### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-0 7 -00 310 -CV

Roland D. For tenberr y, Jr., a/k/a Dale F orte nberry, Jr. and Kaye Ann For tenberr y, Appellan ts

v. G e r ald R. Ca va naug h, J r . a nd D ian na C av ana ugh, indiv idua llyand a s Sha r e hol de r s in t he

right of For tune P roducts, Inc., a Texas Corporat ion, App ellees

F ROM THE DISTRICT CO URT OF B URNET COUNTY , 33RD JUDICIAL DISTRICT

NO. 3059 9 , HO NORAB LE P AUL DAVIS , JUDGE PRESIDI NG

M E M O R

A N D U M O P I N I O N This appea l arises fr om a dispute over the control o f t h e manag ement of For tune Products, I nc., a family -owne d business in Marble F alls. Appellants Roland D. F ortenbe rry a/k/a Da le For

tenber ry , J r., and K ay e An n For tenber ry appea l the jury ’s ver dict and the district court’s judg ment in favor of ap pellees G era ld R. “J ay ” Cava naug h, J r., and Dianna Cavanaug h.

I n five issues, the For

tenber ry s contend that (i) the tria l court er red by awa rding the Cava na ug hs a tto rn e y ’s fe e s and c os ts; (i i) the e vid e nc e is l e g a lly or , a lte rn a tiv e ly , f

a c tua lly insufficient to support the judg ment in favor of the Cavana

ug hs’ claim for decla

ratory judgme nt and,

a s a ma tte r o f l aw, the F or

te nb e rr y s are e nti tle d to de c lara tor y jud g me nt a

nd a tto rn e y ’s fe e s; (iii) questions to the jury

wer e er roneous, c aused the rendition of an i m proper verdic t, and ca

nnotPending be fore this Court are the Cava naug hs’ motion for leave to fi l e s u r- re ply brief, 1 mot ion fo r l e a ve to f

ile po st- argume nt r e sp on se to a pp e lla nts ’ c itatio n of autho ri ty

duri ngargume nt, and motion to strike sections I I and I V of appellants’ reply brief. We de ny the motion to st rike, we de ny the mot ion

fo r l e a ve to f

ile sur- re ply

br ie f a s mo ot, and

we g rant th e mot ion

fo r l e a ve to f

ile po st- argume nt r e sp on se . Als o pe nd ing be fo re thi s Cour t is the F or

te nb e rr y s’ mot ion

fo r l e a ve to f

ile post-submissi on brief a

nd response to motion t o strike. We g rant the motion for le ave. I n this opini on, we refe r t o appellant Rol and D. Fortenbe rry , J r., as “ For tenber ry ,” and w e 2 ref er to his father Da le For

tenber ry , Sr. , as “F o rt en berr

y , Sr.” In addition, we re fer to appellant Kay e Ann F ortenbe rry

as “Mr s. Forte nberr

y .” 2 provide a basis for the judg ment; (iv) the evide nce is leg ally or, alter natively , fac tually

insufficient to support the appointment of a r eceiver; a nd (v) the c ontempt order e x cee ds the district court’s statut or y a uth or ity . F or

the re a so ns that f

oll ow , w e a ff

ir m th e dis tr ic t c ourt ’s jud g me nt. 1

F ACTUAL AND P ROCEDURAL BACK GR OUND Backg ro und o f t he Compa ny For tune Products, I nc., wa s cre ated in 1984. I t m anufacture s and sells knife sharpe ners. F rom its inception in 1984 to 2000, Dale For tenber ry , Sr., was the major ity

share holder, a dire ctor, a

nd held the positions of president a nd chair man of the b o ar d

. Hi s wife, B e tty F or te nb e rr y , w a s a dir e c tor and he ld t he po sit ion s o f s e c re tary and tr e a sure r. Th e ir two children, D ale F ortenbe rry , J r., and Dianna Cavana ug h, also worke d in the business. I n 1990, 2 For tenber ry , Sr., and B etty

For tenber ry , as direc tors, promoted Fo rt enber ry to the position of vice pr esident. Effe ct i v e J an u ary 1 , 2 0 0 0 , Ge ra l d

R

. “J ay ” C av an au gh , t h ei r d au gh t er ’s h u s band, wa s hir e d “ in t

he c a pa c ity of Vi c e Pr e sid e nt o f F ina

nc e and Ad min ist ratio n . . . in c ha

rg e of a ll

acc ounting f

unctions as well as production and plant maintenanc e.” A t the same time, F ortenbe rry ’sAfter the sale on Aug ust 1, 2000, For tenber ry owned 307 share s, Mrs. For tenber ry owned 3 178 share s, Cavanaug h owned 178 sha res, a nd Mrs. Cavana

ug h owned 307 sha

res. 3 title chang ed to Vice President of Sales and Marke ting. Both For tenber ry and Cava

naug h repor

ted to F or te nb e rr y , Sr ., and

the y bo th h a d s up e rv iso ry

re sp on sib ili ty

of oth e r e mpl oy e e s. I n the s ummer of 2000, For tenber ry , Sr., was diag nosed with ca ncer . Although the parties dispute when t h e decision wa s made for the two sides of the f

amily to purcha se the shar es of the c ompany , the re cord r efle cts For tenber ry , Sr., sold the company ’s outstanding share s on A u g u s t1 , 2 0 0 0 , e qu a l l y

t o t h e F o rt e nb e r

r y s an d t h e C a v an a

u g hs

. Al s o on Aug ust 1, 2000, the 3 share holders and dire ctors held a specia l meeting . For

tenber ry , Sr., and B etty

For tenber ry resig ned as d i rectors and off

icer s of the compa

ny , and F ortenbe rry , Mrs. For tenber ry , Cavana

ug h, and Mrs. Cavana

ug h wer e elec ted direc tors. The direc tors elec ted Cavana ug h as chair

man of the boa

rd and vice president, F ortenbe rry as pre sident, and Mrs. Cava naug h as the sec reta

ry and the tre asure r. T h e s h ar e h o ld e r s a ls o a me n d e d th e s h ar e h o ld e r s a g r e e me n t to r e qu ir e th e s h ar e h o ld e r s to elect themselves as the four dire ctors. Shortly afte r the sale , Be tty For tenber ry died, and F ortenbe rry , Sr., died in J une 2001.

The Cont ro v e rsy The shar eholder s and direc t o rs held annua l meeting s in October 2000, 2001, a nd 2002, re- elec ting the sa

me offic ers a

nd direc tors. T h e Oc tober 2003 a nnual meeting , howeve r, ende d without the re-e lection of dire ctors and offi ce rs, and the pa rties have feude d over the day -to-day manag ement of the company since at least that time. By letter dated J une 28, 2004, F ortenbe rry advis ed C av anaug h that he wa s4

discontinuing Cava

naug h’s “pa

rticipation in the day -to-day operations of the company”:

This letter is to inform y ou of cha ng es I am implementing w ith respec t to the day -to-day

operations of the corpor ation. The morale of the c ompany has suffe red as a r esult of y our i ntera ction with the employ ees. . . . The ref ore, in orde r to protec t the company ’s profitability and to c o n t i n u e to enhanc e shar eholder value, I am ex er ci s i n g m y

au t h o ri t y t o d i s co n t i n u e y o ur p ar t i ci p at i o ni nt h e d ay -t o -d ay opera tions o f t h e c o mp an y. Section 5.09 of F ortune Products Inc.’s by laws identifies the Pre sident as the chief executive offic er of

the cor poration , an d gi v es him the authority to make de c isi on s r e g ard ing

the g e ne ra l and

a c tiv e mana g e me nt

o f t h e c o rp or a tio n’ s b us ine ss. The a ction that Iam taking is in no way intended to remove y ou from y our position a s V i c e P r e s i d e n t , b u tt o c h an g e y o u r d u t i e s w i t h r e s p e c tt o d ay - t o - d ay o p e r a tio ns . As y ou kn ow , y our r ole in t

he operat ion

of the c or po ra tio n w a s a lw ay s in te nd e d to c e rt a in f ina nc ia l matte rs. Yo ur

pa rt ic ipatio n in

the op e ra

tio ns of the c omp any

is specific ally

subject to my

authority to deleg ate those d u t i es to other off icer s of the corpor ation as outlined in th e b y l aw s and as de emed in the be st interests of the c omp any and its sh are ho lde rs . B e c a us e of the un qu e sti on a

ble do wnwa

rd tr e nd in c omp any mor a le and pr od

uc tiv ity , I a m no w e xer c isi ng my a uth or ity to e xclu siv e ly overse e the company ’s day -to-day operations. W hile Iappre ciate your pre vious assistance , y ou will no longer provide any

manag ement or pe rsonnel super vision and yo uw i l l n o l o n g e r

o f f i c e o nt h e p r e m i s e s o f

t h e c o mp an y. As Ipreviously

noted, this action does not alter y our position as Vice Pr e sid e nt n or

is it int e nd e d to dis c on tin ue y our sa lary ; th a t a

uth or ity re sts so le ly

wi th the board of direc tors. This a ction is taken pursuant to my duty t o en hance share holder va lue and is spec ifically authorized by

the cor poration’s by laws, which g ra nt the Pr e sid e nt the a

uth or ity to ac tiv e ly mana g e the c omp any ’s da ily op e ratio ns . Itr us t th a t y ou wi ll r e c og nize tha t I a m e xer c isi ng

my a uth or ity in t he be st i nte re sts of all of the c ompany ’s share holders, including y ou. You will be expected to monitor the compa ny ’s investment ac counts as y ou have historica lly

done, and to provide input on financial state ments and transa ctions as spec ifically

reque sted by m e an d / o r t he B oard of Direc tors. Should y ou need additio n al computer e quipment to perfor m these duties from your home, the Company will make ava ilable e q u i p m ent re asonably nece ssary

to perfor ming your du tie s. I n order

to pro vide furthe r cla

rity , y ou are not to direct or supe rvise the activities or duties of an y company employ ees, nor

are y ou to contact a

ny of the5

company ’s salesmen, distributors or c ustomers. Any violation of these instructions will require a ction, judicial or otherw ise, nec essar y to insure compliance . Whil e y ou may reta in the corpor ate Ame rica n Ex press c ard, only

reasonable a

nd nece ssary corpor ate e x penses i n cu rred in the perf ormanc e of the se spec ified duties will be acc epted. Litigati on Com m enced

On June 29 , 2 00 4, F or

te nb e rr y fi le d a de c larator

y jud g me nt a c tio n in Tr a vis County

a g a i n s tC a v a n a

u g ht o d e t e r

m i n e F o rt e nb e r

r y’ s a u t h o r i t y r e g ar d i n g m an a g e m e n to f t h e c o mp a n y, inclu d i n g h i s authority

to prescr ibe Cavana

ug h’s duties. For

tenber ry obtained a te mporary restra ining or der ba

rringCavana

ug h from his offic e at the c ompany . The ne x t d ay , J u n e 3 0 , the C av an au gh s fi l eds u i ti nBu r n et C o u n t y aga i n s tFo rt en b erry

an d Fo rt u n e P ro d

u ct s , s ee k i n g a de c larator y jud g me nt t o d e te rm ine the re sp e c tiv e ri g hts of the pa rt ie s. Th e B ur

ne t Co un ty

a c tio n a lso

asser ted claims for

an acc ounting and the appointment of a r ece iver, for monetary damag es, and f

or injunctive relief

. The Cavana

ug hs obtained a te mporary restra ining or der a g ainst Forte nberr y , and, afte r a he aringin J uly , a tempora ry injunction ag ainst him. The temporary injunction ag ainst For tenber ry rema ined i n eff

ect pe nding the trial on the merits. The injunction enjoined F ortenbe rry from, amongother thing s, enteringinto any contra ct or ag ree ment except as authorized by the cour t or the compan y ’s boar d of direc tors, making with dr aw a ls f

r o m a n y c h e c k in g o r

s a v in g s a c c o u n t o f

F o rtu n e Pr o d u c ts e xc e p t f

o r “ r e a s o n a b le , nece ssary , ordinary

and routine business e x penses,” incurringany indebtedness in the n am e of For tune Pro d u ct s ex cept f

or “r easona

ble, nec essar

y , ordinary

and routine business e x penses,” excluding the Cava

naug hs from the off

ice or other fa cilities of Fo rt u n e P roducts, opening or diverting mail addre ssed to the Cavana ug hs, or eng ag ing in a

ny other acts to hinder or

preve nt the6

Cavana ug hs from exercising their rig hts and authority or fr om perfor

ming their

duties as offic ers of the company . The Cavana ug hs filed numerous motions for contempt alleg ing c ontinuing violations of the injunction by

For t en b er ry , and ther e we re nume rous contempt hea ring s during the pendenc y of the c ase. After hear ings on va

rious matters in B urn et County , including a motion to appoint

a re ceive r, and a

n unsucce ssful mediation, the district court in Novembe r 2 0 04 appointed B ur l H arp e r, wh o h a d b e e n th e c omp any ’s a c c ounta nt s inc e a pp ro xima te ly 19 97 , to se rv e a s a

re c e ive r f or the c omp any . F or

te nb e rr y and F or tun e Pr od uc ts a pp e a le d the re c e ive rs hip to t his Court , and thi s Co ur

t r e ve rs e d it

in Jun e 20 05 , h old ingthat th e “di str ic t c ourt a bu se d it s discretion in pre maturely order ing the appointment of a r ece iver with swee ping pow ers.” See Fortenberry v . Cavanaugh , No. 03-04-00816- CV, 2005 Tex. App. L EXI S 4665, at *10 (Tex. App.—Austin 2005, no pet.).

The litigation continued with the Travis County case being t ra n s fer

red a nd

co n s o l i dated with the B urnet County case in September 2005. In J anuar y 2006, the district court ruled on c ompeting motions for pa rtial summary

ju d gm ent on the par

ties’ re spective de clar atory clai m s , g ranting both motions in part and de ny ing both motions in part. The c ourt g rante d the Cavana ug hs’ proposed de clar ation 2 as to the “inhe rent” power s of t he president and their pr oposed decla rations 5, 8, and 9: (2) Def

endant F ortenbe rry

has no inhere nt powers by virtue of his o ff

i ce a s President to bind For

tune Products, except as to r outine matters arising in the ordinary course of business; . . . (5) Def

endant F ortenbe rry has no power or authority to set, incre ase, r educe or7 discontinue the wa g es or sa lary of any officer o r employ ee of For tune Products, except as authorized by the B oard of

Direc tors of F ortune Products; . . . (8) Pursuant to the By laws of F ortune P roducts, Plaintiff Ger ald Cavana ug h, as Vi c e Pr e sid e nt, is a

uth or ize d, in t

he a bs e nc e or dis a bil ity of the Pr e sid e nt, to perf orm the duties and have the a uthority and exerc ise the powe rs of the Pr e sid e nt; (9) Pursuant to the By laws of For

tune Products, Plaintiff G era ld Cavanaug h, as Vi c e Pr e sid e nt, sh a ll pe rf

or m su c h oth e r du tie s and have su c h oth e r a uth or ity and powe rs as the B oard of Direc tors of F ortune Products may deleg ate.

The c ourt g rante d For

tenber ry ’s proposed de clar ations that “F ortenbe rry , as pre sident, has the

a u th o r it y to ma n a g e an d tr an s a c t th e d ay - to
- d ay b u s in e s s o f F o rtu n e Pr o d u c ts , I nc.,” a nd “F ortenbe rry , as president, has t he authority to presc ribe the duties of t he employ ees and offic ers of the company , subject t o the limits set forth in this Order .” The court de nied the par ties’ other

r e qu e s te d d e c la r a ti o n s . T h e r e a f

te r , th e Ca

v an a u g h s a me n d e d

th e ir p le a d in g s to inc lude a sh are ho lde r’ s d e ri vativ e a c tio n a nd to n a me Mr s. F or

te nb e rr y a s a de fe nd ant.

The Trial The jury

trial occ urre d in October

2006. The p a

r ti e s ag ree d that the pendingcontempt motion and attorney ’s fe es would be tried t o the court, and certain fa cts wer e not disputed. I t was undisputed that Fortune Products rema ined a solvent c ompan y with significa

nt assets and fe w liabiliti es, that the c om p any ’s bylaws we re a dopted in 1984 and had not be en ame nded, that the share holders and boa

rd of dire ctors re mained dead l o ck ed i n the manag ement of the company ’s aff airs, that the Cava

naug hs remove d For

tenber ry as a signatory from the company ’s oper ating and investment acc ounts during the pendenc y of the case , and that F ortenbe rry , among other a ctions, had8

inc ur re d inde bte dn e ss, ma de pa y me nts wi th c omp a

ny c he c ks , a nd e nte re d in to c on tr a c ts o n b e ha lf of the c ompany

without obtaining the Cava naug hs’ ag ree ment during the pende ncy of the c ase. The Cava

naug hs’ theory

to the jury

was that the agr eeme nt betwee n the par ties was for the F ortenbe rry s and the Cava naug hs to manag e F ortune Products at the board le vel with neither side having authority

over the other, c onsistent with the by laws and the manner in which F or te nb e rr y , Sr ., a nd B e tty F or te nb e rr y mana g e d th e bu sin e ss wh e n the y we re of fi c e rs and dir e c tor s. I n a dd iti on to thei r o wn

te sti mony , th e Cava

na ug hs ’ w itn e sse s in c lud e d B ur l H arp e r, Da vid Sc ott wh o w a s th e c on tr oll e r of F or tun e Pr od uc ts, Jame s “ Jim” Ti pto n w ho ha d a wo rk ingfr ie nd sh ip w ith For tenber ry , Sr., Donald Stroud whose c ompany had bee n one of F ortune Products’ s u p p l i ers for approximately

20 y ear s , M i k e T h elen who w as a f ormer e mploy ee of

For tune Products in inside sales, and the ir experts, J oseph Picken a nd Gre g Skelton. Cavana ug h testified that he g ave up a successful care er to c ome to work for For tune P r o d u c t s i n J an u ar

y 2 0 0 0 a f t e r o n g o i n g d i s c u s s i o n s w i t h t h e f a m i l y, i n c l u d i n g w i t h F o rt e nb e r r y, ab o u t what his role would be at the compa ny . He testified that the ag ree ment from the be g inning was “ 50/50 ownership” be tween the two sides o f t h e fa m i ly with the direc tors in “control” of the bu sin e s s . H e t e s t i f

i e d t o h i s d

u t i e s a t t h e c o mp an y a s v i c e p r e s i d e n t an d h i s i n t e r a c t i on s w ith For tenber ry throug h the time of trial. Cava naug h testified that For

tenber ry had pre vented him from participating in the business by , among other thing s, havingthe locks cha ng ed at the offic e, opening

and div e rt ingma il a dd

re sse d to Cava

na ug h, de nyingCava

na ug h a c c e ss t o th e c omp any ’s c om p ute rs , and e nte ri ngint o c ontr a c ts, inc ur ri ngind e bte dn e ss, and

makin g pa

y me nts wi tho ut the Cava

na ug hs ’ prior knowledg e or a

pproval. Da

vid Scott testi fied c onsistently that For tenber ry had t he locks9

chang ed at the c ompany , d en ied Cavana ug h acc ess to the computer s, diverted mail, and ma de pay ments without his prior knowledg e.

Mrs. Cavana

ug h testif i ed t o h er role at the business over the y ear s and how he r pare nts manag ed the b u s i ness tog ether . She testified that the ag ree ment betwee n the two sides of the fa mil y wa s f or e qu a l ow ne rs hip and

c on tr ol a nd tha t, i n th e e ve nt the tw o sid e s we re un a ble to ag ree , the plan wa s for Jim Tipton to serve a s the “tiebre aker .” She testified that he r father told them that For tenber ry ’s title as “pre sident” wa s “just a title that Ipromised to him when he wa s y oung er. I t doesn’t mean a

ny thing.” The Cava

naug hs called o t h er witnesses that testified to the 50/50 arr ang ement betwee n the families. Mike Thelen t es t i fi ed that he was an e mploy ee of For tune Products from October 2002 to the first part of

2004, that he took di rec tion from both For tenber ry and Cava naug h, and to his “fee ling it was a 50/50 split in the company” betwe en the two sides of the family . Tipton testified to a conve rsation that he ha d with For t en b er ry , Sr., in the summer of 2000 af ter For tenber rry , Sr., was diag nosed with ca ncer : Q. Well, at some point in the summer of 2000, did y ou have an occa sion to hear fr om M r. F or

te nb e rr y [, Sr ., ] ab ou t—w ell, le t me a sk y ou thi s b e fo re that. Were y ou awa

re that Mr. For

tenber ry [, Sr.,] ha d some plans fo r m ay be retiringor may

be passingthe company

along to the next gene ration? A. Not until after he told us he was diag nosed with ca ncer . Q. An d w he n w a s th a t? A. That wa s in, Ibelieve, e arly J uly of 2000. * * * Q. And what did he te ll y ou?10

A. He t o l d m e first a bout his cance r. He had just found out about it, and obviously was quite c oncer

ned. And also his w ife wa s quite conce rned. A nd he made the comment to me, he sa y s, “Ji m, I think I ’m g oing to retire be fore y o ud o . ” Ih a d

p l an n e d t o r e t i r e i n2 0 0 2

. A n d I s a id , “ O h ? W h y i s t h a t ?” And then he told me he had been diag nosed with c ance r and nee ded to start makin g so me pla

ns a t th a t po int

. Q. Di d h e ta lk wit h y ou abo ut—a c tua lly , d id h e a sk y ou to h e lp h im, or

he lp those who would be taking the company to the next—t o the next st ag e? A. Ye s. Q. Ex plain that to us, please. A. We talked about that rig ht after the—we ha d a conve rsation about his ca ncer . An d h e sa id t

hat it wa s h is p lan to le a ve the bu sin e ss t o the tw o f a mil ie s, to the C av an au ghs and the F ortenbe rry s. And they would all be on an e qual basis. They

would all have e qual share s of the comp an y . Bu t he didn’t elabor ate on who was to do what. He didn’t—he didn’t indicate in a ny way that one per son would be—would have one re sponsibili t y and the other would have a

nother re sponsibili ty . He sa id he looked to th e b o y s , as he called J ay and Dale, called them “the boy s.” He looked to the boy s to run the c o mp an y. Tipton also testified t hat Fortenber ry , Sr., asked him if he would be will ing to se rve a s a fifth boa rd member, a

nd Tipton said that he would. Othe r w itn e sse s to te sti fy fo r t he Cava na ug hs inc lud e d H arp e r, Str ou d, and the ir experts, J oseph Picken a

nd Gre g Skelton. Harpe r testified a bout his relationship with the company

and the pa rt ie s st art ing in 19 97 and his tim e a t the c omp any a s the re c e ive r. Str ou d te sti fi e d th a t hi s company supplied materials to F ortune Products for ap p ro x imately twenty y ear s and to rec ent problems that he ha d with the company . Picken testified to the value of For tune Products and the eff ect the de adlock be tween the parties ha s had on its v al u e, an d S kelton testified conc erning11

F o rt e nb e r r y’ s s u b m i t t e d b u s i n e s s e x p e n s e s t o t h e c o mp an y. The F ortenbe rry s’ theory

to the jury was that For

tenber ry was within his authority

as the pre sident to manag e and c ontrol the business on a day -to-day basis just as hi s father

had done, including c hang ing Cavanaug h’s duties as expressed in the J une 2004 letter. For tenber ry testified t h a t h i s f a t h e r , a s p r e s i d e n t , “ h a d t h e g e n e r a l an d a c t i v e m an a g e m e n t o f t h e c o mp an y d a y - t o - d a y” and that “some of the func tions or de cisions he made on a day -to-day basis for the c ompany ” we re “hiring employ ees,” “setting salarie s,” “pr escr i b i n g the duties of the e mploy ees of the company ,” “ente ring into leases,” “ borrowingmoney ,” and “ signingchec ks.”

T h e F o rt e nb e r

r ys c a l l e d o t h e r

w i t n e s s e s t h a tt e s t i f

i e d c o n s i s t e n t l y t h a tF o rt e nb e r r y, Sr., made business dec isions withou t i n volvement from his wife and that the a g ree ment was for For tenber ry to run the business the same way that his father

had. David S h epher d, a for mer

e mpl oy e e of F or

tun e Pr od uc ts fr om 199 7 to 2001 , tes tif ie d th a t F or

te nb e rr y , Sr ., “ wa s in

c omp le te control of the company” and that he never saw Be tty For tenber ry “take part in any

business-re lated decisions of a

ny kind.” Thomas Mar

tin, a repr esenta t i v e for F ortune Products to sell its product during the time t h at For tenber ry , Sr., owned the c ompany , testified that, to his knowledg e, B e tty F or te nb e rr y wa s no t inv olv e d in the bu sin e ss “ wh a tso e ve r” and that F or te nb e rr y , Sr ., tol d h im t h a t F o r t e nb e r

r y w o u l d “ b e r u n n i n g m y c o mp an y. ” R o b e rtG l an v i l l e , t h e c o mp an y’ s a t t o r n e y, testified that For

tenber ry , Sr., was “ in char g e” w hen he w as there . J ames Obe rmier, who w orked f or For tune Products from Ma

y 1998 to J uly

2000, testified that For

tenber ry , Sr., “made the final wor d

on e ve ry thi ng .” Rand

y F or te nb e rr y , the br oth e r o f F or

te nb e rr y , Sr ., wh o a lso wo rk e d in the bu sin e ss, testified that he ha d worked at t h e b u s i n ess starting in 1993, that his brother made the “ultimate” decisions when he was the president, that he was unawa re of any part that B etty

For tenber ry play ed12

in business decisions, and that For tenber ry , Sr., told him that For

tenber ry “wa s alway s g oing to make the ultimate decision with the compa ny .” The F ortenbe rry s’ witnesses a lso included Dan D urre nburg er, a n ind ep endent repr esentative for a

company that s u p p l i ed product to Fortune Produc ts, and Thomas Glass, the For tenber ry s’ business valuation expert. Durrenburg er testified that For tenber ry , Sr., told him that he tho u g h t t

h a t h e h a d

ma d e a mi s ta k e b r in g in g Ca

v an a u g h o nb o ar d

. G la s s te s ti f ie d tha t For tune Products was not insolvent and that there was no threat of harm to the company in t he fore seea ble future

. The jury ’s finding s included that the parties “ag ree d the company would be oper ated on a 50/50 basis, with neither party having final authority

over the other,” that the “dire ctors of For tune Products, I nc., ar e dea dlocked in the manag ement of the corpor ate aff airs of the Company and that the sha

reholde rs ar e unable to brea k the deadlock,” and “that such deadloc k has ca used or is threatening to cause irrepa rable injury

to Fortune Products, I nc.” T he jury found that F ortenbe rry excluded the Cavana

ug hs from par

ticipation in the day -to-day operations of the Company ; excluded Cavana ug h from conta ct wi t h t h e company ’s sales pe ople, distributors, or customers; pre vented Cavana ug h from perf

orming his duties as vice president; withheld information from the Cavana ug hs

a bo ut t he c omp any ’s op e ratio ns ; alte re d the c omp any ’s c omp ute r sy ste m to de ny Cava na ug h a c c e ss; made pur chase s or entered int o contra cts not authorized by the board of direc tors; chang ed the locks in order to deny

the Cavana

ug hs acc ess to the company ’s prope rty ; signe d company chec ks without authorization from the boar d of direc tors; and violated orde rs of the c ourt reg ardingthe company ’s op e ratio ns . T he jur

y a lso fo un d th a t F or

te nb e rr y , Ca va na ug h, and Mr s. Cavan aug h h a d f

a ile d toHa rp er h as intervene d in this appeal as the c ompany ’s re ceive r and ha s filed brief s 4 addre ssing the F ortenbe rry s’ issues conc erningthe re ceive rship. 13 comply with their fid uciar

y duties to Fortune Produc ts, but the jury awa rded no da

mag es for the parties’ respe ctive fa ilures to comply

.

The jury declined to f

ind that the Cavana

ug hs an d t h e Fortenbe rry s ag ree d that “Da le Forte nb e r

r y , Jr

. , a s Pr e s id e n t, w o u ld h a v e f in a l a u th o r it y o na ll c o r

p o r a te d e c is io n s , ” that For tenber ry “dominate[d] control of the business and mana g ement” of the company

or that he ha d misapplied the assets of the company , maliciously suppressed dividends from the company , usurped company opportunities for him self, rece ived bene fits that other shar eholder s did not rece ive, ac ted deliberately

to reduc e the va lue of the Cavanaug hs’ s tock, or used company funds t o pay persona l

e xpe ns e s.

Procee dings after Trial

After the jury trial and be fore the entry of final judgme n t , t h e Cava naug hs filed an application for

the appointment of a

n interim rec eiver

and, af ter a hear ing, the trial court a

ppointed H ar p e r t o s e r v e a s t h e r e c e i v e r

f o r t h e c o mp an y. The district c ourt also held an evide ntiary hear ing 4 on attorney ’s fe es and the Cavana ug hs’ motions for contempt and for sanctions and on the e ntry of fi na l ju dg me nt i n N ov e mbe r 2 00 6. Th e dis tr ic t c ourt ru le d f ro m th e be nc h th a t it

wo uld “ g e ne ra lly rende r judg ment on behalf of the [Cavanaug hs]” and confirme d the appointment o f Ha rp er as t he

rec e iv e r . T h e c o u rt a ls o g r an te d th e Ca v an a u g h s ’ r e qu e s t f

o r a tt o r n e y ’ s f e e s an d o r d e r e d an

acc ounting. I n Fe bruar y 2007, the district court e nt er ed i ts final judgme nt in favor of the14

Cavana ug hs. The district cour

t made dec larations based on t he jury ’s verdict and, as a matter of la

w, base d o n it s f

in d in g th a t th e b y la

w s w e r e u n a mb igu o u s . I n th e f in a l ju d g me n t, th e d is tr ic t court g rante d the Cavana

ug hs’ re quest for a

n acc ounting a

nd for pe rmane nt injunctive relief, a war ded attorney ’s fe es and c osts to the Cavanaug hs i n t h e am o u nt of $747,037.84, incorpor ated a nd confirme d the orde r appointi ng Har per as the receive r, and incorporated by ref ere nce se parate orde rs for c ontempt and for sa

nctions. I n the sepa

rate order for contempt, the district c ourt g rante d the Cavana ug hs’ motion for c ontempt, finding that F ortenbe rry “has eng ag ed in e x tensive conduct since the Orde r Gra nting Tempora ry I njunction dated Jul y

23, 2004, which has hindere d, obstructed and damag ed the ong oing business of For

tune Products, I nc. His re p ea t ed attempts to unilatera lly control and ope rate the business have not only

been in violation of the Court’s order , but have in fa ct sig nificantly harme d the business.” The district c ourt order ed For tenber ry to pa y a pena lty

of $25,000 to the Cavana ug hs and the Cava

naug hs’ attorne y ’s fe es for bring ing the contempt motion, “which are included in the attorney s fee s amounts as order ed in the Court’s fina l judgment e ntere d in this case.”

After the For tenber ry s’ motion for

judgme nt notwithst anding the ver dict and, in the alternative, motion for new tria l was over ruled, this appea l followed.

AN AL YSI S Stan dard of Revie w

The F ortenbe rry s’ com p l ai n t s on appea l include cha lleng es to the district court’ s

awa rd of attorney ’s fe es, its appointment of a re ceive r, and the jury char g e. A trial cour

t’s awa rd of attorney ’s fe es, the a

ppointment of a re ceive r, and c omplaint of jury char g e er ror a re r eviewe d under15

an abuse of discre tion standard. In re V. L.K. , 24 S.W .3d 338, 341 (Tex. 2000) (standa rd of r eview for complaints of jury

char g e er ror) ; Bocque t v. He rring , 972 S.W .2d 19, 21 (Tex. 1998) (standa rd of re view for

complaints that trial court erre d in awar ding a ttorney ’s fe es pursua

nt to the Uniform De c larator

y Judg me nts Ac t) ; Ab e lla v . Kn igh t O il To ols , 945 S.W .2d 847, 849 (Tex. App.—Houston [ 1 s tDi s t
. ] 1 9 9 7 , n o wr i t ) ( s t an d ar d o f r ev i ew fo r c o m p l a i n t s t h at t ri al co u rt erre d i nap p o i n t i n g a

rec eiver ). A trial court a

buses its discretion when it ac ts without refer ence to any g uiding r ules or principles. Downer v. Aquam arine Operators, Inc ., 701 S.W .2d 238, 241-42 (Te x . 1985).

“The Dec laratory

J u dg ments Act entrusts attorne y fee awa rds to the trial cour

t’s

s o u n d d i s c r e t i o n , s u

b j e c tt o t h e r e qu i r e m e n t s t h a tan y f e e s aw ar d e d

b e r e a s o n a

b l e an d n e c e s s a r y, which ar e matter s of fact, and to the additi onal requirements t hat fe es be e quitable and just, which

are matters of la

w.” Bocque t , 972 S

. W

. 2 d at 2 1. “The appointment of a r ece iver, e ither as

a uth or ize d b y

statut e or e qu ity , w ill no t be dis tur

be d on a pp e a l un le ss the re c or d r e ve a ls a c le ar a bu se of di scre tion.” Ab e lla , 945 S.W .2d at 849. To re verse a judg ment based on a claimed e rror

in the jury char g e, a pa

rty also must show that the err or “pr obably cause d the re ndition of an improper jud g me nt. ” Te x. R. Ap p. P. 4 4. 1( a )( 1) ; see U nion Pac. R.R. Co. v. W

illiams , 85 S.W .3d 162, 166 (T e x. 20 02 ) (e rr or

in r e fu sin g an in str

uc tio n) ; Nie me

y e r v . Ta na Oi l &Ga s Co rp ., 39 S.W .3d 380, 387 (Tex. App.—Austin 2001, pet. denied) ( err or in jury char g e). The F ortenbe rry s further raise challeng es to the leg al and f actua l sufficienc y

of the evidenc e to support portions of the judg ment. A l eg al s ufficie ncy challeng e may only be sustained wh e n th e re c or d d isc los e s o ne of the fo llo wi ngsit

uatio ns :

(a) a complete absenc e of e vidence of a vital fa ct; (b) the c ourt is barre d by rules of16

law or of evidenc e fr om givingweig ht to the only evidenc e off

ere d to prove a

vital fac t; (c) the e viden ce o ff

er ed to prove a vital fa ct is no more than a mere scintilla; [or ] (d ) t he e vid e nc e e sta

bli sh e s c on c lus ive ly

the op po sit e of

the vit a l f

a c t. City of Keller v. W

ilson , 1 68 S.W. 3d

802, 810 ( Te x. 20 05 ) ( qu oti ngRob e rt W. Ca lve rt , “No E vi den ce ” & “Insufficient Evidence ” Points of Error , 3 8 T e x . L. R e v . 3 6 1 , 3 6 2

- 6 3 ( 1 9 6 0 ) )

. In de te rm ini ngwh e the r a

fi nd ingis su

pp or te d by le g a lly

su ff ic ie nt e vid e nc e , w e vie w the e vid e nc e in the light most favor able to the finding , “cr editing favor able evidenc e if rea sonable juror s could, and disreg arding contra

ry evidenc e unless rea sonable jurors could not.” Id . at 807. We indulge ever y

rea sonable infe renc e that would support the f inding. Id

. at 822. I n revie wing the fa ctual suff iciency of the e vidence , we c onsider and w eig h all the evidenc e in the reco rd , i ncluding any evidenc e contra ry to the judgme nt. Plas -T e x , I nc. v. U.S

. St eel

Cor p ., 772 S.W .2d 442, 445 (Tex. 1989); Cai n v . B ain , 709 S.W .2d 175, 176 (Tex. 1986)

. W e set aside a finding for f actua l insufficienc y “only if it is s o c o n tr ar

y to th e o v e r

w h e lm in g w e ig h t o f th e e v id e n c e a s to b e c le ar ly w rong and unjust.” Cai n , 709 S.W .2d at 176.

This appea l also involves is s u es of statutory construction and the district court’s interpre tation of the company ’s bylaws. We revie w matters of statutory construction de novo , and our primar

y g oal is to determine a

nd g ive ef

fec t to the leg islature’ s intent. City of S an An ton io v. City of Boerne , 111 S.W .3d 22, 25 (Tex. 2003). We beg in with the pl ain l ang uag e of the statute’s words and apply their common mea ning. Id . Wh e re the statut or y te xt is unambi g uo us , w e g e ne ra lly adopt a construction supported by the statute’s plain languag e. Id

. Si mi la r ly , w e r e v ie w whethe r bylaws are a mbi g uo us de novo , and we apply ordinary principles of c ontrac tual interpre tation. See, e.g. , MCI Telec omms. Corp. v. Texas U tils. Elec. Co. , 995 S.W .2d 647, 650-51 (Te x . 1999) (whe ther17

contra ct is a

mbiguous is que stion of law). “I f the written instrument is so worde d that it can be g iven

a c e rt a in o r d e fi nit e le g a l me anin g or int e rp re ta tio n, the n it

is n ot a mbi guou s and th e court

wi ll construe the contra ct as a matter of la

w.” Coker v. Cok

er , 6 5 0 S. W. 2 d 3 9 1 , 3 9 3 ( T e x. 1 9 8 3 )

. We construe w ritten instruments as a whole in an ef fort to har moniz e and g ive ef

fec t to all the provisions of the instrument so that none will be re ndere d meaning less. Sh e ll O il Co

. v. Khan , 138 S.W .3d 288, 292 (Tex. 200 4 ). No sing le provision taken a lone will be g iven controlling eff ect; rather, a ll the provisions must be considered w ith refe renc e to the whole instrument. Id

. Attorn ey’ s Fees I n their first issue, the F ortenbe rry s contend that the district c ourt err ed in awa rding attorney ’s fe es bec ause the Cavana ug h s “a re not, lega lly

or fa ctually , entitled” to an a war d of attorney ’s fe es. The F ortenbe rry s contend that the Cavanaug hs’ claim for decla ratory judgme nt was the only cause of ac tion for which attorney ’s fe es wer e rec overa ble, that it was “ne ither ‘e quitable’

no r ‘j us t’ to aw ard the Cava na ug hs a tto rn e y fe e s, ” and that the jur y ’s fi nd ing s “ we re su

bs tanti a lly aga i n s t t h e C av an au gh s . ” Th ey re l y o nt h e j u ry ’s fi n d i n gs t h at Fo rt en b erry ’s co n d u ct d i d n o td am age the company , that the C avana ug hs failed to comply with their fiduciary duties to the company , and that For tenber ry did not take actions that wer e at the Cavanaug hs’ expense. They further contend tha t th e Ca va na ug hs inc ur re d s ubst ant ial att orn ey ’s f ees u nrel ate d t o t hei r dec lar ato ry ju dgmen t cla im

and that th e Cava

na ug hs we re re qu ir e d to se g re g a te the a tto rn e y ’s fe e s th a t th e y inc ur re d for the ir de c larator y jud g me nt c la im f

ro m th e ir oth e r c la ims

. The issue of attorne y ’s fe es wa s tried to the district court, a nd an evide ntiary

hear ing was he ld in November 2006. B oth t h e F ortenbe rry s and the Cava naug hs sought their

incurre d18

a tto rn e y ’s fe e s, the ir

a tto rn e y s te sti fi e d in

su pp or t of the ir re qu e sts , a

nd ne ith er si de att e mpt e d to

se g re g a te the ir

a tto rn e y ’s fe e s. Th e dis tr ic t c ourt awa rd e d $7 47 ,0 37 .8 4 to the Cava na ug hs fo r t he ir

a tto rn e y ’s fe e s and

c os ts, wh ic h in c lud e d $ 45 ,8 61 .2 4 in c os ts, $1 00 ,0 00 in atto rn e y ’s fe e s o n a pp e a l, and $601,176 for

trial lev el attorney ’s fe es. The a mount also included attorney ’s fe es for the Cavana ug hs’ bring ing a

motion fo r co n tempt and for sa nctions. The Cava

naug hs provided billing re cords a s exhi bits and testimony to support the awa

rd of i n cu rre d attorney ’s fe es at the trial court leve l.

The F ortenbe rry s did not re q uest finding s of fa ct and c onclusions of law a s to the district court’s a

war d of attorne y ’s fe es. See Te x. R. C iv. P. 2 96 . O n matte rs tr ie d to the court , wher e finding s of fac ts a

nd conclusions of law a

re not re quested or f

iled, it will be impl ied that the trial court made all the findi ng s nece ssary to support its j udg ment. W orford v. Stamper , 801 S.W .2d 10 8, 10 9 ( Te x. 19 90 ) ( pe r c ur iam) ; Toles v. Toles , 45 S.W .3d 252, 264 (Tex. App.—Dallas 2001, pe t. d e nie d) ; Universal He alth Servs., Inc . v. Thompson , 2 4 S. W.3 d 5 70 , 5 77 (T e x. Ap p. —A us tin 2000, no pet.). “ I n deter mining whe ther some e vidence supp o rt s the judg ment and the implied fi nd ing s o f f

a c t, ‘ it i s p ro pe r t o c on sid e r o nly that e vid e nc e mos t f

a vo ra ble to t he iss ue a nd

to disreg ard e ntirely

that which is opposed to it or contra dictory in its nature.’” W

or for d , 801 S.W .2d at 1 0 9 (qu o t i n g Re nfr o D ru g Co . v . Le wis , 235 S.W. 2d 60 9, 61 3 (T e x.19 50 ))

. Th e jud g me nt m us t be a f f ir me d if it c anb e u p h e ld o nan y le g a l t h e o r y th a t f in d s s u p p o rt i nth e e v id e nce. Id. We, there fore , must affirm the district cour t’s awa rd of attorney ’s fees i f the a war d can be upheld on any leg al theory

that finds support in the evidenc e. See id

. Attor ne y ’s fe e s are no t r e c ov e ra ble un le ss auth or ize d b y statut e or

c on tr a c t. Tony Gullo Motors I, L.P. v. Chapa , 21 2 S.W. 3d 29 9, 31 0- 11 (T e x. 20 06 ); Strayhorn v. Ray theonAbsent a contra ctual or statutory basis, a trial court lacks authority to awar d attorney ’s fe es 5 based upon a

cont em p t finding. See Ke nnedy v . Kennedy , 125 S.W .3d 14, 19 n.4 (T e x. Ap p. —A us tin

20 02 , p e t. d e nie d) ; Eq uit ab le Tru st C

o. v . Ly le , 627 S.W .2d 824, 826 (Tex. App.—San Antonio 1982, writ ref ’d n.r.e .). The p l ai n l anguag e of a rticles 2.44(B ) and ( D) and 5.14(j), how ever , authorize attorney ’s fe es. See City of San Antonio v. City of Boerne , 111 S.W .3d 22, 25 (Tex. 2003). Pursuant to article 2.44( B) , a court may awa rd a dire ctor attorney ’s fe es t h at the cour

t “dee ms just and proper.” See T e x. B u s . Co r p . A c t A n n . art. 2

. 4 4 ( B ) (West 2003). Article 2.44( D) provide s that a cor poration that re fuses to allow a share holder to examine the c or po rate re c or ds “ sh a ll b e lia ble to s uc h s ha

re ho lde r f or a ll c os ts a nd e xpe ns e s, inc lud inga tto rn e y s’ fee s.” See id. art. 2.44(D ) (W est 2003). Similarly , article 5.14(j) author izes a court to awa rd attorney ’s fe es on “term i n at i o n of a de rivative proc eeding .” See id. art. 5

. 1 4 ( j) ( We s t 2 0 0 3 )

. We c on c lude th at the tr ia l c ourt did no t a bu se its dis c re tio n in

awa rd inga tto rn e y ’s fe e s p ur su a nt t o the UDJA. 19 E-Syste ms, Inc. , 101 S.W .3d 558, 571 (Tex. App.—Austin 2003, pet. denied). The par ties did not have a n ag ree ment that provided for attorney ’s fe es; the attorney ’s fee awa rd then must be authorized by statute. The Cava

naug hs contend that the district c ourt’s aw ard of attorney ’s fe es is supported b y th e ir c la im p u r s u an t to th e U n if o r m D e c la r a to r y Ju d g me n ts A c t ( U D J A). See T ex . Civ. P rac . & Re m. Code Ann. § 37.009 (West 2008). Pursuant to section 37.009 of the UD J A, “the c ourt may

awa rd costs and r easona

ble and ne cessa

ry attorney ’s fee s as ar e equitable and just.” Id . The Cavana ug hs also contend that attorney ’s fee s wer e rec overa ble pursuant to (i) a

rticles 2.44(B ) and (D) a nd 5.14(j) of the Texas Business Corporation A ct an d (i i ) their motion for c ontempt. See Tex. Bus. Corp. Act Ann. a rts. 2

. 4 4 (B ), (D) (direc tors’ ac cess to cor poration’s re cords with provision for a war d of attorne y ’s fe es), 5.14( j) (der ivative proc eeding provision that allows attorney ’s fe es at conclusion of pr ocee ding) (West 2003). Be cause we presume the dist rict cour t awar ded attorne y ’s fee s to the C a v an a

u g h s b a s e d

o nth e ir c la im f o r d e c la r a to r y r e li e f , w e n e e d

n o t a d dr e s s the Cavana ug hs’ additional g rounds. Se e W or for d , 801 S.W .2d at 109. 5 I n arguing that an awa

rd under the UDJA would not b e “e quitable” or “just,” theThe Cava naug hs also argue that a pa rty does not have to substantially preva il to recove r 6 fee s under the UDJA. See, e .g. , Ba rsh op v . Me din a Coun ty Un de rg ro un d W ate r Co ns e rv ati on Di

st ., 92 5 S. W.2 d 6 18 , 6 37 (T e x. 19 96 ) ( fe e awa rd no t de pe nd e nt o n f

ind ingthat a

pa rt y “ su bs tan ti ally pr e va ile d” ); G. Pr op . M

gm t., Ltd . v . M ult iv est F in. Se rv s. of Tex., Inc ., 219 S.W

. 3d 37, 53-54 (Tex. App.—San Antonio 2006, no pet.) (“ The De clar atory J udg ment Act does not limit an awa rd of attorne y ’s fe es only

to a pre vailing pa

rty .”). We ne ed not address this additional arg ument beca use we conclude that the Cavana ug hs preva iled on their cla im for dec laratory relief

. 20 For tenber ry s rely on the jury ’s finding s that the Cavana ug hs di d n o t co m p l y

with their fiduciar

y duties to the company

and that F ortenbe rry ’s ac tions did not damag e the c ompany or the Cava

naug hs

and the ir c on te nti on s that the Cava

na ug hs inc ur

re d su bs tanti a l fe e s o n c la ims un re la te d to the ir c la im for declar atory judgme nt and that the jury finding s were ag ainst the Cavana ug hs. See Tex. Ci v. Prac. & Re m. Code Ann. § 37.009. The jury declined to f

i n d t h at For

tenber ry ’s ac tions inj ured the

c omp any or the Cava na ug hs , a nd it w a s und isp ute d th a t the Cava na ug hs re mov e d F or

te nb e rr y a s a signatory on company bank acc ounts w ithout his ag ree ment and without board a uthorization during the pende ncy

of this case . The Cava

naug hs’ ac tions to remove For tenber ry as a sig natory , howeve r,

oc c ur re d a ft e r F or

te nb e rr y wr ote c he c ks on

the c omp any ’s a c c ounts wi tho ut t he Cava na ug hs ’ knowledg e or a

pproval, a nd the bylaws provide that Mrs. Cavanaug h as the tre asure r had “ custody of the c or po rate fu nd s. ” Th e re wa s a lso e vid e nc e tha t F or te nberr y re pe a te dly

c omm itt e d a c ts t o hinder the Cava

naug hs’ involvement in and knowledg e of the company ’s af fairs. I n g ra nti nga tto rn e y ’s fe e s p ur su ant t o th e UD JA, the dis tr ic t c ourt , c on sis te nt w ith the jury ’s verdict, could have found that the Cava naug hs preva iled on their cla im for dec laratory relief —that the ag ree ment betwee n the par ties was to manag e the business on a 50/50 basis—and that, b a se d o n th e pa

rt ie s’ c on du c t and

e xplanatio ns fo r t

he ir c on du c t, i t wa s “ e qu ita

ble ” and “ jus t” to awa rd a tto rn e y ’s fe e s to the Ca van aug hs

. See id. On this recor d, we c annot say that it was an 6 abuse of discretion for

the district court to aw ard attorney ’s fe es to the Cavana ug hs pursuant to the UDJA.21 Havingconclude d that the dist ri ct cour t did not abuse its discretion in awar ding at to r n e y ’ s f e e s p u r s u an t to th e Ca

v an a u g h s ’ c la im f

o r d e c la r a to r y r e li e f , w e tu r n to th e issue of seg reg ation of attorne y ’s fee s. The Cavana ug hs contend that the For tenber ry s did not preser

ve the issue of seg reg ation for our revie w beca use they did not object on that basis when the Cavanaug hs prese nted their e vidence of attorne y ’s fee s. See, e .g. , Gr e e n I nt’ l, I nc . v . S oli s , 951 S.W .2d 384, 389 (T e x. 19 97 ) ( “ if

no on e ob

je c ts t o th e fa c t th a t th e atto rn e y ’s fe e s a re no t se g re g a te d a s to sp e c if ic

c la ims , th e n th e ob

je c tio n is wa ive d” ); M

c Ca ll a v . S k i R iv e r D ev., I

nc. , 2 3 9 S.W .3d 374, 383 (T e x. Ap p. —Wa c o 2 00 7, no pe t.) (t o pre se rv e c omp la int that th e op po sin g pa

rt y fa ile d to se g re g a te its atto rn e y ’s fe e s, “ [g ]en e ra lly , s uc h an iss ue is pr e se rv e d by ob je c tio n d ur ingte sti mony

of fe re d in support of attorne y ’s fe es or a n objection to the jury question on attorney ’s fe es”) ; Hong Kong Dev ., Inc. v. Nguyen , 22 9 S. W.3 d 4 15 , 4 54 (T e x. Ap p. —H ou sto n [1s t D ist .] 20 07 , n o p e t.) (o bje c tio n to failu re t o seg reg ate pr eser ved throug h objection to char g e); Apache Corp. v. Dyne gy Midstream Se rv s. , 214 S.W .3d 554, 566 (Tex. App.—Houston [14t h Dist.] 2006, pet. g rante d) (f ailure to objec t waives opposingparty ’s fa ilure to seg reg ate) . The Cava naug hs contend that, b ec ause the For tenber ry s did not object at the hear ing when the evidenc e wa s being prese nted, the district cour t did not have the opportunity to corr ect a ny err or and thus any

err or wa s waived. See Tex. R. App. P. 33.1(a)( 1) (to pre serve complaint for a ppellate r eview, the complaint must be made to t h e trial court by “a timely reque st”). Th e F or te nb e rr y s r e sp on d th a t th e Cava na ug hs ha d a

n a ff ir ma tiv e ob lig a tio n to

se g re g a te the ir

a tto rn e y ’s fe e s b e tw e e n r e c ov e ra ble and un re c ov e ra

ble c la ims , whi c h the y

fa ile d to do and that th e y we re no t r e qu ir e d to ob je c t be c a us e the Ca van aug hs ’ p os iti on wa s th a t th e ir attorney ’s fe es “c ould not” be seg reg ated:The Cavanaug hs deducte d attorney ’s fees that they incurre d in a sepa

rate matter c oncer

ning 7 Randy For tenber ry from the total amount in the billing r ecor ds submitt ed to the district cour t. 22 [Th e Cava

na ug hs ] a dmi t that the y pr e se nte d te sti mony that no a tte mpt

wa s ma de to seg reg a te an d th a t th e y c o u ld n o t s e g r e g a te
. U n d e r th is s c e n ar io , th e re is no require ment to ask [the Cavanaug hs] t o do what they had alr eady

stated that they could not do and they need not be place d on notice to do what they had alr eady

stated they could not do.

The F ortenbe rry s overstate the testimony of the Cava

naug hs’ attorne y

to the district court. Th e Cava na ug hs ’ atto rn e y

te sti fi e d w ith ou t ob

je c tio n to the a mou

nt, re a so na

ble ne ss, and nece ssity

of the attorney ’s fe es that the Cava naug hs incurre d and that seg reg ation was not

re qu ir e d:

I n looking at the issue of whe ther the time could be seg reg ated out, my evaluation of the ca se wa s that the fundame ntal dispute was alwa y s control of the c orporation and in finding an understandingof who wa s g oing to be in control of the c orporation, and the re ceive rship was simply a re medy t h at wa s o n e way

in which the dispute over contr o l c o u ld

b e r e s o lv e d

. A n d

s o Ic o n s id e r e d

th e d is p u te o v e r

c o n tr o l o f

the c or po ratio n, wh o is in c on tr ol, to b e a c e ntr a l is su e in t

his c a se and

ine xtri c a bly intertwined with all the a ctivity that occur

red in the c ase.[ ] 7

The attorney

also stated at the he aringthat they prese nted detailed billing rec ords in the eve nt “the

c ourt fo r so me re a so n de c ide s that se g re g a tio n is ne c e ssa ry , that’ s o ne of

the re a so ns that w e pu t in the month-by -month calc ulus, and we pr ovided the individual detail for the acc ounts, if the Court

sees s o me th in g th a t i t d o e s n ’ t t h ink o u g h t t o b e in c lu d e d , f

in e , ma r k it o u t. ” T h e r e c o r d s w e re admitted as exhibit s without objection. During cross-e x amination, the att o rney testified as to the Cavana ug hs’ var ious claims that “I ’ve not attempte d to do that [ seg reg ation] because w e believe the y ’r e ine xtri c a

bly int e rt wi ne d. ” Th e Cava

na ug hs ’ po sit ion wa s no t that the y “ c ou ld no t” se g re g a te but that on this record it wa s not require d.Prior to the district court’s entry of t he final judgme nt in Fe bruar y 2007, the parties filed 8 su pp le me nta l br ie fi ngon

the iss ue of

se g re g a tio n of a tto rn e y ’s fe e s. Th e F or te nb e rr y s argue d in

the ir supplemental brief

ing that the Cavana

ug hs were require d to seg reg ate their attorney ’s fe es pursua nt to Tony Gullo Motors I, L .P. v. Chapa , 212 S.W .3d 299, 313-14 (Te x . 2006), which w as re lease d by the supreme court shortly afte r the he aring o n at t o rn ey ’s fees. I n Chapa , the supreme court mod if ie d a nd c lari fi e d th e e xce pti on

fo r s e g re g a tio n o f f

e e s, bu t th e c omp la ini ngpa rt y in t hat c a se raised obje ction to the failure to seg reg ate f ees “ during and af

ter trial.” Id

. a t3 1 0

. T h e F o rt e nb e r r ys contend that they

wer e not re quired to objec t and have not argued that their supplemental br iefing to the district court preserve d the i ssue for this Court’s re view. We, there fore , have not c onsidered the supplemental brie fing in rea ching our dec ision that the Fortenbe rry s failed to prese rve this issue. 23 The F ortenbe rry s’ attorne y simil arly testified d u ri n g cross-e x amination that the For tenber ry s were seeking all of their attorney ’s fe es pursua nt to their decla

ratory judgme nt action: Q. And ar e y ou asking the Court to awar d all of the fe es that y ou’ve te stified to, to the defe ndant, pursuant to its claim under the declaratory judgme nt motion? A. I ’m asking that the Court awa rd our f ees unde r the de cla ra t o ry judgme nt a c tio n, wh ic h is the de fe ns e of the c la ims ma de by

the pla int if

fs in t his c a se that we ha d no choice but to defend the claims that once they wer e made

. B o t h t h e F o rt e nb e r

r y s a n d t h e C a v an a

u g h s s o u g h tth e i r

i n c u r r e d a t t o r n e y’ s f e e s , t h e i r a t t o r n e ys testified to support their re quests, neither side attempted to seg reg ate attorney ’s fee s, and the pa rties did not object to the opposing parties’ failure to seg reg ate attorney ’s fe es prior to the district c ourt

ru lin g fr om t

he be nc h that it wa s awa

rd ing a tto rn e y ’s fe e s to the Cava na ug hs

. On this recor d, by 8 failing to ob

j ec t at the hea

ring on attorney ’s fe es, we conclude that the For tenber ry s have not prese rved this issue for our revie w. See id. Even if the For

tenber ry s had prese rved this issue, we would conclude that the district

c ourt did no t a bu se its dis c re tio n in the a mou nt o f atto rn e y ’s fe e s a

wa rd e d. Pur su ant t o th e su

pr e me court’s guide lines, a cla imant must segr eg ate attorney ’s fe es betwe en cla ims for which attorney ’s fee s are rec overa

ble and those for which fee s are not rec overa ble. Chapa , 212 S.W .3d at 313. W henTh e Cava na ug hs ’ c a us e s o f ac tio n inc lud e d cla ims fo r d e c lara tor y re lie f, br e a c h o f c on tr a c t, 9 brea ch of f

iduciary duties, an application for the appointment of a rec eiver , an ac tion fo r an acc ounting, a

nd claims for te mporary

and per manent injunctive re lief.

24 le g a l s e r v i c e s a d v an c e b o t h r e c o v e r a b l e an d u n r e c o v e r a

b l e c l a i m s , h o w e v e r , t h e s e r v i c e s a r e so intertwined that the associated fees nee d not be seg reg ated. Id . at 313-14. The need to se g reg ate f ees is a question of law, w hile the extent to which certain claims can or cannot be seg reg ated is a mixed question of law a

nd fac t. Id . at 312-13. The F ortenbe rry s argue that the only claim on which the Cavanaug hs could rec over attorney ’s fe es wa s their claim for decla ratory relief

. I n particula

r, they contend that the U DJ A may 9 not be used to rec over attorney ’s fe es incurr ed in the appointment of a rec eiver

. See Tex. Bus. Corp. Act. Ann. a

rt. 7.05 (West 2003) (a

ppointment of rec eiver t o re h ab ilitate corporation). The For tenber ry s also rely

on the Cavana

ug hs’ pleading s after

the trial cour

t gr anted pa

rtial summ ary judgme nt in J anuar

y 2006 to contend that se g reg ation was re quired. At that time, the Cava naug hs reque sted that the district c ourt rende r a final judg ment on the par ties’ dec laratory

claims and seve r the de c larator

y c la ims fr om t

he oth e r c la ims , a

rguin g th at th e declar a tor y c la ims we re “ no t so int e rw ov e n with the re ma ini ng a c tio n tha t the y inv olv e the same fa c ts an d issu e s. ” Th e dis tr ic t c ourt , howeve r, denie d the Cavana ug hs’ re quest for se vera

nce. The F ortenbe rry s did not provide controv erting testimony or objec t to the Cavana ug hs’ attorne y ’s testimony that “I considere d the dispute over control of the corpor ation, who is in control, to be a centr al i ssue i n this case and inex tricably intertwined with all the ac tivity that

occur red in thi s case .” The Fortenbe rry s also continue to seek all of their attorney ’s fe es base d on their own de clar atory

action on appea l. That they seek the ver y same re cover

y that they argue the Cavana ug hs may not undermines their position and is further support for the district c ourt’s aw ard.The Cava naug hs contend that the F ortenbe rry s have w aived their issues on the dec laratory 10 judgme nt and the jury

char g e by inadequate brief

ing. SeeTex. R. App. P . 38.1(h). To the extent the For tenber ry s addre ss pa

rticular de clar ations and jury char g e questions and instructions, we conclude that the For

tenber ry s have not wa ived their c omplaints. 25 B e c a u s e t h e F o rt e n

b e r r ys d i d n o tr e qu e s tf

i n d i n g s o f

f a c t an d c o n c l u s i o n s o f l aw , w e m ay i mp l y a fi nd ingby

the tr ia l c ourt

tha t th e Cava

na ug hs me t th e ir

burd e n th a t th e y

we re no t r e qu ir e d to seg reg ate their incurre d attorney ’s fe es. Se e W or for d , 8 01 S.W. 2d

a t 10 9; Toles , 45 S.W .3d at 264. We c o n c lu d e th a t t

h e d is tr ic t c o u rt c o u ld

h a v e f o u n d th a t t h e le g a l s e r

v ic e s p r o v id e d

to the Cava na ug hs a dv anc e d b oth

re c ov e ra ble and un re c ov e ra

ble c la ims so that th e servi ces were “ so intertwined that [the attorney ’s fe es] need not be se g reg ated.” See Chapa , 212 S.W .3d at 314.

Although the jury made finding s in f avor of the For tenber ry s, the jury , as we ll as the judge , resolved the control issues that wer e the subj ec t o f t he Cava naug hs’ claim for

decla ratory

re lie f in the Cava

na ug hs ’ favo r. B a se d on the re c or d be fo re us and un de r t he c ir c ums tanc e s o f t

his

c a se , w e c ann ot c on c lud e tha t th e tr ia l c ourt

a bu se d it s d isc re tio n in

awa rd ing$7 47 ,0 37 .8 4 in attorney ’s fe es and c osts to the Cavanaug hs. We overrule the For tenber ry s’ first issue.

De c larato ry

Jud gment I n their sec ond issue, the For tenber ry s contend that the e vidence is leg ally and fac tually insufficient to support dec laratory judgme nt in favor of

the Cavana

ugh s an d t hat the For tenber ry s are entitled to decla

ratory judgme nt as a matter of law and their attorney ’s fe es base d on the unambig uous by laws. Alternatively , the For tenber ry s reque st this C ourt to reve rse the de c larator y jud g me nt a

nd re mand fo r a ne w tri a l. T h e Fo rt en berr y s contend, ba sed on the 10 unambig uous by laws, that F ortenbe rry as president has the authority to hir e and fire employ ees, e nter contra cts on beha lf of the company , expend mone y for c orporate purposes, sig n on company bank26

acc ounts, and presc ribe duties for employ ees not i n conflict with the bylaws. In particula r, the For tenber ry s contend the by

laws authorized For

tenber ry to pr escr ibe Cavana

ug h’s duties as stated in the J une 2004 letter

. 1 . I nt e r pr e t a t io n o f B y la ws The F ortenbe rry s rely

on the first sentenc e in sec tion 5.07 an d s ec t i o n 5 .09 of the by laws to support their interpr etation t hat t he by laws authoriz e Fortenbe rry to act on be half of the company without specific boa rd authorization. The fir st sentence of sec tion 5.07 states that “[t] he Boa rd of Dir ector s, except as ot herw ise provided in these Bylaws, m ay authorize any office r to enter into any contra ct or e x ecute and deliver any i n s t ru m en t in the name of and on beha lf of the corpor ation, and such a

uthority may be g ener a l or confine d to specific instanc es.” Sec tion 5.09 states that the “Pre sident shal l b e t he chie f executive off icer of the c orporation, shall have g ener al and active ma nag ement of the business of the cor poration, and sha ll see t hat all orders and re solutions of the B oard of

Direc tors are car

ried into eff

ect.” Rely ing on the se two sections, the For tenber ry s contend that sec tion 5.07 authorizes the boar d of direc tors to ge nera lly deleg ate its authority , and that, in sec t i o n 5

. 0 9 , the boar d of direc tors g ener a lly

deleg ated to the pr esident the “ manag ement” of the company , simil ar to the duties

o f a “ge n er al m anag er” which is “a very broad de leg ation of powe r by the boar d of direc tors.” Rely ing on a

rticle 2.31(A ) of the busine ss c orporation a ct, the For tenber ry s further

contend that “ the b o ar d o f d i r e c t o r s o f

F o rt u n e P r o d u c t s c h o s e t o g e n e r a l l y d e l e g a t e t h e ‘ m an a g e m e n t ’ o f t h e c o mp a n y, which is the exact term a

nd the entire ty

of the authority held by a board of direc tors as stated in theArticle 2.31(A) of the bus iness corpor ation act provides that “the powe rs of a corpor ation 11 shall be exercised by or under the authority of, and the business and af fairs of a cor poration shall be manag ed under

the direc tion of, the board of direc tors of a corpor ation.” Tex. Bus. Corp. Ac t Ann. art. 2.31(A ) (West 2003). 27 Texas Business Corporation Act.” See Tex. B us. Corp. Act Ann. a rt. 2.31(A) (West 2003). The 11 For tenber ry s contend that their interpretation is consistent with the board’s historical deleg ation of the company ’s m anag ement gene rally to For tenber ry , Sr., including his author ity to prescr ibe other of fi c e rs ’ d uti e s, and that th is g e ne ra l de le g a tio n r e ma ine d w he n F or te nb e rr y be c a me pr e sid e nt. The district cour

t ag ree d with the For

tenber ry s that the by laws were not ambig uous

and that th e y

sh ou ld b e int e rp re te d a s a mat ter of lawbu t di sa g re e d w iththe F or te nb e rr y s’ interpre tation. The district court inter prete d the bylaws to limit the pre sident’s authority to take

cer tain actions witho u t b o ar d authorization, including c hang ing the duties of other of fice rs. The dis tr ic t c ourt

e xpla ine d it s in te rp re ta tio n in the fo llo wi ngfi nd ing s:

a . De fe nd ant D a le F or te nb e rr y , Jr. , h a s n o inhe re nt po wers by vir tue of his o ff i ce as President to bind Fortune Products, except as to routine matter s ari sin g in t

he or din ary

c ours e of bu sin e ss. [Or de r G ra

nti ng P la int if

fs ’ M SJ N o . 2 ]; b. Def

endant Da le For

tenber ry , J r., has no powe r or a

uthority t o s et , incre ase, reduc e or discontinue the wag es or sa lary of any office r or em p l oy ee of For tune Products, except as authorized by the B oard of

Direc tors of F ortune Pr o d u c ts
. [O r d e r

G r an ti n g Pl a in ti f

f s ’ M SJ N o . 5 ];

c. Plaintiff J ay

Cavana ug h, as Vice President , is authorized, in the absenc e or disability of the Preside nt, to perfor m the duties and have the authority and e xe r c is e th e p o w e r s o f th e Pr e s id e n t. [O r d e r G r an ti n g Pl a in ti f f s ’ M SJ No

. 8 ]; d. Plaintiff J ay

Cavana ug h, as Vice President, shall p er form such othe r duties and have such ot her a

uthority and powe rs as the B oard of Direc tors of F o rtu n e Pr o d u c ts ma y d e le g a te
. [O r d e r

G r an ti n g Pl a in ti f

f s ’ M SJ N o . 9 ];28

e. P u rs u an t to the By laws of F ortune Products, ther e ar e limits on t he Pr e sid e nt’ s e mpl oy e e and mana g e me nt author ity

and re sp on sib ili ty . T he se are found, principa lly , in § 5.03 of the F ortune Products B y laws, and include t h e f o l l o wi n g: 1. The powe r to hire of fice rs and employ ees f

or such leng th of time and on such terms a s the Boa

rd choose s; and 2. Th e po we r t o f

ix the sa lari e s o f o ff

ic e rs and e mpl oy e e s. Moreove r, the Preside nt’s manag eria l authorit y is lim ited by

the express duties of the vice -pre sident, the cha irman of the bo ar d, the secr etar y and the tre asure r set out in the B y laws. [Order G ranting M SJ at p
. 4 ]; f. Pursuant to the By laws of F ortune P roducts, Defenda nt Dale F ortenbe rry

has no power or authority

to bind Fortune Produc ts to a ny contra ct or e ng ag ement or to p le dg e its c re dit

or to r e nd e r i t li a

ble pe c un iari ly fo r any purp os e or in any amount, unless authorized to do so by the B oard of

Direc tors of F ortune Pr o d u c ts [B y la

w s o f F o rtu n e Pr o d u c ts a t § 5

. 0 7 ]; g . Pursuant to the By laws of For

tune P roducts, De fenda

nt Dale F ortenbe rry

has no po we r o r a

uth or ity to d e le g a te or

to r e mov e any du tie s or oth e r a uth or ity of Pla int if f G e ra ld C a va

na ug h, a s V ic e Pr e sid e nt o f F or tun e Pr od

uc ts [B y la w s a t § 5

. 1 0 ]; h. Pursuant to the By laws of F ortune Products, Plaintiff Ge rald Cava naug h, as Vi c e Pr e sid e nt, is a

uth or ize d, in t

he a bs e nc e or dis a bil ity of the Pr e sid e nt, to perf orm the duties and have the a uthority and exerc ise the powe rs of the President [Bylaws at § 5.10]; and i. Pursuant to the By laws of F ortune Products, Plaintiff Ge rald Cava naug h, as Vi c e Pr e sid e nt, sh a ll pe rf or m su c h o the r d

uti e s and have su c h o the r a

uth or ity and po we rs a s th e B oa

rd of Di re c tor s o f F or

tun e Pr od uc ts may de le g a te [B y la w s a t § 5

. 1 0 ]. We ag ree that the bylaws ar e unambig uous and interpre t the m a s a matter of la w. See Coker , 650 S.W .2d at 393. Turningto the sections that the For tenber ry s rely on for the pr esident’s authority , the For

tenber ry s’ interpre tation of secti o n 5

. 0 7 an d 5.09 ignor es the plain languag e ofThe sec ond sentenc e of se ction 5.07 also provides that unless a uthorized by

the boar d of 12 direc tors, “no officer , ag ent, or employ ee shall have any power or authority

to bind the corporation by any c on tr a c t or

e ng a g e me nt o r t o p le dg e its c re dit or to re nd e r it lia

ble pe c un iari ly fo r a

ny purp os e or in any amount.” 29 those sections and the by laws as a whole. See Khan , 13 8 S.W. 3d a t 29 2. Se c ti on 5. 07 expre ssl y li mi ts th e b o ar d

o f d ir e c to r ’ s a

u th o r it y to d e le g a te “ a s o th e r

w is e p r o v id e d

in th e s e B y la

w s.” 12 Moreove r, bec ause se ction 5.03 provides that the board of direc tors “shall have the power to enter into c ontrac ts f

or the employ

ment and compe nsation of offic ers a nd employ ees on suc h terms and for suc h leng th of t ime as the B oard de ems advisable,” the plain lang uag e of se ction 5.07 does not support an interpr etation that the boar d of direc tors may g ener ally authorize the pre sident to enter into contrac ts of employ

ment. Simi larly , the scope of the de leg ation in se ction 5.09 to the president to “ma nag e” the company , must be construed in c ontext wi t h t h e bylaws as a whole, including section 5.03 that

rese rves to the boa

rd of dire ctors the power to enter into employ ment contra cts, the sec tions that set

o u tt h e du t i es o f o t h er

o ff i ce rs , an d s ec t i o n3

. 0 1 t h at p ro v i d es t h at t h e bo ar d o f d i re ct o rs wi l l m an age the c omp any . Se c tio n 3 .0 1 o f t he bylaws state s that “ the bu sin e ss and a ff a ir s o f t he c or po ratio n s ha ll be g overne d and mana g ed by its Boar d of Dire ctors.” Sec tion 5.08 provides that the cha irman of the board “ shall have suc h power s and duties as may from time to tim e be pr escr ibed by the B oard of Direc tors, upon written direc tion g iven to him pursuant to re solution dul y adopted by

the B oard of Direc to r s . ” Se c ti o n 5

. 1 0 p r o v id e s th a t v ic e - p r e s id e n ts “ s h a ll , in th e a b s e n c e o r d is a

b il it y o f the President, per form the duties a nd have the authority

and exerc ise the powe rs of the Pre sident” and “shall per form such othe r duties and have such other authority and powe rs as the B oard of Direc torsT h e Fo rt en b erry s also cite Mr . E dd ie , I nc . v . G ins be rg , 430 S.W .2d 5, 10 (Tex. Civ. 13 App.—Eastland 1968, writ ref ’d n.r.e.) , for the g ener al rule that “the president of a c orporation has the authority

to hire and discha

rg e employ ees.” The e mploy ee a t issue in Gi ns be rg was not an office r, and the president was also the principa l shareholde r. Id . at 7, 10 . In c on tr a st, the bylaws in this case e x pressly

authorize the boar d of direc tors to set terms of emp l o y m en t ; Cavana

ug h is the vice pr esident, a sha

reholde r, an d t h e cha irman of the boa rd; and F ortenbe rry

is not the principal share holder. 30 may from time to time deleg ate.” Section 5.13 states that the trea surer “shall have the custody of the corpor ate f

unds and securities,” and section 5.14 states that the tre asure r “sha ll disburse funds of the corpor ation as may

be orde red by

the B oard of

Direc tors.” B y

expressly addre ssing of

fice rs’ duties

and a uth or izin g the bo ard o f di rect ors to s e t th e of fi c e rs ’ d uti e s, the byla

ws a s a wh ole , at a

m inimum, l imit t he pre sident’s “mana g ement” a uthority in section 5.09 and do not authorize the president to pre scribe othe r off icer s’ duties. Se e id

. The c ases that t h e Fo rt enber ry s cite to support their ar g ument that the bylaws deleg ated the c ompany ’s manag ement to the president are inapposite. See San Antonio Joint Stock Land Bank v. Taylor , 1 05 S.W. 2d 65 0 ( Te x. 19 37 ); Ennis Bus. Forms, Inc. v. Todd , 523 S.W .2d 83 (T e x. Civ . Ap p.—Wa c o 1 97 5, no wr it) ; Miller v. A.& N. R.R. Co. , 476 S.W .2d 389 (Tex. Civ. App.—B eaumont 1972, wr it ref’ d n.r.e.)

. I n Taylor , th e c ourt st a te s th a t “ the ru le is g e ne ra lly 13

acc epted that the pr esident of a corpor ation may

be entr usted by th e b o ar d of direc tors with the manag ement of the business of suc h corpor ation, and he ma y perf orm for the corpor ation the business it is authorized to transac t.” 105 S.W .2d at 654. Her e, the dispute is not whether a boar d of direc tors may

deleg ate its authority

to a pre sident, but the ext ent of a ny such dele g ation. I n Todd , the boar d of direc tors did not ex pressly authorize the employ

ment contra ct with a non-off

icer employ ee, but the c ourt fo u n d that the pre sident was author ized to ex ecute the31

contra ct because the by laws authorized the pr esident to execute c ontrac ts “in the ordinar y course .” 523 S.W .2d at 86. The by laws i n this case are conver se; section 5.07 expressly require s the board

o f d ir e c to r s to a

u th o r iz e an o f

f ic e r to e xe c u te a c o n tr a c t. I n Mi ller , the cour t determined that the president wa s authorized to hire the g ener al manag er but, unlike the b y l aw s in this case, the by laws spec ifically

“provide d for the ap p o i ntment of a Ge nera l Manag er by the President.” 476 S.W .2d at 393.

Con str uin g the bylaws a s a who le , we c on c lud e that the dis tr ic t c ourt did no t e rr in its decla rations based on the by laws, i ncluding that the by laws do not authorize For tenber ry , as the president, to pre scribe Cavanaug h’s duties. See Khan , 1 38 S.W. 3d a t 29 2; s ee a l

s o Templeton

v. Nocona Hills Owners Assn, Inc ., 55 5 S. W.2 d 5 34 , 5 38 (T e x. Civ . App .— Te xar ka na 19 77 , n o w ri t) (“se ttled rule in Texas is that a corpor ation president, mer ely by virtue of his off

ice, ha s no inherent power to bind the corporation ex cept a s to rout i n e matters ar ising in the ordina ry course of bu sin e ss” ); se e al

so Tex. Bus. Corp. Act Ann. a rt. 2.42(B ) (West 2003) (“ All office rs . . . , as betwee n themselves and the corpor ation, shall have suc h auth o ri ty and per form such duties in the manag ement of the corpor ation as m ay be provide d in the by laws, or a s may be dete rmined by resolution of the boa

rd of dire ctors not inconsistent with the by laws.”)

. 2. Suf

fi ciency of Evid ence t o Sup port Jury F ind ings Finding that the bylaws do not, as a matt er o f l aw , all ow For tenber ry to prescr ibe Cavana ug h’s duties, we ne x t consider the F ortenbe rry s’ cha lleng e to the sufficiency of the e vidence

. Be cause the For

tenber ry s g lobally challeng e the leg al and f actua l sufficienc y

of the district cour

t’s decla rations, we r eview the district court’s de clar ations based on the jur y verdict t o the extent the32

For tenber ry s have a ddresse d the par ticular de clar ations in their briefing . See Tex . R. App. P. 38.1. The district cour

t made the f

ollowing de clar at i o n s based on the jur y ’s ver dict in favor of

the Cava na ug hs :

a . Th e Pla int if

fs , Jay Cava na ug h a nd Di ann a Cava na ug h, a nd the De fe nd ants , Roland D. For

tenber ry , J r. a n d Kay e Ann F ortenbe rry , ag ree d that the company would be oper ated on a

50/50 basis, with neither pa rty having final authority over the other. [Question No. 1A] b. Th e Pla int if

fs , Jay Cava na ug h a nd Di ann a Cava

na ug h, a nd the De fe nd ants , Roland D. For

tenber ry , J r. and K ay e Ann F ortenbe rry , did not a gre e that Def endant Da le For

tenber ry , J r., as Pre sident, would have final authority on all corpor ate de cisions. [ Question No. 1A]

c. The direc tors of For tune Products, I nc., are deadloc ked i n t h e manag ement of the c or po rate a ff a ir s o f t he Com pa ny and the sh are ho lde rs are una ble to brea k the dea dlock. [Question No. 2] d. Suc h d e a dlo c k h as caus ed or i s th re a te nin g to c a us e ir re pa ra ble inj ur y to For tune Products, I nc. [Question No. 3]

e. Def

endant Da le For

tenber ry , J r., excluded Plaintiffs J ay Cavana ug h or Dianna Cavanaug h from par ticipation in the day

to day opera t i o n s o f t he Com pa ny . [Q ue sti on

No . 4 C] f. Def

endant Da le For

tenber ry , J r., excluded Plaintiff J ay Cavana ug h from c on ta c t wi th the Com

pa ny ’s sa le s pe op le , dis tr ibutor s and cus to me rs . [Question No. 4D] g . Def

endant Da le For

tenber ry , J r., pre vented Plaintiff Jay Cavana ug h from perf orming his duties as Vice Pre sident. [Question No. 4E] h

. Def

endan tDa l e F o rt en b erry , J r. , wi t h h el d i n fo rm at i o nfr o m P l ai n t i ff s J ay and Dianna Cavanaug h about For tune Products, I nc.’s ope rations. [Question No. 4F] i. Def

endant Da le F o rtenbe rry , J r., alter ed F ortune Products, Inc.’s c omputer sy stem to deny

Plaintiff J ay

Cavana ug h acc ess. [Question No. 4G]33

j. Def

endant Da le For

tenber ry , J r., m ade purcha ses or entered into contr acts not authorized by the Boa

rd of Direc tors of For

tune Products, I nc. [Question No. 4K] k. Def

endant Da le Fortenber

ry , J r., chang ed the locks in order to deny Plaintiffs Jay a nd Di ann a Cava na ug h a c c e ss t o F or

tun e P roduc ts, I nc .’ s p ro du c ts. [ Q u e s t i o nN o . 4 L] l. De fe nd ant D a le F or te nb e rr y , Jr. , s ig ne d c h e c k s o n

b e h a l f o f F or tun e Pr od uc ts, I nc ., wi tho ut a

uth or ity fr om t he B oa rd of Di re c tor s. [Qu e sti on

No . 4 M]

m. Def

endan t Dale F ortenbe rry , J r., violated orde rs of the Court re g arding For tune Products, I nc. oper ations. [Question No. 4N]

The F ortenbe rry s’ complaint is directe d at the jury ’s finding s conce rning the par ties’ ag ree ment as to the company ’s manag ement and c ontrol. We lim it our review of the e vidence then to the de c laratio ns c on c e rn ingthe c omp any ’s mana g e me nt a nd c on tr ol. Viewingthe evidenc e in the lig ht most favor able to the dist rict cour t’s decla rations based on the jury

verdic t, the C avana

ug hs testified that their ag ree ment with the For tenber ry s was f o r th e b u s in e s s to b e ma n a g e d w it h e qu a l in

p u t, th a t th e p arti e s w e r e d e a d lo c k e d , and that the deadloc k was c ausing injury to the company . Cavana

ug h testified that the plan f rom the beg inning was that the c ompany would be equally owned, the board of direc tors evenly divided, and not that he would re port to Forte nberr y . Mrs. Cavana

ug h testified that the ag ree ment was to m an age the business as her

pare nts had—at the boa

rd leve l, and, in the eve nt the families wer e unable to ag ree , the plan wa s for Tipton, a c lose frie nd of F ortenb er ry , S r., t o serve as the “ tiebrea ker.” Tipton te s ti f ie d th a t F o rte nb e r

r y , Sr

. , a s k e d

h im if h e would

b e w il li n g to b e a

f if th b o ar d me mb e r . We conclude the evidenc e wa s leg ally sufficie nt to support the district co u rt ’s d ecla rations as to the manag ement and control of t he company based on the jury

verdic t. See City of Keller , 168 S.W .3d at 807, 810.34 Viewingall of the e vidence , the For tenber ry s provided contr overting evidenc e that the par ties’ ag ree ment was fo r Fo rt enberry , as the pre sident, to control the company as it was controlled historica lly

by For tenber ry , Sr.; that he was authorized, as the pre sident, to take ac tions on beh alf of the company , including pr escr ibing Cava naug h’s duties, incurr ing inde btedness, and

e n t e r i n g i n t o c o n t r a c t s ; an d t h a tt h e p art i e s ’ d e a d l o c k h a d n o ti n j u r e d th e c o m p an y. F o rt e nb e r r y, Shepherd, Ma

rtin, and R andy For

tenber ry testified t hat Fortenber

ry , Sr., manag ed and c ontrolled the business and that he did so without involvement from B etty For tenber ry . There was e vidence that Cava na ug h d id n ot q

ue sti on the a uth or ity of F or te nb e rr y , Sr ., wh e n he wa s the pr e sid e nt, and Gl a ss testified that there was no thre at of ha rm to the company

in the fore seea

ble future

. Th e F or te nb e rr y s a lso re ly

on do c ume nta

ry e vid e nc e : a le tte r date d Ma y 31 , 1 99 0, to all personne l from For

tenber ry , Sr., advising them that For tenber ry was a ppointed to the position of vice pr esident, and that, in his absence, F ortenbe rry “will be in cha

rg e of all day

to day activities”; For tenber ry , Sr.’s appointment of Randy For tenber ry in 1995 to the pos ition of production manag er; and the memor andum from F ortenbe rry , Sr., to all personnel that a dvised them of Cava naug h’s po sit ion a s v ic e pr e sid e nt o f f

ina nc e and a dmi nis tr a tio n. Th e F or te nb e rr y s argue that, b e c a

us e F or te nb e rr y , Sr ., ini tia lly

se t Cava na ug h’ s te rm s of e mpl oy

me nt a s we ll a s o the r e mpl oy e e s’ te rm s of employ ment, that For

tenber ry , as the succe eding president, was authorized to c hang e employ ment terms on behalf of the c ompany and that a de clar ation from the c ourt to that eff ect would r esolve the parties’ deadloc k.

The Cava naugh s ’ t es t i m o n y

as t o t h e c o mp an y ’s manag ement structur e, howe ver, w as consistent with the dis tric t c ourt’s interpr etation of the by laws, the e qual owner ship of the company ’s35

share s, the evenly -divided board of di rec tors, the s hare holders ag ree ment requiringthe share holders to vote for eac h other as direc tors, and the c ompany ’s minutes. When the parties met a s share holders and as a board of direc tors for their annual meetings f rom 2000 to 2002, the minutes refle ct that the direc tors resolved that “all proc eeding s of the boar d of direc tors since th e last meeting of share holders, and a ll acts taken by members of

the boar d of d i rectors or by office rs of the corpor ation, are here by

ratified a

nd approve d in all respect s . ” These annua l resolutions are consistent with the direc tors manag ing the business on an equa l basis. The minutes also ref lect that

a sp e c ia l me e tin g wa s h e ld o n Se pte mbe r 5 , 2 00 0, fo r t he purp os e of “c on sid e ri ngne w b us ine ss strateg ies to g row the business.” Occu rr ing shor tly afte r the purc hase, this meetingsupports the Cava na ug hs ’ p os iti on

that th e a g re e me nt wa s f

or bu sin e ss d e c isi on s to be ma de a t th e bo ard le ve l. T h e m i n u t e s d

u r i n g t h e t i m e p e r i o d

t h a tt h e c o mp an y’ s d i r e c t o r s w e r e F o rt e nb e r r y, Sr., and B etty

For tenber ry also support that the agr eeme nt was for the company to be manag ed and

c on tr oll e d at th e bo ard

le ve l. T he min

ute s r e fl e c t th a t, f

ro m 19 84 un til the sa le in 20 00 , the dir e c tor s, For tenber ry , Sr., and B etty

For tenber ry , el ecte d office rs annua lly and made decisions at the boa rd le ve l in c lud ingto r e loc a te the bu sin e ss, to p ur c ha se a c omp any c ar, to p ay

sh are ho lde rs ’ d ivi de nd s,

and to p ro mot e F or

te nb e rr y to v ic e pr e sid e nt. Min

ute s fr om annu a l mee tin g s d ur ingthi s ti me a lso contain re solutions ratify ing a nd approvingthe ac tions of the direc tors and off icer s. The pa rties pre sent ed conflicting evidenc e of the ir ag ree ment and conduc t surrounding the company ’s day -to-day manag ement. The jury

could have resolved the conflicting evidenc e to conc lude that For tenber ry , Sr., an d Be tty

For tenber ry manag ed the c ompany

from the b o ar d l e v e l o r , e v e ni f

F o r t e n b e r

r y, S r . , u n i l at e r a l l y m a d e b u s i n e s s d e c i s i o n s f o r t h e c o mp a n y,36

For tenber ry did not have the same authority as his fathe r who wa s president, majority share holder, and cha irman of the boa

rd. See M

cGalliard v. Kuhlmann , 722 S.W .2d 694, 696 (Tex. 1986) (fa ct fi n d e r i s “ t h e s o l e j u d g e o f

t h e c r e d i b i l i t y

o f t h e w i t n e s s e s an d

t h e w e i g h tt o b e g i v e nt h e ir testimony , ” m ay

b el i ev e o n e w i t n es s , d i s b el i ev e o t h er s , an d “r es o l v e i n co n s i s t en ci es i nt h e t est imony of a ny wi t n e s s ” )

. T h e j u r y r e s o l v e d t h e c o n f l i c t s a s t o t h e p art i e s ’ a g r e e m e n ti nt h e C a v an a u g h s’ fa vo r. We c on c lud e tha

t th e dis tr ic t c ourt ’s de c la ratio ns ba se d o n th e jur

y ve rd ic t w e re no t “ so contra ry to the overw helming w eig ht of the evide nce a s to be clea rly wrongand unjust.” Se e Cai n , 709 S.W .2d at 176. We overr ule the F ortenbe rry s’ sec ond issue. Jury Char

ge Error I n their third issue, the For tenber ry s contend that jury questions 1A , 1B, 3, a nd 4 and

a c c omp anyingins tr

uc tio ns we re e rr on e ou s, pr ob a bly c a us e d the re nd iti on of an impr op e r j ud g me nt, and ca nnot provide a basis for the district c ourt’s judg ment. Question 1A aske d the jury what the pa rt ie s a g re e d a s to the c omp any ’s man agemen t and op e ra tio n; q ue sti on 1B a sk e d th e jur

y to interpre t the by laws; question 3 asked the j u ry whether the direc tors’ dea dlock was c ausing ir re pa ra ble inj ur y to t he c omp any ; and qu est ion 4 a sk e d th e jur

y if F or te nb e rr y ha d e ng a g e d in

cer tain actions.

The F ortenbe rry s contend that que stion 1A was er roneous beca

use “the Court asked the jury to determine if the re w as some collatera l agr ee m ent, ot her tha n the bylaws, re ache d as of Au g us t 1, 20 00 , to ‘o pe rate ’ t he c omp any

on a ‘5 0/5 0 b a sis ’” and

tha t th e dis tr ic t c ourt

e rr e d in submitt ing que stions 1A and 1B a nd rende ring judgme nt b as ed o n the jury ’s answe rs bec ause the questions had “no r eleva

nce to the controlli ng issue in the declaratory judgme nt—what i s the nature37

and extent of the cor

porate president’ s authority as re flec ted in the cor

porate by laws? ” The y

contend that the district c ourt should ha ve deter mined the issue of authority as a matter of la w base d on the unambig uous by laws. They also contend t h at q u est ion 1A contains instructions and def initions “which a re substantially

err oneous and c onstitut e misstatements of the law ” bec ause the jury was allowed to conside r all the evidenc e admitted at the tr ial, including the parties’ conduct a nd the history of the c ompany . Qu e sti on 1Aand 1B to t he jur y , in re le va nt p art , w e re a s f

oll ow s: Question 1A

Di d th e Pla int if

f C a va na ug hs a nd the De fe nd ant F or

te nb e rr y s ag re e that as of

Au g us t 1, 2000, the company would be operated on a 50/50 basis, wit h neither pa rty having final authority

over the other, or did they ag ree that Dale F ortenbe rry , J r., as Pr e sid e nt, wo uld

have fi na l a

uth or ity on a ll c or po rate de c isi on s. Ag ree ments may

be expressed or

demonstrated by

the cour se of de aling s betwee n the parties. You ma

y consider a ll of the evidenc e admitted in this c as e, i n cl u ding the p art i e s ’ c o n d

u c t , t h e b yl aw s o f

F o rtu n e P r o d

u c t s , In c . an d

t h e h i s t o r y o f t h e c o mp an y. Question 1B I t is y our duty

to interpret the by

laws of F ortune Products, Inc. Under the B y laws, does the P resident, Dale Fortenbe rry , J r. or some other of fice r of the Company

have the final authority

to do the following , or do the followingrequire a c tio n o f t

he B oa rd of Di re c tor s? * * * Con sid e r al l of the fa c ts an d cir c ums tanc e s sur ro un din g the a do pti on

of the bylaws , the interpre tation placed on the by laws by the parties, the conduct of the pa rties and the c ours e of

de a lin g of

the pa rt ie s. A “c ourse of

dealing ” is a seque nce of previous conduc t betwee n the par ties under the bylaws which is fa irly to be re g arde d as establishing a comm o n b asi s of un de rs tand ingthe bylaws .38 * * * Yo u ma y c on sid e r a ll o f t

he e vid e nc e a dmi tte d i n this c a se , in c lud ingthe pa rt ie s’ c o n d u c t , t h e b yl aw s o f

F o rtu n e P r o d

u c t s , In c . an d

t h e h i s t o r

y o f t h e c o mp an y. 1. decide whether

to reimburse an expense incur red by a compa ny employ ee a s a business expense? 2

. d et er m i n e w h o h as s i gn at u re au t h o ri t y o n co m p an y b an k ac co u n t s i n cl u d i n g, bu t no t li mit e d to , th e I B C ba nk a c c ou nt a nd the Me rr ill L y

nc h a c c ount? 3. hir e and

fi re e mpl oy e e s? The jury answe red que stion 1A by fi n d i n g t h at the par ties ag ree d to operate the business on a “50/50” ba sis and answe red “no” to each que stion in 1B, except the jury found that boar d action wa s require d to determine w ho has sig nature authority on company

bank ac counts. Even if we w ere to conclude that the district court er red in submitting questions 1A and 1B with their accompany ing instructions to the j ury , the j ury ’s answers t o question 1B we re not incorporat ed i n t he fina l judgment a nd, as to question 1A, the jury ’s answe r that the pa rties ag ree d to operate the business on a “ 50/50 basis” is consistent with the district court’s interpr etation of the bylaws, including that the by laws limit For tenber ry ’s authority

as the pre sident to prescr ibe the duties of other

office rs. Havingconclude d that the district c ourt did not err in its interpre tation of the bylaws , w e c on c lud e that any e rr or in su bmi tti ng qu e sti on s 1Aand 1B did no t pr ob a bly c a us e the re ndition of an improper judg ment. See Tex. R. App. P . 44.1(a) (1).

Th e F ortenbe rry s’ complaint as to question 3 is that the district court er red by ref using to i nc lud e a

de fi nit ion

of “ ir re pa ra ble inj ur y .” Qu e sti on

3 a sk e d th e jur

y :

Do y ou fi nd that su c h d e a dlo c k h a s c a us e d o r i s th re a te nin g to c a us e ir re pa ra ble39

injury to Fortune Products, I nc.?

The F ortenbe rry s contend that “ irrepa rable injury ” is not a term with which or dinary jurors can be expected to be f

amiliar and that the j ury

should have be en instructed that “[a]n i njury is ‘irrepa rable ’ if th e in ju r e d p arty c an n o t b e a d e qu a te ly c o mp e n s a te d in d a ma g e s o r if th e d a ma g es ca nnot be

measure d by

any cer tain pecunia

ry standard.” Question 3 is releva nt to the district court’s appointment of a r ece iver, a nd it was for the district court to deter mine whether to appoint a re ceive r pursuant to the applicable statutes. See Te x. B us . Co rp . A c t A nn . a rt . 7 .0 5; T e x. Civ . Pr a c . & Re m. Code Ann. § 64.001(a )(3) , (6) ( West 2008). E ven if we w ere to conclude that the trial court e rre d in r e fu sin g to i nc lud e a

de fi nit ion

of “ ir re pa ra ble inj ur y ,” we c on c lud e that any e rr or did no t pr ob a bly

cause the re ndition of an improper judg ment. See Tex. R. App. P . 44.1(a) (1).

Qu e sti on 4 a sk e d th e jur

y if F or te nb e rr y , Jr. , h a d e ng a g e d in

c e rt a in a c tio ns :

Do y ou fi nd that D a le F or

te nb e rr y , Jr. , e ng a g e d in

any of the fo llo wi nga c tio ns ? * * * You ar e ins tructed that Dale Forte nberr y , J r., is responsible for

his actions as we ll as those persons, if any , who acte d with him with knowledg e of, a g ree ment with, and intention to accomplish a common objec tive or cour se of a ction. Yo u ar e ins tr

uc te d tha t J ay and Di ann a Cava na ug h, a s dir e c tor s of Fo rt

un e Pr od uc ts, I nc., ar e entitled t o h ave acc ess to and inspec t all books and rec ords of F ortune Products, I nc. A. Misapplied the assets of F ortune Products, Inc.? B. Maliciously

suppressed dividends f

rom For tune Products, I nc.? C. Ex cluded Jay

or Dianna

Cavana ug h from p ar t i cipation in the day to day o p e r a t i o n s o f

t h e c o mp an y? D. Ex cl uded Jay

Cavana ug h from conta ct with the Company ’s sales pe ople, dis tr ibutor s, or

c us tom e rs ?40

E. Pr e ve nte d Jay

Cava na ug h f ro m pe rf or min g his du tie s a s V ic e Pr e sid e nt? F. Wit hhel d information from Jay and Dianna

Cavana ug h about For

tune Pr od uc ts, I nc . o pe ratio ns ? G. A l t e r edFo rt u n e P ro d u ct s , I n c. ’s co mp u t er

s y s t em t o d en y

J ay C av an au gh a c c e ss? H. Usurped c orporate opportunities for F ortune Products, Inc. for himself? I

. Rece ived bene fits that other shar eholder s of For tune Products, I nc. did not rec eive? J

. Acted to de liberate ly reduc e the va lue of the Cava naug hs’ stock? K. Made pur chase s o r en t er ed into contra cts not authorized by the B oard of Direc tors of F ortune Products, Inc.? L

. Cha

ng e d th e loc ks in o rd e r t o d e ny Jay and Di ann a Cava na ug h a c c e ss t o F o rtu n e P r o d

u c t s , In c . p r o p e rt y? M. Signed c hecks on F ortune Products, Inc. without authority from the B oard of Di re c tor s? N. Vi olate d o rd e rs of the Court

re g ard ingF or

tun e Pr od uc ts, I nc . o pe ratio ns ? O. Us e d F or

tun e Pr od uc ts, I nc . f

un ds to p ay

pe rs on a l e xpe ns e s?

I n their brief

ing to this Court, the For

tenber ry s fail to a ddress how the submission of this question

was e rror o r h o w it c a

u s e d th e r e n d it io n o f an im p r o p e r ju d g me n t. T h e y a ls o r e ly o n th e jury ’s neg ative finding s to question 4 to support their own arguments. They , there fore , have w aived a ny

err or in the submission of question 4. See Tex. R. App. P. 38.1( h). Additionally , even if we we re to conclude that the di strict court’s submis sion of question 4 was in er ror, we conclude that any

such

err or did not probably

cause the rendition of an improper judg ment. See Tex. R. App. P . 44.1(a) (1). We overrule the For

tenber ry s’ third issue.41

Re c e iv e rsh ip I n their four th issue, the For

tenber ry s contend t hat the evide nce is leg ally and fac t u all y insufficient to support the district cour t’s judgme nt appointing a rec eiver . I n the final judgme nt, the district court found that the appointm ent of a rece iver was “re quired to conser ve the

a sse ts a nd bu sin e ss o f F or

tun e Pr od

uc ts, I nc., and to av oid

dama g e to p art ie s in

int e re st, in

acc ordanc e with Article 7.05 of t he Tex as B usiness Corporation Act, Sec tion 64.001 et seq. of the Texas Civi l Practice and Remedie s Code, and the e quitable power s of t he Court.” The district court “incor porate d here in by

ref ere nce f or all purpose s as if fully

set forth verbatim” t he orde r appointing

rec eiver dated Oc tober 27, 2006, and confirme d the appointm ent of Har per as the receive r pursua nt to the terms of the O ctober 27, 2006, order

. The For tenber ry s did not reque st f

indings of fac t and conclusions of lawas to the re ceive rship order . We, theref ore, w ill uphold the appointment on any leg al theory

supported by

the re cord. See W

or for d , 801 S.W .2d at 109. Article 7.05 of

the business corpor ation act provides for the appointment of a re ceive r to r e ha bil itate a c or po ratio n a s f

oll ow s:
A. A re ceive r may

be appointed f

or the a ssets and business of a corpor ation by the di s trict court f

or the c ounty

in which the re g istered of fice of the c or po ratio n is loc a te d, wh e ne ve r ci rc ums tanc e s exist de e me d by the c ourt to require the appointment of a rec eiver to conserve the assets and business of the cor poration and to a

void da mag e to parties at inter est, but only if all other re qu ir e me nts of

law a re c omp lied wi th and if

a ll o the r r e me die s ava ila ble e ith e r at la

w o r in e qu ity , inc lud ing the a pp oin tme nt of a re c e ive r f or sp e c if ic assets of the c orporation, are de termined by the cour t to be inadequate, and on ly in t he fo llo wi ngins tanc e s: (1) I n an ac tion by

a shar eholder

when it is established: (a) That the c orporation i s i n s olvent or in imminent dang er of insolvency ; or42 (b) That the dire ctors ar e dea dlocked in t h e manag ement of the corpor ate a ffa irs and the share holders are una ble to brea

k the de a dlo c k, and

that ir re pa ra ble inj ury to the c or

po ratio n is being suffe red or

is threatene d by

rea son thereof

; or (c) That the a cts of the di re ct o rs or those in control of the corpor ation are illega l, oppressive or f raudule nt; or (d) That the c orporate assets a re be ing misapplied or

wasted. (e) That the shar eholder s are deadloc ked in vot ing pow er, a nd have f a il e d , f o r a p e r io d w h ic h in c lu d e s a t l e a s t t wo c on se c uti ve annua l me e tin g date s, to e le c t su c c e sso rs to direc tors whose terms have e x pired or w ould have e x pired up on the e le c tio n a

nd qu a lif ic a tio n o f t

he ir su c c e sso rs . Tex. Bus. Corp. Act Ann. a rt. 7.05(A) (1). Sec tion 64.001 of the civil prac tic e an d remedies code provides that a c ourt may

appoint a rece iver in an action betwee n “par tners or othe rs jointly

owning or intere sted in any

proper ty or fund” or “in a

ny other c ase in wh i ch a re ce i v er ma y be appointed under the rules of e quity .” Te x . Civ. P rac . & Re m. Code Ann. § 64.001(a) (3), ( 6).

As a pre liminary

matter, the Cava

naug hs contend that thi s C o u rt lacks jurisdiction to a d dr e s s H ar

p e r ’ s a p p o i n t m e n t a s a r e c e i v e r b e c a u s e t h e F o rt e nb e r

r y s s h o u l d h a v e a

p p e a l e d h is appointment within twenty day s of Octobe r 27, 2006, the date the district cour t entere d its order ini tia lly a pp oin tin g Ha

rp e r t o b e the re c e ive r, and that the F or te nb e rr y s’ re me dy a t th is p oin t is to f ile a motion to termin at e t h e re ceive rship. See Sclafani v. Sclafani , 870 S.W .2d 608, 611 (Tex. App.—Houston [1s t Dist.] 1993, writ denied) (d ist inguis hin g be tw e e n a n a c tio n to te rm inate

a r ec ei v er s h i p wi t h an ac t i o nt o s et as i d e th e re ce i v er s h i p ). T h e Fo rt en b erry s co u n t er t h at , al t h o u gh they could have filed an i nterlocutory appea l from the Oc tober 27, 2006, orde r appointing Har per

a s th e re c e ive r, the y

a lso may a pp e a l th e a

pp oin tme nt f

ro m th e fi na l ju dg me nt.43 Rule 26.1(b) of the rules of appellate proce dure provides that an interloc utory appea l “must be f

il e d w it h in 2 0 d ay s a f

te r th e ju d g me n t o r o r d e r is s ig n e d

. ” T e x. R. A p p . P. 26.1( b). Section 51.014(a) (1) of

the civil prac tice and r emedies c ode provide s that a par ty “may appea l from

an interlocutory order ” that “appoints a rec eiver .” Tex. Civ. Prac. & Rem. Code § 5 1.014(a) (1) (We st 2 00 8) ; see also Tex. Gov’t Code Ann. § 311.016(1) ( West 2005) (“‘Ma y ’ cr eate s d is c r etionary authority or g rants per

mission or a power .”). The parties ag ree that the For tenber ry s had the rig ht to file an interlocutory appea l f rom the October 27, 2006, order appointing Har per. The issue then is whether the For

t en b err y s were require d to bring an interloc utory appea l from the initial

a pp oin tme nt t o p re se rv e e rr or . I f t he F or te nb e rr y s w e re requ ir e d to fi le an in te rl oc uto ry a pp e a l to prese rve e rror , the For

tenber ry s’ notice of

appea l in M ay 2007 was not timely , and this Court lacks jurisdiction.

The Fortenbe rry s rely

on W ilkins v . State Farm Mutual Automobile InsuranceCo. , 58 S.W .3d 176, 179 (Tex. App.—Houston [14t h Dist.] 2001, no pet.), an d t h e fact that the order appointing H arpe r wa s t i t led an “ interim” orde r to support their conte ntion that they may appea l Har per’ s appointment as par

t of the appeal from the final judg ment. The F ortenbe rry s’ ar g ument that the re ceive rship order was an “interim” order is unpersua sive; the order ’s expressed ter ms allowed f o r th e r e c e iv e r s h ip to c o n ti n u e f o r thr e e y e ar s . I n W

ilkins , the appe llant did not challeng e the

rec eiver ship itself, but that the “trial court lacked jurisdi ction to enter the turnover order beca use a turnover or der c an only

follow from a

final judg ment.” Id . at 178. Our sister court found that it had jur isd ic tio n to he ar the a

pp e a l fr om the tur

no ve r or de r ev e n thou g h the a pp e a l wa s n ot f

ile d w ith in twenty day s of the turnove r order by concluding the order was final, di stinguishing the appointment of a re c e ive r t

hat “ be g ins a

pr oc e e din g ” fr om a

tur no ve r o rd e r “ e ve n tho ugh it may a pp oin t a44

rec eiver .” Id . at 179-80. In contra st, the Forte nberr y s challeng e the r ece ivership itself. Our s ist e r cou rt s th a t ha

ve a dd re sse d th is i ssu e have c on c lud e d th a t th e “ ri g ht t o

a pp e a l th e or de r o f r ecei vers hi p its e lf mus t be e xer c ise d w ith in t we nty da y s a ft e r t he re c e ive rs hip

o rder is entere d.” See Long v. Spe ncer , 1 3 7 S. W. 3 d 9 2 3 , 9 2 6 ( T e x. A p p . — D a ll a s 2 0 0 4 , n o pet.) (c i t i n g Sclafani , 870 S.W .2d at 611). In Long , the appe llant appea led from the tr ial court’s judg ment disbursing the proce eds fr om the sale of r eal pr operty in a suit for pa

rtition. 137 S .W.3d at 924-25. Be cause the initial appointment o f t h e rec eiver was by ag ree d order , the cour

t concluded that the

“ g e ne ra l r e c e ive r- ba se d c omp la int s and c omp l a int s c on c e rn ingthe or ig ina l r e c e ive r w e re a pp e a la ble afte r entry” of the ag ree d order

. Id . at 926 n.2. The court dismiss ed the issues raised conce rning the init ia l a p p o in tm e n t f

o r la c k o f ju

r is d ic ti o n b e c a

u s e “ [a ] c h a ll e n g e to th e r e c e iv e r s h ip o rder afte r twenty day s has passed is untimely and will be dismissed by

the appe llate cour

t.” Id . at 926 (c iting Sclafani , 870 S.W .2d at 613).

I n Sclafani , the cour

t dismi ssed the appe al from the overrulingof a motion to set aside

a rec eiver ship f

or lack of jurisdiction, e x plaining the policy rea sons be hin d t h e t wenty -day require ment for a

ppealingthe establishment of a rec eiver :
A contra ry holding would mea

n that a party

could rig htfully

attempt to set aside an order of re ceive rship in an appe al re g ardle ss of how l ong ag o the receive rship order was e ntere d. The setting aside of a n order of re ceive rship has “th e ef fec t of nullify ing a ll intervening acts of the rec eiver

. . . o r, at least, of r aising serious questions c oncer

ning the validity of such interveningacts.” Christ ie v. Lowrey , 589 S.W .2d 870, 873 (Tex. Civ. App.—Dallas 1979, no writ). Allowing the vac ation of a rec e iv e r s h ip a t a

n y ti me a f te r it s c r e a ti o nw o u ld

w o r k u n d u e h ar d s h ip o nth ird parties who ha

ve dea lt in good fa ith with the rec ei v er . Fur thermore , an unlimited tim e to a p p e a l w o u ld me an th a t th e o r d e r o f r e c e iv e r s h ip w o u ld n e v e r b e bey ond challeng e, and thus ne ver attain the finalit y upon which the pa rties, the re ceive r, and those who have transac ted with the re ceive r, ar e entitled to depe nd. Sclafani , 870 S.W .2d at 611.I n this c a s e , H ar p e r h a s b e e nth e r e c e iv e r

f o r F o rtu n e Pr o d u c ts f o r a p p r o xim a te ly

tw o 14 y ear s. At oral a

rg ument, the For

tenber ry s’ attorne y

acknow ledg ed that there wer e no substantive 15 chang es to the re ceive rship in the final judg ment. 45 This Court has also held that the fa ilure to file an a ppeal f rom the orde r establishing

a rec e iv e r s h ip w it

h in tw e n ty d ay s r e qu ir e s d is mi s s a l o f c o mp la in ts th a t “ te s t t

h e v a li d it y ” o f the

rec eiver ship itself. Se e Be nn ing fie ld v. Be nn ing

fie ld , 1 55 S.W. 2d

82 7, 82 7 ( Te x. Civ . App .— Au sti n 1941, no writ). In Be nn ing fie ld , the orig inal rec eiver did not qualify , an d a s u b s eq u ent orde r wa s enter ed appointing a diffe rent re ceive r with the same power s and duties. Id . This Court dism issed the appe al bec ause the appea l bond was filed twenty -two day s afte r t he original order appointing the

rec eiver

. Id. at 828.

Given the nature of a

rec eiver ship, a party ’s ability to s ee k termination or modification, and the policy rea sons behind t he twenty -day time limi t to appeal, we conclude that the For tenber ry s were require d to appea l the appointment of the re ceive r within twenty day s from the Octobe r 27, 2006, orde r. We, theref ore, c onclude that we lack jurisdictio n t o addre ss the 14 district court’s initial appointment of Har per a s the rec eiver

. 15 Fur ther, e ven if we wer e to conc lude that this Court has jurisdiction to consider the

rec eiver ’s appointment, we w ould conclude that the district c ourt did not abuse its discretion when it a ppointed a rec eiver

for the c ompany . Se e Ab e lla , 945 S.W .2d at 849. I t was undisput ed that the share holders we re de adlocke d in their voting pow er. A t the time of the trial in Octob er 2006, the min ute s r e fl e c t th a t th e sh are ho lde rs ’ l a st e le c tio n o f d ir e c tor s w a s in 2002 . T he dis tr ic t c ourt , there fore , could have appointed the r ece iver pursua nt to ar t i cl e 7.05(A )(1) (e) beca use theT h e d i s trict court, a lternatively , could have found that a r ece iver should be a ppointed 16 purs ua nt to art ic le 7. 05 (A )( 1) (b ) ba se d on the dir e c tor s’ de a dlo c k a

nd the sh are ho lde rs ’ i na

bil ity to brea k the dea dlock or pursua nt to section 64.001 of the civil pra ctice a nd reme dies co d e. See T ex. Bus. Corp. Act Ann. a rt. 7.05(A) (1)( b) (West 2003); Tex. Civ. P rac . & Re m. Code § 6 4. 00 1( a )( 3) , ( 6) (We st 2 00 8) . B e c a us e we c on c lud e that th e dist ri ct cou rt did no t a bu se its dis c re tio n in

a pp oin ti ng a receive r p ur su ant t o a rt ic le 7. 05 (A )( 1) (e ), we ne e d n ot a dd re ss t he se a dd iti on a l g ro un ds

. 46 sh are ho lde rs we re de a dlo c ke d a nd the y ha d fa ile d to e le c t su c c e sso rs fo r ov e r tw o y e ars a t the tim e of trial. See Tex. Bus. Corp. Act Ann. a rt. 7.05(A) (1)( e). 16 R e l yi n g o nt h i s C o u rt ’ s e ar l i e r o p i n i o nr e v e r s i n g t h e r e c e i v e r s h i p , t h e F o rt e nb e r r ys

c on te nd that the law of the c a se pr e c lud e d th e dis tr ic t c ourt fr om a pp oin tin g a

re c e ive r b e c a

us e , to support the appointment of a rec eiver under a rticle 7.05(A )(1) , the district court a lso had to find that “all other reme dies available either at law or in equity ” ar e inade quate. See id. art. 7.05(A ). They argue that, as w as the c ase w hen the inter locutory appea l was bef

ore this Court, there rema ins “no evidenc e of imminent dang er of insolvency o r other e merg ency justify ing the appointment of a

rec eiver .” Se e Fo rte nb e rry , 2005 Tex. App. L EXI S 4665, at *10. “The ‘law of the case d octrine’ is defined a s that principle under which questions of law decided on appea l to a court of l ast resor t will g overn the case throug hout its subs equent stag es.” Hu ds on v . W ak e fie ld , 711 S.W .2d 628, 630 (Tex. 1986). The lawof the c ase doc trine is inapplicable. When the inter locutory appea l was befor e thi s Court, this Court held that the district court “ abused its discre tion in prematurely order ing t he appointment of a

rec eiver with sweepingpower s.” Se e Fo rte nb e rry , 2 0 0 5 T ex . Ap p . LE X IS 46 65 , at *1 0. At

that ti me , th is C ourt

fo un d the a

pp oin tme nt pr e ma tur e a s the re wa s th e po ssi bil ity that the re solution of the parties’ de clar atory actions and monetary

and injunctive re lief would be adequate reme dies; this Court did not rea ch the “spec ific instances in w hich a re ce i v er m ay beSection 21.002(b) of the g overnme nt code pr ovides that “[t] he punishment for c ontempt 17 of a court other than a justice court or municipal court is a fine of not more than $500 or confine ment in the county

jail for no t m o re t h an s i x months, or both such a fine a nd confine ment in jail.” Tex. Gov’t Code Ann. § 21.002(b) ( West 2004). 47 appoi n t ed , ” c o n cl u d i n g t h at t h e C av an au gh s fa i l edt o d em o n s t ra t e t h at o t h er av ai l ab l e r em ed i es wer e inadequate at that time. Id . at *8, 10. At this juncture, the district cour t’s decla rations do not resolve the deadlocks betwee n the share holders or the direc tors and, base d on For tenber ry ’s ac tions during the pende ncy

of this case , the dis t ri ct co u rt could have found that monetar y and injunctive re lief would be inade quate. This Court’s prior ruling did not prec lude the district cour t from appointing

a re ceive r at some point in the future

. Cont empt I n th e ir

fi ft h is su e, th e F or

te nb e rr y s c on te nd

that th e c on te mpt

or de r i s “ vo id a s it exceeds the $500 ma x imum monetary penalty for co n t em p t as set forth in sec tion 21.002” of the g overnme nt code. See Tex. Gov’t Code Ann. § 21.002(b) ( West 2004). 17

As a pre liminary

matter , t h e C avana

ug hs contend that this Court lacks jurisdiction to consider the c ontempt order be cause contempt order s are not directly appea lable. See Ex

pa rte W illiams , 690 S.W .2d 243, 243 n.1 (Tex. 1985) (dec isions in contempt procee dings “ can be attacke d

on ly c oll a te ra lly” ); Metzger v . Sebek , 892 S.W .2d 20, 54-55 (Te x . App.—Houston [1st Dist.] 1994,

no wr it) (a

pp e a l f ro m c on tem pt pro c e e din g dis mis se d) ; Kidd v. Lance , 794 S.W .2d 586, 587 n.1 (Tex. App.—Austin 1990, orig

. proce eding ) (manda mus is the “only ” ava ilable re medy to contempt

or de r w he re the re is n o o rd e r o f c on fi nem ent ). Th e F or te nb e rr y s r e sp on d th a t, b e c a

us e the re is a final judg ment, there is n o n ee d t o pursue the matter by writ of mandamus and that the filing of a writ of mandamus is not a prere quisite to presenting the issue in an ordina ry appea l.On appe al, at ora l argument and in the ir post-submission briefing, the For tenber ry s argued 18 th a t th e d is tr ic t c o u rt e r

r e d in o r d e r in g th e p e n a lt y b e p a id to p r iv a te p artie s. S ee Gal tex Prop. Inve stors, Inc

. v. City of Galveston , 113 S.W .3d 922, 928 (Tex. App.—Houston [14t h Dist.] 2003, no pet.) (“ The lawis well established in Texas that a cour t may not awar d a ci v i l j u d gment to a private litig ant in a contempt proce eding .”). The F ortenbe rry s have not pre serve d this arg ument for o u r re v i ew. See Te x. R. A pp . P. 38 .1 , 3 8. 3; Dallas Co. v. Gonzales , 1 8 3 S. W. 3 d 9 4, 104 (T e x. Ap p. —D a lla s 2 00 6, pe t. d e nie d) (r ule s o f a pp e llate pr oc e dure do no t a llo w a n a pp e lla nt t o ra ise ne w i ssu e in r e ply

br ie f) ; Howell v. Tex. W orkers’ Comp. Comm’n , 143 S.W .3d 416, 439 (Tex. App.—Austin 2004, pet. denied) ( same). To the extent the Fortenber ry s raise new issues in their re ply brief, the y

have not pr eser

ved 19 these issues for

this Court’s review. See Te x. R. A pp . P. 38 .1 , 3 8. 3; H

o w e ll , 1 4 3 S.W .3d at 439. The F ortenbe rry s complain that the trial cour t erre d in gr anting perma

n en t i n junctive re lief in the fi na l ju dg me nt a

nd that H arp e r p e rs on a lly

do e s n ot m e e t st a tut or

y qu a lif ic a tio ns to s e rv e a s a rec eiver

. 48

We find the rea soning in Galtex Prope rty Inve stors, Inc. v. City of Galve ston , 113 S.W .3d 922 (Tex. A

pp.—Houston [14t h Dist.] 2003, no pet.), instructive. I n that case , our sister

c ourt c on sid e re d th e a

pp e lla nts ’ c ha lle ng e to the c on te mpt jud g me nt on dir e c t a pp e a l, a g re e ingwi th the appe llants ’ ar gu ment that the “c ontempt judgment wa s not truly a conte mpt procee ding” and sh ou ld b e re c ha

ra c te ri zed , to c on c lud e that th e “ ‘j ud g me nt o f c on temp t’ was imp ro pe rl y denominated a s a conte mpt order.” Id

. a t9 2 6

- 2 7

. T h e c o u rt f o u n d t h a t “ [ t ] h e o r d e r

w a s a c tu a l l y a partial money

judgme nt for civil penalties delineate d in the ag ree d order .” Id . at 927. I n rea ching its ruling, the c ourt noted that “[d]ecisions in contempt proce eding s may not be re viewed by

an appellate court, e ven whe re a party seeks to appea l the contempt orde r alongwith a judg ment that i s ap p eala

ble.” Id

. T h e F o rt e nb e r r y s h a v e n o tar g u e d

t h a tt h e c o n t e mp to r d e r

w a s “ i mp r o p e rl y denominated” a conte mpt order. Se e id

. We conclude that this Court lacks jurisdiction to review 18 the dis tr ic t c ourt ’s c on te mpt or de r i n th is a

pp e a l. 1949 CO NC LU SION Be cause we conclude that this Court lacks jurisdi ction to consider the contempt orde r or Ha rper ’s initial appointment as t h e rece iver for the company , we dismiss those portions of the For tenber ry s’ appea l that se ek revie w of the contempt order and rec eiver ship f or lack of jurisdiction. Be cause we c onclude that the district c ourt did not abuse its di scre tion in awardingattorney ’s fe es and costs in the amount of $747,037.84 to the Cava naug hs, that any err ors in the district court’s quest ions and instructions to the jury wer e either

waived or

did not cause the rendition of an improper ve rdict, and that the evidenc e wa s leg ally and fa ct ually

sufficie nt to support the district court’s declar ations, we overrule the For tenber ry s’ remaining issues a

nd aff irm the district court’s jud g me nt.

__________________________________________ J an P. Patterson, J ustice Be fore J ustices Patterson, Waldrop and H enson Affir med in Part; Dismissed in P art Filed: Nove mber 26, 2008