REVERSE and RENDER; Opinion issued October 31, 2012

In The 

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## Oa11a No. 05-li-00708-CV
A-DELTA OVERNIGHT LEGAL REPRODUCTION SERVICES CORPORATION 

### DIBIA A-LEGAL COPY & RECORD SERVICES, Appellant V. DAVID W. ELROD, PLLC, Appellee On Appeal from the 95 th Judicial District Court Dallas County, Texas Trial Court Cause No. 09-09815 

### MEMORANDUM OPINION Before Justices Morris, Francis, and Murphy Opinion By Justice Francis This case involves competing breach ofcontract claims between A-Delta Overnight Legal Reproduction Services Corporation d/b/a A-Legal Copy & Record Services and David W. Elrod, PLLC. Following a bench trial, the trial court found in Elrod’s favor and awarded it lost profit damages and attorney’s fees. On appeal, A-Legal contends the trial courterredin (1) awarding lost profits because Elrod failed to plead and prove such damages, (2) allowing Elrod to reopen the evidence to allow additional proofregarding lost profits, and (3) awarding attorney’s fees without evidence ofpresentment or damages. Because we conclude there was no evidence oflost profits,
we reverse the trial court’s judgment and render a take-nothingjudgment on Elrod’s breach ofcontract claim. Lirod describes itselfas a small trial and litigation law firm.A—l .egal is a company that provides litigation support services. OnJanuary 6. 20(Y), Flrod hiredA—Legalto perlbrmelectronic discovery work on the R Project’ and delivered to A—Legal ten computer disks and a box of documents to begin work. Iwo day’s later. Lirod pulled the job when A—Legal doubled the price it previously quoted. That night, A-Legal delivered to Firod a hard drive that it contended contained the requested work. Llrod said the work was performed after it had pulled thejob and, regardless, the drive did not contain the work requested. Five days after pulling thejob from A-Legal, Elrod hired a new vendor to perform the work at a lower price. That same day, A-Legal billed Elrod $1 5,000 for its work on the project. When Elrocl refused to pay the bill, A-Legal sued forbreach of contract. Elrod counterclaimed for breach of contract, among other things. The contract claim asserted A-Legal secretly outsourced the work to an unknown and unapproved vendor in violation ofan agreement to perform the work in-house and the work was not performed as requested. At trial, each side contended the other breached the agreement. A-Legal claimed damages in the amount ofthe unpaid bill. Elrod claimed damages from lost revenue and lost business opportunities in dealing with A-Legal’s breach. Specifically, attorney SusanNassar, who worked
on the “R Project” and hired A-Legal to perform the discovery work, testilied at length about the events that occurred during the two days A-Legal was on thejob and, in particular, the various communications she had with A-Legal representatives. She said that over the two-day period, she spent ‘anumberofhours” dealing with A-Legalon the situation. Nassar said. “once the wholething blew up,” she spent an hour in discussions with A-Legal and then trying to determine what to do withthe project. She had to find anew vendor because a discovery deadline was near. OnFebruary 2. she hired a new vendor that had been recommended by her paralegal on the day ofA-Legal’sbreach. (The new vendor charged $600 per gigabyte as compared to the original quote by A—Legal of$ 1 .000 a iabvte. Nassarstated that between .January 28 and l”ehruar 2. she spentten to fifteen hours “dealing with this situation and said her hourly rate is $325. Those hours were not hilled to the client and did not include time spentby the paralegal. She believedthe time constituted lostrevenues to Elrod. When asked how much time she expended from February 2 until the day oftrial “dealing with this Situation,” Nassarresponded that since January 2009, she had spent approximately 65 hours, which at $325 an hour, was “about $21,000.” She said this also was lostrevenue to the law firm: “That’s time that I could not spend on on other cases and flies.” When asked on cross-examination whether she believed lost revenue is a recoverable damage. Nassar testified that at a minimum. I incurred time as a result ofyour client’s breaching the contract. call it what you want. It

- - those are damages, whether it was just in finding another vendor, having to deal with the situation. those

- - those are damages. and I believe they’re recoverable.” She also believed “those lost revenue damages” were recoverable as a sanction. David W. Elrod, managing member and owner ofthe law firm, testified the firm suffered $20,000 in damages as aresult ofA-Legal’s breach. He explained thatthe $20,000 represented the “time it took in the firm ofNassar, the paralegals. the staff, all ofwhich was not billable. None of that could be billed, and none ofit’s being charged in this case.” Elrod explained “business is our time” and he could not use that time “because we’re using it on unproductive matters such as this that’s being taken up on this.” He reiteratedhis position on cross-examination. quantifyingthe loss
as “the time ofthe people who workforthe Elrod firm, theirinability to work on otherbusiness, lost businessopportunities. becausetheywerehavingto dealwiththebreachbyA-Legalofthecontract.” Elrod saidthose damages were separatefromthe attorney’sfees the firm was entitledto forhandlingthe litigation. At the conclusion ol the evidence, the trial court ruled in Elrod’s flivor and awarded $20,000 in damages. $60J)0() in attorneys fees. and pre— and post—judgment interest. One week later. before the trial court signed ajudgment, Elrod filed a motion to re—open the evidence under Texas Rule of Civil Procedure 270 to otter additional testimony to clarify “how lost revenue equates to lost profits.” The trial court granted the motion over A-Legal’s objections. During a hearing almost three months after the trial ended, Elrod testified that based upon how his law firm works, “lost profits is identical to lost net profits.” Elrod said the firm had net profits in 2009 when the breach occurred, as well as in 2007, 2008, and 2010. When askedwhathe believed were netprofits. Elrod explained. “Our firmhas no debt. So netpro[its. to me, is whenyou pay all ourvendors, you pay allyour salaries, including mine, at year end. you have a net amount ofmoney leftthatyoucall netprofits. afteryou’vemade allyourobligations andyou’vepaid allyour indebtedness, is there a net profit available.” Further, based on how his law firm operates, lost
revenue is lost net profit and “[c]very dollar ofthat $20,000

... was profit, pure net profit to the Elrod law firm.” The trial court ultimately rendered a written judgment awarding Elrod damages and attorney’s fees. In findings offact and conclusions oflaw, the trial court found that A-Legal failed to comply with the contract first, refused to perform its contractual obligations, and materially breachedthe contract. The trial courtfurtherfoundthebreachcaused Elroddamages and concluded Hirod was entitled to recover $20,000 for lost profit damages. In its second issue. A-Legal argues Elrod failed to present any evidence oflost profits. A Legal argues that Elrod’s evidence showed lost revenue, not lost profit. and ‘described its lost
revenue damages in terms that don’t meet the proofrequirements oflost profits under establishedlaw.” \Ve aeree. When an appellant attacks the legal suliiciencv ol an adverse finding on an issue on which it did not have the burden of prool. as in this case. it must demonstrate that no evidence supports the finding. Crouch’r v. Croucher, 660 S.W.2d 55,58 (Tex. 1983). We reviewthe evidence presented at trial in the light most favorable to the fact-finder’s findings, crediting evidence favorable to that party ifa reasonable fhct-finder could and disregarding evidence unless a reasonable ftict-finder could not. (Juevura v. Ferrer. 247 S.W.3d 662. 665 (Tex. 2007): (‘i/v of Keller v. Wilson. 168 S.W.3d 802, 822 ([cx. 2005). Anything more than a “scintilla ofevidence” is legally sufficient to supportthe finding. Con! 1 Co/fee Prods., Co., 937 S.W.2d 444.450 ([cx. 1996). To be more than
a scintilla, the evidence must rise “to a level that would enable reasonable and fair-minded people to differ in their conclusions.” Transp. 

### ins, Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1 994). Generally. the measure ofdamages for breach ofcontract is what restores the injured party to the economic position he would have enjoyed ifthe contract had been performed. 

### Mood v. Aronos Prods., inc., 245 S.W.3d 8. 1 2 (Tex. App.—Dallas 2007, pet. denied). This measure may include reasonably certain lost profits. 

### id. Lostprofits are damages for the loss ofnet income to a business and, broadly speaking, reflectincome from lostbusiness activity, less expenses thatwould havebeen attributableto thatactivity. ExaminationMmt. Svcs., inc. v. 

### KershRisk

### Mgmt., inc., 367 S.W.3d 835, 840 (Tex. App.—I)allas 2012, no pet.). Lost profits may be in the form ofdirect damages. that is. profits lost on the contractitself, or in the form ofconsequential damages, such as profits lost on other contracts or relationships resulting from the breach. Mood, 245 S.W.3d at 12. Consequential damages may not he recovered unless they are foreseeable and traceable to the wrongful actandresultfrom it. 

### Id. Regardless ofwhetherthe lostprofits are characterized as direct
or consequential damages, the amount ofthe loss must be shown by competent evidence withreasonable certainty. be based on objective lcts. figures. ordata, and he predicated on one complete calculation. Id. I he calculation of lost profits must he based on net profits, not gross revenues. Evaininatio,i J,’nii. S’vcs.. 367 S.W.3d at 840. Initially, we note A—Legal has not challenged whether the damages sought by Elrod were a foreseeable consequence of’ its breach: consequently. we will assume lost profits would be an appropriate measure ofdaniageunderthecircumstancespresentedhere. Giventhatassumption. our review ofthe record nevertheless shows there is not more than a scintilla ofevidence that Elrod suffered reasonably certain business losses resulting from A-Legal’s breach. Elrod testified to nothing more than a general number of$20,000 as damages, generally linked that number to the firm’s time spent dealing with the breach, and then said the firm was prolitable in 2009. the year ofthe breach, and in the years before and the year after. The only specific evidencerelating to aworker’s time came fromNassar, whotestifiedherhourlyrateis $325 and she spent ten to fifteen hours over the course ofabout six days (from the time Elrod pulled the job from A—Legal until the time anothervendorwas hired) dealing with the situation.” Further. she said sinceJanuary 2009, she had spent sixty-fivehours “dealing withthe situation.” Nassarwas not asked, and she did not provide any evidence of, exactly what she did for fifty hours after a new vendorhadbeenengaged. Regardless, basedontheevidencepresented, the onlycalculationthatcan be made fromthe evidence producedby Elrod is potential gross revenue brought in byNassar. But
no evidence shows Nassar billed less in the year 2009 because ofthis breach or that but for the breach she wouldhave billed more. Noris there any evidence ofany particularbusiness thatNassar wouldhave worked on had shenotbeendealing with”theA-Legalbreach, thatthe work she would have done would have been billed to any particular client, or that Elrod would have collected the amount billed.

—6—Moreover. Elrod made no attempt to establish what expenses would have been attributable to Nassafs billable hours. lZlrod S testimony that the Orm netted a prolit in 2009 (and in the years beibre andthe yearafter) does not constitute proofthat every hourNassarmighthave billed had she not been dealing with A-Legals breach would have been net profit. [‘inally, there was no evidence presented that Elrod lost any specitic business or any business opportunity because ofthe breach. Because the only evidence presented was conclusorv and speculative, we conclude there is
no evidence oflost protits. We sustain the second issue. Because Lirod’s attorney’s fee award depends on the success ofits breach ofcontractclaim, we also reverse the award ofattorney’s fees. See TEX. Civ. PRAC. & REM. CODE ANN. 

### § 38.001(8) (West 2008): see also Green In! ‘1, Inc. v. Soils. 951 S.W.2d 384. 390 (Tex. 1997) (explaining thatonly party who prevails Ofl breach ofcontract and
recovers damages canrecover attorney’s lees). We need not address the remaining issues. See TEx. R. App. P. 47.1. We reverse the trial court’s judgment on Elrod’s breach of contract claim and render judgment that Elrod take nothing on its claim.

MOLLY FRANCIS JUSTICE I 10708F.P05

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## tIathts JUDGMENT A—[)Ei.Ii\ OVF;RNIGFIT l.IXiAL RI PRODI ( I ION SE’RVI( I S CORPOR \ I ION DiB \ A-I I ( \L COPY & RI CORD ‘I RV1CI S Appcllant No. 05-1 1-00708-CV V Appeal from the 95th Judicial District Court ofI)allas County. Texas. (Tr.Ct.No. 09- 09815). Opinion delivered by Justice Francis, Justices Morris and Murphy participating.
DAVID W. ELROD. PLLC. Appeflee In accordance with this Court’s opinion ofthis date, thejudgment ofthe trial court is REVERSED and judgment is RENDERED that David W. Elrod. PLLC take nothing on its breach ofcontract claim. It is ORDERED that appellant A-DELTA OVERNIGHT LEGAL RLPRODUC 1 iON SERVI( ES CORPORA flON D/B/A A-LEGAL COPY & RECORD SERVICES recover its costs ofthis appeal from appellee David W. Elrod, PLLC. Judgment entered October31. 2012.

MOl LY FRANCIS JUSTICE