NO. 07-05 -022 1-CV IN THE CO UR T OF APPEA LS FO R THE S EVEN TH D ISTRI CT O F TEXAS

AT AM AR ILLO PAN EL B DE CE MB ER13, 2007

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___ JAN IC E E. F RY

and TIMO THY

J. F RY , Appel lan ts
v. FAR M & RAN CH H EALTHC AR E, I NC . and BOBB YGEN E STEW AR T, JR . a/ k/a B. J. STEW AR T, Appel lee s

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______ FRO M T HE 10 8 DIS T RI CT COU RT OF P OT T ERCOU NT Y; TH NO. 90, 846 -E; HON. ABE LOP EZ, PRESI DING

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____ Memorandum Opinion

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______ _ _ _ _ ___ Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ. Appe llants, Ja nice E. Fryand Tim oth y J. Fry (collectiv ely refe rr e d to as th e Fry s) app eal f rom a f inal judgme nt den y ing th em relief a gainst Farm & Ranch Healthca re, Inc. (F ar m) and Bo bby

Gene Ste w art, Jr . a/ k/a B. J. St e wart. The final j udg ment arose from tw o par ti al summar

y j udg ments and a direct ed v erdict en te re d by the tr ial co urt pr ior

toT he Fr y s do not que st i on o n ap peal whet heran or al m ot i on f or di r ect ed v er di ct pr i ort o t he b egi nni ng 1 o ftr ia l w a s a n a p p r o p r ia te v e h ic le th r o u g h w h ic h to d is p o s e o fth e c la im

.

T he ca uses o fact i on o t hert han f r aud and br eached cont r act ar e not at i ssue h er e. T heywer e ei t her 2 r el i nqui shed bel ow orsev er ed i nt o an ot hercause .

I n gr ant i ng t he di r ect ed ve r di ct , w e concl ude t hat t he t r i al cour t deci ded t o excl ude, v i a t he m ot i on 3 i n l i m i ne, al l evi dence ofdam ages. I ft hi s was no t so, t hen t he Fr y s woul d ha v e ha d t he o ppor t uni t y t o pr esent such e v i d e n c e t o t h e j u r y . So , b e c a u s e t h e y d i d n o t , t h e t r i a l c o u r t m u s t h a v e d e c i d e d t o e x c l ude t hat e v i d e n c e w h e n g ra n ti n g th e l i m i n e m o ti o n . See O w ens- C or ning F iber

glas C or

p. v. Mal one , 916 S. W

. 2d 5 51, 5 5 7 (T e x .A p p .– H o u s to n [1 s t D i s t.] 1 9 9 6 ), a ff'd , 972 S. W

. 2d 35 ( 1998) ( not i ng t hat a m ot i on i n l i m i ne, i fgr ant ed, 2 trial. The Frys conte nd th at th e trial court err e d i n grantin g the partial sum ma ry 1 jud g ments and di re cti ng a v erdict on the i ss ue of damag es si nce e vide n ce of damage s ex is ted. W e rev erse and remand th e j udg ment i n par t and aff ir m in par

t. Back gr ound The F rys s old i nsurance product s for F ar m and al leg edl y

w ere pai d c ommis si ons f rom th eir ow n sales an d the sales of age n t s they recruite d. Eventua lly , the relationsh ip betw een t he par

ti es soured, a nd F ar m pur por tedl y st opped pay ing the Fr y s a ny com mission s. Th is resulted in a suit against Farm and Ste w art for, am ong oth er things, f raud and b re a c h o f

contract

. The latter claim was disposed of through sum ma ry 2 jud g ment, as w as one of the fraud al le gat io ns. Thereafter, and shor tl y before tr ial beg an, F ar m file d a mot ion i n l imi ne c ontendi ng thatany ev ide n ce of damag es per tai nin g to the remaini ng frau d clai m shou ld be ex cl uded be caus e the F rys fai led to dis cl ose iti n respon se to di sc ov er y req uest s. The c our

t hea rd and g ra nted the mot ion

. At t hat p oin t, Far m mov ed for the a forementi oned di re cte d v erdict on the remaini ng fraud c lai m beca use the F rys h ad no ev ide nce of damag es. The t ri al cour t g ra nted that moti on as w ell , s ev ered th e remaini ng ca use s f ro m the sui t, and ent ered a final jud g ment. 3d o e s n o t m e a n th a t t h e e v i d e n c e w a s e x c l u d e d b u t ra th e r th a t th e p a rti e s m u s t d i s c u s s th e m a tte r fu rth e r w i th

th e tri a l c o u rt w h e n e ff o rt i s m a d e to te n d e r i t i n to e v i d e n c e a t t ria l ). 3 Iss ue 1 - Br

each of C ontr

act Reg ardin g the cl aim of breache d cont ra ct, the Fr y s ass erted that Far m br e a ch e d i ts ag re emen t with them w hen i t beg an “ re mov ing ag ents and faili ng to pay co mmiss ion s as outl ine d i n the F ar m and R anch comm iss io n s tr uct ure.” So too did F ar m’s refusal to
re imburse a $22, 500 te le p h o ne ex pense al so cons ti tute and i nst ance of breac h, accord ing to the Fry s. Via its motio n fo r summ aryjudgmen t, Farm a v erred th at th ere w as no ev ide nce to su p p o rt i ts opponent s’ cl aims

. This w as so becau se 1) co ncer nin g the remo v al o f

a ge n ts, no ev iden ce illustrated thatFarm’s action breach ed a ny prom ise itmade or

obl ig ati on i t as sumed or thatthe Fr

y s s uffered d a m a ge, 2 ) conc er nin g the failu re to re imburse for th e phone ex pense , i t mad e n o promis e nor ente re d any ag re ement t o pay

i t, and 3) reg ardin g the unpai d c ommis sio n s, no e v ide nce il lus trated tha t F a rm neglected to pay comm issions du e the Frys or that th ey suf fered dam ages. Acc ordin g to the F rys, how ev er , t hey present ed ev ide nce suffici ent t o rais e a facti ss ue on eac h matt er . W e ag re e i n par t and di sag re e i n par

t. Phone Expe nses Ac cordin g to J ani ce, sh e and Far m orall y ag re ed th at s he woul d be re imbursed for cell pho ne e x pen ses w hich w e re i n an am oun t of $22 ,50 0. T his agreem entpurpo rtedly
aros e w he n s he , as a reg i on al ma na g er , w as to l d th at F ar m req ui red he r to provide cell phones for h er

ag ents and that sh e w oul d be re imbursed for th e c harg es inc ur re d. T hese circumsta nces, if be liev ed, constit u t e d s o me ev iden ce up on which fa ctf inde rs coul d rea so n abl y

di sag re e as to w hether the par

ti es entered i nto a bi ndi ng oral4

agreem ent . Th at th e pa rties ma y h a ve a ls o previously ex ecut ed a w ritten con tract
re g ula ti ng thei r busi ness re lat ion shi p and cont ain ing a prov is ion req uir ing modi ficat ion to the w ritten con tract to b e i n w riting doe s not require us to con clude othe rw ise. Simp ly put, a w ri tten cont ra ct g enerall y may be modi fied by

a s ubseq u e n t oral ag re ement ev en thoug h the document say s o ther w is e. Dou ble Di

am ond, Inc

. v. Hi

lc o Elect ric C oop, Inc ., 127 S. W .3d 2 60, 2 67 ( Tex . Ap p.–W a co 2003, no pet .) ; Mar-Lan In dustries, Inc. v. Nel son, 635 S.W .2d 853 , 855 (Tex. App. –El Pa so 19 82, no w rit). And , tho ugh the re are ex cept ion s t o thi s r ule , F ar m di d notas ser t an y a t b a r. Therefore, w e c oncl ude t hat Far m w as not e nti tl ed to su mmary j udg ment on thi s c laim o f b re ached co ntractg iv en the p re senc e of a mater ial q uest ion of fact.

Rem ovi ng Age nts

and Paym ent o f C om m is si ons As prev iou sl y

menti oned, Far m req uest e d s u m m ar y j udg ment on thes e g ro unds becau se it s a ll eg ed acti ons nei ther co nst itu te d a breac h of any promis e or

obl ig ati on, and t he F rys p re sent ed no ev ide nce o f damages ar is ing from any pur por ted b re ach. O f
course, the Fr

y s dis puted thi s c ontendi ng thata prov is ion i n the ir w ri tten ag re ement w it h th e c o m p a n y o bli g ated itto pay them thei r commi ss ion s. F urther more, the damag es all eg edl y su ffered w ere ev ide nced b y a brochure or adv erti sementex pla ini ng the “treme ndo us incom e op portu ni t y” o n e could “take advanta ge of” selling insurance product s for

F ar m & R anch. I n tha t brochure, t he c ompany d e sc ri bed notonl y tr ips
w hic h could be w on but al so potent ial i ncome that coul d be ear ned ov er the y ears. And, itw as the p otent ial i ncome of a sec ond y ear ag ent t hat t he Fry s s oug ht t o recov er as d a m a ges . Ye t, the p otent ial i ncome of a sec ond y ear ag ent a s d esc ri bed i n the5

broch ure w as “base d on av erage f irst y ear c o m mission s plus project ed m ont hly
re n e wals .” Mo re ov er , t he F rys c it ed us to nothi ng of re cord i ll ust ra ti ng w hat t hei r act ual
sa le s we re o r wha t th e sa le s of th e ir age n ts were . No r were we t o l d o f t h e p e rce n ta ge of commis si on ear ned on eac h s a le , the c ommis si ons act ual ly ear ned by

the Fr y s, the commi ss ion s a ctu all y

ear ned by

the ag ents they

recr uit ed, t he nu m ber

of ins ureds w ho act ual ly renew ed th eir

pol ic ies w it h F ar m, or

the ty pe and q uantum of products re new ed by thos e i nsureds, i f any

. And, therein l ies the probl em. W hen meas ur ing damages ari si ng f ro m a purpor ted brea ch of contract , t he factfind er attempt s t o aw ard j ustco mpensation for t he l oss actual ly su sta ine d. Ste wa rt v. Basey, 150 Tex

. 666, 245 S. W .2d 4 84, 4 86 ( 1952) ; Qaddur a v. In do- Eur

opean F oods, Inc ., 141 S.W .3d 8 82, 8 88 ( Tex . Ap p.–D all as 2004, pet. deni ed) ; W alde n v. Af

fi li ated Com

puter Ser v., Inc ., 97 S.W .3d 303, 328 (Tex . Ap p.–H oust on [1 4 D is t.] 2003, pet. deni ed)

. That th los s, how ev er , c annot be bas ed on mere s p e culati on or hy pothes is

. See Form osa Pl ast ics C or p. U SA v

. Pr esi dioEngi neer s &C ontr

actor s, Inc ., 9 6 0 S

. W

. 2 d 4 1 , 5 0 (T e x. 1 9 9 8 ) (h o ld in g t h a t e vid e n c e o f d a m a ge s b a s e d o n a n e n t ir e ly h yp o t h e t ic a l , s p e c u la t ive b a rg ain thatw as nev er st ru ck i s n ot l eg all y

su ff ic ien t ev ide nce of damag es)

. That i s t he si tuati on before u s. Itmay be t hat u nder

a pa rt ic ula r setof ci rc umstan ces , a sec ond y ear Farm agent cou ld earn a particular incom e an d tha t the Frys w ere or w ere beco min g secon d y ear ag ent s. Yet, w e have no ev iden ce of the cond itions u p o n which any par ti cul ar l ev el of compens ati on w as dependentupon b e in g i n ex is tenc e, s uch as the n umber

of sal es by

both the Fr

ys and thei r ow n ag ents and the c ommis si on ear ned6

on t h o se sal es. W it hout suc h ev ide nce, a factfinder i s l eft to s pecul ate a bout w hat t he Fr y s c oul d be ear nin g , and sp ecul ati on i s n ot ev ide nce. Addition ally , the brochu re allude d to ab ove do e s n o tf il l t h e v oid since it w as simp ly an adv erti sementdi sc uss ing pos si bil it ies depend ent upon v ar iou s c ondi ti ons. An d,
mo st impo rtant ly , no evidence app ears of record illustrating that th o s e con dition s w ere sat is fied here. Thus, w e c annot say thatthe Fr

y s p re sent ed s uff ic ien t e vide n ce of damag es to enti tl e them to s ubmitthe is sue to a factfinder

. Nor ca n w e s ay

thatthe tr ial
cour t er re d i n g ra nti ng su mmary j udg ment on the c la im s o f breac hed c ontracti nv olv ing the remov al of ag ents and pay ment of co mmiss ion s.

Iss ue 2 - Fr

aud and Negl ige nt M isrepr esent ati on In th eir second issu e, th e Fry s argue thatEx hibit No. 13 constitu ted a false
re present ati on. Lik e the brochu re a lluded to a bov e, E x hib it13 p ur por ted t o s how

the potent ial i ncome ear ned by reg ion al and d ist ric t m anag ers wor ki ng w it h F ar m. The
co m p e n s a t io n de scribed, howev er, also w as de pen den t upo n the ex istence of a certain q uantum o f sal es hav ing a c ertai n productmix

. Acc ordin g to Jani ce Fr y, sh e w as s ho w n th i s d oc um en t w he n de c i di ng w he th er t o be c om e a reg i on al ma nage r for F ar m. Howev er , s he w as lat er tol d by a mark e ti ng di re cto r for F ar m thathe k new of no
re g ion al manag er

w ho had ear ned t he $575 ,0 0 0 s u m m enti oned i n the doc ument. So, in her v iew , the represen tatio n s c o n taine d in the ex hibit w ere f raud ulen t. Farm dis ag re ed. It bel iev ed th at t he c omments in t h e e xhibi t w ere nei ther promis es nor state me nts of

ex isting fa ct . At mo st, the y dep icted p rojection s of w hatcould ha ppe n in the future i f

ce rt ain cr it er ia w ere met. The l atter co ntent ion s were i ncor porated int o a7

moti on for summar

y j udg ment w hic h the tr ial co urt gran te d

. T h e F rys n ow co ntend that the t ri al cour

t er re d i n g ra nti ng thatsu mmary j udg ment. W e ov er ru le the i ss ue. Predictions a nd o p in io n s regarding the f utu re prof itability of a busine ss g ene rally
canno t form a bas is for a cl aim of f ra ud. Ma ness v. R eese, 4 8 9 S

. W

. 2 d 6 6 0 , 6 6 3 (T e x. Ci v . Ap p.–Bea umon t 1 9 7 2 , wr itref’d n. r. e.) ( sta ti ng thatfuture predi cti ons and opi nio ns do notse rv e as a ba si s for acti onabl e fraud) ; Nation al New spap er E

n te rp ris es, In c. v. Chitwood, 68 S. W .2d 2 64, 2 67 ( Tex . C iv

. Ap p .–Dal las 1934, w ri t di sm’ d) ( sta ti ng thata sta tement of beli ef as to t h e future ear nin g s o f a busi ness bas ed more or l ess on g uess w or k c annot be th e bas is of fraud) ; see als o Zar v. Om ni Indus tr ies, Inc. , 813 F .2d 689 , 693 (5 Cir . 198 7) (holding thatin Te x as, f utu re predictio ns an d op inion s,

th espec ial ly

thos e reg ardin g the future profitabi li ty of a bus ine ss , ca nnot, as a matter of law , form a basis for

fraud)

. This i s s o bec ause fraud g enerall y i nv olv es the u tterance of a pur por tedl y ex is ti ng fact. Tr

enhol mv. R atcli

ff , 646 S.W .2d 927 (Tex. 1983 ). H e re , t h e c o mm e n t s w i t h i n E x h i b i t1 3 a n d re g a rd ing the poten t i a l c o mp e n s a t i o n o f a
re g ion al manag er

fall w it hin the cat eg or y of future pre d ict io n s. Ag ain , t hey tal k a bout poss ibi li ti es dependent upon the occ ur re nce of c ertai n condi ti ons. Those co ndi ti ons inc lud e the sa le of a par ti cul ar “ productmix ,” the re cr uit ing and re tenti on of sal es ag ents
w ho m eeta certain weekly q uot a, th e ap poin tm entof district man agers w ho a lso prod uce a t a particu lar w eekly q uot a, an d the indiv idua l sales of the re gi o n a l m ana ger. Now here do the u ttera nces al lud e to promis es of w hat o ne w il l make i rrespecti v e of the ci rc umstan ces . And, w hil e ev ide nce e xist s of a Far m represent ati v e bei ng unabl e to
re cal l anyone ev er

sa ti sfy ing the condi ti ons, he d id not s ay thatthe compens ati onW e m a k e n o c o m m e n t u p o n h o w i n fo rm a ti o n c o n ta i n e d i n E x h i b i t 1 3 c a n b e d e s c rib e d a s i n a c c u ra te 4 ( i

. e. cont ai ni ng m i sr epr esent at i ons r egar di ng t he pot ent i al i ncom e a r egi onal m anage r coul d r ecei v e) und er o n e th e o r y o ff r a u d b u t a c c u r a te f o r e s ta b lis h in g d a m a g e s u n d e r a n o th e r th e o r y. 8 pack ag e c oul d nev er

be recei v ed or

thatthe condi ti ons coul d nev er be s ati sfied. N or did he ev en s ay

that no o ne has ev er

reache d tha t g oal ; i nst ead, he s impl y opi ned t hat he personal ly

kn ew of no one re achi ng i t. I n s h o rt , the documenti s n othi ng more tha n w hat i t pur por ts to be , i. e. a de sc ri pti on of a “ $575,00 0 per

y ear oppor tuni ty ” if “ done prope rl y .” Be ing futur is ti c i n nat ure and dep end entu p o n co nditio ns w hich m ay or ma y not occu r, w e can notsaythatit const itute d a m isrepresen tatio n o f p re s ent ly

ex isting mate rial fa ct, an d the trial court did
no t er r i n c on c l ud i ng t ha t F ar m w as e nt i tl ed t o s um ma r y j ud g me nto n th e c l ai m. Issue 3 - D irected

Verdict F ina ll y , t he F rys c omplai n of the tr ial co urt’ s d eci si on to deny , v ia a di re cte d v erdict, the o nly cl aim they

ha d l e ft. Ittoo inv olv ed an all eg ati on of fraud, and Far m soug ht t he direct ed v erdict bec ause itbel iev ed th a t th e F rys had no ev ide nce per ti nent to t he dam ages elem entof

their cause of

action . Th e Fry s argu e d thatthey did and thatit
cons is ted o f the i nformati on i mpart ed in Ex hib it 13 menti oned abov e. That i s, Ex hib it13 evin c e d t h e i n com e the y lost due to the alleged f raud in q uest ion. T hus, the trial court act ed i mprop er ly

i n di re cti ng a v erdict, acc ordin g to the F rys. W e ov er ru le the i ss ue. 4 To be recoverable, da ma ges may n o tb e t oo rem ote , too unce rtain, or pu rely conj ect ural. Ar

thur Ander sen & C o. v

. Pe rr y Equi p. C or p., 9 4 5 S

. W

. 2 d 8 1 2 , 8 1 6 (T e x. 1997)

. Fur

ther more, w hen s eeki ng l osti ncome o r p ro f its, the l oss mustbe e sta bli shed
w it h reason abl e c ertai nty and throug h c ompetentev ide nce. Sou thwest Ba ttery Corp. v.9

Owen, 131 Tex . 423 , 115 S.W .2d 1 097, 1098 (19 3 8) ; Cap itol Me tr o. T ra nsp. Author it y/C entr al of T enn. Ry & N avi gati on C o. v

. C entr al of T enn. Ry . & Nav iga ti on Co. , 114 S. W .3d 5 73, 5 79 ( Tex . Ap p.–Aus ti n 2003 , pet . den ied ). I ndeed, the present ati on of obj ect iv e facts , fig u re s, o r d ata from w hic h the amount of los s c an be
asc ertai ned i s n eces sar y . Capito l Metro. Transp. Au tho rity/Cen t ra l o f Tenn . Ry & Nav iga ti on C o. v . C entr al of T enn. Ry . & Nav iga ti on C o., 1 1 4 S

. W

. 3 d a t5 7 9

. Fi n a ll y, prof its dep end entupo n un certain or changing market c o n d it io ns or chan ging busine ss oppor tuni ti es are s pecul ati v e a n d , t herefore, unrecov erabl e. Texas In strum ents, Inc. v. Teletr on Ene rg

y M anagem ent, 877 S. W .2d 2 76, 2 79 ( Tex

. 1 9 9 4 ). And, that is the defect i nherent i n Ex hib it13. Ex hi bi t N o. 13 w as dev el op ed as a ma r k et i ng d ev i c e to i nd uc e i nd i v i du al s t o be c om e regional or district man agers. And, while it spoke of incom e op portu n it ies available if
one w ere to a cc e p t such pos it ion s, the p otent ial oppor tuni ti es depended upon t he sat is facti on of v ar iou s c ondi ti ons. I n oth er w ords, the ex hib it ’s co ntentrepresent ed a hy pothet ic al si tuati on th at c oul d be achi ev ed i f a c e rt a in number of ag ents and manag ers were obt ain ed i n a p arti cul ar g ro up and they , c oupl ed w it h the efforts of the
re g ion a l m a n a ger , s old a c ertai n q uantum o f product. Thoug h i t may be p oss ibl e to achi ev e tha t leve l of inc ome bas ed on the p re senc e of thos e c ondi ti ons, w e are c it ed to
no ev ide nce il lus trati ng that thos e condi ti ons eit her arose or w ere sat isf ie d here. W ithou t t h a tev iden ce, th e prognost ication s app earing in Ex hibit 13 are simply conj ect ure. I n o th er

w ords, Ex hib itN o. 13 l ack ed probati v e v alu e i n abs ence of evidence illustratin g tha t Janice Fry w ould have induce d a suf f icient nu mb er of

d is t rict10

ma nagers and agents to work w ithin he r g roup and se ll t h e r equisite am oun t of produ ct to as sure her

the inc ome menti oned. Si mply pu t, i t is sheer

sp ecul ati on to sa y

that
s i mp l y b ec au s e J an i c e w as a reg i on al ma na g er s he w ou l d have att ai ne d th e i nc om e lev el des cri b e d i n the ex hib itw it hout ev ide nce als o i ll ust ra ti ng thatsh e had in pla ce the foundatio n nec ess ar

y to sec ure tha t in co m e. See Metropo litan Life Ins. Co. v. Hane y, 987 S. W .2d 2 36, 2 47 ( Tex . Ap p.–H oust on [14 D ist.] 1999, pet. deni ed) ( findi ng that th there w as no ev ide nce to s uppor t damag es for fraud w hen t he c ontent ion s that the plaint if f would have comp leted a sale w ere ba sed o n no thing mo re than mere conject ure and the pla intif

f failed to estab lish, base d on any o bjective facts or f igures, that h e w ould hav e ear ned $25 0,000 in commi ss ion s from wo rki n g with ot her ag ents ). Be caus e of this an d the ab s e nce o f any other evidence e v incing dam ages, the trial court did noterr in direct ing a v erdict i n fav or o f Farm. See Pr

udenti al Ins . C o. of

Am . v . F ina nci al R e v ie w S e r v ic e s, In c ., 29 S. W .3d 7 4, 77 ( Tex . 200 0) ( hol din g thata t ri al cour t may
re nder a di re cted v erdict i f no ev ide nce of proba ti v e forc e rais es a fact is sue on th e ma terial question s inv olved). Ac cordin g ly , w e rev erse that par t of the jud g ment den y ing Ja nic e F ry re cov er y upon her cl aim that Far m br e ached i ts ag re ement t o reimburse her for t he c ell phone
ex pense s s he i ncur re d per the d ire ct ives of Far m; tha t i ss ue i s remanded for furth er proceed ing s. In all othe r thi ng s, the j udg ment i s a ff ir med.

Br ian Qui nn Chief Justice