Court Opinion

ID: 67151
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:18:26+00
Date Added: 2024-06-11T08:46:33.590926
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                           June 30, 2009

                                      No. 08-10191                    Charles R. Fulbruge III
                                                                              Clerk

Matrix Oncology, L.P.

                                                  Plaintiff-Appellee
v.

Priority Healthcare Corp.

                                                  Defendant-Appellant

                   Appeal from the United States District Court
                        for the Northern District of Texas

Before GARWOOD, GARZA, and OWEN, Circuit Judges.
PER CURIAM:*
       This appeal results from a jury verdict rendered in favor of plaintiff-
appellee, Matrix Oncology, L.P. (Matrix). The jury awarded Matrix $3,000,000
in damages for negligent misrepresentations committed by defendant-appellant,
Priority Healthcare Corporation (Priority).             The verdict was returned on
November 9, 2007, and the district court entered a Final Judgment for Matrix
on November 13, 2007. On November 27, 2007, Priority filed a Renewed Motion

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR . R. 47.5.4.

                                              1
for Judgment as a Matter of Law, which the district court denied on February
4, 2008. Priority now appeals to this Court. For the following reasons, we
AFFIRM.
                   I. FACTS AND PROCEEDINGS BELOW
      On January 30, 2004, Matrix and Priority entered into a joint-venture
agreement to form Matrix Oncology, L.L.C. (the LLC), an enterprise to purchase
and sell cancer-fighting drugs. Specifically, the LLC would operate as a group
purchasing organization to get drug-pricing discounts for members of its
oncology clinic. Matrix owned forty percent of the LLC and Priority owned sixty
percent. The LLC was successful from the start, generating almost $1.5 million
in profits in its first eleven months of operation.
      In October 2004, Matrix and Priority began discussions to dissolve or
“unwind” the LLC by having Priority purchase Matrix’s forty percent interest in
the LLC. During these discussions, John Rivers, the senior vice president in
charge of cancer drugs for Priority, informed Matrix of merger negotiations
between Priority and One Equity Partners (OEP) whereby OEP would acquire
Priority’s distribution business, which included Priority’s interest in the LLC.
It was believed that such a combination would add considerable value to Priority
and its subsidiaries, including the LLC.
      Prompted by these negotiations between Priority and OEP, both Matrix
and Priority wanted Matrix to receive an additional payment if, after Matrix’s
sale of its forty percent LLC interest to Priority, OEP acquired Priority’s cancer-
drug distribution section and the LLC. Matrix representative William Jordan 1
told Rivers (of Priority) that Matrix wanted this additional payment as

      1
       Specifically, Jordan is one of six members of Matrix Genpar, L.L.C. and a limited
partner in Matrix Holdings, L.P. Matrix Genpar L.L.C. is the general partner of Matrix
Holdings, L.P. and Matrix Holdings, L.P is the sole partner of Matrix.

                                            2
compensation for Matrix’s loss of any future sale of the LLC that would have
resulted in material gain to Matrix had it not first sold its interest in the LLC
to Priority. Rivers recommended that Jordan and Tom Barr, another Matrix
representative,2 meet with Rebecca Shanahan, Priority’s executive vice president
of strategic ventures and general counsel, regarding dissolution of the LLC.
       On January 12, 2005, Steve Cosler, Priority’s CEO, received a phone call
from Dom Meffe, senior vice president of specialty pharmacy for Express Scripts
(ESI) and president and chief executive officer of CuraScript (a subsidiary of
ESI). In that call, Meffe (of ESI) informed Cosler (of Priority) that ESI was
interested in acquiring Priority’s business.3 The very same day, Cosler reported
that phone call to Priority’s Chairman of the Board of Directors and single
largest shareholder, William Bindley, who then informed three other Priority
Board members. Cosler also informed Stephen Saft, Priority’s Chief Financial
Officer, of ESI’s interest on January 12.
       On January 20, 2005, Jordan (of Matrix), Barr (of Matrix), Shanahan (of
Priority), and Guy Bryant, an executive vice president of Priority, met to discuss
the unwinding of the LLC. During this meeting, Jordan asked Shanahan if
Priority was discussing a merger or acquisition with any other companies.
Shanahan told Jordan that she knew of no other offers at that time, and Matrix
does not dispute that Shanahan did not know of other offers at the January 20
meeting. On February 9, 2005, Shanahan (Priority’s general counsel) sent an

       2
       Barr is also a member of Matrix Genpar, L.L.C. and a limited partner of Matrix
Holdings, L.P.
       3
         This was not the first contact between these companies regarding a possible merger
or acquisition. ESI and Priority had discussed ESI’s possibility of acquiring Priority in the
fall of 2003. During the 2003 discussions, the two companies began a due-diligence review
and ESI proposed a buyout, but the negotiations fell through a few months later when ESI
acquired another company.

                                             3
email to Priority representatives Rivers, Bryant, and Saft explaining that she
had advised Wayne Whitman, Matrix’s counsel, that there were no current plans
or activities to sell Priority.
      Draft agreements dissolving the LLC were exchanged between the parties
on January 28, 2005 and February 21, 2005. In the drafts, an acquisition of the
LLC by OEP was the only listed transaction that would trigger any additional
payment to Matrix.
      In mid-February, Meffe (of ESI) again contacted Cosler (of Priority) and
stated that ESI’s Board of Directors continued to be interested in doing a
business deal with Priority. On February 23, Cosler presented this information
to the Priority Board of Directors, stating that ESI had a “strong interest” in
acquiring Priority. Shanahan was present at this meeting and admits that she
learned of ESI’s interest a few days prior to the board meeting.
      On March 4, 2005, Priority and Matrix signed a Membership Transfer
Agreement (the MTA). Jordan testified that a few days prior to this signing, he
again asked Shanahan if Priority was involved in merger or acquisition
discussions with any company other than OEP, and Shanahan answered no.
Priority disputes that this inquiry took place only a few days before March 4, as
evidenced by Shanahan’s February 9 email.
      According to the terms of the MTA, Priority paid $600,000 for Matrix’s
interest in the LLC. The parties also agreed that if there were a third-party sale
of the LLC to OEP after Matrix received its $600,000, Matrix would receive an
additional payment of $3 million:
      “Priority is currently in negotiations with a third party, [OEP] . . .
      . In the event that Priority or the [LLC] shall, as a result of any
      Transaction between the [LLC] or Priority and OEP or its affiliates
      . . . enter into any joint venture with OEP or its affiliates or sell any
      ownership interest in the [LLC], . . . the [LLC] and Priority shall .

                                         4
      . . pay [Matrix] the aggregate sum of $3,000,000 . . . . As used
      herein, ‘Transaction’ shall mean any agreement between and among
      Priority or the [LLC] (or any of their respective affiliates) and OEP
      or its affiliates that is a joint venture, sale or exchange of ownership
      interest in the [LLC] to OEP or its affiliates within the eighteen (18)
      months after [March 4, 2005].”
Membership Transfer Agreement, § 3.
      The MTA also contains broad releases. The MTA contains a release by
Matrix of “all Transferor Released Claims,” defining “Claims” as “any and all
manner of claims . . . whether now known or hereafter discovered.” Id. § 1.
“Transferor Released Claims” includes any “statement, omission, duty, action or
failure to act” arising from the joint venture and related agreements or “any
other relationship or transaction” between the parties “from the beginning of the
world through the Effective Date.” Id. §1.
      Section 6.2 of the MTA provides that “notwithstanding anything to the
contrary contained [in the Agreement]” Priority was not in “any manner
released, relieved or discharged from any Claims . . . arising out of . . . or relating
to any obligations (including monetary obligations) . . . under th[e] Agreement.”
Section 6.4 states that parties “may hereafter discover material facts in addition
to or different from those that they now know or believe to be true” and “that
they assume[]the risk of any mistake of fact or law with regard to all aspects of
this Agreement and any asserted rights released hereby.” Priority proposed an
additional carve out exception for negligent misrepresentation claims, but
Whitham (Matrix’s counsel) and the drafter of section 6.4, did not incorporate
the proposal into the final contract.
      Twelve days after the MTA was signed, ESI again contacted Priority about
the possible acquisition. Priority hired a financial advisor, JP Morgan, to help
Priority with the sale, and the negotiations began in earnest. On July 21, ESI

                                          5
announced that it was buying Priority for $1.3 billion. Priority, being a publicly-
traded company, filed a Proxy Statement with the Securities and Exchange
Commission, according to which, Priority was pursuing a transaction with ESI
between January and March 2005:
      “On January 12, 2005, Express Scripts again approached us and
      expressed an interest in acquiring our business. On that day, in a
      call between [Cosler and Meffe] . . . , Mr. Meffe stated that Express
      Scripts was interested in a potential acquisition of Priority. In mid-
      February 2005, Mr. Meffe informed Mr. Cosler that, following a
      meeting of the board of directors of Express Scripts, Express Scripts
      continued to have an interest in the potential acquisition. Mr.
      Cosler described these discussions to our board of directors at its
      meeting on February 23, 2005.”
      The National Association of Securities Dealers (“NASD”), which regulates
Priority’s publicly-traded stock, requested information regarding the proposed
purchase and asked for a list of companies that had expressed an interest in a
potential business combination with Priority. Priority did not mention OEP in
its response. The sale closed in October 2005 and encompassed Priority and all
of its subsidiaries, including the LLC.
      Matrix then filed suit against Priority claiming its right to the additional
$3 million payment. Matrix raised claims for statutory fraud, common-law fraud,
securities fraud, reformation, negligent misrepresentation, and breach of
fiduciary duty. The case was tried before a jury on November 5, 2007. At the
close of Matrix’s case, Priority filed a Motion for Judgment as a Matter of Law;
the motion was denied. Priority renewed its motion at the close of all the
evidence, but again, the motion was denied. On November 9, 2007, the jury
returned   its   verdict, finding that Priority negligently misrepresented
information upon which Matrix justifiably relied to its detriment and awarded
Matrix $3 million. Final Judgment was entered on November 13, 2007. Priority

                                          6
thereafter filed a Renewed Motion for Judgment as a Matter of Law, which was
likewise denied. Priority now appeals to this court. The parties agree that in
this diversity case the applicable substantive law is that of Texas.
                                II. DISCUSSION
A. Standard of Review
      This court reviews a district court’s denial of a motion for judgment as a
matter of law de novo. Travelers Cas. and Sur. Co. of Am. v. Ernst & Young
LLP, 542 F.3d 475, 481 (5th Cir. 2008). “A jury verdict must be upheld unless
there is no legally sufficient evidentiary basis for a reasonable jury to find as the
jury did.” Id. at 481–82 (quoting Foradori v. Harris, 523 F.3d 477, 485 (5th Cir.
2008)); see F ED. R. C IV. P. 50(a)(1). “We draw all reasonable inferences and
resolve all credibility determinations in the light most favorable to the
nonmoving party.” Id. at 482. The district court’s denial of such a motion will
only be reversed “if the evidence points so strongly and so overwhelmingly in
favor of the nonmoving party that no reasonable juror could return a contrary
verdict.” Id.
      At trial, Matrix presented evidence of two alleged misrepresentations
made by Priority: (1) that Priority falsely represented it was in negotiations with
OEP, and (2) that Priority falsely represented it was not in negotiations with any
other interested third parties. The jury was instructed as follows:
      “Matrix has sued Priority for negligent misrepresentations
      regarding the existence and extent of Priority’s negotiations with
      third parties concerning the potential sale or acquisition of all or
      part of Priority and/or the LLC. . . . Did Priority make a negligent
      misrepresentation on which Matrix justifiable relied?”
The jury answered, “yes;” thus, the verdict could have been based on either (or
both) alleged misrepresentations.
      Priority argues, however, that it is entitled to judgment as a matter of law

                                         7
on Matrix’s negligent misrepresentation claims because (1) Matrix cannot
establish justifiable reliance as a matter of law; (2) Priority’s representations
were immaterial to Matrix’s decision to sign the MTA; and (3) there is
insufficient evidence to support the jury’s damages award.
B. Justifiable Reliance
      Priority first argues that Matrix cannot establish justifiable reliance as a
matter of law because section 6.4 of the MTA expressly disclaims reliance.
      To support a claim for negligent misrepresentation under Texas law, the
plaintiff must show that it justifiably relied on a defendant’s representation.
Fed. Land Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991).
Reliance can, however, be disclaimed. See Forest Oil Corp. v. McAllen, 268
S.W.3d 51, 58, 60 (Tex. 2008). To determine if a waiver-of-reliance provision is
binding, courts must examine the contract itself and the totality of the
surrounding circumstances. Id.; Schlumberger Tech. Corp. v. Swanson, 959
S.W.2d 171, 179 (Tex. 1997). When making this determination, courts should
be guided by the following factors: “[whether] (1) the terms of the contract were
negotiated, rather than boilerplate,        . . . ; (2) the complaining party was
represented by counsel; (3) the parties dealt with each other in an arm's length
transaction; (4) the parties were knowledgeable in business matters; and (5) the
release language was clear.” Forest Oil, 268 S.W.3d at 60.4
      Priority argues that the disclaimer contained in section 6.4 uses clear
language that unequivocally expresses an intention to disclaim reliance. Section
6.4 states that parties “may hereafter discover material facts in addition to or
different from those that they now know or believe to be true” and “that they

      4
       In the present case, it is indisputable that the parties are sophisticated
businessmen, who were represented by qualified counsel in an arm’s length transaction.

                                            8
assume[]the risk of any mistake of fact or law with regard to all aspects of this
Agreement and any asserted rights released hereby.” 5 Section 6.4, however,
must be read in conjunction with section 6.2 of the MTA. Section 6.2 provides
that “notwithstanding anything to the contrary contained [in the Agreement]”
Priority was not in “any manner released, relieved or discharged from any
Claims . . . arising out of . . . or relating to any obligations (including monetary
obligations) . . . under th[e] Agreement.” (emphasis added). Section 6.2 qualifies
the section 6.4 disclaimer and carves out Matrix’s misrepresentation claim. Cf.
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).
       Priority disputes this, arguing that section 6.2 carves out claims related
to contractual obligations, and the misrepresentation was unrelated to any
obligations contained in the MTA. However, courts have held that a negligent
misrepresentation claim, though not grounded in contract, can relate to the
contract and its obligations. See, e.g., Von Graffenreid v. Craig, 246 F. Supp. 2d
553, 560 (N.D. Tex. 2003) (holding that, where allegedly false representations
were made in the course of negotiations of a Guaranty Agreement, a negligent
misrepresentation claim “relate[d] to” the contract); Polk v. St. Angelo, No. 03-
01-00356-CV, 2002 WL 1070550 (Tex. App.—Austin May 31, 2002, pet. denied).
       For example, in Polk, a buyer sued a real estate agent for negligent

       5
         This language is similar to that of other disclaimers which Texas courts have given
effect, albeit in unpublished opinions. See Garza v. State and County Mut. Fire Ins. Co.,
No. 2-06-202-CV, 2007 WL 1168468 at *6 (Tex. App.—Fort Worth Apr. 19, 2007) (finding
that provisions stating that the plaintiff did “not rely and [has] not relied upon any
representation . . . by any of the Released Parties” and “assume[s] the risk of any mistake
of fact in connection with the true facts involved in said controversy” conclusively negated
justifiable reliance); see also, Seniguar v. Ford Motor Co., Nos. 02-41160 and 02-51025,
2003 WL 21417131 at *1 (5th Cir. June 2, 2003) (finding reliance had been disclaimed in a
settlement agreement which provided that the plaintiffs: “assumed the risk of any and all
claims for damages which . . . they did not know or suspect to exist . . . and which whether
or not, if known, would have materially affected the decision to enter into the agreement”).

                                             9
misrepresentation due to a disclosure made in connection with the property she
purchased. The jury found for the purchaser and awarded her attorney’s fees
based on an earnest money contract, which provided:            “If Buyer . . . is a
prevailing party in any legal proceeding brought under or with relation to
this contract, such party shall be entitled to recover . . . attorney’s fees.” Id. at
*2. On appeal, the agent claimed that attorneys’ fees were improperly awarded
because the negligent misrepresentation was not based upon the contract. The
court disagreed, holding that the contract’s implementation was contingent on
the disclosure form, thus, the misrepresentation that form contained was
“‘related to’ the contract.” Id. at *3.
      Like the buyer in Polk, Matrix was induced to enter the MTA based on
Priority’s representations that it was involved in discussions with only one third-
party, OEP. Matrix representatives testified that the representation was critical
to their decision to execute the MTA; thus, the implementation of this
contract—just as in Polk—was predicated on a representation that “relates to”
the MTA and Priority’s obligations thereunder.
      Priority argues, however, that the Polk carve out is far broader than
section 6.2; in Polk, the carve out includes any legal proceeding “in relation to
the contract,” whereas, section 6.2 only carves out claims related to obligations
under the contract. It is true that Priority’s representation that it was only in
discussions with OEP was not a contractual obligation. However, Priority was
obligated by the “Additional Payment” provision in the event that OEP
purchased Priority or the LLC, and Priority’s false representation of discussions
with OEP and no other parties was directly related to the “Additional Payment”
obligation’s terms. Evidence exists that Priority was in discussions with another
third party and, more significantly, that Priority was no longer in negotiations

                                          10
with OEP as of February 23, 2005, rendering the “Additional Payment” provision
misleading.     Based on this, a reasonable jury could conclude that Priority
misrepresented information “related to” its obligations under the MTA.
       Priority, however, argues that the misrepresentation claim was not based
upon any “obligation” under the agreement, but, instead, arose from the MTA’s
formation, and that section 6.2, which offers a release limited to contemplated
transactions (i.e., obligations), does not apply to claims arising from formation.
But section 6.2 is broader than this. It not only reserves claims “arising under”
the MTA’s obligations, but also those claims “arising out of,” “involving,”
“regarding,” or “relating to” the MTA’s obligations. And if section 6.2 were
intended to be limited to breach of contract claims, it would only have reserved
claims “arising under” the MTA’s obligations. Section 6.2 reserves Matrix’s
misrepresentation claim because it relates to those obligations made possible by
the false representation.
       Section 6.2 carves out Matrix’s misrepresentation claims and, thus,
qualifies and trumps the section 6.4 disclaimer as it relates to the claim at
issue.6 Therefore, the district court properly denied Priority’s Renewed Motion
for Judgment as a Matter of Law.
C. Materiality
       Second, Priority argues that the district court erred in denying its motion
because Priority’s representations regarding its third-party merger negotiations
were immaterial to Matrix’s decision to sign the MTA. “Only representations of
material facts are actionable under . . . negligent misrepresentation theories.”
Haralson v. E.F. Hutton Group, Inc., 919 F.2d 1014, 1030 (5th Cir. 1990),

       6
        To the extent, if any, that the agreement remains ambiguous after application of
relevant principles of construction and interpretation, the ambiguity is resolved in favor of
the verdict.

                                             11
overruled on other grounds by Gustafson v. Alloyd Co., 513 U.S. 561 (1995). This
Court has looked to the Restatement of Torts, which defines a matter as material
if:
       “‘(a) a reasonable man would attach importance to its existence or
       nonexistence in determining his choice of action in the transaction
       in question;’ or
       ‘(b) the maker of the representation knows or has reason to know
       that its recipient regards or is likely to regard the matter as
       important in determining his choice of action, although a reasonable
       man would not so regard it.’”
See U.S. v. Davis, 226 F.3d 346, 358 (5th Cir. 2000), cert. denied, 121 S. Ct. 1161
(2001) (quoting Restatement (Second) of Torts § 538 (1976)). Thus, “a statement
could indeed be material, even though only an unreasonable person would rely
on it, if the maker knew or had reason to know his victim was likely so to rely.”
Id. at 359.7
       In the case at hand, the record shows that both parties placed significance
on the possibility of other third-party merger negotiations. First, the record
shows that Priority considered ESI’s overtures important. Cosler (of Priority)
first became aware of ESI’s renewed interest in a business deal in a three-
minute phone call between himself and Meffe (of ESI) on January 12, 2005.8
That very day, Cosler reported the phone call to William Bindley, the Chairman

       7
        There is no indication that Texas courts would not apply § 538, and appellant does
not contend otherwise. Texas courts have looked generally to the Restatement (Second) of
Torts in negligent misrepresentation cases. See, e.g., Federal Land Bank v. Sloane, 825
S.W.2d 439, 442-43 (Tex. 1991); McCamish, Martin v. F.E. Appling, 991 S.W.2d 787, 790-
91 (Tex. 1999). Cf. Exxon Corp. v. Emerald Oil & Gas Co. L.C., ___ S.W.3d ___, ___ (Tex.
2009), 2009 WL 795668 *10.
       8
         Again, this was not the first contact between these companies regarding a possible
merger or acquisition. ESI and Priority had discussed ESI’s possibility of acquiring
Priority in the fall of 2003. During the 2003 discussions, the two companies began a due-
diligence review and ESI proposed a buyout, but the negotiations fell through a few months
later after ESI acquired another company.

                                            12
of Priority’s Board and Priority’s single largest shareholder.    Bindley then
informed three other Priority board members, also that very same day. Cosler
also informed Saft, Priority’s CFO and a signatory to the MTA, of ESI’s interest
on January 12.
      Meffe contacted Cosler on February 21, 2005 to again indicate that ESI’s
board was interested in acquiring Priority.    In a February 23, 2005 board
meeting, Cosler informed Priority’s directors and top executives that ESI had
indicated a “strong interest” in acquiring the company and that ESI’s Board had
convened to authorize further negotiations.     Significantly, Priority’s public
filings included information about its January and February interchanges with
ESI, but made no mention of negotiations with OEP.          In fact, the NASD
specifically asked for a list of other companies that had shown an interest in a
potential business combination with Priority—Priority named only two other
interested companies, neither of which were OEP. The response letter also
stated that “[d]uring the time that [Priority] engaged in discussions with [ESI]
regarding this transaction, [Priority] did not actively seek other buyers and no
other companies expressed an interest in acquiring [Priority].” Finally, at the
time the MTA was signed, OEP had done no due diligence, though ESI had
performed considerable due diligence in 2003, when it was first interested in
purchasing Priority.
      The evidence also shows that Matrix considered other third-party
negotiations to be material and that Priority was aware that Matrix placed
importance on this issue. On January 20, 2005, Matrix representatives, Jordan
and Barr, asked Priority representatives, Shanahan and Bryant, if Priority was
discussing a merger or acquisition with any other companies. Shanahan told
Jordan that she knew of no other offers at that time, and Bryant nodded in
affirmation of her answer. Matrix does not dispute that neither Shanahan nor

                                      13
Bryant were aware of other offers at this time; however, the inquiry gave
Shanahan reason to know Matrix considered the matter important.
       On February 9, 2005, Shanahan sent an email to Priority representatives
Rivers, Bryant, and Saft explaining that she had advised Whitman (Matrix’s
counsel) that there were no current plans or activities to sell Priority.              It is
undisputed that Saft (of Priority), a signatory to the MTA, was aware of ESI’s
interest as of January 12, but did not correct Shanahan’s mistake. It is also
undisputed that Shanahan (of Priority) became aware of ESI’s interest a few
days prior to the February 23 board meeting. And Jordan (of Matrix) testified
that only a few days prior to signing the MTA on March 4, 2005, he again asked
Shanahan if Priority was involved in merger or acquisition discussions with any
company other than OEP, and Shanahan answered no.9                           Presumably,
Shanahan’s February 9 email put Saft (of Priority) on notice that Matrix
considered discussions with other interested third parties material, but he did
not correct Shanahan’s misrepresentations prior to signing the MTA on March
4, 2005.
       The above facts demonstrate that the misrepresentation was material.
Not only did both parties attach importance to a possible merger with ESI, but
Matrix twice inquired about a possible merger with other parties, making
Priority aware that Matrix was likely to regard such information as important
in determining whether to enter into the transfer agreement. Certainly a jury
could conclude from these facts that a reasonable man would attach significance

       9
         Priority disputes this, arguing that Jordan’s inquiry was made in early February,
as evidenced by Shanahan’s February 9 email. Because credibility determinations are left
to the factfinder, this Court must infer that the jury credited Jordan’s testimony over the
argument based on the email.

                                            14
to ESI’s overtures, that Priority itself attached significance to the calls,10 and
that Priority was aware that Matrix attached significance to the possibility of
other third party negotiations. Thus, the district court properly denied Priority’s
Renewed Motion for Judgement as a Matter of Law on this matter.
D. Damages
       Third, Priority argues that the court erred in denying its motion because
Matrix did not have a submissible case of damages. Specifically, Priority alleges
that (1) Matrix’s damages were pure speculation, and (2) the jury impermissibly
awarded benefit-of-the-bargain damages.
       Negligent misrepresentation damages are limited to out-of-pocket
expenses; damages for benefit-of-the-bargain are not available. Fed. Land Bank
Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 443 (Tex. 1991). “The out-of-pocket
measure computes the difference between the value paid and the value received,
while the benefit-of-the-bargain measure computes the difference between the
value as represented and the value received.” Formosa Plastics Corp. USA v.
Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 49 (Tex. 1998). A jury may
award damages anywhere within the range of evidence presented at trial. MCN
Energy Enterprises, Inc. v. Omagro de Colombia, L.D.C., 98 S.W.3d 766, 772
(Tex. App.—Fort Worth 2003, pet. denied).
       Priority argues that the jury awarded benefit-of-the-bargain damages
simply because the jury awarded an amount that corresponded exactly to the $3
million Priority would have been obligated to pay had the transaction with OEP
been realized. Yet, at trial, Matrix presented evidence that Priority, falsely

       10
         Priority’s CEO testified it was his regular practice to disclose such overtures to the
board, but again, credibility determinations are left to the jury, and a reasonable person
could conclude that the disclosure, rather than merely routine, was due to the perceived
significance of the calls.

                                              15
representing that it was only in discussions with OEP and promising Matrix $3
million if that deal were to close, induced Matrix to sign the MTA. And relying
on those representations, Matrix parted with something—its 40% interest in the
LLC, the LLC having earned nearly $1.5 million in profits in its first eleven
months. At trial, a chartered financial analyst testified that Matrix’s 40%
interest in the LLC could be valued at anywhere between $2.35 million to $4.501
million. Thus, the $3 million damage award was within the range of presented
evidence and constituted the jury’s assessment of Matrix’s out-of-pocket
damages.
      Priority also argues that Matrix’s only evidence of damages is the self-
serving testimony of Barr and Jordan, who both testified that they would not
have sold Matrix’s LLC interest had they known discussions were being
conducted with parties other than OEP. See Bridgen v. Scott, 456 F. Supp.
1048, 1063 (S.D.Tex. 1978) (“[S]elf-serving speculative testimony concerning
what a party would have done under different circumstances . . . does not
provide the basis upon which a verdict can be predicated.”).        This Circuit
requires “substantial evidence to create a jury question.” Travis v. Board of
Regents of University of Texas, 122 F.3d 259, 263 (5th Cir. 1997), cert. denied,
522 U.S. 1148 (1998). And Priority cites to several cases overturning damage
awards that were overly speculative.        E.g., Formosa Plastics Corp. USA v.
Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 50 (Tex. 1998) (holding that
evidence of damages was legally insufficient and overly speculative where the
interested party testified that, had he known the truth, he would have increased
his bid from $600,000 to $1.3 million, a bid that likely would have never been
accepted by the offending party); Richter, S.A. v. Bank of Am. Nat’l Trust & Sav.
Ass’n, 939 F.2d 1176, 1188 (5th Cir. 1991) (holding that evidence of damages was
insufficient where an interested party testified that he could have sold his

                                       16
interest for $1.6 million where there was no evidence that anyone ever made
such an offer and the party had previously admitted that the interest was
worthless).
      Matrix’s case, however, is not analogous to those cited above. Matrix did
not speculate as to other transactions it may have entered into; the testimony
simply indicates that, had it known the truth, it would not have entered into the
terms of this transaction. The record shows that Jordan testified at trial that he
would not have signed the MTA had he known of discussions with companies
other than OEP. Similarly, Barr, who was not a signatory, testified that he
would not have recommended that Matrix sign the MTA had he known the
disclosures made in the proxy statement regarding ESI’s interest. Matrix’s
inquiries as to other merger and acquisition discussions corroborate their
testimony because the inquiries, at the very least, indicate that Matrix
considered such discussions consequential to its ultimate decision to enter into
the agreement. Last, a financial analyst valued Matrix’s forty-percent interest
in the LLC to adequately support an amount of damages, and this evidence was
presented to the jury.
      Evidence exists to support the damages award as being neither overly
speculative nor impermissible benefit-of-the-bargain damages; thus, the district
court properly dismissed Priority’s Renewed Motion for Judgment as a Matter
of Law on this issue.
                              III. CONCLUSION
      Priority has failed to show that it was entitled to judgment as a matter of
law on Matrix’s negligent misrepresentation claims. Making all reasonable
inferences and viewing all the evidence in a light most favorable to the verdict,
a jury could reasonably conclude that Matrix justifiably relied on a material
misrepresentation. Further, a legally sufficient evidentiary basis exists for the

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jury’s damages award. For the foregoing reasons, the district court did not err
in denying Priority’s motion for judgment as a matter of law.
                                AFFIRMED.

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