## NO. 12

- 23

- 00050

- CV

IN THE COUR T OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS

RDA PROFESSIONAL BEAUTY SUPPLY INC. AND VELVIA DEANNE KENNEL, APPELLANTS/ CROSS

- AP PELLEES

V.
KRISTAL K. CLAY, APPELLEE/ CROSS

- APPELLANT §

§

§ APPEAL FROM THE 4TH

JUDICIAL DIST R

IC T COURT

RUSK COUN TY, TEXAS

MEMORANDUM OPINION
Appellants RD A Professional Beauty Supply Inc. (RD A) and Velvia Deanne Kennel appeal from t he trial court ’ s judgment entered following a j ury trial . In ten issues, they challenge
the sufficie n cy of the e vidence, the applicabil ity of t h e economic loss rule, the award of damages , Appellee Kristal K . Clay ’ s ability to challen ge the trial court ’ s ju dgment , and venue

. In a single issue on cross appeal, Clay asserts that th is Court should remand the entire ca se in th e event it revers e s the po rtion of the judgment in her favor. We reverse and render in part and affirm as modified in part

.

B ACKGROUND
R D A sells haircare products and equipment to hair salons, barber shops, beauty schools , and stylists through its r etail stores. Ke nne l ( so m etimes referred to as “ Dee ” in the record)
formed RDA on June 7, 2013, after purchasing the assets of a similar compan y

. Initially, Kennel

ow ned all of R DA ’ s 1,000 authorize d shares. Kennel sought to hire Clay , a former coworker, t o
manage RDA ’ s finances , and offered to give Clay a 25% interest in RDA if she would accept the position. Clay agreed, and on October 1, 20 13 , RDA passed a resolution appointing Kennel as2 President and CEO of the corporation and Clay as S ecretary, Treasu r e r, and C FO. Ke nnel t hen
transferred 250 of her sha res in RDA to Clay. Clay was solely responsible for RDA ’ s bookkeeping and accounting, for which she used In tuit ’ s QuickBooks software program

. Clay provided regular financial reports to Kennel

. Kennel alle g edly did not know how to use the accounting software and did not have passwords to access RDA ’ s online bank accounts or credit
card accoun ts. In December of 2019, Kennel became concerned that she was not sufficiently informed
about RDA ’ s finances and obt ained the pass word s from Clay for RDA ’ s QuickBooks, online banking, and credit card accounts. Kennel dis covered that Clay recorded large p ayments from
RDA to both hers elf and Kennel as loans t o shar eholders. 1 The note bala nces a t the end of 2019
show ed a l oan balance fo r Cl ay of $ 253,291.00 , and a loan balance of $230,747.00 for Kenne l.
Kennel additionally learned that Clay issued company c re dit cards to herself and other members of her family, wh ich they used to pay personal expenses such as dental b ills, pet care, and cost s for t ravel un related to RDA. Based upon these events, Kennel terminated Clay ’ s employment
with RDA. Subs equently, Ke nnel performed a detailed review of RDA ’ s finances and spe nding , and discovered that from 201 5 to 2019, Clay misa pp r opri ated a total of $635,771. 00 from the corporation

. Court Proceedings
O n December 3, 2020, Clay sued RDA and Kennel in Rusk County, allegi n g breach of

contract and negligent misrepresentation

. Cla y alleged the existence and breach of two oral

co ntrac ts a t is sue in this appe al

. Re gar ding the first contract , Clay claimed tha t she and Appellants o rally agreed that Kennel ’ s and Clay ’ s “ pay, be nefits, and perks ” from RDA would be equal, except that Kenn el would receive $10,000.00 more per year ( hereafter the Comp ensation Agree ment ). Clay ’s claim for negligent misrepresentation similarly alleges that Kennel represented that she and Clay would be partners , operate RDA as equals, an d receive equal compensation for their respective efforts

. B ut in stead, Clay alleged Kennel receiv ed m uch greater compensation than Clay did throughout her involvement with RDA. Re garding the

se cond contract , Clay allege d that at the meeting wherein Kennel t erminated Clay ’ s employment
with RDA, Kennel and RDA orally ag reed to b uy C lay ’ s share s in the corporati on following both

1 QuickBooks requires that the ope rator sup ply a “code ” for e ach business expens e recorde d, designating t h e g eneral typ e of the expense

.3 parties procuring an “ evaluation ” (hereafter the Separation Agreement)

. In the interim, Clay

wo uld receive pa yments of $5,000.00 per month , up to a maximum of $5 0,000. 00, and th e

am ou nt of such payments would be d educted from Clay ’ s payme nt for the eventual sale of her
shares

. A ppellants moved to transfer venue on the ground that few or no events o r omissions gi ving rise to Clay ’ s claims occurred in Rusk County , which the trial co urt d enied following a hearin g

. On Februa ry 9, 2021, Appell ants countersued Clay for breach of fiduciary duty ( against
both RDA and Kennel ) and money had and received

. The parties did no t reach any extrajudicial resolution or settlement, and th is matter pr ocee ded to a jury tria l

. The Jury ’ s Verdict
I n response to the first jury question , t he j ury found that Clay and Appellants agreed that Clay ’ s and Kennel ’ s “ pay, benefits , and perks ” fr o m RDA would be equal except that Kennel would receive $1 0, 00 0 .00 mo re per ye ar

. The jury al so fou nd that both Kenne l an d RDA fail ed to comply with this agreement. Because of these findings, the third question instructed the jur ors
to deter mine what sum of mone y would compensate Clay for her damages resulting fr om s u ch
fai lure

. The jury ’ s answe r was zero. In response to the fourth ju ry question , the jury found that Clay and RDA agreed that upon her exi t from RDA, Clay would receive a paymen t of $5,000.00 per month (up to $50,0 00.00) to be repaid from the sale of Cl ay ’ s RDA shares to Kennel for a n appr aised val ue. I n resp onse to the fi fth and sixth questions, t he jury determined that RDA (but not Kennel) failed to comply with the agreement, and that Clay shoul d receive $50,000. 00 as compensation

. In response to the s ev e nth jury questio n, t he jury found that Kenn el made a n egligent
mis re presentation on which Clay justifiab ly relied

. T he eig hth question instructed the jur ors to determine what sum of mone y would c ompensate Clay for her damages resulting from said
relia nc e

. This time, the j ury ’ s res ponse was, “ $835,0 00.00

. ”
Fin ally, i n respo nse to the ninth and tenth jury question s , the jury determined that Clay failed to comply wit h her fiducia ry duty to RDA , and i n considering “ t he amount of money

. . . that was m i sapp ro p r i ated by Kristal Clay from RDA , ” damages in the amount of $235,000.00 were appropriate

. 2

2 The jury made additiona l findings a s to Appellants ’ claims for money had an d received and ex emplary damages , which are not at issue in this appeal

.4 Clay moved the trial court to enter her proposed judgment based up on the jury ’ s verdi ct. The tria l court entered Clay ’ s proposed judgment

. Appel lants file d a m otion to modify, correct, or ref orm th e judgment, a mo tion for judgment notw ithstanding the verdict, and a motion for a
new trial

. Following a hearing, the trial court den ied all p ost

- trial motions. This appeal and

cross appea l followed

.

I SSUES P RESENTED Ap p ellants generall y ask this Court t o (1) reverse t he po rtio ns of the trial court ’ s judgment against Kennel and RDA on Clay ’ s claims for negligent misrepre se ntation and breach
of contract , (2) render a take

- nothing judgment on those claims , and (3) affi rm t h e trial court ’ s judgment ag ainst Clay on Appellan ts ’ c laim for b reach of f iduciary duty. In the alternative, Appellants request that we reverse and remand “ the entire case ” fo r a new trial. Clay ’ s sole cross

- issue , labeled a “ conditional is sue , ” cont ends that if we rever se t he tri al

cou rt ’ s judgment in Clay ’ s favor on her negli gent misrepresentation claim and remand that claim
for a new trial, then we should remand al l of the par ties ’ claims for a new trial.

E CONOMIC L OSS R ULE
In the i r first issue, A ppellants contend that the econom ic lo s s ru le bars Clay ’ s negligent misrepresentat i on claim against Kennel

. Applicable Law
The economic loss rule generally precludes recovery in t ort for economic los ses resulting
from a party ’ s failure to fulfill a contractual obl igation when the harm con sist s only of the

econom ic loss of a contractual expectancy. Chapman Custom Homes, Inc. v. Dalla s Plumbing
Co. , 445 S.W.3d 716, 718 (Tex. 2014) ; see also MEMC Pasade na, Inc. v. Riddle Power, L LC , 472 S .W.3d 379 , 39 7 (Tex. App.

— Houston [14th Dist.] 2015 , n o pet

. ) ( economic loss ru le precludes recovery in tort when the only economic loss to the plaintiff is subje ct matter of

contract )

. In operation, th e rule “ restricts contracting parties to cont ractual r emedies f or t hos e economic losses associated with the rel at ionship, even when t he breach might reasonabl y be viewed as a consequence of a contracting party ’ s negl igence. ” Lamar Homes, Inc. v. Mid

Co nti nent Cas. Co. , 242 S.W.3d 1, 12

– 13 (Tex. 2007)

.5 Under t he econom ic l oss rule, a plaintiff may not bring a c laim f o r negligent misrepre sentation unless the plai ntiff can establish that s he suffered an injury that is “ d istinct, separate, and independent ” fro m the economic loss es recoverable under a brea ch of con tract cla im. Guerrero

- McDonald v. Nassour , 516 S.W.3 d 198, 210 (Tex. App.

— Eastl and 2017 , no pet. ) ( citin g Sterling Chemicals, Inc. v. Texaco Inc. , 259 S.W.3d 793, 797

– 98 (Tex. App.

— Houston [1st Dist .] 2007, pet. denied) ( “ [I] f a negligent misrepresentation claim only seeks benefit of the bargain damages

... ( 1) a p l aintiff cannot estab lish an independent injur y that is
distinct from the economic losses recoverable un der a breach of contract claim and ( 2) the
economic loss r ule bars any recovery of these damag es under the negligent mis representation
claim

. ” ) )

. “ [T] h e d amages recoverable for a negligent misrepres entation do not include the benefit of the plaintiff ’ s co ntract with the defendant

. ” D.S.A., In c. v. Hillsboro Inde p. Sch.
Dist. , 973 S.W.2d 662, 664 (Te x. 1998)

. A nalysi s As an in itial matter, we must determ ine whether Appellants preserved this issue for our review by r aising it for the first time in a pos t

- trial motion

. Cla y argues against pres erv ation
because Appellants did not o bject to the jury cha rge which allowed for recovery of both tort and

cont ract d a mages. In Equi star Che micals, L.P. v. Dresser

- R and Co. , a product s liab ility action, the Supreme Co urt of Texas held that a defen dant (Dres ser ) failed to preserve error as to the application of the economic loss rule when it did no t plead the rule, refere n ce the rule in any

mot ions, or object to the ju ry charge on the basis o f the ru le. 240 S.W.3d 864, 868 (Tex. 2007)

. Fu rther, Dres ser did no t m ention the economic loss rule in any of its pre

- or post

- trial motions ; ho wever, the appellate court found that D r ess er ’ s general no

- evi dence complaints encompas sed
its assertion of the economic loss rule

. Id. In overturning that fi nding, the Court note d t hat Texas law provide s defective product remedies in both tort and contrac t , but the eco nomic loss rule

wou ld app l y when “ losses from an occurrence arise from fa ilure of a product and t he damage or loss is limited to the product its elf

. ” Id. a t 867. H owe ver, in Equistar , the jury was only asked to find one damages amount and wa s not instructed to distinguis h the da ma ges resulting from its respective findings that the defendant committed torts and that the defendant breached a contra ct.
Id. In finding tha t Dresser failed to preserve error on the issue, t he Court stated , “ If Dress er believed that the jury charg e pres ent ed an improper measure of damages because it all owed the6 jury to find b oth tort an d contract damages by a single answe r, it was r equired to timely object and make the trial court aware of its complaint in order to pr eserve error for appeal. ” Id.
Subs eq uent ly, in MEMC Pasa den a, I nc. v. Riddle Power, LLC , an appellate court fou nd
that a defendant preserved error as to the e conomic los s rule whe n it raised the issue for the first time in a post

- trial motion. 472 S.W.3d a t 411 n.8. The court distingu ished the c ase from Equistar by no ting t hat MEMC involved a different application of the eco nomic loss rule than the one applie d in products liabi lit y actions

. Id. T he court further noted that a sserting a question
of law ( such as the a pplicability o f the econo mic los s rule ) in a post

- trial motion “ prese rves an iss ue for review if the le gal question is one that the trial court is not requi red t o re sol ve before the jury could properly perform its fact

- finding role. ” Id. (citing Holland v. Wal

- Mart Stores,
Inc. , 1 S.W.3d 91, 94 (Tex. 1999 ) )

. S pecifically, the t rial co urt was not required to resolve the applicability of the rule before the jury cou ld as sess whether the defendant en tity had been negligent at all an d the percentage of its resp onsibility. Id.
Most r ecently, i n Dixie Carpe t Installa tions, Inc. v. Residences at Riverdale, LP ( a ca se involving claims for breach of contract and con version) , an appellate court found that the appellee preserved error as to the economic loss rule by rai sing sam e in its oppos itions to the appellant ’ s pre
- rem and and post

- rem and motio ns for judgment. 599 S. W.3d 618, 633

– 34 (Tex. App.

— Dallas 2020 , no pet. )

. The co u rt similarly di stinguished the matter from Equistar by noting that that case in volved the versi on of the econo mic lo ss rule app licable to products
lia bility cases

. Id. at 636 n.8. Further, because t he jury in Equistar was only asked to find one damages amo u nt for bot h tort and contract , the defendant therein would ha ve had to object to the improper submission to prese rve its econo mic loss rul e argument ; the “ one damages amount ”
issue was not present in Dixie Carpet

. Id. at 636 n.8. In this case, the jury ch a rge contained separate damages questions for Clay ’ s separate claims of breach of the Compensat ion Agreement and n egligent misr epresentation, and the jury
determined a separat e damages amount for ea ch claim , so the “ o ne damages am ount ” issue present in Equ i star is not present here. Further, similar to the situatio n in MEMC (and because the damages questions we r e sepa rat ed), it wa s not necessary for the trial court to resolve
Ke nnel ’ s economi c loss rule issue of law before the jury performed it s fac tfind ing role. If the jury found th at the Compensation Agreement was either nonexistent or nonbinding (and thus
ther e was no contr act related to that subject m atter) , then the economic los s rul e would have no7 application . Similarly, if the jury found i n Kenne l ’ s fa vor on the negligent misrepresentation claim, there would be no economic loss rule issue, because there wou ld be no liabi lity for Kennel
under the tor t claim

. Therefore, we co nclude th at Kennel preserved the economic loss rule issue for appel late revi ew b y raising same in her post

- trial motion.
We n ow turn to the question of whether the economic loss rule app l ies to bar Clay ’s

r ecovery of damages under her tort claim for neglig ent misre presentation. W e note that , contrary to Clay ’ s assertion, Texas c o u rts have not chosen to condition the application of the economic
loss rule on whether t he jury a ctually awarde d the plaint iff damages under claims for both tort and contract. 3 The rule does not state that a plaintiff cannot recover in both contrac t and t ort ; rather, the economic loss rule preclud es any recovery in tort for the economic losses recover able (not nec essari ly actually recovered) under a claim for breach of contract. See Guerrero

McDonald , 516 S.W.3d at 210

. Th is is because when the dama ges s ough t are the result of a
breach of a con tractually created duty, the action itself “ sounds in contr act alone. ” MEMC Pasadena, Inc

. , 472 S.W.3d at 39 7

. Stated differently, when the onl y economi c loss to the plaintiff is the value she e xpected to recei ve unde r a contract, that plaintiff is confined to

contra ctual remedies to recover for that loss. See Cha pman Cus tom Ho mes, Inc. , 445 S .W.3d at
718 ; Lamar Homes, In c . , 242 S.W.3d at 12

– 13

. This is s o even when the breach could reasonably be viewed as a con s eque nce of a contracting party ’ s negligence. Lamar Homes , Inc

. , 242 S.W.3d at 12

– 13

. Also contrary to A ppellee ’ s arg ument, the economi c loss rule applies to claims for negligent misreprese ntation w here the dama ges sought comprise the benefit of the

contra c tua l bargain

. Se e, e.g. , D.S.A., Inc. , 973 S.W.2d at 664 ; Severs v. Mira Vista
Homeowners Ass ’ n, Inc. , 559 S.W .3d 68 4, 703 (Tex. App.

— Fort Worth 2018 , pet. denied ) ; Guerrero

- McDonald , 516 S.W.3d at 210

. To avoid application of the rule , the plaintiff has the
burden to establish an injury o r loss attributable to the alleged negligent m isrepres entation that is

“ disti nct, separate, and independent ” from the loss of her contractual expectan cy. Guerr e r o McDonald , 516 S.W.3d at 210 ; see also Sterling Chemic als , Inc. , 259 S.W.3d at 797

– 98

.

3 Clay c ites to MCN Energy En terp rises , Inc. v. Omagro de Colombia , L.D.C. as s tanding for the pro p osition that “ bec ause the jury f o und for th e d efendant on the c ontract claim, there was no economic

- loss rule problem

. ” 98 S.W.3d 766, 772 (Tex. App

. — Fort Worth 200 3 , pet. denied)

. Howe ver, the jury in MC N found that there was no contra ct betw een the part ies , so the appel late court foun d that the eco n omic loss rule ( w hich the opinion does not mention by name) did not bar a damages award for negligen t misrepr esentatio n

. Id

. In contrast, here, the jury foun d that there was a contract betwe en RDA and Clay reg arding Clay ’ s co mpensation, and that Appel lant s breached that c o ntract ; however, the jury declined to award damag es for the breach.8 A s found by the jury in its answer to the first jury question , t he Compensation Agreem ent provided that “ Krist al K Clay, on the one hand , and Deanne Kennel and RDA P rofessional Beauty Supply , Inc, on the other hand, agree [d ] t hat their pay, bene fits and per ks from RDA Professional Beauty Suppl y, Inc, would be equal except that Kennel would receive $10,000 more

a y ear then Kristal K Clay [.] ” And b oth jur y qu estion thre e (damages f or breach of the Compe nsation Agreement) and jur y question eight (damages for ne gligent misrepresentation)
instruct t he jury to consider the same single eleme n t of d amages “ and none other, ”

— that
element b eing “ [ t ] h e amou nt of pay, benefits and perks that Deanne Kennel received from RDA
Profess io nal Bea uty Supply, Inc . in excess of th e amount agreed to in jury quest io n n umber one, i f any

. ” That is, the jury ch arge ins tructs the factfinder to consider ( in determining damages for
both Appellants ’ breach of the Compensatio n Agreeme nt and Kennel ’ s allege d n egligent misrepresentation ) only the amount of money that would make e qual the amounts of “ pay , benefits, and perks ” r ece ived by Clay and Ke nnel (excepting the addition al $10,000.00 per year

to Ken nel ) , under the terms of the Compe nsation Agreement. Ap pel lants and Clay were parties to the Compensation Agreement, and Clay sued Appellants for allegedly breaching th at con tract. Clay ’ s First Am ended Petition, her live ple ading at the time of trial, d oes not allege an y separa te injury or category of damages spe cific to her claim for negligen t misrepresentati on. Finally, i n reviewing the jury charge , the m easure of t he
dama ges Clay s ought to rec o ver under both her breach of contract c laim and her neglig ent misrepresentation cla im were i dentical , and both depe nd o n a n affirmative answer to the first jury questi on

— namely, that Appellants and Clay had a contra ct regardin g Clay ’ s compensation

. That is , if the jury had found in an swering the first jury questi on that there was no cont ract, the n per the jury charge, the amount of damages for the ne gli gent misrepresentation would have necessarily been zero. Clay does not argu e that she alleged before the trial court the independent
in

jury required to overcome the application of the econo mic loss rule to her claim for neg ligent misrepres entation , and we find that the recor d similarly fails to establish any such independent inju ry

. For this reason, we concl ude that C lay ’ s claim against A ppellants regarding her

compe nsat ion as an employee of RDA soun ds solely in contract , a nd the economic l oss rule bars
her recovery of any tort damages f rom Kennel under her negligent misrepresent at ion claim. 4

4 In he r sole co n dition al counte r
- issue as cross

- app ellee, Clay contend s that “ [i ] f, for any reason, the Court remands Clay’s claim for neg ligent misrepre s entation, the Court then should reverse and remand th e entire case

. ”9 Accordingly, we sustain Appellants ’ first issue

. 5 See MEMC Pasadena, Inc. , 4 72 S.W.3d at
39 7

.

L EGAL S UFFICIEN C Y OF E VI DENCE In th eir third issue , Appellant s challenge t he legal s ufficiency of the evidence to support the jury ’ s finding s rega rd ing breach of contract (spec ifically the Separation Agreement )

. Standard of Review

Le gal sufficiency questions the existence of any evidence t o s upp ort a particul a r finding, and essentially claim s the evidence at trial can po int to only one legal ou tcom e

— that is, the opposite of the outcome m ade by the fact finder. See, e.g. , Ford Motor Co . v. Ridgway , 135 S.W.3d 598, 601 (Tex. 2004). When a pa rty challenges both t h e legal and factual sufficiency of the evidence, appellate cou rts should decide the legal s ufficiency issues first. Alt i ce v. Her nandez , 668 S.W.3d 399, 409 (Tex. App.

— Houst on [1st D ist .] 2022 , no pet. )

. A p arty who chall enges the leg al sufficiency of the evidence to su pport an issue upon
which it did not have the bu rden of proof at trial must d emonstrate on appeal that th e re is no evidence to support the adverse finding. Bri ght v. Ad dison , 171 S.W.3d 588, 59 5 (Tex. App.

— D allas 2005, pet . denied ). Our revi e w is restricted to the jury charge as submitted when there

was no objection to the inst ru ction. Seger v. Yorkshire I ns. Co. , 503 S.W.3d 388, 407 (Tex. 2016)

. T o analyze a le gal suffi ciency challenge, we must determine whe ther the evi dence presented would e nable reasonable and fair

- minded people to make the finding un der review. City of Kel le r v. Wilson , 168 S .W.3d 802, 827 (Tex. 2005). A legal sufficiency review “must
credit favorable evidence if reasonable j urors could, a nd disre gar d contrary evidence unl e ss reasonable jurors could not.” Id. at 821

- 22, 827

. T he jury is the sole judge of th e witnesses ’ credibility and the w eight to be given t o their testimony ; the jurors are en titled to bel ieve one witness an d disbelieve another

. Id

. at 819. On

She repeats, “ were the Court to somehow reverse a nd rem and Clay’ s recovery under the negli gent m isrepre sentation claim, the Court should in th at event reverse and remand t he entire case, including RDA’ s recovery from Clay

. ” Because we do not reverse and remand on the issu e of negligent m isrepresentation , we ne ed not ad d ress this counter

- i ssue. See T EX

. R. A PP

. P. 47.1.

5 Because w e conclude th at the economic loss rule pre cludes Clay ’ s n e gligent mi srepresentation claim and

a ny recovery o f damages thereunder , we do not reach Appellant s ’ second and se v enth issues regardi n g the legal and fac tual s ufficiency of the jury ’ s findings pertaining to that claim. See id

.10 ap peal, we assume the jury re sol ved all conflict s in the evidence and all conflicting inference s reasonably d rawn from the ev idence in accordance with the verdict. Id. at 821. Applicable Law
T h e existence of a valid co ntract between the p art ie s is a pre requisite to a finding of
breach of contract

. Domi ngo v. Mitchell , 257 S.W.3d 34, 39 (Tex. App.

— A marillo 2008 , pet.

re f ’ d )

. For a contract to be valid and enforceable, it must address all essentia l and material terms
of t he parties ’ a greem ent wit h sufficient definiteness t o enable a court to understand th e parties ’ obligations and giv e an appropria te remedy for a b reach. Fisch er v. CTMI, L.L.C. , 479 S.W.3d 231, 237 (Tex. 2016) ; see also Farone v. B ag ’ n Baggage, Ltd. , 165 S .W.3d 795, 802 (T ex. App.

— Eastland 2005, no pet.) ( terms of an oral contract must be definite, certain, and clear as to
all esse nt ial terms or ora l contract f ails for indefiniteness )

. An appellate court decides w hether a

contract contains all essential te rms on a case
- by

- cas e bas i s, and the “primary purpose” of the contract governs this d etermination. Rustic Nat. Res. LLC v. DE Mi dland III LLC , 669 S.W.3d
49 4, 501 (Tex. App.

— Eastland 2022 , pet. filed )

. When an agreement leaves material matters open for future agreemen t and that agr eement neve r occurs, the contract is not suff iciently definite, constit utes merely an agreement to agree , and i s not binding on the parties

. Playoff Corp. v. Blackwell , 300 S.W.3d 451, 455 (Tex. App.

— Fort Wor th 2009, pet. denied) ; see also
Ma rtin v. Marti n , 326 S.W. 3 d 741, 749 (Tex. App.

— Texarkana 2010, pet. deni ed) ; Cent. Te xas Micrographics v. Leal , 908 S.W.2d 2 92 , 297 (Tex. App.

— Sa n Antonio 1995 , no pet. ) ( no enforceable contract “where the agreement of the parties leaves an essential term for l ater det ermination a n d it is never determined

. ” ) (emphasis in original)

. An agre ement to enter into negoti ations in th e future cannot be enfo rced be cause the court has no means to determine what sort of contract the negotiatio ns would have produced. M eru v. Huert a , 136 S.W.3d 383, 391 (Tex. App.

— Corpus Christi 2004 , no pet. )

. The que stion of whether a particula r contract i s an unenforceable ag reement to agree is a question of law

. See Martin , 326 S. W.3d at 746

- 47 (citing Micke ns v . Longhorn DFW Moving , In c. , 264 S.W.3d 875, 8 8 0 (Tex. App.

— Dallas 2008, pet. denied) )

. Analysis
As an ini tial matter, Clay contends that Appell an ts failed to p reserve error on this argument because they did not specifically raise the issue of legal e n forceability in their pos t

- t rial
moti ons. Howe v er, as the Texas Supreme Cou rt has explained, a genera l “no evidence”11 complaint directed to a specif ic jury issue i s usually suffi cient to preserve error without further detail as to why no evidence exists , a n d the rules regarding the s pecificit y of post

- t rial objections
should be co nstrued liberally

. Arkoma Basin Exploration Co. v. FMF Assocs. 19 90

–

A, Lt d. , 249 S.W.3d 3 80, 387 (Tex . 2008). Appellants raise just suc h a general complaint in their motion for jud g ment notwithstanding the ve rdict , 6 so we concl u de that said motion preserved error on Appellants ’ leg al sufficiency po int related to the enforcea bi lity of the Sep ara tion Agree ment. Appellants allege th at the Separation Agreement is not a valid, enforceable contract , but only an ag reement t o agree , bec a use it does not provide a p rice for the shares

. T he pr i ce to be pai d for the object of a sale is an essential eleme nt of a sale s contract and is ther efore a material
term for this contract

. John Wood Grp. USA, Inc. v. ICO, Inc. , 26 S. W.3d 12 , 20 (Tex. Ap p

. — Houston [1st Dist.] 2000 , pet. denied )

. The fourt h j ury question , which the jury answ ered affir ma tively, asks :

Di d Kristal K Clay, on the one hand, and Deanne Kennel and R DA Professional Beauty Supply, In c, o n the other hand, agree t hat whe n Crystal K C l ay exited RDA Professional Beauty Supply, Inc that she would be paid the sum of $5,000 per month (u p to $50,000), t o be deducte d from the sale of Kristal K Clay ’ s shares in R DA Professional Beauty Supply, I nc t o Deanne Kennel for an ap praised value? The p a rtie s do not dispute that th e Separation Agreement was solely a n oral contract , an d that Clay nev er had a written a greement of any kind with Kennel or with RDA. At trial, Clay testified
as follows regarding the terms of the Separatio n Agreeme nt:

On the da y that I was fired, Dee and I both came to an agreement that she would buy me ou t that day. And sh e offered $5,000 a month for u p to $ 50,000 to be deducted off the sale of the pu rchase

... So t he day of our separa tion, we discussed that w e would both

-- as s o on as the taxes were filed that we would both get an e valuation of the company a nd we would come to an agreement, a nd then she would purchase the shares from me. Upon our review, t his testimony is the only dir ect evidence in the rec or d conce rning the

ter m s of the Separation Agreement. 7 Elsewhere, Clay testif ied that she and K ennel ca me to an
agreeme nt on “ buyout ” on “ [t]he day t hat she fired me , ” but did not specify further.

6 To preser ve error on a l e gal suffic iency point of error, the appellant must raise the issue through one of the following : (1) a mot ion for directed verdict; ( 2 ) a motio n for judg ment n otwithstandin g the verdict; (3) an objection to the submi ss ion of the question to the jury; (4) a motion to disregard the jury ’ s answer to a vi tal fact question; or (5) a motion for new trial. See Cecil v. Smit h , 804 S.W .2d 509, 5 1 0

– 11 (Tex

. 1991).

7 Neit her the e
- ma il nor the letter from Kennel that Clay refer enced in her te stimony appears in the r ecord.12 Clay ’ s testimony makes clear that th e primary goal of the Sep aratio n Agreement wa s Appellants ’ future p urchase of Clay ’s s hares in RDA , and that the agreed

- upon monthly payments we re not merely sev erance or a dditional compensation but were instead an advance on the purchase price of t he shar es

. However, t he Sepa rati on Ag reement also e x plicitly leaves the
material pr ice term open for later determination, pending the completion of at least two compet ing “ evalua tion[s] ” and subsequent negotiation between the parties

. The parties do not dispute t hat no such ev aluati ons e ver occurred , n or i s the re any indication that the y later came to

an agree ment as to price. S pecifically regarding a n oral agreeme nt to transfer stock, the terms

must state “ the specific quantity of shares and the specific price ” i n order to be consi dered cle ar, certain , and definite. See Selzer v. Dunn , No. 12

- 12

- 00150

- CV, 2014 WL 356992, at *4 (Tex. App.

— Ty ler Jan. 3 1, 2014 , pe t. d enied ) (mem

. op.) (citing Gannon v. Baker , 830 S.W.2d 706, 709 (Tex. App.

— Houston [1st Dist.] 1992, w rit denied) (op. o n reman d) ). For this r eason alone, the Separation Agreement i s unen forceable

. Even if this were not so , Appellants and C lay left a

mate ri al term ope n for later determination, but the record before us indicates that determination

never occ urred

— a fact ual situation that renders t he Separation Agreement an unenfor ceable

“ agr eement to agree ” as a matter of law

. See Martin , 3 26 S. W.3d at 746

- 47 ; Leal , 908 S.W.2d

at 297

. Although courts have implied terms (including price term s) when the circumstances of a

co n tract lef t l ittle doubt a s to the parties ’ intentions, we cannot imply terms where the parties did not actually reach an a greement, but mere ly planned to reach an agreement that never came to
fruition. Kottke v. Scott , No. 03

- 10

- 00071

- CV, 2011 WL 1467194, at *5 (Te x

. App.

— A ustin
A pr. 14, 2011 , no pet. ) (mem. op.) (citing Ski River Dev. , Inc. v. McCalla , 167 S.W.3d 121, 134 (Tex

. App.

— Wa co 2005, pet. deni ed) )

. The Separation Agreement does not set forth h ow the parties intended t he evaluations to factor into their negotiations o n the sale pri c e

. N or does any record evidence indicat e that the parties intended to be bound by any one appra is al price , or any

s pecific amount mathematically derived from the appraisals, as the purchase price for the shares

. Though n ot specifically addr ess ed, another material term for which there is no evidence is the
date as of which the value of RDA, and accordi ngly its st o ck value, is to be determined. The
record indi cates that on the da y Clay was fired, RDA did not have enough liq uid capital to cover
th e u pcoming payroll , requiring Kennel to borrow money t o keep RDA in business. However, i n the ensuing years si nce Clay ’ s departure (in which she continued to own 25% of RDA ) , RDA13 has returned to solvency and made a record amount in g ross sales

. Obviousl y, the parties will
have opposing d esires as to the valuation date of the company in relation to the s ale of Clay ’ s shares , but the record is silent as to any discussion or agreement by the parties as to th is date. In

summary, the recor d evidence regarding th e S eparation Agreement fails to provide either a set price or a “ formula or standard ” by which to determine sa me. Fisc her , 479 S.W.3d at 2 41

. In the
absence of this information (or any information setting forth how the partie s in tend ed to fix a price) , thi s C ourt has no ability to determine the sale pri ce upon which the parti e s would have

eve ntually agreed , or any other t erms of the sale , cannot approximate the amount which Clay would have received after the $50,000.00 off set, and the refore cann ot f ashio n a n a ppropriate remedy for a ny breach. See i d. at 237 ; Meru , 136 S.W.3d at 391

. We conclude as a matter of law that no bind ing contract exists providing for an advance on the eventual sale price of Clay ’ s RDA shares

. The trial eviden ce does not meet the test of

e n abling reasonable and fair

- mi nded people to reach the verdict which we re view here. See City of Kelle r , 168 S.W.3 d at 8 27. We sustain Appellant ’ s third issue. 8

R EMAINING I SSUES Having reversed the verdict in Clay ’ s favor o n her claims of negl igent misrepr esentation
and breach of the Separat ion Agreement , we do not reach Appe llant s ’ fourth issue alleging that
the tr ial court erred in failing to order Clay to fo rfe it said recoveries. See T EX

. R. A PP

. P. 47.1

. Moreo ver, b ecau se Clay does no t cha llenge on appeal th e verdict or damages award

ag ai nst her for breach of fi duciary du ty , we need not reach Appella nt s ’ fifth i ssue regarding Clay ’ s purported waiver of her ability to do so

. See id

. Therefore, we also do not rea ch Appel lants ’ tenth issu e r egarding the damages award for this claim. See i d

. F inally, having re vers e d the fin dings in Clay ’ s favor on her claims of ne gligent misrepresentation and breach of the Separation Agreement , we do not reach Appel lants ’ remaining sixth i ssue rega rdin g ve nue they submitted as an alternative issue only

. See id

.

D ISPOSITION

8 B ecause we sustain Appellants ’ third i ssue and find that no binding contract existed as a matter o f law, we need not reach Ap p ellants ’ eighth a n d ninth issue s rega rding factual insuffi cien cy of this cla im and enf orcement of the sal e of Clay ’s sha r es in RDA to Appellants. See T E X

. R. A PP

. P. 47.1.14 Having sustained Appellants ’ first issue, w e reverse t he portion of the trial court ’ s final ju dgment of November 28, 2022, ordering that Clay recover from Kennel the su m of $83 5,000.00 f or negligent misrepresentation , and render judgment that Clay take not hing for this

c l aim.
Havi ng sustained Appella nts ’ third i ssue, w e reverse t he portion of the trial court ’ s fin al ju dgment ordering that Clay recover from RDA the su m of $ 50 ,000.00 for br ea ch of cont ract , and render judgment that Clay take not hing for this c laim

. We furt her modify the trial court ’ s final judg me nt to delete the paragraph reducing t he
amount of RDA ’ s recovery from Clay to $185,000.00 as an offset f or Clay ’ s reco very fo r br ea ch
of contract

. We additionally modify the judgment t o dele te the pa ragraph or derin g that Clay

recover a judgmen t against Ke nnel for pre

- and post

- judgment interest.
W e otherwise affi rm the judgment of the trial court as modified

.

G RE G N EELEY Justice

O p inion delive red December 1 4 , 202 3. Panel c onsisted of Worthen, C.J., Ho yle, J., and Nee ley, J.

## COURT OF APPEALS

TW ELFTH COURT OF APPEALS DISTRICT OF TEXAS

J UDGMENT

D ECEMBER 14, 2023

NO

. 12-23-00050- CV

RDA P ROFESS I ONAL BEAUTY SUPPLY INC. AND VELVIA DEANNE KENNEL, Appel lant s/Cross -Appel lees V. K RISTAL K. CLAY, Appellant/Cr oss-Appellee

A ppeal from the 4th District Court
of Rusk County, Texas (Tr.Ct.No. 2020-271)

THIS CAUSE came to be heard on the appel late record , oral argument, a nd briefs filed herein, and the same be ing considered, it is the opinion of this court that the judgment of the court below should be reversed and rendered in part, and affirmed as modified in part.
It is therefore ORDERED, ADJUDGED and D ECREED that the j udgment of
the court below be reversed as to t he portion of the tria l court ’ s fi nal ju dgment of November 28, 2022, ordering that Kristal K. Clay recover from Velvia Deanne Kennel the su m of $83 5,000.00
for negligent misrepresentation , and re nder ed that Cla y take nothing for this c laim

. It is th erefore FURTHER ORDERED, ADJUDGED and DECREED that the judgment of the court below be reversed as to t he portion of the trial court ’ s final ju dgment ordering that Cla y recover f rom RDA Professional B e au ty Supply, Inc. the su m of $ 50,000.00
for br each of co nt ract , and rendered that Cla y take not hing for this claim

.I t is therefore FURTHER ORDERED, ADJUDGED and DECREED that the judgment of the court below be m odified to delete (1) the paragraph reducin g t he amount of
RD A’s recovery from Clay to $185,000.00 a s an offset for Clay ’s recove ry for breach of

contract , and (2) the pa ragraph ordering that Clay recover a judgment against Velvia Deanne Kennel for pre - and post- ju dgment inter est. In all other resp e ct s, the judgment of the trial court is affirmed

. It is FURTHER ORDERED that all cost s of this appeal are hereb y adjudged against the Appellee, KRISTA L K. CLAY , for which execution may issue; and that this
decision be cer tified to th e court below for obse rva nce.

G r eg Neeley , Just ice

. Panel consisted of Worthe n, C.J., Hoyle, J., and Neeley, J.