NO. 07-98-0387-CV IN THE COUR

T OF APPEALS FOR THE SEVEN TH DISTRICT OF TEXAS

AT AMARILLO PANEL C JUNE 20, 2000

______________________________ DEAN E. LIVELY AND FOUR “J” INTER NATION AL COR PORATI ON, AP PELLAN TS V. ROBERT E. GARR ETT AND RANDAL L C. JEFFER S, APPELLEES

_________________________________ FROM THE 1 81ST DI STRICT COURT OF RA NDALL COU NTY; NO. 42,733-B; H ONORABLE SAM UEL C. KISER , JUDGE

_______________________________ Before QUINN and REAVIS an d JOHNSON, JJ. Appellants Dean E. Live ly and Four “J” Intern ationa l Cor porati on appea l from a judgment

entered against them f or exemplary damages, attorney’s fees, and declarato ry relief. W e reverse and render.

FACTUAL AND PROCEDURAL BACKGROUND-2-

In the early 1990's appellees Robert E. Garrett an d Randall C . Je ffers became partners in a general partn ership call ed Finis Terr a. Finis Ter ra and appellant Dean E. Lively became associate d in land dev elopment activ iti es i n the Amarill o, Texas, area

. Lively’s involvement in the development activities was both indiv idually and through sev eral business entities with which he was associated or in which he was an officer or partici pant. The land develo pment venturesdid not prove to be success ful to all the participants’ expectations, and some of t he Fin is Ter ra par tners , not i ncludi ng app ellee s, bec ame plai ntif fs in a lawsuit against Lively, his various ass oc iated entities , and others. The litigati on was filed i n the 181 st Dis trict C ourt of Randall C ounty (“t he Pre-Developer Litigation”). The litig ants attempted to negot iate a settlement agreement. Because Finis Terra’s participati on in the land development and the lawsuit wasas a general partnership, Lively needed appellees to be parties to the Release and Settlement Ag reement (“the P reDeveloper

Release”, or

“the Release ”) whi ch was to settle the lawsuit and allow Lively, his associated business entities and hi s associatesto proceed w ith development of the land which was inv

olved in t he ventu re. Appel lees, howev er, would not agree to sign the release w hich was being negoti ated.
Before they became i nvolved in Finis Ter ra and its i nvestment acti vitieswith Li vely, appellees had suffered f inancial difficulties in their real estate businesses. The end result of those prior

difficulties w

as entry of an agreed judg men t against a ppellees in th e 108 th DistrictCourt of Potter Co unty, Te xas, in fa vor of Am west Savings Assoc iation. The judgment was dated October 31, 1991, an d was in the amount of $30 3,956.82, which included principal, pre-judgment inte rest, and attorney’s fees (“the 199 1 judgment”).-3-

During the same ti meframe that the Pre-D eveloper R elease wasbeing negot iated, Lively was negotiating with First American Bank, SSB (“First American”), succe ssor t o AmW est Savings, to restructure debt on which Lively was a guarantor. Either through his negotiationswith Fi rst American or through con ver sations w ith appellees, Lively learned of AmWest’s 1991 Judgment agains t appellees. B ecause appelleeswere hesi tating to sign the Release, which Lively needed them to sign so the Pre-D eveloper p roject could continue, Lively thr eatened appellees t hat he would purchase the 1991 J udgment from Fi rstAmerican to g ain lever age agains t them in settl ement negotiati ons. As part of hi s negotiationswith Fi rst American , Lively reached an agr

eement with C arla Addy, a Vice President of Fi rst American , for Lively to purchase the1991 Judgment for $15 ,000. The sale of the Judgment by First Amer ican to Lively had to be approved by the Federal Deposit Insurance Cor poration. FDIC’s approval w as obtained in ear ly November, 1994, butLively

had not yet reached a complete agreement with FirstAmerican on r estructuri ng of the d ebt o n wh ich h e wa s guarantor , so the sale of the1991 Judgment w as not consummated at that ti me. During November, 1 994, the Pre-Dev eloper Litig ation settlement negotiationswere progressi ng. By t he time a settlement was reached and languag e for the Pre-D eveloper Release was finali zed in late November, appellees Garr ett and Jeffers had ag reed to execute the Release. Because of the threats w hich Livel y had made about pur chasing the 1991 Judgment, a ppellees i nsisted on a clause being inserted in the Release to protect them from Lively ’s threatened ac tions. Thus, sho rtly before the Release w as execut ed, clause 4.4.c. became part of the Pre -Develope r Release. Clause 4.4.c. provided th at:-4-

Notwiths tanding anything to the c o ntrary in this Agreement, the Lively parties, Flagship , ITC, Antho ny M. Saikowsk i, and any ot her per son, fi rm, corporation, partnership or association owned in part of [sic] controlled in part by Dean E. Lively agree that they will n ot acquire or seek to acquire any judgment, note, lien, demand, cl aim, or cause of ac tion current ly held or ow ned by any creditor of Fi nis Terra Par tners, and any

such acquire d judgment, note, lien, demand, debt, claim, or cause of

action wh ich may be acqu ired is rele ased here by. By defi nitions i n the Release, a ppellees were each “Fi nis Terra Par tners” and appel lant Lively was a “Lively party.” The writ ten Release was executed effecti ve Nov ember 30, 1994.
Because of the additio n of clause 4.4.c. to the Pre-Developer Release, Lively de cide d that he could not comple te the purchase of th e 1991 Judgment f rom First American, despite his earlier agreement to do so. Ms

. Addy, w ho was neg otiating w ith Lively on other debts, was very disappointed w hen Lively told her in early December, 1994, thathe cou ld not complete t he agreed-upon purchase of the 1991 J udgment. Being concerned that his faili ng to purchas e the 1991 Judgment would affect Ms . Addy ’ s negotiating posture on his other oblig ations, Lively told h er thathe would tr

y to find another purchaser

for the 1991 Judgment . He ap proached various persons w ho declined to purc hase t he 1991 Judgment. Lively approached a neig hbor of his, Jose ph Mangione. Mangio ne was in the real estate business, aswell as being an inv

estor in different enterprises. Mangione and Livelyhad pr evio usly become social and bus iness friends a nd had done favors for ea ch other, altho ugh they had not been financiall y associ ated in a business venture. Mangione took an interest i n purchasing t he judgment as a business investment. The trial tes timony is conflicting on how much, i f any, contact M angione had-5-

with Carla Addy

regarding the 1991 Judgment, but on May 31, 1995, First Ame rican sold the 1991 judgment to appellant Four “J” Inter national (“F our J”) for $15,000. Mangione and his wife own all of the stock of Four J, and they are the corp orate office rs. Liv ely and Mangione both te stifie d that L ively had no previous kn owledge of or dealings with Four J.
In the summer of 1995, Four J bega n procee dings to collect amounts due under the judgment. Appellees r

esponded to the col lection efforts of Four J with a lawsuit in Randall Coun tya gainst Lively and Four J. Garrett

and Jeffers sought declaratory judgment that Lively breached claus e 4.4.c. of the Pre- Developer Release b y c ontrolling Four J in i ts purchase of the 1991 Judgment; therefore, the 1991 J udg me nt was sat isfied, releas ed and fully dis charged, and ap pellees ha d no further liabil ity for amountsdue under the judgment. They also sought damages and attor ney’s fees from appe llants on the ba ses that(1) Liv ely breac hed the Release; (2) Liv ely committe d fraud by executing the Release with clause 4.4.c. in it w hen he did not in tend to comply with clause 4.4.c.; (3) Four J tortiouslyi n terfered wi th Lively ’s oblig ations under cl ause 4.4.c., the P re-Devel oper Release and the relati onship betwe en appellees and L ively w hich the Relea se created; and (4) Lively a nd Four J conspi red to cause Li vely’ s breach of claus e 4.4.c. Appell ees claimed that appellantsacted oppressively and with actual malice in their actions and were therefore liable for ex

emplary damag es. Both Lively and Four J filed challengesto venue in Randall C ounty. The v enue challenge s were overruled.
Followi ng a bench trial , judgment was entered in favor of appellees . The 1991 Judgment agai nst appellees w as declared to be satisfied, released and di scharged, and attorney’s fees and exemplary damages were awarded to appellees. Noactual damages1 See T EX
. C IV
. P RAC
. & R EM
. C ODE A NN . § 15.002(a)(1) (Vernon Supp. 2000). -6- were awarded. Appellants request ed and the trial court entered find ings of fact and conclusions of law. By eight issues Lively chall enges the trial court’s (1) venue determi nation, (2) Findings of Fact and Conclusi ons of Law, and (3) judgment in favor of appe llees. Four J does notchallenge t he trial cour t’s venue ruling, but a ppeals the (1) Findingsof Fact and Conclusions of Law, and (2) judgment. Appellees respond that the Pre-Developer Releas e and the judgment based on the Release were formula ted in and arose out of prior Ran dall County li tigation. Thus, they claim that a substanti al part of the even ts or omissi ons 1 givi ng rise to their clai m occurred in Randall Count

y, and the challenges to venue were properly overrul ed by the tr ial court. They then assert that the trial court corr ectly cons trued clause 4. 4.c. to be unambig uous and that the trial court’s findi ngs and judg ment are based on l egally and factually

sufficient evidence. B ecause our conc lusion that theevidence is legal ly insuffici ent to support th e trial court’s findin g that Livel y breached t he terms of clause 4.4.c. of the Pre- Developer Release is dispositive of the appeals ofboth Lively and Four J , w e fi rst address Lively’s issue two and Four J’s

issues one and two.

LAW
When multiple g rounds for reversal are pr esented on ap peal, the appellate court should first addres s those issu es which would afford the g reatest reli ef to an appellant.-7-

Bra dleys’ Elec ., Inc. v. CIGNA Lloy ds Ins. Co. , 995S.W.2d 6 75, 6 77 ( Tex . 199 9). If a challen ge to venue is presented on appea l as well as an issue w hich war rants rev ersal of t he trial court judgment, we are to first address the issue which warrants revers al, an d render the judg ment which t he trial cour t should hav e rendered. Id

. Findings of

fact entered in a case tried tothe bench have the same force and dig nity
as a jury’ s verdic

t upon questio ns. Anderson v. City of Seven Points , 806 S.W.2d 791, 794 (Tex.1991). Atrial court’s findings of fact are reviewable for legal and factual suf ficiency by the s ame stan dard s app lied in revi ewing t he su ff icien cy o f the evid ence su pportin g a jury’s finding. Id . A

factual finding mus t be supported by more than surmi se or suspic ion. Browning-Ferris, Inc. v. R eyna , 865 S.W.2d 925, 928 (Tex. 1993). When reviewing a legal sufficiency poin t, we consider only the ev idence and inferenc es tending to support the tr ial court's finding, dis regarding all contrar y evid ence and inferences. Wa l-Mart Stores, Inc.
v. Gonzalez , 968 S.W.2d 934, 936 (Tex. 1998). Evi dence from which eq ually pl ausible but opposite infe renc es ma y be dr awn is speculat ive and thuslegally insufficient

to support a findin g. Id . In consider ing a factual s ufficiency is sue, we r eview all the ev idence and
reverse only if the c hallenged findi ng is so ag ainst the gr eatweight

and preponderance of the evidence as

to be manifestly

unjust. Pool v. Fo rd Motor C o. , 715 S.W .2d 629 , 635 (Tex.1986); In Re King’ s Estate , 150 Tex. 662, 244 S.W.2d 660, 661 (1962). The trier of fact is the sole judge of the credibil ity of the witnesses and the weight to be given to their test imon y, Leyva v. Pacheco , 163 Tex. 638, 358S.W.2d 547, 549 (1962), and may be lieve
one witnessand disbelieve another and resolve inconsistenc ies in testi mony. McGalliard v. Kuhlmann , 722 S.W .2d 694, 697 (Tex. 1986 ).-8-

One person or enti ty “contr ols” another person o r ent ity by exercis ing restr

aint or deciding influe nce over th e other , or by dom inating, regulati ng, or ov erpoweri ng the other. See Board of Ins. Comm’rs v . Duncan , 174 S.W.2d 326, 329 (Tex.Civ .App.--Amari llo 1943, writ ref’d). “Control” of one by another may be by e ither an agr eement gover ning the right of control, or b y an actual exercis ing of control

. See Coastal Marine Serv. of Texas, Inc.
v. Lawrence , 988 S.W.2d 223, 226 (Tex. 1999). Evidence of the possibili ty of control is not evidence that

the right of control ex ists or that actual contr

ol is exercised. Id

. ANALYSIS Appellants and appellees developed and tried the cas e in the tria l court on the question of whether

Four J was “controlled” in partby Lively w ithin the meaning of clause 4.4.c., and the theory that if it was, then Lively breached the term s of clause 4.4.c. of the Pre-Dev eloper

Release. Asnoted above, the othe r claims as serted by appellees against appellants (fraud by Lively, tort ious interference with contract by Four J, and civil
cons pira cy) are necessarily based on a finding that Lively b reached clause 4.4.c. Therefore, we first consider the ev identiary challengesof appe llants to the trial court’s finding that Fo ur J was“controll ed” in part by Lively in relatio nship to Four J’s acquisiti on of the 1991 Judgm ent, within the meaning of clause 4.4.c.
The trial cour

t concluded asa matter of law that clause 4.4.c. of the Pre-Developer Release is not

ambiguous. N either appell ants nor appellees urge on appeal tha t clause 4.4.c. is ambiguous , but, rather, assert that i t is not ambig uous. We treat th e clause as unambiguous.-9-

Appellees do not contend that Lively owned any part of Four J; nor do they contend thatin general business matters Lively contr olled Four J in whole or in part. They maintain, however , that the recor d contains proo f that Lively controlled F our J’s inv olvement

in the purchase of the 1991 Judgment “from beginning to end .” The evidence app ellees cite to support such conclusion is included in our factual rec itation abov e. Additionally , appellees point to testimony

of Joseph Mangi one that he and Four J would n othave heard of or been involved in pur

chasi ng the1991 Ju dgme nt had it not been for Liv ely. Liv ely prov ided information about Four J to Carla Addy so assign ment of the Judgment coul d be made to Four J, and Liv ely acted as courie r between F our J and Fir st American asto physical transfer of the assignment

of the judgment. N one of these actions qualify as evidence th at Lively dominated or exercised a d etermining in fluence, in whole or in part, over Four J’s (1) decision to inquire about the Judgmen t, (2) decision to make an offer to purchase the Judgment, or ( 3) decision to consummate purchas e of the Judgment in May, 1995.
The record does not cont ain direct ev idence that Lively exercised or had the right to exercise, in whole or in p art, a de ciding, do minati ng, regula ting, or determining influence
over Four J in its purchase of the 1991 Ju dgmen t. Livel y denied any control over, and
even knowledg e of the existen ce of, Four J until short ly before the j udgment wasassigned by First Amer ican in May , 1995. Mangi one, as presi dent of Four J, denied that Lively exerted any contro l over F our J’s deci sion whether to purchase the Judgment. Mang ione testified that L ive ly adv ised him Lively could not purchase the Judgment because of an agre eme ntLively

had made, but that Li vely t hought the Judg ment would be agood business venture. Man gione as serted that the d ecision to pur chase the Judg ment was-10-

his a lone; that L ively

had no interest

in Four J, no control over Four J, no interest i n any proceeds from the Judgment; and that the decision to purchase the J udgment was based
on Mangione’s

examination of a credit repor t on appellees and the fact that Four J would be purchasing the judgment for “five cen ts on the dollar .” No w itnesses other than Lively and Mangione purport ed to ha ve knowledge of what ty pe of relationshi p existed be tween Lively and Four J. After Four J beg an collectio n efforts on the Judg ment, appellee Jeff ers approached Lively . Lively stated that he w

ould see wha t he could do about the matter, but did not say that

he had any cont rol over or righ t t o control Four J to any extent. Jeffers’ testimony

made no reference to L ively ’s relati onship to Four J during the time Four

J was considering purchasing the 1991 Judgment, or when F our J purchas ed the Judgment.
The record demonstr

ates that Lively was aware that he coul d not purchase th e 1991 Judgment

after he executed the Pre-Dev eloper Release, and th at he was hi ghly moti vated to have the Judgment purchased f rom First American so thathis on-goi ng negotiat ions wit h FirstAmerican would not be compromi sed. A pre-existing social and business relationship between Lively

an d Mangio ne is not contr overted. C arla Addy looked to Lively to find a purchaser

for the 1991 Judgment in accordan ce with the sale price approved by the FDIC, and she consider

ed the sale of the Judgment a “Li vely d eal.” Lively approached v arious potential purchasers of the Judgment and w as not successful in finding a purchaser until Mangione expressed interest. Lively facilitated Fo ur J’s pur chase of the 1991 Judg ment, much as a broker or attorney mig ht facilitate a transaction for a friend or cl ient by making suggestions, disclosin g inform ation a nd assis ting with con tracts or assign m ents. But, assi sting an entity in a transaction does not equate to “control” of the entit y whi ch i s-11-

entering into the transaction. The trial ev idence does not c reate a strong er inference that Lively exercis ed or

had the right to exercise any decidi ng influence over, any domi nation of, subjection or

overpowering of

Four J to any ex

tent in its de cision to pur chase the Judgment, than th e evi dence c reates an infer ence th at Four

J ma de an independent business deci sio n to purchase theJudgment becauseof the possibil ity of multip lying its investment th rough coll ection of all or part of the Judg ment.
The trial cour

t, as fact finder and judge of wi tness credibi lity, could have di sbelieved
or discounted the testimony of Liv ely and Man gione that Li vely h ad no control ov er Four J. But, disbeli eving s uch testimony would not c reate affirmativ e evidence that Lively controlled Four J, w hich was the b urden of proof borne by appe llees. Ci rcumstantial evidence may be used to establish mater ial facts. However , where thecircumstanti al evi dence only cr

eates suspici on or surmise , we must s ustain a chall enge to its lega l sufficiency. Browning-Ferris, Inc. , 865 S.W.2d at 928.
We sust ain t he ch alle nges of L ive ly’s s econd issue and Four J’s first and second issues to the legal sufficie ncy of the ev idence to suppor t the finding that Lively

breached clause 4.4.c. of th e Pre-Developer Releas e. Because our disposition of Lively ’s second issue and Four J’s first and second issues is determinati ve of their app eal, we do n ot address the remainder of their issues, including Lively’s challenge to the trial court’s venue ruling. T EX
. R. A PP
. P. 47.1; Bradleys’ Elec., Inc. , 995 S.W.2d at 676-77.
The judgment of

the trial court is rev

ersed and judg ment is rendere d that appellees take nothing.-12- Phil Johnson Justice

Do not publish

.