Court Opinion

ID: 4688042
Source: CourtListenerOpinion
Date Created: 2021-05-19 06:16:22.862305+00
Date Added: 2024-06-11T08:04:45.352488
License: Public Domain

AFFIRMED in part; REVERSE and RENDER in part; REMAND and
Opinion Filed May 13, 2021

                                  S  In The
                           Court of Appeals
                    Fifth District of Texas at Dallas
                              No. 05-19-01490-CV

   PAUL MUNDHEIM, MARLA MUNDHEIM, AND THE MUNDHEIM
                   FIRM, PLLC, Appellants
                            V.
         SCOTT LEPP AND AMY TORRES LEPP, Appellees

               On Appeal from the County Court at Law No. 4
                           Dallas County, Texas
                   Trial Court Cause No. CC-18-01169-D

                       MEMORANDUM OPINION
                 Before Justices Molberg, Goldstein, and Smith
                           Opinion by Justice Smith
      Paul Mundheim, Marla Mundheim, and the Mundheim Firm, PLLC, appeal

the trial court’s judgment in favor of Scott Lepp and Amy Torres Lepp. The

Mundheims challenge the legal and factual sufficiency of the evidence to support

the jury’s findings regarding (1) Scott’s recovery of damages for the Mundheims’

fraud, (2) Scott’s recovery of exemplary damages, (3) Amy’s recovery on her breach

of contract claim, (4) Amy’s recovery of damages for the Mundheims’ fraud, and

(5) Amy’s recovery of exemplary damages. The Mundheims also complain the trial

court erred in not requiring Amy to elect her remedies and awarding Amy attorney’s
fees. We affirm the trial court’s judgment in part, reverse and render in part, and

reverse and remand in part.

        The record shows Amy was employed by Fidelity Title Company beginning

in 1997, and she first met Paul in approximately 2005. Paul was a fee attorney at

Fidelity. In 2013, Paul and Amy discussed their frustrations at work, and Paul said

he wanted to go back out on his own but did not have any money. Amy assured Paul

that she “could take care of it.” Amy and Paul decided they were going to go into

business together and open a title company. Paul did not mention his belief that non-

lawyers such as Amy and Scott, Amy’s husband at the time of trial, could not

actually be owners of a title company. A few weeks later, Amy and Scott met with

Paul, and it was discussed that Scott was going to put up the $50,000, and Amy was

going to work at the company full time. In return, Scott was going to be a twenty

percent owner, and Amy was going to be a forty percent owner. The terms of the

partnership and the parties’ interests in the company were never put in writing. Scott

gave Amy $50,000 in cash, and Amy gave Paul the money. Over the next few

months, Paul deposited the cash in the bank in a series of deposits under $10,000

each.

        For four years, the title company was very successful, earning between

$450,000 and $500,000 per month. During that time, Scott and Amy were treated

as owners of the company and received distributions in keeping with what they

believed were their percentage ownership interests and were also given access to the

                                         –2–
company’s profit and loss statements. In the summer of 2017, Paul indicated to Amy

that he hated the business and wanted out. Paul said he was not sure the company

was “going to have the income that we’ve always had moving forward,” and he

thought the market was “going to crash.”

      Instead of getting out of the business, Paul became an employee of Alamo and

Fidelity and received a $400,000 “bonus,” document preparation fees of

approximately $250,000 per year, and commissions of approximately $3000 per

month. The company in which Amy and Scott invested their time and money thus

effectively ceased to exist, and Amy and Scott received nothing.

      On October 20, 2017, Amy entered into a “settlement agreement and mutual

release” with the Mundheim Firm and Paul and Marla. Among other things, the

agreement divested Amy of any interest in the company and provided: (1) the parties

waived all claims for fraud; (2) Amy would receive payments totaling $301,000; (3)

the parties would bear their own “costs, expenses, and attorney’s fees incurred in

connection with any future Litigation”; and (4) the parties would keep the terms and

contents of the agreement confidential. Scott was not a party to the agreement.

      Amy received an initial $100,000 payment and a second $50,000 payment.

However, Amy received no further payments. On March 2, 2018, Scott sued Paul,

Marla, and the Mundheim Firm asserting they failed to pay Scott his share from the

company. Among other things, Scott asserted causes of action for breach of contract,

breach of fiduciary duty, and fraud. In April 2018, Amy intervened in the suit

                                        –3–
asserting causes of action for breach of contract. Amy later added claims of fraud

and fraudulent inducement. The case was tried before a jury, which returned a

unanimous verdict in favor of Scott and Amy awarding Amy damages for the

Mundheims’ breach of the agreement and awarding Scott and Amy damages for the

Mundheims’ fraud, exemplary damages, and attorney’s fees. This appeal followed.

                      Evidentiary challenges to jury findings

      Appellants challenge both the legal and factual sufficiency of the evidence to

support the adverse jury findings.       “When an appellant challenges the legal

sufficiency of an adverse finding on which he did not have the burden of proof at

trial, he must demonstrate there is no evidence to support the adverse finding.”

Fulgham v. Fischer, 349 S.W.3d 153, 157 (Tex. App.—Dallas 2011, no pet.). We

view the evidence in the light most favorable to the fact finding, indulging every

reasonable inference that would support it and disregarding contrary evidence unless

a reasonable factfinder could not. Bos v. Smith, 556 S.W.3d 293, 300 (Tex. 2018).

“When reviewing the record, we determine whether any evidence supports the

challenged finding.” Fulgham, 349 S.W.3d at 157. “If more than a scintilla of

evidence exists to support the finding, the legal sufficiency challenge fails.” Id.; see

Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d
41, 48 (Tex. 1998); see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751

(Tex. 2003) (more than a scintilla of evidence exists when evidence “rises to a level

that would enable reasonable and fair-minded people to differ in their conclusions”).

                                          –4–
      In a challenge to the factual sufficiency of the evidence on an issue, we

consider all the evidence supporting and contradicting the finding in a neutral light.

Fulgham, 349 S.W.3d at 157 (citing Plas–Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d
442, 445 (Tex. 1989)). “We set aside the finding for factual insufficiency only if the

finding is so contrary to the evidence as to be clearly wrong and manifestly unjust.”
Id. (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam)). The fact

finder is the sole judge of the credibility of the witnesses and the weight to be given

their testimony. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex.

2003). We defer to the jury’s implicit determinations of credibility and the weight

to be given to the evidence. Wise v. SR Dallas, LLC, 436 S.W.3d 402, 408 (Tex.

App.—Dallas 2014, no pet.). As long as the evidence falls within the “zone of

reasonable disagreement,” we will not substitute our judgment for that of the fact-

finder. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). In conducting a

factual sufficiency review, we should detail the evidence relevant to the issue in

consideration and clearly state why the finding is factually insufficient or is so

against the great weight and preponderance as to be manifestly unjust, shock the

conscience, or clearly demonstrate bias. Windrum v. Kareh, 581 S.W.3d 761, 781

(Tex. 2019).

      In their first set of issues (issues 1.a though 1.k), the Mundheims argue the

evidence is insufficient to support the jury’s findings regarding Scott’s fraud claim

against the Mundheims and his resulting damages. The Mundheims also argue Scott

                                         –5–
failed to secure findings necessary to support an exemplary damages award. Under

this set of issues, the Mundheims’ arguments focus on the jury’s findings that (1)

Paul, Marla, and the Mundheim Firm committed fraud against Scott; (2) clear and

convincing evidence showed the harm to Scott resulted from the fraud committed

by Paul, Marla, and the Mundheim Firm; (3) Paul, Marla, and the Mundheim Firm

had actual awareness of the falsity of the representation or promise the jury found to

be fraud; (4) $80,000 would fairly compensate Scott for damages resulting from the

fraud; and (5) $64,000 each from Paul, Marla, and the Mundheim Firm should be

assessed as exemplary damages.

      In their next issue, the Mundheims argue the evidence is insufficient to

support the jury’s findings regarding Amy’s breach of contract and fraud claims

against the Mundheims and her resulting damages. The Mundheims also argue Amy

failed to secure findings necessary to support an exemplary damages award. Under

this issue, the Mundheims’ arguments focus on the jury’s findings that (1) Paul,

Marla, and the Mundheim Firm breached their contract with Amy; (2) $151,000

would fairly compensate Amy for damages resulting from the breach of contract; (3)

Paul, Marla, and the Mundheim Firm committed fraud against Amy; (4) clear and

convincing evidence showed the harm to Amy resulted from the fraud committed by

Paul, Marla, and the Mundheim Firm; (5) Paul, Marla, and the Mundheim Firm had

actual awareness of the falsity of the representation or promise the jury found to be

fraud; (6) $160,000 would fairly compensate Amy for damages resulting from the

                                         –6–
fraud; and (7) $96,000 each from Paul, Marla, and the Mundheim Firm should be

assessed as exemplary damages.

                                       Fraud

      The Mundheims argue the evidence is insufficient to support any fraud finding

by the jury including common law fraud, fraudulent inducement, and fraud by

nondisclosure. A common-law fraud claim requires a material misrepresentation,

which was false, and which was either known to be false when made or was asserted

without knowledge of its truth, which was intended to be acted upon, which was

relied upon, and which caused injury. Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d
143, 153 (Tex. 2015).

      The Mundheims argue the evidence was insufficient to establish the elements

of misrepresentation, reliance, causation, and damages. The record reflects that Paul

represented that Scott would own twenty percent of the company and Amy would

own forty percent. The terms of the partnership and the ownership structure were

never put in writing because Amy and Scott trusted the Mundheims and relied on

the Mundheims’ good faith. Scott invested $50,000 in the company, and Amy

worked full-time at the company. Amy and Scott were thereafter treated as owners

of the company until Paul accepted the $400,000 “bonus” from Alamo, and the

company was absorbed into Alamo. Scott received nothing to compensate him for

his lost interest in the company. The jury could have found the Mundheims

                                        –7–
committed fraud against Scott by taking his $50,000 and misrepresenting that Scott

owned twenty percent of the company.

      Amy also lost her interest in the company. Therefore, the jury could have

found that the Mundheims committed fraud against Amy for the four years she

labored under the belief that she actually owned forty percent of the company. We

conclude this evidence is legally and factually sufficient to establish the Mundheims’

common-law fraud against Amy and Scott. See Fulgham, 349 S.W.3d at 157;

Zorrilla, 469 S.W.3d at 153.

      Fraudulent inducement is a distinct category of common-law fraud that shares

the same elements but involves a promise of future performance made with no

intention of performing at the time it was made. Id. Fraudulent inducement arises

only in the context of a contract. Anderson v. Durant, 550 S.W.3d 605, 614 (Tex.

2018). In a fraudulent-inducement claim, the “misrepresentation” occurs when the

defendant falsely promises to perform a future act while having no present intent to

perform it. Int’l Bus. Machines Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224, 228

(Tex. 2019). The plaintiff's “reliance” on the false promise “induces” the plaintiff

to agree to a contract the plaintiff would not have agreed to if the defendant had not

made the false promise. Id.

      Under this sub-issue, the Mundheims argue that, even if they did tell Scott he

would be an owner of the company, there is insufficient evidence to show the

Mundheims did not intend to perform on that promise. Further, the Mundheims

                                         –8–
argue the fact that Scott received bonuses during the years he purportedly had an

interest in the company disproves any alleged intent not to perform. On the contrary,

the evidence before the jury was entirely consistent with the Mundheims intent not

to perform on their promise that Scott would be an owner of the company. Before

opening the company, Paul represented that he did not have any money. Paul

accepted $50,000 in cash from Scott and promised Scott he would be a twenty-

percent owner in the company. From the very beginning, Paul did not believe non-

lawyers like Scott could have an actual ownership interest in the title company. The

jury could have reasoned that Paul took Scott’s $50,000 in cash, never reduced the

agreement with Scott to writing so there would be no written contract, and the

Mundheims paid Scott during the successful years the company operated to keep the

company running smoothly. The jury could have believed Paul took the deal with

Alamo and left Scott with nothing, and this established Paul never intended to make

Scott an owner of the company.

      Many of the same reasons support a finding that the Mundheims fraudulently

induced Amy into an identical agreement in which Amy would own a forty-percent

interest in the company. In addition to delivering the $50,000 from Scott, Amy also

committed to full-time employment at the company in reliance on the Mundheims’

representation that she would be a forty-percent owner. As with Scott, Paul did not

believe Amy could actually have an ownership interest in the company.

Additionally, in Amy’s case, there was ultimately a written contract, the “settlement

                                        –9–
agreement and mutual release.” When asked why she decided to settle, Amy

testified as follows:

      Paul and Paula Hester convinced me that Paul just wanted out of the
      business, and it was best to walk away, and they painted a story for me
      and -- and I believed them, and I fell back into a corner, thought I had
      no choice, and I settled.

Thus, the jury could have also reasoned that Amy was induced to enter into the

October 2017 agreement by Paul’s representations that he was quitting the title

business. There was no evidence Paul disclosed his deal with Alamo or his intent to

accept a bonus, salary, and fees in an ongoing position with Alamo and no evidence

Amy signed the agreement to release her interest in the company so Paul could

continue in the title business with Alamo free and clear.

      The Mundheims argue there was insufficient evidence of reliance to support

Amy’s fraud claim because the agreement “expressly contemplates that [Amy] was

giving up any claims to ownership” in the company, and she knew the company’s

worth and “what she was giving up.” The jury could have reasonably concluded that

Amy signed the agreement in reliance on Paul’s representations that he was going

to quit the title business and walk away from the company in which Amy had a forty-

percent stake, but she would not have signed the agreement if she knew Paul was

accepting a $400,000 bonus, a salary and monthly fees in return for allowing the

company to be absorbed by Alamo.

      Second, the Mundheims argue the terms of the agreement expressly state that

Amy was not relying on any statements or omissions by the Mundheims in entering
                                     –10–
the agreement. The agreement does provide that the parties waive and assume the

risk of any claims for damages which they do not know or suspect to exist and which,

if known, would materially affect the decision to enter the agreement. However,

courts “must always examine the contract itself and the totality of the surrounding

circumstances when determining if a waiver-of-reliance provision is binding.” Int’l

Bus. Machines, 573 S.W.3d at 229 (quoting Forest Oil Corp. v. McAllen, 268
S.W.3d 51, 60 (Tex. 2008)). A clause that clearly and unequivocally expresses the

party’s intent to disclaim reliance on the specific misrepresentations at issue can

preclude a fraudulent-inducement claim. Id. at 229. This is not the case here. As

discussed, the specific misrepresentations about which Amy complains, that Paul

said he was walking away from the title business but was actually accepting a bonus

and a well-paid position with Alamo, were not referenced in the agreement and were

not disclosed to Amy.      Thus, we reject the Mundheims’ argument that the

disclaimer-of-reliance provision in the agreement was binding to preclude Amy from

asserting she relied on the Mundheims’ misrepresentations when she entered the

agreement. See id.

      We conclude the evidence is legally and factually sufficient to establish the

Mundheims fraudulently induced Scott and Amy into contracts for ownership of the

company and fraudulently induced Amy to enter into the settlement agreement.

Fulgham, 349 S.W.3d at 157; Int’l Bus. Machines, 573 S.W.3d at 228.

                                       –11–
      Fraud by nondisclosure is simply a subcategory of fraud because, where a

party has a duty to disclose, the non-disclosure may be as misleading as a positive

misrepresentation of facts. Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171,

181 (Tex. 1997). To establish fraud by nondisclosure, a party must prove (1) the

defendant failed to disclose facts to the plaintiff, (2) the defendant had a duty to

disclose those facts, (3) the facts were material, (4) the defendant knew the plaintiff

was ignorant of the facts and the plaintiff did not have an equal opportunity to

discover the facts, (5) the defendant was deliberately silent when it had a duty to

speak, (6) by failing to disclose the facts, the defendant intended to induce the

plaintiff to take some action or refrain from acting, (7) the plaintiff relied on the

defendant’s nondisclosure, and (8) the plaintiff was injured as a result of acting

without that knowledge. Blankinship v. Brown, 399 S.W.3d 303, 308 (Tex. App.—

Dallas 2013, pet. denied).

      In the context of fraud by nondisclosure, a duty to disclose may arise when

the defendant: (1) discovered new information that made its earlier representation

untrue or misleading; (2) made a partial disclosure that created a false impression;

or (3) voluntarily disclosed some information, creating a duty to disclose the whole

truth. Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d
213, 220 (Tex. 2019).

      The jury heard evidence that Paul accepted $50,000 in cash from Scott and

promised Scott he would be a twenty-percent owner in the company. The jury could

                                        –12–
have reasonably believed this representation created a false impression that imposed

on the Mundheims the duty to disclose the whole truth: Scott could not actually be

an owner of the company; his twenty-percent share would only be paid as long as it

was expedient; and when Paul discovered Alamo was interested in taking over the

company, he went ahead with the deal without telling Scott or paying him anything

for his twenty-percent interest. See Bombardier, 572 S.W.3d at 220.

      The Mundheims discovered Paul had an opportunity to profitably join Alamo

and permit the dissolution of the company, and the Mundheims only partially

disclosed to Amy Paul’s dissolution of the company as “walking away.” We

conclude these circumstances imposed on the Mundheims the duty to disclose the

whole truth to Amy. See id. We conclude the evidence is sufficient to support the

jury’s finding that the Mundheims defrauded Scott and Amy by nondisclosure.

Fulgham, 349 S.W.3d at 157; Blankinship, 399 S.W.3d at 308.

      The Mundheims challenge the sufficiency of the evidence to support the jury’s

findings the Mundheims and the Mundheim firm had actual awareness of the falsity

of the representation or promise the jury found to be fraud. The Mundheims rely on

St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co., 974 S.W.2d 51, 53–54 (Tex.

1998) for the proposition that “[a]ctual awareness” does not mean merely that a

person knows what he is doing; rather, it means that a person knows that what he is

doing is false, deceptive, or unfair. In other words, a person must think to himself at

some point, “Yes, I know this is false, deceptive, or unfair to him, but I'm going to

                                        –13–
do it anyway.” Once again, we have already determined the jury could have found

that the Mundheims knew from the very beginning that they were misrepresenting

the entire situation concerning Amy and Scott’s involvement in the company. We

conclude the evidence is legally and factually sufficient to support the jury’s finding

that the Mundheims had actual awareness of the falsity of their representations to

Amy and Scott. See Fulgham, 349 S.W.3d at 157; St. Paul Surplus Lines, 974
S.W.2d at 53–54.

                                  Fraud Damages

      The Mundeims also attack the sufficiency of the evidence to support the jury’s

award of fraud damages to Scott and Amy. The jury has discretion to award damages

within the range of evidence presented at trial. SAS & Assocs., Inc. v. Home Mktg.

Servicing, Inc., 168 S.W.3d 296, 303 (Tex. App.—Dallas 2005). We are not

permitted to disregard the jury’s damages award on the basis that the jury’s reasoning

is unclear. Id. The jury awarded Scott $80,000, or twenty percent of the “bonus”

Paul received from Alamo, and the jury awarded Amy $160,000. Both of these

awards were in keeping with the twenty percent interest Scott had in the company

and Amy’s forty percent interest. The evidence is legally and factually sufficient to

support the jury’s award of damages for fraud. See Fulgham, 349 S.W.3d at 157;

SAS & Assocs., 168 S.W.3d at 303.

      Under these circumstances, we conclude the evidence is legally and factually

sufficient to support the jury’s findings regarding the Mundheims’ fraud, including

                                        –14–
the Mundheims’ misrepresentations, Scott’s reliance on the Mundheims’

misrepresentations, causation, and Scott’s damages resulting from the Mundheims’

fraud. See Fulgham, 349 S.W.3d at 157; Zorrilla, 469 S.W.3d at 153.

                               Exemplary Damages

      Regarding the jury’s award of exemplary damages to Scott and Amy, the

Mundheims challenge the sufficiency of the evidence to prove by clear and

convincing evidence the elements set forth in section 41.011 of the Texas Civil

Practice and Remedies Code.

      Exemplary damages may be awarded only if the claimant proves by clear and

convincing evidence that the harm with respect to which the claimant seeks recovery

of exemplary damages results from fraud, malice, or gross negligence. TEX. CIV.

PRAC. & REM. CODE ANN. § 41.003. “Clear and convincing” means the measure or

degree of proof that will produce in the mind of the trier of fact a firm belief or

conviction as to the truth of the allegations sought to be established. Goodyear Tire

& Rubber Co. v. Rogers, 538 S.W.3d 637, 645 (Tex. App. 2017)

      The Mundheims challenge the jury’s finding by clear and convincing

evidence that the harm to Scott and Amy resulted from the Mundheims’ fraud.

Relying on their previous arguments, the Mundheims again contest the sufficiency

of the evidence to show they made misrepresentations to Scott or Amy or intended

not to perform the “alleged agreement.” Our review of the record shows clear and

convincing evidence that the harm Scott and Amy suffered resulted from the

                                       –15–
Mundheims’ fraud, including what the jury was free to conclude was a “sale” of the

company to Alamo for $400,000.

      We review an exemplary damage award under a factual sufficiency standard

of review. Hernandez v. Sovereign Cherokee Nation Tejas, 343 S.W.3d 162, 168

(Tex. App.—Dallas 2011, pet. denied). We are not free to reweigh the evidence and

set aside a jury verdict merely because we feel that a different result is more

reasonable. Id. Because the award of exemplary damages rests in the jury’s

discretion, we will not set aside the damages unless after reviewing the entire record,

we determine the award is so contrary to the overwhelming weight and

preponderance of the evidence as to be clearly wrong and manifestly unjust. Id.

      When determining whether the exemplary damage award is excessive, we

consider the following statutory factors: (1) the nature of the wrong; (2) the character

of the conduct involved; (3) the degree of the Mundheims’ culpability; (4) the

situation and sensibilities of the parties concerned; (5) the extent to which such

conduct offends a public sense of justice and propriety; and (6) the Mundheims’ net

worth. See TEX.CIV. PRAC. & REM. CODE ANN. § 41.011(a); McCullough v.

Scarbrough, Medlin & Assocs., Inc., 435 S.W.3d 871, 913 (Tex. App.—Dallas 2014,

pet. denied). The jury charge listed the 41.011 factors and instructed the jury to

consider these factors in determining the amount of exemplary damages to assess

for both Scott and Amy.

                                         –16–
      Here, the record supports the jury’s findings that the Mundheims perpetrated

a fraud on Scott and Amy as discussed above, and the Mundheims were actually

aware of the fraud. Paul accepted $50,000 in cash from Scott to start up a business

with Scott and Amy. After four years, Paul accepted a $400,000 “bonus” and went

to work for Alamo earning $250,000 in fees and approximately $3000 per month in

commissions. Not only did Scott and Amy receive nothing from Paul’s deal with

Alamo, Scott lost his twenty-percent income stream when the company ceased to

exist as an entity in which he claimed an interest. Amy lost her forty-percent interest

when the company ceased to exist. On this record, we conclude the clear and

convincing evidence was legally and factually sufficient to support the jury’s award

of exemplary damages to Scott and Amy.

      As to the jury’s award of exemplary damages, the Mundheims further argue

(1) the questions regarding fraud defined fraud as both actual and constructive fraud

and therefore cannot support an award of exemplary damages and (2) the questions

regarding the Mundheims actual awareness of the falsity of their representations

omitted the requirement of “clear and convincing evidence.”             However, the

Mundheims did not object to these alleged defects at trial. In fact, the Mundheims

submitted a proposed jury charge that was identical with respect to the questions

about which the Mundheims now complain. The Mundheims do not complain that

the relevant issues were not submitted at all; they argue the issues were submitted

defectively. A defendant must preserve error by objecting when an independent

                                        –17–
theory of recovery is submitted defectively. See TEX. R. CIV. P. 279; United

Scaffolding, Inc. v. Levine, 537 S.W.3d 463, 481 (Tex. 2017). This includes when

an element of that theory of recovery is omitted. Levine, 537 S.W.3d at 481. Thus,

the Mundehims’ arguments about the defective nature of questions 6 and 8 present

nothing for our review. See id. Having found the evidence sufficient to support the

complained-of jury findings, we conclude the trial court did not err in denying the

Mundheims’ motion for judgment notwithstanding the verdict and motion for new

trial. We overrule the Mundheims’ issues complaining of the jury’s fraud findings.

                                Breach of Contract

      In their next issue, the Mundheims argue Amy’s breach of contract recovery

should be set aside. Specifically, the Mundheims challenge the legal and factual

sufficiency of the evidence to support the jury’s findings that (1) they failed to

comply with the agreement by failing to pay Amy all the monies due under the

agreement and (2) the Mundheims owed Amy $151,000 under the agreement. The

Mundheims argue the evidence established they were excused from performing

under the agreement due to Amy’s prior breach in violating the confidentiality

provision by telling Scott about the agreement.

      Amy responds that (1) Paul admitted not paying all monies owed pursuant to

the agreement; (2) Paul stopped paying the money he owed under the agreement

because it was his “belief” that Amy had disclosed to Scott information about the

agreement in violation of the confidentiality provision; (3) Paul admitted he had only

                                        –18–
his “belief” to rely on and did not have “any facts or evidence or anything like that”

to show Amy violated the confidentiality provision; and (4) the Mundheims’ “claims

of first-breach by Amy were never pled and therefore could not properly form the

basis for any judgment.”

      The record is clear that the Mundheims failed to pay Amy the final payment

of $151,000 due under the agreement. Paul testified it was his “belief” that Amy

had disclosed to Scott information about the agreement. Paul relied only on his

“belief” and had no evidence Amy violated the confidentiality agreement. Marla

testified, “I believe that [Amy] told Scott about [the agreement] right away.” Marla

identified no evidence to support her belief. Scott testified he did not know about

the agreement until it was “put . . . into the case at some point.” Amy testified, “Scott

did not see the agreement.” On this record, we conclude the evidence was legally

and factually sufficient to support the jury’s findings that the Mundheims failed to

pay Amy $151,000 due under the agreement, and the Mundheims were not excused

from performing under the agreement due to any violation of the confidentiality

provision. See Fulgham, 349 S.W.3d at 157.

      In an alternative argument, the Mundheims complain that the jury’s award of

$151,000 as Amy’s damages from the Mundheims’ breach of the agreement was

excessive. The entirety of their argument is that the evidence established they “paid

$223,112.00 of the Settlement Agreement’s $301,000.00 owed, in payments of

$100,000, $50,000, and payroll extending through the end of December 2017 of

                                         –19–
$73,112 per the terms of the agreement.” The agreement does provide for “regular

payroll” payments from October through December 2017 totaling $73,112.

However, a separate paragraph of the agreement entitled “Payment” provided for

“lump sum or installment payments” amounting to “a grand total of ($301,000.00).”

Thus, the express terms of the agreement show the $73,112 in regular payroll

payments were separate from the $301,000. Because the jury’s award of $151,000,

coupled with the $150,000 the Mundheims paid Amy in lump sum payments merely

resulted in the payment of the $301,000 contemplated by the settlement agreement,

we conclude the award was not excessive. We overrule the Mundheims’ issue

regarding breach of contract.

                           Election of Remedies for Amy

      In their next issue, the Mundheims argue the trial court erred in failing to

require Amy to elect her remedy. A party is entitled to sue and seek damages on

alternative theories but is not entitled to recover on both theories; to do so is

considered equivalent to a “double recovery.” Waite Hill Servs., Inc. v. World Class

Metal Works, Inc., 959 S.W.2d 182, 184 (Tex. 1998).

      In this context, a double recovery exists when a plaintiff obtains more than

one recovery for the same injury. Waite Hill, 959 S.W.2d at 184; Stewart Title Guar.

Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991). The prohibition against double

recovery is a corollary of the rule that a party is entitled to but one satisfaction for

the injuries sustained by him. See Stewart Title, 822 S.W.2d at 7–8 (noting that

                                         –20–
courts have applied the one satisfaction rule when defendants commit the same act

as well as when defendants commit technically differing acts that result in a single

injury). An election will normally be required between contract damages and fraud

damages to prevent a double recovery. Foley v. Parlier, 68 S.W.3d 870, 883 (Tex.

App.—Fort Worth 2002, no pet.).

      Although the causes of action Amy asserted, breach of contract and fraud,

were separate, the damages for both causes of action were the same: Amy’s

ownership interest in the company. In this situation, the Mundheims argue, Amy

should be required to elect her remedy to recover either for breach of contract or

fraud. We agree. Amy was entitled to sue and seek damages for both breach of

contract and fraud, but she is not entitled to recover on both theories. Waite Hill,
959 S.W.2d at 184.

      Further, to the extent Amy seeks recovery for fraudulent inducement

associated with the agreement and also seeks recovery for breach of the agreement,

these remedies are inconsistent. A plaintiff who has two inconsistent remedies must

elect between them and pursue only one of them. Foley, 68 S.W.3d at 882.

Remedies are inconsistent when one of the remedies results from affirming the

transaction and the other results from disaffirming the transaction. Id. For example,

in a fraud case, the plaintiff can either claim rescission for fraud and get his property

back or he can sue for damages and affirm the transaction. Id. In Dallas Farm

                                         –21–
Machinery Co. v. Reaves, specifically regarding remedies for fraudulent inducement

and breach of contract damages, the supreme court stated:

      [I]t is well settled that one who is induced by fraud to enter into a
      contract has his choice of remedies. He may stand to the bargain and
      recover damages for the fraud, or he may rescind the contract, and
      return the thing bought and receive back what he paid.

158 Tex. 1, 307 S.W.2d 233, 238–39 (1957); see also Fortune Prod. Co. v. Conoco,

Inc., 52 S.W.3d 671, 677 (Tex. 2000) (recognizing quote from Reaves as correct

statement of long-standing general proposition of law).

      Thus, in electing a remedy, Amy has two choices. She can elect to recover

for breach of contract and recover the amount owed under the contract, or she can

elect to recover for fraud and return the $150,000 the Mundheims paid to her

pursuant to the contract. See Foley, 68 S.W.3d at 883.

      We note that the agreement expressly provided a waiver of claims that

included “any claims for any alleged fraud.” Thus, not only is Amy required to elect

her remedies to prevent a double recovery and to elect between inconsistent

remedies, if she elects to recover for breach of contract, the express terms of the

agreement bar recovery of any damages for fraud.          See id.   We sustain the

Mundheim’s issue regarding election of remedies.

                                 Attorney’s Fees

      In their next issue, the Mundheims argue the trial court erred in awarding Amy

attorney’s fees. First, the Mundheims point out that the settlement agreement

provides that each party will bear its own “attorney’s fees incurred in connection
                                        –22–
with any future Litigation or Attorney review of this document.” The Civil Practice

and Remedies Code provides that “[a] person may recover reasonable attorney's fees

from an individual or corporation, in addition to the amount of a valid claim and

costs, if the claim is for . . .an oral or written contract.” TEX. CIV. PRAC & REM.

CODE ANN. § 38.001; Peterson Grp., Inc. v. PLTQ Lotus Grp., L.P., 417 S.W.3d 46,

60 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). To obtain an award of

attorney's fees under Section 38.001, “a party must (1) prevail on a cause of action

for which attorneys fees are recoverable, and (2) recover damages.” Green Int’l,

Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997). However, “[p]arties are free to

contract for a fee-recovery standard either looser or stricter than Chapter 38’s.”

Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex.

2009). When parties include such a provision in a contract, the language of the

contract controls, rather than the language of the statute. Id. at 654–56. We agree

the settlement agreement controls and precludes Amy’s recovery of attorney’s fees

if she elects her remedy for breach of contract. See id. Second, the Mundheims

assert attorney’s fees are not recoverable for fraud. Tony Gullo Motors I, L.P. v.

Chapa, 212 S.W.3d 299, 304 (Tex. 2006). Again, we agree. See id. Thus, Amy is

not entitled to recover attorney’s fees if she elects her remedy for fraud; because

Scott’s claim is for fraud, he is also not entitled to attorney’s fees. See id. We sustain

the Mundheims’ issue regarding attorney’s fees.

                                          –23–
      Accordingly, we (i) reverse the trial court’s award of attorney’s fees and

render judgment that Amy and Scott take nothing on their claims for attorney’s fees

and (ii) remand for Amy to elect her remedy in accordance with this opinion. In all

other respects, we affirm the trial court’s judgment.

                                           /Craig Smith/
                                           CRAIG SMITH
                                           JUSTICE

191490F.P05

                                        –24–
                                    S
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                  JUDGMENT

PAUL MUNDHEIM, MARLA                           On Appeal from the County Court at
MUNDHEIM, AND THE                              Law No. 4, Dallas County, Texas
MUNDHEIM FIRM, PLLC,                           Trial Court Cause No. CC-18-01169-
Appellants                                     D.
                                               Opinion delivered by Justice Smith.
No. 05-19-01490-CV           V.                Justices Molberg and Goldstein
                                               participating.
SCOTT LEPP AND AMY TORRES
LEPP, Appellees

       In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED in part and REVERSED in part. We REVERSE that portion
of the trial court's judgment awarding Scott Lepp and Amy Torres Lepp attorney's
fees and RENDER judgment that Scott Lepp and Amy Torres Lepp take nothing
on their claims for attorney’s fees. We REMAND this cause to the trial court for
Amy Torres Lepp to elect her remedy in accordance with this Court’s opinion. In
all other respects, the trial court's judgment is AFFIRMED.

      It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 13th day of May 2021.

                                        –25–