### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-11-00680- CV

Appellan t, P aul DeNucci, Indivi dual ly, and in h is Der ivative Capacity on behalf of eStrategy Solutions, In c.// Cross-A ppellan ts, John Matthews, S teve Mattand eStrategy Solutions, I nc.

v. Appellees, John Matthews, S teve Mattand eStrategy Solutions, I nc.// Cross-A ppellee, P aul DeNucci, Indivi dual ly, and in h is Der ivative Capacity on behalf of eStrategy Solutions, In c.

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 200 TH JUDICI AL DISTRICT NO. D-1 -GN-1 0-0 0206 5, H ONO RAB LE STEP HEN Y ELENOSK Y , JUDGE P RESIDING

O P I N I O N

Paul DeNuc ci, a minority share holder in a closely held corpor ation, eStrateg y Soluti ons, I nc. (ESS), alleg ed that J ohn Matthews, the majority share holder, president, and trea surer of t h e co rp oration, brea ched his fiduciar y duties and committed fra ud by , among other things, funding distributions by incurring unauthorized loans and failing to pay vendors. At trial, Matthews essentially admitted to this conduct but asser ted that DeNuc ci had impliedly ratified the distributions by reta ining his portion of the distribution. The trial court dismiss ed DeNuc ci’s fra ud claims on a

n o - e v id e n c e mo ti o n f

o r s u mm a r y ju d g me n t. T h e r e ma in in g d e r iv a ti v e b r e a c h o f f

id u c ia r y d u ty c la im s proce eded to trial, including claims ag ainst Matthews and counter -cla ims ag ainst DeNuc ci. The trial
court rende red judgme nt based on a jury verdic t in fa vor of DeNuc ci, finding that Matthews had brea ched his f

iduciary duties to the corpor ation, and awa rded damag es. All parties have appea led.We aff irm the trial court’s judgme nt, except as to the interest char g es awa rded to ESS

as damag es for Matthews’s brea ch of fiduciar y duty

. Concluding there is some evidenc e of damag es but insufficient evidenc e to support the full amount awa rded, we reve rse this portion of the judgme nt and re mand for f

urther pr ocee dings c onsistent with thi s opinion. 1

BACK GR OUND This suit arises from a dispute a mong the three share holders of ESS, a close ly held
corpor ation that provides onli ne training and testing for persons who need to obtain or m aintain a licensure by Texas g overnme ntal entities. The three s h ar eh o l d ers are : (1) J ohn Matthews, 51% majority share holder; (2) Paul DeNuc ci, 40% minority share holder; and (3) Steve Matt, 9% minority share holder. Matthews is also the pre sident, treasur er, f ounder, a nd CEO of ESS. Matt is also an employ ee an d on the board of direc tors. DeNuc ci is the only non-employ ed, non-salar ied share holder. I n 2000, Matthews founded and incorporated ESS. I n 2006, DeNuc ci purcha sed his share s for $72,000 and beca me a member of the board of direc tors. I n addition to purcha sing stock, DeNuc ci loaned $179,000 to ESS. I n conjunction with the stock purcha se and loan ag ree ments, the share holders ag ree d that the salarie s for Matt and Matthews would not incre ase without DeNuc ci’s
consent. Shortly there afte r, the three share holders beg an rec eiving distributions fro m ESS. DeNuc ci

On J anuar y 25, 2013, we abate d this appea l upon the appellee s’ reque st beca use the parties 1 had potentially

rea ched a mediated settlement of the underly ing suit in this a

ppeal. On Septe mber 8, 2014, the parties filed a joint st atus repor t informing the Court that settlement eff orts had fa iled and re questing the ca se be se t for ora l arg ument. 2testified that he consente d to the d i s t ri b u t i ons based on Matthews’s repr esenta tions reg arding the

profitability

of ESS. I n April of 2007, the share holders ag ree d that ESS would temporar ily suspend loan pay ments to D eNuc ci in or der to stoc kpile cash neede d for business de velopment. Matthews
t es t i fi ed at trial that, althoug h ESS had stopped pay ing back its loan to DeNuc ci, the corpor atio n

never used the missed loan pa

y ments to increa se its cash re serve s. I n Fe bruar

y 2008, DeNuc ci l oaned ESS an additional $20,000. Matthews testi fied that, as a condition of the loan, he a g ree d that ESS would not incur a ny additional debt from other lender s. I n May 2008, howeve r, Matthews incre ased ESS’s line of cre dit at Fr ost Ba nk by $20,000.
I n Aug ust 2008, Matthews borrowe d an additional $25,000 under a fac toring ag ree ment. Matthews testified that he did not, at the time ESS enter ed these ag ree ments, disclose the additional debts to the ot her shareholde rs. He further testified that he borrowed the money to fund di stributions, pay

curr ent expenses, and prepa re for a new client that never came to fruition. Whil e the company was borrowing money , all three share holders continued to r ece ive distributions.

M at t h ew s testified that he was the only person at ESS who made deter minatio n s reg arding the amount and fre quency of distributions

. He further testified that—during the time ESS

was making distributions —he was the trea surer of the corpor ation but failed to keep books or rec ords of t h e co m p any ’s financ ial transac tions. To deter mine whether to make a distribution, Matthews testified that he looked at the corpor ation’s chec king acc ount and made a “ver y cursor y ” calc ulation of outstanding liabiliti es to deter mine how much money

was a vailable to dis tribute. He a dmitted, howeve r, t hat he did not alway s consider ESS ’s out standing liabiliti es when maki n g d i s tributions and made distributions knowing that ESS would be unable to pay its vendors.
3After lear ning th at E S S was not pay ing its vendors, Matt and DeNuc ci called an

emer g ency share holders’ meeting in October 2008 to discuss ESS’s financ ials. Matthews admitted
at t ri al that ESS was insolvent by this time, which was define d as unable to pay its obliga ti o n s

as they beca

me due. There are no board minutes from the meeting , and the share holders h ea v ily dispute what was discussed. All parties ag ree that the shareh o l d er s agr eed to stop distributions until ESS was solvent. I t is also undisputed that, during this meeting , the share holders—including DeNuc ci—ag ree d to salary incre ases for Matthews and Matt. The parties disputed at trial, howeve r, th e e xte n t to w h ic h M a

tt h e w s d is c lo s e d E SS ’ s f

in a n c ia l w o e s , in c lu d in g th e a d d it io n a l d e b ts M a tt h e w s had incur red a nd that the cor

poration had be en using borrowe d money to fund distributions. After the share holders’ meeting , ESS reta ined—at DeNuc ci’s reque st—an auditor to revie w its financ ial rec ords. Acc ording to the auditor’s repor t, ESS’s distributions to share holders in 2008 exceede d its net p ro fi t s. The repor t found that ESS’s net profits for 2008 wer e less than $156,000, but that the company had distributed t o s h areholders more than $228,000. The repor t further conclude d that Matthews had been able to fund the distributions only by incurring loans, failing to pay

vendors, a

nd not pay

ing pa y roll liabilit ies owed to the I RS. After the au d i t o r issued her repor t, the rela tionships betwee n the parties quickly deter iorated. Matthews and Matt eventua lly voted DeNuc ci off of the board of direc tors and limit ed his ac ce s s t o the company ’s financ ial rec ords. ESS also ref used to resume reg

ular pay ments on DeNuc ci’s loans to the c orpora tion. DeNucc i, in turn, filed suit ag ainst Matthews, Matt, and ESS (collec tively appellee s) seeking to enfor ce the promissory notes and later added claims for minority share holder oppression and d er i vative claims on behalf of ESS, including claims for fra ud and

4brea ch of fiduciar y duty

. The appellee s, in turn, filed a counter claim ag ainst DeNuc ci for brea ch of fiduciar y duty

. DeNuc ci obtained a favor able judgme nt on the promissory notes, and ESS has now repa id those notes with interest.

Wit h reg ard to the rema ining claims, Matthews and Matt obt ained a no-evide nce partial summary judgme nt dismiss ing the majority of DeNuc ci’s cla i m s , i ncluding his claims of fra ud and share holder oppression. DeNuc ci then nonsuited his rema ining claims ag ainst Matt prior
to tr ial. Thus, the only claims submitt ed to the jury wer e DeNuc ci’s deriva tive claim for brea ch of fiduciar y duty ag ainst Matthews and the appellee s’ cor responding

deriva tive counter claim ag ainst DeNuc ci for brea ch of fiduciar y duty , as well as a claim for decla ratory relief seeking construction of a buy -out provision in the parties’ stock purcha se ag ree ment. The jury found in favor of DeNuc ci, finding that only Matthews had brea ched his f iduciary duties to E SS. The jury also found in f avor of De Nucc i in construing the stock purcha se ag ree ment.

The jury additionally found that Matthews’s brea ch of fiduciar y duty proxi mat ely caused ESS to incur the following damag es: (1) $0 for excess salarie s; (2) $37,230 in excess distri butions; (3) $39,783 in interest on the fac toring ag ree ment and other interest char g es; (4) $92,000 in attorney ’s fees; and (5 ) $ 1 3 , 6 0 0 i n ex cess interest on the l oan from DeNuc ci. The trial court render ed judgment consist ent wit h the j ury ’s findi ng s, except i t eliminated t he $92,000

awa rded to ESS ag ainst Matthews for attorney ’s fee s proxi mately cause d by his brea ch of fiduciar y d u ty

. T h e e v id e n c e a

t tr ia l s h o w e d th a

t E SS h a d p a id $ 9 2 , 0 0 0 in a tt o r n e y ’ s f e e s in c u r r e d b y M a tt h e w s and Matt in this lit igation.

5The trial c ourt additionally g rante d equitable r elief to, in par t, reinstate De

Nucc i to the board of direc tors and to r equire ESS t o reta in a bookkee per a nd provide De Nucc i with acce ss to f inancial rec ords. The trial c ourt also awa rded D eNuc ci $75,000 in attorney ’s fee s ag ainst ESS for prepa ration of the case and trial, see Tex. Bus. Org s. Code § 2 1.561(b)( 1) (cour t may order
corpor ation to pay attorney ’s fee s plaintiff incurre d in share holder deriva tive proce eding if the court finds the proce eding resulted in substantial benef it to the corpor ation), and $10,000 in attorney ’s fee s for the de clar atory

judgme nt action. See Tex. Ci v. Prac. & Rem. Code § 37.009. All parties have appea led. DeNuc ci raises two issues on appea l: (1) whether the trial
court err ed in dismiss ing his f raud claims on no-evide nce summary judgme nt; a nd (2) whether the trial court err ed by not awa rding to ESS the $92,000 in attorney ’s fee s design at ed by the jury as damag es proxi mately cause d by Matthews’s brea ch of fiduciar y duty

. We conclude any err or in the trial court’s summary judgme nt was rende red harmless by the jury ’s fi n d i ng s at trial. We further conclude that DeNuc ci has not shown the trial court abused its discretion by disreg arding the jury ’s finding s on attorney ’s fe es.

On cross-a

ppeal, the appellee s raise five issues: (1) whether the trial court abused its discretion in permitting DeNuc ci to int r o d u c e u n d is c lo s e d d a

ma g e s e vidence ; (2) whether DeNuc ci’s
rete ntion of his dist ribution procee ds constituted ratifica tion of the distribution as a matter of law; (3) or alterna tively , whether there was insufficient evidenc e to support the jury ’s fi n d ing that DeNuc ci had not brea ched his fiduciar y duties by reta ining the distributions ; (4) whether the awa rd of damag es for interest was excessive; and (5) whether the trial court err ed by finding that the buy

out provision of the stock purchase ag ree ment was ambiguous. We overrule the appe llees’ issues

6on appea l, with the exception of their challeng e to the fac tual sufficie ncy of the evidenc e supporting

the awa rd of inter est cha

rg es.

Summ ary Judgm ent on DeNucc i’s F raud Claims I n his first issue on appea l, DeNuc ci challeng es the trial court’s partial summary judgme nt on his fra

ud claims. A partial summary judgme nt is revie wable on appea l, wher e as here ,

2 it has been merg ed into a final judgme nt disposing of the whole case . See Pan Am. Petroleum Corp.

v. Texas Pac. Coal & Oil Co. , 324 S.W .2d 200, 201 (Tex. 1959). “[ T ] h e p ro p ri ety of g ranting a partial summary judgme nt must be deter mined from the p osture of the pleading s and evidenc e at the time the court g rante d the motion.” State Farm Fire & Cas. Co. v. Griffin , 888 S.W .2d 150, 153 (Tex. App.—Houston [1s t Dist.] 1994, no writ).

A trial court’s err oneous decision to g rant summary judgme n t , howeve r, can be rende red harmless by subsequent events in t h e t rial court. See Progressive Cnty. Mut. Ins. Co. v. Boyd , 177 S.W .3d 919, 921 (Tex. 20 0 5 ) (holding that any err or in g ranting partial summary jud gm ent was rende red harmless when subsequent jury finding neg ated rec overy on dismiss ed claim); see also T ex . R. App. P. 44.1(a)

. The harmless err or rule states that befor e reve rsing a judgme nt beca

use of an err or of law, the revie wing court must find that the err or amounted to such

a denial of the appe l l an t ’s ri gh ts that the err or “proba bly cause d the rendition of an improper

On appea l, DeNuc ci initially also soug ht revie w of the trial court’s dismiss al on summary 2 judgme nt of his share holder oppression claims. I n light of Ritchie v. Rupe , 443 S.W .3d 856, 877–91 ( T e x. 2 0 1 4 ) ( d e c li n in g to r e c o g n iz e a c o mm o n la w c a u s e o f a c ti o n f

o r mi n o r it y s h a r e h o ld e r o p p r e s s io n in closely held corpor ation), DeNuc ci conce ded this issue at oral arg ument and withdrew the issue from re view. 7judgme nt,” or that the err or “proba bly preve nted the appellant from proper ly prese nting the case
to the court of appea ls.” See Tex. R. App. P. 44.1(a) ; see also G & H Towi ng Co. v. Magee , 347 S.W .3d 293, 297–98 (Tex. 2011). “The rule applies to al l er ro rs.” See G & H Towi ng Co. , 347 S.W .3d at 297. Thus, to merit reve rsal, DeNucc i must show that the t rial court’s g rant of the motion for partial summary judgme nt on his fra ud claims was harmful. See Tex. R. App. P. 44.1(a) ; see also Progressive Cnty. Mut. Ins ., 177 S.W .3d at 921.

On appea l, DeNuc ci contends that he was harme d by the trial court’s partial summary judgme nt of his fra

ud claims beca

use he was not able to rec over damag es at trial rela ted to Matthews and Matt’s salary incre ases. I n his live pleading s at the time of summary jud gm en t , howeve r, DeNuc ci asserted t he same fac tual basis for both his claims of fraud and brea ch of f iduciary duty , and the jury failed to find that the salary incre ases wer e damag es proxi mately cause d by Matthews’s conduct. DeNuc ci pleade d that Matthews had both brea ched his fiduciar y duties and com m i t t ed fra ud by distributing non-existent profits and by misrepre senting the profitability of ESS to induce De Nu cc i to consent to salary incre ases for Matthews and Matt. DeNuc ci additionally soug ht the

s am e d am ages, return of the prohibited distributions and return of the salary incre ases, for b o t h claims. The trial c ourt g rante d summary judgme nt as to the fra

ud claim but pe rmitted DeNuc ci to
proce ed at tria l with his breach of fiduciar y duty claim. Be cause the brea ch of fiduciar y duty and fra

ud claims we re b as ed on the same fac ts and soug ht the same damag es, the parties ful l y l i t i gated at trial the distribution and salary incre ase issues, and the trial court admitted all evidenc e rele vant to these claims. Wit h reg ard to the distributions , DeNuc ci prese nted evidenc e that Matthews had made dis t ri b u t ions by borrowing

8undisclosed debts and failing to pay vendors. Matthews essentially admitted to this conduct at trial,

and De Nucc i rec overe d damag es for this claim. Wit h reg ard to the s alar

y incre ases, however , there wer e m any disputed fac t issues
at trial. DeNuc ci testified that Matthews h ad i n d u ce d him to consent to the salary incre ases by misrepre senting the profitability of ES S an d fa i l ing to disclose the additional debts Matthews had incurre d. Matthews, on the other hand, testified that h e h ad clar ified many of the alleg ed misrepre sentations p ri o r t o DeNuc ci’s consent to the s alar y incre ases. The appellees additionally pleade d and prese nted evidenc e that DeNuc ci had ratified the salary incre ases afte r all materia l fac ts

wer e disclosed to him. The evidenc e included an email from DeNuc ci, written afte r he rec eived the auditor’s re port, stating: “ I do not car e whe ther or not y ou have ta ken y our ra ise—Iok’d it.” The jury was instructed that any brea ch of fiduciar y duty by Matthews was excused if DeNuc ci ratified the conduct afte r all materia l f acts wer e fully disclosed to him. The jury then found that the salary incre ases we re not da mag es proximately cause d by

Matthews’s br eac h of fiducia ry duty

. Assuming without deciding that the trial court err ed by dismiss ing the fra ud claims,

we conclude any err or was harmless beca use the issue of whether the salary incre ases wer e damag es proxi mately cause d by Matthews’s conduct was fully litigated at trial independe ntly of the g rant of the motion for partial summary judgme nt. See Progressive Cnty. Mut. Ins ., 177 S.W .3d at 921 (er ror is harmless when subsequent jury finding neg ates an essential element of claim dismiss ed on summary judgme nt). As n o t ed above, the jury found that the salary incre ases wer e not damag es proxi mately cause d by Matthews’s brea ch of fiduciar y duty

. This f

inding has not be en challeng ed

9on appea l and may be considere d in deter mining harm from the trial court’s g rant of partial summary judgme nt. See id.

On appea l, D eNuc ci attempts to r e-litig ate this claim by char acte rizing it a s a fra ud cl ai m . Both claims, howeve r, wer e predic ated on identical theories of liability , and an officer’ s fra udulent conduct that harms the corpor ation is nece ssarily also a brea ch of the office r’s fiduciar y duties. See Fidelity Nat’l Title Ins. Co. v. Heart of Tex. Titl e Co. , No. 03-98-00473- CV, 2000 WL 13037, at *3 (Tex. App.—Austin J an. 6, 2000, pet. denied) (not desig nated for p ublication) (“[A] brea ch of fiduciar

y duty that cause s injury to another is al wa y s fra udulent; whether that fra ud is

ac t ual or constructive is deter mined by the actor ’s mental state or moral culpability .”); see also Smith v. Moody Gardens, Inc ., 336 S.W .3d 816, 821 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (whe re jury

found on statutory

claim that skater ’s fa ll was not proxi mately cause d by

deep g roove in ic e, any err or in tr ial court’s summary judgme nt of neg lige nce and premises liability claims that

wer e predic ated on same fac ts and theory of rec overy was harmless err or). Acc ording ly , we cannot conclude that DeNuc ci has shown that the trial court’s partial summary judgme nt on his fra ud claims was ha rmful er ror.

Attor ney’s F ees I n his last issue on appea l, DeNuc ci challeng es the trial court’s ref usal to awa

rd ESS attorney ’s fee s desig nated by the jury as damag es proxi m at ely cause d by Matthews’s brea ch of fiduciar y duty

. The trial court had asked the jury wh at am o u n t o f attorney ’s fee s, if any , wer e proxi mately cause d by Matthews’s failure to comply with his fiduciar y d u t y to ESS. The jury responde d: “$92,000.00.” There was evidence at trial that t his was the total amount of l eg al fees

10paid by ESS during this litigation for both Matthews and Matt’s litigation co s t s . T he trial court

initially rende red a final judgme nt consistent with the jury ’s fin d i n gs awa rding ESS $92,000 in attorney ’s fee s for the brea ch of fiduciar y duty claim. The appellee s moved to modify the judgme nt, in part, on the g rounds that—under the Americ an Rule—attorney ’s fee s “paid to prosec ute or defe nd

a lawsuit cannot be rec overe d in that suit absent a statute or contra ct that allows for their rec overy .” See Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Dev

. & Researc h Corp ., 299 S.W .3d 106, 120 (Tex. 2009)

. The trial court g rante d the motion and enter ed a modified judgme nt de leting the

awa rd. The a vailability

of attorne y ’s fe es is a question of law we r eview de novo. See H olland v

. W al-Mart Stores, Inc ., 1 S.W .3d 91, 94–95 (Tex. 1999).

A preva iling party on a brea ch of fiduciar y duty cl ai m gen erally may not rec over attorney ’s fee s ag ainst an adver sary to the claim. See Turner v. Turner , 385 S.W .2d 230, 233 (Tex. 1964) (“The g ener al rule of law in this s t at e i s t h at, unless provided for by statute or by contra ct betwee n the parties, attorney ’s fe es incurr ed by a par ty to liti g ation are not rec overa ble ag ainst his adver sary . . . in an action in tort.”); Potter v. GMP, L.L.C

. , 141 S.W .3d 698, 705 (Tex. App.—San Antonio 2004, pet. dism’d) (attorne y ’s fee s are g ener ally not rec overa ble for brea ch of fiduciar

y duty claims). Her e, howeve r, DeNuc ci—pursuant to a statutory provision—was ab l e t o re cover from ESS the $75,0 0 0 i n at t o rn ey ’s fee s he incurre d prosec uting the brea ch of fiduciar y duty claim d e r iv a ti v e ly o n b e h a lf o f E SS

. S e e T e x. B u s . O r g s . Co d e § 2 1

. 5 6 1 ( b ) ( 1 ) ( c o u r t ma y o r d e r c o r

p o r a ti o n
to pay attorney ’s fees pl aintiff incu rr ed i n s h ar eholder deriva tive proce eding if the court finds the
proce eding has resulted in substantial benef it to the corpor ation). These attorney ’s fee s h ave not been c halleng ed and a

re not a t issue in this case .

11What is at issue, howeve r, is whether ESS can rec over as damag es for its succe ssful

brea ch of fiduciar

y duty claim the $92,000 in attorney ’s fee s the corpor ation paid for Matthews and Matt’s litigation expenses. These attorney ’s fee s wer e not incurre d solely on the brea ch of fiduciar y duty claim ag ainst Matthews and included fee s rela ted to other cause s of action in the suit, including DeNuc ci’s nonsuited cla ims ag ainst Matt.

On appeal , DeNucci’s sole arg ument for rec overing these fee s is that Matthews brea ched his fiduciar

y duties to ESS by improperly authorizing the corpor ation to pay these expenses without following the appropr iate proce dures for indemnification in ESS’s by laws, including failing
to provide ESS with written aff irmation of his g ood faith belief that he met the standard of conduct

nece ssary for indemnification. Thus, DeNuc ci rea sons that Matthews brea ched his fiduciar y duties by improperly causing ESS to indemnify its off icer s without following the a ppropriate proce dures for indemnification, and the damag es proxi mately cause d by that brea ch of fiduciar y duty wer e the attorney ’s fe es paid by

ESS. DeNuc ci, howeve r, failed to plead this theory of liability at trial. Rather, DeNuc ci’s live pleading s at trial alleg ed Matthews had b re ac h ed h i s fiduciar y duties by incre asing office r salarie s, distributing non-ex istent profits, and incurring unauthorized debt. The pl eading s did not alleg e improper indemnification as a b as i s for his brea ch of fiduciar y duty claim. I n fac t, the pleading s do not mention the by law provisi o ns rela ted t o indemnification nor Matthews’s alleg ed improper advanc ement of indemnification funds. “A party may not be g rante d relief in the absenc e of pleading s to support that relief .” See Cunningham v. Parkdale Bank , 660 S.W .2d 810, 813 (Tex. 1983). Moreove r, DeNu cc i fa i l ed to prese nt this theory of rec overy to the trial court. Rather,

12DeNuc ci’s arg uments at trial mirrore d his pleading s. During closing arg uments, DeNuc ci’s counsel

asked the jury to awa

rd attorney ’s fee s on the bre ac h of fiduciar y duty claim beca

use Matthews’s

u n d is c lo s e d b o r

r o w in g and distribution of nonexis tent profits had cause d ESS to incur attorney ’s fe e s in this l itigation. Counsel did not arg ue that attorney ’s fe es should be aw arde d beca use Matthews had brea ched his fiduciar

y duties by failing to follow proper indemnification proce dures. L ikewise, when asked by the trial court to respond to the appellee s’ motion to modify the awa rd of attorney ’s fee s, DeNuc ci responde d that the fee s wer e rec overa ble beca use the liti gat i o n co u ld have been avoided if Matthews had not brea ched his fiduciar y duties by distributing non-existent profits. Ag ain, even afte r a direc t reque st from the trial court, DeNuc ci failed to arg ue that the attorney ’s fee s

wer e re cover able ba sed on improper indemnification. We there fore cannot conclude DeNuc ci has shown an abuse of discretion by the trial
court in ref

using to awa

rd attorney ’s fee s based on a theory of rec overy he failed to plead o r otherwise prese nt to the trial court. See In re L.M.I ., 119 S.W .3d 707, 711 (Tex. 2003) (to prese rve issue for appellate revie w, party must prese nt to trial court timely reque st, motion, or objection, state

s pecif ic g rounds there for, and obtain ruling ). Acc ording ly , we overr ule DeNuc ci’s third issu e o n appea l and have disposed of all of De Nucc i’s appellate issues.

Adm ission of DeNucci’s Dam ages Model Moving to the issues raised on cross-a ppeal, the appellee s first con t en d t h at the trial court abuse d i t s d i s cre tion in admitting DeNuc ci’s damag es testimony beca use he failed to disclose the expert damag es model o n wh i ch h e relied at trial. The appellee s, howeve r, failed to object to D eNuc ci’s dama g es testimony on this ground. Wit hout a timely objection, the appellee s
13have waived any err or in the admission of the testimony

. See Tex. R. App. P. 33.1(a) (1) (to prese rve

err or, party must prese nt complaint to trial court via timely objection or reque st and obtain a ruling ). Moreove r, t h e ex pert’s damag es model was admitted as an exhibi t at trial without objection. S chwartz v. Forest Pharms., Inc. , 127 S.W .3d 118, 124 (Tex. App.—Houston [1st Dist. ] 2 0 0 3 , pet. denied) (e rr o r in admitting evidenc e is cure d when same evidenc e comes in elsewhe re without objection). Acc ording ly , we conclude the app ell ees failed to prese rve err or for their first issue on appea l.

DeNucc i’s Ret ention of Distributions At trial, there was evidenc e that the Boa rd m em b er s—Matthews, Matt, and DeNuc ci—had assented to $73,000 in distributions that exceede d the company ’s profits. There was also evidenc e that ESS had stopped pay ing its vendors to fund the distributions and d i d n o t have sufficie nt funds to pay

its outst anding liabiliti es. At trial, Matthew s testified that, as the pr esident and trea surer of ESS, he was “the only person who made [t he] deter mination about how much and when to pay distributions .” He testified further that he had repr esente d that distributions wer e being made from profits, and that it was “re asonable ” for the other Boa rd member s “to think that the distributions that wer e being made wer e based on the actua l profit of the company .” During crossexamination, Matthews admitted that the d is tr ib u ti o n s h a d b e e n “ in a p p r o p r iate.” He further admitted that the distributions had render ed ESS insolvent, meaning una ble to pay its debts as t hey beca me due. Acc ording to the auditor’s repor t, the total excess distributions paid to eac h share holder wer e: (1) $37,230 to Matthews; (2) $29,000 to De Nu cc i ; an d (3 ) $6,570 to Matt. None of the three share holders, howe ver, ha s returne d these e x cess distributions to ESS

. 14Rather, DeNuc ci reta ined his distributions but sued Matthews for brea ch of fiduciar y duty and soug ht disgor g ement of Matthews’s distributions as an element of damag es. The appellee s, in turn, counter sued DeNucc i for breac h o f fiduciary duty and sought disgor g ement of DeNuc ci’s distributions as d amag es. Alterna tively , the appellee s alleg ed that DeNuc ci had ratified the distributions by

failing to return his portion to ESS, and therefor e, no share holder was require d to
return the distributions

. The jury found in favor of DeNuc ci, finding that he had complied with his fiduciar y duties to ESS. On the other hand, the jury found that Matthews had brea ched his fiduciar y duties and aw arde d ag ainst him the $37,000 he had re ceive d in excess distributi ons.

On appea l, the appellee s contend that ESS—as a matter of law—is entitled to rec over fr o m DeNucci the distributions he rec eived. Alterna tely , the appellee s contend that DeNuc ci ’s
rete ntion of the distributions constituted ratification a s a matter of law, and thus, no share holder is require d to return their

distributions

. We disag ree with both contentions.

3

1. DeNucc i’s Liab ility as Direct or for Wrongfu l Distribution s We first addre ss the appellee s’ contention that ESS is entitl ed as a matter of law to

rec over the distributions it made to DeNuc ci. Although not raised b y the parties on appea l, the L eg islature has presc ribed exclusive statutory reme dies to redr ess the injury cause d to a corpor ation when a direc tor approve s or a share holder rece i v es a prohibit ed dis tribution. See Tex. Bus. Org s.

The appellee s prese rved err or for these issues throug h a motion for new trial, but on 3 appea l, they ask the Court to rende r judgme nt rathe r than rema nd for a new trial. We have held that “omission of an expli cit pray er for a rema nd in [an] appellant’ s brief does not waive his entitlement to such relief or limit our power to a war d it .

. . if we sustain a ny of his issues on appea l.” Majee d v. Hussain , No. 03-08-00679- CV, 2 0 1 0 WL 4137472, at *8 (Tex. App.—Austin Oct. 22, 2010, no pet.) (me m. op.).

15Code §§ 21.316(d) (L iability of Direc tors for Wrongf ul Distributions) (“[L ]i abil i t y i m posed under [t he statute] is the only liability of a direc tor to the corpor ation or its cre ditors for authorizing

a distribution th at i s p rohi bited

. . . .”), 21.318 (Contribution Fr om Certain Shareholde rs and Direc tors) (“[L ]i ability provided by [t he s t at u t e] i s the only liability of a share holder to the
corpor ation

. . . for acc epting or rec eiving a distribution by the corpor ation that is prohibited

. . . .”). Prohibited distributions are define d to include dis t ri butions that, as here , rende r the corpor ation insolvent—defined a s unable to pay its debts as they

become due in the ususal course of business. See id . §§ 1.002(40), 21.303( b)(1)

.

The key for liability under the statute is not whether the direc tor reta ined a prohibited distribution, but whether the direc tor should suffe r liability for authorizing the distribution. See id

. § 2 1

. 3 1 6

. Pu

r s u a n t to th e s ta

tu te , a d ir e c to r is n o t li a

b le to th e c o r

p o r a ti o n f o r a p r o h ib it e d d is tr ib u ti o n if, in voting or assentin g t o t h e d istribution, the di rec tor relies in g ood faith wit h ordinary car e on
statements prepa

red or prese nted by an office r or empl o y ee of the corpor ation. Id

. § 21.316(c)

. Her e, Matthews admitted at trial that—as the president and trea surer of ESS— h e h ad m ade
repr esenta tions to DeNuc ci reg arding the profitability of the company and that DeNuc ci had relied in g ood faith on these repr esenta tions i n assenting to the distributions

. Acc ording ly , we cannot conclude that appellee s have established as a matter of l aw that ESS is en t i t l ed t o re cover ag ainst DeNuc ci for a

pproving the distributions.

2. DeNucc i’s Liab ility as Sh areholder Wit h reg ard to DeNuc ci’s rec eipt of the distributions as a share holder, the L eg islature has provided that a share holder shall be liabl e for a wrong ful distribution only if the share holder

16“ac cepte d or rec eived the wrong ful distribution knowing that it was prohibited.” See id

. § 21.318(a) ,

(c)

. Upon such proof, a direc tor who is held liable for approving a wrong ful distribution is “entitled
to rec eive contributions from share holders who acc epted o r rec eived the wrong ful distribution knowing that it wa s prohibited.” Id

. § 21.318(b). This “is the only liability of a share holder to the
corpor ation . . . for a cce pting or rec eiving a distribution by the cor poration that is prohibited.” Id

. § 21.318(c)

. Her e, howeve r, Mat t h ew s neither pleade d nor proved a contribution claim ag ainst DeNuc ci for acc epting a distribution he knew was prohibited. Moreove r, there was no evidenc e at trial that DeNuc ci acc epted or rec eived the distributions knowing they would rende r the corpor ation insolvent. As such, we cannot conclude the appellee s have shown as a matter of law that DeNuc ci is liable for the distributions he re ceive d as a sha reholde r.

3. Ratification I n the alterna tive, appellee s contend that DeNuc ci’s rete ntion of the distributions as a share holder c onstitut ed a r atifica tion of the distributions as a matter of law. “I t is the gene ral rule in T e xa s th a

t tr a n s a c ti o n s b e tw e e n c o r

p o r a te f id u c ia r ie s a n d th e ir c o r

p o r a ti o n a r e c a p a b le o f r a t i f i c a t i o n by the s h ar eh o l d er s .” See Gene ral Dynamics v. Torres , 915 S.W .2d 45, 50 (Tex. App.—El Paso 1995, writ denied)

. Ratification, howeve r, is only eff ective when the office r has fully disclosed all of the materia l f

acts of the transac tion to the share holders. Id

. Her e, as detailed more fully above, there was evidenc e at trial that DeNuc ci was not awa re of Matthews’s conduct when he rec eived his distributions

. After he was informed that ESS had been making wrong ful distributions , the evidenc e at trial showed that DeNuc ci immediately condemne d Matthews’s c onduct, and shortly there afte r,
17initiated this suit. At trial, the jury was instructed on ratification but failed to find that DeNuc ci had

ratified Ma tthews’s conduc t after all materia l fac ts were fully disclosed to him. On appea l, the appellee s contend DeNuc ci’s rete ntion o f h i s distribution proce eds constituted ratifica

tion of the transac tion as a matter of law and prec ludes Matthews’s liability as a direc tor of ES S

. The L eg islature, howeve r, in presc ribing the exclusive reme dies for holding a direc tor liable for a wrong ful distribution did not include ratifica tion or rete ntion of the distributions b y a s h a r e h o ld e r a s a

n a f f ir ma ti v e d e f e n s e to a d ir e c to r ’ s li a

b il it y . S e e T e x. B u s . O r g s . Co d e § 2 1

. 3 1 6 (providing statutory aff

irmative defe nse for direc tor who authorizes prohibited distributi o n wh en direc tor relies in g ood faith with ordinary car e on cer tain information but not providing aff irmative defe nse when share holder reta ins wrong ful distribution). Rather, the L eg islature provided for disgor g ement of a shareholder ’s di stribution only when the sh ar eh o l d er “ac cepte d or receive d the
wrong ful distribution knowing that it was prohibited.” Id

. § 21.318(a) , (c)

. Acc ording ly , we cannot conclude that DeNuc ci’s re tention of the distributions negated Matthews’ s statutory liability

. Moreove r, we note that other ap p el l at e courts have found that a direc tor who
eng ag es in self-de aling conduct cannot assert share holder ratification as a defe nse to a tra nsaction barr ed by statute or public policy

. See Dye r v. Shafer, Gilliland, Davis, McCollum & Ashley, Inc. , 7 7 9 S

. W

. 2 d 474, 478 (Tex. App.—El Paso 1989, writ denied) (“[A]s with other acts involving interested direc tors, the share holders of the corpor ation o rd i n ar i l y can ratify the transac tion; the ratifica tion is valid unless the trans ac t i o n i tself violates a statute or public policy .”); Pruitt v. W e s tb r o o k , 1 1 S. W. 2 d 5 6 2 , 5 6 5 ( T e x. Ci v . A p p . — F o r t Wo r th 1 9 2 8 , n o w r it ) ( “ [B ]o d

y o f s h a r e h o ld e r s

can ratify and confirm any ac t , done by the direc tors unless the corpor ation is, by

. . . g overning

18statute

. . . prec luded from doing it in the first instance.” ). Her e, ESS was prohibited by statute from

making distributions that rende red the company insolvent. See Tex. B us. Org s. Code § 21.303(b).

Ba sed on the fore g oing, we conclude that the appellee s h av e fa i l ed to prove, as a
matter of law, that ESS is entitled to rec over its distributions to DeNuc ci or that his rete ntion of the distributions neg ated Matthews’s l iabi l i t y . We overr ule t he appellees’ second and third issues on

cross a ppeal. 4

Intere st Charges A warded as Dam ages After DeNuc ci p revailed on his deriva tive brea ch of fiduciar y duty claim ag ainst Matthews, the trial court awa rded ESS—i n acc ordanc e with the jury ’s verdic t—$39,783 in damag es for interest char g es acc rued by ESS. I n their fourth issue, appellee s contend the a w a r d was excessive. We ag ree . T h e standard of revie w for an excessive damag es complaint is fac tual sufficie ncy of the evidenc e. See Rose v. Doctors Hosp ., 801 S.W .2d 841, 847–48 (Tex

. 1 990). The court of
appea ls should employ the same test for deter mining exc es s i v e damag es as for any fac tual sufficie ncy

question. See Pope v. Moore , 711 S.W .2d 622, 624 (Tex. 1986). When considering a

On appea l, the appellee s filed a motion to dismiss DeNuc ci’s deriva tive cl ai m s on the 4 g rounds that his rete ntion of the distributions rende red him unable to fairly and adequately repr esent the interests of the corpor ation. See Tex. B us. Org s. Code § 21.552 (shar eholder may not institute deriva tive p ro ce ed i n g unless the share holder fairly and adequately repr esents interests of the corpor ati o n ). The L eg islature has enac ted specia l rules to allow share holders in a closely held corpor ation, such as ESS, to more easily bring a deriva tive suit on behalf of the corpor ation. See id

. § 21.563(b); see also Ritchie v. Rupe , 443 S.W .3d 856, 880–81 (Tex. 2014). Pursuant to these rules, “shar eholder s in a closely held corpor ation

. . . can bring a deriva tive action without having to prove th a t th e y f a ir ly a n d a d e q u a te ly r e p r e s e n t th e in

te r e s ts o f th e c o r

p o r a ti o n . ” R it c h ie , 4 4 3 S. W. 3 d a

t 8 8 1

. We overrule the appe llees’ motion to dismi ss. 19fac tual sufficie ncy challeng e to a jury ’s verdic t, courts of appea ls must consider and weig h all of the

evidenc e, not just that evidenc e which supports the verdic t. See Ortiz v. Jones , 917 S.W .2d 770, 772 (Tex. 1996). A court of appea ls can set aside the verdic t only if it is so contra ry to the overw helming weig ht of the evide nce tha t the verdic t is clea rly wrong and unjust. See id

. When r ever sing a trial court’s judgme nt for fac tual insufficienc y , the court of appea ls must detail all the evidenc e rele vant
to the i ssue and clea

rly state why the j ury ’s find i n g i s fa ct ually insufficient or so ag ainst the gre at weig ht and preponde ranc e of the evidenc e that it is manifestly unjust. See Ellis Cnty. State Bank v. Keev er , 888 S.W .2d 790, 794 (Tex. 1994).

Her e, the jury found that Matthews’s failure to comply with his fiduciar y duties had

cause d ESS to incur $39,783 in interest char g es “on the fac toring ag ree ment and other interest char g es.” At trial, DeNuc ci had submitt ed a damag es model seeking an awa rd of $39,783 for interest ch arge s acc rued by ESS. The damag es model repr esente d that ESS had incurre d thes e ch ar ges during the y ear s 2007–2009 on interest char g ed for “the fac toring ag ree ment and other interest ch ar ges . ” De Nucc i and his expert witness testified that the “other interest char g es” arose from ESS’s Frost notes, cr edit car d debt, and “ other miscellane ous char g es.” 5

On appea l, DeNuc ci advanc es sever al theories of liability for rec overing as damag es th e in te r e s t a c c r u e d b y E SS o n th e s e d e b ts

. D e N u c c i f ir s t c o n te n d s th a

t if M a tt h e w s h a d n o t b r e a c h e d his fiduciar

y duties by incurring two new debts—the fac toring ag ree ment and the $20,000 extension

on the Fr ost note, ESS would not have incurre d interest char g es on those debts. Wit h reg ard to the

The trial court additionally awa rded ag ainst Matthews, in acc ordanc e with the jury ’s 5 verdic t, $13,600 in interest char g es acc rued on ESS’s loan from DeNuc ci as a separ ate cate g ory of damag es. The damag es for the DeNuc ci loan have not been appea led and are not addre ssed in this opinion. 20rema ining interest char g es, DeNucc i’s damag es t heory was that if Matthews had not brea ched h is

fi duciar y duties by seeking and obtaining salary incre ases and prohibited distributions , th en E S S would have had a g rea ter cash flow and been able to retire its debt by 2008. Thus, DeNuc ci rea sons that Matthews is liable for these interest char g es beca use ESS—but for Matthews’s obtaining the salary incre ases and distributions —would have been able to pay off its debts sooner and avoid these interest cha

rg es. On appea l, the appellee s contend th e aw ard is excessive beca use there is fac tually insufficient evidenc e that Matthews’s brea ch of fiduciar y duty cause d ESS to incur all of these in te r e s t c h a r g e s . T h e a

p p e ll e e s c o n c e d e th e r e is a c a u s a l li n k b e tw e e n M a

tt h e w s ’ s b r e a c h o f f

id u c ia r y duty and the interest incurre d by ESS for the two new debts, the fac toring ag ree ment and the Fr ost extension. The appellee s, howeve r, contend that there is no causa l link betwee n Matthews’s brea ch of fiducia ry duty and the inter est incurr ed by ESS for prior debts of the company . We ag ree with the appellee s that the evidenc e is fac tuall y s u ff i cient to support a damag es awa

rd for the interest char g es acc rued by ESS on the fac t o ri n g ag ree ment and Fr ost extension but insufficient to support the full amount o f i n t er es t awa rded by the jury as damag es. DeNuc ci’s damag es theory for the re m ai n i n g interest char g es was premised on two theories of liability ag ainst Matthews: the salary incre ases and prohibited distributions

. We cannot conclude , howeve r, that either of these theories of liability establishes the nece ssary causa l link betwee n Matthews’s br eac h of fiducia ry duty and the inter est awa

rded. First, with reg ard to the distributions , the L eg islature has provided that a direc tor who authorizes a prohibited distribution may be liable for the amount of the distribution. See Tex. Bus. Org s. Code § 21.316. This, howeve r, is “ t h e only liabili ty of a direc tor to the corpor ation

. . . for
21authorizing a distribution that is prohibited.” Id

. (empha sis added)

. As the L eg islature has provided

an exclusive reme dy , Matthews’s authorization of the distributions cannot be used as a g round for awa rding addit ional damag es outside the reme dies presc ribed by the statute. See Holmans v. Transource Polyme rs, Inc. , 914 S.W .2d 189, 192 (Tex. App.—For t Wo rt h 1 9 9 5 , writ denied) (“U nder Texas law, in a s i t u at i o n where common law and a statute both provide reme dies, the statutory reme dy is cumulative of the common-law reme dy unless the statute expressly or impliedly
neg ates or de nies the rig ht to the common-law re medy .”).

Wit h reg ard to the salary incre ases, the jury failed to find that Matthews’s brea ch of fi d u ciary duty proxi mately cause d the salary incre ases. Uncha lleng ed jury finding s, like finding s of fac t in a non-jury trial, are binding o n appea l. See W ilson v. Texas Parks and W ildlif e Dep’ t , 853 S.W .2d 825, 832 (Tex. App.—Austin 1993), rev’ d on other grounds , 8 8 6 S.W .2d 259 (Tex. 1994). As the jury

found no ca

usal link betwee n Matthews’s alleg ed breac h of fiducia ry duty and the incre ased salarie s, the rec ord nece ssarily does n ot support a causa l link betwee n Matthews’s b re ac h of fiduciar

y duty and interest char g es cause d by the incre ased salarie s. Acc ording ly , we conclude there is factua lly insufficient e vidence of ca usation to support the full awar d of intere st. When there is some evidenc e of damag es but not enoug h to support the full amount

awa rded, we m ay either s u gg est a remitti tur or remand t o the t rial court for a new trial. See Akin, Gump, Strauss, Hauer & Feld , 299 S.W .3d at 124. I n this case , the evidenc e is sufficie nt to support

an awa rd for the int er es t charg es incurre d on the fac toring ag ree ment and Fr ost extension but insufficient to support the full amount awa rded. We cannot, howeve r, conclusively asce rtain from the rec ord how much of the $39,783 awa rded in interest char g es is solely attributable to the fac toring

22ag ree ment and the Fr ost extension. Acc ording ly , remittitur is not an available reme dy in this case .

See Redman Homes, Inc. v. Ivy , 920 S.W .2d 664, 669 (Tex. 1996) (re mitti tur not a vailable reme dy when damag es cannot be established as a matter of law). There fore , we reve rse the $39,783 awa rded for interest char g es and rema nd to the trial court for deter min at i o n o f the amount of the awa rd attributable to the fac toring ag ree ment and Fr ost extension and for renditi o n o f j u d g ment

acc ording ly

. See Tex. R. App. P . 44.1(b). 6

Dec larator y Relief I n their last issue, the appellee s challeng e the trial court’s d ec l ar atory judgme nt construing the buy -out provision of the stock purcha se ag ree ment. I n 2000, Matthews incorporated E S S and was its only share holder. Six y ear s later, DeNuc ci l ear ned of the bus iness and sought to become a share holder. At the time the parties enter ed into the ag ree ment, the evide n ce at trial showed that ESS was a s m al l , s t rug g ling corpor ation with no assets. To eff ectua te DeNuc ci’s purcha se of forty perc ent of the corpor ation’s stock, ESS and DeNuc ci enter ed into a stock purcha se

We may not order a separ ate trial solely on unliquidated damag es if liability is contested. 6 See Tex. R. App. P. 4 4

. 1 (b ); but see Browning Oil Co. v. Luecke , 38 S.W .3d 625, 647 (Tex. App.—Austin 2000, pet. denied) (holding g ood cause exis t ed t o suspend application of this rule when interests of

justice war

rante d a new trial on issue of damag es alone)

. Her e, howeve r, Matthews co n cedes he is liable for the interest char g es incurre d on the fac toring ag ree ment and the Fr o s t extension. Moreove r, the amount of interest incurre d o n these loans “ca n be deter

mined with exactness

. . . by arithmetica l proce ss.” See Ryc ade Oil Corp. v. Lasater , 375 S.W .2d 556, 557 (Tex. Civ. App.—Austin 1964, no writ) (interna l q u o t at ion marks omitted) (“L iquidated means made cer tain as to what and how much is due, and a liquidated claim is one which can be deter mined with exactness from the ag ree ment betwee n the parties, or by arithmetica l proce ss, or by the application of definite rules of law.”) ; see also Ortiz Oil Co. v. Gey er , 159 S.W .2d 494, 497 (Tex. 1942) (conc luding that demand o f ro y al ty owner s could be calc ulated on undisputed fac tors, such as amou n t o f o i l p roduce d and price of oil, and was liquidated demand)

. Be cause liability is uncontested and the amount of damag es may be calc ulated with e x actne ss, w e rema nd only on the issue of dama g es re lated to the intere st charg es on the fa ctoring ag ree ment and F rost extension. 23ag ree ment. Pursuant to the ag ree ment, DeNuc ci ag ree d to pay ESS $72,000 in exchang e for his

4,000 share s. The ag ree ment additionally provided Matthews and Matt—who wer e the only other share holders and also employ ees of ESS—t he option, afte r t wo y ea rs , to purcha se back 1,000 of those share s from De Nucc i.

At issue is what the price should be for those 1,000 share s. The ag ree ment provided that the cost of the sha

res should be c alculate d by :
[t aking ] the total reve nue earned by the Corporation during the twelve months prec eding the date of t he noti ce give n to exercise the option, and thi s amount shall then be multipl ied by 3 (three ) and then multipl ied ag ain by the perc ent age o f the total outstanding stock of the Corporation which is the subject of the option purcha se.
(empha sis added)

. The parties dispute whether the phrase “total reve nue ear ned,” which is not define d in the ag ree ment, means: (1) total g ross reve nue, i.e, the total reve nue rec ei v ed b y ESS without deductions for expenses; or (2) tot al n et re v en ue, i.e., the total reve nue rec eived by ESS minus deductions for expenses.

Finding the phrase ambig uous, the trial court submitt ed to the jury a question asking whether the parties had intended for the phrase to mean “total g ross reve nue” or “total net reve nue.” After hear ing testimony from all parties, the jury found that the parties had intended for the phrase to

mean total g ross reve nue. On appea l, the appellee s do not challeng e the sufficie ncy of the evidenc e supporting the jury ’s finding

. Rather, the appellee s contend that the only rea sonable interpre tation

o f th e p h r a s e “ to ta l r e v e n

u e e a r n e d ” is “ to ta l n e t r e v e n

u e , ” a n d th u s , th e tr ia l c o u

r t e r r e d in s u b mi tt in g the issue to the jury beca

use the contra ct is unambig uous. The appellee s contend in their brief that

24interpre ting the phrase as “total g ross reve nue” is unrea sonable beca use such an interpre tation “would impose an a

bsurd valuation on De Nucc i’s stock.” Whether a contra ct is ambig uous is a question of law that must be decide d by examining the co n t ract as a whole in light of the circ umstances prese nt when the contra ct was
enter ed. Nati o n a l Un i o n F i r e Ins. Co. v. CBI Indus., Inc ., 907 S.W .2d 517, 520 (Tex. 1995). A
contra ct is not ambig uous if it can be g iven a definite or cer tain meaning as a matter of law. Id

. On the other hand, if the contra ct is subject to two or more rea sonable interpre tations afte r apply ing the pertinent rules of construction, the contra ct is ambig uous, which cre ates a fac t issue on the parties’ intent. Columbia Gas Transmissi on Corp. v. New Ulm Gas, Ltd. , 940 S.W .2d 587, 589 (Tex. 1996). An ambig uity does not arise simply beca use the parties advanc e conflicting interpre tations of the
contra ct. Forbau v. Aetna Life Ins. Co ., 876 S.W .2d 132, 134 (Tex. 1994). For an ambig uity to exis t, both interpretations must be re asonable

. See CBI Indus. , 907 S.W .2d at 520. When a term in a written ag ree ment is not specific ally define d, as in this ag ree ment, the term should be g iven its plain, ordinary , and g ener ally acc epted meaning unless the instrument shows that the par

ties used it in a technica l or differ ent sense. Heritage Res., Inc. v. NationsBank , 9 3 9 S. W. 2 d 1 1 8 , 1 2 1 ( T e x. 1 9 9 6 )

. A p p ly in g th is r u le o f c o n s tr

u c ti o n , th e te r

m “ r e v e n u e ” is g e n e r a ll y understood to me an “g ross income or r ece ipts.” See Bla ck’s L aw Dic tionary 1433 (9th ed. 2009). Thus, we cannot conclude that it is unrea sonable to interpre t the p h rase “total reve nue ear ned” as meaning total gr oss reve nue.

Moreove r, while we cannot p re s u m e that a contra ct would impose an absurd

or impossibl e condition on one of the parties, see Citi zens Nat’l Bank v. Texas & Pac. R y. Co. ,

25150 S.W .2d 1003, 1006 (Tex. 1941), we cannot conclude that this interpre tation is absurd in light

of the circ umstances prese nt when the parties enter ed the contra ct. First, we note that this provision
g rants Matthews and Matt the rig ht to forc e DeNuc ci to sell his stock. Moreove r, DeNuc ci was the only non-salar ied share holder at ESS. Under the appellee s’ interpre tation of the contra ct, DeNuc ci’s stock would be valued b as ed o n t he g ross reve nue of ESS minus expenses, which would include the salary expenses for Matthews an d M at t

. T h us, if the salarie s for the other two share holders consumed all of ESS’s reve nue, DeNuc ci’s stock would be worthless. Under these circ umstances,

we cannot conclude that it was unrea sonable for the parties to ba se the value of the stock on g ross, rathe r than ne t, reve nue.

The appellee s contend on appea l that this result is unfair beca use, under this in te r p r e ta ti o n , th e v a lu e o f D e N u c c i’ s s to c k h a s r is e n d r a ma ti c a ll y in th e la s t s ix y e a

r s . We , h o w e v e r ,

m ust look at the circ umstances exis ting when the parties enter ed into this ag ree ment, not from hindsight. See CBI Indus. , 907 S.W .2d at 520. We overr ule the appellee s’ fifth issue on crossappea l.

CONCLUSION

W e af fi rm t h e trial court’s judgment, ex cept as to the $39,783 awa rded to ESS for interest char g es. We reve rse this portion of the trial court’s judgme nt and rema nd to the trial court for f urther pr ocee dings c onsistent with thi s opinion. See Tex. R. App. P . 44.1.

26__________________________________________ Scott K. Field Be fore J ustices Pury ear , Pemberton and F ield Affir med in Part; Reverse d and Remande d in Part Filed: Apr il 23, 2015

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