Court Opinion

ID: 4054569
Source: CourtListenerOpinion
Date Created: 2016-09-29 05:29:15.321756+00
Date Added: 2024-06-11T14:31:37.686621
License: Public Domain

ACCEPTED
                                                                                    01-13-00738-CV
                                                                          FIRST COURT OF APPEALS
                                                                                  HOUSTON, TEXAS
                                                                               4/17/2015 1:46:08 PM
                                                                                CHRISTOPHER PRINE
                                                                                             CLERK

                          NO. 01-13-00738-CV

         ___________________________________________________
                                                           FILED IN
                                                     1st COURT OF APPEALS
                                                         HOUSTON, TEXAS
                  IN THE FIRST COURT OF APPEALS
                                                     4/17/2015 1:46:08 PM
         ___________________________________________________
                                                     CHRISTOPHER A. PRINE
                                                             Clerk
                           CHRIS WILMOT,
                              Appellant

                                    V.

                     HARRY A. BOUKNIGHT, JR.
                             Appellee

                    FROM CAUSE NO.: 2010-00373;
    Harry A. Bouknight, Jr. v. WCW International, Inc. and Chris Wilmot

IN THE 295TH JUDICIAL DISTRICT COURT OF HARRIS COUNTY, TEXAS

 APPELLANT CHRIS WILMOT’S MOTION FOR EN BANC REHEARING

                                      Michael M. Essmyer, Sr.
                                      State Bar No. 06672400
                                      messmyer@essmyerdaniel.com
                                      Essmyer & Daniel. P.C.
                                      5111 Center Street
                                      Houston, Texas 77007
                                      (713)869-1155 Telephone
                                      (713)869-8659 Facsimile
                                      Attorney for Appellant
                                      CHRIS WILMOT
                                            TABLE OF CONTENTS

Contents
TABLE OF CONTENTS .................................................................................................... ii
INDEX OF AUTHORITIES .............................................................................................. iii
APPELLANT’S MOTION FOR EN BANC REHEARING ............................................... 1
A.      Background ............................................................................................................... 1
B.      Introduction ............................................................................................................... 2
C.      Reason to Grant Reahearing En Banc ....................................................................... 4
D.      ARGUMENT ............................................................................................................ 4
      a. The law precludes recovery of benefit of the bargain damages for a fraudulent
      inducement claim against a third party to the allegedly induced contract, contrary to
      the Panel Opinion. ....................................................................................................... 6
      b. The undisputed evidence showed Bouknight mitigated his damages by working
      elsewhere and being paid nearly the same amount contemplated by the employment
      contract with CIPR, and yet the District Court and the Panel erroneously disregarded
      that evidence and allowed Bouknight to also obtain lost wages under the
      employment contract with CIPR instead of mitigating the loss against a third party
      and failed to follow the law of Mitigation, in contradiction to Finding 5 and
      Conclusion 7. ............................................................................................................. 10
      c. Bouknight’s fraudulent inducement claim fails, as a matter of law, based on the
      District Court’s own Findings of Fact numbers 1-4 and Conclusion of Law number 1
      and as found by the Panel. ......................................................................................... 15
E.    CONCLUSION ......................................................................................................... 18
F.    PRAYER ................................................................................................................... 18
CERTIFICATE OF SERVICE .......................................................................................... 20
CERTIFICATE OF COMPLIANCE ................................................................................ 21

                                                                 ii
                                            INDEX OF AUTHORITIES
Cases

Alexander and Alexander v. Bacchus Indus., 754 S.W.2d 252 (Tex.App.—El Paso 1988,
  writ denied) .................................................................................................................... 14

Auto Chem Laboratories, Inc. v. Turtle Wax, Inc., 2008 WL 4372697 at 16-18, 2010 U.S.
  Dist. LEXIS 100677 (S.D. Ohio Sept. 24, 2010) ............................................................ 8

Crews v. Cortez, 102 Tex. 111, 113 S.W. 523(1908) ....................................................... 14

Dixie Glass v. Pollak, 341 S.W.2d 530 (Tex.Civ.App.-Houston, writ ref'd n.r.e.per
  curiam, 162 Tex. 440, 347 S.W.2d 596 (1961) ............................................................. 12

Exxon Corp.v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217(Tex. 2011) ...................... 15

Formosa Plastics Corp.v. Presidio Eng’rs& Contractors, Inc., 960 S.W.2d 41(Tex. 1998)
  ....................................................................................................................................... 16

George v. Hesse, 100 Tex. 44, 93 S.W. 107(1906) ....................................................... 9, 10

Gulf Consol Int’l Inc. v. Murphy, 658 S.W.2d 565 (Tex. 1983)(per curiam) ................... 12

LHC Nashua Partnership, Ltd. v. PDNED Sagamore Nashua, LLC, 659 F.3d 450(5th Cir.
  2011) ........................................................................................................................ 6, 7, 8

Professional Serv. Inc. v. Amaitis, 592 S.W.2d 396 (Tex.Civ.App.—Dallas 1979, writ
  ref'd n.r.e.) ................................................................................................................ 11, 13

Rogers v. McGuffey, 96 Tex. 565, 74 S.W. 753(1903) ..................................................... 14

Smith v. Hamilton, 237 S.W.2d 774(Tex.Civ. App. –Austin 1951, no writ) ............. 12, 14

Trenholm v. Ratcliff, 646 S.W.2d 927, 930(Tex.1983) ..................................................... 16

Warfa Leasing Corp. v. Prime Capital Corp., 339 F. Supp. 2d 1051(N.D. Ill. 2004) ........ 8

                                                                    iii
Other Authorities

Restatement (Second) Of Torts § 549 ......................................................................... 6, 7, 9
Rules

TEX. R. APP. P. 41.2 .......................................................................................................... 2

TEX. R. APP. P. 9.4(i)(3) .................................................................................................. 21

                                                               iv
                                 NO. 01-13-00738-CV
                ___________________________________________________

                         IN THE FIRST COURT OF APPEALS
                ___________________________________________________

                                 CHRIS WILMOT,
                                    Appellant

                                        V.

                            HARRY A. BOUKNIGHT, JR.
                                    Appellee

                     FROM CAUSE NO.: 2010-00373;
     Harry A. Bouknight, Jr. v. WCW International, Inc. and Chris Wilmot
IN THE 295TH JUDICIAL DISTRICT COURT OF HARRIS COUNTY, TEXAS

                 APPELLANT’S MOTION FOR EN BANC REHEARING

       Appellant CHRIS WILMOT, (“WILMOT” herein), respectfully requests that

the full en banc Court reconsider the opinion of the Panel in this appeal1 and that,

upon reconsideration, the en banc Court reverse the judgment below and either

render a take-nothing judgment in favor of WILMOT, or order a remittitur or a

remand for a reduction in damages, as set forth below.

                                    A. Background

       1. Appellant is CHRIS WILMOT. (“WILMOT” herein).

       2. Appellee is HARRY A. BOUKNIGHT, JR., (“BOUKNIGHT” herein).

1
    Exhibit 1 hereto.

                                         1
   3. A Panel of this Court issued the original judgment and memorandum

opinion in this case on March 3, 2015. A copy of that memorandum opinion is

attached as Exhibit A.

   4. The Panel that rendered the judgment in this case consisted of Chief Justice

Sherry Radack, and Justices Terry Jennings and Evelyn Keys.

   5. WILMOT files this Motion for En Banc Rehearing in response to the March

3, 2015 opinion and judgment. At the same time, WILMOT has filed a motion for

Panel rehearing.

   6. The Court has the authority to grant this motion and conduct en banc

reconsideration. TEX. R. APP. P. 41.2.

                                   B. Introduction

   7. An en banc hearing should be held because it is patently unreasonable, and

contrary to settled Texas law, for a contracting party like Bouknight to be able to

sue a third party, non-signatory to a contract (WILMOT) for fraudulent

inducement into the contract—rather than the counter-party (CIPR) to the contract

for breach of contract—and then to be able to recover as damages from that third

party the entire benefit of the bargain under the contract. It is even more perverse,

and contrary to established Texas law, to allow Bouknight to recover the full

amount owed under that employment contract notwithstanding that he

undisputedly mitigated his losses by immediately finding employment elsewhere

                                         2
and getting paid approximately $960,000 from the other employers during the

same time period that he was to work for CIPR. Whether or not Bouknight had a

duty to mitigate his damages, he did in fact mitigate them, and Texas law requires

that his damages award be reduced by the amount of mitigation. By instead

awarding the full amount allegedly owed under CIPR’s employment agreement

(against WILMOT, a third party to the contract) and ignoring the amount that

Bouknight mitigated, the Trial Court gave Bouknight precisely the sort of double

recovery that Texas law abhors, and the Panel erred in upholding it.

   8. As set forth below, WILMOT is entitled as a matter of law to a holding that

Texas law does not allow benefit of the bargain recovery from a third party in a

fraudulent inducement case. WILMOT is further entitled to a remittitur of

damages, or alternatively a remand, in order to properly apply the law of mitigation

of damages. And finally, WILMOT urges that the fraudulent inducement claim

fails based on the Trial Court’s own finding that WILMOT lacked authority to

bind CIPR to the employment contract. The Trial Court’s finding means there was

no valid contract between CIPR and Bouknight, but that defeats the fraudulent

inducement claim as a matter of Texas law because such a claim requires that there

have been inducement into a valid contract. Conversely, if, as the Trial Court and

the Panel found, the CIPR contract is valid, then WILMOT did not commit a

                                         3
material misrepresentation as he actually bound CIPR to the contract. The Court

En Banc should reconsider these issues that are important to the state of Texas law.

                      C. Reason to Grant Reahearing En Banc

   9. WILMOT raised a number of issues in the appeal, which the Panel resolved

in its opinion and judgment by affirming the Trial Court. WILMOT does not

waive those issues.

   10.This Motion for Rehearing En Banc also particularly addresses, without

waiver of the other issues for a Petition for Review, the Panel ’s resolution of three

issues: (1) whether Texas law precludes recovery of benefit of the bargain damages

for a fraudulent inducement claim against a third party; (2) whether the Trial

Court and Panel erred by disregarding the undisputed evidence showing Bouknight

mitigated his damages by working elsewhere and being paid nearly the same

amount contemplated by the employment contract with CIPR; and (3) whether the

fraudulent inducement claim fails, as a matter of Texas law, based on the Trial

Court’s own finding that WILMOT had no authority to bind CIPR into the

employment contract with Bouknight, such that there was no valid contract; and

then finding that there was a valid contract.

                                   D. ARGUMENT

   11. This is an employment case. APX7; CR12-24; 5RR PEx.1. It involves an

employment contract (“the CIPR Executive Engagement Agreement”), “EEA”

                                          4
herein, allegedly between Bouknight and Cote d’Ivoire Peace Refinery, Ltd.,

“CIPR” herein, a non-party to this suit. APX6; 5RR PEx.1. The Trial Court and

Panel allowed full benefit of the bargain damages against a third, non-contracting

party, based on a fraudulent inducement claim, even though Bouknight went out

and was employed elsewhere during nearly the entire period of time. This result

was allowed by the Trial Court and the Panel based upon a contract to which the

third party, Wilmot, was not a party, did not guarantee, and did not breach.

   12.In the District Court, the only measure of damages ever pled by Bouknight

was for contractual benefit of the bargain recovery under the CIPR Contract.

CR12-24. Bouknight did not plead or place into evidence either reliance damages

or cost of profit damages. APX7; CR12-24; 2RR19-22; 4RR113 and 119.

   13.The only ground of recovery allowed in the Amended Judgment or by the

Panel is fraud in the inducement, and solely as to Wilmot, individually. APX3 and

CR1274. Further, the sole alleged misrepresentation found by the District Court is

that Wilmot allegedly materially represented to Bouknight that Wilmot, as

Chairman of the Board of CIPR, could bind CIPR; that such material

representation was untrue; that Bouknight relied upon such representation; and that

this representation caused benefit of the bargain damages to Bouknight. APX2 and

CR1274-76. All other causes of action or fraud allegations pleaded by Bouknight

are gone.

                                         5
a.      The law precludes recovery of benefit of the bargain damages for a
        fraudulent inducement claim against a third party to the allegedly
        induced contract, contrary to the Panel Opinion.

     14.Bouknight is attempting to recover benefit of the bargain damages from a

third party, Wilmot, not the party with which Bouknight contracted, CIPR, and is

attempting to do it under the guise of fraudulent inducement law. Bouknight as a

matter of law in a fraudulent misrepresentation case cannot recover benefit of the

bargain damages related to a third party to a contract.

     15.There are two measures of damages in fraudulent misrepresentation cases:

(1) “out of pocket” damages or reliance damages, that restore the plaintiff to his

position before the fraud; and (2) “benefit of the bargain” damages sufficient to

give the plaintiff the benefit of his bargain with the defendant. See, Restatement

(Second) Of Torts §549 at comment g, APX8; see also LHC Nashua Partnership,

Ltd. v. PDNED Sagamore Nashua, LLC, 659 F.3d 450, 460 (5th Cir. 2011).

     16.As to benefit of the bargain damages, the Restatement explains that when the

plaintiff has made a bargain with the defendant, the plaintiff is entitled to the

benefit of that bargain, including lost profits. LHC at 460. Where, however, the

plaintiff has not entered into any transaction with the defendant, the plaintiff can

recover only “out of pocket” costs. Bouknight did not contract with Wilmot

individually and therefore, under the Restatement, Bouknight cannot recover

benefit of bargain losses from Wilmot as Bouknight is then dealing with a third

                                          6
party. The District Court and the Panel in the present case thus erroneously

allowed Bouknight his benefit of the CIPR bargain by the District Court’s Finding

5 and Conclusion 7. Id.

   17.The Fifth Circuit recently addressed this type of scenario, where the alleged

deceit did not allegedly come from the “maker” of the contract but instead a third

party, in LHC Nashua P‘ship, Ltd. v. PDNED Sagamore Nashua, L.L.C. The

plaintiff, a potential buyer of an option to purchase a shopping mall property, sued

the seller for breach of contract, promissory estoppel, and fraudulent

misrepresentation after the transaction failed to close. Id. at 453. The District Court

granted a directed verdict against plaintiff on its contract claim because no contract

was found to exist between the parties, but the fraud claim went to the jury. Id. The

jury found for plaintiff on its fraud claim and awarded damages of $534,380.00 for

“out of pocket” losses and $25,500,000.00 in lost profits. See id. The lost profits

related to money the plaintiff expected to make from a lease with a third party after

plaintiff acquired the shopping center from the defendant. Id. at 454. The Fifth

Circuit, relying on the Restatement, APX8, held that because the plaintiff and

defendant never had a contract, the plaintiff could not recover lost profits related to

a third-party lease. Id. at 464 (“[w]hen the plaintiff has not entered into any

transaction with the defendant but has suffered his pecuniary loss through reliance

                                          7
upon the misrepresentation in dealing with a third person, these are the rules [out

of pocket measure of damages] that must of necessity be applied.”).

   18.Other courts have also held that where the plaintiff and defendant had no

contractual relationship, benefit of the bargain or lost profits related to a third-party

deal are not available to the plaintiff as damages for fraud. See Auto Chem

Laboratories, Inc. v. Turtle Wax, Inc., 2008 WL 4372697 at 16-18, 2010 U.S. Dist.

LEXIS 100677 at 26 (S.D. Ohio Sept. 24, 2010), APX9; Warfa Leasing Corp. v.

Prime Capital Corp., 339 F. Supp. 2d 1051, 1056 (N.D. Ill. 2004) (“Because of

this basis of ‘benefit of the bargain’ damages in contract theory, it would be unfair

for a plaintiff to collect ‘benefit of the bargain’ damages from a defendant that was

not a party to the bargain…Therefore, to the extent a Moving Defendant was not a

party to the bargain with Warfa, ‘benefit of the bargain’ damages are not available

with respect to that defendant.”).

   19.The situation here is almost identical to the Nashua case. Bouknight claims

that Wilmot fraudulently induced Bouknight into securing an agreement with a

third party, CIPR. APX7. Bouknight had no contract with Wilmot (nor was one

ever contemplated), but nevertheless Bouknight claims Wilmot is responsible for

Bouknight’s benefit of the bargain with CIPR. Just as the Nashua plaintiff never

executed a contract with the defendant for the real estate transaction, Bouknight

never had a contract with Wilmot. Just as the plaintiff in Nashua was denied

                                           8
benefits of the bargain damage from its lease with a third party that failed to

materialize due to the alleged fraud, Bouknight should be denied benefit of the

bargain damages on a contract with third-party CIPR if it never materialized due to

the alleged fraud.2

       20.This result, which is mandated by the Restatement and case law, is also the

logical result. Had the alleged fraudulent act, Wilmot representing that he could

bind CIPR by his signature as Chairman of the Board of CIPR3, not occurred,

Bouknight presumably would not have pursued a contract with CIPR and would

not have made any salary, as he had no job at the time.

       21.In addition, Texas has in the past limited liability in deceit cases to the out-

of-pocket measure of damages stated in Subsection (1) of the Restatement, and

allowed no benefit of the bargain in such an action of deceit. George v. Hesse, 100
Tex. 44, 93 S.W. 107(1906); RESTATEMENT (SECOND) OF TORTS §549 at

comment Reporter’s Note 2, APX8.

       22.In George the Texas Supreme Court held that in an action by a vendee

against the vendor for damages for false representations to the effect that there was

a well on the land, when there was not, the measure of damages was not the

difference in value between the value of the land with a well and without it, but the

2
    Conversely, if the contract is valid, there is no fraud in this case.
3
 But since the Trial Court and Panel found that Wilmot did bind CIPR, and Wilmot testified at
any rate that such was his intent, there was no fraud in the inducement.
                                                                9
difference between the value of the consideration given for the conveyance and the

value of the land. The George Court went on to say that George is a case in which

the plaintiff sues to recover damages, from the maker, for a fraudulent

representation by which he has been induced to enter into a contract to his loss.

     23.Clearly, the George Court held, the extent of plaintiff’s loss is the difference

between the value of that which he has parted with, and the value of that which he

has received under the agreement. The contract in this case was not to convey a

tract of land with a ‘gusher’ on it; but was to convey a certain tract of land, which

was falsely represented to have a ‘gusher’ on it, which false representation was an

inducement which led to the contract. Logically, therefore, what George has lost

by the transaction is the measure of his reliance damage. Bouknight has no reliance

damages, and he pled for none. This case needs to be reversed and rendered

because, as a matter of Texas law, Bouknight is not permitted to recover the only

type of damages that he pled and offered evidence on.

b.      The undisputed evidence showed Bouknight mitigated his damages by
        working elsewhere and being paid nearly the same amount
        contemplated by the employment contract with CIPR, and yet the
        District Court and the Panel erroneously disregarded that evidence and
        allowed Bouknight to also obtain lost wages under the employment
        contract with CIPR instead of mitigating the loss against a third party
        and failed to follow the law of Mitigation, in contradiction to Finding 5
        and Conclusion 7.
     24.At a minimum, if Bouknight somehow can recover benefit of the bargain

damages, the amount of damages as found by the District Court and the Panel

                                           10
cannot stand, and to do so is to allow Bouknight a double recovery because it fails

to account for the undisputed evidence of mitigation. The District Court’s damage

award, Finding 5 and Conclusion 7, is in error, or, alternatively, excessive, gives

Bouknight a double recovery, is supported by no legally or factually sufficient

evidence, and is contrary to the conclusive evidence of mitigation.

    25.If the employment contract with CIPR had been performed as written, then

Bouknight would not have been able to work for another company because the

CIPR contract required 100% of Bouknight’s time and effort. As such, the salary

Bouknight gained from the other companies that Bouknight was able to work at,

solely because he was no longer employed by CIPR, should be deducted from

Bouknight’s damages award.

    26.As explained above, Bouknight sought benefit of the bargain damages,

measured by the amount he claims was owed under the CIPR contract. Under

settled Texas law, however, breach of contract damages must be reduced by the

amount that a party mitigates after the breach.4 That is the same outcome as in

4
  The inability of Bouknight to obtain benefit of the bargain damages against WILMOT was
explicitly argued to the Trial Court at CR1194-95; 1340. At CR1225, paragraph 18, WILMOT
urged to the Trial Court the damages issue of the employment agreement in Lee-Wright, Inc. v.
Hall, 840 S.W.2d 572, 580-81 (Tex. App.-Houston [1st Dist.] 1992, no writ)., That case states
that the general rule concerning mitigation of damages is applied in employment contracts by
requiring a discharged employee to use reasonable diligence to seek other employment. Gulf
Consolidated Int'l, Inc. v. Murphy, 658 S.W.2d 565, 566 (Tex.1983); Professional Serv. Inc. v.
Amaitis, 592 S.W.2d 396, 397 (Tex.Civ.App.—Dallas 1979, writ ref'd n.r.e.). WILMOT has
consistently made his mitigation argument.

                                             11
employment cases for an aggrieved employee: correct damages measure is the

present cash value of the employment contract, less any amounts the employee

should, in the exercise of reasonable diligence, be able to earn through other

employment. See Gulf Consol Int’l Inc. v. Murphy, 658 S.W.2d 565, 566(Tex.
                      5
1983)(per curiam).        When the employee proves that he actually obtained other

employment, he must show the amount actually earned to prove his damages. See

Smith v. Hamilton, 237 S.W.2d 774, 777(Tex.Civ. App. –Austin 1951, no writ).

    27.Likewise, the general rule as to the correct measure of damages for the

wrongful discharge of an employee is the present cash value of the contract to the

employee “... if it had not been breached, less any amounts that he should in the

exercise of reasonable diligence be able to earn through other employment.” Dixie

Glass v. Pollak, 341 S.W.2d 530, 538 (Tex.Civ.App.-Houston, writ ref'd n.r.e.per

curiam, 162 Tex. 440, 347 S.W.2d 596 (1961). That rule should apply in the

present case.

    28.It is the burden of one seeking damages, here Bouknight, to prove them. 6

Bouknight was required to prove his actual damages and any income actually

earned during the period in question was properly admissible as rebuttal evidence.

Since this was evidence in the nature of rebuttal, no pleadings were even necessary

5
  Bouknight in his brief did not contest the fact that this is an employment case arising under
Texas law generally as to employment.
6
  Bouknight denied knowing his gross or taxable income for the relevant years. 2R.R.261-62
                                              12
to support it. Professional Services, Inc. v. Amaitis, 592 S.W.2d 396

(Tex.Civ.App.-Dallas 1979, writ ref'd n.r.e.).

   29.Applying these legal principles here, the judgment against Wilmot should be

reversed and rendered, or a remittitur or a new trial should be granted, because the

undisputed evidence—including Bouknight’s admissions at trial—conclusively

showed that Bouknight made as much or nearly as much money at his new

employer (Willbros Group or the Japanese company he worked for at time of trial),

starting almost immediately after Bouknight claims he left CIPR. In particular,

Bouknight admitted that he received a $220,000 base salary, plus a $25,000 bonus

(paid in 2010) and full benefits, from Willbros after allegedly leaving CIPR in

September 2009, and that he missed at most 1 or 2 paychecks during a one-month

period. He further admitted that as of May 2011 his salary rose to $280,000, plus

full benefits and bonus opportunities (the bonus date with the current employer

was to mature shortly after trial, and that dollar amount was not in evidence).

Bouknight also received $80,000.00 from Spectrum. This totals $920,000.00.

   30.The CIPR contract required 100% of Bouknight’s time. Bouknight could not

be at two jobs at once. As a matter of law, Bouknight cannot recover from Wilmot

the amount of his employment agreement with CIPR for time periods during which

Bouknight had other, paid employment.

   31.In any event, if any recovery is allowed, the best rule, even in a fraud in the

                                         13
inducement case, is that stated years ago in Smith v. Hamilton, 237 S.W.2d 774,

777(Tex.Civ.App.-Austin 1951, no writ), that by the weight of Texas authority, the

rule of minimizing the damages is made applicable to cases such as this, and the

measure of recovery is the sum that would have been earned under the contract,

less what the employee earned in other employment, or by the exercise of

reasonable diligence could have earned during the unexpired portion thereof.

Rogers v. McGuffey, 96 Tex. 565, 74 S.W. 753 (1903); Crews v. Cortez, 102 Tex.
111, 113 S.W. 523(1908).

   32.The law prohibits an injured party from recovering damages that could have

been avoided or were incurred as a result of the failure to mitigate. Alexander and

Alexander v. Bacchus Indus., 754 S.W.2d 252, 253 (Tex.App.—El Paso 1988, writ

denied). Thus, even if Bouknight were correct in all other respects, no award of

damages against a third party can include the amounts Bouknight was paid by his

new employment, which, as described above, totals at least $840,000 in salary and

bonuses alone, plus another $80,000 paid to Bouknight by Spectrum. That means

Bouknight’s recovery of $1,337,500.00 in the Amended Judgment, which

represented the $25,000.00 alleged base salary for the remainder of the CIPR

contract without any reduction for these mitigation amounts, must be reduced by at

least $920,000, to an alternative recovery amount of $417,500.00, and that is

before one considers, as discussed in Wilmot’s earlier briefs, if $25,000 per month

                                        14
is the appropriate monthly amount to apply and what is the appropriate period of

time for the application of that monthly amount, if any.

     33.In sum, the evidence conclusively establishes these mitigation damages, and

as a matter of law, Bouknight cannot recover these amounts. Because the District

Court’s and the Panel ’s damages award includes these amounts, it is an excessive

award, it is supported by no legally or factually sufficient evidence, it is contrary to

the conclusive evidence, and either a rendition or a remittitur or a new trial should

be granted. Allowing Bouknight to recover these amounts from Wilmot, while

Bouknight successfully mitigated his alleged damages, would lead to an

impermissible double recovery and such fails to follow the established law of

mitigation

c.      Bouknight’s fraudulent inducement claim fails, as a matter of law,
        based on the District Court’s own Findings of Fact numbers 1-4 and
        Conclusion of Law number 1 and as found by the Panel.

     34.To prevail on a fraud claim, Bouknight must prove that: (1) Wilmot made a

material representation that was false; (2) Wilmot knew the representation was

false or made it recklessly as a positive assertion without any knowledge of its

truth; (3) Wilmot intended to induce Bouknight to act upon the representation; (4)

Bouknight actually and justifiably relied upon the representation, and (5)

Bouknight had actual injury caused by the Wilmot representation. See Exxon

Corp.v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217(Tex. 2011), Trenholm v.

                                          15
Ratcliff, 646 S.W.2d 927, 930 (Tex.1983). Further, in a fraudulent inducement case

such as Bouknight’s, there are the additional requirements that the tortfeasor must

have reason to expect that the plaintiff will enter into a binding agreement based on

the false representation, and that the plaintiff actually entered into a binding

agreement based on the alleged representation. See Formosa Plastics Corp.v.

Presidio Eng’rs& Contractors, Inc., 960 S.W.2d 41, 48(Tex. 1998); Haase v.

Glazner, 62 S.W.3rd 795, 797-98(Tex. 2001).

    35.Critically, Bouknight does not deny that a fraudulent inducement case

requires as one of its elements a valid binding contract.7 See Formosa Plastics

Corp. v. Presidio Eng’rs & Contractors, Inc., 962 S.W.2d 41, 48(Tex. 1998), and

Haase v. Glazner, 62 S.W. 3rd 795, 797-98(Tex. 2001). Nor could he.

    36.Here, however, the               Trial Court’s only finding of misrepresentation by

Wilmot was that he represented to Bouknight that Wilmot had authority to bind

CIPR to the terms of the CIPR contract, when did not. APX2; Findings 1 and 2.

The Court found that this representation was false, that Wilmot did not have

authority to bind CIPR, and that Wilmot was aware that he did not have such

authority. APX2; Findings 1-4. Yet, these findings, if true – and they are not true,

as they are unsupported by legally or factually sufficient evidence - would defeat

any claim of fraudulent inducement as a matter of law. If Wilmot lacked the ability

7
  And if the CIPR contract was a binding, valid contract then there was no fraud as Wilmot bound CIPR by his
signature. Thus, Bouknight’s entire case falls.

                                                       16
to bind CIPR to an employment contract, then there was no valid and binding

contract and, therefore, a fraudulent inducement claim would fail under Texas law.

See Haase. This fact alone requires reversal and rendition in Wilmot’s favor.

   37.Of course, if – as Wilmot urges in his briefs - there is no legally or factually

sufficient evidence that Wilmot’s alleged material representation was false or

knowingly false, then that means Wilmot did have the ability to bind CIPR to the

employment contract, thereby satisfying the requirement of the existence of a valid

contract element for fraudulent inducement. In that case, however, then there is no

fraudulent inducement because there is no evidence on those required elements of

the fraud claim; there is no material misrepresentation at all. One way or the other,

the fraudulent inducement judgment cannot stand.

   38.In sum, as a matter of law, for there to be any finding of fraud in the

inducement, the CIPR contract must have been a valid, binding contract. If the

CIPR contract is not valid and binding because (as the District Court found in

Findings 1 and 2 and the Panel affirmed) Wilmot lacked the authority to bind CIPR

to it, then there cannot be fraud in the inducement because there is no binding

contract. Haase v. Glazner, 62 S.W.3d 795, 797-98(Tex. 2001). Yet, if the contract

is valid and binding because Wilmot did have authority to bind CIPR, then there

was no misrepresentation and therefore no fraud in the inducement. Either way, the

case must be reversed and rendered.

                                         17
                                   E. CONCLUSION

   39. As it stands, the Panel rather than applying the correct law as to damages

and fraud in the inducement enforced the terms of a contract on a non-party to the

contract even without a showing by the contracting party that such contract was

valid or invalid, and with a showing of a lack of harm to the contracting party. The

entire Court sitting En Banc should review these issues on appeal and render a

cohesive opinion so as to give guidance not only to the litigants in this case but to

others who will read this opinion looking for the correct interpretation particularly

of these particular laws on the allowance of benefit of the bargain damages to a

third party in a fraudulent inducement case.

                                     F. PRAYER

   40. For these reasons, WILMOT respectfully asks the Court to grant this

Motion to Rehear the case En Banc, to hear the issues En Banc, and to reverse and

render the case, or alternatively order a remittitur or a remand, and for such other

relief as this Court deems just.

   SIGNED:          April 17, 2015

                                               Respectfully submitted,

                                               /s/ Michael M. Essmyer, Sr.
                                               MICHAEL M. ESSMYER. SR.
                                               State Bar No. 06672400
                                               Michael M. Essmyer, Jr.
                                         18
     Texas Bar No.24076372
     Essmyer & Daniel. P.C.
     5111 Center Street
     Houston, Texas 77007
     (713)869-1155 Telephone
     (713)869-8659 Facsimile
     messmyer@essmyerdaniel.com

     Attorneys for Appellant
     Chris Wilmot

19
                          CERTIFICATE OF SERVICE

      I hereby certify that on April 17, 2014, Appellant CHRIS WILMOT’S

Motion for En Banc Rehearing was served on the following via by EFile:

Brian Charles Poldrack Via EFile
Anne Marie Finch
ZIMMERMAN AXELRAD MEYER STERN & WISE PC
3040 Post Oak Boulevard, Suite 1300
Houston, Texas 77056

Attorneys for Appellee
Harry A. Bouknight, Jr.

                                                 /s/ Michael M. Essmyer, Sr.
                                                 Michael M. Essmyer, Sr.

                                       20
                     CERTIFICATE OF COMPLIANCE
      As required by TEX. R. APP. P. 9.4(i)(3), I certify that this document was

generated by a computer using Microsoft Word, which indicated the word count of

this document is 4,364 words.

                                                 /s/ Michael M. Essmyer, Sr.

                                      21
Opinion issued March 3, 2015

                                    In The

                             Court of Appeals
                                   For The

                         First District of Texas
                          ————————————
                             NO. 01-13-00738-CV
                          ———————————
                        CHRIS WILMOT, Appellant
                                      V.
                  HARRY A. BOUKNIGHT, JR., Appellee

                   On Appeal from the 295th District Court
                            Harris County, Texas
                      Trial Court Case No. 2010-00373

                                OPINION

      Appellee, Harry A. Bouknight, Jr., sued appellant, Chris Wilmot, for

fraudulent inducement relating to an employment contract and, following a bench

trial, the trial court rendered judgment in Bouknight’s favor. In five issues on

                                                               Exhibit 1
appeal, Wilmot challenges the trial court’s judgment, arguing that (1) Bouknight’s

fraudulent inducement claim fails as a matter of law; (2) the evidence supporting

the trial court’s finding of fraudulent inducement was legally and factually

insufficient; (3) the evidence supporting the trial court’s award of damages was

legally and factually insufficient; (4) various legal doctrines, such as the economic

loss rule, prohibit Wilmot’s liability as a matter of law, and (5) the Texas Supreme

Court’s opinion in Sawyer v. E.I. DuPont De Nemours & Co. precludes

Bouknight’s recovery.

      We affirm.

                                   Background

      Petroci, the national oil company of Côte d’Ivoire in West Africa, wanted to

build a refinery, also known as the Côte d’Ivoire Peace Refinery. Through its

managing director, Kassoum Fadika, it contracted with WCW International, Inc.

(“WCW”) to manage the project, which included everything from obtaining a

feasibility study through final development of the Peace Refinery. Wilmot is the

sole owner of WCW and a majority owner of its holding company, WCW

International Holding Company, Ltd. (“WCW Holding”). In 2007, Wilmot hired a

company called Energy Allied International (“Energy Allied”) to prepare a

feasibility study for building the Peace Refinery.         Bouknight, an engineer

specializing in the energy industry, worked for Energy Allied at the time Wilmot

                                         2
hired it. Bouknight was involved in completing and presenting a feasibility study

on the Peace Refinery Project to government officials in Côte d’Ivoire. The Côte

d’Ivoire government and Petroci approved the Peace Refinery Project and a site

was dedicated in Abidjan, Côte d’Ivoire.

      In November 2007, because of Bouknight’s role in the feasibility study and

his experience in the field, Wilmot sought Bouknight’s participation in the Peace

Refinery Project by asking him to serve as chief operating officer (“COO”).

      In December 2007, planning for the Peace Refinery Project began in earnest.

Energy Allied withdrew from the project because it could not obtain the necessary

funding. Bouknight decided to leave Energy Allied and work for Wilmot at

WCW. Project development activities began in early 2008, and Bouknight signed

an executive employment agreement (“EEA”) with Côte d’Ivoire Peace Refinery

Ltd. (“CIPR”), a corporation formed by Petroci and WCW Holding.

      The EEA provided that it was made effective as of January 5, 2008. It stated

that it was entered into between Bouknight and the “Cote d’Ivoire Peace Refinery

Ltd, a corporation incorporated under the law of the British Virgin Islands, with its

principal place of business at 1001 McKinney, Suite 1660, Houston (hereinafter

referred to as the “Company”).” The EEA stated that the “Company hereby agrees

to engage [Bouknight] as its Chief Operating Officer (“Executive”) and Executive

hereby accepts such employment in accordance with the terms of this Agreement.”

                                           3
It set out Bouknight’s responsibilities as COO, including “solicit[ing], identify[ing]

and secur[ing] new business opportunities for Company” and “manag[ing] and

supervis[ing] the construction of the refinery and related facilities.”

      Regarding compensation, the EEA provided that Bouknight was entitled to a

$100,000 signing bonus, $300,000 in annual salary for the first year, $400,000 in

the following years, and various stock options and other benefits. The majority of

the compensation provisions were contingent upon CIPR’s obtaining initial

funding for its activities: “Executive acknowledges that Company is in the process

of obtaining initial funding for the activities of the Company and execution of the

Project and consequently Company would not be able to commence payment of

the entire base salary until such initial funding is in place.” However, the EEA

provided, “In the interim and until the initial funding is acquired, Company agrees

to pay Executive a monthly allowance of $25,000.”

      The EEA was to remain in effect for a term of five years and was subject to

renewal under certain circumstances. The EEA also provided that it “may be

terminated at Company’s discretion, provided that Company shall pay to Executive

an amount equal to payment at Executive’s base salary rate for the remaining

period of the Agreement.”

      Following execution of the EEA, Bouknight worked to obtain funding for

the Peace Refinery Project. Petroci wired $2.5 million to WCW that Bouknight

                                           4
contended was for the Peace Refinery Project, and Bouknight eventually arranged

a financing deal with a Chinese bank. In the meanwhile, Bouknight was not being

paid regularly under the terms of the EEA. He informed Wilmot that he was not

being paid, and Wilmot told him that he would be paid and that things were just

slow. CIPR paid Bouknight a total of $152,500.

      In April 2009, Bouknight and Wilmot traveled to China to complete the

financing deal. In September 2009, Wilmot sent Bouknight an email terminating

his employment and representing that CIPR would not honor the EEA.

      The Peace Refinery Project subsequently collapsed. According to Wilmot,

this was due in part to the financial collapse that began in 2008 and in part to a war

and regime change in Côte d’Ivoire.

      Bouknight sued Wilmot and WCW for tortious interference with the EEA,

for conspiracy, and for fraudulent inducement, and he also argued that he was

entitled to recover under a quantum meruit theory. Wilmot designated CIPR as a

responsible third party and asserted cross-claims against Bouknight.

      Bouknight testified at trial that Wilmot recruited him to be COO of CIPR,

telling him that he was needed for his technical experience and his previous work

on the project while he was employed by Energy Allied. Bouknight stated that,

based on a verbal agreement between Wilmot and himself, he began working out

of an office at WCW. As far as he was aware, there was never a separate office for

                                          5
CIPR in Houston. Bouknight testified that in January 2008, when he signed the

EEA, Wilmot told him that the agreement had to be between Bouknight and CIPR,

rather than Wilmot individually or WCW, because CIPR was the entity that was

going to lead the development of the Peace Refinery and ultimately operate it.

      At the time he left his employment with Energy Allied and signed the EEA,

Bouknight did not have first-hand knowledge of the financial situation or corporate

structure of CIPR, and he relied upon what Wilmot told him. He testified that

Wilmot negotiated the terms of the EEA with him, acted as his supervisor and

assigned him work on behalf of CIPR, and provided him with his paychecks.

Bouknight became aware that CIPR had a bank account that Wilmot controlled.

He stated that whenever he would complain to Wilmot that he had not been paid in

accordance with the terms of the EEA, Wilmot would assure him that he was

arranging for payment and that Bouknight would be paid soon. Bouknight further

testified that Wilmot was very complimentary of his work on behalf of CIPR.

      However, in September 2009, Bouknight received an email from Wilmot

terminating his employment.       The September 2009 email stated that his

employment on the project had actually been terminated in April 2009, before

Bouknight’s trip to China to obtain funding from a Chinese bank. Shortly after

receiving this email, Bouknight obtained other employment.

                                         6
      Wilmot testified at trial that Bouknight was recruited by other people

involved in the Peace Refinery Project and that he paid Bouknight as a consultant.

He further stated that Bouknight was “kicked out by Energy Allied” and that he

allowed Bouknight to office out of WCW as a favor. Regarding the EEA, Wilmot

testified that he intended to bind CIPR to the EEA. However, he also testified that

he knew he did not have authority to bind CIPR to the EEA at the time he and

Bouknight executed it because his authority was subject to board approval.

Wilmot, who was the chairman of CIPR’s board, stated that the board never met or

considered the EEA. He testified that he never called a board meeting because the

formulation of the board changed and CIPR changed its organizational structure.

      Wilmot testified that in March 2008, approximately two months after he and

Bouknight signed the EEA, he traveled to Côte d’Ivoire and met with the Chief

Executive, Kassoum Fadika, who told him that CIPR could not sign the document.

Wilmot testified that the laws of Côte d’Ivoire precluded Bouknight from being an

employee of CIPR and that Bouknight could only function as a consultant. Wilmot

also testified that the only reason the EEA was ever effective was because he was

trying to do a personal favor for Bouknight after Bouknight lost his job at Energy

Allied. He further testified that he called Bouknight to his office, first in April

2008 and then again in April 2009, and told him that CIPR was terminating the

EEA. After originally indicating that CIPR never approved the EEA and that it

                                        7
was terminated in March 2008, Wilmot subsequently testified that CIPR

terminated the EEA in April 2009.

      Wilmot testified that the EEA was a contingent contract because it was not

enforceable unless initial funding occurred. He argued that initial funding was $40

million, and CIPR never obtained this amount. Wilmot further testified that he and

Bouknight discussed and understood that Bouknight was working as a contractor

and that they did not have a written consultation agreement because he believed a

handshake was sufficient to establish the agreement. Wilmot also argued at trial

that Bouknight never complained of any violations of the EEA in writing.

      Wilmot challenged Bouknight’s ability to pursue liability solely against

Wilmot personally. He testified that he was an agent of CIPR at all relevant times.

As such, he argued, he could not be personally liable to Bouknight under the EEA.

Wilmot also testified that Bouknight knew and worked with Kassoum Fadika,

another principal of CIPR, and that Bouknight was aware that CIPR was a start-up

company with uncertain funding and that the business and political climate in Côte

d’Ivoire was unstable. Thus, he argued, Bouknight was a knowing and willing

participant in the enterprise, and he could not have relied upon any representations

made by Wilmot.

      The trial court found in Bouknight’s favor on his fraudulent inducement

claim against Wilmot individually and awarded Bouknight $1,337,500 in damages

                                         8
on that claim. The trial court determined that Wilmot and WCW did not commit

tortious interference with a contract or conspiracy and that Bouknight was not

entitled to relief for quantum meruit. The trial court likewise found that Wilmot

and WCW failed to establish their counter-claims against Bouknight.

      In its findings of fact and conclusions of law, the trial court found that

Wilmot represented to Bouknight that Wilmot had the authority to bind CIPR to

the terms of the EEA and that “[t]his was an intentional material

misrepresentation.” The trial court further found that Wilmot did not have the

authority to bind CIPR to the EEA, that Wilmot knew he did not have the authority

to bind CIPR to the EEA, and that Bouknight “reasonably relied on [Wilmot’s]

misrepresentations when entering into the [EEA].” The trial court determined that

Bouknight suffered economic damages as a result of Wilmot’s fraud in the

inducement because he was “owed $25,000 a month for five years . . . decreased

by the amount of $152,500.00 which he [had] previously received for his services.”

Accordingly, the trial court concluded that Wilmot “committed fraudulent

inducement against” Bouknight and that Bouknight was entitled to $1,337,500 in

economic damages.

                             Fraudulent Inducement

      In his first issue, Wilmot argues that Bouknight’s fraudulent inducement

claim fails as a matter of law based on the trial court’s findings that Wilmot did not

                                          9
have authority to bind CIPR to the EEA. He argues that if he did not have

authority to bind CIPR to the EEA, then there was no valid and binding contract

and, therefore, Bouknight’s fraudulent inducement claim fails under Texas law. In

his second issue, Wilmot argues that the evidence is legally and factually

insufficient to support the trial court’s findings on each element of fraudulent

inducement. In his fourth issue, Wilmot argues that “[t]here is no legally or

factually sufficient evidence or the [judgment] otherwise cannot legally stand”

because all of his acts were done as an agent of CIPR, the economic loss rule bars

recovery, the EEA’s merger clause prohibits a fraud in the inducement finding, and

CIPR is a responsible third party. In his fifth issue, Wilmot argues that the Texas

Supreme Court case Sawyer v. E.I. DuPont De Nemours & Co. prohibits recovery

for fraudulent inducement in this case. We construe all of these arguments as

attacking the legal and factual sufficiency of the evidence to support trial court’s

judgment in favor of Bouknight on his fraudulent inducement claim.

A.    Standard of Review

      In an appeal of a judgment rendered after a bench trial, the trial court’s

findings of fact have the same weight as a jury’s verdict, and we review the legal

sufficiency of the evidence used to support them just as we would review a jury’s

findings. Daniel v. Falcon Interest Realty Corp., 190 S.W.3d 177, 184 (Tex.

App.—Houston [1st Dist.] 2005, no pet.) (citing Catalina v. Blasdel, 881 S.W.2d
10
295, 297 (Tex. 1994)).      In conducting a legal-sufficiency review, we credit

favorable evidence if a reasonable fact-finder could and disregard contrary

evidence unless a reasonable fact-finder could not. City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex. 2005); Brown v. Brown, 236 S.W.3d 343, 348 (Tex. App.—

Houston [1st Dist.] 2007, no pet.). We consider the evidence in the light most

favorable to the finding under review and indulge every reasonable inference that

would support it. City of Keller, 168 S.W.3d at 822. We sustain a no-evidence

contention only if: (1) the record reveals a complete absence of evidence of a vital

fact; (2) the court is barred by rules of law or of evidence from giving weight to the

only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital

fact is no more than a mere scintilla; or (4) the evidence conclusively establishes

the opposite of the vital fact. Id. at 810; Volkswagen of Am., Inc. v. Ramirez, 159
S.W.3d 897, 903 (Tex. 2004).

      In reviewing a challenge to the factual sufficiency of the evidence, we must

consider and weigh all the evidence and should set aside the judgment only if it is

so contrary to the overwhelming weight of the evidence as to be clearly wrong and

unjust. Arias v. Brookstone, L.P., 265 S.W.3d 459, 468 (Tex. App.—Houston [1st

Dist.] 2007, pet. denied) (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986)).

The trial court acts as fact-finder in a bench trial and is the sole judge of the

credibility of witnesses. HTS Servs., Inc. v. Hallwood Realty Partners, L.P., 190

                                         11
S.W.3d 108, 111 (Tex. App.—Houston [1st Dist.] 2005, no pet.). We review a

trial court’s conclusions of law de novo, and we will uphold the conclusions if the

judgment can be sustained on any legal theory supported by the evidence. BMC

Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); In re Moers,

104 S.W.3d 609, 611 (Tex. App.—Houston [1st Dist.] 2003, no pet.).

B.    Law of Fraudulent Inducement

      The elements of fraud are: (1) that the speaker made a material

misrepresentation (2) that he knew was false when he made it or that he made

recklessly without any knowledge of its truth and as a positive assertion (3) with

the intent that the other party act upon it and (4) that the other party acted in

reliance on the misrepresentation and (5) suffered injury thereby. Italian Cowboy

Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011). A

representation is material if “a reasonable person would attach importance to [it]

and would be induced to act on the information in determining his choice of

actions in the transaction in question.” Id. Fraudulent inducement is a particular

species of fraud that arises only in the context of a contract and requires the

existence of a contract as part of its proof. Haase v. Glazner, 62 S.W.3d 795, 798

(Tex. 2001); Clark v. Power Mktg. Direct, Inc., 192 S.W.3d 796, 799 (Tex. App.—

Houston [1st Dist.] 2006, no pet.). That is, with a fraudulent inducement claim, the

                                        12
elements of fraud must be established as they relate to an agreement between the

parties. Haase, 62 S.W.3d at 798–99.

        Fraud requires a showing of actual and justifiable reliance. Grant Thornton

LLP v. Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010).                   In

evaluating justification, the court considers whether, “given a fraud plaintiff’s

individual characteristics, abilities, and appreciation of facts and circumstances at

or before the time of the alleged fraud[,] it is extremely unlikely that there is actual

reliance on the plaintiff’s part.” Id. (quoting Haralson v. E.F. Hutton Grp., Inc.,

919 F.2d 1014, 1026 (5th Cir. 1990)).

C.      Legal and Factual Sufficiency of the Evidence

        The trial court found that Wilmot made a material misrepresentation to

Bouknight when he represented that he had the authority to bind CIPR to the terms

of the EEA. The trial court further found that Wilmot did not have the authority to

bind CIPR to the EEA, that Wilmot knew he did not have the authority to bind

CIPR to the EEA, and that Wilmot’s misrepresentation was “intentional.” The trial

court    also   found   that   Bouknight       “reasonably   relied   on    [Wilmot’s]

misrepresentations when entering into the [EEA].”

        The misrepresentation identified by the trial court was Wilmot’s

representation to Bouknight that Wilmot had the authority to bind CIPR to the

EEA. This is the type of information that “a reasonable person would attach

                                          13
importance to and would be induced to act on . . . in determining his choice of

actions in the transaction in question.” See Italian Cowboy, 341 S.W.3d at 337.

Thus, it was a material misrepresentation.

      Wilmot signed the EEA in his capacity as “Chairman” of CIPR.                He

acknowledged at trial that he did not have authority to bind CIPR to the EEA and

that he knew he lacked such authority at the time he and Bouknight executed the

EEA. He also knew he needed the approval of CIPR’s board, but he, in his

capacity as chairman of the board, never called a board meeting and never

presented the EEA to the board for approval. He further testified that he knew in

March 2008 that CIPR would not agree to the EEA, but he testified that he did not

provide this information to Bouknight until April 2008 or April 2009. This is

legally and factually sufficient evidence that Wilmot made a material

misrepresentation that he knew was false when he made it. See id.; see also City of

Keller, 168 S.W.3d at 810 (setting out standard for legally sufficiency review);

Arias, 265 S.W.3d at 468 (setting out standard for factual sufficiency review).

      Bouknight, on the other hand, testified that Wilmot recruited him to work as

CIPR’s COO and that he did extensive work for the Peace Refinery Project,

including traveling to Africa and Asia and obtaining funding for the project, while

under the impression that he was an executive of CIPR. He stated that every time

he complained to Wilmot that he was not being paid under the terms of the EEA,

                                         14
Wilmot assured him that the financial arrangements were being made and that he

would receive his full compensation soon. Bouknight testified that Wilmot did not

tell him that CIPR would not honor the EEA until September 2009. This is legally

and factually sufficient evidence that Wilmot misrepresented his authority to enter

into the EEA with the intent that Bouknight act upon it by agreeing to the EEA and

providing services pursuant to its terms. See Italian Cowboy, 341 S.W.3d at 337;

City of Keller, 168 S.W.3d at 810; Arias, 265 S.W.3d at 468.

      Finally, Bouknight testified that, at the time he entered into the EEA and left

his consulting job with Energy Allied, he relied on Wilmot’s representations about

CIPR’s corporate structure and financing. He testified that he performed work for

the Peace Refinery Project in what he believed was his capacity as COO, including

overseeing development and obtaining funding. Specifically, Bouknight testified

that he flew to China to finalize a funding deal with a Chinese bank in April 2009

and that Wilmot did not inform him that CIPR would not honor the EEA until

September 2009, after Bouknight had once again asked about his compensation

and status on the Peace Refinery Project. Wilmot testified that he told Bouknight

that CIPR would not honor the EEA in April 2008 or 2009 and that Bouknight

continued working only as a consultant, but Wilmot acknowledged that they had

no written consulting agreement. Although the parties disagreed about whether

initial funding was obtained that would trigger all of the EEA’s compensation

                                         15
provisions, it is undisputed that Bouknight was not paid the monthly allowance of

$25,000 that was due him under the terms of the EEA “[i]n the interim and until

the initial funding [was] acquired” for the Peace Refinery. Rather, Bouknight was

paid $152,000 for his work between January 2008 and September 2009. Thus,

there was sufficient evidence to support the trial court’s finding that Bouknight

acted in reliance on Wilmot’s misrepresentation and that he suffered injury

thereby. See Italian Cowboy, 341 S.W.3d at 337 (setting out elements of fraud);

City of Keller, 168 S.W.3d at 810; Arias, 265 S.W.3d at 468.

      Likewise, there is evidence that the fraud here arose in the context of a

contract, namely the EEA. See Haase, 62 S.W.3d at 798. Wilmot argues that

because the trial court found that he did not have the authority to bind CIPR to the

EEA, it was not a valid contract and thus will not support a conclusion that he

fraudulently induced Bouknight into the executing the EEA, and he relies on

Haase to support his argument.      However, Haase is distinguishable from the

present case. In Haase, the supreme court held that Texas law imposes a duty to

abstain from inducing another to enter into a contract through the use of fraudulent

misrepresentations, but “there can be no breach of that duty when one is not

induced into a contract.” Id. at 798. The Haase court stated, “[W]hen a party has

not incurred a contractual obligation, it has not been induced to do anything.” Id.

                                        16
It concluded that because the parties in Haase “never reached a final agreement”

the plaintiff could not maintain a fraudulent inducement claim. Id.

      Here, by contrast, the trial court never found that the EEA was not a valid

agreement. It merely found that Wilmot misrepresented his authority to enter into

it on behalf of CIPR. The record demonstrates the existence of a valid contract, in

that Wilmot offered Bouknight employment as the COO of the Peace Refinery

Project, Bouknight accepted his offer, both of them agreed to the terms set forth in

the EEA and executed the agreement, and Bouknight performed his obligations

under the EEA. See DeClaire v. G & B McIntosh Family Ltd. P’ship, 260 S.W.3d
34, 44 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (setting out elements of

valid contract as requiring “(1) an offer, (2) an acceptance, (3) a meeting of the

minds, (4) each party’s consent to the terms, and (5) an execution and delivery of

the contract with the intent that it be mutual and binding”).

      There is likewise evidence of Bouknight’s detrimental reliance on Wilmot’s

misrepresentation: Bouknight left his consulting position with Energy Allied after

being recruited by Wilmot, and he worked on the Peace Refinery Project while

under the impression that he was an executive on the project and believed

Wilmot’s representations that the financing was being arranged and that he would

soon get paid under the terms of the EEA.           See Haase, 62 S.W.3d at 798

(discussing significance of detrimental reliance element of fraudulent inducement

                                          17
claim). Texas courts have long held that when one party enters into a contract with

no intention of performing, that misrepresentation may give rise to an action in

fraud. See, e.g., Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors,

Inc., 960 S.W.2d 41, 46–47 (Tex. 1998); Crim Truck & Tractor Co. v. Navistar

Int’l Transp. Co., 823 S.W.2d 591, 597 (Tex. 1992).

      We conclude that the evidence was legally and factually sufficient to support

the trial court’s conclusion that Wilmot fraudulently induced Bouknight into

executing the EEA.

      Wilmot also argues that he cannot be held liable for fraudulent inducement

in his individual capacity because he acted at all times as an agent of CIPR.

However, as we discussed above, the evidence was sufficient to support the trial

court’s conclusion that Wilmot did not have the authority to bind CIPR to the EEA.

Wilmot has pointed to no legal authority to support his contention that he should

not be held liable for his own acts of fraud. See, e.g., Kingston v. Helm, 82 S.W.3d
755, 758–59 (Tex. App.—Corpus Christi 2002, pet. denied) (holding that

corporation’s employee is personally liable for tortious acts that he directs or

participates in during his employment and that “a corporate agent can be held

individually liable for fraudulent statements or knowing misrepresentations even

when they are made in the capacity of a representative of the corporation”) (citing

Leyendecker & Assocs., Inc v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984), and

                                        18
Commercial Escrow Co. v. Rockport Rebel, Inc., 778 S.W.2d 532, 541 (Tex.

App.—Corpus Christi 1989, writ denied)); Maintenance, Inc. v. ITT Hartford

Group, Inc., 895 S.W.2d 816, 819 (Tex. App.—Texarkana 1995, writ denied) (“An

agent may be liable for its own acts of negligence or fraud committed in

performing a contract for its principal if those negligent or fraudulent acts cause

reasonably foreseeable harm to a third party.”).

      Wilmot argues that the merger clause in the EEA prevents a finding of

fraudulent inducement. However, even a written contract containing a merger

clause can be avoided for fraud in the inducement, and the parol evidence rule does

not stand in the way of proof of such fraud. Italian Cowboy, 341 S.W.3d at 331;

see also Formosa Plastics, 960 S.W.2d at 46 (“This Court has also repeatedly

recognized that a fraud claim can be based on a promise made with no intention of

performing, irrespective of whether the promise is later subsumed within a

contract.”); Dallas Farm Mach. Co. v. Reaves, 307 S.W.2d 233, 239 (Tex. 1957)

(“[T]he law long ago abandoned the position that a contract must be held sacred

regardless of the fraud of one of the parties in procuring it.”).

      Wilmot further argues that the economic loss rule prohibits Bouknight from

prevailing on his fraudulent inducement claim.          This argument likewise fails

because the Texas Supreme Court has held that “tort damages are not precluded

                                           19
simply because a fraudulent representation causes only an economic loss.”

Formosa Plastics, 960 S.W.2d at 47.

      Wilmot also contends that Bouknight’s fraudulent inducement claim must

fail as a matter of law because CIPR was a responsible third party. The trial court

permitted Wilmot to name CIPR as a responsible third party. However, the trial

court did not apportion any liability to CIPR in its findings of fact and conclusions

of law or in its final judgment.     Furthermore, Wilmot has not presented any

evidence that CIPR was a participant in his fraud against Bouknight. Thus, this

argument also fails.

      Finally, Wilmot argues that the supreme court’s opinion in Sawyer v. E.I.

DuPont De Nemours & Co. prohibits Bouknight from establishing his fraudulent

inducement claim. In Sawyer, former employees brought an action against their

former employer, DuPont, alleging that they were fraudulently induced to

terminate their employment with DuPont and accept employment with its wholly-

owned subsidiary, DuPont Textiles and Interiors (“DTI”). 430 S.W.3d 396, 398

(Tex. 2014). The former employees alleged that DuPont assured them that it

would not sell DTI and that they would continue to have the same pay and benefits

they had had at DuPont. Id. However, after the employees moved to DTI, DuPont

sold DTI to another company that reduced the former DuPont employees’ pay and

benefits. Id. The supreme court held that because the employees were at-will

                                         20
employees, they could not bring an action for fraud that depended upon continued

employment, citing the holding of various Texas courts that “a fraud claim cannot

be based on illusory promises of continued at-will employment.” Id. at 400.

      Sawyer is factually distinguishable from the present case, which does not

involve a promise of continued at-will employment. Bouknight was not an at-will

employee of Wilmot’s at the time that Wilmot made the fraudulent

misrepresentation that induced Bouknight to leave his consulting job with Energy

Allied and work for CIPR with Wilmot as his supervisor. In fact, Bouknight was

hired for a term of years pursuant to the EEA, which obligated his new employer to

provide him with at least his base pay for a period of five years unless he was

terminated for cause. Thus, Sawyer does not apply here. Furthermore, as the

Saywer court recognized, its holding in that case did not mean that even an at-will

employee can never sue for fraud. Id. “Recovery of expenses incurred in reliance

on a fraudulent promise of prospective employment has been allowed because

neither the injury nor the recovery depends on continued employment.” Id. Again,

here, Wilmot fraudulently induced Bouknight to enter into the EEA by

misrepresenting his authority to bind CIPR to the EEA. Bouknight performed the

services and duties of the COO as set out in the EEA, but he was not paid

according to its terms because of Wilmot’s fraudulent misrepresentation.

      We overrule Wilmot’s first, second, fourth, and fifth issues.

                                        21
                                     Damages

      In his third issue, Wilmot argues that the evidence is legally and factually

insufficient to support the trial court’s award of damages. Alternatively, he argues

that the amount of damages awarded was excessive.

A.    Damages for Fraudulent Inducement

      Damages for fraudulent inducement typically conform to one of two

measures of damages: an “out-of-pocket” measure or a “benefit-of-the-bargain”

measure. See, e.g., Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768,

775 (Tex. 2009); Formosa Plastics, 960 S.W.2d at 49. “The out of pocket measure

computes the difference between the value paid and the value received, while the

benefit-of-the-bargain measure computes the difference between the value as

represented and the value received.” Aquaplex, Inc., 297 S.W.3d at 775 (quoting

Formosa Plastics, 960 S.W.2d at 49); see also Baylor Univ. v. Sonnichsen, 221
S.W.3d 632, 636 (Tex. 2007) (per curiam) (observing that out-of-pocket damages

“derive from a restitutionary theory,” while benefit-of-the-bargain damages “derive

from an expectancy theory”). “Under the benefit-of-the bargain measure, lost

profits on the bargain may be recovered if such damages are proved with

reasonable certainty.” Aquaplex, Inc., 297 S.W.3d at 776 (citing Formosa Plastics,
960 S.W.2d at 50).

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B.    Sufficiency of the Evidence of Damages

      Here, the trial court found that Bouknight “suffered economic injury as a

result of [Wilmot’s] fraud in the inducement” and that Bouknight “was owed

$25,000 per month for five years.” The trial court found that the amount that

Bouknight was owed must be “decreased by the amount of $152,500 which he

[had] previously received for his services.” It awarded Bouknight damages of

$1,337,500.

      The trial court based its findings on the clause in the EEA that provided, “In

the interim and until the initial funding is acquired, Company agrees to pay

Executive a monthly allowance of $25,000.” The EEA, by its own terms, was to

be effective from when it was executed in January 2008 for a period of five years.

Furthermore, the terms of the agreement required payment of “an amount equal to

[Bouknight’s] base salary rate for the remaining period of the Agreement” if the

EEA was terminated at CIPR’s discretion at any point. It is undisputed that

Bouknight was paid $152,500 for his work. Thus, there was sufficient evidence to

support the trial court’s conclusion that $1,337,500 constituted the benefit of the

bargain to Bouknight. Stated another way, that amount, as proved with reasonable

certainty by Bouknight based on the terms of the EEA and the evidence presented

at trial, reflected the difference between the value of the EEA as represented to

                                        23
Bouknight and the value he actually received. See Aquaplex, Inc., 297 S.W.3d at

775–76.

      Wilmot argues that Bouknight could not obtain benefit-of-the-bargain

damages in this case because Bouknight did not contract with Wilmot in his

individual capacity. However, as we have already held, the record demonstrates

the existence of a valid contract, in that Wilmot offered Bouknight employment as

the COO of the Peace Refinery Project, Bouknight accepted his offer, both of them

agreed to the terms set forth in the EEA and executed the agreement, and

Bouknight performed his obligations under the EEA. See DeClaire, 260 S.W.3d at

44 (setting out elements for valid contract). Likewise, Wilmot has not presented

any valid legal theory supporting his claim that he cannot be held individually

liable for his own act of fraud. See, e.g., Kingston, 82 S.W.3d at 758–59.

      Wilmot also argues that Bouknight mitigated his damages by working

elsewhere following his termination in 2009. However, the fact that Bouknight

was subsequently employed by a different company is irrelevant in determining the

benefit he anticipated from the performance of the EEA. The EEA entitled him to

five years of his base salary if CIPR terminated his employment in its discretion

before the EEA expired on its own terms. The EEA did not limit Bouknight’s

ability to find new employment upon termination or otherwise condition the

payment of his base salary for the full term of the contract on his remaining

                                         24
unemployed after being terminated by CIPR at its discretion. An injured party is

required to exercise reasonable care to minimize his damages, if the damages can

be avoided with only slight expense and reasonable effort. Harris Cnty. v. Smoker,

934 S.W.2d 714, 721 (Tex. App.—Houston [1st Dist.] 1996, writ denied). As the

terms of the EEA demonstrate, no action on Bouknight’s part could have

minimized his employer’s damages for the failure of the EEA. See id. Wilmot

does not cite any authority indicating that Bouknight should not receive as

damages the amount he would have received under the EEA had it been performed

according to its terms. See Cook Composites, Inc. v. Westlake Styrene Corp., 15
S.W.3d 124, 135 (Tex. App.—Houston [14th Dist.] 2000, pet. dism’d) (holding

that breaching party bears burden of proving that damages could have been

mitigated and that injured party was not required to mitigate its damages by

forgoing its rights and remedies under its agreement with breaching party).

      Wilmot also argues that there was no evidence that his fraudulent

inducement was the proximate cause of Bouknight’s damages. He argues that

factors such as the financial crash of 2008 and the civil war in Côte d’Ivoire were

the causes of the failure of the Peace Refinery Project and CIPR. However, as

discussed above, the evidence demonstrates that Wilmot induced Bouknight into

the EEA by misrepresenting his ability to bind CIPR to the terms of the EEA.

According to Wilmot’s own testimony, CIPR never intended to honor the EEA,

                                        25
and Wilmot knew this within two months after he and Bouknight executed the

EEA.     However, he continued to assign Bouknight job responsibilities and

Bouknight performed his obligations under the EEA for more than a year and a

half, relying on Wilmot’s initial misrepresentation and on his continued

representations that the financing was being arranged and that Bouknight would

eventually be paid pursuant to the EEA. We conclude that there is evidence that

Wilmot’s misrepresentation was the cause of Bouknight’s damages, as found by

the trial court.

       Wilmot also argues that Bouknight waived his $25,000 per month allowance

and that Bouknight waived any requirement of written notice of termination, but

these contentions are likewise unsupported by the record. Wilmot further contends

that employment law principles limit Bouknight’s recovery in this case. However,

Wilmot does not point to any place in the record where he presented this argument

to the trial court. Accordingly, it is waived. See TEX. R. APP. P. 33.1(a).

       We overrule Wilmot’s third issue.

                                    Conclusion

       We affirm the judgment of the trial court.

                                                Evelyn V. Keyes
                                                Justice

Panel consists of Chief Justice Radack and Justices Jennings and Keyes.

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