Court Opinion

ID: 4274059
Source: CourtListenerOpinion
Date Created: 2018-05-10 15:47:13.070421+00
Date Added: 2024-06-11T14:33:42.573685
License: Public Domain

COURT OF APPEALS
                          SECOND DISTRICT OF TEXAS
                               FORT WORTH

                              NO. 02-17-00253-CV

ERIC FREEMAN AND ERIC                                               APPELLANTS
FREEMAN & COMPANIES, INC.

                                         V.

CHARLES WILLIS                                                          APPELLEE

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          FROM THE 442ND DISTRICT COURT OF DENTON COUNTY
                     TRIAL COURT NO. 15-05860-442

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                         MEMORANDUM OPINION1

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                                 I. INTRODUCTION

      Appellants Eric Freeman and Eric Freeman & Companies, Inc. appeal from

a final judgment following a bench trial in favor of Appellee Charles Willis in this

contract dispute stemming from the parties’ efforts to sell Willis’s exotic car and

to buy him a new one. Appellants’ three issues challenge Freeman’s personal

      1
       See Tex. R. App. P. 47.4.
liability under the judgment and the trial court’s contractual-liability and

attorney’s-fees findings and conclusions. We will affirm as modified.

                                II. BACKGROUND

      Willis is a board-certified anesthesiologist who specializes in pain

management. Freeman buys and sells used cars through a corporation, Eric

Freeman and Companies, Inc., which does business as Trendsetter Motors.

Willis and Freeman had done business several years before the events that are

the subject of this appeal.

      Sometime between March and May 2014, Willis contacted Freeman about

selling his 2004 Lamborghini Gallardo on consignment.         When Willis asked

Freeman what kind of commission he would charge, Freeman responded that he

would add the commission on top of the vehicle’s sale price, meaning that the

commission would not be taken from the funds that Willis obtained from the

vehicle’s sale. Willis delivered the vehicle and its title to Freeman sometime

around mid-May.

      Willis had originally wanted $110,000 for the 2004 Lamborghini, but he

later agreed with Freeman to sell it for $85,000. Willis intended to apply the

funds that he received from the sale towards the purchase of a new exotic car.

To cover Freeman’s commission for his role in acquiring the new vehicle, Willis

and Freeman had an arrangement whereby money would flow to Freeman if

Willis wrote prescriptions to be filled at a compound pharmacy designated by

                                        2
Ryan Hunt, an acquaintance of Freeman’s who markets and sells medical

supplies.2

      In mid-June 2014, the 2004 Lamborghini was transferred to Freeman’s

company and used as collateral for a loan that Freeman’s floor-plan lender

financed in the amount of $61,400. Willis claims that he never agreed to a

$61,400 trade-in sale, and he denied that the signature on the assignment of title

was his, but around the same time, he wrote a check to Freeman’s company in

the amount of $111,497 to be used towards the purchase of a new vehicle.

Freeman’s company sold the 2004 Lamborghini several months later for

approximately $85,000. Freeman retained the difference between the sale price

and the $61,400 collateral figure.

      Willis eventually decided to purchase a 2012 Lamborghini Gallardo Spyder

that was located in New York for $169,000. Freeman had sufficient funds on

hand to cover the purchase price ($61,400 + $111,497 = $172,897), but he

instead financed the August 18, 2014 purchase through his floor-plan lender,

affording him a seven-to-fourteen-day window to return the vehicle. Freeman’s

company issued temporary license plates and delivered the 2012 Lamborghini to

Willis on August 23, 2014, but Freeman neither delivered the vehicle’s title to

Willis nor immediately repaid his lender because, according to Freeman, the

“deal wasn’t done.”

      2
      Freeman testified that this was also the commission agreement for the
sale of the 2004 Lamborghini. Hunt testified and denied that any such
agreement ever existed.

                                        3
      Freeman was alluding to the fact that his prescription-writing commission

agreement with Willis had not worked as he thought it would.           Willis wrote

prescriptions for Hunt’s pharmacies until Hunt ended the arrangement when

Willis refused to use a particular medical device, but Freeman never received

any monies from Hunt. When it became clear that he would not receive his

commission—after the 2012 Lamborghini had been purchased—Freeman

demanded that Willis pay him a 20% commission on both the sale of the 2004

Lamborghini and the purchase of the 2012 Lamborghini.          Willis declined and

asked Freeman to transfer the 2012 Lamborghini’s title to him, but Freeman

refused to do so until he was paid his commissions.3

      Willis sued Appellants for breach of contract, fraud, conversion, and

attorney’s fees.    He alleged in part that Appellants had breached their

agreements to sell the 2004 Lamborghini and to buy the 2012 Lamborghini by,

respectively, selling the 2004 Lamborghini for approximately $60,000 instead of

$85,000 and by demanding an additional $20,999 in exchange for the 2012

Lamborghini’s title. Appellants answered and filed counterclaims against Willis

for breach of contract and for attorney’s fees, averring that Willis had agreed, but

had failed, to pay Freeman a 20% commission on both the sale of the 2004

Lamborghini and the purchase of the 2012 Lamborghini.4 Following a bench trial,

      3
      Freeman paid his lender before December 2014, but only after incurring
approximately $75,000 in interest charges.
      4
        Earlier, the trial court had granted Appellants a new trial after granting
Willis a default judgment against Appellants.

                                         4
the trial court signed a final judgment in favor of Willis and against Appellants

jointly and severally, awarding Willis offset damages in the amount of $8,507 and

attorney’s fees in the amount of $22,148 and ordering Appellants to deliver the

2012 Lamborghini’s title to him.     The trial court issued findings of fact and

conclusions of law.

                       III. FREEMAN’S INDIVIDUAL LIABILITY

      In their first issue, Appellants argue that the trial court erred by imposing

personal liability upon Freeman for the damages and attorney’s fees that were

awarded to Willis because there is no evidence, or insufficient evidence, that

Freeman was a party, individually, to the oral agreements involving the 2004 and

2012 Lamborghinis. Disagreeing, Willis directs us to evidence that he contends

shows that Freeman pledged his personal responsibility for the agreements,

contractually obligating him to uphold the bargains.5

      5
        Willis also responded in part that Appellants had failed to challenge any
particular findings of fact or conclusions of law. Appellants replied that they were
challenging conclusions of law numbers 2, 3, 4, 5, 6, 7, and 8 but none of the
findings of fact. The findings and conclusions do not specifically address
Freeman’s personal liability but instead repeatedly refer to “Defendants” plurally,
effectively imposing personal liability upon Freeman. We reasonably construe
Appellants’ first issue to challenge the findings and conclusions that could
implicate Freeman’s personal liability for the damages and attorney’s fees. See
Shaw v. Cty. of Dallas, 251 S.W.3d 165, 169 (Tex. App.—Dallas 2008, pet.
denied) (“A challenge to an unidentified finding of fact may be sufficient if we can
fairly determine from the argument the specific finding of fact which the appellant
challenges.”).

                                         5
A.    Standard of review

      A trial court’s findings of fact have the same force and dignity as a jury’s

answers to jury questions and are reviewable for legal and factual sufficiency of

the evidence to support them by the same standards. Catalina v. Blasdel, 881
S.W.2d 295, 297 (Tex. 1994); Anderson v. City of Seven Points, 806 S.W.2d
791, 794 (Tex. 1991); see also MBM Fin. Corp. v. Woodlands Operating Co., 292
S.W.3d 660, 663 n.3 (Tex. 2009).

      We may sustain a legal sufficiency challenge only when (1) the record

discloses a complete absence of evidence of a vital fact, (2) the court is barred

by rules of law or of evidence from giving weight to the only evidence offered to

prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a

mere scintilla, or (4) the evidence establishes conclusively the opposite of a vital

fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014) (op. on reh’g);

Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998), cert.

denied, 526 U.S. 1040 (1999). In determining whether there is legally sufficient

evidence to support the finding under review, we must consider evidence

favorable to the finding if a reasonable factfinder could and disregard evidence

contrary to the finding unless a reasonable factfinder could not. Cent. Ready Mix

Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson,

168 S.W.3d 802, 807, 827 (Tex. 2005).

      When reviewing an assertion that the evidence is factually insufficient to

support a finding, we set aside the finding only if, after considering and weighing

                                         6
all of the evidence in the record pertinent to that finding, we determine that the

credible evidence supporting the finding is so weak, or so contrary to the

overwhelming weight of all the evidence, that the answer should be set aside and

a new trial ordered. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986)

(op. on reh’g); Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Garza v. Alviar,

395 S.W.2d 821, 823 (Tex. 1965).

      We review conclusions of law to determine their correctness based upon

the facts, but we will not reverse because of an erroneous conclusion if the trial

court rendered the proper judgment. City of Austin v. Whittington, 384 S.W.3d
766, 779 n.10 (Tex. 2012) (citing BMC Software Belgium, N.V. v. Marchand, 83
S.W.3d 789, 794 (Tex. 2002)); H.E.B., L.L.C. v. Ardinger, 369 S.W.3d 496, 513

(Tex. App.—Fort Worth 2012, no pet.).

B.    No evidence of individual liability

      “A bedrock principle of corporate law is that an individual can incorporate a

business and thereby normally shield himself from personal liability for the

corporation’s contractual obligations.” Willis v. Donnelly, 199 S.W.3d 262, 271

(Tex. 2006). When an officer of a corporation enters into an agreement on behalf

of a corporation as an agent of the corporation, the agreement is the

corporation’s, and the officer is not individually liable thereunder. Ward v. Prop.

Tax Valuation, Inc., 847 S.W.2d 298, 300 (Tex. App.—Dallas 1992, writ denied);

see Holloway v. Skinner, 898 S.W.2d 793, 795 (Tex. 1995) (“As a general rule,

                                        7
the actions of a corporate agent on behalf of the corporation are deemed the

corporation’s acts.”).

      Agency law shares the same premise—generally, an agent for a disclosed

principal is not personally liable on a contract that he signs for the principal.

Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560, 573 (Tex. App.—Houston

[14th Dist.] 2014, pets. denied). However, where “it is determined that the agent

has substituted his own responsibility for that of his principal, or has pledged his

own responsibility in addition to that of his principal, he will be bound

accordingly.” Am. Nat’l Bank v. Am. Loan & Mortg. Co., 228 S.W. 169, 171 (Tex.

Comm’n App. 1921, judgm’t adopted). Under these circumstances, “liability is

not predicated upon his agency, but upon his contract obligations.” Id.

      We agree with Appellants that there is no evidence that Freeman

subjected himself to personal liability under the agreements for the sale of the

2004 Lamborghini and the purchase of the 2012 Lamborghini.

      The trial court admitted into evidence a handful of text messages between

Freeman and Willis regarding the transactions.       The texts that were sent by

Freeman are identified as being from “Eric (trendsetters”—the latter term being a

reference to the entity that Eric Freeman & Companies, Inc. does business as.

      Regarding the purchase of the 2012 Lamborghini, the check that Willis

wrote in the amount of $111,497 was made out to “Trendsetter Motors,” and it

was deposited into an account belonging to “Eric Freeman & Companies, INC.

DBA Trendsetter Motors.” Also, the purchase contract for the 2012 Lamborghini

                                         8
from Manhattan Motorcars identified “Trendsetter Motors” as the purchaser, and

an inventory sheet shows that “Eric Freeman & Companies, INC. DBA:

Trendsetter Motors” purchased the 2012 Lamborghini.

       Regarding the sale of the 2004 Lamborghini, the vehicle’s title identifies

“Trendsetter Motors” as the purchaser, and the funds that Freeman obtained

from his floor lender using the 2004 Lamborghini as collateral were included in a

check that was made out to “Eric Freeman & Companies, INC. DBA: Trendsetter

MO.”

       Notwithstanding this uncontradicted documentary evidence, perhaps the

strongest evidence that Freeman did not bind himself individually came from

Willis’s own testimony on cross-examination:

             Q.      And would it be correct that at all times you were
       dealing with [Freeman’s] company as being the person -- as being
       the entity that was handling the transaction?

             A.    Yes.

This evidence confirms that Willis had full knowledge that Freeman was acting as

an agent on behalf of a disclosed principal, Eric Freeman & Companies, Inc.

See Fleming & Assocs., 425 S.W.3d at 574 (disagreeing that agent was

individually liable in part because “[a]t the time that Fleming signed this

addendum, the Barton Group was aware that he was acting as an agent for

F & A”); Burch v. Hancock, 56 S.W.3d 257, 262 (Tex. App.—Tyler 2001, no pet.)

(overruling challenge to finding of individual liability in part because appellee had

no actual knowledge that agent was acting on behalf of principal).

                                         9
      Willis counters that some evidence exists to support Freeman’s individual

liability because at several points during his testimony about the agreements

involving the vehicles and the commissions, Freeman referred to himself

individually. Specifically, Willis observes that Freeman “referred to himself as

being the one to ‘mark up’ the 2004 Lambo with his commission,” “told Dr. Willis

that he could get the 2012 Lambo for $169,000,” “admitted that, as part of the

side deal, he and his company would” make money from the prescription-writing

agreement, and “referred to himself as being entitled to a commission.”

[Emphases in original.]

      The trial court could not have reasonably inferred from Freeman’s

references that he pledged his own personal responsibility for Eric Freeman &

Companies, Inc.’s agreements because, simply put, Freeman was speaking as

any normal human being does every day. It would be ridiculous if, to avoid

subjecting himself to personal liability for Eric Freeman & Companies, Inc.’s

contractual obligations, Freeman had to specifically clarify each time he said “I”

or “me” during his testimony that he actually meant “I” or “me” as the corporate

agent for Eric Freeman & Companies, Inc. Considering Freeman’s testimony in

light of the record evidence above, Freeman’s use of first-person pronouns alone

is no evidence that he expressly or impliedly pledged his personal responsibility

for the obligations of Eric Freeman & Companies, Inc.

                                       10
      The evidence conclusively demonstrates that all of Willis’s dealings

occurred with Freeman only as an agent for Eric Freeman & Companies, Inc.

We sustain Appellants’ first issue.

                            IV. BREACH OF CONTRACT

      In their second issue, Appellants argue that there is no evidence, or

insufficient evidence, that either Freeman or Eric Freeman & Companies, Inc.

breached an oral agreement with Willis. We determined immediately above that

Freeman’s interactions with Willis occurred only as an agent for Eric Freeman &

Companies, Inc., so we address Appellants’ evidentiary-sufficiency complaint

only insofar as it is directed only at Eric Freeman & Companies, Inc.6

      To prevail on a breach of contract claim, the plaintiff must establish (1) the

existence of a valid contract, (2) performance or tendered performance by the

plaintiff, (3) breach of the contract by the defendant, and (4) damages. S. Elec.

Servs., Inc. v. City of Houston, 355 S.W.3d 319, 323‒24 (Tex. App.—Houston

[1st Dist.] 2011, pet. denied). The elements of a valid and binding contract are

(1) an offer, (2) an acceptance in strict compliance with the offer’s terms, (3) a

meeting of the minds, (4) consent by both parties, (5) execution and delivery, and

(6) consideration. Hubbard v. Shankle, 138 S.W.3d 474, 481 (Tex. App.—Fort

Worth 2004, pet. denied). The elements of written and oral contracts are the

same. Id.

      6
       Appellants challenge conclusions of law numbers 2‒8.

                                        11
      Appellants direct us to evidence that when the 2004 Lamborghini did not

sell on consignment for $85,000, Willis signed the title over to Eric Freeman and

Companies, Inc., who used the vehicle as collateral for a $61,400 loan, which

was ultimately applied towards the purchase of the 2012 Lamborghini. In other

words, Appellants contend that when Willis transferred the 2004 Lamborghini to

Eric Freeman & Companies, Inc., Willis no longer retained any ownership interest

in the vehicle, and it was no longer subject to being sold on consignment for the

agreed-upon price of $85,000.      Regarding the 2012 Lamborghini, Appellants

contend that there is no evidence that Willis paid Freeman a commission,

apparently implying that the obligation to transfer the vehicle’s title to Willis was

never prompted, thus precluding a finding that Freeman failed to comply with the

agreement to purchase the 2012 Lamborghini.

      Appellants’ arguments are flawed for a reason that we see all too often in

evidentiary-sufficiency issues: they disregard the standards of review and direct

us to evidence that supports only Appellants’ theory of the case—evidence that

the trial court impliedly rejected in arriving at its judgment. The evidence viewed

in the light most favorable to the trial court’s findings shows that the parties

agreed to sell the 2004 Lamborghini for $85,000, that Willis never agreed to

transfer the vehicle to Eric Freeman & Companies, Inc. or to use it as collateral

for a $61,400 loan, and that Appellants never credited Willis for the full $85,000

after the vehicle was sold by Eric Freeman & Companies, Inc. for that amount.

                                         12
         As for the 2012 Lamborghini, Freeman testified that he refused to provide

Willis with the vehicle’s title because Willis did not pay Freeman a commission,

but there was evidence that the parties had alternative arrangements for

Freeman’s commissions and that Freeman did not request a 20% commission

until after the 2012 Lamborghini had been purchased. Thus, there was evidence

that no binding agreement for a 20% commission ever existed, a fact that even

Freeman seemed to concede:

               Q.     . . . Are you aware that Defendant’s counterclaim
         alleges that Dr. Willis agreed to pay 20 percent?

               A.     Yes.

               Q.     Okay. But that’s not true, is it?

               A.     No.

         Properly applying the standards of review, the evidence is both legally and

factually sufficient to support the trial court’s findings related to the agreements to

sell the 2004 Lamborghini and to purchase the 2012 Lamborghini. See Cent.

Ready Mix Concrete Co., 228 S.W.3d at 651; City of Keller, 168 S.W.3d at 807,

827; Pool, 715 S.W.2d at 635; Cain, 709 S.W.2d at 176.                The trial court’s

relevant conclusions of law are not erroneous. We overrule Appellants’ second

issue.

                                  V. ATTORNEY’S FEES

         In their third issue, Appellants argue that the trial court reversibly erred by

failing to award Eric Freeman & Companies, Inc. attorney’s fees because the

evidence demonstrates, as a matter of law, that Willis breached the oral

                                            13
agreements to pay Freeman a 20% commission.7 Appellants established nothing

as a matter of law. For the sale of the 2004 Lamborghini, Willis testified that

Freeman agreed to add his commission on top of the vehicle’s sale price. For

the purchase of the 2012 Lamborghini, Willis testified that he and Freeman had

an arrangement whereby money would flow to Freeman if Willis wrote

prescriptions to be filled at a compound pharmacy designated by Hunt. And as

we explained, there was evidence that the parties never had a binding

agreement for Willis to pay Freeman a 20% commission for either the sale of the

2004 Lamborghini or the purchase of the 2012 Lamborghini.            The trial court

properly denied Appellants’ request for attorney’s fees. We overrule their third

issue.

                                   VI. CONCLUSION

         Having sustained Appellants’ first issue, we modify the trial court’s final

judgment to provide that only Eric Freeman & Companies, Inc. is responsible for

the damages, attorney’s fees, costs, and interest ordered therein.           Having

overruled Appellants’ remaining issues, we affirm the final judgment as modified.

See Tex. R. App. P. 43.2(b).

                                                    /s/ Bill Meier
                                                    BILL MEIER
                                                    JUSTICE

         7
         Appellants challenge conclusions of law numbers 2‒8.

                                          14
PANEL: WALKER, MEIER, and KERR, JJ.

DELIVERED: May 3, 2018

                               15