic harm caused by the defendants.” In sum, Bunnett, citing § 41.008, argues the exemplary
damages needed to have been calculated by adding the amount of contract damages with the amount of
tort damages. See TEX. CIV. PRAC. & REM. CODE ANN. § 41.008 (capping exemplary damages to an amount
equal to the greater of: (1) two times the amount of economic damages plus an amount equal to any
noneconomic damages found by the jury, not to exceed $750,000; or (2) $200,000). However, as we have
concluded that Bunnett cannot collect both its contract and tort damages and that it is not entitled to
exemplary damages under its contract claim alone, this issue is not dispositive to this appeal. See TEX. R.
APP. P. 47.1.
46