Court Opinion

ID: 4707808
Source: CourtListenerOpinion
Date Created: 2021-07-30 07:18:52.10935+00
Date Added: 2024-06-11T08:06:46.123731
License: Public Domain

In The

                                 Court of Appeals

                       Ninth District of Texas at Beaumont

                               ________________

                              NO. 09-19-00309-CV
                               ________________

           BAM HEAVY EQUIPMENT AND REPAIR, LLC AND
                  BERT T. JOHNSON, Appellants

                                        V.

                  MICHAEL E. JACKSON, Appellee
__________________________________________________________________

                On Appeal from the 284th District Court
                      Montgomery County, Texas
                    Trial Cause No. 18-03-03481-CV
__________________________________________________________________

                          MEMORANDUM OPINION

      Michael E. Jackson sued BAM Heavy Equipment and Repair, LLC and Bert

T. Johnson for breach of contract regarding BAM’s failure to continue making

payments to Jackson, even after he stopped working with the company. 1 A jury

found in Jackson’s favor and awarded him $117,318. BAM appeals the judgment in

      1
        Johnson filed a notice of appeal but abandoned his appeal before any opinion
issued in this case.
                                          1
Jackson’s favor. 2 In five issues, BAM complains: (1) Jackson failed to obtain a

finding that he was a member of BAM, a controlling issue under Tex. R. Civ. P. 279;

(2) the evidence was legally and factually insufficient to show that Jackson was a

member of BAM, and therefore, he is not entitled to any distributions from the

company; (3) Jackson’s evidence of damages was legally and factually insufficient

to support the judgment; (4) the charge contained Casteel error because Question

No. 1 contained an instruction on ratification when Jackson did not affirmatively

      2
         Following the entry of the Final Judgment, BAM filed a timely motion for
new trial, which the trial court overruled. BAM then timely appealed. However,
more than thirty days after denying the motion for new trial and after the expiration
of the trial court’s plenary power, the trial court entered a “Nunc Pro Tunc Modified
Final Judgment” awarding costs to Jackson against BAM and Johnson jointly and
severally where the original Final Judgment indicated costs were “to be borne by the
party incurring same,” and the jury’s verdict did not address Johnson’s liability. It
also changed the date the prejudgment interest began to accrue. The judgment nunc
pro tunc noted that it “modifies” the judgment in these two respects. The
amendments to the Final Judgment were not corrections of clerical errors, but
instead, modifications to the judgment. See Tex. R. Civ. P. 316 (allowing for
correction of clerical errors only through judgment nunc pro tunc); see also In re
R.P.T., No. 04-03-00475-CV, 2005 WL 418220, at *3 (Tex. App.—San Antonio
Feb. 23, 2005, pet. denied) (mem. op.) (characterizing error as judicial rather than
clerical when trial court awarded costs in a nunc pro tunc after plenary power expired
where original judgment rendered costs were to be borne the party who incurred
them). Because it was executed after the trial court’s plenary power had expired and
corrected a judicial rather than clerical error, the “Nunc Pro Tunc Modified Final
Judgment” is void. In re R.P.T., 2005 WL 418220, at *3; see also State ex rel. Latty
v. Owens, 907 S.W.2d 484, 486 (Tex. 1995) (citations omitted) (“Judicial action
taken after the court’s jurisdiction over a cause has expired is a nullity.”).
Accordingly, our opinion addresses the original Final Judgment entered by the trial
court in this cause. See id. (noting where order was void, original final order
remained intact).
                                            2
plead ratification and Question No. 2 allowed the jury to find that BAM breached an

unspecified agreement though the jury made the finding only as to the alleged

amended operating agreement; and (5) the trial court abused its discretion by

admitting evidence of settlement negotiations he had with BAM and a recording.

We affirm.

                                   I. Background

      Jackson married Florence Dees in approximately 2012. Florence’s daughter

and Jackson’s stepdaughter, Carrie, was married to Johnson. A heavy equipment

mechanic, Johnson wanted to start his own business. In late 2013, Jackson and

Florence agreed to help Johnson start his own company, BAM Heavy Equipment

and Repair.

      They decided to form an LLC, and Johnson, Jackson, and Florence used

LegalZoom to prepare the formation documents. Jackson loaned Johnson money to

purchase four trucks to be paid back at interest rates between eight and nine percent.

The money loaned for the vehicles totaled $330,000 and was secured by four

promissory notes. Jackson also deposited $35,500 when they opened BAM’s bank

account. This money was eventually rolled into the last truck promissory note

because Johnson indicated he wanted to pay that money back. Jackson testified that

he set aside $46,000 to ensure the company had enough money to pay Johnson’s

                                          3
salary, but he never had to use that money. There was no dispute at trial that Johnson

repaid the truck loans and the additional $35,500.

      At trial, Jackson testified that Johnson initially offered to make Jackson a

partner in the business with an ownership interest, but Jackson declined. He said he

and Florence wanted to help get the company going the first twelve to fifteen months,

then leave it in Johnson’s hands. According to Jackson, the parties settled on Johnson

being the managing member with full ownership interest. Jackson explained that he

and Florence would also be members but would not have an ownership interest in

BAM. Jackson also testified that despite having executed an Original Operating

Agreement (the “Original Agreement”) a few days prior, on December 27, 2013, the

parties executed an “Amendment to the BAM Operating Agreement” (the

“Amended Agreement”) whereby BAM would pay Jackson and Florence an annual

“dividend” equivalent to four percent of BAM’s gross income. 3 This payment was

at the center of the parties’ dispute. This Amended Agreement referred to Jackson

and Florence as “investors” rather than members. Johnson denied signing the

Amended Agreement.

      Jackson testified that he volunteered to basically help Johnson perform any

task he needed done so Johnson could focus on working and getting business.

      3
      While the parties referred to it as the original operating agreement, the
document is titled “Company Agreement.”
                                      4
Jackson explained that this included helping secure insurance, running parts, and

picking up Johnson’s kids from school, among other things. Florence started out

keeping BAM’s books. Neither Jackson nor Florence took a salary for their work.

Johnson testified that the quarterly payments were for them doing the books and only

while they worked for the company. However, BAM paid the “dividend” in 2014

and 2015 without incident but did so quarterly rather than annually. Johnson

admitted he was aware the checks had been written and saw the money come out of

the account but denied having approval authority over the checks. Yet, Johnson also

testified that he thought the four percent payment was based on gross income rather

than gross profit. In April 2016, Jackson and Florence received the last dividend

check.

      In 2016, Jackson and Florence were going through a contentious divorce, and

Johnson approached them about reducing the payment from four percent to two

percent of BAM’s gross income, with each of them getting one percent. Jackson

testified that he was agreeable to that and told Johnson to have his lawyer draft

something up. Johnson said he did this because Florence threatened to sue him.

When Jackson did not receive the quarterly BAM payment, he approached Johnson

and inquired about it. Johnson advised that BAM would not be making the payments

until a new agreement was signed and Florence and Jackson’s divorce was finalized.

Jackson testified that eventually, Johnson’s lawyer sent over a new proposed

                                         5
agreement reducing the payment to two percent; however, other terms changed he

was not agreeable to, and a new agreement was not signed reducing the dividend.

The changes included the payment being based on gross profit rather than gross

income. Jackson alleged in his petition that because the parties did not execute a new

agreement, the Amended Agreement remains in effect. The parties’ testimony was

consistent that the two percent reduction agreement was never finalized.

      During this time, Jackson testified that things “weren’t quite sitting right with

me” which led him to surreptitiously record a February 7 meeting he had with

Johnson about non-payment of the dividend. Over objection, the trial court admitted

the entire recording, comprised of two separate conversations, which Jackson played

a portion of for the jury. The trial court also admitted a transcript of one of the

recorded conversations as evidence.

      Jackson moved for directed verdict on BAM’s counterclaim for fraud based

on a lack of evidence of misrepresentation, which the trial court granted. BAM

moved for directed verdict on Jackson’s breach of contract claim arguing there was

no evidence that a valid agreement existed, and Jackson failed to present any

evidence of damages. The trial court denied BAM’s motion for directed verdict.

Specifically, the trial court noted that Plaintiff’s Exhibit 17, a spreadsheet breaking

down BAM’s quarterly gross income from the second quarter of 2016 through the

third quarter of 2018, coupled with the testimony and evidence that the dividend paid

                                          6
to Jackson and Florence was four percent of gross income, provided sufficient

evidence of damages. The trial court admitted this exhibit during pretrial, and BAM

failed to object. Specifically, when asked if there were additional exhibits BAM

could agree to preadmit, counsel responded that “[exhibit]17 are the numbers I gave

him for gross income. I can’t exactly object to those.”

      The Court’s charge included instructions on ratification and implied

ratification with Question 1, which addressed the existence of an agreement. During

the charge conference, BAM objected to the submission of the contract questions,

arguing that Jackson failed to prove the existence of a valid contract. BAM also

objected to the instructions included with Question 1 regarding ratification. BAM

further objected to Questions 1 and 2 as follows:

      [COUNSEL]: I object to the Question Number 1 and 2 of the Charge
      further, the wording of them. In Question Number 2, it says, Comply
      with the agreement. It doesn’t have the definition of the agreement.
      Under Question 1, it does not have an end date to when the dividend
      would be paid, and I believe that is a -- is a fatal flaw in the question if
      my clients -- if the jury finds that my clients agree to pay a dividend.

      With respect to omitted questions or issues, BAM objected as follows:

      [COUNSEL]: [A]s to questions that are not included on this jury
      charge, I object to the fact that Defendant’s claim of forgery is not
      included in the jury charge for the promissory note, the bank
      documents, and the - - the W-9. There’s clear and convincing evidence
      that those were forged by Mr. Jackson and they should be included on
      the jury charge as well as damages just for such.

                                           7
      The trial court overruled these objections as to Questions 1 and 2 and to the

failure to include a proposed charge for BAM’s counterclaim for forgery. In

overruling these objections, the trial court noted that it had not received any proposed

submissions. 4 However, the trial court ultimately included a question in the charge

asking whether Jackson forged the Amended Agreement.

      The jury returned a verdict in Jackson’s favor. The jury found that: (1) Jackson

and BAM agreed BAM would pay Jackson a dividend per the “Amendment to BAM

Heavy Equipment & Repair Operating Agreement;” (2) BAM failed to comply with

the Agreement; (3) Jackson was entitled to $117,318 in damages; and (4) the

“Amendment to BAM Heavy Equipment & Repair Operating Agreement” was not

forged. BAM moved for judgment notwithstanding the verdict, which the trial court

denied.

     II. Issues One and Two: Membership Status and the Court’s Charge

      BAM first contends a fact issue existed regarding whether Jackson was a

member of the LLC, and this was a “controlling issue” that required submission of

the question to the jury. BAM asserts that Jackson failed to object to the court’s

omission of a question regarding his membership status at trial, and that because

Jackson’s member status required an affirmative finding, Jackson’s failure to obtain

      4
        The clerk’s record reveals that BAM submitted a proposed charge on May
20, 2019 at 4:46 p.m. The only questions in BAM’s proposed charge pertained to its
forgery counterclaim.
                                         8
such a finding is fatal to his case. In its second issue, BAM argues the evidence is

legally and factually sufficient to support that Jackson was a member of BAM.

A. Standard of Review
      The trial court is required to submit jury questions in the jury charge raised by

the pleadings and evidence. See Tex. R. Civ. P. 278. “When an element of a claim

is omitted from the jury charge without objection and no written findings are made

by the trial court on that element then the omitted element is deemed to have been

found by the court in such manner as to support the judgment.” Serv. Corp. Int’l v.

Guerra, 348 S.W.3d 221, 228–29 (Tex. 2011) (citing Tex. R. Civ. P. 279; In re

J.F.C., 96 S.W.3d 256, 263 (Tex. 2002)). Because there was no objection to the

charge on the basis that it omitted an element of a claim and the trial court did not

make findings on it, there is a deemed finding in support of the judgment. See id. at

229. “But just as with any other finding, there must be evidence to support a deemed

finding.” Id.

B. Analysis

      Despite being the party complaining of the judgment, BAM attempts to place

the onus of objecting to the court’s charge on Jackson by arguing that his breach of

contract claim required an affirmative finding on his membership status in the LLC.

We disagree. In essence, BAM’s argument is that because Jackson is not a member

of the LLC, the parties’ agreement regarding payment of a combined four percent to

                                          9
Jackson and Florence is void or unenforceable, as it fails to follow the corporate

structure outlined in Texas Business Organizations Code.

      The requisite elements of a breach of contract cause of action are: (1) the

formation of a valid contract; (2) plaintiff’s performance; (3) defendant’s breach;

and (4) damages to plaintiff resulting from the breach. See USAA Tex. Lloyds Co. v.

Menchaca, 545 S.W.3d 479, 501 n.21 (Tex. 2018). The jury found that the parties,

BAM and Jackson, had an agreement whereby BAM would pay this amount to

Jackson. Whether Jackson was a member of BAM is not a requisite element of a

breach of contract cause of action. See id.

      The cases BAM cites for the proposition that Jackson had the burden to prove

his membership status are distinguishable. See Sohani v. Sunesara, 546 S.W.3d 393,

406 (Tex. App.—Houston [1st Dist.] 2018, no pet.); Tex. Ear Nose & Throat

Consultants, PLLC v. Jones, 470 S.W.3d 67, 83–84 (Tex. App.—Houston [14th

Dist.] 2015, no pet.); Perez v. Le Prive Enters., L.L.C., No. 14–15–00291–CV, 2016

WL 3634298, at *3 (Tex. App.—Houston [14th Dist.] July 7, 2016, no pet.). Sohani

v. Sunesara involved the parties filing declaratory judgment actions to determine

membership status in the LLCs and whether that status conferred an entitlement to

a percentage of the company’s proceeds. See 546 S.W.3d at 404. Perez v. Le Prive

Enterprises, L.L.C. involved another declaratory judgment where individuals sought

declarations that they had an ownership interest that was not documented in writing.

                                         10
See 2016 WL 3634298, at *3. In the case before us, neither Jackson nor BAM sought

a declaration of Jackson’s membership status. Texas Ear Nose & Throat Consultants

v. Jones involved a jury finding determining that a party was still a member of the

LLC at the time of trial and the evidence to support that finding. See 470 S.W.3d at

83–84. Here, neither party sought to submit a question to the jury regarding

Jackson’s status as a member. Jackson’s only live claim at the time of trial was for

breach of contract, and specifically whether the parties had an agreement that BAM

would pay him and Florence a combined amount of four percent of the company’s

gross income.

      Nevertheless, even if we agree that this is a controlling issue, BAM, as the

party complaining of the judgment, had the burden of objecting to this omission in

the court’s charge. See Tex. R. Civ. P. 274. If “an element is omitted from the charge

‘without request or objection,’ the missing element can be found by the trial court or

deemed found if certain requirements are met.” Ford Motor Co. v. Ledesma, 242

S.W.3d 32, 44 (Tex. 2007) (citing Tex. R. Civ. P. 279); see also Serv. Corp. Int’l,

348 S.W.3d at 228–29. None of BAM’s charge objections addressed the omission

of a question regarding Jackson’s membership status on the basis that it was a

necessary finding or controlling issue that must be submitted to the jury. BAM did

not articulate any objection to the omission of any jury question or instruction on the

                                          11
basis that it was a “controlling issue.” When discussing the court’s charge, BAM

failed to mention Jackson’s membership status.

      Because BAM failed to object that the court’s charge omitted a question

regarding Jackson’s membership status, we determine if legally sufficient evidence

supports the deemed membership finding. Serv. Corp. Int’l, 348 S.W.3d at 228–29.

      A no-evidence challenge will be sustained when “(a) there is a complete
      absence of evidence of a vital fact, (b) the court is barred by rules of
      law or of evidence from giving weight to the only evidence offered to
      prove a vital fact, (c) the evidence offered to prove a vital fact is no
      more than a mere scintilla, or (d) the evidence conclusively establishes
      the opposite of the vital fact.”

Id. at 228 (quoting King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003).

      Although there was conflicting evidence, Jackson testified that he and

Florence were members. Additionally, evidence at trial showed that Jackson

provided start-up capital to open BAM’s bank accounts, that he contributed time and

labor to the company in the form of bookkeeping, running parts, and other tasks, and

he did not take a salary for this work. The various documents admitted in this case

at times referred to Jackson as a member, while the Amended Agreement referred to

him as an investor. Based on this, legally sufficient evidence supports a deemed

membership finding. See King Ranch, Inc., 118 S.W.3d at 751.

      We overrule BAM’s first and second issues.

                                        12
         III. Issue Three: Sufficiency of Evidence to Support Damages

      In its third issue, BAM challenges the legal and factual sufficiency of the

evidence supporting the damages award. BAM contends that Jackson’s only

evidence of damages “was a conclusory and vague piece of paper that constitutes no

evidence.”

A. Standard of Review

      Evidence admitted at trial is legally sufficient to support a verdict if it allowed

“reasonable and fair-minded people to reach the verdict under review.” City of Keller

v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). When reviewing legal sufficiency, we

“credit evidence that supports the verdict if reasonable jurors could, and disregard

contrary evidence unless reasonable jurors could not.” Kroger Tex. Ltd. P’ship v.

Suberu, 216 S.W.3d 788, 793 (Tex. 2006) (citing City of Keller, 168 S.W.3d at 827).

We will sustain a legal sufficiency challenge if the evidence establishing a vital fact

is no more than a scintilla. See id. at 793. “[M]ore than a scintilla of evidence exists

if the evidence ‘rises to a level that would enable reasonable and fair-minded people

to differ in their conclusions.’” Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601

(Tex. 2004) (quoting Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711

(Tex. 1997). However, evidence offered to prove a vital fact constitutes no more

than a scintilla when it “is so weak as to do no more than create a mere surmise or

                                          13
suspicion of its existence[,]” thus, “in legal effect, is no evidence.” Id. (quoting

Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)).

      When reviewing the factual sufficiency of the evidence, we “set aside the

verdict only if it is so contrary to the overwhelming weight of the evidence as to be

clearly wrong and unjust.” Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). In

examining whether the evidence is factually sufficient to support the jury’s findings,

we weigh all the evidence, both for and against the finding. See Dow Chem. Co. v.

Francis, 46 S.W.3d 237, 242 (Tex. 2001).

B. Analysis

      Despite BAM’s argument on appeal that the only evidence of damages was a

“conclusory and vague piece of paper[,]” the “Amendment to BAM Operating

Agreement” contained the language regarding payment of the “dividend” and

indicated that Jackson and Florence would be paid an annual amount of four percent

of BAM’s gross income. Jackson testified that he and Florence were to receive four

percent of BAM’s gross income and other evidence indicated it was split equally

between Jackson and Florence. Although Jackson did not provide testimony

regarding the exact figure, Plaintiff’s Exhibit 17 was pre-admitted without

objections and sent back for the jury’s consideration during deliberations. This

exhibit was entitled “Gross Income” and provided quarterly amounts from the

second quarter of 2016 through the third quarter of 2018. These gross income figures

                                         14
totaled $5,865,905, with four percent of that amount equaling $234,636.20, and half

of the four percent was $117,318.10. The jury awarded Jackson exactly $117,318.

The evidence in this case constituted more than a mere scintilla and allowed

reasonable and fair-minded jurors to reach the result, therefore, the evidence was

legally sufficient to support the jury’s finding. See City of Keller, 168 S.W.3d at 827.

      When examining the evidence for and against the finding, the record reveals

that BAM failed to introduce any contrary evidence of any damage calculations.

Moreover, contrary to BAM’s contention through Johnson that it did not agree to

pay the amount, Johnson acknowledged in his testimony and in recorded phone

conversations with Jackson that such an agreement existed, but he stopped paying

during the Jacksons’ contentious divorce. Johnson further testified that he was aware

the dividend checks had been written and saw the money come out of the account.

When weighing the evidence for and against the jury’s finding, we cannot say that

the verdict is “so contrary to the overwhelming weight of the evidence as to be

clearly wrong and unjust.” See Cain, 709 S.W.2d at 176; see also Francis, 46 S.W.3d

at 242. Therefore, we conclude the evidence is factually sufficient to support the

jury’s damages award.

      Having determined the evidence was legally and factually sufficient to

support the jury’s award of damages, we overrule this issue.

                                          15
                IV. Issue Four: Jury Charge and Casteel Error

      BAM argues that the jury charge contained Casteel error when it

impermissibly commingled valid and invalid theories of recovery in a single broad-

form submission, which is presumed harmful. BAM points to two such errors in the

charge. First, BAM argues that the trial court erroneously included instructions for

ratification and implied ratification with Question 1 in the court’s charge, which

addressed the existence of a contract. Second, BAM asserts that the trial court

erroneously instructed the jury it could find that BAM failed to comply with an

unspecified agreement in Question 2. In support of this argument, BAM reasons that

it is impossible to ascertain if “the jury determined whether BAM failed to comply

with the amended operating agreement, the BAM Company Agreement, or some

other unspecified agreement,” therefore Question 2 commingled valid and invalid

theories.

A. Standard of Review

      A trial court has the discretion to determine necessary and proper jury

instructions, and we review those for abuse of discretion. See Columbia Rio Grande

Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 856 (Tex. 2009); Shupe v. Lingafelter,

192 S.W.3d 577, 579 (Tex. 2006). A trial court abuses its discretion by failing to

follow guiding rules and principles. Hawley, 284 S.W.3d at 856. “When a trial court

abuses its discretion by including erroneous charge questions or instructions in a

                                        16
single-theory-of-liability case, our traditional harmless error analysis applies and the

appellate courts should review the entire record to determine whether the charge

errors probably caused the rendition of an improper judgment.” Thota v. Young, 366

S.W.3d 678, 693 (Tex. 2012) (citing Tex. R. App. P. 44.1, 61.1; Bed, Bath, &

Beyond, Inc. v. Urista, 211 S.W.3d 753, 757 (Tex. 2006)).

B. Analysis

      When feasible, a trial court must submit a cause to the jury by broad-form

submission. See Tex. R. Civ. P. 277. Moreover, it must give “such instructions and

definitions as shall be proper to enable the jury to render a verdict.” Id.; see also

Hawley, 284 S.W.3d at 855. “An instruction is proper if it (1) assists the jury, (2)

accurately states the law, and (3) finds support in the pleadings and evidence.”

Hawley, 284 S.W.3d at 855–56 (citing Tex. Workers’ Comp. Ins. Fund v.

Mandlbauer, 34 S.W.3d 909, 912 (Tex. 2000)). “[W]hen a trial court submits a

single broad-form liability question incorporating multiple theories of liability, the

error is harmful and a new trial is required when the appellate court cannot determine

whether the jury based its verdict on an improperly submitted invalid theory.” Crown

Life Ins. Co. v. Casteel, 22 S.W.3d 378, 388 (Tex. 2000). In such cases where a

single broad-form question commingles valid and invalid theories of liability, such

error is presumed harmful if an appellate court cannot determine whether the jury

                                          17
based its answer on an invalid theory. See Tex. R. App. P. 61.1(b); Hawley, 284

S.W.3d at 864.

      1. Ratification Instructions and Definition
      BAM contends that “the jury may have found that BAM ratified an otherwise

unenforceable agreement with Jackson to pay him a dividend[,]” which “effectively

precludes this Court from determining whether the jury found liability on an invalid

basis or whether the error probably caused the rendition of an improper judgment.”

The trial court included the following instructions and definitions with Question 1

regarding the existence of an agreement:

             In deciding whether the parties reached an agreement, you may
      consider what they said and did in light of the surrounding
      circumstances, including any earlier course of dealing. You may not
      consider the parties’ unexpressed thoughts or intentions.
             A party’s conduct includes the conduct of others that the party
      has ratified. Ratification may be express or implied.
             Implied ratification occurs if a party, though he may have been
      unaware of unauthorized conduct taken on his behalf at the time it
      occurred, retains the benefits of the transaction involving the
      unauthorized conduct after he acquired full knowledge of the
      unauthorized conduct. Implied ratification results in the ratification of
      the entire transaction.

During the charge conference, BAM objected to the inclusion of the definition for

implied ratification with Question 1, stated in the charge as follows:

             I believe Mr. Jackson hasn’t proven his case-in-chief that the
      amendment was actually agreed to or signed, so I don’t think that
      question should go to the jury.
             I’m also objecting to the definition in terms of implied
      gratification [sic] at the bottom. He pled for a written contract that

                                         18
      everyone signed. I don’t think he is allowed to attach that definition to
      Question 1 because it’s outside of his pleadings and outside of his proof.

      Contrary to BAM’s objection at trial and assertion on appeal that the

ratification definition could not be attached to Question 1 since it was not a valid

theory of recovery as it was not pleaded and was outside the proof, Jackson’s Second

Amended Petition, his live pleading at the time of trial, alleged that “plaintiff and

his then spouse subsequently separated, and since then have been divorced, the

parties had all agreed the dividends provided for in the Amendment to the Operating

Agreement would be paid in equal shares to plaintiff[] and Florence[.]” Jackson

further alleged that “[f]ollowing execution of the Amendment, defendants made

some dividend payments to plaintiff and [Florence]. While dividend payments were

due annually, defendants elected to make them quarterly, which was acceptable to

plaintiff.” Moreover, Jackson’s live pleading claimed that “Defendants made some,

but not all, dividend payments in accordance with the Amended Operating

Agreement until April, 2016[.]”

      During trial, BAM’s primary contention was that BAM, through Johnson,

never agreed to pay Jackson and Florence an amount equal to four percent of its

gross income, in essence questioning the existence of this agreement. Specifically,

BAM denied Johnson signed the Amendment. Much of Jackson’s evidence went to

show BAM paid these dividends in an amount consistent with the Amended

Agreement and how they changed from annual payments to quarterly payments
                                         19
during the divorce. Evidence adduced at trial showed that Johnson had access to

BAM’s accounting and banking records with knowledge of the payments.

Considering the pleadings and evidence, whether Johnson ratified the Amended

Agreement by permitting BAM to pay Jackson and Florence, was squarely before

the jury. Based on the foregoing, we determine the instructions and definitions

regarding ratification were neither outside the pleadings nor outside the proof. 5

Hawley, 284 S.W.3d at 855–56 (citing Mandlbauer, 34 S.W.3d at 912) (explaining

when jury instructions are proper). In this breach of contract case, the submission of

a question regarding the existence of an agreement which included instructions and

definitions regarding implied ratification did not commingle valid and invalid

theories of recovery in a single broad-form submission question. See Tex. R. App.

P. 61.1(b); Hawley, 284 S.W.3d at 864. Therefore, the trial court did not abuse its

discretion.

      5
         Hawley explains that instructions are proper when they assist the jury, state
the law accurately, and find support in the pleadings and evidence. See Columbia
Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 855–56 (Tex. 2009)
(citing Tex. Workers’ Comp. Ins. Fund v. Mandlbauer, 34 S.W.3d 909, 912 (Tex.
2000)). BAM only complained that the definition and instructions regarding
ratification were “outside [the] pleadings and [] proof.” It never complained that the
ratification language would not assist the jury or was an incorrect statement of the
law.
                                          20
      2. Question 2: Undefined Agreement and Multiple Theories

      Second, BAM asserts that the trial court erroneously instructed the jury it

could find that BAM failed to comply with an unspecified agreement in Question 2.

Question 1 in the court’s charge asked whether the parties agreed to the payment of

a dividend “per the ‘Amendment to BAM Heavy Equipment & Repair Operating

Agreement[.]’” Question 2 then asked, “Did BAM Heavy Equipment and Repair,

LLC fail to comply with the agreement?”

      During the charge conference, BAM complained that “I don’t believe Mr.

Jackson proved his cause of action or there was a contract in existence. There was

no - - there was no offer acceptance for consideration of the contract. So that is the

same objection, that it should not be submitted to the jury.” BAM also objected that

“[i]n Question Number 2, it says, Comply with the agreement. It doesn’t have the

definition of the agreement.”

      On appeal, however, BAM attempts to couch this as a Casteel error,

commingling valid and invalid theories of recovery, and asserts “it is impossible to

determine whether the jury determined whether BAM failed to comply with the

amended operating agreement, the BAM Company Agreement, or some other

unspecified agreement[.]” We disagree. First, it is evident when examining the entire

charge that the trial court’s definition of “agreement” in Question 1 that limited it to

the “Amendment to the BAM Heavy Equipment & Repair Operating Agreement”

                                          21
necessarily implicated the scope of Question 2. Second, although BAM tries to

characterize this as a Casteel error, Question 2 did not allow for the commingling of

valid and invalid theories. There was one agreement in this case. Either the Original

Agreement had been amended or it had not. The Amended Agreement addressed a

four percent payment to Jackson and Florence. Casteel error occurs when a single

broad-form submission commingles valid and invalid theories. See Thota, 366

S.W.3d at 687–88; Casteel 22 S.W.3d at 389. When the jury answered Question 1

affirmatively, it determined the parties amended the Original Agreement to include

the four percent payment. The question of BAM’s compliance addressed by

Question 2 regarding BAM’s failure to comply with the agreement did not

commingle valid and invalid theories, as the jury had already determined that the

sole agreement in this case had been amended.

      We overrule this issue.

                      V. Issue Five: Admission of Evidence

      Finally, BAM complains the trial court erroneously admitted evidence.

Particularly, BAM contends that the trial court erred by admitting documents that

constituted settlement negotiations and recorded conversations Jackson had with

Johnson due to Jackson’s failure to lay the proper foundation for the admission of

such evidence.

                                         22
A. Standard of Review

      We review a trial court’s rulings admitting evidence over a party’s objection

for an abuse of discretion. Heniff Transp. Sys., LLC v. Mack Individually and as Next

Friend of D.T.M., No. 09-19-00049-CV, 2019 WL 5440602, at *4 (Tex. App.—

Beaumont Oct. 24, 2019, pet. denied) (mem. op.); see also State v. Bristol Hotel

Asset Co., 65 S.W.3d 638, 647 (Tex. 2001) (“Whether to admit or exclude evidence

is a matter committed to the trial court’s sound discretion.”). A trial court abuses its

discretion when it acts arbitrarily or unreasonably or without reference to guiding

rules and principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–

42 (Tex. 1985). “The trial court may exercise its discretion in determining whether

a communication amounts to a compromise offer,” and we will not overrule that

decision if it is supported by evidence. Tatum v. Progressive Polymers, Inc., 881

S.W.2d 835, 837 (Tex. App.—Tyler 1994, no writ) (citation omitted). We will not

reverse for the trial court’s erroneous admission of evidence unless it “probably

caused the rendition of an improper judgment[.]” Tex. R. App. P. 44.1(a)(1).

B. Analysis

      1. Settlement Negotiations

      In support of this issue BAM first complains the trial court erroneously

admitted documents between various attorneys addressing the payment of dividends

and that these documents constituted settlement negotiations. At trial, Jackson

                                          23
sought to introduce two documents wherein attorneys discussed the payment of

dividends. BAM objected to both documents on the basis that they constituted

settlement negotiations. The trial court overruled these objections and admitted the

documents.

      Offers made to settle disputed claims are not admissible to prove liability.

Tex. R. Evid. 408; Ford Motor Co. v. Leggat, 904 S.W.2d 643, 649 (Tex.1995) (orig.

proceeding); Rule 408 provides as follows:

      (a) Prohibited Uses. Evidence of the following is not admissible either
      to prove or disprove the validity or amount of a disputed claim:
             (1) furnishing, promising, or offering--or accepting, promising to
             accept, or offering to accept--a valuable consideration in
             compromising or attempting to compromise the claim; and
             (2) conduct or statements made during compromise negotiations
             about the claim.
      (b) Permissible Uses. The court may admit this evidence for another
      purpose, such as proving a party’s or witness’s bias, prejudice, or
      interest, negating a contention of undue delay, or proving an effort to
      obstruct a criminal investigation or prosecution.

Tex. R. Evid. 408; see Certain Underwriters at Lloyd’s, London v. Chi. Bridge &

Iron Co., 406 S.W.3d 326, 339 (Tex. App.—Beaumont 2013, pet. denied). “Whether

documents constitute an offer of settlement depends on ‘whether something is given

up by one of the parties to avoid litigation where some concession is made by one

or both of the parties.’” Chi. Bridge & Iron Co., 406 S.W.3d at 340 (quoting

Tatum, 881 S.W.2d at 837).

                                         24
      Even if the trial court erred in admitting these documents, BAM has failed to

show that such evidence probably resulted in the rendition of an improper judgment.

See Tex. R. App. P. 44.1(a)(1). Other similar evidence was adduced at trial without

objection that the evidence was inadmissible as settlement negotiations. Jackson

testified regarding a meeting with Johnson and Johnson’s desire to reduce the

dividend payment from four percent to two percent. Likewise, Johnson testified that

he contacted Jackson about reducing the dividend and described potentially reducing

the dividend from four percent to two percent. Johnson’s attorney elicited the

following testimony from him:

      Q. And in discussions with them about how they were going to get
      compensation, what was the agreed compensation that you said they
      could do?
      A. The agreed compensation was they would get paid 4 percent per
      quarter.
      Q. 4 percent per quarter out of the gross income?
      A. See, that’s where it’s hazy because I was under the impression at
      first it was off of gross, not profit.

In addition to the foregoing testimony, as discussed in greater detail below, the

evidence contained in these exhibits was admitted elsewhere in the form of recorded

conversations between Jackson and Johnson. 6 Considering the other evidence, any

error in admitting the complained-of documents was harmless.

      6
        BAM did not object to the admissibility of this recording on the basis that it
constituted settlement negotiations.
                                       25
      2. Recorded Conversation and Transcript

      BAM next complains that the trial court erred by admitting a recorded

conversation between Jackson and Johnson, as well as a transcript of that recording,

for failure to lay the proper foundation. A proper foundation can be laid for the

admission of the recording by the following:

      (1) a showing that the recording device was capable of taking
      testimony; (2) a showing that the operator of the device was competent;
      (3) establishment of the authenticity of the correctness of the recording;
      (4) a showing that changes, additions, or deletions have not been made;
      (5) a showing of the manner of the preservation of the recording; (6)
      identification of the speakers; and (7) a showing that the testimony
      elicited was voluntarily made without any kind of inducement.

Seymour v. Gillespie, 608 S.W.2d 897, 898 (Tex. 1980). Some elements may be

inferred and need not be shown in detail. See id.

      The recorded conversation involved a lengthy discussion between Jackson

and Johnson regarding the divorce, dividend payment, a reduction of payment to two

percent, and proposals sent by BAM’s attorney to Jackson and Florence. Jackson

played a short excerpt for the jury. The objection raised at trial was for “improper

predicate,” as well as “improper recording, lack of foundation, lack of evidence, and

possibly an incomplete record[.]” Johnson also complained that the “[t]estimony

could . . . be severely prejudicial because it could be taken out of context.” During

Jackson’s testimony he explained the following as it pertained to the recording:

      I know the original recording device was my cell phone. I have that
      right here, the original. I can verify it. I can verify the voices on the
                                         26
      recording. And I can verify that I’ve been in possession of it ever since
      that time.

The trial court overruled the objections and noted that Jackson testified to the history

of the recording. Jackson’s testimony established he recorded the conversations with

his cell phone, he could verify the voices on the recording, it was the original, and it

had been in his possession since he recorded it. Critical to BAM’s complaint was

that it did not know if it was the complete recording. Jackson’s testimony that the

recording was original allowed the trial court to conclude it had not been altered or

edited. Accordingly, the trial court did not abuse its discretion in determining

Jackson laid the proper foundation for the recording’s admissibility.

      Next, BAM complains that the trial court abused its discretion by failing to

listen to the recording before ruling on its admissibility when the contents of the

recording were at issue. BAM relies upon Diamond Offshore Servs., Ltd. v. Williams,

542 S.W.3d 539, 546 (Tex. 2018) for this proposition. Diamond Offshore is

distinguishable though. That case involved a video recording rather than an audio

recording. See id. at 542. The Texas Supreme Court explained the unique

considerations with video evidence. See id. In recognizing video “can be the single

most compelling piece of evidence in a case, captivating the jury’s attention like no

other evidence could[,]” the Court explained that “[v]ideo can often convey what an

oral description cannot—demeanor, personality, expressions, and motion, to name a

few.” Id.
                                          27
      The objection before the trial court in that case was that the probative value

of the evidence was significantly outweighed by the prejudicial impact. See id. at

544–45; see also Tex. R. Evid. 403. In reaching its conclusion, the Court explained

a Rule 403 objection requires the trial court to “balance probative value against the

relevant countervailing factors to determine admissibility.” 7 Id. At trial, BAM’s 403

complaint seemed to be that they had no way of knowing if it was a complete

recording or transcript, which could be taken out of context and thus, be prejudicial

to BAM. The trial court noted the entire recording would be admitted.

      Based on the record before us, we need not address whether this holding

extends to audio recordings. Assuming, but without deciding, that the trial court

abused its discretion by failing to listen to the audio recording to determine whether

the probative value outweighed the danger of unfair prejudice or confusing the jury,

such error was harmless given the other evidence admitted at trial in the record

before us. See Tex. R. App. P. 44.1(a)(1) (explaining reversible error occurs if the

error “probably caused the rendition of an improper judgment[]”). Jackson and

Johnson both testified they had agreed to a four percent payment of gross income.

      7
        This requires balancing the evidence’s probative value against concerns
including unfair prejudice, the potential to mislead the jury, and needless
presentation of cumulative evidence. See Tex. R. Evid. 403; Diamond Offshore
Servs., Ltd. v. Williams, 542 S.W.3d 539, 542 (Tex. 2018). “Rule 403 favors
admission by requiring these countervailing concerns to substantially outweigh the
evidence’s probative value before it may be excluded.” Diamond Offshore, 542
S.W.3d at 542.
                                       28
Both also testified that BAM made the four percent payments for a period before

stopping them. Finally, Johnson admitted that he approached Jackson about reducing

the payments from four percent to two percent. Similar information was contained

in the recording. We overrule this issue.

                                    Conclusion

      Having overruled each of BAM’s issues, we affirm the trial court’s final

judgment.

      AFFIRMED.

                                                 ________________________________
                                                         CHARLES KREGER
                                                               Justice

Submitted on April 26, 2021
Opinion Delivered July 29, 2021

Before Golemon, C.J., Kreger and Johnson, JJ.

                                            29