* District Judge of the Southern District of Texas, sitting

by designation.

1

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 93-8199

____________________

HOLLYWOOD FANTASY

CORPORATION,

Plaintiff - Appellee,

v.

ZSA ZSA GABOR,

Defendant - Appellant.

_________________________________________________________________

Appeal from the United States District Court

for the Western District of Texas

_________________________________________________________________ August 12, 1998

Before KING and WIENER, Circuit Judges, and ROSENTHAL *

,

District Judge.

ROSENTHAL, District Judge:

Appellee Hollywood Fantasy Corporation was briefly in the

business of providing “fantasy vacation” packages that would allow

participants to “make a movie” with a Hollywood pe rsonality and

imagine themselves movie stars, for one week, for a fee. In May

1 991, Hollywood Fantasy planned to offer its second fantasy

vacation package, in San Antonio, Texas. Hollywood Fantasy1 After we heard oral argument in this case, Ms. Gabor

filed a Chapter 11 bankruptcy petition in the United States

Bankruptcy Court for the Central District of California. The

petition triggered an automatic stay of this appeal. On March 5,

1997, the bankruptcy court lifted the stay to permit the parties to

litigate this appeal.

2 arranged to have Zsa Zsa Gabor as one of two celebrities at the

event. Two weeks before the fantasy vacation event, Ms. Gabor

c ancelled her appearance. A short time later, Hollywood Fantasy

cancelled the vacation event, to which it had sold only two

tickets. A short time after that, Hollywood Fantasy went out of

business.

Hollywood Fantasy sued Ms. Gabor for breach of contract

and fraud. After the trial judge found that Ms. Gabor and

Hollywood Fantasy had reached a contract, the jury found that Ms.

Gabor ha d breached that contract. The jury awarded Hollywood

Fantasy $100,000 for the breach, as well as $100,000 for fraud.

The district court set aside the jury’s fraud verdict for lack of

eviden ce and entered judgment in favor of Hollywood Fantasy for

$100,000 on the breach of contract claim, plus attorneys’ fees and

post-judgment interest. Ms. Gabor appealed. 1 We affirm the

district court’s judgment as to liability; reverse the district

court’s damages award; and render judgment for a lesser amount of

damages.

I. The Facts as to Hollywood Fantasy

Leonard Saffir created Hollywood Fantasy and serv ed as

its chief executive officer. The company Mr. Saffir created

charged each vacation “client” $7,500 for a w eek of “pampering,”3

instruction on making movies, rehearsals, and a “starring” role in

a short videotaped film with a “national ly known” television or

movie star. Mr. Saffir hoped that “bloopers” and “outtakes” from

the videotapes would ultimately become the basis for a television

series. A new venture, Hollywood Fantasy had conducted only one

vacation event before the package scheduled to take place in San

Antonio in May 1991. The first event, held in Palm Springs,

California, had received some media coverage, but had lost money.

This case began with a letter Hollywood Fantasy sent Zsa

Zsa Gabor dated March 4, 1991. The letter opened with the

following language:

This will confirm our agreement whereby

Hol lywood Fantasy Corporation (HFC) will

employ you under the following terms and

conditions: . . .

The letter set out the terms and conditions of Ms.

Gabor’s appearance in fourteen numbered paragraphs. The terms and

conditi ons specified the dates of employment; the hours of work;

the duties requ ired; the payment; and certain perquisites to be

provided. The letter stated that Ms. Gabor was to be employed from

May 2-4, 1991, in San Antonio, Texas; was to be “on call” from

after breakfast until before dinner each day; was to act in

videotaped “movie” scenes with the clients, using scripts and

direction provided by H ollywood Fantasy, and was to join the

clients for lunch and dinner; was to allow Hollywood Fantasy to use

her name and photograph for publicity; and was to provide media

interviews “as appropriate” during her stay in San Antonio.

Hollywood Fantasy was to pay Ms. Gabor a $10,000 appearance fee and4

$1,000 for miscellaneous expenses. Hollywood Fantasy would also

provide Ms. Gabor two first-class round-trip plane fares from Los

Angeles; transportation to the Los Angel es airport and in San

Antonio; hair and makeup services; meals; hotel expenses, excluding

long distance telephone calls; and a hotel suite with “two bath

rooms if available.”

Ms. Gabor made three handwritten changes to this letter

before signing and returning it to Mr. Saffir. She inserted the

word “one” into the sentence stating that she would make herself

available for media interviews; inserted the words “two bedroom”

above the sentence describing the hotel suite that was to be

provided in San Antonio; and added the words “wardrobe to be

supplied by Neiman Marcus” to the paragraph outlining the

perquisites.

The last paragraph of the terms and conditions provided

an “out clause”:

[Hollywood Fantasy] agrees that if a significant acting opportunity in a film comes

up [Gabor] will have the right to cancel [her]

appearance in San Antonio by advising

[Hollywood Fantasy] in writing by April 15,

1991.

The final paragraph of the letter stated: “Please sign

a copy of this agreement and fax it to me

. . . as soon as possible

so we can proceed.” Ms. Gabor signed the letter in a signature

bla nk above the words “Agreed and accepted,” and sent it back to

Leonard Saffir, who had already signed as the chief exe cutive

officer for Hollywood Fantasy.

On April 10, Ms. Gabor and Mr. Saf fir talked by5

telephone. The parties differ as to the substance of that

conversation. Mr. Saffir asserts that they discussed the changes

Ms. Gabor had made and “everything was agreed.” Ms. Gabor asserts

that Mr. Saffir acted as if the original offer had been accepted.

The parties agree that Ms. Gabor sent Mr. Saffir a telegram dated

April 15, 1991, stating:

In accordance with the contract that exists

between us the purpose of this telegram is to

inform you that I must terminate it because I

am due to b e involved in preproduction and a

promotion fil m for a motion picture I am

contracted to do. The name of the film is

Queen of Justice produced b y Metro Films of

Los Angeles.

. . . I am very sorry to cause

you any discomfort but will be happy to try to

hel p in supplying you with a replacement and

hopefully we’ll be able to do something

together in the very near future.

Hollywood Fantasy unsuccessfully attempted to replace Ms.

Gabor for the San Antonio event. The San Antonio event was

canc elled; the two ticket purchasers received their money back;

Hollywood Fantasy went out of business; and this litigation began.

Ms. Gabor did not appear at the docket call scheduled

for November 9, 1992. Following a default judgment on liability

and a jury trial on damages, the jury awarded Hollywood Fantasy

$3,000,000. The district court entered final judgment in that

amount. Ms. Gabor moved to set aside the judgment on the ground

that she did not receive notice of the docket call. The district

court granted Ms. Gabor’s motion to vacate the judgment and ordered

a new t rial. After a second trial, the jury awarded Hollywood

Fantasy $100,000 on its breach of contract claim and $100,000 on

its fraud claim. In a post-trial order entered February 8, 1993,2 The parties agree that Texas substantive law applies.

6 the district court set aside the jury’s fraud verdict on the ground

that Hollywood Fantasy had failed to show any fraudulent inducement

o r material misrepresentation. In the order, the district court

found that a contract did exist between Ms. Gabor and Hollywood

Fantasy, reje cting Ms. Gabor’s argument that her handwritten

changes to the March 4, 1991 letter materially modified and

rejected Hollywood Fantasy’s offer. The district court also upheld

the jury’s finding that Ms. Gabor’s cancellation was not based on

“a significant acting opportun ity in a film,” as the contract

permitted. The district c ourt entered judgment in favor of

Hollywood Fantasy for $100,000, plus attorneys’ fees and postjudgment interest. Ms. Gabor timely appealed.

Ms. Gabor asserts four grounds fo r appeal: (1) the

parties did not reach a contract; (2) the jury’s finding that Ms.

Gabor did not effectively exercise the cancellati on clause was

against the weight of the evidence; (3) the jury’s award of damages

for breach of contract was not supported by competent evidence and

was speculative; and (4) the district judge erred in failing to

recuse himself before the second trial.

II. The Contract Formation Issue

Under Texas law, 2 “[w]hen reviewing written negotiations,

the question of whether an offer was accepted and a contract was

formed is primarily a question of law for the court to decide.”

Scaife v. Associated Air Ctr. Inc.

, 100 F.3d 406, 410 (5th Cir.

1996) (citing S & A Marinas, Inc. v. Leonard Marine Corp. , 8753 Hollywood Fantasy argues that Ms. Gabor waived her

objection to enforcement of the contract by failing to plead it as

an affirmative defense. In a diversity case, state law defines

affirmative defenses that are waived if not timely pleaded. See,

e.g.

, Davis v. Huskipower Outdoor Equip. Corp. , 936 F.2d 193, 198

(5th Cir. 1991); Morgan Guar. Trust Co. of N.Y. v. Blum , 649 F.2d

342, 344 (5th Cir. Unit B 1981). Ms. Gabor’s argument is that no

contract was formed; she does not argue against enforcement of an

existing contract. The argument is not in the nature of an

affirmative defense under Texas law and Ms. Gabor did not waive it.

7 S.W.2d 766, 769 (Tex. App.

-- Austin 1994, writ denied)); see also

Gilbert v. Pettiette

, 838 S.W.2d 890, 893 (Tex. App.

-- Houston

[ 1st Dist.] 1992, no writ). We review questions of law d e novo

.

Lubbock County Hosp. Dist. v. National Union Fire Ins. Co. of

Pittsburgh, Pa. , 143 F.3d 239, 241-42 (5th Cir. 1998); Williamson

v. Elf Aquitaine, Inc. , 138 F.3d 546, 549 (5th Cir. 1998). 3

The general rule is that “an acceptance must not change

or qualify th e terms of the offer. If it does, the offer is

rejected.” U nited Concrete Pipe Corp. v. Spin-Line Co.

, 430 S.W.2d

360, 364 (Tex. 1968); see generally E. A LLAN F ARNSWORTH

, 1 F ARNSWORTH ON

C ONTRACTS § 3.21, at 259 (1990). Under this “mirror image” rule, a

modification of an offer qualifies as a rejection and counteroffer

only if the modification is “materi al.” H oyt R. Matise Co. v.

Zurn

, 754 F.2d 560, 566 (5th Cir. 1985); Gi lbert , 838 S.W.2d at

893; MTrust Corp. N.A. v. LJH Corp.

, 837 S.W.2d 250, 254 (Tex. App.

-- Fort Worth 1992, writ denied). Ms. Gabor asserts that by making

the three handwritten changes to the March 4, 1991 letter, she

rejected Hollywood Fantasy’s offer and made a counteroffer, which

Mr. Saffir did not accept before Ms. Gabor revoked it. Hollywood

Fantasy asserts that the changes were not material and that Ms.8

Gabor accepted the offer and entered into a contract, which she

breached.

The cases in which courts find mo difications to be

material under Texas law generally involve significant increases in

a party’s financial obligation or exposure or in a party’s duties

under a proposed contract. In G ilbert

, the defendants had employed

the plaintiff as an expert witness in a toxic tort case. After the

trial, the plaintiff sent the defendants a letter demanding payment

of his expert witness fee s. The defendants sent the plaintiff a

check for the amount of the fees. On the back of the check, the

defendants wrote that their endorsement “constitutes a full, final

and c omplete release, indemnity, settlement and satisfaction” of

all claims arising out of the trial. G il bert , 838 S.W.2d at 892

(emphasis omi tted). The court found this modification to be

material because the defendant’s indemnity condit ion “shifts the

entire burden of loss from one party to another. . . . Requiring

[the plaintiff] to indemnify [the defendants] for ‘any and all

claims’ arising from the toxic tort cas e was a new and onerous

condition on the original offer.” I d. at 893 (citations omitted).

In Arguelles v. Kaplan

, 736 S.W.2d 782 (Tex. App.

--

Corpus Christi 1987, writ ref’d n.r.e.), the plaintiff prepared and

sent a promissory note payable to the defendant, who increased the

interest rate on the note and included a provision for entry of a

consent judgment if the plaintiff defaulted. The court held that

the defendant’s modifications were material and that the response

was not an acceptance but a counteroffer. I d. at 785. S ee a lso9

Ferrero v. Amigo, Inc. , 703 F. Supp. 890, 892 (D. Kan. 1988) (the

plaintiff sen t the defendant a letter seeking employment and

listing a proposed annual base salary of $31,200; the defendant’s

reduction of the plaintiff’s annual base salary to $30,000 was a

modification to a material term of the offer); International Paper

Co. v. Suwyn

, 966 F. Supp. 246, 254 (S.D.N.Y. 1997) (an employee’s

memorandum in which he interpreted his noncompetition agreement to

permit him to seek employment with companies that were proscribed

under the agreement materially modified the agreement); Hullman v.

Board of Trustees of Pratt Community College

, 725 F. Supp. 1536,

1551-52 (D. Kan. 1989) (an employee’s memorandum protestin g his

reassignment and refusing to waive a challenge to that reassignment

contained a material modification t o his employment contract),

aff’d , 950 F.2d 665 (10th Cir. 1991).

Texas cases finding modifications not material generally

involve changes that do not significantly alter the obligations or

exposures under a contract. S ee, e.g.

, Zurn

, 754 F.2d at 566 (a

buyer’s modific ation of a real estate contract to require the

seller to provide the buyer with various documents six days earlier

than originally stated was not a material modification; the change

made the disputed provision consistent with other parts of the

contract); United Concrete

, 430 S.W.2d at 365 (ho lding that a

change in a sales contract of the term “contract price” to “unit

price” was not material because the modification “did not change

the legal effect of the language”); MTrust Corp.

, 837 S.W.2d at 254

(the plaintiff’s substitution of a “metes and bounds” description10

of real property for a “cartographical” description of the property

in a real estate contract was not a material modification).

Applying these criteria to the changes Ms. Gabor made

before she signed and returned the March 4, 1991 letter leads us to

affirm th e district court’s conclusion that the changes were not

material. The changes did not significantly add to Ho llywood

Fantasy’s financial obligation to Ms. Gabor or significantly reduce

the duties she agreed to undertake during her appearance.

As set out in the March 4, 1991 letter, Ms. Gabor’s

obligations included appearing in San Antonio for three days,

acting in scenes with the Hollywood Fantasy clients, and dining

with the clients at lunch and dinner. Ms. Gabor was also obligated

to allow Hollywood Fantasy to use her name and photograph for

publicity and, with her permission, to use the videotaped scenes in

which she appeared for publicity and a possible television pilot.

Hollywood Fantasy’s financial obligation to Ms. Gabor was a $10,000

appearance fee and $1,000 for miscellaneous expenses.

A separate paragraph listed benefits that Hollywood

Fantasy would provide Ms. Gabor during her three days of

employment. Ms. Gabor’s addition of the words “two bedroom” to the

hotel room provision, making it read “one hotel suite with two

bedroom two bath rooms if available,” did not materially alter

Hollywood Fantasy’s financial obligation to Ms. Gabor. In its

letter, Hollywood Fantasy did not specify that the hotel suite was

limited to one bedroom. Indeed, Mr. Saffir testified without

contradiction that Hol l ywood Fantasy had already reserved the11

hotel’s “Presidential Suite” for Ms. Gabor.

Whether Ms. Gabor’s addition of the sentence requiring a

N eiman Marcus wardrobe for the fantasy vacation event materially

mod ified Hollywood Fantasy’s offer presents a closer question.

However, the record leads this court to agree with the district

judge that the change was not a material modification. Ms. Gabor

bases her argument on her trial testimony that a Neiman Marcus

wardrobe would have cost Hollywood Fantasy $8,000. A review of the

trial record shows that Ms. Gabor’s estimate was based on her

assumption that she would be required to do “three shows a day” for

three days, and would therefore need nine “wardrobe changes.”

Leona rd Saffir testified that Hollywood Fantasy intended to film

one scene with Ms. Gabor for each of the clients, so that she would

need only one outfit. Although Ms. Gabor testified that she could

not “make nine shows in the same outfit,” she was not aware that

Hollywood Fantasy int ended to film her performing the same scene

several times. Mr. Saffir testified that providing Ms. Gabor with

one outfit from Neiman Marcus would have been “a simple thing to

do.”

The March 4, 1991 letter also stated that Ms. Gabor would

make herself “available as appropriate for media interviews during

the time [she was] in San Antonio.” Ms. Gabor changed this

sentence to read “one media interview.” Ms. Gabor’s limitation on

media interviews was not a material modification to the terms of

the proposed contract. Although Mr. Saffir had arranged for

extensive media coverage, he testified that he did not view the12

limitation on the number of interviews in San Antonio as a

“problem” because “[k]nowing Miss Gabor from past experience, there

was no way she was going to see a lot of press in San Antonio and

only do one interview. . . . The last thing she would want to do

is restrict herself from publicity coverage.” Mr. Saffir also

testified th at Ms. Gabor’s participation in the San Antonio

vacation package event would trigger the publicity he sought and

that the number of media interviews she provided during her threeday stay was much less important to the event’s success.

In the unusual factual context this record presents, we

find that the modifications Ms. Gabor sought were not material

because they did not significant ly increase Hollywood Fantasy’s

financial obligations or significantly reduce Ms. Gabor’s

performance obligations under the March 4, 1991 letter. This court

also notes that to apply the mirror image rule in this factual

context would lead to a result inconsistent with the purpose of

that rule. The rule requiring an acceptance to the terms of the

original offer generally serv es to protect the original offeror,

the “master of the offer.” F A RNSWORTH

, 1 F ARNSWORTH ON C ONTRACTS § 3.13,

at 229. Texas cases generally apply the rule defensively, when an

original offeror seeks to avoid more onerous demands sought by the

offeree. S ee, e.g.

, Gilbert

, 838 S.W.2d at 892-93; MTrust

, 837

S.W.2d at 254; Arguelles

, 736 S.W.2d at 785 . In this case, by

contrast, Ms. Gabor, the offeree, seeks to use the mirror image

rule offensively, arguing that her own additional demands prevented

the formation of a contract that she “cancelled” a short time13

later.

It is particularly troubling to use the offeree’s

modifications as a basis for finding that no contract was formed

when, as here, the original offeror agrees that the modifications

became a part of the contract. The record leads this court to

conclude that Hollywood Fantasy agreed to Ms. Gabor’s additional

demands.

To form a binding contract, “there must be a clear and

definite acceptance of all terms contained in the offer.” E ngelman

Irrigation Dist. v. Shields Bros., Inc.

, 960 S.W.2d 343, 352 (Tex.

App.

-- Corpus Christi 1997, petition for review filed). “[I]t

must appear that the party to whom the offer is made accepts such

offer and communicates such acceptance to the person making the

offer.” Id. “[T]he mode of expressing assent is inconsequential

so long as it effectively makes known to the offeror that his offer

has been accepted.” Fujimoto v. Rio Grande Pickle Co. , 414 F.2d

648, 652 (5th Cir. 1969). An offeree’s acceptance of an offer may

be inferred by his acts or conduct. S ee Hearthshire Braeswood

Plaza Ltd. Partnership v. Bill Kelly Co.

, 849 S.W.2d 380, 392 (Tex.

App.

-- Houston [14th Dist.] 1993, writ denied) (“If one party

signs, the other may accept by his acts, conduct or acquiescence in

the terms of the contrac t.”); A ugusta Dev. Co. v. Fish Oil Well

Servicing Co.

, 761 S.W.2d 538, 544 (Tex. App.

-- Corpus Christi

1988, no writ); F A RNSWORTH

, 1 F ARNSWORTH ON C ONTRACTS § 3.13, at 226;

R ESTATEMENT (S ECOND ) OF C ONTRACTS § 19(1) (“The manifestation of assent

may be made wholly or partly by written or spoken words or by other14

acts or by failure to act.”); see also Karl Rove & Co. v.

Thornburgh

, 39 F.3d 1273, 1291 (5th Cir. 1994) (quoting the

R ESTATEMENT (S ECOND ) OF C ONTRACTS § 19(2) for the rul e that “[t]o

manifest tacit ass ent to a contract through conduct, one must

‘[intend] to engage in the conduct and know[] or ha[ve] reason to

k now that the other party may infer from his conduct that he

assents’”).

The record supports the conclusion that Mr. Saffir

reasonably conveyed to Ms. Gabor that Hollywood Fantasy agreed to

her demands. Mr. Saffir telephoned Ms. Gabor on April 10, 1991 to

“welcome her, to just go over some of the mechanics of what she was

going to be doing . . . .” In the conversation, Mr. Saffir told

Ms. Gabor that her demand for a Neiman Marcus wardrobe would be “no

problem.” There is no evidence that Mr. Saffir refused any of Ms.

Gabor’s handwritten changes to the March 4, 1991 letter. In the

April 10 conversation, Ms . Gabor made some additional demands,

including that she be allowed to bring her personal makeup artist

with her to San Antonio. Mr. Saffir testified that at the end of

that discussion, “everything was agreed.” Even if Ms. Gabor’s

modifications were material and therefore a counteroffer to the

March 4, 1991 offer, Hollywood Fantasy accepted that counteroffer

before Ms. Gabor sent her cancellation notice.

Ms. Gabor’s actions after that conversation made it clear

that she, too, believed that a contract had been formed. On April

15, 1991, Mr. Saffir again telephoned Ms. Gabor to reaffirm the

parties’ agreement. Mr. Saffir testified that Ms. Gabor stated “I15

could get a doctor’s letter and get out of this contract if I want

. . . .” The same day, Ms. Gabor sent Mr. Saffir a telegram

exercising the “out clause” in the March 4, 1991 letter. Ms. Gabor

wrote: “In accordance with the contract that exists between us

. .

. I must terminate it bec ause I am due to be involved in

preproduction and a promotional film.” Mr. Saffir’s telephone

calls, Ms. Gabor’s responses to the calls, and Ms. Gabor’s April

15, 1991 t elegram make it clear that Leonard Saffir effectively

conveyed, and Zsa Zsa Gabor understood, that Hollywood Fantasy had

accepted Ms. Gabor’s demands and that the parties had reached a

contract.

The district court correctly found that a binding

contract existed between the parties.

III. The Cancellation Provision

The contract permitted Ms. Gabor to cancel her appearance

obligation by a certain date if a “significant acting opportunity

in a film comes up.” The jury found that Ms. Gabor had timely

cancelled her appearance at the San Antonio event, but not because

of a “significant acting opportunity.” After the trial, Ms. Gabor

moved for judgment as a matter of law under F ED

. R. C IV

. P. 50(b),

asserting that there was insufficient evidence to support the

jury’s finding. The trial court denied Ms. Gabor’s motion. Ms.

Gabor renews her objection here. We review the district court’s

denial of a motion for judgment as a matter of law de novo

. H idden

Oaks Ltd. v. City of Austin , 138 F.3d 1036, 1040 (5th Cir. 1998);

Nichols v. Lewis Grocer , 138 F.3d 563, 565 (5th Cir. 1998). “If16

there is substantial evidence to support the verdict, the challenge

to it must be denied.

. . . ‘Substantial evidence’ means evidence

of such quality and weight that reasonable and fair-minded persons

in the exercise of impartial judgment might reac h different

conclusions; a mere scintilla of evidence is insufficient.”

Bradley v. Armstrong Rubber Co.

, 130 F.3d 168, 174 (5th Cir. 1997)

(citing Boeing Co. v. Shipman

, 411 F.2d 365, 374-75 (5th Cir. 1969)

(en banc)).

In her April 15, 1991 telegram to Mr. Saffir, Ms. Gabor

stated that she was scheduled to be in “preproduction and a

promotional film for a motion picture I am contracted to do” called

Queen of Justice

. At trial, Ms. Gabor testified that on April 15,

she had “offers” to act in both Queen of Justice and a movie called

Naked Gun 21⁄2

on the dates of the San Antonio event.

Ms. Gabor and Richard Heard, who referred Hollywood

Fantasy to Ms. Gabor, testified that Queen of Justice was a

significant acting opportunity because Ms. Gabor would have had an

important role in the movie. However, undisputed testimony

established that Ms. Gabor was not involved in any activity

relating to Queen of Justice during the three days she was

scheduled to be in San Antonio working for Hollywood Fantasy. Ms.

Gabor did film a part in N aked Gun 21⁄2 during those three days.

However, undisputed testimony established that Ms. Gabor’s role in

Naked Gun 21⁄2 consisted of a fourteen-second cameo dur ing the

opening credits. Ms. Gabor testified that her appearance in N aked

G un 21⁄2 was a significant acting opportunity because she recei ved17

positive reviews for the cameo. Richard Heard testified that N aked

Gun 21⁄2 was a significant opportunity for Ms. Gabor because “it was

a wonderful opportunity to introduce her to a different audience

that she doesn’t have now.” Mr. Saffir testified that he did not

consider Ms. Gabor’s part in Naked Gun 21⁄2 to be a “significant

acting opportunity” under the contr act because her role was a

fourteen-second cameo role during the opening credits. The jury saw

this portion of Naked Gun 21⁄2 and concluded that Ms. Gabor had not

cancelled her San Antonio obligation on the basis of a “significant

acting opportunity.”

Ms. Gabor argues that the trial court erred in permitting

Mr. Saffir to testify as to whether Ms. Gabor’s role in Naked Gun

21⁄2 was a significant acting opportunity because Mr. Saffir was not

a “movie indu stry” expert qualified to give such an opinion. At

trial, Ms. Gabor’s counsel objected to Mr. Saffir’s testimony only

on the basis that there was “no foundation” for the testimony. Ms.

Gabor did not object that the question called for an expert opinion

from an unquali fied witness. Nor did Ms. Gabor seek to offer

herself or Heard as experts on what constituted a “significant

acting opportunity.”

We review the trial court’s evidentiary rulings for abuse

of discretion. Snyder v. Trepagnier , 142 F.3d 791, 801 (5th Cir.

1998); S nap-Drape, Inc. v. Commissioner of Internal Revenue

, 98

F.3d 194, 197 (5th Cir. 1996); Eiland v. Westinghouse Elec. Corp.

,

58 F.3d 176, 180 (5th Cir. 1995). Rule 701 of the Federal Rules of

Evidence states in pertinent part:18 [T]he witness’ testimony in the form of

opinions or inferences is limited to those

opinions or inferences which are (a)

rationally based on the perception of the

witness and (b) helpful to a clear

understanding of the witness’ testimony or the

determination of a fact in issue.

F ED

. R. E VID . 701.

Mr. Saffir testified that he had extensive experience in

public relations and in television production. Mr. Saffir also had

experience in negotiating with film actors. Mr. Saffir himself

drafted the March 4, 1991 letter containing the language at issue.

M r. Saffir’s testimony was “helpful to a clear understanding” of

whether Ms. Gabor had a “significant acting opportunity” that

conflicted with her San Antonio appearance obligation. The trial

court did not abuse its discretion in allowing Mr. Saffir to

present the testimony at issue.

Even without Mr. Saffir’s testimony, substantial evidence

supported the jury’s determination that Ms. Gabor did not cancel

the contract because of a significant acting opportunity. Ms.

Gabor testified at trial that she had contracted to do Naked Gun 21⁄2

o n or before April 15, 1991. However, plaintiff’s counsel

impeached Ms. Gabor with her deposition, in which she testified

that she did not know on April 15, 1991 whether she had a contract

to appear in a cameo role in Nake d Gun 21⁄2 . In addition, Ms.

Gabor’s role in Naked Gun 21⁄2 was a fourteen-second cameo appearance

during the credits. The jurors viewed the relevant part of the

film. The jury had a sufficient evidentiary basis to conclude that

this part was not a “significant acting opportunity in a film.”19 There was also substantial evidence that Queen of Justice

did not present Ms. Gabor wit h a significant acting opportunity.

Mr. Saffir testified that he had never heard of Queen of Justice ;

that no money had been raised to produce this film; and that this

film had no preproduction or production work scheduled on April 15,

1991 or in May 1991. Ms. Gabor testified that Q ueen of Justice was

never made. Ms. Gabor never signed a contract to make Q ueen of

Justice and never did any preproduction or other work for the film.

Althoug h her April 15, 1991 telegram stated that she was to do

“promotional work” fo r Queen of Justice , Ms. Gabor testified at

trial that she did not even know what “promotional work” she was

referring to in the telegram. The evidence showed that Ms. Gabor

was not committed to work in Queen of Justice that would conflict

with her Hollywood Fantasy appearance when she cancelled that

appearance.

Substantial evidence existed to support the jury’s

finding that Ms. Gabor did n ot cancel the contract because of a

significant acting opportunit y. The trial court properly denied

Ms. Gabor’s motion for judgment as a matter of law under F ED

. R.

C IV

. P. 50(b).

IV. The Evidence on Damages

At trial, Ms. Gabor moved for judgment as a matter of law

that there was insufficient evidence to support the jury’s award of

$100,000 for breach of contract. The district court denied Ms.

Gabor’s motion. Ms. Gabor renews her objection here.

“In a federal case involving a state law claim, state law20

determines the kind of evidence that may be produced to support a

verdict, but federal law establishes the quantum of evidence needed

t o support a verdict.” P arham v. Carrier Corp.

, 9 F.3d 383, 386

(5th Cir. 1993) (citations omitted); see also Jones v. Wal-Mart

Stores, Inc. , 870 F.2d 982, 986 (5th Cir. 1989). This court will

uphold the district court’s denial of a challenge to the

sufficiency of the evidence if there is substantial evidence to

support the jury’s verdict. Bradley , 130 F.3d at 174.

“It is a general rule that th e victim of a breach of

contract should be restored to the position he would have been in

had the contract been performed.” M istletoe Express Serv. of Okla.

City, Okla. v. Locke , 762 S.W.2d 637, 638 (Tex. App. -- Texarkana

1988, no writ); see also General Resources Org., Inc. v. Deadman

,

907 S.W.2d 22, 32 (Tex. App.

-- San Antonio 1995, writ denied);

Sassen v. Tanglegrove Townhouse Condominium Ass’n

, 877 S.W.2d 489,

493 (Tex. App. -- Texarkana 1994, writ denied); G eneral Ele c

.

Supply Co. v. Gulf Electroquip, Inc.

, 857 S.W.2d 591, 599 (Tex.

App.

-- Houston [1st Dist.] 1993, writ denied). “However, an

injured party may, if he so chooses, ignore the element of profits

and recover as damages his expenditures in reliance.” N elson v.

Data Terminal Sys., Inc.

, 762 S.W.2d 744, 748 (Tex . App. -- San

Antonio 1988, writ denied) (citing R ESTATEMENT (S ECOND ) OF C ONTRACTS §§

347, 349); s ee also F ARNSWORTH

, 3 F ARNSWORTH ON C ONTRACTS § 12.16, at

262.

The $100,000 damages award cannot be supported as the

recovery of lost profits. Mr. Saffir testified that Hollywood21

Fantasy lost $250,000 in profits from future fantasy vacation

events and at least $1,000,000 in future profits from the creation

of a television series based on “bloopers” and “outtakes” from the

videotapes of clients “acting” with Hollywood personalities.

Although “[r]ecovery of lost profits does not require that the loss

be susceptible to exact calculation,” Szczepanik v. First Southern

Trust Co.

, 883 S. W.2d 648, 649 (Tex. 1994), lost profits must be

proved wit h “reasonable certainty.” T exas Instruments, Inc. v.

Teletron Energy Management, Inc.

, 877 S.W.2d 276, 279 (Tex. 1994).

“[A] party claiming injury from lost profits need not produce in

court the documents that support his opinions or estimates.” I shin

Speed Sport, Inc. v. Rutherford

, 933 S.W.2d 343, 351 (Tex. App.

--

Fort Worth 1996, no writ). A witness may testify “from personal

knowledge as to what profits would have been.” N aegeli Transp. v.

Gulf Electroquip, Inc. , 853 S.W.2d 737, 740 (Tex. App. -- Houston

[14th Dist.] 1993, writ denied). However, “[a]t a minimum, opinions

or estimates of lost profits must be based on objective facts,

f igures or data from which the amount of lost profits may be

ascertained.” S zczepanik

, 883 S.W.2d at 649; see also Ishin Speed

Sport

, 933 S.W.2d at 350. “Mere speculation” of the amount of lost

profits i s insufficient. T hedford v. Missouri Pac. R.R. Co.

, 929

S.W.2d 39, 47 (Tex. App.

-- Corpus Christi 1996, writ denied)

(citing Holt Atherton Indus., Inc. v. Heine

, 835 S.W.2d 80, 85

(Tex. 1992)).

Leonard Saffir’s testimony that Hollywood Fantasy lost

$250,000 in future profits was based on his estimate that Hollywood22

Fantasy would make a $25,000 profit from each of ten future events.

Hollywood Fantasy was a new venture. It had put on one event, in

which nine people participated, and in which it had lost money. Two

weeks before the San Antonio event, only two people had bought

tickets for the event. Hollywood Fantasy had no commitments to, or

arrangements for, specific future events. “Profits wh ich are

largely speculative, as from an activity dependent on uncertain or

changing market conditions, or on chancy business opportunities,

.

. . or on the success of a new and unproven enterprise , cannot be

recovered.” T exas Instruments

, 877 S.W.2d at 279 (emphasis added).

“The mere hope for success of an untried enterprise, even when that

hope is realistic, is not enough for recovery of lost profits.”

Id. at 280. In T exas Instruments

, the Texas Supreme Court made it

clear that the relevant “enterprise” in the lost profits inquiry is

“not the business entity

, but the activity which is alleged to have

been damaged.” I d. (emphasis in original). There was no evidence

at trial that the “movie fantasy vacation” enterprise promoted by

Hollywood Fantasy had been a successful enterprise in any context.

There was no evidence that the Hollywoo d Fantasy management had

ever been involved in any prior fanta sy vacation enterprise, let

alone a successful one. See id. (“The focus is on the experience

of the persons involved in the enterprise and the nature of the

business activity, and the relevant market.”); Ishin Speed Sport

,

933 S.W.2d at 351.

In Texas Instrume nts , the Texas Supreme Court stated

that even a new enterprise may attempt to recover lost profits when23

there are “firmer reasons” to “expect [the] business to yield a

profit.” T exas Instruments

, 877 S.W.2d at 280; see also Hiller v.

Manufacturers Prod. Research Group of N. Am., Inc. , 59 F.3d 1514,

1521 (5th Cir. 1995); National Union Fire Ins. Co. of Pittsburgh,

Pa. v. Insurance Co. of N. Am. , 955 S.W.2d 120, 131 (Tex. App. --

Houston [14th Dist.] 1997, writ denied). There was no evidence at

trial that Hollywood Fantasy had “firm” reasons to expect a profit.

Nine participants attended the Palm Springs event; not all of those

participants paid the full $7, 500 price of admission and only

“some” of the Hollywood Fantasy employees were paid for their work.

As of April 15, 1991, two weeks before the San Antonio event, only

two t ickets had been sold. Mr. Saffir’s testimony that he still

expected twenty participants was based on the optimistic but

unsupported a ssertion that people generally “don’t send in their

money right away.”

Hollywood Fantasy’s claim for loss of television revenue

is even more speculative. Mr. Saffir admitted that he had not sold

a television pilot, let alone a series, based on the fantasy

vacation videotapes. Mr. Saffir testified that the actors

appearing in the videotapes could have unilaterally declined to

permit Hollywood Fantasy to use the tapes in a television pilot.

Mr. Saffir testified that unidentified produc ers and others were

enthusiastic about the “concept” of such a television series, but

he had difficulty even estimating what the profits from a series

might be. No “objective facts, figures, or data” substantiated the

estimate of lost profits.24 Hollywood Fantasy’s claims for lost profits also fail

because there was no evidence of how Hollywood Fantasy estimated

the profits or what data it used to do so. S ee National Union

Fire

, 955 S.W.2d at 132 (noting that lost profits may be recovered

“if factual data is available to furnish a sound basis for

computing probable losses”); Thed ford , 929 S.W.2d at 49

(“[T]estimony about lost profits must at least be based upon some

factual data.”); S zczepanik

, 883 S.W.2d at 650; Holt Atherton

, 835

S.W.2d at 84.

Mr. Saffir also test ified that Hollywood Fantasy lost

$200,000 in “goodwill.” Under Texas law, the loss of goodwill or

business reputation is not recoverable in a breach of contract

action. S ee, e.g.

, Rubalcaba v. Pacific/Atlantic Crop Exch., Inc.

,

952 S.W.2d 552, 558 (Tex. App. -- El Paso 1997, no writ); Nelson

,

762 S.W.2d at 748.

Hollywood Fantasy also seeks to support th e damages

awarded as based on evidence of lost investment in the corporation.

Mr. Saffir testified that Hollywood Fantasy lost $200,000 that had

been invested in the corporation. Under Texas law, “actual damages

may be recovered when loss is the natural, probable, and

foreseeable consequence of the defendant’s conduct.” M ead v.

Johnson Group, Inc.

, 615 S.W.2d 685, 687 (Tex. 1981). The record

must contain evidence that permits the jury “to assess with

reasonable certainty the

. . . degree of causation of the damage by

the breach or interference relative to other factors.” U niversity

Computing Co. v. Management Science Am., Inc

., 810 F.2d 1395, 13984 The general rule is that the nonbreaching party may only

recover out-of-pocket expenses incurred after the contract was

formed. See, e.g.

, Autotrol Corp. v. Continental Water Sys. Corp.

, 918 F.2d 689, 695 (7th Cir. 1990) (applying Texas law); H ough v.

Jay-Dee Realty & Inv. , Inc. , 401 S.W.2d 545, 551 (Mo. Ct. App.

25 (5th Cir. 1987). It is pure speculation that but for Ms. Gabor’s

breach, Hollywood Fantasy would not have gone out of business.

Hollywood Fantasy had lost money on the Palm Springs event despite

the fact that it had not charged the full fee to several

participants and had not paid all of its employees. Hollywood

Fantasy had sold only two tickets to the San Antonio event.

Hollywood Fantasy is not entitled to an award of damages

representing a return of $200,000 invested in the corporation.

Although Hollywood Fantasy di d not present evidence to

base an award of compensatory damages on either lost profits or

lost investment, it did present sufficient evidence as to certain

out-of-pocket expenses to justify their recovery. Mr. Saffir

testif ied that Hollywood Fantasy incurred the following out-ofpocket expenses for the San Antonio event: (1) $8,500 in printing

costs for color brochures and press releases; (2) $12 ,000 in

marketing costs for mailings and advertising; (3) $22,000 in

personnel and miscellaneous expenses, including air fares , staff

accommodations, script-writing costs, telephone calls, and logo tshirts; (4) $9,000 in travel expenses for Mr. Saffir and members of

the Hollywood Fantasy “staff,” including Margo Mayor, Hollywood

Fantasy’s president; and (5) $6,000 i n expenses relating to

preparations to film the San Antonio event for a possible

television pilot. These expenses total $57,500. 41966); see also 3 F ARNSWORTH

, F ARNSWORTH ON C ONTRACTS § 12.16, at 262-63

n.2; Gregory S. Crespi, Recovering Pre-Contractual Expenditures as

an Element of Reliance Damages

, 49 SMU L. R EV

. 43, 44 ( 1 995).

Saffir’s testimony does not make it clear whether each of these

expenses were incurred after Ms. Gabor returned the March 4, 1991

letter. However, Ms. Gabor does not challenge the jury’s award on

this ground.

26

Ms. Gabor objects that this evidence cannot form the

basis of a damages award because Mr. Saffir testified that there

were documents relating to a few of these expenses, but did not

produce any documents at trial. However, the Texas cases Ms. Gabor

cites to support her argument do not hold that documentary evidence

is required for the recovery of out-of-pocket expenses. In Black

Lake Pipe Line Co. v. Union Constr. Co.

, 538 S.W.2d 80 (Tex. 1976),

the plaintiff attempted to prove damages by introducing summaries

of records. The court held that the summaries were inadmissible

h earsay because the plaintiffs had failed to make the underly ing

records available to the defense. I d. at 92-94 . The court’s

holding was based on the plaintiff’s failure to comply with the

rules governing the admissibility of summaries of voluminous

underlying information. I d. at 93-94. The court did not hold that

the summaries wer e inadmissible because they were not the “best

evidence” of damages. Nor did the court hold that oral testimony

regarding dam ages, if based on sources other than the flawed

summaries themselves, would have been inadmissible. Id. at 94.

Ms. Gabor also cites G ulf Coast Inv. Corp. v. Rothman

,

506 S.W.2d 856 (Tex. 1974). In Rothman , the plaintiff stipulated

during trial the amount of damages he had suffered from the

defendant’s breach of contract, without providing the basis for his27

damages figure. The trial court found that although the defendant

breached the contract, the plaintiff had not proved that he

sustained any damages. The plaintiff appealed. The plaintiff

argued that he was not required to show the “exact” amount of

damages he had suffered. I d. at 858. The Texas Supreme C ourt

affirmed the trial court, holding that the plaintiff had failed to

show any basis for an award of damages. Although the plaintiff did

not have to show his “exact” damages, this rule “did not mean that

a guess or surmise on the part of the jury woul d suffice.” I d.

“While mathematical precision is not required to establish the

extent or amount of one’s damages, one must bring forward the best

evidence of the damage of which the situation admits, and there

must be some basis for reasonable inferences.” I d. (citing C.

M C C ORMICK

, T HE L AW OF D AMAGES §§ 26, 27 (1935)).

Although Rothman stated that a plaintiff must provide the

“best evidence” of damages, the Texas Supreme Court used this term

in the context of examining the requirement that a plaintiff must

provide a basis for estimating damages sought. R othman does not

prevent the admission of oral testimony as evidence of damages,

even when the oral testimony is based on documentary evidence. See,

e.g.

, Vance v. My Apartment Steak House of San Antonio, Inc. , 677

S.W.2d 480, 483 (Tex. 1984) (noting that a witness’s oral testimony

was “competent evidence” of damages for breach of contract, without

mentioning the need for production of supporting docu mentation);

cf. Holt Atherton

, 835 S.W.2d at 84 (noting that oral testimony

alone may be sufficien t to establish lost profits without the5 Hollywood Fantasy cannot recover the $15,000 it refunded

to the two individuals who had bought tickets to the San Antonio

event before it was cancelled. The ticket price refund was not an

out-of-pocket expense. Hollywood Fantasy presented no testimony as

to what portion, if any, of this amount it would have kept as profit had the event gone forward with Ms. Gabor’s participation.

28 production of supporting documentation); Pena v. Ludwig

, 766 S.W.2d

298, 304 (Tex. App.

-- Waco 1989, no writ) (stating in the context

of recovering damages for lost profits that “[t]his court has not

found any blanket requirement that a witness’ testimony, which is

based on first-hand knowl edge of financial data, must be

supplemented in every instance by the financial records from which

actual knowledge is gained”).

Ms. Gabor presented no evidence controverting Mr.

Saffir’s testimony as to Hollywood Fantasy’s lo st out-of-pocket

expenses for the San Antonio event. Mr. Saffir’s testimony as to

Hollywood Fantasy’s out-of-pocket expenses is sufficient to support

an award of $57,500 for breach of contract, but not to support an

award of $100,000. 5 The award of $100,000 is reversed in part on

the basis that the evidence disclosed in the record does not

support compensatory damages beyond $57,500.

V. The District Judge’s Failure to Recuse

Ms. Gabor finally argues that the district judge should

have recused himself because he was biased against her. The

obligation to recuse is governed by 28 U.S.C. § 455, which states

in pertinent part:

(a) Any justice, judge, or magistrate of the

United States shall disqualify himself in any

proceeding in which his impartiality might6 The United States Supreme Court has stated:

[O]pinions formed by the judge on the basis of

facts introduced or events occurring in the

course of the current proceedings, or of prior

proceedings, do not constitute a basis for a

bias or partiality motion unless they display

a deep-seated favoritism or antagonism that

would make fair judgment impossible.

Liteky v. United States , 114 S. Ct. 1147, 1157 (1994). The Court

noted that “remarks during the course of a trial that are critical

or disapproving of, or even hostile to, counsel, the parties, or

their cases, ordinarily do not support a bias or partiality

challenge.” I d. The district court’s comment to the first jury

and isolated comment to the media do not display a “deep-seated

favoritism or antagonism” that “would mak e fair judgment

impossible.” At most, the comments revealed the district judge’s

temporary frustration with a defendant who he perceived to have

ignored her tri al. When Ms. Gabor argued that she had not had

notice of the trial, the district judge granted Ms. Gabor’s motion

for a new trial and set aside the default judgment of $3,000,000.

29 reasonably be questioned.

(b ) He shall also disqualify himself in the

following circumstances:

(1) Where he has a personal bias or

prejudice concerning a party

. . . .

28 U.S.C. §§ 455(a)-(b)(1).

Ms. Gabor’s argument is frivolous. Ms. Gabor asserts

that the district judge’s remarks criticizing her after she failed

to appear at the first trial reveal bias against her. A review of

the remarks do not show bias warranting recusal. 6 Ms. Gabor

asserts that the bias manifested itself when the trial judge

allowed counsel for Hollywood Fantasy to ask Mr. Saffir a leading

question and when the judge made an evidentiary ruling against her.

Ms. Gabor ignores the fact that after she demonstrated that she did30

not receive notice of the first trial setting, the judge set aside

the $3,000,000 default judgment and ordered a new trial. Ms. Gabor

also ignores the fact that at the conclusion of the second trial,

the judge set aside the jury’s finding of fraud. A review of the

record, including the evidentiary rulings, reveals no bias.

Ms. Gabor’s argument is also untimely. Despite her

assertion that the judge revealed his bias in remarks made after

the first trial, Ms. Gabor did not raise the argument until this

appeal. This court has not yet “clearly defined the scope of our

review of § 455 issues raised for the first time on appeal.”

M cKethan v. Texas Farm Bureau

, 996 F.2d 734, 744 n.31 (5th Cir.

1993), quoted in Mangum v. Hargett

, 67 F.3d 80, 82 (5th Cir. 1995).

Although a disqualification challenge raised for the first time on

appeal is not per se untimely, the timeliness requirement of

section 455 obligates a party to raise the disqualification issue

“at a reasonable time in the litigation.” United States v. York

,

888 F.2d 1050, 1055 (5th Cir. 1989). Application of this standard

is an additional bar to Ms. Gabor’s argument; she failed to present

her disqualification argument at a reasonable time in the

litigation. See Stephenson v. Paine Webber Jackson & Curtis, Inc.

,

839 F.2d 1095, 1096 n.3 (5th Cir. 1988) (declining to consider the

plaintiff’s argument that the district judge, who had an attorneyclient relationship with de f ense counsel, should have recused

because “[p]laintiff has waived any objection by not raising it at

an earlier stage of the litigation”); cf. Delesdernier v. Porterie

,

666 F.2d 116, 122-23 (5th Cir. 1982) (declining to consider a31

dis qualification argument made under section 455(a) because the

plaintiff raised the argument for the first time on appeal); York

,

888 F.2d at 10 56 (finding the defendant’s post-trial motion for

disqualification untimely because the defendant was aware of the

grounds of the motion before the trial began).

Ms. Gabor’s recusal argument, too little and too late, is

rejected.

VI. Conclusion

We affirm the district court’s judgment with respect to

Ms. Gabor’s liability for breach of contract. We reverse the

district court’s award of $100,000 for breach o f contract and

render judgment in the amount of $57,500, with post-j udgment

interest from the date of the district court’s judgment to the date

it is paid, at the rate previously set by the district court, and

the attorneys’ fees awarded by the district court.

AFFIRMED IN PART AND REVERSED AND RENDERED IN PART.