Court Opinion

ID: 4030006
Source: CourtListenerOpinion
Date Created: 2016-08-31 07:09:18.632636+00
Date Added: 2024-06-11T13:29:00.566171
License: Public Domain

Affirmed, in part, Reversed and Remanded, in part, and Opinion Filed August 24, 2016.

                                                           In The
                                            Court of Appeals
                                     Fifth District of Texas at Dallas
                                                     No. 05-15-00340-CV

                                 T. CHRISTIAN COOPER, Appellant
                                               V.
                          SANDERS H. CAMPBELL/RICHARD T. MULLEN, INC.
                              D/B/A THE MULLEN COMPANY, Appellee

                                 On Appeal from the 162nd Judicial District Court
                                              Dallas County, Texas
                                      Trial Court Cause No. DC-12-15127

                                           MEMORANDUM OPINION
                                         Before Justices Bridges, Lang, and O'Neill1
                                                  Opinion by Justice Lang
            T. Christian Cooper appeals the trial court’s final judgment that awards Sanders H.

Campbell/Richard T. Mullen, Inc. d/b/a The Mullen Company (Mullen Co.) $890,823.29 on its

promissory note claim. The Mullen Co. was initially awarded $1,431,000 on the promissory

note claim, but that sum was reduced by the trial court’s award to Cooper of $519,300 on his

equitable forfeiture claim and $20,000 in damages awarded by the jury on his breach of contract

counterclaim. The parties’ claims and counterclaims in this case relate to the Mullen/Cooper

Joint Venture in which Cooper and the Mullen Co. were partners.

1
    The Hon. Michael J. O'Neill, Justice, Assigned
       Cooper raises three issues on appeal. First, he argues the trial court erred when it denied

his motions for directed verdict, judgment notwithstanding the verdict, and to modify the final

judgment or for new trial on the claim for enforcement of a promissory note brought by the

Mullen Co. because the Mullen Co. was not the holder or owner of the promissory note. Second,

Cooper asserts the trial court erred when it denied his motions for directed verdict and judgment

notwithstanding the verdict because, as a matter of law, the promissory note is “non-recourse,”

which precludes the imposition of personal liability on Cooper. Third, he argues the trial court

erred when it denied his motion to modify the final judgment or for new trial because the trial

court’s limited order of equitable forfeiture does not “fit the circumstances or adequately protect”

him from the breach of fiduciary duty by the Mullen Co.

       The Mullen Co. filed a cross appeal. In cross-issues one and two, the Mullen Co. argues

the trial court erred when it: (1) denied its motion to modify the judgment or for new trial

because the record does not show the trial court determined its conduct was “a clear and serious

breach of duty,” supporting the imposition of equitable forfeiture; and (2) denied its motion to

modify the judgment or for new trial because the amount of forfeiture should have been limited

to the amount of compensation or profits realized by the Mullen Co. Also, in cross-issue three,

the Mullen Co. argues the trial court erred when it granted Cooper’s motion for directed verdict

on its claim for an accounting.

       We conclude the trial court did not err when it denied Cooper’s motions for directed

verdict, judgment notwithstanding the verdict, and to modify the final judgment or for new trial

as to the promissory note claim of the Mullen Co. However, we conclude the trial court erred as

to two of its rulings. First, it erred when it denied the motion to modify the final judgment or for

new trial filed by the Mullen Co. on the issue of equitable forfeiture. Second, the trial court

erred when it granted, in part, Cooper’s motion for directed verdict on the Mullen Co.’s claim

                                                –2–
seeking an accounting. The trial court’s final judgment is affirmed, in part, and reversed and

remanded, in part.

                      I. FACTUAL AND PROCEDURAL CONTEXT

       In 2001, Cooper was employed by the Mullen Co. That same year, he assisted the

Mullen Co. in entering into a management agreement with Newnan Crossing Partnership. As a

result, in 2001, the Mullen Co. executed a management agreement with Newnan Crossing

Partnership.   Pursuant to that management agreement, the Mullen Co. was responsible for

managing, developing, and marketing ten real estate properties, the largest of which was located

in Georgia. Newnan Crossing was a partnership of several families in Monterrey, Mexico, and

those families were represented by Roberto Segovia Kane (Segovia). Also, Newnan Crossing

invested through a company named Agave Investments. Then, in 2004, Cooper and the Mullen

Co. became partners, executing the Mullen/Cooper Joint Venture, which, in part, gave Cooper a

30% ownership interest in the Newnan Crossing investment.

       In 2006, Cooper learned the The PNL Companies were “interested in purchasing” some

of the Newnan Crossing property. However, they were “actually [] talking about forming a

venture and supplying a loan into the property.” Cooper approached Mullen about participating

with him in that deal, but Mullen “[did not] want to go into the business of competing against

Newnan Crossing.” However, Cooper decided “to be a partner in that deal” in his individual

capacity. In order to fund his partnership interest, Cooper, in his individual capacity, worked

with Segovia to obtain a loan for $600,000 from Newnan Crossing. The loan was made upon

Cooper’s execution of a business loan agreement, a promissory note, and a pledge and security

agreement. In the promissory note, Cooper agreed to “apply all distributions received from the

[p]artnership [i]nterest [] to the [n]ote.”   Cooper received distributions in the amounts of

$1,388,959.57, $14,389, and $30,000. However, he did not apply any of these partnership

                                               –3–
distributions toward repayment of the promissory note as agreed or repay the promissory note.

According to Cooper, in 2008, he called Segovia to explain that he could not repay the

promissory note and Segovia “forgave the loan,” stating “don’t worry about it.” However, the

December 31, 2008 and May 1, 2009 balance sheets for Newnan Crossing show an account

receivable of $600,000 due from Cooper.

       In September 2010, Segovia died unexpectedly and the new leadership of Newnan

Crossing refused to pay approximately $1.8 million in management fees that the Mullen Co. and

Cooper believed were owed pursuant to the 2001 management agreement. On January 24, 2011,

John McFarland, an attorney for Newnan Crossing, spoke on the telephone with Cooper about

the $600,000 loan. Contrary to Cooper’s assertion that Segovia “forgave” or discharged the

loan, according to McFarland, Cooper told him that “[h]e [] got [] Segovia to agree that Cooper

would pay the $600,000 back at a later time, or it would be an offset by future fees payable to

Cooper from the Mullen/Cooper management agreement with [Newnan Crossing].” However,

during their conversation, Cooper claimed there was no documentation for the loan.

       As a result of Newnan Crossing’s refusal to pay, the Mullen Co., as party to the

management agreement, sued Newnan Crossing to recover the unpaid management fees. Also,

Newnan Crossing filed a completely separate suit against the Mullen Co., as party to the

management agreement.

       Eventually, in 2012, the Mullen Co., Newnan Crossing, and Agave settled their claims as

to the management agreement. The Mullen Co. agreed to dismiss its claims against Newnan

Crossing regarding the management agreement in exchange for $300,000 and an assignment of

any causes of action and claims that Newnan Crossing or Agave may have against the

Mullen/Cooper Joint Venture or Cooper. According to McFarland, the “Cooper debt clearly was

a factor in determining the amount of the settlement that [Newnan Crossing] was willing to pay.”

                                              –4–
            In December 2012, the Mullen Co. sued Cooper. In its first amended petition, the Mullen

Co. alleged the following claims for damages against Cooper: (1) money had and received; (2)

unjust enrichment; and (3) an accounting. Also, the Mullen Co., as assignee of the $600,000

promissory note, asserted a claim on the promissory note against Cooper, seeking an equitable

lien on the collateral securing the promissory note, pre- and post-judgment interest, and

attorneys’ fees.

            In Cooper’s first amended answer, he generally denied the allegations and asserted that

the claims brought by the Mullen Co., as partner in the Mullen/Cooper Joint Venture, were: (1)

barred by the statute of limitations, the doctrine of unclean hands, and the doctrine of estoppel;

(2) he was not the actual or proximate cause of the damages; and (3) the Mullen Co., as partner

in the Mullen/Cooper Joint Venture, failed to mitigate its damages. Further, Cooper sought a

setoff of any damages awarded on his counterclaims against the Mullen Co., as partner in the

Mullen/Cooper Joint Venture. Also, Cooper contended that the claims brought by the Mullen

Co., as assignee of the promissory note, had no merit because: (1) the assignment of claims was

invalid; (2) the promissory note was not delivered; (3) it is not the holder or owner of the

promissory note; (4) the promissory note is not a negotiable instrument; (5) the promissory note

was discharged or forgiven; (6) the promissory note was non-recourse; and (7) the claim for

attorneys’ fees brought by the Mullen Co., as assignee of the promissory note, is beyond the

scope of the section 38.001 of the Texas Civil Practices and Remedies Code.

            In his original counterclaim, Cooper sought damages against the Mullen Co., as partner in

the Mullen/Cooper Joint Venture, for breach of contract and breach of fiduciary duty,2 and

recovery of his attorneys’ fees. As to his counterclaim for breach of fiduciary duty, Cooper

2
    The parties do not argue or address whether section 152.204 of the Texas Business Organizations Code allows for a breach of fiduciary duty
    claim in against a partner. See TEX. BUS. ORGS. CODE ANN. § 152.204 (West 2012). Accordingly, we express no opinion as to the effect of
    section 152.204 on claims for breach of fiduciary duty in a partnership.

                                                                    –5–
claimed that the Mullen Co., as partner in the Mullen/Cooper Joint Venture, did not consult with

him about the settlement made between the Mullen Co., as party to the management agreement,

and Newnan Crossing, or obtain his approval to the terms of the settlement agreement as

required by the Mullen/Cooper Joint Venture.

       The case was tried to a jury. At the conclusion of the evidence, Cooper moved for a

directed verdict as to: (1) the claims for money had and received, unjust enrichment, and an

accounting; and (2) the claim to enforce the promissory note. After a hearing, the trial court

denied Cooper’s motion for a directed verdict as to the claims for money had and received,

unjust enrichment, and the promissory note claim. However, the trial court granted Cooper’s

motion for directed verdict as to the accounting claim.

       The jury found in favor of the Mullen Co. on its claims for: (1) money had and received,

finding that Cooper received $300,000 that in equity and justice belonged to the Mullen Co.; and

(2) unjust enrichment, awarding it no compensation. In addition, the jury found in favor of the

Mullen Co. on its claim to enforce the promissory note, the damages of which were liquidated,

and awarding it $15,000 in attorneys’ fees for trial and no attorneys’ fees in the event of an

appeal. Also, the jury found against Cooper on his affirmative defense of discharge as to the

claim to enforce the promissory note.      Further, the jury found in favor of Cooper on his

counterclaims against the Mullen Co. for: (1) breach of contract, awarding him $20,000 in

damages; and (2) breach of fiduciary duty, awarding him no damages.

       Cooper filed a motion for judgment notwithstanding the verdict, arguing the trial court

should disregard some of the jury’s findings and, because the jury found in favor of Cooper on

his counterclaim for breach of fiduciary duty, but awarded Cooper no damages, the trial court

should impose the equitable remedy of forfeiture. Also, the Mullen Co. filed a motion for

                                               –6–
judgment. Cooper responded to the motion for judgment, arguing the trial court should render a

take nothing judgment on the promissory note claim.

       The final judgment signed by the trial court granted, in part, and denied, in part, the

motion for judgment filed by the Mullen Co. and Cooper’s motion for judgment notwithstanding

the verdict. The final judgment also states that the trial court accepted the jury’s verdict and

found that each question submitted was supported by the evidence adduced at trial, except for the

finding as to appellate attorneys’ fees. Further, the final judgment awarded to the Mullen Co. a

total recovery of $1,431,000 in damages, less $519,300, which is comprised of the amount

awarded by the trial court to Cooper as equitable forfeiture claim based on breach of fiduciary

duty by the Mullen Co., and $20,000 that was awarded by the jury to Cooper on his counterclaim

for breach of contract. As a result, the net recovery, including interest, to the Mullen Co. was

$890,823.29. In addition, the final judgment awarded the Mullen Co. attorneys’ fees and set

aside the jury’s findings that it should recover no attorneys’ fees in the event of an appeal. Both

parties filed motions to modify the final judgment or for new trial, which were overruled by

operation of law. See TEX. R. CIV. P. 329b(c).

                     II. MOTIONS FOR DIRECTED VERDICT,
                JUDGMENT NOTWITHSTANDING THE VERDICT, AND
                MODIFY THE FINAL JUDGMENT OR FOR NEW TRAIL

       Each issue and cross-issue on appeal challenges multiple rulings by the trial court.

Although the issues and cross-issues vary as to the specific combination of rulings challenged in

each, collectively they challenge the trial court’s rulings on: (1) Cooper’s motions for directed

verdict, judgment notwithstanding the verdict, and to modify the final judgment or for new trial;

and (2) the Mullen Co.’s motion to modify the final judgment or for new trial.

                                                 –7–
                                       A. Standards of Review

                                  1. Motion for Directed Verdict

        A directed verdict is warranted when the evidence is such that no other verdict can be

reached and the moving party is entitled to judgment as a matter of law. See Blackstone Med.,

Inc. v. Phoenix Surgicals, L.L.C., 470 S.W.3d 636, 645 (Tex. App.—Dallas 2015, no pet.);

Halmos v. Bombardier Aerospace Corp., 314 S.W.3d 606, 619 (Tex. App.—Dallas 2010, no

pet.); Byrd v. Delasancha, 195 S.W.3d 834, 836 (Tex. App.—Dallas 2006, no pet.). A directed

verdict for a defendant may be proper in three situations: (1) when a plaintiff fails to present

evidence raising a fact issue essential to the plaintiff’s right of recovery; (2) if the plaintiff either

admits or the evidence conclusively establishes a defense to the plaintiff’s cause of action; or (3)

a legal principle precludes recovery. See Prudential Ins. v. Fin. Review Servs., 29 S.W.3d 74, 77

(Tex. 2000); Blackstone, 470 S.W.3d at 645; JSC Neftegas-Impex v. Citibank, N.A., 365 S.W.3d
387, 398 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) (noting directed verdict also proper

when legal principle precludes recovery); see also Cambio v. Briers, No. 01-10-00807-CV, 2015
WL 2229274, at *3 (Tex. App.—Houston [1st Dist.] May 12, 2015, no pet.) (mem. op.) (noting

directed verdict also proper when legal principle precludes recovery).

        To the extent that a trial court’s denial of a directed verdict is based on the evidence, the

standard of review is a legal sufficiency or “no evidence” standard of review. See Blackstone,
470 S.W.3d at 645; Mauricio v. Castro, 287 S.W.3d 476, 478–79 (Tex. App.—Dallas 2009, no

pet.). Similarly, when reviewing a trial court’s order granting a directed verdict, an appellate

court also follows the standard of review for assessing the legal sufficiency of the evidence. See

Flagstar Bank, FSB v. Walker, 451 S.W.3d 490, 498 (Tex. App.—Dallas 2014, no pet.). When

reviewing a directed verdict, an appellate court considers all the evidence in a light most

favorable to the nonmovant, and resolves all reasonable inferences that arise from the evidence

                                                  –8–
admitted at the trial in the nonmonvant’s favor. See King Ranch, Inc. v. Chapman, 118 S.W.3d
742, 750–51 (Tex. 2003); Blackstone, 470 S.W.3d at 645; Mikob Props., Inc. v. Joachim, 468
S.W.3d 587, 594 (Tex. App.—Dallas 2015, pet. denied). If a fact issue is raised on a material

question, a directed verdict is not proper and the issue must go to the jury. See Exxon Corp. v.

Emerald Oil & Gas Co., 348 S.W.3d 194, 220–21 (Tex. 2011); Blackstone, 470 S.W.3d at 645.

       To the extent that the trial court’s ruling on a directed verdict is based on a question of

law, an appellate court reviews that aspect of the ruling de novo. See JSC Neftegas-Impex, 365
S.W.3d at 398; see also Cambio, 2015 WL 2229274, at *3.

                    2. Motion for Judgment Notwithstanding the Verdict

       A trial court should grant a motion for judgment notwithstanding the verdict when: (1)

the evidence is conclusive and one party is entitled to recover as a matter of law, or (2) a legal

principle precludes recovery. See Blackstone, 470 S.W.3d at 645; Iroh v. Igwe, 461 S.W.3d 253,

261 (Tex. App.—Dallas 2015, pet. denied); see also TEX. R. CIV. P. 301.              A judgment

notwithstanding the verdict is proper when a directed verdict would have been proper. See TEX.

R. CIV. P. 301; Fort Bend Cty. Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex. 1991);

Blackstone, 470 S.W.3d at 645; Helping Hands Home Care, Inc. v. Home Health of Tarrant Cty.,

Inc., 393 S.W.3d 492, 515 (Tex. App.—Dallas 2013, pet. denied). Also, the standard of review

for the denial of a motion for judgment notwithstanding the verdict is the same as for the denial

of a motion for directed verdict. City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005) (“the

test for legal sufficiency should be the same for summary judgments, directed verdicts,

judgments notwithstanding the verdict, and appellate no-evidence review”); Blackstone, 470
S.W.3d at 645–46; Iroh, 461 S.W.3d at 261 n.3; Cambio, 2015 WL 2229274, at *3 (judgment

notwithstanding the verdict also proper when legal principle precludes recovery, which is

reviewed de novo); JSC Neftegas-Impex, 365 S.W.3d at 398.

                                               –9–
                     3. Motion to Modify the Judgment or For New Trial

       An appellate court reviews a trial court’s denial of a motion to modify a final judgment

under an abuse of discretion standard. See Hodges v. Rajpal, 459 S.W.3d 237, 250 (Tex. App.—

Dallas 2015, no pet.). In addition, an appellate court reviews the denial of a motion for new trial

for an abuse of discretion. See Hodges, 459 S.W.3d at 250. A trial court abuses its discretion

when its actions are arbitrary or unreasonable, or when it acts without reference to any guiding

rules or principles. See Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.

1985); Hodges, 459 S.W.3d at 250; Dernick, 471 S.W.3d at 482; Miller, 142 S.W.3d at 338.

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

court abused its discretion.   See Dernick, 471 S.W.3d at 482; Miller, 142 S.W.3d at 338.

However, an abuse of discretion does not occur when a trial court bases its decision on

conflicting evidence, as long as some evidence reasonably supports the trial court’s decision.

See Dernick, 471 S.W.3d at 482–83; Miller, 142 S.W.3d at 338.

                            B. Enforcement of the Promissory Note

       In issues one and two, Cooper challenges: (1) the legal and factual sufficiency of the

evidence to support the jury’s findings that the Mullen Co. established its claim to recover on the

promissory note; and (2) the trial court’s conclusion that, as a matter of law, Cooper was

personally liable for that promissory note.

                          1. Owner or Holder of the Promissory Note

       In issue one, Cooper argues the trial court erred when it denied his motions for directed

verdict, judgment notwithstanding the verdict, and to modify the final judgment or for new trial

on the promissory note claim because the evidence is legally and factually insufficient to support

the jury’s answer to question no. 7, finding that the Mullen Co. was the holder or owner of the

promissory note. Cooper maintains that the Mullen Co. is not the holder of the promissory note

                                               –10–
because evidence shows that it does not have possession of and never indorsed the promissory

note. Also, Cooper contends that the Mullen Co. is not the owner of the promissory note because

the evidence shows there was no transfer of the promissory note, the assignment was made to an

entity that was not a party to the lawsuit, and the settlement agreement between Newnan

Crossing and the Mullen Co., as party to the management agreement, did not reference or attach

the promissory note. The Mullen Co. responds that it “has never claimed the rights of a holder.”

However, the Mullen Co. argues it is the owner of the promissory note because the jury found

that “Cooper issue[d] the signed promissory note to Newnan Crossing” and the evidence shows

that Newnan Crossing assigned the promissory note to the Mullen Co., as party to the

management agreement.

                                       a. Applicable Law

       To recover on a promissory note, the plaintiff must prove: (1) the note in question; (2) the

party sued signed the note; (3) the plaintiff is the owner or holder of the note; and (4) a certain

balance is due and owing on the note. See Manley v. Wachovia Small Bus. Capital, 349 S.W.3d
233, 237 (Tex. App.—Dallas 2011, pet. denied); Bean v. Bluebonnet Sav. Bank FSB, 884 S.W.2d
520, 522 (Tex. App.—Dallas, no writ); see also Perkins v. Crittenden, 462 S.W.2d 565, 568

(Tex. 1970) (plaintiff must establish he is present legal owner or holder of note sued upon).

       One of the elements required to enforce a promissory note is that the plaintiff is the

owner or holder of the note. The Texas Uniform Commercial Code defines “person entitled to

enforce” an instrument as: (i) the holder of the instrument; (ii) a nonholder in possession of the

instrument who has the rights of a holder; or (iii) a person not in possession of the instrument

who is entitled to enforce the instrument pursuant to section 3.309 or 3.418(d). See TEX. BUS. &

COM. CODE ANN. §§ 1.101, 3.301; Manley, 349 S.W.3d at 239. Also, a person may be a person

                                               –11–
entitled to enforce the instrument even though the person is not the owner of the instrument or is

in wrongful possession of the instrument. See TEX. BUS. & COM. CODE ANN. § 3.301.

          A “holder” is “the person in possession of a negotiable instrument that is payable either

to bearer or to an identified person that is the person in possession.” TEX. BUS. & COM. CODE

ANN. § 1.201(b)(21); see Manley, 349 S.W.3d at 239. However, Texas law also recognizes that

even if a person is not the “holder” of the note, he may prove that he is the “owner” and entitled

to enforce the note. See Manley, 349 S.W.3d at 240. That is, the owner of a note may enforce

the note even if he is not a holder. See Manley, 349 S.W.3d at 240. As a result, even if a person

is not the holder of a note, he may still be able to foreclose on collateral and obtain a deficiency

judgment under common-law principles of assignment. See Myers v. HCB Real Holdings,

L.L.C., No. 05-13-00113-CV, 2015 WL 2265152, at *2 (Tex. App.—Dallas 2015, pet. denied)

(mem. op.); Nelson v. Regions, 170 S.W.3d 858, 864 (Tex. App.—Dallas 2005, no pet.).

Likewise, under certain circumstances, common law principles of agency allow enforcement of a

note by one not in possession. See Nelson, 170 S.W.3d at 864. Further, the law of negotiable

instruments is supplemented not only by principles of law such as assignment and agency, but

also by principles of equity. See TEX. BUS. & COM. CODE ANN. § 1.103(b) (unless specifically

displaced, Uniform Commercial Code is supplemented by principles of law and equity such as

assignment, agency, and mistake); Manley, 349 S.W.3d at 240; Nelson, 170 S.W.3d at 864. It

would be inequitable to conclude that the owner of an unpaid note who did not have possession

of the original note due to a mistake could not sue to enforce the note. See Manley, 349 S.W.3d

at 240.

          A party not identified in a note who is seeking to enforce it as the owner or holder must

prove the transfer by which it acquired the note. See Myers, 2015 WL 2265152, at *2; Leavings

v. Mills, 175 S.W.3d 301, 309 (Tex. App.—Houston [1st Dist.] 2004, no pet.). Under Texas law,

                                                –12–
the transfer of a note may be proved by testimony or documentation. See Leavings, 175 S.W.3d

at 312. An unexplained gap in the chain of title creates a genuine issue of material fact. See

Myers, 2015 WL 2265152, at *2; Leavings, 175 S.W.3d at 309.

                            b. Application of the Law to the Facts

        In his first issue, Cooper challenges the legal and factual sufficiency of the evidence to

prove that the Mullen Co. is the owner or holder of the promissory note. The jury answered

“yes” to question no. 7 that asked if the Mullen Co. was the “owner or holder” of the promissory

note. Because the Mullen Co. acknowledges it is not the holder of the promissory note, we limit

our review to whether the evidence is legally and factually sufficient to support the jury’s answer

to question no. 7, in so far as it found that the Mullen Co. was the owner of the promissory note.

        The jury made three findings in favor of the Mullen Co. on its promissory note claim.

First, in question no. 6 of the jury charge, the jury found that Cooper issued the signed

promissory note to Newnan Crossing. Second, in question no. 7, the jury found that the Mullen

Co. was the holder or owner of the promissory note. Third, in question no. 8, the jury found

against Cooper on his defense of discharge.

        The promissory note, which was admitted into evidence, provides language

contemplating the assignment of the promissory note and explains:

        17.     Successor and Assigns. This Note and all covenants, promises and
        agreements contained herein shall be jointly and severally binding upon and shall
        inure to the benefit of [Cooper] and [Newnan Crossing] [] and their respective
        successors and assigns.

[Italics added].

        In addition, the pledge and security agreement, which was also admitted into evidence,

includes language in paragraph 9, titled “Miscellaneous,” that assignment of the promissory note

is expressly permitted. It states, in part: “Without limiting the generality of the foregoing, the

Secured Party may assign or otherwise transfer the Note to any other person, and such other

                                               –13–
person shall thereupon become vested with all of the benefits in respect thereof granted to the

Secured Party herein or otherwise.” [Emphais added].

       Also, the settlement agreement between Newnan Crossing, Agave, and the Mullen Co.

was admitted into evidence. That settlement agreement specifically states that it is between

“Newnan Crossing [], Agave [], and Sanders H. Campbell/Richard T. Mullen, Inc., d/b/a The

Mullen Company.” In a section titled “Assignment of Claims,” Newnan Crossing and Agave

transferred and assigned to “Richard T. Mullen and Company, Inc.” all causes of action and

claims they may have against Cooper.

       During the trial, Cooper testified that he understood that the Mullen Co. agreed to dismiss

its claims against Newnan Crossing “in exchange for a $300,000 cash payment and an

assignment of claims against [him].” Also, McFarland testified that: (1) “the terms of the

settlement were that the parties would dismiss the lawsuits and release their claims in exchange

for a $300,000 cash payment to the Mullen Co[.] and an assignment of any claims or causes of

action that Newnan [Crossing] or its managing partner[,] Agave[,] had against Mr. Cooper.”; (2)

“the ultimate settlement reached [] involved an assignment of claims from Newnan to the Mullen

Co[.]”; and (3) the assignment of claims Newnan Crossing made in connection with the

settlement agreement states, “Newnan [Crossing] and Agave . . . hereby transfer and assign to

Richard T[.] Mullen and Company Inc[.], to the fullest extent permitted by law any and all

causes of action[] and claims that either or both of them may have against . . . Cooper.” In

addition, Mullen testified that he obtained “an assignment of the claims that Newnan Crossing []

had against . . . Cooper.” However, Mullen also testified that “Richard T. Mullen Company,

Inc.” is an affiliated company of the Mullen Co.

       Based on the record, we conclude that there was legally and factually sufficient evidence

to support the jury’s finding that the Mullen Co. was the owner of the note. See Myers, 2015 WL

                                              –14–
2265152, at *2 (Even if a person is not the holder of note, he may still be able to foreclose on the

collateral and obtain a deficiency judgment under the common-law principle of assignment.).

Accordingly, we conclude the trial court did not err when it denied Cooper’s motions for directed

verdict, judgment notwithstanding the verdict, and to modify the final judgment or for new trial

as to the jury’s finding that the Mullen Co. was the owner of the promissory note.

       Issue one is decided against Cooper.

                                       2. Personal Liability

       In issue two, Cooper argues the trial court erred because, as a matter of law, Cooper was

not personally liable on the promissory note claim. He claims that he cannot be held personally

liable because the promissory note is a non-recourse note and the only remedy available under

the promissory note was the security interest in the collateral and that “pledged collateral was

gone.” The Mullen Co. responds that while the promissory note limits Cooper’s personal

liability, it did not eliminate it. Also, the Mullen Co. claims it did not seek to impose any

personal liability on Cooper beyond the partnership distributions and proceeds from the sale of

the partnership interest in accordance with the limitation on liability in the promissory note.

                                        a. Applicable Law

       Courts employ the same rules for interpreting a promissory note that they use to interpret

a contract. See Fin. Freedom Senior Funding Corp. v. Horrocks, 294 S.W.3d 749, 753 (Tex.

App.—Houston [14th Dist.] 2009, no pet.). It is a basic premise of contract interpretation that

unambiguous contracts are construed as a matter of law. See Plains Expl. & Prod. Co. v. Torch

Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex. 2015); Coker v. Coker, 650 S.W.2d 391, 393

(Tex. 1983); Worldwide Asset Purchasing, L.L.C. v. Rent-A-Center E., Inc., 290 S.W.3d 554,

560 (Tex. App.—Dallas 2009, no pet.). The entire instrument, taken by its four corners, must be

read and considered to determine the true intention of the parties. Worldwide Asset, 290 S.W.3d

                                               –15–
at 560; First Union Nat’l Bank v. Richmont Capital Partners I, L.P., 168 S.W.3d 917, 924 (Tex.

App.—Dallas 2005, no pet.). Terms are given their plain, ordinary, and generally accepted

meaning, unless the instrument shows the parties used them in a technical or different sense. See

Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996); Worldwide Asset, 290
S.W.3d at 560; First Union, 168 S.W.3d at 924.

       When interpreting a contract, courts examine the entire agreement in an effort to

harmonize and give effect to all provisions of the contract so that none will be meaningless. See

Plains Expl., 473 S.W.3d at 305; MCI Telecomms. Corp. v. Tex. Util. Elec. Co., 995 S.W.2d 647,

651 (Tex. 1999); Worldwide Asset, 290 S.W.3d at 560; First Union, 168 S.W.3d at 924. No

single provision taken alone is given controlling effect. See Plains Expl., 473 S.W.3d at 305.

Rather, each provision must be considered in the context of the instrument as a whole. See

Plains Expl., 473 S.W.3d at 305. Courts presume the parties to a contract intend every clause to

have some effect. See Heritage Res., 939 S.W.2d at 121; Worldwide Asset, 290 S.W.3d at 560;

First Union, 168 S.W.3d at 924. When interpreting a promise or agreement, specific and exact

terms are given greater weight than general language. See Worldwide Asset, 290 S.W.3d at 560;

First Union, 168 S.W.3d at 924. However, although courts may consider the title of a contract

provision or section to interpret a contract, the greater weight must be given to the operative

contractual clauses of the agreement. See RSUI Indem. Co. v. The Lloyd Co., 466 S.W.3d 113,

121 (Tex. 2015).

       Section 9.102(a)(66) of the Texas Uniform Commercial Code defines a “promissory

note” as “an instrument that evidences a promise to pay a monetary obligation, does not evidence

an order to pay, and does not contain an acknowledgement by a bank that the bank has received

for deposit a sum of money or funds.” TEX. BUS. & COM. CODE ANN. § 9.102(a)(66) (West

Supp. 2015). “Collateral” means, in part, “the property subject to a security interest” and

                                              –16–
includes proceeds to which a security interest attaches.        TEX. BUS. & COM. CODE ANN. §

9.102(a)(12). Generally, a non-recourse note has the effect of making the note payable out of a

particular fund or source, namely, the proceeds of the sale of the collateral securing the note. See

Patton v. Porterfield, 411 S.W.3d 147, 157 (Tex. App.—Dallas 2013, no pet.); Fein v. R.P.H.,

Inc., 68 S.W.3d 260, 266 (Tex. App.—Houston [14th Dist.] 2002, pet. denied). Under a non-

recourse note, the maker does not personally guarantee repayment of the note and thus, will have

no personal liability. See Patton, 411 S.W.3d at 157; Fein, 68 S.W.3d at 266. If a maker of a

non-recourse note elects not to repay the note, he is not exposed to personal liability, but, instead,

takes the risk that the collateral securing the note will be lost if the holder of the note decides to

enforce its security interest in the collateral. See Patton, 411 S.W.3d at 157; Fein, 68 S.W.3d at

266.

                             b. Application of the Law to the Facts

       In its first original petition, the Mullen Co. claimed it was “entitled to recover from []

Cooper the value of the collateral securing the note up to $600,000, plus interest and reasonable

attorney’s fees pursuant to the terms of the note.” The final judgment awarded the Mullen Co.

damages on its promissory note claim as follows:

       ORDERED, ADJUDGED, AND DECREED that [the Mullen Co.] is entitled to
       recover from [Cooper] $600,000, together with $30,000 in prejudgment interested
       (calculated at the rate of 5% per annum from July 14, 2006 through July 13,
       2007), and together with $801,000 in prejudgment interest (calculated at the rate
       of 18% per annum from July 14, 2007 through the date of this judgment), for a
       total recovery in the amount of $1,431,000, which amount is to be adjusted as set
       forth below.

       During the trial, Cooper testified that he received distributions in the amounts of

$1,388,959.57, $14,389, and $30,000.         Cooper stated that he had promised to use those

distributions to repay the promissory note, he did not fulfill that promise, and he spent the money

from the distributions elsewhere.

                                                –17–
       The parties identify paragraph 18 of the promissory note as the provision that is relevant

to interpret whether the promissory note is non-recourse. However, we conclude that paragraph

3 is also instructive. We interpret these paragraphs together in conjunction with the entire

promissory note. See Plains Expl., 473 S.W.3d at 305.

       First, paragraph 3 of the promissory note does not specify the amounts or dates on which

Cooper is obligated to pay. Instead, it includes an affirmative duty for Cooper to “apply” or

transfer all partnership distributions to repay the promissory note. Specifically, it states:

       3.      Payments Required. During the period beginning on the date of this Note
       and ending on the Maturity Date (as hereinafter defined), [Cooper] shall apply all
       distributions received from the Partnership Interest (“Partnership Distributions”)
       to the Note with payments to be applied first to any accrued and unpaid. interest,
       and the balance, if any, applied to reduce the outstanding principal balance of the
       Note; provided, [Cooper] may reduce the amount of Partnership Distributions
       applied to the Note by any federal income taxes incurred by [Cooper] with respect
       to the Partnership Interest. All remaining accrued but unpaid interest, together
       with all unpaid principal and any additional charges applicable as provided in this
       Note, shall be due and payable on the Maturity Date (as hereinafter defined).

Second, paragraph 18 identifies Cooper’s liability and states:

       18.    Limitation on Liability of [Cooper]. Nothing in the Note or the Loan
       Documents to the contrary withstanding, Payee shall look solely to the
       Partnership Distributions (reduced by tax obligations of [Cooper], as provided
       above) and the Partnership Interest for payment on this Note. No deficiency
       judgment for amounts unsatisfied after application of such distributions and
       proceeds from sale of the Partnership Interest shall ever be instituted, sought,
       taken or obtained against any party for any amounts which become due and
       owing.

       Although paragraph 18 is titled “Limitation on Liability of [Cooper],” we must give

greater weight to the operative contractual clauses of the promissory note. See RSUI Indem., 466
S.W.3d at 121. In order to properly analyze the meaning of paragraph 18, we must address its

two material parts. Those are: (1) “Nothing in the Note or the Loan Documents to the contrary

withstanding, Payee shall look solely to the Partnership Distributions (reduced by tax obligations

of [Cooper], as provided above) and the Partnership Interest for payment on this Note”; and (2)

                                                –18–
“No deficiency judgment for amounts unsatisfied after application of such distributions and

proceeds from sale of the Partnership Interest shall ever be instituted, sought, taken or obtained

against any party for any amounts which become due and owing.”

       Further, although it uses the language “shall look solely to,” the first part of paragraph 18

also states that it relates to “payment on the [n]ote.” See Patton, 411 S.W.3d at 157 (generally,

non-recourse note has effect of making note payable out of particular fund or source, namely,

proceeds of sale of collateral securing note); Fein, 68 S.W.3d at 266. As a result, it restates

Cooper’s affirmative duty, as stated in paragraph 3, to repay the promissory note from the

partnership distributions. See Patton, 411 S.W.3d at 157 (if maker of non-recourse note elects

not to repay note, he is not exposed to personal liability, but takes risk collateral securing note

will be lost if holder decides to enforce security interest); Fein, 68 S.W.3d at 266. However,

importantly, the language of the note does not address default or a deficiency judgment. Nor

does it specify that the secured party has no recourse against Cooper or that Cooper will not be

held personally liable in the event of a default or deficiency.

       The second part of paragraph 18 establishes that the secured party may not seek a

deficiency judgment for “amounts unsatisfied after application of such distributions and proceeds

from the sale of the Partnership Interest.” We construe this language to identify the extent of any

recourse against Cooper. However, by its plain language, this provision that Cooper claims

demonstrates the promissory note is non-recourse, only makes clear the non-recourse provision

is contingent on or does not take effect until “after the application of such distributions.” See

Worldwide Asset, 290 S.W.3d at 560 (courts examine entire agreement and terms are given plain,

ordinary, and generally accepted meaning, unless instrument shows they are used in technical or

different sense).

                                                –19–
       The record shows Cooper testified at trial that he did not fulfill his promise to use the

partnership distributions he received to repay the promissory note and he spent the money from

the distributions elsewhere. As a result, by its own terms, the second part of paragraph 18, which

says “No deficiency judgment for amounts unsatisfied after application of such distributions and

proceeds from sale of the Partnership Interest shall ever be instituted, sought, taken or obtained

against any party for any amounts which become due and owing,” did not become effective

because no partnership distribution was applied to pay the promissory note. Accordingly, we

conclude the trial court did not err when it denied Cooper’s motions for directed verdict and

judgment notwithstanding the verdict as to the Mullen Co.’s promissory note claim.

       Issue two is decided against Cooper.

                                    C. Equitable Forfeiture

       In issue three and cross-issues one and two, the parties argue the trial court erred when it

denied their respective motions to modify the final judgment or for new trial as to the issue of

equitable forfeiture. In issue one, Cooper complains the final judgment improperly included

only a limited order of equitable forfeiture in the final judgment. He claims this relief “does not

fit the circumstances or adequately protect” him from the Mullen Co.’s breach of fiduciary duty

and the Mullen Co. should not be allowed any recovery on the assigned promissory note that was

obtained through the self-dealing of the Mullen Co. In cross-issue one, the Mullen Co. argues

the trial court abused its discretion in making an equitable forfeiture award to Cooper. This is

because the record does not show the trial court made the required determination that the conduct

of the Mullen Co. was a “clear and serious” breach of fiduciary duty, which the trial court can

conclude only after applying the factors identified by the Texas Supreme Court. See ERI

Consulting Eng’r, Inc. v. Swinnea, 318 S.W.3d 867, 874, 875 (Tex. 2010). In cross-issue two,

the Mullen Co. argues the trial court abused its discretion when it determined the amount of

                                              –20–
forfeiture, which should have been limited to the amount of compensation or profits realized by

the Mullen Co.

                              1. Standard of Review—Forfeiture

       An appellate court reviews a trial court’s forfeiture determination for an abuse of

discretion.   See Burrow v. Arce, 997 S.W.2d 229, 243 (Tex. 1999) (quoting Restatement

(Second) of Trusts § 243 cmt. c (9159)); see also Dernick Resources, Inc. v. Wilstein, 471
S.W.3d 468, 482 (Tex. App.—Houston [1st Dist.] 2015, pet. filed); Miller v. Kennedy &

Monshew, Prof’l Corp., 142 S.W.3d 325, 338 (Tex. App.—Fort Worth 2003, pet. denied);

Jackson Law Office, P.C. v. Chappell, 37 S.W.3d 15, 23 (Tex. App.—Tyler 2000, pet. denied).

                                       2. Applicable Law

       Courts may fashion equitable remedies such as disgorgement and forfeiture to remedy a

breach of a fiduciary duty. See ERI Consulting, 318 S.W.3d at 873–875; Burrow, 997 S.W.3d at

873; see also Dernick, 471 S.W.3d at 482. Disgorgement is an equitable forfeiture of benefits

wrongfully obtained. See In re Longview Energy Co., 464 S.W.3d 353, 361 (Tex. 2015) (orig.

proceeding); Swinnea v. ERI Consulting Eng’r, Inc., 481 S.W.3d 747, 752 (Tex. App.—Tyler

2016, no pet.). A party must plead forfeiture to be entitled to that equitable remedy. See Alavi v.

MCI Worldcom Network Servs., Inc., No. 09-05-00364-CV, 2007 WL 274565, at *3 (Tex.

App.—Beaumont Feb. 1, 2007, pet. denied) (mem. op.); Lee v. Lee, 47 S.W.3d 767, 780 (Tex.

App.—Houston [14th Dist.] 2001, pet. denied).

       Whether a forfeiture should be imposed must be determined by the trial court based on

the equity of the circumstances. See Burrow, 997 S.W.2d at 245; Swinnea, 481 S.W.3d at 753;

Dernick, 471 S.W.3d at 482. However, certain matters may present fact issues for the jury to

decide, 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

                                              –21–
principal. See Dernick, 471 S.W.3d at 482; Miller, 142 S.W.3d at 338. Once the factual disputes

have been resolved, the trial court must determine: (1) whether the fiduciary’s conduct was a

“clear and serious” breach of duty to the principal; (2) whether any monetary sum should be

forfeited; and (3) if so, what the amount should be. See Swinnea, 481 S.W.3d at 753 (citing

Burrow, 997 S.W.2d at 245–46); Dernick, 471 S.W.3d at 482.

       As stated above, the trial court’s first step is to determine whether there was a “clear and

serious” breach of duty. See Swinnea, 481 S.W.3d at 753; Dernick, 471 S.W.3d at 482. The trial

court should consider factors such as: (1) the gravity and timing of the breach; (2) the level of

intent or fault; (3) whether the principal received any benefit from the fiduciary despite the

breach; (4) the centrality of the breach to the scope of the fiduciary relationship; (5) any other

threatened or actual harm to the principal; (6) the adequacy of other remedies; and (7) whether

forfeiture fits the circumstances and will work to serve the ultimate goal of protecting

relationships of trust. See ERI Consulting, 318 S.W.3d at 875; Swinnea, 481 S.W.3d at 753;

Dernick, 471 S.W.3d at 482. However, 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. See Burrow, 997 S.W.2d at 241; Dernick, 471 S.W.3d at 482; Miller, 142
S.W.3d at 338.

       Second, the trial court must determine whether any monetary sum should be forfeited.

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

principal, but to protect relationships of trust by discouraging disloyalty. See In re Longview,
464 S.W.3d at 361 (Tex. 2015) (orig. proceeding); ERI Consulting, 318 S.W.3d at 872–73;

Burrow, 997 S.W.2d at 238; see also Dernick, 471 S.W.3d at 482.                  Disgorgement is

compensatory in the same sense as attorney fees, interest, and costs, but it is not damages. See In

re Longview, 464 S.W.3d at 361. As a result, equitable forfeiture is distinguishable from an

                                              –22–
award of actual damages incurred as a result of a breach of fiduciary duty. See Burrow, 997
S.W.2d at 240; McCullough v. Scarbrough, Medlin & Assocs., Inc., 435 S.W.3d 871, 905 (Tex.

App.—Dallas 2014, pet. denied); Swinnea, 481 S.W.3d at 753. In fact, a claimant need not

prove actual damages to succeed on a claim for forfeiture because they address different wrongs.

See Burrow, 997 S.W.2d at 240; Swinnea, 481 S.W.3d at 753. In addition to serving as a

deterrent, forfeiture can serve as restitution to a principal who did not receive the benefit of the

bargain due to his agent’s breach of fiduciary duty. See Swinnea, 481 S.W.3d at 753 (citing

Burrow, 997 S.W.2d at 237–38).

       Third, if the trial court determines there should be a forfeiture, it must determine what the

amount should be. The amount of disgorgement is based on the circumstances and is within the

trial court’s discretion. See McCullough, 435 S.W.3d at 905; Swinnea, 481 S.W.3d at 753. For

example, it would be inequitable for an agent who performed extensive services faithfully to be

denied all compensation if the misconduct was slight or inadvertent. See McCullough, 435
S.W.3d at 905 (quoting Burrow, 997 S.W.2d at 241).

                             3. Application of the Law to the Facts

       The record shows that Cooper filed a counterclaim against the Mullen Co. for breach of

fiduciary duty, seeking actual and punitive damages, which he sought to be determined by the

jury. However, Cooper’s counterclaim pleading did not raise in any way the equitable remedy of

forfeiture. See Alavi, 2007 WL 274565, at *3 (party must plead forfeiture to be entitled to

remedy); Lee, 47 S.W.3d at 780. The jury found that the Mullen Co. breached its fiduciary duty

to Cooper, but awarded Cooper no damages. The trial court’s charge did not ask the jury to

determine the Mullen Co.’s mental state or culpability, the value of its services, or the existence

and amount of harm to Cooper. See Dernick, 471 S.W.3d at 482 (noting matters that may

present fact issues for jury on equitable forfeiture claim); Miller, 142 S.W.3d at 338.

                                               –23–
           The record before us shows that Cooper first asserted his counterclaim for the equitable

remedy of forfeiture in his motion for judgment notwithstanding the verdict, arguing:

           In addition, the [trial court] should order that, based on the jury’s finding that [the
           Mullen Co.] breached its fiduciary duty to [Cooper] in entering into the settlement
           agreement by which [the Mullen Co.] allegedly obtained an assignment of its
           claim to enforce the promissory note at issue, [the Mullen Co.] forfeit the ill-
           gotten gains it obtained in the settlement.

In a footnote to his motion for judgment notwithstanding the verdict, Cooper added

“Accordingly, the [trial court] should, as an equitable remedy for [the Mullen Co.’s] breach of

fiduciary duty, order that [the Mullen Co.] forfeit its assigned claim to enforce the promissory

note—along with any money it might be able to recover in connection therewith.”

           The quoted statements comprise the entirety of Cooper’s argument in his motion.

Although Cooper did cite in that motion the seminal Texas Supreme Court case respecting

equitable forfeiture, ERI Consulting, he failed to address the factors that the Texas Supreme

Court identified which are to be considered by a trial court when determining whether there was

a “clear and serious” breach of duty. See ERI Consulting, 318 S.W.3d at 874–75; Swinnea, 481
S.W.3d at 753; Dernick, 471 S.W.3d at 482. Whether there was a “clear and serious” breach of

duty is the predicate to the determination of whether there should be an equitable forfeiture in

any amount. Further, Cooper did not argue in his motion the amount or propose a calculation for

determining the amount that he believed the Mullen Co. should be required to forfeit. See

Swinnea, 481 S.W.3d at 753 (trial court must determine whether monetary sum should be

forfeited and if so, what amount).3

           The Mullen Co. filed a motion for judgment based on the jury’s verdict. In his response,

Cooper incorporated the equitable forfeiture argument previously made in his motion for

3
    The case summary, which is included in the clerk’s record, indicates that there was a hearing on Cooper’s motion for judgment
    notwithstanding the verdict, but no reporter’s record of that hearing has been filed on appeal.

                                                              –24–
judgment notwithstanding the verdict, arguing only that “[the Mullen Co.] obtained the note (if it

did) by breaching its fiduciary duty to [Cooper] and, therefore, should forfeit the note and any

proceeds therefrom.” Again, as with his motion for judgment notwithstanding the verdict,

Cooper did not address the factors identified by the Texas Supreme Court for determining

whether there was a “clear and serious” breach of duty by the Mullen Co. Nor did he argue the

amount or propose a calculation for determining the amount that he believed the Mullen Co.

should be required to forfeit.

        When the trial court rendered its judgment, it ordered as follows regarding equitable

forfeiture:

        ORDERED, ADJUDGED, AND DECREED that, based on the Court’s exercise
        of its powers in Equity, [the Mullen Co.] shall forfeit the amount of $519,300
        (Being the sum of 30% of the amount which [the Mullen Co.] would otherwise be
        entitled to recover, and 30% of the $300,000 received by [the Mullen Co.] from
        Newnan Crossing []) from its recovery of the amount calculated in the previous
        paragraph, thereby reducing the amount to be awarded to [the Mullen Co.] from
        $1,431,000 to $911,700, which amount is to be adjusted further as set forth below.

        Thereafter, Cooper filed a motion to modify the final judgment or, in the alternative, for

new trial. In that motion, Cooper conceded that the trial court “granted [his] request[,] in part,

ordering that [the Mullen Co.] only be required to forfeit 30% of the recovery on the Note, plus

30% of the $300,000 cash received by [the Mullen Co.] in settlement with [Newnan Crossing].”

However, Cooper asked the judgment to be modified “to order that [the Mullen Co.] forfeit any

and all recovery on its claim to enforce the Note.” The Mullen Co. also filed a motion for new

trial and to modify the judgment. The Mullen Co. argued the trial court should modify the

judgment, in part, because “[A]ny breach [of fiduciary duty] [by the Mullen Co.] was not the

type of clear and serious breach of fiduciary duty that is a prerequisite to forfeiture.” The

parties’ motions to modify the judgment or for new trial were overruled by operation of law. See

TEX. R. CIV. P. 329b(c).

                                              –25–
       Our concern regarding the imposition of equitable forfeiture of $519,300 by the trial

court in this case is based on the holding of the Texas Supreme Court in ERI Consulting. See

ERI Consulting, 318 S.W.3d at 875. In that case, the Texas Supreme Court wrote at length about

the concept of equitable forfeiture and the requirement that, in order for equitable forfeiture to be

imposed, a trial court must conclude a party committed a “clear and serious” breach of duty. See

ERI Consulting, 318 S.W.3d at 875.          Importantly, that court identified the “factors” and

“principles” which must be addressed in making the determination of whether the breach of duty

was a “clear and serious” one and in fashioning the award. Those “factors” and “principles” are:

(1) the gravity and timing of the breach; (2) the level of intent or fault; (3) whether the principal

received any benefit from the fiduciary despite the breach; (4) the centrality of the breach to the

scope of the fiduciary relationship; (5) any other threatened or actual harm to the principal; (6)

the adequacy of other remedies; and (7) whether forfeiture fits the circumstances and will work

to serve the ultimate goal of protecting relationships of trust. See ERI Consulting, 318 S.W.3d at

875; see also Swinnea, 481 S.W.3d at 753; Dernick, 471 S.W.3d at 482.

       Further, critical to the case before us, the Texas Supreme Court, in ERI Consulting,

concluded there was no indication in the record the trial court followed the “factors” and

“principles” enumerated above for determining whether there was a “clear and serious” breach of

duty and in “fashioning its award” of equitable forfeiture. ERI Consulting, 318 S.W.3d at 875.

That court determined that case must be remanded to the trial court “for consideration of these

factors.” See id.

       Cooper did not identify or brief in the trial court the requirement that the trial court

conclude there was a “clear and serious” breach of duty as a predicate to assessing a sum that

should be awarded as an equitable forfeiture. Cooper does not cite to anything in the record, nor

can we find anything in the record, to show that in the fashioning of the equitable forfeiture

                                               –26–
award the trial court considered the “principles” or “factors” enumerated in ERI Consulting.

Accordingly, we conclude the claim of forfeiture should be remanded to the trial court for

consideration of the factors described by the Texas Supreme Court. See ERI Consulting, 398
S.W.3d at 875.

       Cross-issue one is decided in favor of the Mullen Co. Based on our resolution of cross-

issue one, we need not address issue three or cross-issue two.

                                         C. Accounting

       In cross-issue three, the Mullen Co. argues the trial court erred when it granted Cooper’s

motion for directed verdict on its claim for an accounting. It claims that the Texas Uniform

Partnership Act permits a partner to maintain an action for an accounting without suing for

dissolution or the necessity of proving an inadequate remedy at law. Cooper responds that: (1)

the Mullen Co. pleaded a claim for an equitable accounting and had the burden to prove that the

facts and accounts were so complex that adequate relief may not be obtained at law; (2) the

Mullen Co. sought an accounting as to the $600,000 loan made to Cooper in his individual

capacity and it cannot seek an accounting on an asset that is not part of the partnership; and (3)

the claim for an accounting was an improper attempt to circumvent the statute of limitations

barring the common law claims for money had and received, and unjust enrichment brought by

the Mullen Co.

                             1. Standard of Review—Accounting

       A suit for an accounting is generally founded in equity. See Palmetto Lumber Co. v.

Gibbs, 80 S.W.2d 742, 748 (Tex. 1935); Sw. Livestock & Tucking Co. v. Dooley, 884 S.W.2d
805, 809 (Tex. App.—San Antonio 1994, writ denied). The decision to grant an accounting is

within the discretion of the trial court. See Sw. Livestock, 884 S.W.2d at 809–10.

                                              –27–
                                      2. Applicable Law

       Section 152.211(b) of the Texas Business Organizations Code provides that, “A partner

may maintain an action against the partnership or another partner for legal or equitable relief,

including an accounting of partnership business,” to enforce a right under the partnership

agreement or other rights established in the statute.     See TEX. BUS. ORGS. CODE ANN. §

152.211(b) (West 2012). However, a right to an accounting does not revive a claim barred by

law. See TEX. BUS. ORGS. CODE ANN. § 152.211(b)(d).

                            3. Application of the Law to the Facts

       In its first amended petition, the Mullen Co. brought a claim for an accounting against

Cooper. The Mullen Co. alleged that Cooper has failed and refused to account for or to deliver

$750,000 lent or advanced to him by Newnan Crossing against the fees earned by the Mullen

Co., as party to the management agreements. The $750,000 was comprised of the $600,000 loan

and $150,000 in earned fees relating to a different venture. As a result, the Mullen Co. sought an

accounting to investigate and establish the parties’ interest in the $750,000 and claimed there

was no adequate remedy at law.

       During the trial, Cooper sought a directed verdict on the claim for an accounting brought

by the Mullen Co. on the sole basis that “the evidence that comes out shows the facts and

accounts are not so complex that [the Mullen Co.] lacks an adequate remedy at law.” However,

section 19.01 of the Mullen/Cooper Joint Venture agreement, which is titled “Equitable

Remedies,” and was admitted into evidence shows the parties agreed as follows:

       It is mutually agreed that[,] in the event of a breach or threatened breach of this
       Agreement by any Venturer[,] there is no adequate remedy at law in favor of
       the other Venturer and any Venturer, in addition to all other rights which may be
       available, shall have the right of specific performance in the even of any breach or
       injunction in the event of any threatened breach, of this Agreement by the other
       Venturer(s).

                                              –28–
(Emphasis added). By the terms of the parties’ agreement, there was no adequate remedy at law.

Accordingly, we conclude the trial court erred when it granted Cooper’s motion for directed

verdict on the claim for an accounting as described above.

       Cross-issue three is decided in favor of the Mullen Co.

                                      III. CONCLUSION

       The trial court did not err when it denied Cooper’s motions for directed verdict, judgment

notwithstanding the verdict, and to modify the final judgment or for new trial on the Mullen

Co.’s promissory note claim. This part of the trial court’s final judgment is affirmed.

       However, the trial court erred when it denied the motion to modify the final judgment or

for new trial filed by Mullen Co. on the issue of equitable forfeiture. The portion of the trial

court’s final judgment granting equitable forfeiture and reducing the Mullen Co.’s total recovery

by $519,300 is reversed and the claim is remanded to the trial court for further proceedings

consistent with this opinion.

       Finally, the trial court erred when it granted, in part, Cooper’s motion for directed verdict

on the Mullen Co.’s claim seeking an accounting. Accordingly, that ruling of the trial court is

reversed and that claim is remanded for further proceedings consistent with this opinion.

       Accordingly, the trial court’s final judgment is affirmed, in part, and reversed and

remanded, in part.

150340F.P05                                         /Douglas S. Lang/
                                                    DOUGLAS S. LANG
                                                    JUSTICE

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                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

T. CHRISTIAN COOPER, Appellant                       On Appeal from the 162nd Judicial District
                                                     Court, Dallas County, Texas
No. 05-15-00340-CV         V.                        Trial Court Cause No. DC-12-15127.
                                                     Opinion delivered by Justice Lang. Justices
SANDERS H. CAMPBELL/RICHARD T.                       Bridges and O’Neill participating.
MULLEN, INC. D/B/A THE MULLEN
COMPANY, Appellee

       In accordance with this Court’s opinion of this date, the final judgment of the trial court

is AFFIRMED, in part, and REVERSED, in part.

       We REVERSE the portion of the trial court’s final judgment granting appellant T.

CHRISTIAN COOPER’s counterclaim for equitable forfeiture and motion for directed verdict

on appellee SANDERS H. CAMPBELL/RICHARD T. MULLEN, INC. D/B/A THE MULLEN

COMPANY’s claim for an accounting.

       In all other respects, the trial court’s final judgment is AFFIRMED.

       We REMAND this cause to the trial court for further proceedings consistent with this

Court’s opinion.

       It is ORDERED that appellee SANDERS H. CAMPBELL/RICHARD T. MULLEN,

INC. D/B/A THE MULLEN COMPANY recover its costs of this appeal and cross-appeal from

                                              –30–
appellant T. CHRISTIAN COOPER and from the cash deposit in lieu of cost bond. After all

costs have been paid, the Clerk of the District Court is directed to release the balance, if any, of

the cash deposit to T. CHRISTIAN COOPER.

Judgment entered this 24th day of August, 2016.

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