Court Opinion

ID: 3095837
Source: CourtListenerOpinion
Date Created: 2015-10-16 04:34:05.425708+00
Date Added: 2024-06-11T07:38:25.715047
License: Public Domain

COURT OF APPEALS
                                     EIGHTH DISTRICT OF TEXAS
                                          EL PASO, TEXAS

    DANIEL ROJAS, CARLA ROJAS,                           §
    ATM’S OF EL PASO, DANCAR
    ENTERPRISES, INC., and DOCUMENT                      §                 No. 08-11-00072-CV
    PROCESSING SYSTEMS, INC.,
                                                         §                    Appeal from the
                                  Appellants,
                                                         §              34th Judicial District Court
    v.
                                                         §               of El Paso County, Texas
    DAVID DUARTE and ELIZABETH
    DUARTE,                                              §                    (TC#2007-2949)

                                  Appellees.             §

                                                 OPINION

         David Duarte sued Daniel Rojas alleging that he and Rojas verbally formed a partnership

for the purpose of acquiring and operating ATMs.1 Duarte sought to establish the existence of the

partnership and the value of his one-half interest in the partnership. The jury found that a

partnership existed and that the value of Duarte’s one-half interest was $119,000. In accordance

with the jury’s verdict, the trial court rendered judgment for Duarte and against Rojas. Rojas

appeals, contending the evidence was legally insufficient to support the jury’s finding of a

partnership and award of damages. We affirm, in part, and reverse and remand, in part.

                         FACTUAL AND PROCEDURAL BACKGROUND

         Rojas and Duarte grew up together. Duarte considered Rojas his mentor, and Rojas took

Duarte under his wing, occasionally helping Duarte find work. At one of those jobs, Duarte

learned how to repair, maintain, and program ATM machines. Duarte knew that Congress had
1
 Duarte was joined by his wife, Elizabeth. They sued Rojas and Rojas’s wife, Carla, and some of the entities through
which the business operated, i.e., ATM’s of El Paso, Dancar Enterprises, Inc., and Document Processing Systems, Inc.
For the sake of simplicity and convenience, we refer to the parties as “Duarte” and “Rojas.”
passed legislation permitting individuals to own and operate ATMs, and when he became aware

that a particular business had several ATMs sitting unused in a warehouse, he bought one and

approached Rojas about acquiring, selling, and operating ATMs together. At trial, Duarte

testified that Rojas assented to his proposal and that, in the fall of 2002, they agreed to be partners,

splitting profits and liabilities equally and reinvesting profits into the business. Rojas, on the

other hand, testified that he and Duarte were not partners and that Duarte was merely contract labor

who helped him operate the ATM business, which he began previously with his wife. The

business grew handsomely, but by May 2005 the relationship between Rojas and Duarte had

soured to the point where they agreed to go their separate ways. Duarte testified that he and Rojas

agreed to divide the partnership’s assets and property equally, with Rojas keeping the ATM’s

located on the West Side of El Paso and in Las Cruces, New Mexico and Duarte keeping the

remaining ATM’s located in El Paso. Rojas had his accountant assist Duarte in establishing a

corporation, and Duarte retained the name of the business, ATM’s of El Paso. The division of

assets and property never occurred, however. Duarte testified that after Rojas returned from a

trip, Rojas told him that he was keeping all the ATMs because he needed them to expand into

interchange processing, and that, instead, Rojas was going to give Duarte $1,000 per month until

Rojas paid him out. Duarte received a grand total of $2,500.

        Duarte eventually sued Rojas. At trial, Duarte presented evidence from an expert who

opined that the partnership was worth $420,000 as of December 31, 2008. At the close of

evidence, Rojas moved for a directed verdict on several bases. The trial court granted the motion

for directed verdict as to the claims of conversion and punitive damages, but denied it as to the

other claims. The trial court did, however, instruct the jury to determine what the value of

                                                   2
Duarte’s partnership interest was as of either May 31, 2005 or December 31, 2008. The jury

found that Duarte voluntarily withdrew from the partnership and determined that he had incurred

damages of $119,000. After trial, Rojas moved for judgment n.o.v. on the bases, among others,

that there was no evidence that a partnership existed and no evidence that the value of Duarte’s

partnership interest was $119,000 as of May 31, 2005. The trial court denied the motion by

implication when it signed the final judgment in favor of Duarte.

                                    STANDARD OF REVIEW

       By three issues, Rojas contends that the trial court erred by denying its motions for directed

verdict and for judgment n.o.v. because the evidence is legally insufficient to support the jury’s

findings. We review the trial court’s ruling on a motion for directed verdict under a legal

sufficiency standard. City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005). Likewise, we

review the trial court’s ruling on a motion for judgment n.o.v. under a legal sufficiency standard.

Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009), citing City of Keller,
168 S.W.3d at 823.

       In reviewing the legal sufficiency of the evidence, we review the evidence in the light most

favorable to the jury’s verdict, crediting evidence favorable to that party if reasonable jurors could,

and disregarding contrary evidence unless reasonable jurors could not. City of Keller, 168
S.W.3d at 827. If more than a “scintilla of evidence” exists to support the jury’s findings, it is

legally sufficient. City of Keller, 168 S.W.3d at 822. More than a “scintilla of evidence” exists

when the evidence supporting the finding, as a whole, would enable reasonable and fair-minded

people to differ in their conclusions. Id. As the sole judge of the weight and credibility of the

evidence, the jury is entitled to resolve any conflicts in the evidence and to choose which

                                                  3
testimony to believe. Id. at 819. We therefore assume that jurors decided questions of

credibility or conflicting evidence in favor of the verdict if they reasonably could do so. Id. at

819, 820. Accordingly, we do not substitute our judgment for that of the jurors if the evidence

falls within this zone of reasonable disagreement. Id. at 822.

                                   EXISTENCE OF PARTNERSHIP

        In his first issue, Rojas argues that the trial court erred by denying his motions for directed

verdict and for JNOV because “there was no evidence that the parties created a partnership, even if

one was legally possible.” We disagree.

                                               Applicable Law

        Both Rojas and Duarte agree that the applicable law in this case is the Texas Revised

Partnership Act (TRPA), as construed by the Texas Supreme Court in Ingram v. Deere, 288
S.W.3d 886 (Tex. 2009).2 The TRPA provides that “an association of two or more persons to

carry on a business for profit as owners creates a partnership . . . .” TEX.REV.CIV.STAT.ANN.

art. 6132b–2.02(a). Pursuant to the TRPA, five factors indicate the creation of a partnership: (1)

receipt or right to receive a share of profits of the business; (2) expression of an intent to be

partners in the business; (3) participation in or right to participate in control of the business; (4)

sharing or agreeing to share losses or liability; and (5) contributing or agreeing to contribute

money or property to the business. TEX.REV.CIV.STAT.ANN. art. 6132b–2.03(a).

        When determining whether a partnership exists under the TRPA, the fact finder must

consider the totality of the circumstances bearing on the evidence in support of the five statutory

2
  Although the TRPA expired on January 1, 2010, it was in effect during all of the events made the basis of this
lawsuit. See Act of May 31, 1993, 73rd Leg., R.S., ch. 917, § 1, 1993 Tex Gen. Laws 3887, 3890 (expired January 1,
2010) (former TEX.REV.CIV.STAT.ANN. arts. 6132b–2.02(a), 6132b–2.03(a)). The Texas Business Organizations
Code now applies to all partnerships, regardless of their formation date. See generally TEX.BUS.ORGS.CODE
ANN. § 152.001-.914 (West 2012), Ingram, 288 S.W.3d at 894 n.4.
                                                        4
factors. Ingram, 288 S.W.3d at 896. Under this approach, the evidence, or lack thereof, in

support of the five factors is considered on a continuum. On one end of the continuum, a

partnership exists as a matter of law when conclusive evidence supports all five statutory factors.

Id. at 898. On the other end of the continuum, a partnership does not exist as a matter of law when

there is no evidence as to any of the five factors, and conclusive evidence of only one factor will

normally be insufficient to establish the existence of a partnership. Id. Points on the evidentiary

continuum between these two ends are where the challenge lies in applying the

totality-of-the-circumstances test. Id. at 896. As the statutory comments to the TRPA make

clear, this is because “it is not feasible to say exactly which [statutory] factors must be present, or

what the relative weights of the factors should be.” TEX.REV.CIV.STAT.ANN. art. 6132b–2.03

cmt.

                                              Discussion

       We now turn our focus to the evidence pertaining to each of the five statutory factors to

determine whether the evidence was legally sufficient to support the jury’s finding that Duarte and

Rojas were partners.

                                         1. Sharing Profits

       The first factor is “receipt or right to receive a share of profits of the business,” a factor that,

along with the right to control, has traditionally been important in determining whether a

partnership exists and “will probably continue to be [one of] the most important under the

[TRPA].” TEX.REV.CIV.STAT.ANN. art. 6132b–2.03(a)(1), cmt. Rojas argues that “[t]here is

no evidence that [Duarte] ever got a nickel from the profits of the business.” Instead, Rojas

contends that Duarte was paid as an independent contractor and that, in 2003, he prepared some

                                                    5
“split sheets” to entice Duarte to buy stock in Dancar Enterprises3 by showing Duarte what his

profits would be if he were to become a shareholder. We agree that there is no evidence that

Duarte actually received a share of the profits. There is evidence in the record, however, of

Duarte’s right to share profits.

        Duarte testified that he and Rojas agreed to be partners, to split profits and liabilities

equally, and to reinvest profits back into the business to support its growth. Duarte’s testimony

that he and Rojas agreed to split the profits equally is supported by the aforementioned “split

sheets” Rojas prepared for Duarte in 2003. Each of the three “split sheets” lists the revenues

generated by the business, the expenses associated with running the business, and the “Total split

amount” allocated to Duarte and Rojas. Two of the “split sheets” allocate the net profits to Duarte

and Rojas equally. One of the “split sheets” allocating the net profits equally has the notation

“what we would have made w/processing *3,057.70*.” [Emphasis added]. And significantly,

nothing in the “split sheets” indicates that they were prepared for the purpose of enticing Duarte to

buy stock in Dancar, as Rojas maintains. Duarte’s testimony and the “split sheets” prepared by

Rojas constitute more than scintilla of evidence of an agreement to share profits.

                                                  2. Intent

        The second statutory factor is “expression of an intent to be partners in the business.”

TEX.REV.CIV.STAT.ANN. art. 6132b–2.03(a)(2). “Evidence of expression of intent could

include . . . the parties’ statements that they are partners,” but “there must be evidence that both

parties expressed their intent to be partners.” Ingram, 288 S.W.3d at 900. Rojas contends that

the testimony of three witnesses that Duarte and Rojas introduced themselves as partners, while

3
 As noted above in footnote number one, Dancar Enterprises was one of the entities through which the ATM business
operated.
                                                       6
probative, was legally insufficient to establish the existence of a partnership when Rojas in fact

“did not want [Duarte] to be a partner.” We do not dispute that Rojas testified that he did not want

Duarte to be a partner. However, Duarte adduced some evidence that both he and Rojas

expressed an intent to be partners.

         Three witnesses testified that, in different business settings, Rojas and Duarte introduced

themselves as partners. Cecilia Ayers, a childhood friend of Duarte’s, testified that Rojas and

Duarte presented themselves as partners to her and to her boss at a wine festival where they had

installed an ATM machine. Likewise, Margaret McGuire Luevano, a woman Duarte had known

many years and one of the first people Duarte solicited to buy an ATM machine, testified that

Rojas and Duarte presented themselves as partners to her at a restaurant where they had gathered to

finalize her purchase of an ATM machine. Finally, Jaime Romo, Luevano’s son and longtime

friend of Duarte’s whom Duarte had asked to apprise Luevano of the opportunity to buy an ATM

machine, testified that Rojas introduced himself as Duarte’s partner at the aforementioned

restaurant.4 Rojas attempts to diminish the impact of Romo’s testimony by directing us to his

testimony that when he referred to Duarte as his “partner” he used the word as a term of

endearment, not in its legal sense. (Rojas’s testimony, however, finds no independent support in

the record and flies directly in the face of the testimony of the three witnesses identified above,

each of whom had no stake in the outcome of the lawsuit. The testimony of these witnesses

constitutes more than scintilla of evidence that both Duarte and Rojas expressed an intent to be

partners.

                                                    3. Control

4
  In his brief, Rojas contends that his introduction to Romo as Duarte’s partner “cannot be said to [sic] a sufficient
expression of intent to someone you’ve never before met.” Rojas, however, cites no authority for this proposition.
                                                           7
       The third factor under the TRPA is participation in or right to participate in control of the

business, which, as noted above, has always been an important factor and “will probably continue

to be [one of] the most important under the [TRPA].” TEX.REV.CIV.STAT.ANN. art. 6132b–

2.03(a)(3), cmt. “The right to control a business is the right to make executive decisions.”

Ingram, 288 S.W.3d at 901. Several sub-factors are relevant to concluding that a party has the

right to make executive decisions, including: (1) the exercise of authority over the business’s

operation; (2) the right to write checks on the business’s checking account; (3) control over and

access to the business’s books; and (4) the receipt of and management of all of the business’s

assets and monies. Id. at 901-02. Rojas asserts that Duarte did not have the right to make

executive decisions because Duarte lacked control over the business’s books and checkbook and

over the entity the partnership operated through when it began. We do not dispute that Rojas was

in charge of the business’s accounting and that he compiled the financial information to which

Duarte had access. However, there was evidence adduced at trial that Duarte had the right to

make, and did make, executive decisions.

       Duarte testified that he exercised authority over some of the business’s operations.

According to Duarte, he was in charge of sales, public relations, customer service, and the

maintenance, repair, and installation of the ATM’s. Duarte also testified that, although Rojas was

“management,” they made some decisions collaboratively. For example, when Duarte spotted a

good location for an ATM, he discussed the opportunity with Rojas and together they decided

whether to proceed. In addition, Duarte testified that he had complete access to the business’s

checking account and had the right to write checks from the account. In support of his testimony,

Duarte introduced into evidence the business account application submitted to the bank in which

                                                 8
he was identified as an owner and key individual. The evidence undermines Rojas’s testimony

that Duarte was granted access to the account only for convenience. Furthermore, Duarte

testified that he had daily, unrestricted access to the business’s books and records, which were kept

at Rojas’s home – to which Duarte had a key. According to Duarte, he also had access to monitor

the ATM’s. Duarte’s testimony and the evidence introduced at trial constitutes more than

scintilla of evidence that Duarte participated in or had the right to participate in control of the

business.

                                         4. Sharing Losses

        The fourth statutory factor is sharing or agreeing to share losses or liability.

TEX.REV.CIV.STAT.ANN. art. 6132b–2.03(a)(4). Although an agreement to share losses or

liabilities is not necessary to create a partnership under the TRPA, the existence of such an

agreement supports the existence of a partnership. TEX.REV.CIV.STAT.ANN. art. 6132b–

2.03(c); Ingram, 288 S.W.3d at 902. Rojas argues that there is no evidence that Rojas shared

losses because “there were no losses in the sense that expenses exceeded income . . . .” Although

Rojas is correct that there is no evidence that the business ever lost money, this is not the relevant

test. The relevant test is whether Duarte shared or agreed to share losses or liabilities. See

TEX.REV.CIV.STAT.ANN. art. 6132b–2.03(a)(4). There is evidence in the record that Duarte

agreed to share, and did share, liabilities.

        Duarte testified that he and Rojas agreed to share equally the liabilities incurred in buying

back ATM machines from their customers, and, in accordance with their agreement, bought back

machines from Luevano and two gentlemen named Tovar and Betancourt. These purchases were

recorded, and characterized as expenses in two of the three “split sheets” Rojas provided Duarte.

                                                   9
These two “split sheets” reflect that, after expenses were subtracted, including the repurchase of

the ATM machines, Duarte and Rojas shared equally in the profits. When considered in the light

most favorable to the jury’s verdict, Duarte’s testimony and the “split sheets” prepared by Rojas

constitute more than scintilla of evidence that Duarte and Rojas agreed to share, and did share,

liabilities. See City of Keller, 168 S.W.3d at 827.

                                        5. Contribution

       The fifth and final factor is whether the alleged partners contributed or agreed to contribute

money or property to the business. TEX.REV.CIV.STAT.ANN. art. 6132b–2.03(a)(5). The

TRPA defines “property” as “all property, real, personal, or mixed, tangible or intangible, or an

interest in that property.” TEX.REV.CIV.STAT.ANN. art. 6132b–1.01(15). Rojas contends

that there is no evidence that Duarte contributed “any money to the venture,” and that if Duarte did

contribute property in the form of a single ATM machine, the money for that machine and the

others was provided by entities controlled by Rojas. Duarte testified, however, that he

contributed money to the business and agreed to reinvest his profits back into the business, which,

by all accounts, did occur. Duarte also testified that he contributed several ATMs to the business.

Contrary to Rojas’s assertion, Duarte’s testimony constitutes more than a scintilla of evidence that

he agreed to contribute, and did contribute, money and property to the business.

                                         6. Conclusion

       We conclude that the record contains more than a scintilla of evidence in support of each of

the five factors of the TRPA. Though the evidence as to each and every factor may not be

conclusive, it is nonetheless sufficient to enable reasonable and fair-minded people to differ in

their conclusions. As established above, there is ample evidence in the record that Duarte shared

                                                10
profits and control over some aspects of the business, the two factors that the statutory comments

to the TRPA state that will probably continue to the most important factors in determining whether

a partnership exists. See TEX.REV.CIV.STAT.ANN. art. 6132b–2.03 cmt. Accordingly, we

conclude that the evidence is legally sufficient to support the jury’s finding of a partnership.

Rojas’s first issue is overruled.

                                BREACH OF FIDUCIARY DUTY

        In his second issue, Rojas argues that he did not breach any fiduciary duty to Duarte

because there was no partnership from which a fiduciary duty arose. This argument fails,

however, because as established above, the evidence is legally sufficient for the jury to have found

that Duarte and Rojas were partners. Rojas’s second issue is overruled.

                                            DAMAGES

        In his third and final issue, Rojas argues that the jury’s award of $119,000 in damages is

erroneous because “[t]here is absolutely no evidence in the record to support” the jury’s finding

that this amount was the value of half of the partnership on May 31, 2005. In so arguing, Rojas

asserts that nothing in his financial exhibits or in the report from Duarte’s business valuation

expert, who opined that the value of the business was $420,000 as of December 31, 2008, provided

the jury with a rational basis to calculate damages of $119,000. We agree.

                                          Applicable Law

        As a general rule, the jury has broad discretion to award damages within the range of

evidence presented at trial, as long as there is a rational basis for the jury’s calculation. Gulf

States Utils. Co. v. Low, 79 S.W.3d 561, 566 (Tex. 2002); Mayberry v. Tex. Dep’t of Agric., 948
S.W.2d 312, 317 (Tex.App.--Austin 1997, writ denied). If there is a rational basis for the jury’s

                                                 11
calculation, its damages award will not be disregarded and set aside, even if it is unclear in the

record exactly how the jury calculated the award. First State Bank v. Keilman, 851 S.W.2d 914,

930 (Tex.App.--Austin 1993, writ denied). If, however, there is no rational basis for the jury’s

calculation, i.e., a calculation that is not authorized or supported by, or properly extrapolated from,

the evidence presented at trial, the jury’s damages award will be disregarded and set aside. See id.

at 930-31 (damages neither authorized nor supported by the evidence may be disregarded).

                                             Discussion

       In this case, there is no doubt that Duarte suffered some amount of damages. However,

there is no rational basis for the jury’s award of $119,000 in damages. Neither of the parties have

been able to explain in their briefs or at oral argument how the jury arrived at that figure. In his

brief, and at oral argument, Duarte offered several theories as to how the jury could have arrived at

$119,000, but his attempts to justify the amount do not find reasonable support in the record.

       The evidence presented by Duarte provided a relatively precise method for calculating the

value of the partnership as of one date and one date only – December 31, 2008. In opining that the

value of the partnership was $420,000 as of that date, Duarte’s expert relied, in large part, on the

business’s federal income tax returns, general ledger reports, and financial statements for the

four-year period beginning December 31, 2005 and ending December 31, 2008. These records

contained a variety of numbers to which Duarte’s expert applied several tools of valuation

analysis. He “normalized” assets, income, and cash flow by adjusting for items not representative

of the business’s value as a going-concern, applied a discount rate to the “normalized” figures, and

added back cash in excess of that required to sustain the business’s operations. As is evident,

Duarte’s expert did an excellent job of identifying for the jury the financial aspects of the business

                                                  12
that he considered important in determining its value, and providing it with his calculation, the

source of the numbers inputted into his calculation, and the result of his calculation. The problem

is that the data relied upon by Duarte’s expert and the valuation methods he used are pertinent only

to the value of the partnership as of December 31, 2008. Nothing in the expert’s testimony or

report identifies any other date on which the value of the partnership was, or could have been,

calculated by using the same data and methods. Given these constraints, the jury’s determination

that $119,000 was the value of Duarte’s partnership as of May 31, 2005 was not authorized or

supported by the evidence presented at trial. Moreover, as a result of these shortcomings, the jury

lacked sufficient data from which to extrapolate properly that the value of the partnership was

$119,000 as of May 31, 2005.

       Because Duarte failed to prove the amount of his damages with reasonable certainty, the

evidence is legally insufficient to support the jury’s damages award.

                                         DISPOSITION

       Rojas requests that we reverse the judgment of the trial court and render judgment that

Duarte take-nothing. Given our conclusion that the evidence was legally insufficient to support

the jury’s damages award, the traditional relief would be to reverse and render a take-nothing

judgment. See Larson v. Cactus Util. Co.,730 S.W.2d 640, 641 (Tex. 1987)(articulating general

rule that when an appellate court finds the evidence legally insufficient to support a damages

verdict, the court should reverse and render a take-nothing judgment as to that amount).

However, pursuant to Rule of Appellate Procedure 43.3, we have broad discretion to reverse and

remand a case for a new trial in the interests of justice. See TEX.R.APP.P. 43.3 (providing for

such a disposition); Fanning v. Fanning, 847 S.W.2d 225, 226 (Tex. 1993)(Opin. on

                                                13
reh’g)(appellate courts have broad discretion to reverse and remand in the interests of justice).

       Remand in the interests of justice is appropriate in a case where the plaintiff has proved

liability and that he has sustained some loss as result, but has failed to prove the amount of

damages with reasonable certainty. See Williams v. Gaines, 943 S.W.2d 185, 193

(Tex.App.--Amarillo 1997, writ denied)(concluding that, although no evidence was presented that

met the definition of fair market value in the jury’s instructions, remand for a new trial on damages

was appropriate in the interests of justice because the jury found that the parties had an agreement,

that the defendant breached the agreement, and that the plaintiff sustained some loss as a result);

A.B.F. Freight Sys., Inc. v. Austrian Import Serv., Inc.,798 S.W.2d 606, 616 (Tex.App.--Dallas

1990, writ denied)(concluding that, although plaintiff did not prove its damages with reasonable

certainty, there was some evidence which showed damages generally, and interests of justice,

therefore, required remand for new trial). Here, the jury found the existence of a partnership

between Duarte and Rojas and that although Duarte voluntarily withdrew from the partnership, he

was not adequately compensated by Rojas and sustained damages as a result. Under these

circumstances, the interests of justice require that Duarte be given an opportunity to prove the

amount of his damages with reasonable certainty.

                                         CONCLUSION

       Accordingly, we reverse that portion of the trial court’s judgment awarding $119,000 to

Duarte and remand this case to the trial court for a new trial as to Duarte’s damages only as of May

31, 2005. In all other respects, the judgment of the trial court is affirmed.

November 30, 2012
                                              CHRISTOPHER ANTCLIFF, Justice

                                                 14
Before McClure, C.J., Antcliff, J., and Medrano, Judge
Medrano, Judge (Sitting by Assignment)

                                              15