Case Name: NATIONAL FAMILY CARE LIFE INSURANCE COMPANY and NFC Marketing Associates, Appellants, v. Frances Ann FLETCHER, Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 2001-10-25
Citations: 57 S.W.3d 662
Docket Number: No. 09-00-537-CV
Parties: NATIONAL FAMILY CARE LIFE INSURANCE COMPANY and NFC Marketing Associates, Appellants, v. Frances Ann FLETCHER, Appellee.
Judges: Before WALKER, C.J., BURGESS and GAULTNEY, JJ.
Reporter: South Western Reporter Third Series
Volume: 57
Pages: 662–677

Head Matter:
NATIONAL FAMILY CARE LIFE INSURANCE COMPANY and NFC Marketing Associates, Appellants, v. Frances Ann FLETCHER, Appellee.
No. 09-00-537-CV.
Court of Appeals of Texas, Beaumont.
Submitted May 3, 2001.
Decided Oct. 25, 2001.
Hector DeLeon, Thomas P. Washburn, DeLeon, Boggins & Icenogle, P.C., Austin, Thomas W. Duesler, Harris, Lively & Duesler, L.L.P., Beaumont, for appellants.
Michael R. McGown, Benckenstein, Nor-vell & Nathan, L.L.P., Beaumont, for ap-pellee.
Before WALKER, C.J., BURGESS and GAULTNEY, JJ.

Opinion:
OPINION
GAULTNEY, Justice.
National Family Care Life Insurance Company and NFC Marketing Associates (collectively "appellants" or "NFC") appeal the trial court's judgment entered in favor of appellee Frances Fletcher. Fletcher filed suit against appellants for breach of contract arising out of an agency agreement, under which she sold insurance on their behalf. She sought renewal commissions she claimed were vested on termination "without cause" of the Agreement. The jury found NFC breached the Agreement and awarded Fletcher $91,380.00 in damages, plus interest and attorney's fees. Appellants raise five issues.
Venue
In issue one, appellants contend the record does not support venue in Jefferson County, Texas, where Fletcher filed suit; they argue that venue is proper in Dallas County.
The Supreme Court has stated that where venue may be proper in more than one county under general, mandatory, or permissive venue rules, the plaintiff is given the first choice of venue in the filing of the suit. See GeoChem Tech Corp. v. Verseckes, 962 S.W.2d 541, 544 (Tex.1998); Wilson v. Texas Parks and Wildlife Dep't, 886 S.W.2d 259, 260 (Tex.1994). If the defendant challenges plaintiffs venue choice, the burden falls on the plaintiff to prove that venue is maintainable in the county of suit. Id.; Rosales v. H.E. Butt Grocery Co., 905 S.W.2d 745, 750 (Tex.App.—San Antonio 1995, writ denied). Since appellants challenged Fletcher's choice, the burden was on her to prove that Jefferson County is a proper venue site. In re Masonite Corp., 997 S.W.2d 194, 197 (Tex.1999). Our standard of review of the trial court's denial of a motion to transfer venue is found in Tex. Civ. PRAC. & Rem.Code Ann. § 15.064(b) (Vernon 1986). We must conduct an independent review of the entire record, including the trial on the merits. See Wilson, 886 S.W.2d at 261.
In support of their position that venue should be maintained in Dallas County, appellants direct us to both the general venue rule in section 15.002(a)(3) of the Texas Civil Practices and Remedies Code and another venue provision in section 15.035(a). See Tex. Civ. Prac. & Rem.Code Ann. § 15.002(a)(3), 15.035(a) (Vernon 1986 & Supp.2001). Appellants argue that since their contract with Fletcher expressly provides that the agreement "shall be deemed to have been executed and be performable in Dallas, Dallas County, Texas," venue is proper there under section 15.035(a).
Claiming their principal office is in Dallas County, appellants also contend the general venue rule, as well as section 15.035(a), puts venue there. The general venue rule states that "[e]xcept as otherwise provided by [Subchapter A] or Sub-chapter B or C," "all lawsuits shall be brought ." in the venues specified by § 15.002. See Tex. Civ. Prac. & Rem.Code Ann. § 15.002 (Vernon Supp.2001). The "[e]xeept as otherwise provided" language refers to the definitions and general rules of Subchapter A, the mandatory venue rules in Subchapter B, and the permissive venue rules in Subchapter C.
Section 15.035(a) is not a mandatory venue section; it is permissive. Since it falls in the permissive category, Fletcher was not required to file suit in Dallas County under section 15.035. Neither the reviewing court nor the trial court is required to transfer the case to a permissive venue site when the record shows by probative evidence that venue is proper in the county where plaintiff instituted suit. See generally Tex. Civ. PRAC. & Rem.Code Ann. § 15.063(1) (Vernon 1986).
Here, there is probative evidence that Jefferson County is the county in which a substantial part of the events or omissions giving rise to the claims occurred; the suit is properly in Jefferson County under the general venue statute. See § 15.002(a)(1). Evidence in the record reflects that Fletcher's territory and business activity included Beaumont, Jefferson County. She testified her "East Central" territory included Beaumont; she sold some of the insurance policies in Jefferson County; a portion of the commission payments at issue in the suit came from policies sold in Jefferson County; appellants maintain offices in Jefferson County; appellants issued and Fletcher received some commission checks in Jefferson County; and Fletcher's supervisor directed her employment from Jefferson County. Based on our independent review of the record, we find probative evidence that Jefferson County is the county in which a substantial part of the events or omissions giving rise to the claim occurred. We overrule issue one.
CROSS-EXAMINATION
Issues two, three, and four all relate to the trial court's limitation of appellants' right of cross-examination. Specifically, the trial court denied appellants the right to cross-examine Fletcher in three areas: her performance under the contract (a liability issue), her economic damages (the damage issue), and the accuracy of her direct testimony on both issues (impeachment). We address only issue two, since it is dispositive of this appeal.
The complaint here involves more than simply exclusion of relevant evidence or error in rulings on the form or nature of questions; the essential complaint here is that an issue in dispute was blocked off from cross-examination, and supporting evidence, by the trial court. Before we address the basis for the trial court's ruling, we address its context.
Protected by both the Fourteenth Amendment to the United States Constitution and article I, section 19, of the Texas Constitution, cross-examination is a fundamental due process right. See U.S. Const. amend. XIV, § 1; Tex. Const, art. I, § 19; see also Goldberg v. Kelly, 397 U.S. 254, 269, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) ("In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses."); Davidson v. Great Nat'l Life Ins. Co., 737 S.W.2d 312, 314 (Tex.1987) ("Due process requires an opportunity to confront and cross-examine adverse witnesses."). Wigmore has characterized cross-examination as follows: "It may be that in more than one sense it takes the place in our system which torture occupied in the mediaeval system of the civilians. Nevertheless, it is beyond any doubt the greatest legal engine ever invented for the discovery of truth." 5 John Henry Wigmore, Evidence § 1367, 32 (Chadbourn rev. 1974). The Texas Supreme Court emphasizes that "[c]ross-examination is a safeguard essential to a fair trial and a cornerstone in the quest for truth." Davidson, 737 S.W.2d at 314. We therefore review a denial of cross-examination with the utmost scrutiny.
Appellants argue the trial court erred in refusing to allow them to cross-examine Fletcher on the issue of her performance, an ultimate controlling issue under the Agreement. In effect, they maintain that in order to recover on her breach of contract claim, Fletcher had to show, along with the other elements of her cause of action, that she performed or tendered performance under the Agreement. The Agreement expressly provides that all "commissions, bonuses, fees, benefits or other compensation payable to Agent by [appellants] shall immediately cease . [if] Agent shall violate any of the terms, provisions or covenants of the Agreement." If Fletcher violated the Agreement, she would not have performed her obligations under it, and defendants would be relieved of their obligations to pay her the requested compensation. To meet this proof requirement, Fletcher testified she did not violate any of the terms of the contract; appellants argue they had the right to cross-examine her on that issue.
At trial, Fletcher objected to appellants' cross-examination on the ground that the subject matter (performance) on which appellants sought to cross-examine her was irrelevant, as was any evidence appellants offered to support their cross-examination on that issue. Fletcher told the trial court that the basis for her "irrelevancy" objection could be found in appellants' response to her request for disclosure. When asked in Fletcher's request for disclosure to list their "[l]egal theories and, in general, the factual basis of [their] claims or defenses[,]" appellants responded as follows:
RESPONSE:
Defendants specifically deny that Defendants terminated the agreement between Plaintiff and Defendants on or about December 15, 1997. Defendants specifically deny that there is any evidence they terminated said agreement.
Defendants claim that Ms. Fletcher choose [sic] to terminate the agreement between herself and Defendants as a result of her failure to abide by the terms and conditions of the agreement.
The incident which caused Ms. Fletcher to terminate her contract with Defendants occurred in December of 1997. Ms. Fletcher insulted the office staff at National Family Care Life Insurance Company to a customer, and the customer, Mr. Ford, wrote a letter of complaint to Defendants. Ms. Sandra Erwin wrote to Ms. Fletcher's manager, Yernell Bateaste, and to Ms. Fletcher demanding that Ms. Fletcher write an apology to the office staff and to Mr. Ford. Ms. Fletcher chose to terminate her agreement with Defendants and instigate this litigation, rather than to issue the requested apologies.
Fletcher argues that appellants' response serves to limit the subject matter on which they may present evidence and conduct cross-examination. Since appellants specifically referenced the Ford incident as being the cause of termination, Fletcher maintains their cross-examination must be restricted solely to that subject matter; she says any other issues, such as her performance or violations of the contract, are irrelevant.
Appellants' offer of proof to the trial court included documents stating that the company's policy was not to replace or add on coverage to existing insurance policies. Several company memos repeated the following instruction:
We HAVE CLEARLY INSTRUCTED ALL AGENTS AND MANAGERS THAT EXISTING BUSINESS MAY NOT BE REPLACED OTHER THAN BY THIS OFFICE IF IT IS DEEMED NECESSARY. CONTINUED REPLACEMENT OF EXISTING BUSINESS COULD RESULT IN THE TERMINATION OF THE agent/managek involved PER Bob Erwin.
This instruction, like other NFC rules and regulations on selling policies, had to be followed by Fletcher and other agents. NFC offered a copy of a letter sent by NFC in December 1997 to Fletcher's supervisor in Beaumont and to Fletcher herself. Appellants specifically referenced this letter in their response to Fletcher's request for disclosure. The letter declared that Fletcher "is and has been the biggest offender of replacing business." Referencing the Ford incident, the letter stated as follows: "If this gentleman's policy had not been rewritten, there would never have been a problem." To rectify the difficulty, NFC instructed Fletcher to write a letter of apology to NFC staff and a letter to Ford "telling him it was her fault." Fletcher refused to do so.
We believe the trial court based its decision to restrict appellants' cross-examination on an overly restrictive interpretation of appellants' response to the request for disclosure. The governing rule, Tex.R. Civ. P. 194.2(c), provides that a party may request, among other things, "the legal theories and, in general, the factual bases of the responding party's claims or defenses (the responding party need not marshal all evidence that may be offered at trial)[.]" We do not view appellants' response — which moves from their general denial of termination, to their defensive theory, to specific evidence pertaining to that theory — as permitting the trial court to restrict cross-examination to the incident with Ford and Fletcher's refusal to apologize to him.
The disclosure response encompassed more than the Ford incident, as is evidenced by the express references in appellants' response to two letters written by Sandra Erwin, the president and CEO of NFC, to Fletcher's supervisor and to Fletcher herself. Also included in appellants' response to the disclosure request was a list of persons with knowledge of relevant facts. Appellants named Ford as one of those persons and described his knowledge of relevant facts as follows:
Mr. Ford is a customer of [NFC] who wrote a letter of complaint concerning several items, including Ms. Fletcher rewriting his policies and insulting the office staff at [NFC].
From the context of the response, it is clear that the disclosure encompasses the performance issue.
In making the determination to limit appellants' cross-examination, the trial court had before it the response to the disclosure, along with three letters appellants offered as evidence. The trial court reviewed the letters in their entirety and then, in two of the letters, redacted those portions that expressly described Fletcher's "rewriting" violations of the contract. The third letter was excluded in its entirety. The two letters that the trial court redacted were cited in the disclosure response as evidence of the appellants' legal theories, which were set out by appellants in the second paragraph of their disclosure.
We conclude that appellants' response, when read in the context of the content of the letters referenced in the response, as well as appellants' description of the relevant facts known by Ford, was clearly adequate to put Fletcher on notice of appellants' legal theory, as well as the factual bases of that theory. To the extent that the trial court limited cross-examination because of appellants' response to the request for disclosure, the trial court erred. Appellants were not required to marshal all their evidence in responding to this discovery tool, whose purpose is to obtain early disclosure of basic information.
Furthermore, even if appellants' response to the request for disclosure could somehow serve to restrict the presentation of their defense to the circumstances surrounding the Ford incident, appellants were nonetheless entitled to cross-examine Fletcher on the elements of her cause of action. Performance is an essential element of a breach of contract claim. See Frost Nat'l Bank v. Burge, 29 S.W.3d 580, 593 (Tex.App.—Houston [14th Dist.] 2000, no pet.) (The elements are (1) the existence of a valid contract; (2) plaintiffs performance or tender of performance; (3) defendant's breach of the contract; and (4) damage to the plaintiff as a result of defendant's breach.). Because appellants expressly contested the element of performance, evidence of Fletcher's violation of the terms of the contract is relevant to the existence of a fact that is of consequence to the determination of the action.
In addition to the rules of discovery, we look to the rules of evidence. Evidence Rule 611 provides, in pertinent part, as follows:
(a) Control by Court. The court shall exercise reasonable control over the mode and order of interrogating witnesses and presenting evidence so as to (1) make the interrogation and presentation effective for the ascertainment of the truth, (2) avoid needless consumption of time, and (3) protect witnesses from harassment or undue embarrassment.
(b) Scope of Cross-Examination. A witness may be cross-examined on any matter relevant to any issue in the case, including credibility.
Tex.R. Evid. 611(a), (b). The definition of "relevant evidence" is set forth in Rule 401:
"Relevant evidence" means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.
Tex.R. Evid. 401. These rules provide that within the confines of the court's reasonable exercise of control over interrogation of witnesses and presentation of evidence, the parties may cross-examine witnesses on any matter relevant to any issue in the case, including credibility. As we apply Rule 611(b) to this case, appellants had the right to test the credibility of the party bringing the suit on the elements of that party's cause of action. If, upon cross-examination, the party is found to be equivocal or less than truthful, the jury weighs that response and draws its own conclusion. In short, "[t]he right to cross examination is a vital element in a fair adjudication of disputed facts[,]" and it includes "the right to cross examine adverse witnesses and to examine and rebut all evidence^]" Richardson v. City of Pasadena, 513 S.W.2d 1, 4 (Tex.1974). We, therefore, hold the trial court erred in not allowing appellants to exercise their constitutional right to cross-examine Fletcher on one of the essential elements of her cause of action.
The trial court not only narrowly restricted the subject matter of NFC's cross-examination of Fletcher, it also excluded (on relevance grounds) other evidence appellants offered in support of their theory that Fletcher violated the terms and conditions of the Agreement. Appellants claim the trial court erred in excluding such evidence. In reviewing a trial court's admission or exclusion of evidence, we employ an abuse of discretion standard. See McEwen v. Wal-Mart Stores, Inc., 975 S.W.2d 25, 27 (Tex.App.—San Antonio 1998, pet. denied). In their offer of proof, appellants submitted evidence pertaining to two categories of Fletcher's alleged violations of the Agreement: violation of appellants' "rewriting" policy and the policy regarding "fraternizing" with other company employees. We again focus our analysis on the proof offered by appellants concerning Fletcher's violation of the replacement policy.
As we have noted herein, appellants submitted documents in their offer of proof that established the company's policy against replacement of existing business. They also submitted two letters referencing the Ford incident that contained express references in their offer of proof to Fletcher's "violation] [of] Company Policy time and time again by continuing to add on coverage to present policyholders." Written in December 1997, both letters were in response to the incident with Ford, the disgruntled policyholder who had submitted complaints about Fletcher; both letters were identified in appellants' response to the request for disclosure. Appellants also offered a 1995 letter, written on NFC letterhead and addressed to Fletcher, in which Fletcher was instructed "not to add any coverage on any existing policyholders." The letter further states the following:
We want career oriented people, not people using the company and its lead system to become vested for life. I would recommend that you read your contract carefully. It states that in order to receive renewals, you must stay in good graces with the Company at all times. This means doing the things that have been stated in writing to you.
In addition, as we have noted, several memos repeated the instruction that "replacement of existing business could result in the termination" of the agent. The trial court excluded appellants' offer of proof.
Appellants' offer of proof included documentary and testimonial evidence that related to violations of the Agreement. The excluded evidence was relevant to Fletcher's "performance," an ultimate issue in the ease, and to Fletcher's credibility. We, therefore, find the trial court abused its discretion and erred in excluding this evidence on grounds of irrelevancy, just as it erred in restricting appellants' cross-examination on the same ground. The trial court's limitation of cross-examination and exclusion of relevant evidence in support of that cross-examination effectively muzzled the appellants at trial on a key disputed issue. Since this evidence related to an essential element of Fletcher's cause of action, the error probably caused the rendition of an improper judgment and was harmful. See generally Brookhart v. Janis, 384 U.S. 1, 8, 86 S.Ct. 1245, 16 L.Ed.2d 314 (1966) (holding that, in the criminal context, "[a] denial of cross-examination . would be constitutional error of the first magnitude and no amount of showing of want of prejudice would cure it."). We sustain issue two.
We decline to consider issues three and four as they also relate to the denial of cross-examination and would not result in greater relief than the new trial we have granted.
Damages
In issue five appellants contend there was no evidence, or, in the alternative, insufficient evidence, to support the jury's answer as to the amount of Fletcher's damages. On the legal sufficiency point, appellants claim they are entitled to a judgment that Fletcher recover nothing. We have considered this point because it asks for greater relief that we grant under issue two. Consideration of the factual sufficiency point is unnecessary, however, since appellants would have no greater relief on that point than the remand we grant under issue two.
In reviewing the damages award under a legal sufficiency standard, we consider only the evidence and reasonable inferences supporting the jury's damages finding. See Minnesota Mining & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733, 738 (Tex.1997). If there is more than a scintilla of evidence favoring the finding, appellants' legal sufficiency challenge must fail. Id. Fletcher offered her 1099 form from 1997 which reflected compensation of $30,467.06 for ten months. She testified she was entitled to $1,523 per month in commissions for sixty months or $91,380, the amount the jury awarded her. This testimony, along with the 1099 form, amounts to more than a scintilla of evidence on her damages. The fact that NFC's offer of proof cast doubt upon the calculation of her damages does not affect our legal sufficiency review. "[A]n appellate court generally may not reverse and render a different judgment based on excluded evidence." See Transport Ins. Co. v. Faircloth, 898 S.W.2d 269, 275 (Tex.1995). We cannot conclude on this record that Fletcher's unrebutted evidence was no evidence and thereby render a take nothing judgment. We overrule issue five.
Having sustained issue two, we reverse the judgment of the trial court and remand this case for a new trial.
REVERSED AND REMANDED.
. Although appellants direct us to cases citing the predecessor of section 15.035 for the proposition that venue is controlled by the place where the contract requires the defendant (rather than the plaintiff) to perform, those cases do not assist appellants. The controlling principle here is that a plaintiff has first choice on venue selection, as long as she selects a "proper" county. See In re Masonite Corp., 997 S.W.2d at 197.
. We recognize that Fletcher pleaded her venue facts under Tex. Civ. Prac. & Rem.Code Ann. § 15.092(b) (Vernon 1986), which applies to suits brought in justice court, not in district court. However, at trial she presented venue facts, as detailed herein, that demonstrate venue is proper in Jefferson County under section 15.002(a)(1).
. Section 15.002(a)(1) provides "the county in which all or a substantial part of the events or omissions giving rise to the claim occurred" is a proper county in which to file suit. See Tex. Civ. Prac. & Rem.Code Ann. § 15.002(a)(1) (Vernon Supp.2001).
. In issues two and four, appellants contend the trial court erred in refusing to allow them to cross-examine Fletcher on the issues of performance under the contract and on damages. In issue three, appellants claim the trial court erred in refusing their request for a special issue on excuse, which they pleaded as a defense to Fletcher's breach of contract cause of action. Appellants contend their special issue on excuse was supported by the evidence that would have been developed had the trial court allowed them to cross-examine Fletcher on her alleged non-performance of the Agreement.
. Appellants contested the issue in their general denial and by pleading in their answer Fletcher's violation of the contract as an affirmative defense.
. Appellants' response to Fletcher's disclosure request is not contained in the record on appeal — either as a filed pleading or an exhibit. Tex.R. Civ. P. 191.4(a)(2) provides that discovery responses "must not be filed." The rule also provides in section (d) that "[a]ny person required to serve discovery materials not required to be filed must retain the original or exact copy of the materials during the pendency of the case and any related appellate proceedings begun within six months after judgment is signed, unless otherwise provided by the trial court." We note there are exceptions to the "no-filing" rule. See Rule 191.4(c). Here, Fletcher attached appellants' response to the request for disclosure to her appellate brief. Although appellants point out in their reply brief that their response is not part of the record, we note they do not dispute its contents. Moreover, the parties discussed the content of the response with the trial court during the trial; that discussion is part of the record.
. The redacted portions of the two letters, both written in December 1997, are as follows: "[Fletcher] is and has been the biggest offender of replacing business. This is the reason we have a Company Policy of not rewriting business. It only creates problems as indicated in the letter. If this gentleman's policy had not been rewritten, there would never have been a problem." (December 9, 1997). "You [Fletcher] have violated Company Policy time and time again by continuing to add on coverage to present policyholders. You have been cautioned in writing." (December 12, 1997). The third letter, dated March 19, 1997, addressed to Fletcher, and signed by Erwin, stated, "It is against Company policy to pay overwrites to someone who does not want to work with people and split business."
. Fletcher argues that most of the evidence in appellants' offer of proof is irrelevant, because most of the offered proof occurred pri- or to her quitting the company in 1996. Her contention is premised on the claim that she "left the employ of [NFC] in June [of that year], but was later hired back by NFC's President the same month." When asked by appellants' counsel at trial if she ever left the company, Fletcher testified "I had talked to [Sandy Erwin] about quitting one time, but it wasn't long enough for me to . have misses to mess up my contract." "That happened in a day's time. You have to have four misses a year in order for you to mess up your contract." A June 18, 1996, letter from Erwin to Fletcher stated that Erwin was informed on that day that Fletcher had left the company. According to Fletcher, she came back the same day she left, and her quitting did not affect her contract. Erwin's letter of June 24, 1996, appears to support Fletcher's interpretation, as does another Erwin letter of December 12, 1997. If Fletcher did leave the company for one day in June 1996, her departure and return did not affect the contract, which, along with her vesting rights, continued without interruption until December 1997.