Opinion ID: 894945
Heading Depth: 1
Heading Rank: 2

Heading: Evidence of Damages: Preservation and Legal Sufficiency

Text: Arkoma also challenges the legal sufficiency of the damages evidence. For the reasons stated above, we restrict our review to the two partnerships who proved fraud. They argue Arkoma failed to preserve this error in the trial court because Arkoma's no-evidence objection (1) did not specify why the evidence was legally insufficient, and (2) was not raised before or during trial. As these preservation points concern procedural matters, Texas law governs. [17] To assert a no-evidence complaint in this Court, a party must preserve error in both the trial court and the court of appeals. [18] The court of appeals held that Arkoma's objections in the trial court were not specific enough to call the trial court's attention to the precise lack of sufficiency asserted on appeal. [19] We disagree, for two reasons. First, Arkoma's post-trial motion explicitly asserted that there is no evidence . . . to support the jury's answers to each part of Question 4, the damages question. Generally, a no-evidence objection directed to a single jury issue is sufficient to preserve error without further detail. [20] Thus, as Justice Calvert wrote for this Court 50 years ago, while a single such objection to all 79 jury answers is too general, the same objection addressed to each individual issue is adequate. [21] Several commentators suggest this is precisely what careful practitioners should do. [22] Second, the cardinal rule for preserving error is that an objection must be clear enough to give the trial court an opportunity to correct it. [23] Here, the trial judge not only had that opportunity, he took it. The trial judge conducted a post-trial hearing on the sufficiency of the damages evidence, received letter briefs on the issue, and wrote a four-page single-spaced letter granting remittitur. Though damages were not reduced as much as Arkoma had hoped, there is no question the trial court was aware of its objection. Of course, stock objections may not always preserve error. If a single jury question involves many issues, it is possible that a general objection may not tell the trial court where to start. [24] But post-trial objections will rarely be as detailed as an appellate brief because time is short, the record may not be ready, and the trial court is already familiar with the case. In that context, an objection is not necessarily inadequate because it does not specify every reason the evidence was insufficient. [25] Like all other procedural rules, those regarding the specificity of post-trial objections should be construed liberally so that the right to appeal is not lost unnecessarily. [26] We hold the court of appeals erred in holding that Arkoma's objection was too general. It is a closer question whether Arkoma had to object to the damages evidence during trial. It was the partnerships' burden to prove damages by expert testimony, as the value of mineral reserves is not a matter of common knowledge. [27] Texas law requires an objection to expert testimony before or during trial if the objection requires the court to evaluate the underlying methodology, technique, or foundational data, but no objection is required if the complaint is restricted to the face of the record, as when the complaint is that an opinion was speculative or conclusory on its face, [28] or assumed facts contrary to those on the face of the record. [29] Of course, some objections will fall close to the line between these categories. But we need not categorize Arkoma's objection, because even if no objection was necessary the expert testimony here was legally sufficient. The 1988-B and Lazare partnerships called Michael Harper, a petroleum engineer, to calculate the amount by which reserves were fraudulently inflated. Arkoma does not object to the volumes he estimated for the exaggerated reserves; its sole challenge is that when Harper multiplied those volumes by prices, he failed to discount the total. Arkoma's argument assumes Harper was using the income approach to value without saying so. In that approach, estimated future income is discounted by a capitalization rate (reflecting both risk and the time value of money) to reach a present value. [30] Arkoma argues that no reasonable jury could credit testimony that a risky return of $100 in the future had a fair value of $100 now. But Harper never purported to use the income approach. While his testimony about his calculations was cursory, a demonstrative exhibit shows that he believed the price reasonable investors would pay for mineral interests was the total dollars they expected to receive in the next eight years without any adjustment for risk, inflation, or interest rates. Although his calculations did not include an explicit discount rate, they included an implicit return for risk and interest because the wells here were expected to produce for substantially more than eight years. While failing to use an explicit discount rate might undermine expert testimony in other cases, we note that payouts in the oil and gas business are often calculated in precisely this manner. [31] Arkoma is certainly correct that Harper's testimony could have been a lot clearer; his references to up here and right there on slides and posters used at trial often make it hard to tell what he is talking about. But we cannot say on this record that his opinions were unreliable or speculative. Nor were they conclusory as a matter of law; Harper did not simply state a conclusion without any explanation, [32] or ask jurors to take my word for it. [33] It is true that without the foundational data in the appellate record, we cannot confirm that cash off my runs . . . divided by mcf yielded the $1.62, $1.41, $1.43, and $1.59 prices he calculated as the low range for damages. But experts are not required to introduce such foundational data at trial unless the opposing party or the court insists. [34] Accordingly, we reject Arkoma's claim that evidence of the damages suffered by the 1988-B and Lazare partnerships was legally insufficient.