Court Opinion

ID: 2983480
Source: CourtListenerOpinion
Date Created: 2015-09-22 21:43:00.757637+00
Date Added: 2024-06-11T11:38:00.772988
License: Public Domain

Affirmed and Memorandum Opinion filed July 22, 2014.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-13-00172-CV

CASTLE HILLS PHARMACY, LLC AND MICHAEL L. WARD, Appellants
                                        V.
                         JOSEPH A. TRIAL, Appellee

             On Appeal from the County Civil Court at Law No. 3
                           Harris County, Texas
                      Trial Court Cause No. 1002800

                 MEMORANDUM                      OPINION

      An electricity provider sued Joseph A. Trial for damages under a contract to
provide services to Trial’s pharmacy after appellant Michael L. Ward purchased
the pharmacy from Trial and switched electricity providers, triggering early-
termination fees. The trial court found Trial liable to the electricity provider and
Ward liable to Trial. On appeal, Ward contends that the trial court erred in finding
him liable to Trial on any of Trial’s pleaded theories and in rejecting Ward’s and
his company’s counterclaims against Trial for breach of contract. We affirm.
I.     FACTUAL AND PROCEDURAL BACKGROUND

       In 1976, Joseph A. Trial, a pharmacist, purchased and operated a pharmacy
at 3412 Sam Houston Drive in Victoria, Texas. At some point, he began operating
under the assumed name of Castle Hills Pharmacy. In 2008, Castle Hills Pharmacy
and Champion Energy Services, LLC, executed an energy-services contract for
Champion to supply electricity to three meters at the pharmacy: one for the main
building, and one for each of two security lights around the building. The sixty-
month contract provided that if the pharmacy switched electric service to another
provider within the contract term it would be subject to, among other things, early-
termination fees. The contract also prohibited the pharmacy from assigning the
contract without Champion’s express written consent.

       Trial eventually decided to sell his pharmacy and retire. Trial had known
Michael L. Ward for about ten years, and Ward had worked for Trial as a
pharmacist for about eighteen months before he agreed to purchase the pharmacy
from Trial in 2009. In anticipation of the purchase, Ward formed a company,
Castle Hills Pharmacy, LLC (the “LLC”).1

       On February 19, 2009, Trial and Ward executed an Asset Purchase
Agreement (the “Agreement”) for “the retail pharmacy, real property and
improvements, prescription records, telephone numbers, trade name and the trade
fixtures, appliances and inventory including any warranties which may still be in
effect, therein contained.” Exhibit A, identifying the assets to be sold, included
“[c]ontract rights, if assignable.” Relevant here, paragraph 6(b) of the Agreement
provided that upon closing the sale, Ward was obligated to “execute any and all

       1
        Because of the similarity between Trial’s d/b/a as “Castle Hills Pharmacy” and Ward’s
company, “Castle Hills Pharmacy, LLC,” for clarity’s sake we will refer to the physical
pharmacy as “the pharmacy” and Ward’s company as “the LLC” unless the context requires
otherwise.

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documents required for the assumption of the leases, service agreements and
contracts.” On February 27, 2009, the pharmacy business was conveyed under a
“Blanket Bill of Sale” between Trial and the LLC. The bill of sale recited that the
transferred properties included “[a]ll of Seller’s interest in all management,
maintenance, service, supply, employment, and vending machine contracts, if any .
. . .” Trial, however, did not tell Ward about the Champion contract either before or
after the closing.

      After the closing, Ward began operating the pharmacy. Champion continued
to provide electricity services to the pharmacy and mail its invoices to “Castle Hills
Pharmacy, Joe Trial,” at the pharmacy’s Sam Houston address. Ward customarily
opened the envelopes and paid the invoices, all of which included the statement,
“You have a contract valid from 06/17/2006 to 06/16/2013[.]” Ward never
discussed his electricity service with Trial, however, and he never sought or
obtained an assignment of Trial’s contract with Champion.

      On September 30, 2009, Ward requested that Champion disconnect the
meter to one of the security lights on the property. At that time, Champion
informed Ward that Trial, as the customer on the account, would have to approve
the change. Although the record discloses an amendment to the Champion contract
to disconnect the meter, which purportedly reflects Trial’s signature, the parties
dispute whether Trial signed the document. Ward later switched his electric service
at the two remaining meters to a different electricity provider, but did not discuss
his decision to switch providers with Trial. In August 2010, Champion began
invoicing the early-termination fees, totaling over $15,000.00. Ward did not pay
these invoices.

      In 2011, Champion sued Trial to recover the unpaid balance on the account.
Trial answered and sued Ward and the LLC as third-party defendants. Ward and

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the LLC each filed answers, asserting various affirmative defenses, and
counterclaims for breach of contract. The case was tried to the court, and on
February 25, 2013, the trial court signed a judgment ordering that Champion
recover from Trial actual damages of $15,008.97, plus attorney’s fees and court
costs. The court further ordered that Trial recover $15,008.97 from Ward, plus
attorney’s fees. Ward timely requested findings of fact and conclusions of law, but
the trial court did not make them. This appeal followed.

II.   ANALYSIS OF ISSUES ON APPEAL

      On appeal, Ward and the LLC contend the trial court reversibly erred by: (1)
holding Ward liable to Trial under any of Ward’s pleaded bases for liability; (2)
rejecting Ward’s and the LLP’s counterclaim against Trial for breach of contract,
and (3) failing to file findings of fact and conclusions of law. Because the third
issue informs our discussion of Ward’s first two issues, we begin there.

      A.     The Findings of Fact and Conclusions of Law

      In his third issue, Ward and the LLC contend that the trial court erred in
failing to file findings of fact and conclusions of law, and request that this court
abate the appeal and instruct the trial court to make them. When properly
requested, the trial court has a mandatory duty to file findings of fact and
conclusions of law. Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 770 (Tex.
1989). If the trial court does not file findings of fact and conclusions of law, harm
is presumed unless the record affirmatively shows that the requesting party was not
harmed by their absence. Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996) (per
curiam). Error is harmful if it prevents an appellant from properly presenting a case
to the appellate court. Id.

      Ward and the LLC complain that the trial court’s error leaves them

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“guessing about the grounds for its final judgment and effectively unable to argue
their appeal.” Ward and the LLC argue that Trial asserted five claims against them
(indemnification, forgery, contribution, breach of contract, and quantum meruit),
any of which, they contend, could have been the basis for the trial court’s
judgment. Ward and the LLC further argue that they asserted affirmative defenses,
including release, merger, the statute of frauds, waiver, and estoppel, all of which
the trial court apparently rejected, and trial court’s judgment does not mention their
counterclaim for breach of contract. In response, Trial does not dispute that Ward
and the LLC timely and properly requested the findings and conclusions, but
asserts that Ward’s liability is “obvious” from the record.

      We granted Ward’s and the LLC’s request, abated the appeal, and directed
the trial court file findings of fact and conclusions of law. The trial court
responded, and although most of its findings concerned Champion’s claims against
Trial, which are not at issue in this appeal, the trial court made two findings
relevant here:

    “Based on a valid and enforceable Asset Purchase Agreement dated
     February 19, 2009 between Defendant Joseph A. Trial and Third-
     party Defendant Michael L. Ward (regarding the purchase and transfer
     of Cast[le] Hills Pharmacy), Third-party Defendant Michael L. Ward
     is liable to Defendant Joseph A. Trial for breach of contract for actual
     damages in the amount of $15,008.97 and reasonable and necessary
     attorney’s fees in the amount of $5,000.00.”
    “There was no sufficient evidence presented to support a counterclaim
     by Third-party Defendant Michael L. Ward against Defendant Joseph
     A. Trial for breach of contract.”
Thus, the trial court found Ward liable to Trial for breach of contract, and rejected
Ward’s breach-of-contract counterclaim against Trial because he failed to present
sufficient evidence to support it. These findings inform our discussion of Ward and
the LLC’s remaining issues.
                                          5
      B.     Is Ward is Liable to Trial for Breach of Contract?

      In his first issue, Ward contends the trial court erred in finding him liable to
Trial on any of the grounds Trial asserted against him. As noted above, because the
trial court has clarified in its findings of fact and conclusions of law that it found
for Trial against Ward on Trial’s breach-of-contract claim, we will begin by
considering whether the evidence supports the trial court’s finding.

             1.    Standards of Review

      A trial court’s findings are reviewable for legal and factual sufficiency of the
evidence by the same standards applied in reviewing the evidence supporting a
jury’s findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). We review
the trial court’s legal conclusions de novo to determine if the trial court drew the
correct legal conclusions from the facts. BMC Software Belg., N.V. v. Marchand,
83 S.W.3d 789, 794 (Tex. 2002).

      When considering a legal-sufficiency challenge, we review the evidence in
the light most favorable to the challenged finding and indulge every reasonable
inference that would support it. See City of Keller v. Wilson, 168 S.W.3d 802, 822
(Tex. 2005). The evidence is legally sufficient if it would enable a reasonable and
fair-minded person to reach the verdict under review. Id. at 827. When reviewing a
challenge to the factual sufficiency of the evidence, we weigh all of the evidence
and set aside the fact finding only if it is so contrary to the overwhelming weight of
the evidence as to be clearly wrong and unjust. Pool v. Ford Motor Co., 715
S.W.2d 629, 635 (Tex. 1986). In a bench trial, the trial court, as fact finder, is the
sole judge of the witnesses’ credibility and the weight to give their testimony. See
City of Keller, 168 S.W.3d at 819; Barrientos v. Nava, 94 S.W.3d 270, 288 (Tex.
App.—Houston [14th Dist.] 2002, no pet.).

                                          6
              2.    Sufficiency of the Evidence to Support Breach-of-Contract
                    Finding
      Paragraph 6(b) of the Agreement provides that upon closing, “[Ward] will
execute and deliver and [Trial] will execute, where appropriate, and accept . . . any
and all documents required for the assumption of the leases, service agreements
and contracts.” Ward does not dispute that the Champion contract is within the
scope of this provision, but he argues that he cannot be held liable for failing to
comply with an obligation to assign a contract he was never told existed.

      First, Ward argues that the only duty imposed on him under 6(b) is to
“execute and deliver” documents required for assuming the Champion contract.
Thus, Ward argues, he cannot be liable to Trial for breach of the Agreement
because he had no obligation under paragraph 6(b) to investigate the pharmacy’s
contracts himself. Even if he had a duty to investigate, Ward contends, he could
not be expected to investigate whether the contract existed or to initiate an
assignment when Trial did not tell Ward about the contract and failed to familiarize
himself with the Champion contract’s assignment requirements and early-
termination fees.

      The record reflects that, under the Agreement, Trial agreed to sell Ward all
of his interest in the pharmacy except for those items expressly excluded. Also, the
bill of sale specifically provides that Trial was transferring to Ward “[a]ll of
Seller’s interest in all . . . service . . . contracts[.]” Thus, Trial conveyed all of his
interest in any pharmacy service contracts to Ward in February 2009, and under
6(b) of the Agreement, Trial was obligated to execute and accept such assignments
and Ward was obligated to execute any documents required to assume such service
agreements.

      Trial acknowledged that he never familiarized himself with the assignment

                                            7
or early-termination provisions of the Champion contract, and he also did not tell
Ward about the contract because he did not remember it. The record also showed,
however, that after the sale, Champion continued providing electricity services to
Castle Hills Pharmacy; Champion’s monthly invoices were addressed to Joe Trial
at the pharmacy; Ward regularly opened Champion’s mail; and Ward paid
Champion’s invoices.2 Each invoice Ward paid contained the following statement:
“You have a contract valid from 06/17/2008 to 06/16/2013[.]” The invoices thus
plainly reflect that Champion was providing electric service to the pharmacy
pursuant to a contract with Champion that was valid to June 16, 2013.

       Nevertheless, Ward maintained that he had “no idea” a contract existed,
because “as far as [he] knew, this was a month-to-month thing” similar to what he
had at his home. Ward also testified that he was not bothered that Trial’s name
appeared on the monthly bills, because Ward “had not had time yet to strike [his]
own bill.” Ward explained that, as time went by, he prioritized the things he had to
change to his own name and, after those “higher priority” items—including the
water bill—had been addressed, “then farther down the road when [he] had more
time, that’s when [he] decided to do the electric bill in [his] name.” And, Ward
acknowledges that in September 2009, he was informed that Champion required
Trial’s signature to amend the contract to allow removal of one of the two security-
light meters, yet at no time did he discuss his electrical service with Trial. Even
after he received the initial invoice for over $14,000 in early-termination fees,
Ward did not attempt to contact Trial to discuss it, because, he testified, he thought
it was “all bogus.” Instead, unlike the other bills that Ward opened and paid, Ward
merely had an employee deliver that bill to Trial’s home.

       2
         When asked whether Ward opened Trial’s mail, Ward replied, “in most cases, yes,
whenever it was something like this, yes.” Trial testified that he never gave Ward permission to
open his mail.

                                               8
      On this record, the trial court could have discounted Ward’s explanation that
he assumed the contract was merely a “month-to-month thing” and concluded that
the evidence was sufficient to inform Ward that an electrical-services contract
existed between Trial and Champion, it was a service contract that had been
transferred to Ward as part of the Agreement and bill of sale, and, therefore, under
paragraph 6(b) of the Agreement, Ward was obligated to obtain an assignment of
the contract but failed to do so. Thus, even if Trial initially failed to inform Ward
of the existence of the Champion contract, and assuming Ward had no duty to
independently investigate the existence of any previously unidentified contracts,
the trial court did not err in finding that Ward breached the Agreement.

      Ward argues that, even if he had a duty to investigate, “[a] contractor is
excused from performance when the owner fails to provide the required means to
complete the contract.” See SP Terrace, L.P. v. Meritage Homes of Texas, LLC,
334 S.W.3d 275, 285 (Tex. App.—Houston [1st Dist.] 2010, no pet). As we have
explained, even though Trial did not tell Ward about the Champion contract, Ward
had sufficient independent evidence of the contract’s existence to trigger his duty
to comply with paragraph 6(b) by obtaining an assignment of the Champion
contract. And, Ward does not contend Trial unreasonably withheld consent to an
assignment of the contract; indeed, Ward made no effort to discuss the pharmacy’s
electrical service with Trial at any time, either with Trial or Champion.

      Ward next argues that he is not liable to Trial for breach of contract because
Trial waived Ward’s performance of paragraph 6(b). Waiver is the intentional
relinquishment of a right actually known, or intentional conduct inconsistent with
claiming that right. Clear Lake Cntr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527,
542 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (citing Ulico Cas. Co. v.
Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). The elements of waiver

                                          9
include (1) an existing right, benefit, or advantage held by a party; (2) the party’s
actual knowledge of its existence; and (3) the party’s actual intent to relinquish the
right, or intentional conduct inconsistent with the right.” Id. (citing Ulico Cas. Co.,
262 S.W.3d at 778). Waiver is an affirmative defense of which Ward had the
burden of proof. See El Paso Natural Gas Co. v. Am. Petrofina Co. of Tex., 733
S.W.2d 541, 553 (Tex. App.—Houston [1st Dist.] 1986, writ ref’d n.r.e.).

      Ward acknowledges that in September 2009, he was informed that
Champion required Trial’s signature on the addendum to his contract with
Champion to allow removal of one of the two security-light meters. Ward argues
that if Trial signed the addendum as Ward testified, then Trial waived Ward’s
performance of 6(b). Alternatively, if someone other than Ward forged Trial’s
signature, then Trial’s earlier conduct (presumably his failure to inform Ward of
the Champion contract’s existence) either waived Ward’s performance or estopped
him from complaining that Ward breached 6(b).

      Trial steadfastly denied signing the addendum, and testified that he had
never seen the document before the lawsuit began. Trial also stated that, while he
believed someone forged his signature, he did not believe it was Ward. Conversely,
Ward testified that, in his opinion, Trial signed the document. Ward also stated that
he had seen Trial’s signature “many, many times” and offered that it could be
compared to other signatures Ward had on file. Ward also denied that he or
someone else at his direction signed Trial’s name. However, Ward acknowledged
that he did not ask Trial to sign the addendum, and, in fact, he never contacted
Trial about moving the meter. Ward also acknowledged that the fax number to
“Castle Hills Pharm.” appearing at the top of the document was his fax number,
but he could not remember if he faxed it or if his fax machine was used to fax the
document to Champion.

                                          10
       On this record, we conclude that the trial court would not have erred in
rejecting Ward’s affirmative defense of waiver. The trial court, as the sole fact
finder, could have accepted Trial’s testimony that he never signed the addendum
and disbelieved Ward’s contrary testimony.

       Ward points to no other evidence that would support a finding that Trial
actually intended to waive his right to Ward’s compliance with 6(b), or that Trial
engaged in any intentional conduct inconsistent with that right. Ward merely
argues that Trial’s silence and inaction about the Champion contract “of which he
was aware” waived Ward’s obligation to comply with 6(b) to investigate and
initiate its assignment to him. However, Trial testified that after he executed the
Champion contract he simply filed it away in a pharmacy filing cabinet and forgot
about it. We conclude Ward did not conclusively establish that Trial waived
Ward’s performance of 6(b). We overrule Ward’s first issue.

       C.     Is Trial Liable to Ward and the LLC for Breach of Contract?

       In his second issue, Ward and the LLC contend that the trial court erred in
rejecting their counterclaim against Trial for breach of contract.3 Ward points to a
separate provision at paragraph 24 of the Agreement titled, “No Reliance on Third
Parties,” which provides as follows:

             Each party is entering into this Agreement in reliance upon the
       other party’s representation that there are no obligations, agreements
       or understandings between such party and any such third party that
       would in any manner affect this Agreement.

       3
          Trial argues that Ward never presented any breach-of-contract counterclaim and offered
no theory of damages other than attorney’s fees. However, Ward and the LLC pleaded
counterclaims for breach of contract, and Ward questioned Trial concerning the basis for his
claim without objection. Further, on appeal, Ward and the LLC rely on the evidence developed at
trial to support their issue. We will therefore consider the merits of Ward’s and the LLC’s
argument.

                                              11
To recover for breach of contract, Ward had to establish (1) the existence of a valid
contract, (2) Ward performed or tendered performance, (3) Trial breached the
contract, and (4) Ward suffered damages as a result of Ward’s breach. See Parker
Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 72 (Tex. App.—Houston [14th
Dist.] 2010, pet. denied). Ward contends that the first two elements are undisputed,
and he argues that Trial’s testimony constitutes an admission that his
representation under paragraph 24 was false at the time he signed the Agreement.
However, Ward points to no evidence in the record that he suffered damages as a
result of Trial’s alleged breach of contract, and we have found none.

      On appeal, Ward argues that his damages “consist, at present, of his third-
party liability for Trial’s damages” and, even if this court relieves him of that
liability, he is still damaged “to the extent of the attorney’s fees he has expended
because of Trial’s breach.” The record shows that, as a result of Trial’s failure to
tell Ward about the Champion contract before Ward purchased the pharmacy,
Ward enjoyed the benefit of Champion’s continued provision of electrical service
to the pharmacy for many months without any obligation to Champion. When
Ward switched electricity providers before the contract’s term ended—triggering
the early-termination fees—the trial court found that Trial, not Ward, was liable to
Champion for actual damages of $15,008.97. The trial court found that Ward was
liable to Trial for an equal amount of actual damages because, as discussed above,
Ward breached the Agreement by failing to assume Trial’s obligation under the
Champion contract.

      The record shows that Ward offered no evidence to support a claim that he
suffered actual damages as a result of any alleged breach of the Agreement by
Trial. Indeed, at the start of the trial, the trial court specifically asked Ward’s
counsel what Ward was seeking, and he stated that Ward was seeking $5,000.00 in

                                         12
attorney’s fees and damages of $250.00. When the trial court asked what the
$250.00 in damages represented, counsel responded that it was for Ward’s
“expenses in just coming back and forth to Houston.” The trial court explained that
Ward’s travel expenses were “not damages” and advised that Ward was “not
entitled to that under any legal theory.” Ward’s counsel acknowledged that was
correct.4 Therefore, on this record, the trial court did not err in finding that “no
sufficient evidence” was presented to support Ward’s and the LLC’s breach-of-
contract counterclaim against Trial.         We therefore overrule Ward’s and the
LLC’s second issue.

III.   CONCLUSION

       The trial court’s judgment is affirmed.

                                             /s/     Ken Wise
                                                     Justice

Panel consists of Chief Justice Frost and Justices Jamison and Wise.

       4
          Ward’s counsel argued that, alternatively, Ward was entitled to the damages and
attorney’s fees under Texas Rule of Civil Procedure 13, but Ward did not file a Rule 13 motion
for sanctions in the trial court and does not argue Rule 13 as an alternative basis for damages and
attorney’s fees on appeal.

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