Opinion ID: 5047
Heading Depth: 1
Heading Rank: 4

Heading: the account freeze

Text: The FDIC contends that even if the release was not enforceable, the judgment . . . should be reversed because the escrow account freeze was legally justified. (Appellants' Br. at 34). In its argument, the FDIC broadly asserts that the freezing of the account was fully justified under the circumstances because the funds were deposited in an escrow account and were only to be disbursed in accordance with the agreement between Taylor and CI. The FDIC, however, raises this point of error without challenging any specific factual finding in the jury's verdict or indicating which of the various issues submitted was not supported by the evidence. It is established law that matters which have not been adequately briefed are precluded from consideration on appeal. In re HECI Exploration Co., Inc., 862 F.2d 513, 525 (5th Cir. 1988); Morrison v. City of Baton Rouge, 761 F.2d 242, 244 (5th Cir. 1985). The FDIC's failure to specify precisely which jury finding was in error, would, in effect, require this court to consider whether the verdict taken as a whole was supported by substantial evidence. Because such a review would be limitless, we consider the FDIC's arguments on these issues waived and decline to address them. collateral estoppel effect. See, e.g., Rhoades v. Prudential Leasing Corporation, 413 S.W.2d 404, 407 (Tex. Civ. App.--Austin, 1967, no writ history) (. . . a judgment of dismissal entered by agreement of the parties in pursuance of a compromise, or settlement of a controversy, becomes a judgment on the merits). Thus, we have no occasion to, and do not, pass on the effect of the judgment of dismissal in the interpleader suit. 20 See Franceski v. Plaquemines Parish School Bd., 772 F.2d 197, 199 n.1 (5th Cir. 1985); In re Texas Mortgage Services Corp., 761 F.2d 1068, 1073-74 (5th Cir. 1985); Kemlon Products & Development Co. v. United States, 646 F.2d 223, 224 (5th Cir.), cert. denied, 454 U.S. 863 (1981). Even if we were to assume that the FDIC's argument was sufficiently briefed, the evidence is quite clear that MBank had no right to freeze Taylor's accounts. Taylor opened two commercial checking accounts with MBank. Under the terms and conditions of the deposit agreements, MBank and Taylor agreed that the bank would be the agent for Taylor only and would honor any and all withdrawals from the accounts by the authorized signatory, Suzan Taylor. Thus, MBank was bound to obey the orders of Taylor under the express terms of their contract. Moreover, under Texas law, Taylor's deposit of funds with Mbank created an implied agreement that the bank would disburse those funds only in accordance with Taylor's instructions. La Sara Grain Co. v. First Nat'l Bank of Mercedes, 673 S.W.2d 558, 564 (Tex. 1984), citing Mesquite State Bank v. Professional Invest. Co., 488 S.W.2d 73, 75 (Tex. 1972). Considering the entire record of this case, particularly the initial deposit agreements which created both accounts, we are of the opinion that no escrow account existed and that MBank, in freezing Taylor's accounts, failed to comply with the express terms of the deposit contracts in wanton disregard of Taylor's rights. 21 In its next point of appeal, the FDIC argues there is insufficient evidence to support the jury's finding that the account freeze was a producing cause of Taylor's damages under the DTPA.12 Section 17.50 of the DTPA authorizes consumers to hold sellers liable for actual damages where a false, misleading, or deceptive act or practice is a producing cause of those damages.13 In Pope v. Rollins Protective Services Co., this court noted that: One of the primary reasons for the enactment of the DTPA was to provide consumers with a remedy for deceptive trade practices without the burdens of proof and numerous defenses encountered in a common law fraud or breach of warranty action.14 Emphasizing the broad remedial purposes of the DTPA, Section 17.44 provides: This subchapter shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection. There is no dispute that Taylor was required to prove that MBank's action in freezing the accounts was a producing cause of her damages. The jury was instructed that 'producing cause' 12 In Texas, when a depositor pays service fees and the bank in return agrees to honor the checks of its depositor, the depositor is a consumer of banking services within the purview of the DTPA. Farmers & Merchants State Bank of Krum v. Ferguson, 605 S.W.2d 320, 324 (Tex. Civ. App.--Fort Worth 1980), modified, 617 S.W.2d 918 (Tex. 1981). The FDIC does not dispute the applicability of the DTPA to this transaction. 13 Tex. Bus. & Com. Code Ann. § 17.50(a)(1). 14 703 F.2d 197 (5th Cir. 1983); see also Smith v. Baldwin, 611 S.W.2d 611, 616 (Tex. 1980). 22 means an efficient, exciting or contributing cause, which, in a natural and continuous sequence produced the damage or harm complained of, if any. While the FDIC does not challenge this jury instruction, it does contend there is insufficient evidence to support the jury's finding that MBank's actions were a producing cause of Taylor's damages. According to the FDIC, the account freeze did not cause Taylor to lose the opportunity to participate in the Comite and Santa Paula prospects since (1) payment for both prospects did not come due until after the freeze was lifted, and (2) Taylor had substantial assets which could reasonably have been used to pay for or obtain financing for the prospects during the freeze. Shortly before drilling activities began on the Comite prospect, MBank froze Taylor's accounts. The accounts remained frozen from December 18, 1984 until April 16, 1985. According to the drilling contract, payment was due as soon as the well was drilled to a certain depth, not on the completion of a successful producing well. Thus, when it became apparent that Taylor could not resolve her dispute with MBank and obtain the needed funds in time to pay for the drilling, Taylor suspended drilling operations. The FDIC argues that even if Taylor was required to cease drilling operations, she could have obtained extensions or paid delay rentals to keep the Comite lease alive. This argument, however, ignores the undisputed fact that Taylor never intended to assume more than a 25% working interest in the Comite venture and that by the time MBank released the funds, the 23 opportunity to develop this prospect with the same working interest did not exist. Even if Taylor had wanted to continue to develop the prospect after the bank released her money, she would have been required to take a full 100% working interest in the prospect--a share that would have cost far more than the amount of funds she had on deposit at MBank. Taylor also lost the opportunity to participate in the Santa Paula Prospect because of MBank's wrongful actions. Though Taylor briefly acquired the Santa Paula lease by assignment in February of 1985, she essentially lost the opportunity to invest in the prospect when MBank repeatedly refused payment on a $100,000 check intended to pay for her share of the lease. By the time MBank released the funds in April 1985, Taylor no longer had a co-investor to develop the Santa Paula property and therefore could not participate in the prospect with the same working interest. Based upon the evidence adduced at trial, the jury could reasonably have concluded that the account freeze was a producing cause of Taylor's loss in the Comite and Santa Paula Prospects. The FDIC also maintains that the loss of the prospects could easily have been avoided had Taylor used her own assets, including her personal jewelry, geophysical data and cash, to either pay for or finance the drilling prospects during the freeze. This argument raises a damage question involving the doctrine of avoidable consequences. The doctrine of avoidable consequences is a fundamental rule of damages which requires the 24 injured party to take advantage of reasonable opportunities to minimize his damages and avoid or prevent loss. Gladden v. Roach, 864 F.2d 1196, 1200 (5th Cir.), cert. denied, 491 U.S. 907 (1989); Ford Motor Co. v. Dallas Power & Light Co., 499 F.2d 400, 414-15 (5th Cir. 1974); City of San Antonio v. Guidry, 801 S.W.2d 142, 151 (Tex. App.--San Antonio 1990, no writ). Texas courts have applied this rule for losses arising in actions in tort and breach of contract, as well as DTPA. Pinson v. Red Arrow Freight Lines, Inc., 801 S.W.2d 14, 15 (Tex. App.--Austin 1990, no writ); Pulaski Bank & Trust Co. v. Texas American Bank, 759 S.W.2d 723, 735 (Tex. App.--Dallas 1988, writ denied); see also Ford Motor Co., 499 F.2d at 415 n.27. Under the doctrine of avoidable consequences, an injured party with an otherwise valid cause of action who fails to mitigate his damages may not recover those damages shown to have resulted from his failure to use reasonable efforts to avoid or prevent the loss. Ford Motor Co., 499 F.2d at 415; see Pinson, 801 S.W.2d at 15; Alexander & Alexander of Texas, Inc. v. Bacchus Industries, Inc., 754 S.W.2d 252, 253 (Tex. App.--El Paso 1988, writ denied). Although an injured party is required to use reasonable diligence to minimize his losses, he is not required to make unreasonable personal outlays of money, Halliburton Oil Well Cementing Co. v. Millican, 171 F.2d 426, 430 (5th Cir. 1948), or to sacrifice a substantial right of his own. Fidelity & Deposit Co. of Maryland v. Stool, 607 S.W.2d 17, 25 (Tex. Civ. App.--Tyler 1980, no writ). Rather, an injured party is required 25 to incur only slight expense and reasonable effort in mitigating his damages. City of San Antonio, 801 S.W.2d at 151 (quoting Pulaski Bank & Trust Co., 759 S.W.2d at 735). One who claims a failure to mitigate damages has the burden to prove not only lack of diligence on the part of injured party, but also the amount by which damages were increased by such failure to mitigate. Lakeway Land Co. v. Kizer, 796 S.W.2d 820, 824 (Tex. App.--Austin 1990, writ denied); Geotech Energy Corp. v. Gulf States Telecommunications & Info. Sys., Inc., 788 S.W.2d 386, 390 (Tex. App.--Houston [14th Dist.] 1990, no writ); Cocke v. White, 697 S.W.2d 739, 744 (Tex. App.--Corpus Christi 1985, writ ref'd n.r.e.). We conclude that MBank's proof failed to meet these requirements. The FDIC asserts that Taylor had substantial sums readily available to maintain these prospects. The undisputed testimony at trial, however, makes clear that a substantial portion of Taylor's money was already committed to pay for her company's payroll of some fifty employees, office space and general business expenses. In addition, during the period of time the Comite drilling operation was shut down because of the account freeze, Taylor was required to pay sizable day rates to the drilling contractor while the rig was on standby. As for the FDIC's contention that Taylor could sell her jewelry or cars to fund the drilling prospects, we find this completely without merit. In taking reasonable efforts to minimize her losses, Taylor was not obligated to sell or encumber her own personal 26 property in order to maintain these drilling prospects during the freeze. Halliburton, 171 F.2d 426, 430; Pulaski Bank & Trust Co., 759 S.W.2d at 735; Fidelity & Deposit Co., 607 S.W.2d 17, 25. Because MBank offered no evidence that Taylor failed to make reasonable efforts to minimize her losses and because MBank failed to prove the amount by which damages were increased, the trial court properly refused to instruct the jury on this issue. The FDIC also challenges the jury instructions because the state trial court refused to submit to the jury MBank's defensive issues relating to the release, including ratification, waiver, estoppel, and accord and satisfaction. A trial court has broad discretion in composing a charge for the jury so long as the instructions are fundamentally accurate and not misleading. Landrum v. Goddard, 921 F.2d 61, 62 (5th Cir. 1991) (citing Gates v. Northwest Ins. Co., 881 F.2d 215 (5th Cir. 1989)), cert. denied, 494 U.S. 1017 (1990). The instructions need not be perfect in every respect provided that the charge in general correctly instructs the jury, and any injury resulting from the erroneous instruction is harmless. Rogers v. Eagle Offshore Drilling Servs., Inc., 764 F.2d 300, 303 (5th Cir. 1985). In the present appeal, the FDIC has not cited, nor do we find, evidence in the record to justify the requested instructions. Even if we were to assume MBank presented sufficient evidence to warrant the requested instructions, we conclude that the jury instructions taken as a whole correctly instructed the jury on controlling law and were fundamentally accurate and not misleading. Migerobe, 27 Inc. v. Certina USA, Inc., 924 F.2d 1330, 1335 (5th Cir. 1991); Landrum, 921 F.2d at 62.