Court Opinion

ID: 2983837
Source: CourtListenerOpinion
Date Created: 2015-09-22 21:50:38.965522+00
Date Added: 2024-06-11T15:02:22.217114
License: Public Domain

Motion for Rehearing Denied, Motion for En Banc Rehearing Denied as Moot,
Affirmed, Memorandum Opinion filed March 4, 2014 Withdrawn, and Substitute
Memorandum Opinion filed June 3, 2014.

                                  In the

                  Fourteenth Court of Appeals

                           NO. 14-12-00940-CV
                           NO. 14-12-01077-CV
                           NO. 14-12-01139-CV

         WCW INTERNATIONAL, INC., AND CHRIS WILMOT,
                       Appellants/Cross-Appellees

                                   V.
JERRY W. BROUSSARD, RONNIE D. LABORDE, DAVID M. KERNION,
  DAVID O. STRICKLAND, CRAIG M. BOREL, KEVIN J. ROUSSEL,
         GEORGE A. LOWERY, AND CARLOS O. GIRON,
                       Appellees/Cross-Appellants

                 On Appeal from the 152nd District Court
                          Harris County, Texas
                    Trial Court Cause No. 2009-12773
     SUBSTITUTE MEMORANDUM OPINION
      This consolidated appeal concerns a Stock Purchase Agreement (“SPA”)
entered into among appellant/cross-appellee WCW International, Inc. (“WCW”),
and appellees/cross-appellants Jerry Broussard, Ronnie D. Laborde, David M.
Kernion, David O. Strickland, Craig M. Borel, Kevin J. Roussel, George A.
Lowery, and Carlos O. Giron. In the SPA, WCW agreed to purchase stock from
appellees/cross-appellants, 1 who were shareholders in two engineering firms. This
purchase was to be made partly in cash, with the rest to be represented by
promissory notes.         Appellant/cross-appellee Chris Wilmot, WCW’s CEO and
President, also executed a guaranty, wherein he agreed to be bound with WCW and
deliver a letter of credit to Shareholders.

      Shareholders ultimately sued WCW and Wilmot for breach of the SPA, the
promissory notes, and the guaranty, and for fraud and fraudulent inducement.
WCW and Wilmot counterclaimed for breach of the SPA, and for fraud and
fraudulent inducement.            The jury rendered findings mostly favorable to
Shareholders and awarded damages to them on WCW’s breach of the SPA and the
promissory notes, and on the fraud claims. The trial court granted JNOV on the
fraud findings and otherwise entered judgment on the verdict. WCW and Wilmot
present six issues on appeal; Shareholders present one issue on cross-appeal.2
Although we deny WCW’s motion for rehearing, and deny its motion for en banc
rehearing as moot, we withdraw the memorandum opinion issued in this case on
March 4, 2014, and issue this substitute memorandum opinion. We affirm the trial
court’s judgment.

      1
          We refer to the appellees/cross-appellants collectively as “Shareholders.”
      2
          The granting of JNOV on the fraud findings is no longer at issue in the cross-appeal.

                                                 2
                 I.       FACTUAL AND PROCEDURAL BACKGROUND

      In late 2007, WCW, a company that provides engineering and other services,
and Wilmot, WCW’s sole shareholder, CEO, and President, expressed interest in
purchasing two consulting engineering companies, Spectrum Engineering, Inc.,
and Spectrum Services, Inc. (collectively, “Spectrum”). Spectrum was owned by a
group of eight shareholders: Jerry Broussard, Ronnie D. Laborde, David M.
Kernion, David O. Strickland, Craig M. Borel, Kevin J. Roussel, George A.
Lowery, and Carlos O. Giron. Starting in January 2008, WCW negotiated with
Shareholders and engaged in due diligence for the purchase of 100% of Spectrum’s
outstanding stock. WCW/Wilmot’s due diligence team consisted of Eric Amoako,
Ed Laborde, 3 Musheer Robinson, Hal Bouknight, Mike Hagarty, Abe and Ahmad
Fatemizadeh. WCW also retained CPA Dan Ramey with the accounting firm PKF
Texas (“PKF”) to provide a written due diligence report, which Ramey provided in
February 2008 and updated in June 2008. PKF’s report was based on financial
data provided by Spectrum from 2005 through May 30, 2008.

      WCW and Shareholders entered into the SPA, which had an effective date of
July 16, 2008. The full purchase price was based on a four-times multiple of
Spectrum’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and
Amortization) at the end of 2007. WCW agreed to provide initial consideration of
$4.6 million in cash on July 16, 2008; $3.8 million in deferred consideration, to be
represented by promissory notes (the “Notes”) to Shareholders and to be secured
by a letter of credit (“LOC”); and $2.8 million in earnout consideration, for a total
amount of $11.2 million. The $3.8 million represented by the Notes was to be paid
in three installments: (1) $1 million on January 31, 2009; (2) $1 million on January
31, 2010; and (3) $1.8 million on January 31, 2011. The SPA included provisions

      3
          Ed Laborde is not related to Shareholder Ronnie Laborde.

                                               3
wherein Shareholders made certain representations regarding Spectrum’s financial
statements and status with regard to its customers, disclosures, accounts, and any
litigation. The Shareholders 4 agreed to repay any outstanding indebtedness on
company loans.

        WCW did not provide the initial consideration or provide the LOC on July
16, 2008. Wilmot advised that the funds and LOC would be delivered on July 21.
They were not. WCW and Shareholders then entered into a deposit agreement,
wherein WCW agreed to place $250,000 in escrow, to be forfeited if WCW failed
to pay the initial consideration and deliver the LOC by July 29, 2008. WCW failed
to meet the deadline, and the $250,000 was forfeited to Shareholders.

        In September 2008, WCW and Shareholders amended the SPA, requiring
WCW to pay the initial consideration in three installments: (1) $250,000 by
September 24, 2008; (2) $250,000 by October 8, 2008; and (3) the $4.1 million
balance by October 31, 2008, along with the LOC. WCW also agreed to pay off or
cause Shareholders’ guarantees on Spectrum’s line of credit at Whitney National
Bank to be released by October 20, 2008. The amendment authorized a delay
payment of $250,000 as liquidated damages for failure to timely pay the initial
consideration and timely deliver the LOC. With this amendment, Shareholders
released all closing documents to WCW, the stock transferred, and WCW assumed
full management of Spectrum. The amendment had an effective date of July 16,
2008.       At the same time as the amendment, Wilmot executed a commercial
guaranty, wherein he agreed to be bound with WCW under the SPA, up to the sum
of $4.1 million, and agreed to deliver the LOC.

        4
          Each of the Shareholders classified as “Nonexempt”—Broussard, R. Laborde,
Strickland, and Kernion—owed a loan to Spectrum in the amount of $11,551. They agreed to
repay their loans at closing.

                                           4
      WCW paid Shareholders $250,000 on September 25, 2008, and $250,000 on
October 8, 2008. WCW did not pay or cause Spectrum’s bank indebtedness to be
released by October 20, 2008. WCW did not make the remaining $4.1 million
cash payment or provide the LOC by October 31, 2008. On November 10, 2008,
Shareholders sent a notice of default letter to WCW. On November 26, 2008,
WCW paid Shareholders $1 million but still had not delivered the LOC. WCW did
not make its $1 million first payment on the Notes on January 31, 2009, and failed
to make any subsequent payments.

      In February 2009, Shareholders filed suit against WCW for breach of
contract, against Wilmot for breach of guaranty, and against WCW and Wilmot for
fraud and fraudulent inducement. WCW and Wilmot counterclaimed for breach of
contract, and fraud and fraudulent inducement. The jury returned findings in favor
of Shareholders on most issues. Specifically, in pertinent part, the jury found:

          • WCW, Broussard, Kernion, R. Laborde, and Strickland breached the
            SPA.
          • WCW failed to comply with the SPA first.
          • WCW’s failure to comply with the SPA was not excused.
          • Broussard, Kernion, R. Laborde, and Strickland’s failures to comply
            with the SPA were excused.
          • WCW failed to pay all of the Shareholders’ Notes.
          • WCW’s failure to pay the Notes was not excused.
          • Wilmot failed to comply with the guaranty.
          • Wilmot’s failure to comply with the guaranty was not excused.
          • WCW and Wilmot committed fraud in the inducement of a contract
            against all of the Shareholders. Shareholders did not commit fraud in
            the inducement of a contract against WCW and Wilmot.
          • WCW and Wilmot committed common law fraud against all the
            Shareholders. Shareholders did not commit common law fraud
            against WCW and Wilmot.
                                          5
          • The following sums, if paid now in cash, would fairly and reasonably
            compensate the respective Shareholders for their damages
            proximately caused by WCW’s breach: Borel, $63,264.80;
            Broussard, $1,601,713.80; Giron, $63,264.80; Kernion, $399,673.30;
            R. Laborde, $399,673.30; Lowery, $63,264.80; Roussel, $63,264.80;
            Strickland, $399,673.30—a total of just over $3 million.
          • The following sums, if paid now in cash, would fairly and reasonably
            compensate the respective Shareholders for their damages
            proximately caused by WCW’s failure to pay the Notes: Borel,
            $77,551; Broussard, $1,977,550; Giron, $77,551; Kernion, $504,082;
            R. Laborde, $504,082; Lowery, $77,551; Roussel, $77,551;
            Strickland, $504,082—a total of $3.8 million.
          • No damages to Shareholders resulted from Wilmot’s breach of the
            guaranty.
          • The jury also awarded Shareholders damages on the fraud claims
            against WCW and Wilmot.

Shareholders moved for entry of judgment on the jury’s verdict.        WCW and
Wilmot moved to disregard all of the jury’s adverse findings. The trial court
granted their motion as to the fraud findings, but otherwise entered judgment on
the verdict—thus awarding the full amount of damages on the breach claims
against WCW and no damages against Wilmot.              The trial court awarded
Shareholders attorneys’ fees in an amount stipulated to by WCW. All parties
appealed from the final judgment.

      WCW and Wilmot attack the judgment in six issues. First, they contend
there is no evidence that WCW breached the SPA first and conclusive evidence
that Shareholders materially breached the SPA first. Second, WCW and Wilmot
argue that there was a failure or lack of consideration as a matter of law, and the
trial court erred by refusing to submit a jury question on Spectrum’s value. Third,
they argue that indemnification provisions in the SPA limit Shareholders’ recovery
to $500,000 as a matter of law. Fourth, they also argue that the SPA either

                                        6
precludes or limits the recovery of certain Shareholders as to the Notes. Fifth,
WCW and Wilmot contend that Shareholders’ attorney’s fee award must be
reversed if the judgment against WCW is reversed or reduced. Finally, they argue
that if a new trial is ordered on Shareholders’ breach claims against WCW, then
the new trial must include WCW and Wilmot’s breach and fraud counterclaims. In
their cross-appeal, Shareholders argue that the trial court erred in not holding
Wilmot jointly and severally liable as to WCW’s breach.

             II.      LEGAL SUFFICIENCY STANDARD OF REVIEW

      The test for legal sufficiency is whether the evidence at trial “would enable
reasonable and fair-minded people to reach the verdict under review.” City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In making this determination,
we must view the evidence in the light most favorable to the verdict, crediting any
favorable evidence if a reasonable factfinder could and disregarding any contrary
evidence unless a reasonable factfinder could not. Id. at 827. We assume jurors
made all inferences in favor of their verdict if reasonable minds could, and
disregarded all other inferences. Id. at 821. We cannot substitute our judgment for
that of the jury, so long as the evidence falls within the zone of reasonable
disagreement. Id. at 822. The factfinder is the only judge of witness credibility
and the weight to give to testimony. Id. at 819. We will sustain a legal sufficiency
challenge only when: (1) the record discloses the complete absence of a vital fact,
(2) the court is barred by rules of law or evidence from giving weight to the only
evidence offered to prove a vital fact, (3) the only evidence offered to prove a vital
fact is no more than a mere scintilla, or (4) the evidence conclusively establishes
the opposite of a vital fact. Id. at 810. More than a scintilla of evidence exists if
the evidence “rises to a level that would enable reasonable and fair-minded people
to differ in their conclusions.” Service Corp. Int’l v. Guerra, 348 S.W.3d 221, 228

                                          7
(Tex. 2011). Evidence is conclusive only if reasonable people could not differ in
their conclusions, which depends on the facts of each case. City of Keller, 168
S.W.3d at 816. To successfully challenge the legal sufficiency of an adverse
finding on an issue on which it has the burden of proof, such as an affirmative
defense, a party must conclusively establish all vital facts in support of that issue.
Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam).

                              III.      ANALYSIS

A. The evidence is legally sufficient to support the jury’s findings that WCW
   breached the SPA first, the Nonexempt Shareholders’ breaches were
   excused, and WCW’s breach was not excused.

      WCW argues that, at the most, it breached the SPA by failing to release
Spectrum’s line of credit on October 20, 2008, and by failing to pay the remaining
initial consideration and deliver the LOC by October 31, 2008. WCW and Wilmot
contend that Shareholders’ material breaches of the SPA occurred months earlier
on July 16 or at the time of the amendment in September 2008, at the latest. They
argue the trial record conclusively demonstrates that Shareholders—all of them—
breached by failing to disclose or misrepresenting information they were required
to provide to WCW under seven separate provisions of the SPA: sections 2.8
(Financial Statements), 2.13 (Litigation), 2.14 (Customers and Suppliers), 2.15
(Accounts Receivable and Accounts Payable), 2.27 (Brokers/Advisors), 2.29 (Due
Diligence Information), and 2.30 (Disclosure Schedules). They also argue that the
Nonexempt Shareholders, Broussard, R. Laborde, Strickland, and Kernion, whom
the jury found breached the SPA, committed their breaches on the same day by not
paying back their company loans as required by section 1.4.

      Shareholders argue there is some evidence, or the evidence conclusively
proves, that WCW breached the SPA first and without excuse, and that there is no

                                          8
evidence or conflicting evidence that Shareholders materially breached and
breached first. They assert that WCW breached the SPA on July 16, 2008, when it
failed to pay the initial consideration and failed to deliver the LOC. Shareholders
argue that their alleged nondisclosures or misrepresentations did not constitute
breaches of the SPA, were not material, and were excused. Shareholders also
argue that the Nonexempt Shareholders planned to offset their loans, and the jury
reasonably could have found that their failure to repay the de minimis officer loans
at closing was excused.

      A party breaches a contract when it neglects or refuses to perform a
contractual obligation.     Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.—
Houston [14th Dist.] 2006, pet. denied). If the breach is material, the other party is
excused from further performance of the contract. Mustang Pipeline Co. v. Driver
Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam) (citing Hernandez v.
Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994)). Generally, the issue of
whether a breach rises to the level of a material breach presents a dispute for
resolution by the trier of fact. See Hiles v. Arnie & Co., P.C., 402 S.W.3d 820, 831
(Tex. App.—Houston [14th Dist.] 2013, pet. filed). Materiality depends on several
circumstances, including:

      (a) the extent to which the injured party will be deprived of the benefit
      which he reasonably expected;
      (b) the extent to which the injured party can be adequately
      compensated for the part of that benefit of which he will be deprived;
      (c) the extent to which the party failing to perform or to offer to
      perform will suffer forfeiture;
      (d) the likelihood that the party failing to perform or to offer to
      perform will cure his failure, taking account of the circumstances
      including any reasonable assurances; [and]
      (e) the extent to which the behavior of the party failing to perform or
      to offer to perform comports with standards of good faith and fair
                                          9
      dealing.

Mustang Pipeline, 134 S.W.3d at 199 (citing Rest. (2d) of Contracts § 241 (1981)).
Because we are dealing with dual findings that WCW and certain Shareholders
breached the SPA, we must determine whether there is legally sufficient evidence
that WCW materially breached first. See Casarez v. Alltec Constr. Co., Inc.,
No. 14–07–00068–CV, 2007 WL 3287933, at *4 (Tex. App.—Houston [14th
Dist.] Nov. 6, 2007, no pet.) (mem. op.).

      We conclude that there is legally sufficient evidence to support the jury’s
findings. WCW does not contest that it materially breached the SPA, but instead
emphasizes the materiality and earlier timing of the Nonexempt Shareholders’
breaches and of the alleged article 2 breaches by all Shareholders. With regard to
the timing of the respective breaches actually found by the jury in question 1, even
if we agree with WCW that its breach date was October 31, 2008, we cannot agree
that there is no evidence or merely a scintilla of evidence that WCW breached first,
as found by the jury in question 2. The SPA initially required WCW to pay the
initial consideration of $4.6 million and deliver the $3.8 million dollar LOC on
July 16, 2008—the SPA’s designated closing date for “the consummation of the
sale and purchase of the Stock.” The Nonexempt Shareholders’ obligation to pay
their Spectrum loans back in section 1.4 was expressly tied to “closing.” However,
there is more than a scintilla of evidence from which a reasonable jury could
conclude that this “closing” date was pushed back to when WCW and
Shareholders entered into the amendment, and effectively pushed back even further
to October 31, 2008, the date when the amendment required WCW to pay the last
installment on the initial consideration and provide the LOC. In other words, the
Nonexempt Shareholders would not be required to pay back their officer loans—

                                            10
according to Broussard, 5 they were going to be “offset against the money that was
owed to us”—until WCW fulfilled its “closing” requirements.

       Moreover, the jury also determined that the Nonexempt Shareholders’
failures to comply with the SPA were excused in question 3. Within a “Failure to
Comply/Excused Instruction,” expressly linked to questions 2 and 3, the jury was
instructed that a failure to comply must be material and was provided with the
Mustang Pipeline factors. The jury also was instructed that a failure to comply by
one party is excused by the other party’s previous failure to comply with a material
obligation of the same agreement. Thus, under the charge as given, the jury could
conclude that a failure to comply with the SPA was excused where the other party
materially breached first or where that failure to comply was not “material.”6 We
already have determined that the evidence was legally sufficient to support the
jury’s finding that WCW breached first. Further, based on the amount of the four
unpaid officer loans, in the amount of $11,551 each, the jury reasonably could
have concluded that the circumstances weighed in favor of the Nonexempt
Shareholders’ failures to comply not being material. WCW was deprived of a
benefit of approximately $46,000 in unpaid loans due; WCW was obligated to pay
Shareholders a substantially larger amount in initial consideration of $4.6 million
cash so the due and owing amounts reasonably could have been offset and the
failures thus cured; the Nonexempt Shareholders stood to forfeit significant
percentages of ownership in Spectrum (over 90%) if their failures to pay back their
loans were treated as material; and the failure to pay back $46,000 when the

      5
          Broussard was the majority Shareholder in Spectrum.
      6
         In a footnote, WCW and Wilmot attempt to argue because there is no evidence that
WCW committed a prior material breach (one of Shareholders’ defensive theories), there is a
Crown Life Insurance Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000), problem within question 3
warranting a new trial. However, Casteel does not apply where, as we conclude here, such
theory was not improperly submitted. Id. at 389.

                                              11
purchase price for Shareholders’ companies was for a total of $11.2 million,
including initial consideration in cash of $4.6 million, does not strongly offend
standards of good faith and fair dealing. See Mustang Pipeline, 134 S.W.3d at
199; see also Hernandez, 875 S.W.2d at 693–94 (extent to which party prejudiced
by breach factors into materiality).

       Finally, the evidence does not conclusively prove WCW’s affirmative
defense of prior material breach as a matter of law; i.e., that all the Shareholders
materially breached the SPA on July 16, 2008, or otherwise before WCW, by their
alleged failures to comply with various disclosure and representation
requirements. 7 The jury only found that the Nonexempt Shareholders breached the
SPA. 8 Moreover, the charge instructed the jury that a failure to comply must be
material, and is excused by the other parties’ previous failure to comply with a
material obligation of the same agreement. And the jury found that WCW’s failure
to comply with the SPA was not excused in question 3.

       WCW and Wilmot primarily argue testimony from their expert witness,
CPA Scott Bayley, that Shareholders’ financial statements failed to comply with
multiple GAAP standards conclusively proves they breached section 2.8 9; a

       7
         WCW and Wilmot assert that Shareholders’ prior material breaches also require a take-
nothing judgment in WCW’s favor on the Notes.
       8
         WCW and Wilmot contend that Shareholders conceded they committed a breach but
only disagree as to materiality. We disagree. Shareholders argue first that they committed no
breach, and “even if any technical breach is found,” that it was not material.
       9
         Specifically, WCW and Wilmot point to Bayley’s testimony that use of the term “gross
revenues” in Spectrum’s financial statements was not in accordance with GAAP because project
write downs were not separately deducted as a line item; the statements were not accompanied
by statements of cash flows and notes to financial statements as required by GAAP; Spectrum
recorded contingent receivables with respect to client N.A. Water Systems (“NAWS”) not
permitted by GAAP; there was “no confirmation that the company’s financial statements have
been prepared in accordance with Generally Accepted Accounting Principles” because they were
not audited by an independent CPA and R. Laborde, Spectrum’s CFO, was not a CPA; and the
statements failed to properly reserve for litigation and bad debt liabilities with respect to clients
                                                 12
threatening letter from one of Spectrum’s major clients, NAWS, conclusively
proves Shareholders breached section 2.13; Shareholders’ failure to list any
“unresolved customer disputes” conclusively proves they breached section 2.14 in
light of Spectrum’s disputes with three of its largest clients, Enterprise Products,
Baker Petrolite, and NAWS; Bayley’s testimony regarding Spectrum’s accounts
receivable as not being in accordance with GAAP and being overstated
conclusively proves they breached section 2.15; Broussard’s testimony regarding
broker Tim Barfield conclusively proves they breached section 2.27; and the
evidence that Shareholders omitted material facts in making their representations
and disclosures and falsely represented there were no undisclosed facts that would
have an adverse effect on the value of Spectrum conclusively proves they breached
sections 2.29 and 2.30.

       Because WCW had the burden to establish prior material breach, we first
examine the record for evidence supporting the jury’s finding that WCW’s failure
to comply was not excused due to Shareholders’ prior material breach, while
ignoring all contrary evidence. See Dow Chem., 46 S.W.3d at 241. If there is no
evidence to support the finding, then we examine the entire record to determine
whether Shareholders’ prior material breach is established as a matter of law. See
id. We conclude WCW has not met its burden to conclusively establish that
Shareholders committed a prior material breach. See id.

       With regard to Spectrum’s financial statements, section 2.8 states that the
provided statements are “unaudited” but that they “are true and correct in all
material respects and, taken as a whole, fairly present, in accordance with [GAAP]
consistently applied, the financial position of the Company as of the dates

NAWS and Baker Petrolite in accordance with GAAP. Bayley also testified that adherence to
GAAP is “important” to buyers of companies essentially so they can understand what they are
purchasing.

                                            13
indicated.”   Through WCW’s team’s own due diligence process, WCW and
Wilmot were aware of Spectrum’s “unaudited and unreviewed financial
statements.” Through retained due diligence examiner PKF’s report, WCW and
Wilmot were aware that “[t]he Company’s books have not been audited or under
gone a review by a CPA.” WCW and Wilmot also were aware that Spectrum’s
financial statements were not consistent with GAAP in certain respects. Although
WCW had not engaged PKF to perform a full audit of Spectrum’s financials, PKF
reported that some of Spectrum’s journal and adjusted journal “descriptions/entries
are not standard accounting terminology/practices” and “[t]here were a few
accounting terms and entries used by the Company that are inconsistent with the
profession’s standards.” At trial, Ramey testified regarding his impression of
Spectrum’s financial records:

      A. . . . They had some issues with some of the naming of the accounts,
      but we worked through those issues. And as soon as I know what
      they are just translate them to what that would be in normal practice.
      Q. So, some of this terminology was different than what you were
      used to?
      A. Right.
      Q. But once you understood the terminology?
      A. Then I was fine.

When asked whether Spectrum’s accounting procedures were “not up to GAAP”
and had “certain GAAP problems,” Ramey stated: “There are with like three or
four just the name on the accounts were different or unique and that is okay. We
work around that.” Specifically, with regard to accounts receivable and bad debts,
PKF reported that “Spectrum does not use an Allowance for Doubtful Accounts
methodology,” but instead immediately writes off accounts when it deems them
uncollectible. PKF reported that “[a]ccounting appears to be at the proper level of

                                        14
detail” and “appears to be appropriate to provide management with information to
make business decisions.”          PKF also reported that through May 30, 2008,
Spectrum’s financials reflected reserved “write-offs” in the amount of $1,301,000
for “two major projects” for clients NAWS and Baker Petrolite. Finally, within
schedule 2.10(d) 10 attached to the SPA, Shareholders disclosed “two projects with
budget issues which will result in unbilled costs” for clients NAWS and Baker
Petrolite. Shareholders disclosed that these budget issues “are the result of quality
problems (rework), poor project management, manpower shortages, clients’ refusal
to accept change orders and low initial engineering estimates.” This schedule
disclosed that through May 2008, Spectrum’s financial statements reflected write
downs of $1,301,000; additional write downs of approximately $139,000 would be
reflected in Spectrum’s June 2008 financial statement.                    At trial, Wilmot
acknowledged that he knew about these two write down reserves for NAWS and
Baker Petrolite when he signed the SPA, but they were “not significant” and “not a
big deal.” Thus, there is evidence Shareholders disclosed that Spectrum’s financial
statements were not audited and WCW was aware of that; WCW was aware that
Spectrum’s financials had GAAP problems, particularly with how receivables and
bad debt were recorded; despite these problems, Spectrum’s financials were
appropriately detailed to allow for business decisions; Shareholders disclosed write
down reserves on two significant projects; and WCW was aware of those reserves,
but Wilmot was not concerned. Viewing the evidence in the light most favorable
to the verdict, we find there is legally sufficient evidence from which a reasonable
jury could have found that WCW was not excused by any prior material breach by
Shareholders of section 2.8. See id.
       10
          WCW and Wilmot do not argue that Shareholders breached section 2.10 of the SPA,
Absence of Certain Changes or Events. In section 2.10, Shareholders made representations
about the absence of changes with respect to, e.g., commencement of litigation, liabilities not
disclosed in the financial statements, and accounting methods.

                                              15
      With regard to litigation, section 2.13 states that “[t]here are no actions,
claims, suits, investigations, inquiries or proceedings pending against the Company
or in rem against any of the Assets, or to the knowledge of the Company or any
Seller threatened . . . at law or in equity, in any court, or before or by any
Governmental Body.” Broussard testified that as of the execution of the SPA and
the amendment, Spectrum had not received any demand for arbitration or any
intent to file arbitration from NAWS. By the time Broussard left Spectrum in mid-
November 2008, there had not been any arbitration filed.           It was not until
November 25, 2008 that Spectrum filed a demand for arbitration against NAWS.
There was testimony from Ed Laborde, who participated in drafting the SPA,
agreeing that such November 2008 arbitration and NAWS’ later counterclaim
would not be “pending” as of July or September 2008. Moreover, aside from
noting the budget issues and the write down reserves for the NAWS project,
Shareholders attached to schedule 2.10(d) of the SPA over 50 pages relating to the
project. This included correspondence between NAWS and Spectrum concerning
“several issues” regarding the project they were working on for their client
Marathon. Within its letter, NAWS agreed if Spectrum felt it necessary that
Spectrum could initiate dispute resolution procedures against NAWS to advance its
position on certain change orders.      However, NAWS indicated it wanted to
cooperate “to get this relationship and Work back on track.” Spectrum agreed,
“The issues can be resolved if we work together.” According to Broussard, “What
we knew at that time is what we put in [the schedule].” Viewing the evidence in
the light most favorable to the verdict, we find there is legally sufficient evidence
from which a reasonable jury could have found that WCW was not excused by any
prior material breach by Shareholders of section 2.13. See id.

                                         16
      With regard to customers and suppliers, section 2.14 states that “[t]he
relationships of the Company with the Largest Customers and Suppliers are good,
and except as set forth on Schedule 2.14 there are no unresolved disputes with any
of such Largest Customers and Suppliers.” In addition to the budget issues and
write down reserves with NAWS and Baker Petrolite disclosed in schedule 2.10(d),
Shareholders also disclosed that they were having a “design issue regarding
hydrostatic test pressures” on a project for Enterprise Products, such that they had
informed their professional liability insurance agent. Shareholders attached the
email to their agent from Kernion, who described the issue as “troubling.”
Broussard also forwarded Abe Fatemizadeh this email in conjunction with their
discussions about this Enterprise Products project. According to Broussard, for
several months prior to the July closing, he discussed the NAWS, Baker Petrolite,
and Enterprise Products project issues with Abe because Abe was WCW’s agent
and “pointman” who was going to take Broussard’s place as president of the new
company. WCW and Wilmot also were aware, through PFK’s diligence efforts,
that because Enterprise Products comprised over 70% of Spectrum’s 2007 revenue,
there was a “high risk of revenue collapse if Enterprise finds another service
provider” and that by May 2008, Spectrum’s revenue stream from Enterprise
Products had declined to 27.5%. They were aware through WCW’s diligence
efforts that Enterprise Products presented “[v]olatile business” and had recently
undergone “[k]ey management change” with “[u]nknown effect.”             Broussard
wanted to “flag” the change for WCW because the new management might not
provide Spectrum with as much work. When Broussard left Spectrum in mid-
November 2008, Enterprise Products had not made any complaint, formal or
informal, about the design issue. Enterprise Products did not stop doing business
with Spectrum until 2009. Baker Petrolite did not file suit against Spectrum until
March 2010; Ed Laborde agreed that a lawsuit filed in 2010 likely was not
                                        17
“pending” in 2008; Broussard and Borel stated that in 2008 they did not know
Baker Petrolite would file suit; and Borel stated Baker Petrolite had not made any
claim by the time he left Spectrum in September 2009. Viewing the evidence in
the light most favorable to the verdict, we find there is legally sufficient evidence
from which a reasonable jury could have found that WCW was not excused by any
prior material breach by Shareholders of section 2.14. See id.

       With regard to accounts receivable, section 2.15 states that “trade and other
accounts and notes receivable of the Company which are classified as current
assets on the Financial Statements or are listed on Schedule 2.15A are bona fide
receivables, are stated in accordance with GAAP and are fully collectible, subject
to the reserve for doubtful accounts reflected in the Financial Statements.” The
evidence detailed above indicates Shareholders had disclosed $1,450,000 in write
down reserves through June 30, 2008; WCW and Wilmot also were aware that
Spectrum’s treatment of their receivables had GAAP issues; and Wilmot testified
that such write downs were not a “big deal.” In addition, Broussard and R.
Laborde verified that Spectrum had disclosed all anticipated receivable reserves as
of the July closing. Viewing the evidence in the light most favorable to the verdict,
we find there is legally sufficient evidence from which a reasonable jury could
have found that WCW was not excused by any prior material breach by
Shareholders of section 2.15. See id.

       In a footnote, WCW and Wilmot make their arguments with regard to how
the evidence conclusively shows Shareholders breached sections 2.27, 2.29, and
2.30 of the SPA. With regard to section 2.27 on brokers/advisors, there is evidence
that WCW was aware Barfield represented Shareholders in the negotiations. 11 In

       11
          Communications between Broussard and WCW/Bouknight during December 2007 and
January 2008 resulting in WCW/Wilmot’s letter of intent occurred via Barfield. WCW’s due
diligence team shared their February 2008 findings with Broussard and Barfield, which Wilmot
                                            18
any event, WCW has not conclusively proven the vital fact that it suffered
damages due to any section 2.27 breach. With regard to section 2.29 on due
diligence information and section 2.30 on disclosure schedules, WCW and Wilmot
cumulatively rely on the same evidence of the other alleged breaches. However,
we already have found that WCW has not met its burden to conclusively establish
that Shareholders committed a prior material breach with regard to these respective
sections. Therefore, viewed in the light most favorable to the verdict, we find there
is legally sufficient evidence from which a reasonable jury could have found that
WCW was not excused by any prior material breach by Shareholders of section
2.27, 2.29, or 2.30. See id.

      We overrule WCW and Wilmot’s first issue.

B. Lack or complete failure of consideration
      1. WCW and Wilmot did not prove as a matter of law that Spectrum
         had no value at the time of sale.

      As part of their second issue, WCW and Wilmot argue that the only legally
sufficient and unrebutted evidence of Spectrum’s value when WCW took control,
based on Ramey’s testimony, was that Spectrum was worthless, with a negative
EBITDA of -$182,506. Thus, because Spectrum had no actual value, there was a
lack or complete failure of consideration and the SPA was unenforceable.

      Shareholders respond that WCW did not meet its burden to prove this
affirmative defense. To prove total failure of consideration, WCW had to, and did
not, conclusively prove that Spectrum’s stock, representing an operational
engineering firm with assets, clients, and projects, was worthless at the time of
purchase. We conclude that WCW has not met its burden to show a lack or

acknowledged.

                                         19
complete failure of consideration.

      Generally, a contract must be supported by consideration to be enforceable.
McLernon v. Dynegy, Inc., 347 S.W.3d 315, 335 (Tex. App.—Houston [14th Dist.]
2011, no pet.) (citing Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d
644, 659 (Tex. 2006)). Consideration consists of either a benefit to the promisor or
a detriment to the promisee. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d
492, 496 (Tex. 1991). It is a present exchange bargained for in return for a
promise. Id. It may consist of some right, interest, or profit, or benefit that accrues
to one party, or, alternatively, of some forbearance, loss or responsibility that is
undertaken or incurred by the other party. Angelou v. African Overseas Union, 33
S.W.3d 269, 280 (Tex. App.—Houston [14th Dist.] 2000, no pet.). The rule is well
settled in Texas that the burden of proving a want or failure of consideration is
upon the pleader. Rodriguez v. Sw. Drug Corp., 619 S.W.2d 469, 472 (Tex. Civ.
App.—Houston [14th Dist.] 1981, no writ); see Kish v. Van Note, 692 S.W.2d 463,
467 (Tex. 1985) (op. on reh’g) (citing Tex. R. Civ. P. 94); McLernon, 347 S.W.3d
at 335 (same). “The burden rests upon the party alleging lack of consideration to
prove the same because of the general rule a written contract is presumed to be
supported by consideration.” Rodriguez, 619 S.W.2d at 472; see McLernon, 347
S.W.3d at 335. However, parol evidence may be used to show want or failure of
consideration. McLernon, 347 S.W.3d at 335 (citation omitted).

      Here, the presumption of consideration applies.          See id. (“[A] written
instrument reciting a consideration imports one, and with such a recitation we
presume the consideration [to be] sufficient.”). The SPA expressly recites:

            WHEREAS, Sellers, in the aggregate, own 9,800 shares (the
      “Shares”) of the no par value common stock of each of Spectrum
      Engineering, Inc. and Spectrum Services, Inc., respectively (the
      “Stock”” [sic]) constituting all of the issued and outstanding Shares of

                                          20
       the Stock; and
              WHEREAS, Buyer desires to acquire from the Sellers, and
       Sellers desire to sell, all of said Shares upon and subject to the terms
       and conditions set forth herein.
             NOW, THEREFORE, in consideration of the mutual premises,
       covenants and agreements set forth herein and in reliance upon the
       representations and warranties contained herein, the parties hereto
       covenant and agree as follows . . . .

The amended SPA recites:

             WHEREAS, the parties desire to amend the Stock Purchase
       Agreement dated as of July 16, 2008 (the “Stock Purchase
       Agreement”), pursuant to which, among other things, the Buyer has
       agreed to acquire the Company;
            WHEREAS, the parties desire to amend the Stock Purchase
       Agreement as set forth below:
             NOW, THEREFORE, in consideration of the premises, and
       other good and valuable consideration, the receipt and sufficiency of
       which is hereby acknowledged, the parties hereto agree as follows . . .
       .

There is no dispute that the agreed purchase price for Spectrum’s stock was based
on a four-times multiple of Spectrum’s end-of-2007 EBITDA, which was $2.8
million. 12 The parties also generally agree that somewhere between three- or four-
times to six-times EBITDA would be in the “typical” range for valuation on a
purchase of an engineering company of Spectrum’s size.

       To succeed on this issue, WCW and Wilmot must demonstrate that they
conclusively proved their affirmative defense of lack or complete failure of

       12
          In addition to the initial consideration of $4.6 million and the deferred consideration of
$3.8 million, the SPA also provided that, if Spectrum’s EBITDA at the end of 2010 equaled or
exceeded $2.8 million, WCW was to pay $2.8 million to Shareholders as earnout consideration
on or before February 28, 2011. If Spectrum’s end-of-2010 EBITDA was less than $2.8 million,
WCW would reduce the payout of earnout consideration accordingly.

                                                21
consideration as a matter of law. See Roark, 813 S.W.2d at 495. They must
conclusively rebut the presumption of consideration and conclusively establish that
Shareholders provided no consideration to support the SPA.                 See Walden v.
Affiliated Computer Servs., Inc., 97 S.W.3d 303, 319 (Tex. App.—Houston [14th
Dist.] 2003, pet. denied); Rodriguez, 619 S.W.2d at 472. Because WCW and
Wilmot had the burden at trial and because they challenge the legal sufficiency of
the evidence in this appeal, they bear the appellate burden to show “that the
evidence establishes, as a matter of law, all vital facts in support of the issue.” See
Dow Chem., 46 S.W.3d at 241.

       WCW and Wilmot argue that Spectrum had a negative value when WCW
took control. They rely on Ramey’s testimony that Spectrum’s financials showed a
negative EBITDA of -$182,506. However, Ramey calculated this figure based on
Spectrum’s financials for the entirety of 2008—that is to say, he provided
Spectrum’s end-of-2008 EBITDA. Ramey did not provide any testimony that
Spectrum’s end-of-2007 EBITDA of $2.8 million, to which he had provided
adjustments during the negotiations that resulted in its reduction, was incorrect.
Nor did he provide any testimony as to Spectrum’s EBITDA as of July 16, 2008,
or as of sometime in late September 2008, when the amendment was signed and,
according to Wilmot, WCW had “assumed ownership and management of the
company.” 13 Bayley also did not testify regarding Spectrum’s EBITDA at the time
of closing or takeover. Bayley testified that he recalled Spectrum’s EBITDA
figures for 2007 in the “neighborhood” of $2.8 million, and agreed that 2007 had
been a “profitable year” for Spectrum. He also stated that Spectrum had “positive”

       13
           Quick calculation of Spectrum’s 2008 EBITDA through June (month before July
closing) and through August (month before September takeover), based on the same 2008
balance sheet and using the exact same formula used by Ramey during his testimony, yields
positive figures. Perhaps this explains why Ramey was not cross-examined except as to end-of-
2008 EBITDA.

                                             22
cash flows through the end of 2008. Bayley did not opine that Spectrum had no
value as of July or September 2008; instead, he opined that Spectrum’s value then
was less than the purchase price of $11.2 million. There also was evidence that, in
late 2007, the other Shareholders offered to “internally” buy out Broussard based
on a $4.8 million valuation and there was a valuation associated with a potential
“strategic” offer by third party Energy Allied of $8.7 million. 14 Further, there was
evidence that by November 2008, the financial markets had “crashed.”

       Based on the trial evidence, viewed in the light most favorable to the verdict,
we conclude that WCW has failed to overcome the presumption of consideration
and has failed to meet its burden to conclusively establish its affirmative defense
that the SPA lacked consideration. See id. 15

       2. The trial court did not abuse its discretion in refusing WCW’s
          requested valuation questions.

       Next, WCW contends that at the least it should be granted a new trial
because the trial court refused to submit WCW’s proffered jury questions on the
value of Spectrum. Here, WCW requested that the jury be asked to find “the value
of” the respective Spectrum companies as of July 16, 2008 and as of September 25,

       14
           WCW and Wilmot contend such evidence of valuation is incompetent because it was
speculative and based on lay testimony. However, WCW still bears the burden to conclusively
prove want of consideration, and even discounting such evidence, there is no evidence that
Spectrum was completely worthless at takeover. Moreover, both CPA Ramey and CPA Bayley
testified as to Spectrum’s end-of-2007 EBITDA, the agreed basis of valuation for the SPA.
       15
          WCW’s cited cases do not advance its position. Unlike in Kish, here, there is not
“ample” evidence that Spectrum was not “functional” and “worthless” at closing, and at the time
of transfer, WCW took over a functioning engineering firm with clients, projects, and still
positive cash flows. Cf. 692 S.W.2d at 465, 467. In Anderson Machine Co. v. Harber, the
appeals court in fact did not find total failure of consideration as a matter of law where the
purchaser had made some use of the scraper machinery at issue. 584 S.W.2d 480, 482 (Tex. Civ.
App.—Austin 1979, no writ). And unlike in Worm v. Huffman, here, there was no conclusive
evidence that Spectrum was completely “unfit” at the time of takeover. Cf. 244 S.W.2d 899, 900
(Tex. Civ. App.—San Antonio 1951, writ ref’d n.r.e.).

                                              23
2008. 16 The trial court refused the submission.

       Whether consideration is adequate or fails is a question of law for the court.
Hall v. Hubco, Inc., 292 S.W.3d 22, 28 (Tex. App.—Houston [14th Dist.] 2006,
pet. denied); Schepps Grocery Co. v. Burroughs Corp., 635 S.W.2d 606, 608 (Tex.
App.—Houston [14th Dist.] 1982, no writ). Where appropriate, a trial court may
base its legal determination on lack or failure of consideration on underlying facts
as found by the jury. Schepps, 635 S.W.2d at 608 (not improper to submit jury
question “as to whether appellee failed to provide the necessary service and parts
to maintain the computer in good operating condition”—trial court may have
decided there was enough evidence to submit issue). However, ultimately it is “the
duty of the court (not the jury) to determine whether there was a failure of
consideration.” Id. As detailed above, we already have concluded WCW and
Wilmot failed to prove that Spectrum had no value at the time of sale or transfer
such that the SPA lacked consideration as a matter of law.

       WCW relies on rule 278 in arguing that the trial court abused its discretion
in refusing to submit its valuation questions. Rule 278 requires trial courts to
submit questions that are properly raised by the pleadings and the evidence. See
Tex. R. Civ. P. 278. However, WCW has not provided, and we have not located,
any case applying rule 278 to require submission of an underlying fact question on
the legal question of consideration in this precise context. Assuming solely for
purposes of our analysis that rule 278 applies, a trial court may properly refuse to
submit a question to the jury if no evidence exists to warrant its submission.
Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex. 1992). “When the evidence offered to
prove a vital fact is so weak as to do no more than create a mere surmise or
       16
         Although not raised by the parties, these requested questions misplaced the burden of
proof. Appropriate questions would have asked whether Spectrum had no value at the time of
closing.

                                             24
suspicion of its existence, the evidence is no more than a scintilla and, in legal
effect, is no evidence.” Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.
1983). Although its requested questions asked about the value of Spectrum as of
July and September 2008, the precise fact issue that WCW was required to raise to
show lack or complete failure of consideration was the complete absence of
Spectrum’s value at these times. That is, WCW needed to present some evidence
such that reasonable jurors could answer the requested questions with “$0.00.”
Even viewing the evidence and inferences in the light most favorable to WCW,
and disregarding evidence and inferences to the contrary, see Elbaor, 845 S.W.2d
at 243, evidence of Spectrum’s end-of-2008 EBITDA at best only creates a “mere
suspicion” that Spectrum was entirely worthless five and a half months earlier at
closing or three months earlier at takeover.17 See Kindred, 650 S.W.2d at 63.
Thus, we reasonably construe the trial court’s statement during the charge
conference—“Refused. There is no evidence of the value of SCI or SSI . . . .”—to
mean it was ruling that there was no evidence of the lack of Spectrum’s value on
those dates.

      Therefore, we conclude that the trial court did not abuse its considerable
discretion or act without regard to guiding principles in refusing the submission.
See Tex. Dep’t of Human Servs. v. E.B., 802 S.W.2d 647, 649 (Tex. 1990) (op. on
reh’g); 4901 Main, Inc. v. TAS Auto., Inc., 187 S.W.3d 627, 633, 635 (Tex. App.—
Houston [14th Dist.] 2006, no pet.) (citing rule 278 and Elbaor, 845 S.W.2d at 243,
in concluding that trial court did not abuse discretion in refusing to submit
proposed jury questions where no evidence warranted submission).

      We overrule WCW and Wilmot’s second issue.
      17
         WCW and Wilmot insist that Shareholders conceded a factual dispute on Spectrum’s
“worthlessness.” We disagree. Shareholders expressly argued that “there is no evidence”
Spectrum’s value was negative when WCW took control.

                                           25
C. Shareholders are not limited to $500,000 in damages for WCW’s SPA
   breach.

      In their third issue, WCW and Wilmot argue that the indemnification
provisions in the SPA unambiguously limit and cap any breach damages at
$500,000.    They specifically point to section 9.2, Indemnification of Seller
Indemnitees, which provides:

             Buyer agrees to defend, indemnify and hold Seller Indemnitees
      (as defined below) harmless from and against all Damages arising out
      of, based upon or resulting from:
            A. any misrepresentation, breach of representation or warranty
      on the part of Buyer under the terms of this Agreement;
            B. any nonfulfillment of any covenant or agreement on the part
      of Buyer under the terms of this Agreement; and
          C. the unlawful conduct of the operations and business of the
      Company or the ownership of the Assets on or after the Closing Date.

They also point to section 9.4, Limitations on Indemnification, which, in pertinent
part, provides:

            B. The indemnification provided for in Section 9.2 hereof shall
      be subject to the following limitations:
                   ...
                  (2) The Sellers shall not be entitled to indemnification
             from Buyer under Section 9.2 in excess of Five Hundred
             Thousand Dollars ($500,000).

And they point to section 9.6, Exclusive Remedy, which provides: “The indemnity
provided in this Article 9 shall be the exclusive remedy with respect to a breach of
the matters contained in this Agreement.” WCW and Wilmot highlight the ability
of sophisticated parties to limit liability between themselves through the use of
indemnity provisions. According to WCW and Wilmot, section 9.2’s text is broad

                                        26
and encompasses damages caused by WCW itself on a breach of the SPA, and
section 9.4B unambiguously limits Shareholders’ damages to $500,000. WCW
and Wilmot contend the trial court erred by refusing their request to disregard the
jury’s answer to question 15 (damages per Shareholder resulting from WCW’s
SPA breach) and instead apply article 9’s cap.

      Shareholders respond that WCW’s interpretation of the indemnity provisions
is not one to which the provisions are reasonably susceptible. In particular, they
contend the parties’ intent—prior to application of the limiting indemnity rights of
the SPA—was that WCW be required to pay Shareholders $4.6 million in initial
consideration and secure the deferred consideration with a $3.8 million LOC by
closing, or by the dates provided in the amendment, in exchange for Spectrum’s
stock, and WCW failed to do so. According to Shareholders, limiting WCW’s
subsequent liability to them for such a breach to a maximum of $500,000 without
payment of the initial consideration and delivery of the LOC is not a reasonable
interpretation of the indemnity clause.

      “The interpretation of an unambiguous contract is a question of law, and we
review a trial court’s interpretation de novo.” Weaver v. Jamar, 383 S.W.3d 805,
810 (Tex. App.—Houston [14th Dist.] 2012, no pet.). Our primary concern is to
“ascertain the true intentions of the parties as expressed in the instrument.” FPL
Energy, LLC v. TXU Portfolio Mgmt. Co., L.P., 426 S.W.3d 59, 63 (Tex. 2014)
(quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). To discern the
parties’ intent, we must examine the entire contract in an effort to harmonize and
give effect to all provisions so that none will be rendered meaningless. J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). “We presume the
parties to the contract intended every clause to have some effect.” Weaver, 383
S.W.3d at 810 (citing Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121

                                          27
(Tex. 1996)). Further, we “construe contracts from a utilitarian standpoint bearing
in mind the particular business activity sought to be served” and “will avoid when
possible and proper a construction which is unreasonable, inequitable, and
oppressive.” Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex.
2005) (per curiam). If the written instrument is worded so that it can be given a
certain or definite legal meaning or interpretation, then it is not ambiguous, and we
will construe the contract as a matter of law. J.M. Davidson, 128 S.W.3d at 229;
Coker, 650 S.W.2d at 393. 18

      If we were to read article 9’s provisions in isolation, then such
“indemnification” might appear broad enough to encompass the instant breach of
the SPA by WCW. However, the Texas Supreme Court consistently has cautioned
against ignoring pertinent language in contracts.              See Frost Nat’l Bank, 165
S.W.3d at 313 (court of appeals “ignored pertinent language” in lease schedule at
issue); see also FPL Energy, 426 S.W.3d at 64 (“We cannot interpret a contract to
ignore clearly defined terms . . . .”). We cannot give a single provision taken alone
controlling effect, but rather must consider all the provisions with reference to the
whole instrument. J.M. Davidson, 128 S.W.3d at 229. When we consider the PSA
as a whole, as we must, see id., we first note that within section 1.2, Purchase
Price, the PSA provides for a total purchase price of $11.2 million to be paid by
WCW for the Spectrum stock.

      The PSA makes clear that one essential component of the $11.2 million
purchase price was $4.6 million in “Initial Consideration.” Section 1.2A, Initial
Consideration, provides:

               Buyer shall pay to Sellers the aggregate amount of Four Million
      Six      Hundred Thousand Dollars ($4,600,000) (the “Initial

      18
           Neither party contends that the SPA is ambiguous.

                                               28
       Consideration”), allocated among Sellers in accordance with
       Schedule 1[ 19]; provided that (i) Two Hundred Fifty Thousand
       Dollars ($250,000.00) shall be paid on or before September 24, 2008,
       (ii) Two Hundred Fifty Thousand Dollars ($250,000.00) shall be paid
       on or before October 8, 2008, and (iii) Four Million One Hundred
       Thousand Dollars ($4,100,000) shall be paid on or before October 31,
       2008, which due date shall be automatically extended for the duration
       of any Unavoidable Delay, however in no event shall the due date be
       extended beyond November 15, 2008. The payment of the balance of
       the Initial Consideration shall be guaranteed by Chris Wilmot and
       shall be evidenced by a continuing guarantee in the form attached as
       Exhibit A-I[.]

(Emphases in original). Another vital component of the purchase price was $3.8
million in “deferred consideration” to be paid to Shareholders pursuant to the
Notes. Section 1.2B, Deferred Consideration, defines the term as “the aggregate
amount of Three Million Eight Hundred Thousand Dollars ($3,800,000).” Section
1.2B additionally provides that the deferred consideration would be “allocated
among Sellers in accordance with Schedule 1, in three annual payments”; “[t]he
Deferred Consideration due each Seller shall be evidenced by a promissory note,”
which “Note(s) shall be secured by a letter of credit”; and “the Buyer shall deliver
the Security for the Deferred Consideration on or before October 31, 2008 . . . .
The delivery of the Security shall be guaranteed by Chris Wilmot and shall be
evidenced by a continuing guarantee in the form attached as Exhibit A-I.” The
parties to the SPA recognized that payment of the initial consideration, and
securing payment of the deferred consideration, to the Shareholders was so crucial
as to warrant a guaranty by Wilmot.

       19
          Schedule 1 to the PSA specifically details, per Shareholder, the precise amount of
consideration, including initial and deferred, that each would receive in exchange for his number
of Spectrum shares.

                                               29
      The SPA further reflects the importance of the requisite payment of the
initial consideration to the parties’ business transaction by requiring that WCW pay
the initial consideration “[a]t the Closing.” Section 1.6, Closing, provides:

             Subject to the terms and conditions hereof, the consummation
      of the sale and purchase of the Stock provided for herein (the
      “Closing”) shall take place on July 16, 2008 and shall be deemed
      effective at 11:59 p.m. CST on such date (the “Closing Date”) at the
      offices of Winstead PC, in Houston, Texas, or at such other place or
      time upon which Buyer and Sellers may agree in writing. . . . At the
      Closing, Buyer (or an affiliate of Buyer acting on Buyer’s behalf)
      shall pay the Initial Consideration by wire transfer in immediately
      available funds in accordance with the wiring instructions to be
      provided as contemplated in Section 1.2A.

(Emphases in original). Section 1.2B also provides that the Notes, as secured by
the LOC, were “to be delivered to each Seller at Closing.” And, in consistent
fashion, the pertinent portion of article 7, Closing Deliveries of Buyer, provides:

            Except as may be waived in writing by Sellers, Buyer shall
      deliver the following to Sellers at the Closing;
      ...
      7.2 Purchase Price
             Buyer shall deliver the Initial Consideration as contemplated in
      Section 1.6 and the Notes and Security as contemplated in Paragraph
      1.2.B.

Finally, within article 5, Covenants of Buyer, section 5.3, Certain Acts or
Omissions, expressly provides: “Buyer shall satisfy all conditions to Closing
imposed on Buyer set forth in this Agreement.” These provisions consistently
contemplate WCW’s payment of the initial consideration and securing of the Notes
as “conditions” to the business transaction’s closing. Moreover, although section
1.5, discussed further below, provides for later potential adjustment downward or

                                          30
nonpayment of the deferred consideration in certain situations, it does not apply to
payment of the $4.6 million in initial consideration or to delivery of the LOC.20

       On the whole, the PSA thus makes clear that it was the core intent of the
parties for WCW to pay the initial consideration of $4.6 million cash and provide a
$3.8 million LOC to secure the deferred consideration at closing in exchange for
the Shareholders’ turning over Spectrum’s stock. Applying WCW’s interpretation
of the indemnity provisions—that they apply to WCW’s breach for failure to meet
these set-out, detailed, integral “consideration” prerequisites to its acquisition of
the Shareholders’ stock—could result in WCW’s effectively being able to purchase
Spectrum for the sum total consideration of $500,000, rendering multiple
provisions of the PSA meaningless. See FPL Energy, 426 S.W.3d at 69. Bearing
in mind that our primary goal is to ascertain the intent of WCW and Shareholders
when they entered into the PSA, we find such a construction unreasonable. See
Frost Nat’l Bank, 165 S.W.3d at 313.

       In contrast, interpreting the PSA’s indemnity provisions as not applying to
WCW’s requisite payment of the initial consideration and securing of the LOC
“does not conflict with, or render meaningless, any other provision of the [PSA].”
See FPL Energy, 426 S.W.3d at 68. This is because the indemnity provisions, as
harmonized, would still be applicable to WCW’s “nonfulfillment” of any of its
other covenants or agreements under the PSA, e.g., any failure in connection with
obtaining required governmental approvals or third-party consents for the
transaction (section 5.1) or any failure to comply with or disclose information in
connection with applicable legal requirements (section 5.2).

       20
          As mentioned earlier, the SPA also provides for later potential adjustment downward
of the $2.8 million WCW was to pay in earnout consideration. See supra note 12.

                                             31
      Because there is only one reasonable interpretation, we conclude as a matter
of law that the PSA is unambiguous and the indemnification provisions do not
apply to, and Shareholders are not required to indemnify WCW for damages from,
WCW’s breach of the SPA by failing to pay the initial consideration and failing to
supply the LOC. See Frost Nat’l Bank, 165 S.W.3d at 313. Thus, the trial court
did not err in refusing to apply article 9.

      Alternatively, WCW and Wilmot argue that no evidence supports the jury’s
finding of collective breach damages of over $3 million for WCW’s SPA breach.
However, rather than argue their position based on the trial evidence, they rely on
their unreasonable construction of the indemnification provisions. To the extent
their argument presents a challenge to the legal sufficiency of the evidence
supporting the jury’s award of breach damages in the amount of $3,053,792.90, we
disagree. Here, the SPA and amendment required WCW’s payment of initial
consideration in cash of $4.6 million. The evidence shows that WCW made only
three payments toward the initial consideration, totaling $1.5 million. The jury’s
award indicates that it divided the remaining balance of $3.1 million among the
Shareholders based on their respective ownership percentages and that it offset for
the unpaid loans of the Nonexempt Shareholders—all within a margin of error of
about 1% for each Shareholder. Viewing the evidence in the light most favorable
to the verdict and indulging every reasonable inference, we conclude that a
reasonable and fair-minded jury could award this amount of damages for WCW’s
breach of the SPA. See City of Keller, 168 S.W.3d at 827.

      We overrule WCW and Wilmot’s third issue.

D. Shareholders are not limited in their breach recoveries under the Notes.

      In their fourth issue, WCW and Wilmot assert there is legally insufficient
evidence to support any breach or damages findings as to the Notes claims of
                                              32
certain Shareholders, and that the evidence conclusively proves that that any
failure to pay on the Notes was excused, contrary to the jury’s finding in question
5. With regard to Broussard, Kernion, and R. Laborde, WCW and Wilmot contend
because these Nonexempt Shareholders resigned without “good reason,” they
forfeited any unpaid amounts on their Notes under section 1.5 of the SPA.21 Also,
WCW and Wilmot argue that, at a minimum, under section 1.2B,22 because

       21
            Section 1.5, Purchase Price Adjustment for Termination of Employment, in relevant
part, provides:

                  A. Adverse Termination.
               Following the Closing Date, should the employment of any Seller
       designated as “Nonexempt” on Schedule 1 be terminated (a) by Resignation or (b)
       by Buyer for Cause in either case, (an “Adverse Termination”), such Seller shall
       forfeit all rights to receive any unpaid Deferred Consideration, Earnout
       Consideration and Bonus Consideration as of and following the effective date of
       the Adverse Termination.
                  B. For purposes of this Agreement:
                  ...
               (2) the term “Good Reason” means the termination of a Seller’s
       employment with the Company or its affiliates by the Seller by reason of (i) the
       Company’s or any of its affiliates (including the Buyer after the Closing Date)
       material breach of this Agreement or any employment agreement to which Seller
       is a party after two (2) written notices and opportunity to cure has been given by
       such Seller affected . . . . .

       22
            Section 1.2B of the SPA, Deferred Consideration, provides:

               Buyer shall pay to Sellers the aggregate amount of Three Million Eight
       Hundred Thousand Dollars ($3,800,000) (the “Deferred Consideration”),
       allocated among Sellers in accordance with Schedule 1, in three annual payments
       following the Closing pursuant to the payment schedule specified below;
       provided, however, that in the event that any Nonexempt Seller (as identified on
       Schedule 1) other than Jerry W. Broussard (“Broussard”) is not employed by
       Company as of the date that is one (1) year after the Closing Date for reason of (i)
       voluntary resignation by Seller without Good Reason (as defined below)
       ("Resignation") or (ii) termination of said Seller’s employment by Buyer for
       Cause (as defined below), the Deferred Compensation otherwise due such Seller
       in accordance with Schedule 1 shall be forfeited by such Seller and retained by
                                                 33
Kernion, R. Laborde, and Strickland were not employed as of the dates the second
and third Note installments came due, they forfeited these later payments. Finally,
with regard to Broussard, WCW and Wilmot argue that, under section 1.2B,
Broussard’s Notes damages must be reduced by the amount of the Notes payable to
the Exempt Shareholders (Borel, Giron, Lowery, and Roussel) because they ended

      Buyer, and the aggregate Purchase Price and the Deferred Consideration shall be
      reduced by said amount. The Deferred Consideration due each Seller shall be
      evidenced by a promissory note of the form attached as Exhibit A, to be delivered
      to each Seller at Closing (as to each Seller, a “Note” and collectively, the
      “Note(s)”); each Note shall be payable with interest, compounded monthly at the
      “Prime” rate as published in the Wall Street Journal, which rate shall be fixed on
      the Closing Date and adjusted on the 15th day of September, December, March
      June for the rate as published on said date(s) so long as any balance remains
      outstanding on the Note(s), and, in the case of Nonexempt Sellers other than
      Broussard, shall be conditioned upon employment of the Seller by Company as of
      the respective payment due dates. The schedule for the installment payments and
      the aggregate maximum amount of the installments due under the Notes, less any
      amount otherwise payable to any Seller whose employment has terminated for the
      reasons specified in (i) and (ii) above, shall be as follows:
                     (1) One Million Dollars ($1,000,000) plus accrued interest payable
             in cash by wire transfer on January 31, 2009;
                     (2) One Million Dollars ($1,000,000) plus accrued interest payable
             in cash by wire transfer on January 31, 2010; and
                    (3) One Million Eight Hundred Thousand Dollars ($1,800,000)
             plus accrued interest payable in cash by wire transfer on January 31, 2011.
             The Note(s) shall be secured by a letter of credit in substantially the form
      attached as Exhibit B (the “Security”).
              The proportionate Deferred Consideration due under the Note held by
      each Exempt Seller (as identified on Schedule 1) shall be payable notwithstanding
      termination of such Seller’s employment for any reason; provided, however, that
      the amount of Deferred Consideration payable to any such Exempt Seller whose
      employment has terminated on or before the due date for payment of any
      installment thereof, as aforesaid, shall be deducted from Deferred Consideration
      otherwise due Broussard. The Deferred Consideration evidenced by the Note
      held by Broussard shall be subject to no conditions, limitations or reductions for
      any cause other than deductions in respect of payments of Deferred Consideration
      to Exempt Sellers whose employment has been terminated and otherwise as
      provided in this Agreement.
(Emphases added).

                                              34
their employment before the second and third payments were due.

       While the parties advance their respective interpretations, there is no dispute
that these sections of the SPA contain certain conditions precedent to WCW’s
performance of paying Shareholders all or even any of the deferred compensation
portion of the purchase price.23           The first condition, applying to Nonexempt
Shareholders except Broussard, is that they must still be employed at Spectrum one
year after closing unless they resign with good reason to receive any deferred
compensation. The second condition, again applying to Nonexempt Shareholders
except Broussard, is that they must be employed as of the Note installment due
dates to receive those payments. And the third condition, applying to Broussard, is
that the Exempt Shareholders must be employed as of the Note installment due
dates for him to receive his full amount of deferred consideration. 24 In addition,
the Notes themselves state that WCW “is executing and delivering this Promissory
Note pursuant to the terms and conditions of” the SPA. The Notes also state:
“Payments to Payee of the principal amount of this Promissory Note shall be
subject to the provisions of Section 1.2(B) of” the SPA.

       Where a contract contains conditions precedent, there must be some
allegation by the plaintiff that the conditions have been met. Grimm v. Grimm, 864
S.W.2d 160, 161 (Tex. App.—Houston [14th Dist.] 1993, no writ). Performance

       23
          A condition precedent that affects a party’s obligation to perform is an act or event that
must occur after the making of a contract before a right to immediate performance arises and
before there may be a breach of contractual duty. Centex Corp. v. Dalton, 840 S.W.2d 952, 956
(Tex. 1992). Conditional language such as “if,” “provided that,” or “on condition that” must
generally be included in order to make performance specifically conditional. Solar Applications
Eng’g, Inc. v. T.A. Operating Corp., 327 S.W.3d 104, 109 (Tex. 2010).
       24
         These three conditions precedent are contained in section 1.2B. Section 1.5, consistent
with the first two conditions, provides that Nonexempt Shareholders whose employment is
terminated due to “Resignation,” defined in section 1.2B as “voluntary resignation without Good
Reason,” forfeit any unpaid deferred consideration as of their termination.

                                                35
of any condition precedent is an essential element of the plaintiff’s case. Id.
Under rule 54, if a plaintiff pleads generally the performance of conditions
precedent, the plaintiff need only prove performance of those conditions
specifically denied by the defendant. Tex. R. Civ. P. 54; Cmty. Bank & Trust,
S.S.B. v. Fleck, 107 S.W.3d 541, 542 (Tex. 2002) (per curiam); Bencon Mgmt. &
Gen. Contracting, Inc. v. Boyer, Inc., 178 S.W.3d 198, 203 (Tex. App.—Houston
[14th Dist.] 2005, no pet.); Grimm, 864 S.W.2d at 162. That is, a defendant’s
general denial that all conditions precedent to a plaintiff’s right to recover have
been performed is not sufficient under rule 54. See Tex. R. Civ. P. 54; compare
Dairyland Cnty. Mut. Ins. Co. of Tex. v. Roman, 498 S.W.2d 154, 158–599 (Tex.
1973) (allegation that plaintiff failed to comply with conditions of insurance policy
accompanied by copy of policy’s “conditions” section held not sufficient); Coastal
Terminal Operators v. Essex Crane Rental Corp., No. 14–02–00627–CV, 2004
WL 1795355, at *7 (Tex. App.—Houston [14th Dist.] Aug. 12, 2004, pet. denied)
(mem. op.) (“[I]t is not sufficient to simply deny that all conditions precedent have
been satisfied, even if the word ‘specifically’ is included in the denial.”); and
Kartalis v. Lakeland Plaza Joint Venture, 784 S.W.2d 64, 67 (Tex. App.—Dallas
1989, writ denied) (allegation “that the Plaintiff has failed to comply with each and
every of the provisions of the Agreement and that all conditions precedent
necessary to the maintenance of this action and, [sic] has not met all the conditions
precedent necessary to the institution of this action” held not sufficient), with Betty
Leavell Realty Co. v. Raggio, 669 S.W.2d 102, 103–04 (Tex. 1984) (allegation that
purchaser failed to obtain financing within 20-day period required by paragraph 17
of contract held sufficiently specific).

      Within their breach of contract count for both the SPA and the Notes,
Shareholders pleaded that they “fully performed all conditions precedent under the

                                           36
SPA and the Notes.” Thus, they were required to prove only the conditions
precedent WCW specifically denied. See Tex. R. Civ. P. 54, Bencon Mgmt., 178
S.W.3d at 203. WCW and Wilmot’s second amended answer does not contain the
term “condition precedent,” much less any specific denials as to the alleged
conditions precedent in sections 1.2B and 1.5 of the SPA asserted by them against
certain Shareholders in their fourth issue. In their second amended answer, under
affirmative defenses, WCW and Wilmot state: “Defendants assert that Plaintiffs’
claims are barred by the terms of the actual relevant documents and Defendants’
contractual defenses.” They also state: “Defendants assert that Plaintiffs neglected
their contractual employment duties, and therefore breached the contracts and
agreements.” Neither of these statements amounts to a specific denial or allegation
that Shareholders failed to comply with the conditions precedent to their right to
recover deferred consideration under the SPA and the Notes. Nonetheless, WCW
and Wilmot complain on appeal that certain Shareholders failed to satisfy the
specific employment conditions precedent to their recovery of deferred
consideration, i.e., their payments due under the Notes, and that they failed to
obtain findings even if any “good reason” exception to the conditions precedent
may apply. However, it was WCW and Wilmot that failed to specifically deny that
Shareholders performed these conditions. Under these circumstances, and based
on this state of the pleadings, we conclude that Shareholders were not required to
prove the specific conditions precedent regarding their employment status and
dates under sections 1.2B and 1.5 of the SPA to be able to recover their deferred
consideration under the Notes. See Dairyland, 498 S.W.2d at 159; Bencon Mgmt.,
178 S.W.3d at 205; Kartalis, 784 S.W.2d at 67.

      We overrule WCW and Wilmot’s fourth issue.

                                        37
      Because we overrule WCW and Wilmot’s first four issues, we do not reach
their two remaining issues, which are dependent on reversal of the trial court’s
judgment. See Tex. R. App. P 47.1.

E. The trial court did not err by not holding Wilmot jointly and severally
   liable as to WCW’s breach.

       In their sole remaining cross-appeal issue, Shareholders argue that the trial
court erred by not signing a judgment against Wilmot based on the guaranty
because the evidence conclusively shows that he is jointly and severally liable with
WCW on the SPA and the Notes. WCW and Wilmot contend that Shareholders
waived this issue by moving for the trial court to sign a judgment on the jury’s
findings—which included a $0.00 damages finding based on Wilmot’s breach of
the guaranty. Shareholders assert they did not waive the issue where the trial court
did not sign their proposed judgment that they “approved as to form,” and where
they filed a motion to disregard that damages finding and to enter judgment on
sums due on the guaranty, which motion the trial court considered and denied.

       Assuming without deciding that Shareholders did not waive an appellate
attack on the judgment by filing their motion, the record reveals that what
Shareholders requested and argued below was not joint and several liability against
Wilmot with WCW on the breach of the SPA and the Notes, but rather that the trial
court disregard the guaranty damages finding and amend the judgment to reflect
damages against Wilmot in the amount of $7.9 million for the sums due on the
guaranty ($4.1 million in initial consideration plus the $3.8 million LOC).25
Shareholders’ complaint and request on appeal does not comport with their
objection and request below. As such, they have failed to preserve, and thus we
      25
         While joint and several liability was discussed during the hearing on the entry of
judgment, it was in the specific context of the jury’s fraud findings against both WCW and
Wilmot.

                                            38
overrule, this issue. See Tex. R. App. P. 33.1(a); Wohlfahrt v. Holloway, 172
S.W.3d 630, 639 (Tex. App.—Houston [14th Dist.] 2005, pet. denied) (party
waived particular argument on calculation of post-judgment interest in trial court’s
judgment by making different argument before trial court).

                            IV.         CONCLUSION

      Accordingly, we affirm the trial court’s judgment.

                                  /s/         Marc W. Brown
                                              Justice

Panel consists of Justices Christopher, Donovan, and Brown.

                                         39