Court Opinion

ID: 2813507
Source: CourtListenerOpinion
Date Created: 2015-07-01 07:16:24.226659+00
Date Added: 2024-06-11T11:28:04.303104
License: Public Domain

Opinion issued June 30, 2015

                                     In The

                             Court of Appeals
                                    For The

                         First District of Texas
                            ————————————
                             NO. 01-13-00853-CV
                           ———————————
                  DERNICK RESOURCES, INC., Appellant
                                       V.
 DAVID WILSTEIN AND LEONARD WILSTEIN, INDIVIDUALLY AND
AS TRUSTEE OF THE LEONARD AND JOYCE WILSTEIN REVOCABLE
                     TRUST, Appellees

                   On Appeal from the 164th District Court
                            Harris County, Texas
                      Trial Court Case No. 2002-31310

                                 OPINION

      Appellees, David Wilstein and Leonard Wilstein, individually and as trustee

of the Leonard and Joyce Wilstein revocable trust (“the Wilsteins”), sued Dernick

Resources, Inc. (“Dernick”) for breach of contract, breach of fiduciary duties,
fraud, and conversion related to the Wilsteins’ investment in two different oil and

gas leases—the Bradshaw Joint Venture and the McCourt Field Joint Venture. The

trial court originally concluded that the Wilsteins’ claims for breach of fiduciary

duty were barred by the statute of limitations. On appeal, this Court held that

Dernick breached its fiduciary duty as a matter of law, that its failure to disclose

information necessary for the Wilsteins to discover their injuries tolled the statute

of limitations, and that, therefore, the Wilsteins’ claims were not time barred. On

remand, the trial court ruled that the issues of duty and breach were already

established as a matter of law and thus submitted only questions of causation and

damages to the jury.      The trial court also held a bench trial to address the

Wilsteins’ claim for fee forfeiture.

      In four issues, Dernick argues that (1) the trial court abused its discretion in

entering its June 18, 2012 order defining the scope of trial and in instructing the

jury that duty and breach had already been determined, based on this Court’s prior

ruling in this case; (2) the trial court abused its discretion in ordering the fee

forfeiture in favor of the Wilsteins; (3) the trial court erred in awarding pre-

judgment interest on the fee forfeiture award; and (4) the trial court abused its

discretion by awarding excessive attorney’s fees.

      The Wilsteins, in their cross-appeal, challenge the trial court’s decision to

disregard the jury’s finding of $750,000 in damages regarding revenue generated

                                          2
by the Bradshaw Joint Venture. The Wilsteins argue that this award was improper

because (1) the Wilsteins’ pleadings were sufficient to give Dernick fair notice that

they were demanding an accounting of revenues; (2) even if their pleadings were

not adequate, Dernick did not suffer any prejudice or surprise; and (3) the evidence

was legally sufficient to support the jury’s award.

      We modify the judgment and affirm as modified.

                                    Background

      The Wilsteins were joint venturers with Dernick under Joint Venture

Agreements (“JVAs”) for a Nebraska gas field (“the McCourt Field”) and a Kansas

oil and gas field (“the Bradshaw Field”). See Dernick Res., Inc. v. Wilstein, 312
S.W.3d 864, 868 (Tex. App.—Houston [1st Dist.] 2009, no pet.). The JVAs,

which were substantially similar, required any party to give full written notice to

the other parties regarding any proposed sale of an interest, the proposed purchase

price, and all other terms of the offer. They also provided that Dernick, who

served as the attorney-in-fact for the Wilsteins under both JVAs and as the record

title holder, was required to inform the Wilsteins if joint venture assets were sold

and to account to them for their share of the proceeds.

      Regarding the McCourt Field, Dernick was the attorney in fact and record

title holder for both its own 15% interest and the Wilsteins’ 10% interest. In 1996,

when the operator of the McCourt Field, Snyder Oil Corporation (“Snyder”),

                                          3
decided to sell its 75% working interest in the McCourt Field, it provided written

notice to Dernick as required by the JVA. It offered to sell its interest to Dernick

for approximately $3 million in cash. Stephen Dernick, the principal of Dernick,

told David Wilstein of the opportunity to participate in the acquisition of Snyder’s

interest (“the Snyder acquisition”) for a cash payment of $3 million. Wilstein told

Dernick that the Wilsteins were not interested in making the acquisition. Dernick

did not provide any notice of the opportunity to the Wilsteins in writing, in breach

of the JVA.

      Dernick then pursued other financing options and decided to purchase the

Snyder acquisition itself with no cash down using a volumetric production

payment (“VPP”) 1 which burdened the entire McCourt Field, including the

Wilsteins’ interest, with an obligation to sell gas produced from the field to the

holder of the VPP and with a mortgage to secure the VPP payments. Dernick

never informed the Wilsteins in any way of the opportunity to finance the Snyder

acquisition with the VPP, and it never informed the Wilsteins that it had burdened

their interest in the McCourt Field with the VPP. Furthermore, this purchase made

Dernick the owner of the majority interest in the McCourt Field. Dernick named

1
      A volumetric production payment agreement is a common oil and gas financing
      device. Dernick Res., Inc. v. Wilstein, 312 S.W.3d 864, 868 n.1 (Tex. App.—
      Houston [1st Dist.] 2009, no pet.) (citing EOG Res., Inc. v. Dep’t of Revenue, 86
P.3d 1280, 1282 (Wyo. 2004)). The VPP at issue in this case was entered into
      between Dernick and Resource Fund, L.P.I. to finance Dernick’s purchase of
      Snyder’s interest in the McCourt Field.

                                          4
its alter ego, Pathex Petroleum, as the field operator and collected more than $15

million in fees pursuant to the McCourt Field Joint Operating Agreement.

      Several years later, Dernick decided to repurchase the VPP, thereby un-

burdening the gas in the McCourt Field. It again failed to inform the Wilsteins of

this change in their interest, and it continued to pay the Wilsteins for their portion

of the gas produced from the field at the reduced rate required by the VPP.

      Regarding the Bradshaw Field, Dernick sold the entire interest to which it

held title in the Bradshaw Field, which necessarily included the portion owned by

the Wilsteins because Dernick was the record title holder under the JVA. Dernick

failed to disclose the sale to the Wilsteins and failed to provide them with the

accounting required by the JVA, but it did record the sale in the Kansas real

property records. After the sale, the buyer conveyed back to Dernick an overriding

royalty interest. Dernick likewise failed to disclose the existence of the royalty

interest to the Wilsteins and failed to provide an accounting for them or otherwise

give the Wilsteins their portion of the proceeds.

      In October 2003, following the completion of two independent audits, the

Wilsteins discovered these breaches of fiduciary duty and joined in litigation that

was already pending against Dernick.          The Wilsteins asserted claims against

Dernick for breach of fiduciary duty and fraud in connection with several acts:

(1) Dernick’s sale of the Wilsteins’ interest in the Bradshaw Field without notice;

                                          5
(2) Dernick’s acquisition of the interest of a third party, Snyder, in the McCourt

Field by burdening the field with a VPP; and (3) Dernick’s repurchase of the VPP

and resale of the gas for its own benefit. The Wilsteins also claimed that they had

not had notice of the sale of their working interest in the Bradshaw Field, that they

had not been given the opportunity to participate in the acquisition of Snyder’s

interest in the McCourt Field financed with the VPP, and that they had not been

notified of the repurchase of the VPP and offered the benefit of the same bargain as

Dernick. Id. at 873.

      A.     The 2005 Bench Trial and the 2006 Jury Trial

      In 2005, the trial court held a two-week bench trial on the Wilsteins’ claims.

It ruled that the Wilsteins’ claims for breach of the JVA and breach of fiduciary

duty with respect to the Bradshaw Field were barred by limitations because

Dernick recorded the sale of their interests in the Bradshaw Field in the Kansas

land records in June 1998, which gave the Wilsteins constructive notice of the sale.

Id. Regarding the Wilsteins’ McCourt Field claims, the trial court found that

Stephen Dernick’s telephone call to David Wilstein fairly informed them of the

Snyder acquisition. Accordingly, the trial court ruled that the Wilsteins’ complaint

that Dernick breached its common law and contractual fiduciary duties by failing

to fully and fairly inform them of the opportunity to purchase Snyder’s interest in

the McCourt Field was likewise barred by the statute of limitations. Id. at 876.

                                         6
However, the trial court also found that Dernick’s act of burdening the McCourt

Field with the VPP “was a breach of the narrow fiduciary duties owed the Wilstein

Brothers as the co-owners” of the McCourt Field and that those claims were not

barred by limitations, and it allowed the McCourt Field claim dealing with the VPP

to proceed to trial. Id. at 875.

      Following a May 2006 jury trial, the trial court entered judgment in 2007

awarding the Wilsteins $287,400 for losses sustained as a result of the McCourt

Field VPP, $13,226 for the difference between the amount that the Wilsteins

received for their share of gas produced from the McCourt Field and the amount

they should have received, $225,000 in attorney’s fees, and $500,000 in exemplary

damages (the “2007 judgment”). Dernick appealed the jury’s award on the breach

of fiduciary duty claim arising out of the McCourt Field VPP and its award of

exemplary damages. The Wilsteins appealed the trial court’s pre-trial rulings that

their claims for breach of fiduciary duty arising out of the acquisition of Snyder’s

interest in the McCourt Field and the sale of their interest in the Bradshaw Field

were barred by the statute of limitations.

      B.     The 2009 Appellate Opinion

      In a 2009 opinion (“2009 opinion”), a panel of this Court held that, because

they were joint venturers and Dernick owed the Wilsteins the fiduciary duties of a

joint venturer, the fraudulent concealment doctrine applied to the Wilsteins’

                                             7
claims. Id. at 878–79. This Court further held that the Wilsteins’ claims were not

barred by the statute of limitations. See id. at 883, 885. In so holding, we

reasoned, “Dernick breached its fiduciary duty to the Wilsteins by failing to

disclose its sale of their interest in the Bradshaw Field” and “the Wilsteins were

not put on constructive notice of the sale by the filing of the sale in the Kansas

public records.” Id. at 885. Concerning the McCourt Field claim, we concluded

that by failing to disclose, “orally or in writing, the opportunity to purchase

Snyder’s interest by entering a VPP agreement with Resource Fund,” Dernick

breached the notice requirement of the joint operating agreement and the JVA and,

“in doing so, breached its duty of full and fair disclosure to the Wilsteins.” Id. at

880. Accordingly, we reversed the 2007 judgment on the Wilsteins’ appealed

claims and remanded the case for further proceedings consistent with our opinion.

See id. at 886. We overruled Dernick’s issues on appeal and affirmed the 2007

judgment as it related to the Wilsteins’ breach of fiduciary duty claim arising out

of the VPP on the McCourt Field.

      C.     The 2012 Mistrial and 2013 Jury and Bench Trials

      On remand, the parties filed briefs in the trial court outlining which issues

remained to be tried. The trial court entered an order identifying the “issues [that]

were remanded by the Court of Appeals for a new trial.” The trial court found

“that duty and breach of the contractual right to notify in writing and breach of

                                         8
fiduciary duty are established as a matter of law as to both the McCourt Field and

Bradshaw Field. It is therefore, ORDERED that those issues will not be tried.”

The trial court further ordered that “the only two issues that are ripe for trial are

causation and damages as a result of the duty and breach.”

      Dernick challenged this ruling by mandamus in this Court, and we denied

the petition for writ of mandamus. See In re Dernick Res., Inc., No. 01-12-00633-

CV, 2012 WL 5878097, at *1 (Tex. App.—Houston [1st Dist.] Nov. 21, 2012,

orig. proceeding) (per curiam). Dernick also filed a petition for writ of mandamus

in the Texas Supreme Court that was likewise denied.

      The case proceeded to trial in February 2012. However, on the third day of

that trial, Dernick moved for a mistrial, arguing that the Wilsteins “injected into

this case matters that were tried in the first case” and that the trial court had

previously ruled that “any issues of double charges were not a matter to be tried in

this case.” The Wilsteins replied that “this is an accounting and profits trial,” so

information relevant to whether Dernick double-billed the Wilsteins for certain

services was relevant to determining profits and losses. Dernick and the trial court

both expressed concern, however, at the prejudicial effect the testimony would

have on the jury. Accordingly, the trial judge granted the mistrial, stating that

there was “enough question” about her previous rulings regarding what evidence

                                         9
should be admissible to justify a mistrial and that she wanted “to make a nice,

clean record.”

      A second trial on remand was commenced in April 2013. The trial court

instructed the jury that the questions of whether Dernick owed a fiduciary duty and

whether Dernick had breached that duty with respect to both fields had already

been determined as a matter of law. The jury found that the Wilsteins did not

sustain any damages as a result of Dernick’s breach of fiduciary duty in failing to

notify them of the opportunity to acquire Snyder’s interest in the McCourt Field.

In fact, the jury found that the Wilsteins would have sustained a loss on the past

sale from the gas and from fees for the use of the field’s gas gathering system.

Regarding the Bradshaw Field claim, the jury found that Dernick’s failure to notify

the Wilsteins about its sale of their interest in the Bradshaw Field and its failure to

account to the Wilsteins for their share of the assets of the Bradshaw Joint Venture

proximately caused damages in the amount of $162,194.14, representing the

Wilsteins’ share of the sales proceeds of the Bradshaw Joint Venture, and

$750,000, representing the Wilsteins’ share of production revenues of the

Bradshaw Joint Venture.

      Following the jury trial, the trial court held a bench trial on the issue of

attorney’s fees and on the Wilsteins’ claim for an equitable fee forfeiture. The

Wilsteins sought forfeiture of all fees paid by them to Pathex, Dernick’s alter-ego,

                                          10
as operator of the McCourt Field, based on Dernick’s breach of its fiduciary duty

in failing to notify the Wilsteins of the opportunity to participate in the Snyder

acquisition and Dernick’s resultant seizure of the opportunity to become majority

owner of the McCourt Field and to name its operator. The trial court found in the

Wilsteins’ favor on the fee-forfeiture issue and ruled that Dernick should forfeit the

fees that it collected as operator of the McCourt Field following the Snyder

acquisition. The trial court also determined that the Wilsteins’ attorney’s fees for

prosecuting the Bradshaw Field claim, on which they prevailed and obtained

damages, totaled $727,324.82, which was 30% of the reasonable and necessary

attorney’s fees incurred by the Wilsteins between December 2006 and July 2013. 2

      Dernick subsequently moved to disregard the jury’s finding awarding the

Wilsteins $750,000 for damages representing the Wilsteins’ share of production

revenues of the Bradshaw Joint Venture. Dernick argued that the finding must be

disregarded because it was unsupported by evidence and because it was immaterial

and should never have been submitted due to the Wilsteins’ “failure to plead for

and disclose such damages.” The trial court agreed with Dernick and disregarded

that jury finding.

2
      The trial court found that the Wilsteins incurred attorney’s fees in the amount of
      $2,424,416.10 for the prosecution of their lawsuit between December 2006 and
      July 2013.

                                          11
      The trial court then entered judgment, ordering that the Wilsteins recover the

$162,194.14 found by the jury for damages representing the Wilsteins’ share of the

sales proceeds of the Bradshaw Joint Venture and prejudgment interest on that

award; $1,709,421.06 as an “equitable fee forfeiture” and prejudgment interest on

that claim; and attorney’s fees and costs. Dernick and the Wilsteins both appealed.

                              I.     DERNICK’S APPEAL

                                    Scope of Trial

      In its first issue, Dernick argues that the trial court erred in limiting the

issues tried on remand in 2009 to the issues of causation and damages.

      Dernick argues that the trial court abused its discretion in failing to observe

and comply with this Court’s mandate remanding certain claims for a new trial

without limitation and in entering its order identifying the issues for trial as

including only the issues of causation and damages. Dernick asserts that the merits

of the Wilsteins’ claims were never reached, and, thus, it is entitled to a full trial on

the merits, including scope of its fiduciary duty, liability, causation, and

affirmative defenses. It cites Texas Rule of Civil Procedure 320 and Texas Rule of

Appellate Procedure 44.1, both of which provide that a court may not order a

separate jury trial solely on the issue of unliquidated damages where liability is

also contested. TEX. R. CIV. P. 320; TEX. R. APP. P. 44.1(b). It also cites various

cases, such as Estrada v. Dillon, which hold that an appellate court may not

                                           12
remand a case only for the issue of damages where liability is contested. 44
S.W.3d 558, 562 (Tex. 2001) (per curiam).

      However, the law cited by Dernick does not prevent the trial court on

remand from determining some of those liability issues as a matter of law in light

of this Court’s previous opinion. See id.; Hudson v. Wakefield, 711 S.W.2d 628,

630 (Tex. 1986) (holding that “courts should look not only to the mandate itself,

but also to the opinion of the court” in interpreting mandate of appellate court and

determining scope of remand); Denton Cnty. v. Tarrant Cnty., 139 S.W.3d 22, 23

(Tex. App.—Fort Worth 2004, pet. denied) (holding that trial court has reasonable

amount of discretion in complying with mandate and may look to mandate itself

and appellate court’s opinion).

      In considering this case on remand, the trial court was bound by the law of

the case. See In re Henry, 388 S.W.3d 719, 728 (Tex. App.—Houston [1st Dist.]

2012, orig. proceeding). The law of the case doctrine is defined as “that principle

under which questions of law decided on appeal to a court of last resort will govern

the case throughout its subsequent stages.” Loram Maint. Of Way, Inc. v. Ianni,

210 S.W.3d 593, 596 (Tex. 2006). Accordingly, where the court of appeals’

decision is not challenged in the supreme court, the law of the case doctrine

ordinarily binds the court of appeals to its initial decision if there is a subsequent

appeal in the same case. Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716 (Tex.

                                         13
2003). Although a decision rendered on an issue before the appellate court does

not absolutely bar re-consideration of the same issue on a second appeal,

application of the doctrine lies within the sound discretion of the court, depending

on the particular circumstances surrounding that case. Id. For example, it is an

exception to the general rule that the original rulings govern the case where those

rulings were clearly erroneous. Id.

      Generally, when we reverse and remand a case for further proceedings and

the mandate is not limited by special instructions, the effect is to remand the case

to the lower court on all issues of fact. In re Henry, 388 S.W.3d at 728 (quoting

Simulis, L.L.C. v. Gen. Elec. Capital Corp., 392 S.W.3d 729, 734 (Tex. App.—

Houston [14th Dist.] 2011, pet. denied)). The law of the case doctrine, by contrast,

applies to questions of law and does not apply to questions of fact. Hudson, 711
S.W.2d at 630; In re Henry, 388 S.W.3d at 728. When, as here, there are no

factual questions to resolve, a determination was made as a matter of law, and that

determination was not challenged by a petition for review in the supreme court,

“the trial court on remand is bound by our previous legal conclusion.” See In re

Henry, 388 S.W.3d at 728.

      In our 2009 opinion, we held, as a matter of law, that Dernick owed the

Wilsteins contractual and common-law fiduciary duties with regard to both the

McCourt Field and the Bradshaw Field. See Dernick Res., 312 S.W.3d at 877–78.

                                        14
We further held that Dernick breached its fiduciary duties to the Wilsteins when it

participated in the Snyder acquisition in the McCourt Field without full and fair

disclosure to the Wilsteins and when it sold the Wilsteins’ interest in the Bradshaw

Field without providing them with the required notice. Id. at 880, 884. Dernick

did not seek review of this opinion in the supreme court. Accordingly, the trial

court was bound by our previous legal conclusion that Dernick breached the

fiduciary duties it owed the Wilsteins with respect to both fields. See Hudson, 711
S.W.2d at 630; In re Henry, 388 S.W.3d at 728.

      Dernick also argues that the trial court’s order determining the scope of

issues to be tried presumed liability based on the Wilsteins’ Bradshaw Field claims

involving a “Horizontal Drilling Program” that were barred by a summary

judgment ruling before the 2006 trial proceedings that was not reversed and

remanded in the 2009 opinion. However, the record does not support Dernick’s

contention that issues relating to the Horizontal Drilling Program were retried in

2013. Dernick does not identify any portions of the record where such claims or

evidence were erroneously presented to the jury, nor does it point this Court to any

place where it objected on this basis in the trial court, as it was required to do to

preserve this complaint for review on appeal. See TEX. R. APP. P. 33.1(a). Dernick

further argues that certain findings of fact from the 2006 trial were erroneous.

Again, it does not appear that Dernick presented this argument to the trial court,

                                         15
and it did not challenge those findings of fact during or after its prosecution of its

appeal in 2009. Accordingly, this argument is not preserved for review on appeal.

See id.

      We overrule Dernick’s first issue.

                                   Fee Forfeiture

      In its second issue, Dernick complains of the trial court’s award of equitable

fee forfeiture following the 2013 bench trial, in which the Wilsteins sought

forfeiture of the fees they had paid to Dernick’s alter ego Pathex as operator of the

McCourt Field following Dernick’s seizure of the opportunity to become majority

owner of the field through the Snyder acquisition without notice to them and its

subsequent appointment of Pathex as operator. The bench trial also addressed the

issue of the amount of reasonable and necessary attorney’s fees. This bench trial

was conducted after the 2013 trial to the jury on the issues of causation and

damages arising from Dernick’s breach of its fiduciary duty to provide notice to

the Wilsteins of the opportunity to participate in the Snyder acquisition in the

McCourt Field. Dernick argues that the Wilsteins did not secure the necessary jury

findings or present legally sufficient proof to support an award of equitable fee

forfeiture. It further argues that there is no evidence of a “clear and serious

violation” as required for equitable fee forfeiture. Finally, it argues that the fee

forfeiture award is improper because it relates to fees paid under an operating

                                           16
agreement, for which there was no finding of breach, not the joint venture

agreement, and it argues that the fee forfeiture was improper and excessive.

      In its third issue, Dernick argues that the trial court erroneously awarded pre-

judgment interest on the equitable fee forfeiture award. Dernick contends that the

fee forfeiture award was not compensatory in nature, and thus prejudgment interest

does not apply.

A.    Equitable Fee Forfeiture Award

      1.     Facts relevant to fee forfeiture award

      In contrast to its claim on appeal that the Wilsteins did not secure the

necessary jury findings or present legally sufficient evidence to support an award

of equitable fee forfeiture, Dernick argued in pretrial briefing on the claims and

issues to be tried on remand that

      [t]he Wilsteins also seek the equitable remedy of disgorgement and
      fee forfeiture. Because this is an equitable rather than a legal remedy,
      it should be presented to the Court, not the jury, after the jury renders
      its verdict on the Wilsteins’ limited damage claims. Burrow v. Arce,
      997 S.W.2d 229, 245 (Tex. 1999) (“Forfeiture of an agent’s
      compensation, we have already explained, is an equitable remedy
      similar to a constructive trust. As a general rule, a jury does not
      determine the expediency, necessity, or propriety of equitable relief.”)
      (internal quotations omitted).

      Accordingly, the trial court held a bench trial and heard evidence and

arguments of counsel on the issue of the Wilsteins’ request for equitable fee

forfeiture from Dernick regarding fees Dernick received from the Wilsteins as the

                                         17
operator of the McCourt Field. The Wilsteins informed the trial court that there

were no facts remaining to be decided and that the amount of the fees had been

stipulated to by the parties. Dernick did not object to this characterization of the

Wilsteins’ claim as a claim for equitable fee forfeiture in a stipulated amount, or

did it suggest to the trial court that there were fact questions that needed to be

resolved before the court could consider the Wilsteins’ fee forfeiture claim.

      The Wilsteins presented evidence that Dernick recorded more than $15

million in fees over sixteen years with respect to the McCourt Field and that the

Wilsteins themselves paid approximately $1.7 million of those fees. They argued

that Dernick received these fees from them as a result of its breach of its fiduciary

duty. The Wilsteins pointed to the established facts of the case, as supported by

exhibits and testimony that had already been presented to the trial court at various

stages in the litigation since 2005: Dernick breached its fiduciary duty in failing to

notify the Wilsteins of the opportunity to purchase a controlling interest in the

McCourt Field by making the Snyder acquisition; Dernick took for itself the

opportunity to purchase the controlling interest in the McCourt Field, thereby

allowing it to select its alter ego operating company, Pathex Petroleum, as the

successor field operator under the joint operating agreement; Dernick acquired the

controlling interest in the McCourt Field by burdening the Wilsteins’ interest in

that field with a VPP and a mortgage without providing notice to them of that fact;

                                         18
and Dernick failed to notify the Wilsteins of the opportunity to repurchase the

VPP, thereby underpaying them for their share of the gas produced in the McCourt

Field during that time period.

       The Wilsteins also presented evidence that Dernick misrepresented its

ownership of the interest in the McCourt Field to Resource Fund, the party that

provided the VPP financing option. And they presented evidence that Stephen

Dernick lied when the Wilsteins confronted him about their interests in the

McCourt Field: Stephen Dernick told the Wilsteins that their “McCourt Field

assets were not utilized to acquire the Snyder interest and were not burdened by the

VPP”; Dernick then refused to continue to market and sell the Wilsteins’ share of

the gas from the McCourt Field, and Pathex, Dernick’s alter ego, threatened to

discontinue insurance coverage on the Wilsteins’ portion of the McCourt Field

interest.   The Wilsteins argued that these acts constituted a clear and serious

violation of Dernick’s fiduciary duty to them and required it to forfeit the fees that

the Wilsteins had paid for the operation of the McCourt Field during the relevant

time period.

       Dernick did not object to any of this evidence or otherwise argue to the trial

court that the form of the Wilsteins’ evidence, comprised of documents and

testimony excerpts from the previous trials and other proceedings, was in any way

inadequate or erroneous.

                                         19
      Dernick argued instead that all of the Wilsteins’ claims about wrongdoing

related to the VPP and were fully tried in 2006. Dernick pointed out that the 2006

jury awarded the Wilsteins $13,226 in damages based on the underpayment for

gas, and, Dernick argued, the Wilsteins received $500,000 in punitive damages for

breach of the fiduciary duty relating to the VPP. Dernick argued that the Wilsteins

did not seek fee forfeiture at that time on the claim that Dernick breached its

fiduciary duty with regard to the VPP, and, thus, it contended, they could not seek

fee forfeiture on their claim that Dernick breached its fiduciary duty by failing to

inform them of the opportunity to purchase Snyder’s interest in the McCourt Field.

Dernick argued that the Wilsteins were not entitled to fee forfeiture because they

were not allowed to “re-try the 2006 case.”

      Dernick presented evidence that the McCourt Field was not a successful

investment, in terms of profitability, and therefore the Wilsteins could not show

that they were harmed by Dernick’s failure to allow them to participate in

acquiring a majority interest in that field. Dernick relied, in part, on the jury’s

finding that if the Wilsteins had participated in the acquisition of Snyder’s interest

they would have lost money.

      Dernick also argued that the breach was not particularly grave—Dernick

informed the Wilsteins about the opportunity to acquire Snyder’s interest on the

phone, and it did not tell the Wilsteins about the VPP financing method because it

                                         20
was expensive and high risk, and Dernick did not think they would be interested.

Dernick also relied on testimony and documents that had been admitted in previous

proceedings, including the 2006 bench trial and the 2013 trial to the jury

underlying the present appeal.     Dernick argued that in discussing the Snyder

acquisition on the phone Stephen Dernick was simply following the course of

conduct that had developed between the parties over the years, and thus Dernick’s

failure to inform the Wilsteins in writing of the opportunity to acquire a portion of

Snyder’s interest in the McCourt Field was not intentional or negligent.

      The evidence demonstrated that Snyder was originally the operator of the

McCourt Field. Once Dernick purchased Snyder’s interest, it was able to name a

new operator under the terms of the joint operating agreement. Dernick named its

alter ego, Pathex Petroleum, as the operator and was paid approximately $15

million in fees in that capacity during the relevant time period. The Wilsteins

sought forfeiture of the portion of those fees—approximately $1.7 million—that

they had paid to Dernick under the joint operating agreement. Dernick argued that

there was no evidence that it failed to properly manage the McCourt Field and

there was no breach of fiduciary duty or mismanagement of any kind relating to

the fees the Wilsteins paid to Dernick to operate the McCourt Field. Stated another

way, Dernick argued that the fees the Wilsteins wanted Dernick to forfeit were

unconnected to its breach in failing to give notice of the opportunity to buy

                                         21
Snyder’s interest in the McCourt Field because the fees were charged under the

joint operating agreement, but its fiduciary duty was set out in the joint venture

agreement. Thus, Dernick argued, the breach was not central to the scope of the

fiduciary relationship.

        Following this bench trial, the trial court made several relevant findings of

fact:

        4. Dernick’s breach of fiduciary duties concerning the McCourt Field
        Joint Venture Agreement and Joint Operating Agreement gave it
        control of the McCourt Field and allowed it to appoint its alter ego,
        Pathex Petroleum, Inc. (“Pathex”), as the field operator to charge fees
        per well [including operator fees, and fees for the use of the Gas
        Gathering System and Salt Water Disposal System].

        5. Without Dernick’s breach of fiduciary duties concerning the
        McCourt Field [JVA and JOA], Dernick would not have been entitled
        to receive any of the fees at issue.

        ....

        7. Dernick’s conduct on which fee forfeiture is based was deliberate
        and intentional; not merely negligent.

        ....

        10. Because Dernick’s right to charge and collect certain fees from the
        Wilstein Brothers arose by virtue of Dernick’s breach of fiduciary
        duty, equity dictates that Dernick may not retain such benefits.

        ....

        16. Dernick’s conduct constituted a clear and serious breach of
        fiduciary duty. . . .

                                          22
      17. The Court considered the seriousness of the violation, including
      the gravity and timing of the violation, its willfulness, its effect on the
      value of Dernick’s work for the Wilsteins, other threatened or actual
      harm to the Wilsteins, and the adequacy of other remedies. . . .

      The trial court also found that the parties stipulated to the amount of fees

charged and collected by Dernick as operator of the McCourt Field over the

relevant time period—between January 1997, when it took over as operator, and

March 2013. The trial court found that Dernick charged and collected over $15

million in fees as the operator of the McCourt Field under the JOA and as the

owner and operator of the Gas Gathering System and Salt Water Disposal System.

The trial court further found that the Wilsteins paid $764,286.15 for the field

operations of the McCourt Field under the terms of the JOA, $818,472.29 for the

Gas Gathering System of the McCourt Field, and $126,662.61 for the Salt Water

Disposal System of the McCourt Field.           The trial court concluded that the

Wilsteins “should recover $1,709,421.05 from [Dernick] for equitable fee

forfeiture as a result of Dernick’s clear and serious breach of fiduciary duties under

the McCourt Field [JVA and JOA].”

      The trial court’s judgment ordered that the each of the Wilsteins recover

$854,710.53, for a total of $1,709,421.06, in “equitable fee forfeiture,” plus five

percent prejudgment interest on that award, based on its findings and conclusions

following the bench trial.

                                          23
      2.     Standard of review and law of fee forfeiture

      Courts may fashion equitable remedies such as profit disgorgement and fee

forfeiture to remedy a breach of a fiduciary duty. ERI Consulting Eng’rs, Inc. v.

Swinnea, 318 S.W.3d 867, 873 (Tex. 2010); see also Burrow, 997 S.W.2d at 237

(“[A]s a rule a person who renders service to another in a relationship of trust may

be denied compensation for his service if he breaches that trust.”). The primary

purpose of fee forfeiture as an equitable remedy is not to compensate the injured

principal, but to protect relationships of trust by discouraging disloyalty. Swinnea,
318 S.W.3d at 872–73 (quoting Burrow, 997 S.W.2d at 238). Forfeiture is not

justified in every instance in which a fiduciary violates a legal duty because some

violations are inadvertent or do not significantly harm the principal. Burrow, 997
S.W.2d at 241 (quoting RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS

§ 49 cmt. b (1996)); Miller v. Kennedy & Minshew, Prof’l Corp., 142 S.W.3d 325,

338 (Tex. App.—Fort Worth 2003, pet. denied). The remedy of fee forfeiture is

only available for “clear and serious” violations of a fiduciary duty. Burrow, 997
S.W.2d at 241; Miller, 142 S.W.3d at 338.

      “Whether a fee forfeiture should be imposed must be determined by the trial

court based on the equity of the circumstances.” Miller, 142 S.W.3d at 338; see

also Burrow, 997 S.W.2d at 245 (“As a general rule, a jury ‘does not determine the

expediency, necessity, or propriety of equitable relief.’”) (quoting State v. Tex. Pet

                                         24
Foods, Inc., 591 S.W.2d 800, 803 (Tex. 1979)). However, certain matters—such

as whether or when the alleged misconduct occurred, the fiduciary’s mental state

and culpability, the value of the fiduciary’s services, and the existence and amount

of harm to the principal—may present fact issues for the jury to decide. Burrow,
997 S.W.2d at 246; Miller, 142 S.W.3d at 338. Once the factual disputes have

been resolved, the trial court must determine whether the fiduciary’s conduct was a

clear and serious breach of duty to the principal, whether any of the fees should be

forfeited, and if so, what the amount should be. Burrow, 997 S.W.2d at 245–46;

Miller, 142 S.W.3d at 338.

      The remedy of forfeiture must fit the circumstances presented. Swinnea, 318
S.W.3d at 874. The trial court should consider factors such as the gravity and

timing of the breach, the level of intent or fault, whether the principal received any

benefit from the fiduciary despite the breach, the centrality of the breach to the

scope of the fiduciary relationship, any other threatened or actual harm to the

principal, the adequacy of other remedies, and whether forfeiture “fit[s] the

circumstances and work[s] to serve the ultimate goal of protecting relationships of

trust.” Id. at 875; see Burrow, 997 S.W.2d at 243–46; Miller, 142 S.W.3d at 338–

39.

      We review the trial court’s fee forfeiture determination for an abuse of

discretion. Miller, 142 S.W.3d at 339 (citing Burrow, 997 S.W.2d at 243 (“It is

                                         25
within the discretion of the court whether the trustee who has committed a breach

of trust shall receive full compensation or whether his compensation shall be

reduced or denied.”)). A trial court abuses its discretion if it acts arbitrarily or

unreasonably, without reference to any guiding rules or principles. Id. Legal and

factual sufficiency are relevant factors to be considered in assessing whether the

trial court abused its discretion. Id. (citing Beaumont Bank, N.A. v. Buller, 806
S.W.2d 223, 226 (Tex. 1991)). However, an abuse of discretion does not occur

when the trial court bases its decision on conflicting evidence, as long as some

evidence reasonably supports the trial court’s decision. Id. (citing Butnaru v. Ford

Motor Co., 84 S.W.3d 198, 211 (Tex. 2002)).

      3.     Analysis

      Dernick argues that the trial court abused its discretion in awarding fee

forfeiture of the fees the Wilsteins had paid to Pathex, Dernick’s alter ego, as a

result of Dernick’s seizure of the opportunity to acquire a majority interest in the

McCourt Field and appoint Pathex as operator because the Wilsteins did not obtain

the necessary jury findings as a predicate for finding such equitable relief.

However, Dernick did not preserve this issue, as no such objection was made in the

trial court. See TEX. R. APP. P. 33.1(a). Furthermore, Dernick affirmatively argued

in its pretrial briefing that the issue of equitable fee forfeiture had to be presented

to the trial court in a bench trial following the jury trial and should not be presented

                                          26
to the jury. Thus, this case is distinguishable from the case relied upon by Dernick,

Dallas Fire Insurance Co. v. Texas Contractors Surety & Casualty Agency, which

held that the plaintiff could not seek equitable fee forfeiture because it did not

establish that the breach of fiduciary duty caused damages and it failed to obtain

jury findings regarding whether the agents acted intentionally, with gross

negligence, or recklessly, and regarding the value of the agents’ services. See 128
S.W.3d 279, 303 (Tex. App.—Fort Worth 2004), reversed on other grounds, 159
S.W.3d 895 (Tex. 2004).

      At the 2013 bench trial, the parties represented that all fact issues had been

resolved, either by this Court in the 2009 opinion or in the 2013 jury trial on

remand. The Wilsteins presented evidence of a stipulation between themselves

and Dernick regarding the amounts of fees paid by the Wilsteins to Pathex as

operator of the McCourt Field. The only question left to be answered was whether

Dernick’s breach of its fiduciary duty by seizing the opportunity to purchase the

majority interest in the McCourt Field and appoint Pathex as operator was “clear

and serious” so as to justify equitable fee forfeiture and, if so, what amount of fees

should be forfeited. These are questions that are properly determined by the trial

court. See Burrow, 997 S.W.2d at 245–46; Miller, 142 S.W.3d at 338.

      Dernick also argues the evidence was legally insufficient to support

equitable fee forfeiture because there was no evidence of a clear and serious

                                         27
violation of fiduciary duty.     Dernick argues on appeal that “the Wilsteins’

complaint for [the McCourt Field] boils down to a technical complaint that an oral

notice should have been put in writing and that the Wilsteins should have been

advised of financing opportunities that they would not have used.”

        However, the record contradicts this view of the evidence. Dernick acted as

the attorney in fact and record title holder for both its own and the Wilsteins’

interest in the McCourt field. As the Wilsteins’ joint venture partner, Dernick

owed the Wilsteins a duty to provide written notice of the opportunity to

participate in the Snyder acquisition, but it failed to perform this duty.      The

Wilsteins point to evidence that they would have been interested in acquiring

Snyder’s interest in the McCourt Field using the VPP financing option. The

evidence also establishes that Dernick informed David Wilstein over the phone—

not in writing—of the opportunity to purchase Snyder’s interest for a cash

payment. Stephen Dernick admitted that he never informed the Wilsteins of the

opportunity to participate in the Snyder acquisition using the VPP as a financing

tool.

        The Wilsteins further argue, and produced evidence, that Dernick’s

acquisition of Snyder’s interest without giving them the full and written notice

required by their JVA made Dernick the majority owner of the McCourt Field.

Dernick’s majority-owner status allowed it to name itself, via its alter-ego Pathex,

                                         28
as operator of the McCourt Field and to charge approximately $15 million in

operation fees under the McCourt Field Joint Operating Agreement. Dernick’s

failure was not a “technical complaint.” Its failure to satisfy its fiduciary duty

under the JVA resulted in Dernick’s having an opportunity to enrich itself at the

expense of its principal, the Wilsteins. Accordingly, there is evidence that the

breach of fiduciary duty was serious and grave. See Burrow, 997 S.W.2d at 243

(stating that gravity of violation is factor to consider in determining whether fee

forfeiture is appropriate).

      Furthermore, there was evidence that Dernick’s breach of its fiduciary duty

in failing to notify the Wilsteins in writing of the opportunity to make the Snyder

acquisition, and its seizure of the opportunity to become majority owner and

appoint the operator of the field, was not a single limited, “technical” failure

arising from the parties’ business practice, as Dernick argues. Rather, it was part

of repeated conduct on Dernick’s part that involved concealing or failing to

disclose information it was required to disclose, using the Wilsteins’ interest to

enrich itself, and threatening further harm to the Wilsteins’ interest in the field.

Thus, there is evidence that the violation had repercussions that were felt by the

Wilsteins over a period of years, from 1997 until the time of trial in 2013, and that

it was willful.

                                         29
      Dernick also argues that the trial court erred in considering evidence relevant

to its breach of fiduciary duties with regard to the burdening of the Wilsteins’

interest in the McCourt Field with a VPP because the burdening of the field with

the VPP had already been considered by the jury in the 2006 jury trial; the jury had

awarded the Wilsteins damages, including exemplary damages; and that judgment

had been paid. However, the 2007 judgment awarded the Wilsteins only their

actual losses for the difference between their share of the gas produced from the

McCourt Field and what they would have received had it not been improperly

burdened by the VPP plus exemplary damages for Dernick’s breach of its fiduciary

duty solely with respect to its burdening the field with the VPP. It did not consider

the effect on the Wilsteins’ interests of Dernick’s seizure of the opportunity to

purchase a majority interest in the McCourt Field without giving notice of the

opportunity to the Wilsteins and its subsequent appointment of its alter ego Pathex

as operator, which enabled it to enrich itself by millions of dollars in fees. These

claims were not heard in the 2006 trial because the trial court had held prior to that

trial that the Wilsteins’ damage claims arising from Dernick’s failure to give notice

of the opportunity to make the Snyder acquisition were barred by limitations. This

Court heard and reversed that determination in the 2009 opinion on appeal, and

those claims were not tried until 2013.

                                          30
      This appeal arises solely from the issues tried in 2013. The 2013 jury

awarded no damages for lost gas sales on the McCourt Field, and the question of

equitable fee forfeiture of the fees paid by the Wilsteins to Pathex as operator of

the McCourt Field after Dernick’s purchase of the majority interest in the field

without notice to the Wilsteins was tried to the bench. It is that award which

Dernick now appeals. Evidence of all of Dernick’s breaches of fiduciary duty and

bad acts was relevant to establish the Wilsteins’ entitlement to equitable forfeiture

of the fees Dernick received as operator for the McCourt Field. Evidence of

Dernick’s intent to breach its duty to give notice to the Wilsteins of the opportunity

to purchase the majority interest in the McCourt Field, evidence of Dernick’s

purchase of that interest following its failure to given notice, evidence of its

appointment of its alter ego Pathex as operator, and evidence of the millions of

dollars in fees Dernick, through Pathex, charged the Wilsteins in its capacity as

operator of the field after the purchase were all material to the establishment of the

Wilsteins’ right to equitable fee forfeiture of the fees they paid to Dernick as

operator of the McCourt Field.        Dernick’s pattern of abuse of the fiduciary

relationship demonstrated that its failure under the McCourt Field JVA with regard

to the Snyder acquisition was not an innocent mistake on Dernick’s part, but rather

part of its repeated pattern of behavior to use the Wilsteins’ trust in it as a fiduciary

                                           31
to enrich itself in its capacity as operator of the field. See id. (stating that intent

behind breach of trust is factor relating to propriety of fee forfeiture).

      Dernick also argues that forfeiture of fees collected under the operating

agreement was not permissible for claimed breaches of the joint venture

agreement, as opposed to the joint operating agreement. Dernick cites Gregory v.

Porter & Hedges, LLP, 398 S.W.3d 881 (Tex. App.—Houston [14th Dist.] 2013,

pet. denied), for the proposition that fee forfeiture is not permitted for a separate

agreement for which there is no breach finding. In Gregory, our sister court of

appeals held that a former client seeking forfeiture of attorney’s fees was not

entitled to recover fees paid by a third party. Id. at 886. In Gregory, the client

sought forfeiture of attorney’s fees paid during the second occasion on which the

law firm provided legal representation. Id. The court observed that the former

client and the attorneys “had two distinct attorney-client relationships,” that it was

undisputed that the attorneys fully performed all of their obligations under the first

attorney-client relationship, and that all of the client’s claims arose out of the

second representation, for which the client never paid any fees. Id. at 886–87.

Because the client had paid no fees related to the second representation, she could

not seek the forfeiture of any fees. Id. at 887.

      Here, in contrast, the Wilsteins are seeking forfeiture of the fees that they

themselves paid to Pathex for the operation of the McCourt Field following the

                                           32
Snyder acquisition—fees that Dernick was able to collect only because of its

breach of its fiduciary duty to the Wilsteins under the joint venture agreement. The

circumstances in Gregory are thus clearly distinguishable from those in the present

case. As stated above, Dernick’s acquisition of Snyder’s interest without giving

the Wilsteins the full and fair written notice required by their JVA enabled Dernick

to become the majority owner of the McCourt Field, which allowed Dernick to

appoint itself in its alter ego capacity as the operator of the McCourt Field and

thereby to collect millions of dollars in operating fees under the Joint Operating

Agreement. The Wilsteins sought the forfeiture of the fees they paid to Dernick as

a result of Dernick’s breach of the JVA.

      Finally, Dernick argues that the amount of the fee forfeiture was excessive.

Dernick complains that the trial court abused its discretion in awarding “total fee

forfeiture, despite the jury’s finding that the Wilsteins suffered no damages, and, in

fact, avoided additional losses by not participating in the Snyder acquisition.” We

observe that the parties stipulated, and the trial court found, that Dernick collected

over $15 million in fees as the operator of the McCourt Field and that the Wilsteins

paid more than $1.7 million of those fees.

      Although it is true that total fee forfeiture is not always appropriate, the

supreme court has held, “Ordinarily, forfeiture extends to all fees for the matter for

which the [fiduciary] was retained.”         Burrow, 997 S.W.2d at 241 (quoting

                                           33
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS, § 49 cmt. e); see also

Swinnea, 318 S.W.3d at 873 (“[C]ourts may disgorge all ill-gotten profits from a

fiduciary when a fiduciary agent usurps an opportunity properly belonging to a

principal, or competes with a principal.”).      As an example of when total fee

forfeiture is not appropriate, the supreme court has cited a circumstance such as

“when a lawyer performed valuable services before the misconduct began, and the

misconduct was not so grave as to require forfeiture of the fee for all services.”

Burrow, 997 S.W.2d at 241 (quoting RESTATEMENT (THIRD)                OF THE    LAW

GOVERNING LAWYERS, § 49 cmt. e).              It stated that “[s]ome violations are

inadvertent or do not significantly harm the client” and can “be adequately dealt

with by . . . a partial forfeiture.” Id. (quoting RESTATEMENT (THIRD) OF THE LAW

GOVERNING LAWYERS, § 49 cmt. b). Ultimately, fee forfeiture must be applied

with discretion, based on all of the circumstances of the case. Id. at 241–42;

Swinnea, 318 S.W.3d at 874–75.

      As discussed above, the breach of fiduciary duty in this case cannot be

described as “inadvertent.” Dernick failed to provide a full and fair disclosure of

the opportunity to participate in the Snyder acquisition to the Wilsteins and instead

took the opportunity solely unto itself. Dernick was able to acquire a majority

interest in the McCourt Field, name itself the operator, and proceed to collect fees

from the Wilsteins. Although Dernick argues that it provided valuable services

                                         34
that the Wilsteins would have been required to pay for in any event, we observe

that Dernick’s ability to charge all of those fees was the direct result of its

misconduct. Dernick usurped an opportunity properly belonging to the Wilsteins

and was enriched because of that breach. Thus, this is the type of violation for

which total fee forfeiture is appropriate. See Swinnea, 318 S.W.3d at 873; Burrow,
997 S.W.2d at 241.

      Furthermore, Dernick’s argument that the Wilsteins should not be entitled to

receive an equitable remedy because the jury failed to award it a legal remedy is

unavailing. As the supreme court held in Burrow, “Even though the main purpose

of the remedy is not to compensate the client, if other remedies do not afford the

client full compensation for his damages, forfeiture may be considered for that

purpose.” 997 S.W.2d at 244. Thus, the purpose of the fee forfeiture is not to

compensate the Wilsteins for financial loss related to the lost opportunity to

participate in the Snyder acquisition—it is to protect the fiduciary relationship.

And, it is precisely for situations such as the one here—where traditional legal

remedies do not adequately compensate for the loss of trust in the fiduciary

relationship—that fee forfeiture “may be considered for that purpose.”        See

Swinnea, 318 S.W.3d at 874; see also Russell v. Truitt, 554 S.W.2d 948, 953 (Tex.

Civ. App.—Fort Worth 1977, writ ref’d n.r.e.) (upholding total fee forfeiture,

reasoning that “[a]lthough the alleged secret agreement may have put [the

                                       35
defendant] in a better position to look after the interests of the plaintiffs it also put

the defendants in a position to make an additional profit which plaintiffs would not

share”).

      We overrule Dernick’s second issue.

B.    Prejudgment Interest on Equitable Fee Forfeiture

      In its third issue, Dernick argues that the trial court erred in awarding

prejudgment interest on the fee forfeiture award. The Wilsteins argue that the trial

court’s award of prejudgment interest was not an abuse of discretion but was

instead “consistent with the purposes of prejudgment interest.” They assert that the

award of prejudgment interest on the fee forfeiture was appropriate because it

served to encourage settlement and discourage Dernick’s delay.

      We review a trial court’s decision regarding the award of prejudgment

interest for an abuse of discretion, giving only limited deference to the trial court’s

application of the law to the facts. Purcell Constr., Inc. v. Welch, 17 S.W.3d 398,

402 (Tex. App.—Houston [1st Dist.] 2000, no pet.).

      Prejudgment interest is compensation for the lost use of money owed as

damages. Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809, 812 (Tex. 2006)

(holding that prejudgment interest is awarded to fully compensate injured party,

not to punish defendant); Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc.,

962 S.W.2d 507, 528 (Tex. 1998) (stating that decision to extend prejudgment

                                           36
interest recovery to personal injury, wrongful death, and survival actions was

“driven primarily by the rationale that awarding prejudgment interest was

necessary to fully compensate injured plaintiffs”). Awarding prejudgment interest

serves two purposes: (1) encouraging settlement and (2) expediting settlements and

trials by removing incentives for defendants to delay without creating such

incentives for plaintiffs. Johnson & Higgins, 962 S.W.2d at 529.

      An award of prejudgment interest may be based either on an enabling statute

or on general principles of equity. Johnson & Higgins, 962 S.W.2d at 528. Here,

the Wilsteins sought prejudgment interest on the fee forfeiture award based on

principles of equity, arguing that Dernick ought not to benefit from its protracted

litigation and delayed forfeiture of its wrongly-acquired fees. Here, there is no

statute enabling the recovery of prejudgment interest for a breach of fiduciary duty

such as the one asserted by the Wilsteins. Cf. TEX. FIN. CODE ANN. § 304.102

(Vernon 2006) (“A judgment in a wrongful death, personal injury, or property

damage case earns prejudgment interest.”). However, the supreme court has held

that awards of prejudgment interest may be based on “general principles of equity”

and that when no statute controls the parties must look to equitable considerations

to support an award of prejudgment interest. Cavnar v. Quality Control Parking,

Inc., 696 S.W.2d 549, 552 (Tex. 1985). Thus, when, as here, no statute controls

the award of prejudgment interest, the decision to award prejudgment interest is

                                        37
left to the sound discretion of the trial court, which should rely upon equitable

principles and public policy in making its decision. Henry v. Masson, 453 S.W.3d
43, 2014 WL 6678937, at *5 (Tex. App.—Houston [1st Dist.] 2014, no pet.)

(citing Citizens Nat’l Bank v. Allen Rae Invs., Inc., 142 S.W.3d 459, 487 (Tex.

App.—Fort Worth 2004, no pet.), and Purcell Constr., 17 S.W.3d at 402).

      In examining the general principles of equity implicated in this case, we

conclude that the trial court did not abuse its discretion in awarding prejudgment

interest on the fee forfeiture award. The trial court awarded the fee forfeiture,

including prejudgment interest on that amount, based on its findings and

conclusions regarding the nature and severity of Dernick’s breach of its fiduciary

duty to the Wilsteins and the amount of fees that it would not have collected but

for its breach. The trial court found that Dernick’s “clear and serious” breach of its

fiduciary duty to the Wilsteins was “intentional and deliberate.” It further found

that “Dernick’s right to charge and collect the fees . . . arose by virtue of [its]

breach of fiduciary duty” and thus, “equity dictates that Dernick may not retain

such benefit.”

      Not only did Dernick commit a “clear and serious” breach of its fiduciary

duty to the Wilsteins, it then engaged in protracted litigation—dating back to

2003—to avoid facing the consequences of that breach. The trial court’s ruling

here thus served an essential equitable function of prejudgment interest—to

                                         38
encourage settlement and discourage delay by removing incentives for defendants

such as Dernick to use lengthy legal proceedings to avoid its obligations as a

fiduciary. See Johnson & Higgins, 962 S.W.2d at 529.

      Furthermore, the trial court’s grant of prejudgment interest on the fee

forfeiture award served to award the injured party—the Wilsteins—the use of the

forfeited money for the time its claims were being litigated. We have already

upheld the trial court’s determination that equity dictated that Dernick forfeit the

fees it collected from the Wilsteins as a result of its breach of fiduciary duty. It

was likewise appropriate for the trial court to conclude that Dernick should not

retain the benefit of the use of the fees it was eventually ordered to forfeit during

the protracted litigation and that, instead, the Wilsteins were entitled to that benefit.

See Johnson & Higgins, 962 S.W.2d at 528–29 (holding that prejudgment interest

is compensation for lost use of money due as damages and that prejudgment

interest serves dual purposes of encouraging settlement and discouraging delay);

see also Swinnea, 318 S.W.3d at 881 (holding, in context of equitable forfeiture of

contractual consideration, that “the rule allowing such equitable remedies to

protect relationships of trust encompasses the ability to fashion such remedies

against those who would conspire to abuse such relationships”).

      Dernick, however, argues that prejudgment interest is available only for

compensatory damages and that, because the fee forfeiture award did not constitute

                                           39
compensatory damages, prejudgment interest should not be available on that

award. We first observe that the supreme court has never held that prejudgment

interest is available only on compensatory damages, and its holding on equitable

fee forfeiture indicates otherwise. Moreover, Dernick does not cite, and we could

not find, any cases in which the supreme court has prohibited awards of

prejudgment interest on equitable remedies such as the fee forfeiture here. Cf.

Brainard, 216 S.W.3d at 812 (holding that prejudgment interest is intended to fully

compensate injured party, not to punish defendant, and stating, “We have

consistently viewed prejudgment interest as falling within the common law

meaning of damages”); Johnson & Higgins, 962 S.W.2d at 528–29 (purpose of

prejudgment interest is to fully compensate plaintiff for lost use of money due as

compensation).

      We note that the supreme court has carefully distinguished those types of

damages for which prejudgment interest is not available—damages that do not

apply here. See Cavnar, 696 S.W.2d at 555 (holding that prejudgment interest is

not available on punitive damages or future damages); see also TEX. CIV. PRAC. &

REM. CODE ANN. § 41.007 (Vernon 2015) (“Prejudgment interest may not be

assessed or recovered on an award of exemplary damages.”). Dernick relied on

similar reasoning in arguing that the trial court did not abuse its discretion in

excluding the fee forfeiture award when it calculated the amount of the

                                        40
supersedeas bond required for Dernick to pursue its appeal. In that instance, we

agreed with Dernick and held that for purposes of setting the amount of the

supersedeas bond, the fee forfeiture award “was not primarily intended to

compensate the Wilsteins, but to protect relationships of trust by deterring Dernick

from breaching its fiduciary duties.” However, based on our analysis of all of the

equitable principles involved here and the underlying purposes of awards of

prejudgment interest, as discussed above, we cannot conclude that the trial court

abused its discretion in awarding the Wilsteins prejudgment interest on the fee

forfeiture award.

      We overrule Dernick’s third issue.

                                 Attorney’s Fees

      In its fourth issue, Dernick argues that the attorney’s fees awarded on the

Wilsteins’ Bradshaw Field claim were excessive.

A.    Relevant Facts

      Following the jury trial, the trial court held a bench trial on the issue of

attorney’s fees.    The Wilsteins presented evidence in the form of invoices,

summaries, and other documents, in addition to the testimony of its attorneys.

      The Wilsteins’ appellate attorney, who also testified as an expert on

attorney’s fees, stated that the Wilsteins segregated their attorney’s fees so that

only the fees necessary to the litigation of the Bradshaw Field claim against

                                        41
Dernick were presented. The attorney testified to the method he used to determine

what portion of the work was allocated to the Bradshaw Field claim—the attorneys

eliminated any work that was specifically related to an unrecoverable claim, such

as those arising out of the McCourt Field claims. Of the remaining fees invoiced

to the Wilsteins, the attorneys “perform[ed] an allocation based upon the type of

work that was being done and how much of that work, if any, would have been

avoided if the non-recoverable claim had not been pursued.” The attorney testified

that some portions of the work, such as reading the record from the trial, would

still have been 100% necessary even if the non-recoverable claim had not been

pursued. Also, both the recoverable and non-recoverable claims were based on

similar contracts with similar legal theories, so some of the broader research

applied 100% to the recoverable claim. Other portions of the work, such as

preparing briefing and preparing for oral argument, required that the attorney

determine what portion of that time was dedicated solely to the recoverable claim.

In total, the amount the attorney allocated to the recoverable claims was

approximately 62% of the total billing.

      The attorney likewise testified about the nature of the work done on the case,

the attorneys and paralegals who worked on the case, their professional

qualifications, and their billable rates.

                                            42
      The attorney acknowledged that the attorney’s fees incurred in the case were

higher than usual, but he testified that the high fees were due to the unusual nature

of the case. The fees were incurred over a period ranging from 2006, following the

first jury trial, until the 2013 trial underlying this appeal. He also testified that

Dernick’s strategy of repeatedly challenging the trial court’s implementation of the

2009 opinion and mandate caused a lot of the fees: the “$466,000 figure—had the

parties simply prepared the case and gone to trial, that figure would have $200,000

less, but for the argument that the defendant decided to make” regarding the

interpretation of the 2009 opinion and mandate and the scope of issues for trial on

remand. The attorney testified that, between the issuance of this Court’s judgment

in the 2009 appeal and the start of the 2013 trial on remand, Dernick filed several

motions and emergency motions in this Court, including a motion to stay, and

Dernick also filed a mandamus to this Court and a mandamus to the supreme court,

both of which required prompt responses and were more costly than work that can

be done “at a slower pace.” These proceedings that occurred between the original

appeal and the trial on remand also created additional expenses for “trials that

didn’t go forward, trial settings that got blown, the necessity of the mistrial, [and]

preparing for trials that didn’t happen,” all of which added to the legal fees

incurred in this case.

                                         43
       Ultimately, the trial court found that the Wilsteins’ reasonable and necessary

attorney’s fees for the entire case, from 2006 until the time of the underlying trial

in 2013 were $2,424,416.10. The trial court found that the Wilsteins properly

segregated their fees to include only the fees incurred in litigating their recoverable

claim—the Bradshaw Field claim—and awarded them $727,324.82, or thirty

percent of their total fees.

B.     Standard of Review on Attorney’s Fees

       The prevailing party in a breach of contract suit is entitled to attorney’s fees.

TEX. CIV. PRAC. & REM.CODE ANN. § 38.001(8) (Vernon 2015); Haden v. David J.

Sacks, P.C., 332 S.W.3d 503, 510 (Tex. App.—Houston [1st Dist.] 2009, pet.

denied). An award of attorney’s fees must be supported by evidence that the fees

are reasonable and necessary. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d
1, 10 (Tex. 1991). A trial court determines the reasonableness of an attorney’s fees

award by considering the factors enumerated in Arthur Andersen & Co. v. Perry

Equipment Corp. 945 S.W.2d 812, 818 (Tex. 1997) (holding that evidence of

contingency fee agreement alone does not support award of reasonable and

necessary attorney’s fees and that trial court must still consider other factors). The

reasonableness of attorney’s fees is generally a fact issue. Haden, 332 S.W.3d at

512. We review attorney’s fees awards for an abuse of discretion. Ridge Oil Co.

v. Guinn Invs., Inc., 148 S.W.3d 143, 163 (Tex. 2004).

                                          44
      Regarding the amount of attorney’s fees, the party applying for the award

bears the burden of proof. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 762–63

(Tex. 2012). In El Apple I, the supreme court stated:

      That proof should include the basic facts underlying the lodestar,
      which are: (1) the nature of the work, (2) who performed the services
      and their rate, (3) approximately when the services were performed,
      and (4) the number of hours worked. An attorney could, of course,
      testify to these details, but in all but the simplest cases, the attorney
      would probably have to refer to some type of record or documentation
      to provide this information.

Id. at 763. Thus, the supreme court held that, when applying for a fee under the

lodestar method, “the applicant must provide sufficient details of the work

performed before the court can make a meaningful review of the fee request” and

that such evidence includes “documentation of the services performed, who

performed them and at what hourly rate, when they were performed, and how

much time the work required.” Id. at 764.

      Furthermore, attorney’s fee “claimants have always been required to

segregate fees between claims for which they are recoverable and claims for which

they are not.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex.

2006) (citing Stewart Title Guar. Co. v. Aiello, 941 S.W.2d 68, 73 (Tex. 1997)).

However, the supreme court has recognized a narrow exception “when discrete

legal services advance both a recoverable and unrecoverable claim” and thus “are

so intertwined that they need not be segregated.” Id. at 313–14. The court stated:

                                         45
      This standard does not require more precise proof for attorney’s fees
      than for any other claims or expenses. Here, Chapa’s attorneys did
      not have to keep separate time records when they drafted the fraud,
      contract, or DTPA paragraphs of her petition; an opinion would have
      sufficed stating that, for example, 95 percent of their drafting time
      would have been necessary even if there had been no fraud claim.
      The court of appeals could then have applied standard factual and
      legal sufficiency review to the jury’s verdict based on that evidence.

Id. at 314.

C.    Analysis

      Dernick complains about the amount of attorney’s fees awarded here,

arguing that they were excessive and not supported by the record. Specifically, it

argues that the Wilsteins were only entitled to recover fees based on their claim for

breach of contract for the Bradshaw Field, for which they recovered approximately

$162,000 in damages. Thus, the attorney’s fees award was almost five times more

than the damages the Wilsteins recovered. 3

      However, it is undisputed that the Wilsteins recovered damages on their

claim of breach of contract. Thus, Dernick’s argument can only be interpreted as a

complaint that the Wilsteins did not segregate their fees regarding the different

measures of damages presented to the jury on that single Bradshaw Field claim.

Dernick made no such complaint in the trial court, and accordingly, it is waived.

3
      Dernick also argues that the Wilsteins’ presentation on fees related to the jury
      award that the trial court subsequently disregarded—the $750,000 in damages
      representing the Wilsteins’ share of production revenues of the Bradshaw Joint
      Venture. However, in the analysis of the Wilsteins’ cross-appeal, we reinstate this
      award, so we do not consider this argument here.

                                          46
See Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 389 (Tex. 1997) (holding that

parties waive error regarding failure to segregate attorney’s fees by failing to

object); see also TEX. R. APP. P. 33.1(a).

      Furthermore, the evidence at the bench trial indicated that the Wilsteins

properly segregated their attorney’s fees to limit them only to the recoverable

claim. See Chapa, 212 S.W.3d at 313. The Wilsteins’ attorney and expert on

attorney’s fees testified that the attorneys all went through their invoices and

removed any items that related only to non-recoverable claims. They then went

through each item in the invoice and determined what percentage of the remaining

fees, if any, would have been necessary even in the absence of the non-recoverable

claims. See id. at 314. The expert testified that the Wilsteins were seeking

approximately 62% of their total fees as attributable to their litigation of the

Bradshaw Field claim. The Wilsteins provided both documentary evidence and

testimony regarding the type of work done, the professional who completed the

work, their hourly rates, the dates on which the work was performed, and how

much time the work required. See El Apple I, 370 S.W.3d at 764.

      Dernick also argues that the fees awarded in this case were not reasonable or

necessary because the amount of fees awarded was so high, especially in light of

the “minimal” focus on the Bradshaw Field claims during trial. Dernick argues

that the high fees resulted from “overwhelming duplication of effort, having

                                             47
multiple attorneys read the massive record (multiple times) from the prior trial,

even though the merits of the Bradshaw claim had nothing to do with it, and the

focus on Bradshaw was minimal.” However, the record demonstrates that, in spite

of the Wilsteins’ request for more, the trial court awarded them only 30% of their

total fees. Furthermore, the Wilsteins’ expert acknowledged that the fees in this

case were higher than usual, but argued that the high fees were the result of the

protracted length of the litigation and the strategic choices made by Dernick to file

multiple emergency motions and mandamuses that resulted in high fees to prepare

responses on an emergency basis and caused wasted effort preparing for trial

settings and other matters that were delayed.

      Dernick also argues that “even though the Wilsteins were responsible for a

mistrial [in 2012], there was no deduction for any of those fees.” However, the

record again demonstrates that Dernick failed to ask for segregation on this basis in

the trial court. See Solis, 951 S.W.2d at 389 (holding that parties waive error

regarding failure to segregate attorney’s fees by failing to object); see also TEX. R.

APP. P. 33.1(a). And the record demonstrates that the mistrial was not due to any

legal maneuverings on the Wilsteins’ part. Rather, it was Dernick that sought the

mistrial, which the trial court granted because it believed its own rulings were

unclear and wanted to be sure to have a clean trial with a clean record for appeal.

                                         48
      Thus, we conclude that the attorney’s fees awarded were reasonable and

necessary under the circumstances of this case.

      We overrule Dernick’s fourth issue.

                     II.    THE WILSTEINS’ CROSS-APPEAL

            Accounting of Revenues from Bradshaw Joint Venture

      In their cross-appeal, the Wilsteins challenge the trial court’s decision to

disregard the jury’s finding of damages regarding revenue generated by the

Bradshaw Joint Venture.

A.    Facts Relevant to the Wilsteins’ Issue

      The Wilsteins collectively owned a 25% interest in the Bradshaw Field,

Dernick owned a 25% interest, and a third party owned a 50% interest. Dernick

sold the entire interest to which it held title in the Bradshaw Field, which

necessarily included the portion owned by the Wilsteins because Dernick was the

record title holder under the JVA. Dernick failed to disclose the sale to the

Wilsteins and failed to provide them with the accounting required by the JVA, but

it did record the sale in the Kansas real property records. After the sale, the buyer

conveyed overriding royalty interests back to Dernick. Dernick likewise failed to

disclose the existence of the interests to the Wilsteins and failed to provide an

accounting for them or otherwise give the Wilsteins their portion of the proceeds.

                                         49
      In their live pleading at the time of trial, 4 the Wilsteins asserted multiple

causes of action, including a cause of action for breach of contractual and fiduciary

duties, stating that Dernick was “required to maintain and furnish [the Wilsteins]

with accurate records regarding the monthly and cumulative accounting of the

expenses incurred in operations, the value of gas produced and marketed, and the

revenues [the Wilsteins] were entitled to receive from the Properties,” a duty that

the Wilsteins alleged was breached. The Wilsteins further contended that Dernick

was their “agent in the marketing of gas, the handling of revenues, and in the

representation of [the Wilsteins] in litigation filed by Dernick,” that Dernick was

their fiduciary and owed them fiduciary duties, and that Dernick breached those

duties for its own purposes and gains. Several of their specifically enumerated

complaints dealt with the failure to pay revenues, including an allegation that

Dernick “unlawfully and without authority asserted and assumed dominion and

control over [the Wilsteins’] gas and revenues, thereby converting same to [its] use

and benefit and also breaching [its] fiduciary and agency duties. . . .”

      “Count Seven” of the Wilsteins’ live pleading was for a claim “for Breach of

Contractual and Fiduciary Duties and Claim for Accounting.” Under this cause of

action for “an accounting,” the Wilsteins pleaded facts related to Dernick’s sale of

their interest in the Bradshaw Field without notice and without paying them their

4
      Their live pleading was their seventh amended petition, which was filed on August
      2, 2004, prior to the original trial.

                                          50
share of the proceeds. The Wilsteins further alleged that they “ha[d] not received

any monies whatsoever representing the value of their collective 25% interest in

the assets of lease acquisition costs of initial investment of the Joint Venture, nor

[had] the Wilsteins received an accounting of the profits realized from the sale of

these properties.” They also alleged that Dernick failed “to properly account for

the assets of the Joint Venture” and that Dernick’s wrongful acts “resulted in

[Dernick’s] unjust retention of benefits, properties, profits and proceeds under the

Bradshaw Joint Venture Agreement which would have otherwise flowed to the

Wilsteins.” In their prayer for relief, the Wilsteins sought “[j]udgment against

Dernick for breach of fiduciary and contractual duties related to the Bradshaw

Program” and “[j]udgment against Dernick for a sum to be determined in the

accounting.”

      In 2005, the trial court ruled that all of the Wilsteins’ claims for breach of

fiduciary duties related to the Bradshaw Joint Venture were barred by limitations.

This ruling was appealed to this Court, which stated:

      The Wilsteins contend that ‘Dernick’s failure to properly account for
      the assets of the Joint Venture . . . and its failure to disclose the sale of
      the properties, both constitute a breach of its fiduciary duties, and a
      breach of the terms of the [Bradshaw Field JVA]. . . .’ Again, we
      agree with the Wilsteins.

Dernick Res., 312 S.W.3d at 884. Thus, we concluded in our 2009 opinion that

Dernick owed the Wilsteins a fiduciary duty under the Bradshaw Field JVA and

                                           51
that Dernick breached its duties to the Wilsteins with regard to the sale of their

interest in the Bradshaw Field as a matter of law when it failed to provide them

with notice of the sale or proceeds. Id. at 884–85. We remanded the case for trial

on the claims that the trial court excluded on limitations grounds.

      The Wilsteins subsequently filed an expert witness designation and

supplement to their responses to Dernick’s request for disclosure designating

experts to testify to the “lost profits in connection with Dernick’s breach of

fiduciary duty to the Wilsteins in the remanded Bradshaw claim” and to “[t]he

benefits and profits made by Dernick in the Bradshaw transaction as a result of its

breach of fiduciary duty to the Wilsteins, including Dernick’s commingling of

funds belonging to the Wilsteins from the sale of leases to Bradshaw Energy,

LLC.” The Wilsteins identified an expert who would testify regarding benefits that

Dernick retained in the sale of the Bradshaw Field that were not shared with the

Wilsteins, and they stated, “It is believed that there may be additional assignments

and interests purchased by Dernick that were within the scope of the Bradshaw

Joint Venture, and that were not shared with the Wilsteins.”

      Likewise, Dernick designated an expert to testify regarding the revenue the

Wilsteins would have received under the Bradshaw Joint Venture between 1994,

when they entered into the JVA, and 1998, when Dernick sold their interest

without informing them of the sale or compensating them for their interest. The

                                         52
Wilsteins deposed this witness, Howard Blunk, in 2011. At that time, Blunk stated

that he was originally engaged to determine the net revenue earned by the

Wilsteins’ interests from the date of the acquisition to the date of the sale but that

he was not able to obtain the necessary information to do so.

      The Wilsteins also made a disclosure regarding the amount and any method

of calculating economic damages by referring to the “second amended expert

witness designation and supplement hereto.” They stated,

      With respect to the Bradshaw claim, the burden is on Dernick, as the
      breaching fiduciary, to account to the Wilsteins for their share of the
      proceeds received from the Bradshaw sale. Absent a full accounting,
      the Wilsteins are entitled to 25% of the net sales proceeds from the
      Bradshaw sale.

      At trial, the Wilsteins established that they entered into the Bradshaw JVA in

1994, thus obtaining a collective 25% interest in the Bradshaw Field, and that the

Bradshaw Field had producing wells from 1994 through 1998 and even in the

2000s. The evidence indicated that Dernick sold its entire title interest in the

Bradshaw Field in 1998, which included the Wilsteins’ interest because Dernick

was the record title holder, for approximately $8.25 million. It is undisputed that it

never paid any of those proceeds to the Wilsteins. Dernick also obtained, as part of

the sale of the Bradshaw Field interest, an overriding royalty interest. 5 It was

5
      “An overriding royalty is an interest in the oil and gas produced at the surface, free
      of the expense of production.” Paradigm Oil, Inc. v. Retamco Operating, Inc.,
      372 S.W.3d 177, 180 n.1 (Tex. 2012).

                                            53
likewise undisputed that Dernick never paid any portion of that overriding royalty

interest to the Wilsteins, even though there was evidence that the Bradshaw Field

wells were producing during the relevant time. Dernick did not object to any of

the Wilsteins’ evidence based on a failure to disclose.

      Dernick’s expert, Blunk, testified at trial that he could not determine the

amount of revenue generated by the Bradshaw Field. Stephen Dernick likewise

testified that he did not know “what amount of revenue is attributable to” the

Wilsteins’ interests in the Bradshaw Field. And Blunk could not provide an

accounting for the value of the overriding royalty interest conveyed back to

Dernick as part of the sale of the Bradshaw Field. He testified that if there were

producing properties there would be revenue, but he could not do an accounting

because Dernick had told him the records were not available.

      The jury charge asked the jury what sum of money would compensate the

Wilsteins for their damages, if any, “that were proximately caused by Dernick’s

breach of fiduciary duty in failing to notify the Wilstein Brothers about the

acquisition of leasehold interests in Greeley County, Kansas, and in failing to

account to the Wilsteins Brothers for their share of the assets of the Bradshaw Joint

Venture.”    Dernick objected to the submission of a question on production

revenues on the ground that it was not supported by the Wilsteins’ pleadings and

was barred by their disclosures and that the Wilsteins did not establish what their

                                         54
production revenues would be. The trial court overruled this objection. Dernick

did not object to the jury charge on the ground that lost profits, rather than

production revenues, was the proper measure of damages, nor did it provide any

alternative measure of damages.

      The jury found that the Wilsteins’ “share of the sales proceeds of the

Bradshaw Joint Venture” was $162,194.14.         The jury further found that the

Wilsteins’ “share of the production revenues of the Bradshaw Joint Venture” was

$750,000.

      Dernick filed a motion to disregard the jury’s finding that the Wilsteins were

entitled to $750,000 as their share of the production revenues of the Bradshaw

Joint Venture. Dernick argued that the finding must be disregarded because it was

unsupported by evidence and because it was immaterial and should never have

been submitted due to the Wilsteins’ “failure to plead for and disclose such

damages.” Dernick argued that the submission of that question was barred by

Rules 193.6, 278, and 301, and that it challenged the submission of the question

based on the Wilsteins’ failure to disclose such damages. Dernick also argued,

“Assuming, arguendo, that the Wilsteins had pleaded for and disclosed their intent

to seek damages related to production of oil and gas from the Bradshaw leases,”

lost profits, not lost revenues, was the proper measure of damages. The trial court

granted Dernick’s motion to disregard.

                                         55
B.    Standard of Review

      The trial court has broad discretion in submitting the jury charge, subject

only to the requirement that the questions submitted must (1) control the

disposition of the case; (2) be raised by the pleadings and the evidence; and

(3) properly submit the disputed issues for the jury’s determination. TEX. R. CIV.

P. 277, 278; Moore v. Kitsmiller, 201 S.W.3d 147, 153 (Tex. App.—Tyler 2006,

pet. denied).

      Error in the charge must be preserved by distinctly designating the error and

the grounds for the objection. Keetch v. Kroger Co., 845 S.W.2d 262, 267 (Tex.

1992); see TEX. R. CIV. P. 274. The test for whether a party has preserved error in

the jury charge is whether the party made the trial court aware of the complaint

timely and plainly and obtained a ruling. State Dep’t of Highways & Pub. Transp.

v. Payne, 838 S.W.2d 235, 241 (Tex. 1992).

      A trial court may disregard a jury finding if (1) the finding is immaterial or

(2) there is no evidence to support one or more of the jury findings on issues

necessary to liability. TEX. R. CIV. P. 301; Spencer v. Eagle Star Ins. Co. of Am.,

876 S.W.2d 154, 157 (Tex. 1994).             A finding is immaterial when the

corresponding question either: (1) should not have been submitted; (2) calls for a

finding beyond the province of the jury, such as a question of law; or (3) was

properly submitted but has been rendered immaterial by other findings. Se. Pipe

                                        56
Line Co. v. Tichacek, 997 S.W.2d 166, 172 (Tex. 1999); Spencer, 876 S.W.2d at

157.

       We review the grant or denial of a motion for judgment notwithstanding the

verdict or a motion to disregard jury findings as a legal-sufficiency challenge. See

City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005). In conducting a legal-

sufficiency review, we credit favorable evidence if a reasonable factfinder could

and disregard contrary evidence unless a reasonable factfinder could not. Id. at

827; Brown v. Brown, 236 S.W.3d 343, 348 (Tex. App.—Houston [1st Dist.] 2007,

no pet.). We consider the evidence in the light most favorable to the finding under

review and indulge every reasonable inference that would support it. City of

Keller, 168 S.W.3d at 822. We sustain a no-evidence contention only if: (1) the

record reveals 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 conclusively establishes the opposite of the vital

fact. Id. at 810; Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.

1997).

C.     Analysis

       Here, Dernick argues that the trial court should disregard the jury’s finding

regarding production revenues for the Bradshaw Field because the question is

                                         57
immaterial and because no evidence supports the finding. Specifically, Dernick

argues that the question is immaterial because it should not have been submitted—

the Wilsteins’ pleadings did not properly raise the question of whether they were

entitled to any damages beyond their share of the proceeds from the sale of the

field.6 Dernick argues that the Wilsteins’ pleadings only sought recovery of their

share of the proceeds of the sale of the Bradshaw Field and that they never

mentioned “production revenues” in their pleadings or disclosures.

      The Wilsteins’ pleadings and disclosures focused on the loss of sales

proceeds arising from Dernick’s sale of its interest in the Bradshaw Field. This

Court’s 2009 opinion overturned the trial court’s judgment in the case as originally

pleaded and tried. We concluded:

      Dernick breached its fiduciary duty to the Wilsteins by failing to
      disclose its sale of their interest in the Bradshaw Field and that the
      Wilsteins were not put on constructive notice of the sale by the filing
      of the sale in the Kansas public records. The trial court found that the
      Wilsteins discovered the sale of their interest in the Bradshaw Field
      following the 2002 audit of that field. This finding is supported by the
      evidence. Because the Wilsteins filed their Bradshaw Field claims in
      2003, their claims were not barred by the four-year statute of
      limitations for breach of fiduciary duty and fraud.

6
      Dernick also argues that the Wilsteins failed to disclose such a measure of
      damages. However, Rule of Civil Procedure 193.6, which Dernick cites as
      authority here, does not deal with submission of questions to the jury. Rather, it
      provides that the remedy for failing to disclose evidence or witnesses is exclusion
      of that evidence. See TEX. R. CIV. P. 193.6. Dernick does not point to any
      specific evidence that should have been excluded for this reason. Thus, this
      argument is unavailing.

                                          58
Dernick Res., 312 S.W.3d at 885. Thus our opinion and mandate remanded the

claim for breach of contractual and fiduciary duties arising out of Dernick’s sale of

the Wilsteins’ interest in the Bradshaw Field because the trial court had erred in

excluding trial of these claims on limitations grounds. Our opinion did not address

the Wilsteins’ right to any production revenues for the time between when they

entered into the Bradshaw Field JVA in 1994 and when Dernick sold the interest in

1998. That is, our opinion did not address damages for which Dernick might be

held liable on remand. It is undisputed that the “share of the sales proceeds of the

Bradshaw joint venture” constituted a measure of the Wilsteins’ damages. Thus,

we must determine whether “production revenues” could also be a measure of

damages for Dernick’s breach of contractual and fiduciary duties on retrial.

      The Wilsteins’ pleadings and the evidence at trial indicated that their

damages went beyond their share of the sales proceeds. It was established that, as

part of the sale, Dernick obtained an overriding royalty interest. Dernick never

paid any portion of this overriding royalty to the Wilsteins, despite the fact that it

obtained the royalty in part by selling the Wilsteins’ interest in the Bradshaw Field.

An overriding royalty interest can be considered “production revenues.”           See

Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d 177, 180 n.1 (Tex.

2012) (“An overriding royalty is an interest in the oil and gas produced at the

surface, free of the expense of production.”). We conclude that the question

                                         59
regarding damages beyond the sales proceeds for breach of contractual and

fiduciary duties is controlling and was raised by the pleadings and the evidence.

      Dernick argued in the trial court that “production revenue” was not the

proper measure of damages. However, Dernick did not argue in the trial court that

some alternate method of determining these damages should have been submitted.

It did not offer any alternative instruction to address these damages. Therefore,

this objection is waived. See TEX. R. CIV. P. 274; Keetch, 845 S.W.2d at 267;

Payne, 838 S.W.2d at 241.

      Dernick also argues that the Wilsteins presented no evidence supporting

their right to production revenues in any amount. Dernick further argues on appeal

that the evidence of production revenue is factually insufficient and the award was

“excessive” and “manifestly too large.”           However, Dernick’s argument

mischaracterizes the evidence. The record indicates that Dernick sold the 50%

interest it held in the Bradshaw Field, including its own 25% interest and the

Wilsteins’ 25% interest, for $8.25 million in 1998 and that it also obtained an

overriding royalty interest in the field as part of that transaction. The record also

demonstrated that there was production of hydrocarbons in that field as recently as

2009. Thus, there is evidence on which a fact finder could rely to conclude that

production revenues were paid to Dernick in the eleven years between 1998 and

                                         60
2009 and that the Wilsteins, by virtue of their 25% interest, were entitled to some

portion of that money.

      Dernick, as the breaching fiduciary, bore the burden of providing more

specific information regarding the revenues generated by the royalty it obtained by

selling the Wilsteins’ interest in the Bradshaw Field. Thus, we find this case

similar to Thompson v. Duncan, 44 S.W.2d 904 (Tex. Comm’n App. 1932, judgm’t

adopted). There, the court considered the failure of a joint venture and stated:

      When the [fiduciary] was called upon by letter for specific
      information, which he as a trustee was under a solemn duty to furnish
      his associates in this enterprise, he wholly ignored their request. He
      declined to permit an inspection of his books after promising to do so.
      When this case was called for trial he absented himself and did not
      offer any evidence whatever. Although [the plaintiffs] offered
      evidence on the trial tending to show that other sales had been made
      by [the fiduciary] since the filing of his purported report, yet no report
      covering same was made up to the time of the trial, and [the fiduciary]
      declined to make any showing upon the trial which would in any way
      tend to excuse or justify his conduct. We can hardly imagine a state
      of facts which would show a more flagrant disregard of the rights of
      the members of the joint enterprise by the man who was designated as
      trustee to conduct its operations. . . .
             But it is argued by [the fiduciary] that [the plaintiffs] produced
      no proof upon the trial showing injury to them by reason of his failure
      to make the reports required by the contract. We think, as before
      stated, there were sufficient circumstances shown to justify an
      inference that [the fiduciary] had made sales of lots not covered by his
      report. Even if this were not true, [the fiduciary], resting under the
      solemn duty of furnishing his associates with full information in
      regard to all transactions had in the common enterprise, and having
      failed and refused to do so, is in no position to complain of the
      insufficiency of the showing made by them as to injury.

Thompson, 44 S.W.2d at 908.

                                         61
      The facts here are similar.      The Wilsteins sought an accounting from

Dernick regarding these revenues, but Dernick never provided one.              At trial,

Stephen Dernick testified that he had no way of accounting for any revenues that

might be due to the Wilsteins. However, the Wilsteins presented evidence that

Dernick obtained some sort of revenues, in the form of its overriding royalty

interest on a field that was known to be producing. Dernick, as the fiduciary, owed

“the solemn duty of furnishing [its] associates with full information” in regard to

this transaction and, “having failed and refused to do so, is in no position to

complain of the insufficiency of the showing made by them as to injury.” See id.

      We cannot conclude that the jury’s finding on this issue was immaterial or

that there is no evidence to support it. See TEX. R. CIV. P. 301; Spencer, 876
S.W.2d at 157.     Accordingly, the trial court erred in disregarding the jury’s

finding.7

      We sustain the Wilsteins’ issue and reinstate the jury’s finding, including

pre-judgment interest.

7
      The Wilsteins have agreed to waive their right to remand to recalculate attorney’s
      fees if this Court determines that rendering judgment is the proper disposition on
      appeal. We have concluded that we will modify the judgment and affirm it as
      modified, so we will not remand for recalculation of attorney’s fees.

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                                      Conclusion

      We modify the trial court’s judgment to reinstate the jury’s award to the

Wilsteins of $750,000 for damages relating to production revenues and

$365,924.26 for prejudgment interest on that claim. 8 We affirm the judgment as

modified.

                                                 Evelyn V. Keyes
                                                 Justice

Panel consists of Chief Justice Radack and Justices Jennings and Keyes.

8
      The calculation of prejudgment interest is governed by Financial Code section
      304.003. See TEX. FIN. CODE ANN. § 304.003(c)(2) (Vernon 2006) (providing
      accrual rate for post-judgment interest); Johnson & Higgins of Tex., Inc. v.
      Kenneco Energy, Inc., 962 S.W.2d 507, 532 (Tex. 1998) (holding that
      prejudgment interest accrues at same rate as post-judgment interest). The interest
      rate is 5% simple interest, and the interest is calculated from the date the Wilsteins
      filed their claims against Dernick on October 8, 2003, until the date of the final
      judgment on July 8, 2013. This amounts to $365,924.26.

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