Court Opinion

ID: 6336820
Source: CourtListenerOpinion
Date Created: 2022-05-02 07:21:10.283926+00
Date Added: 2024-06-11T09:24:18.219461
License: Public Domain

Affirmed and Majority and Concurring Opinions filed April 28, 2022.

                                  In The

                  Fourteenth Court of Appeals

                           NO. 14-20-00558-CV

         LITIGATION & RECORDS SERVICES, LLC, Appellant

                                    V.
                 QTAT BPO SOLUTIONS, INC., Appellee

                                   and

             QTAT BPO SOLUTIONS, INC., Cross-Appellant

                                    V.

 LITIGATION & RECORDS SERVICES, LLC; JAMES LEE, JR.; JAMES
 LEE LAW FIRM, PC; LEE & MURPHY LAW FIRM, GP; CLAYTON A.
   CLARK; CLAYTON A. CLARK, ESQ., PC; AND CLARK LOVE &
                 HUTSON, GP, Cross-Appellees

                  On Appeal from the 281st District Court
                          Harris County, Texas
                    Trial Court Cause No. 2015-50482
                      MAJORITY OPINION

      This appeal involves a commercial dispute between a litigation services
entity and its subcontractor. A group of Houston lawyers formed a record retrieval
and review company, Litigation & Records Services, LLC (“LRS”).                  LRS
subcontracted some of its work to a company with operations in India, QTAT BPO
Solutions, Inc. LRS and QTAT worked together for almost two years before the
relationship soured and ultimately ended. QTAT sued LRS, and a jury found that
LRS breached the parties’ contract and, along with an individual lawyer associated
with LRS, committed fraud. After the verdict, the trial court dismissed the fraud
claim for insufficient evidence but signed a judgment awarding contract damages
to QTAT.

      Both sides appealed.      LRS challenges the sufficiency of the evidence
supporting the jury’s contract damages finding, but we hold that legally sufficient
evidence supports the award. QTAT challenges the trial court’s dismissal of its
fraud claim, but we hold that QTAT presented no evidence of an essential element
of fraud:   a material misrepresentation.     We also find no merit to QTAT’s
complaint that the trial court abused its discretion in denying QTAT leave to
amend its petition to add theories of derivative liability after the pleading deadline
had passed.     QTAT’s remaining challenges to various discovery, summary
judgment, and evidentiary rulings are moot.

      We affirm the trial court’s judgment.

                                    Background

      Attorneys James Lee, Jr. and Clayton A. Clark practiced law together before
Lee founded his own firm with attorney Erin Murphy, the Lee Murphy Law Firm
(“Lee Murphy”). Clark remained at the firm now known as Clark Love & Huston

                                          2
(“Clark Love”).    Both Lee and Clark, and their respective firms, represented
claimants in mass-tort personal injury lawsuits, including suits against the
manufacturers of transvaginal mesh.

      In 2011, Clark Love and Lee Murphy formed LRS. LRS’s purpose was to
review potential claimants’ medical records so that law firms (including the law
firms that owned LRS) could assess possible claims arising in certain mass-tort
litigation. LRS in turn sought to subcontract much of its record-review work to
QTAT based on the rationale that QTAT could perform the work more
inexpensively.

      QTAT began work for LRS in January 2012, although Lee and Afshan
Khan, QTAT’s president, did not sign a written letter agreement until July 2012
(the “Contract”). We discuss the Contract’s specific provisions below, but broadly
speaking, the agreement confirmed the parties’ understanding regarding “medical
record retrieval and nurse review projects.” LRS agreed to pay QTAT monthly for
its reasonable and necessary invoices, which would be “at cost” and would not
include any profit margin for QTAT. The invoices were to include “the actual
necessary costs associated with QTAT hiring its employees for LRS projects.”
The Contract also expressed the parties’ intent to split “net profits” 25% to QTAT
and 75% to LRS. Any net profit would be calculated “after deduction of all
overhead, expenses and fixed asset costs necessary to run the LRS business/QTAT
business.” The Contract contained several cautionary statements, such as “the
future remains uncertain” and “LRS net profits remain unknown.” But Lee also
stated in the Contract that he was “confident and optimistic about the future” and
that it was his intent “to realize a profit as soon as possible.” According to QTAT,
Lee orally represented to QTAT that, if QTAT agreed to bill only its costs and wait

                                         3
to receive profits after settlement or litigation of the mass-tort dockets, QTAT
stood to make $20 million.

       QTAT provided record-retrieval, record-review, and data-entry services, for
which it invoiced LRS approximately $1.9 million, representing twenty-two
months of labor costs. LRS paid those invoices. QTAT also invoiced LRS for
$821,108.53 in “operational and deployment expenses.” LRS did not pay those
invoices. Further, QTAT did not receive any profit share at any time. LRS
contends that it never made a profit and, in fact, lost more than $9 million before
shuttering in 2016.

       LRS allegedly became increasingly frustrated with not realizing promised or
expected savings and suspected that QTAT was overbilling. In November 2013,
LRS terminated its agreement with QTAT. In 2015, QTAT filed suit against LRS,
Lee, Clark, Lee Murphy, and Clark Love.1 QTAT asserted claims for fraud,
fraudulent inducement, breach of contract, unjust enrichment, quantum meruit,
breach of fiduciary duty, and money had and received. QTAT also alleged theories
of aiding and abetting and conspiracy and sought compensatory and exemplary
damages, declaratory relief, costs, interest, and attorney’s fees.

       The trial court dismissed QTAT’s conspiracy theory at the summary
judgment stage. After other rulings narrowed the scope of the triable issues, the
parties proceeded to a jury trial on QTAT’s breach of contract, fraud, and quantum
meruit claims.

       QTAT presented evidence of its unpaid invoices. In support of its fraud
claim, QTAT argued to the jury that LRS induced it to sign the Contract but never
       1
          QTAT also named as defendants two other law firms associated with Lee and Clark
(James Lee Law Firm, PC and Clayton A. Clark, Esq., PC), but those entities successfully moved
for summary judgment on all of QTAT’s claims and were not submitted as potentially liable
parties in the jury charge.

                                              4
intended to make a profit. As evidence, QTAT contended that LRS charged
below-market rates for its services2 and failed to track the necessary financial data
from which it could calculate QTAT’s 25% profit share. According to QTAT, if
LRS lacked the means to allocate the revenues and expenses attributable to QTAT,
that could only mean that LRS never intended to uphold its profit-sharing promise.
QTAT also told the jury that LRS waited to invoice its clients until after the
underlying lawsuits settled, which in some instances could be several years. This
invoicing delay, QTAT claimed, contravened LRS’s stated intention to realize a
profit as soon as possible.

          QTAT focused on two of these alleged choices—the choice to bill below-
market rates and the choice to wait to invoice until the underlying mass-tort
dockets settled—as illuminative of LRS’s fraudulent motive. QTAT presented
evidence that LRS represented in 2012 that nurse review charges would be billed
to clients at $350 per review. However, at some point LRS decided to charge only
$75 to its clients, thus ensuring that it would never make enough money to cover
its incurred debt or make a profit. QTAT believed that a $75 rate was below
prevailing market rates. QTAT’s damages expert testified that, if LRS had charged
market rates for each invoice on which QTAT worked, LRS would have made a
profit.

          LRS disputed that it never intended to make a profit. Erin Murphy, LRS’s
president, testified that litigation support is “a low-margin business.” Attorney
Sean Tracey, who was not affiliated with LRS but who used LRS in his mass-tort
cases, testified that litigation support businesses are “difficult to run and labor
intensive” and that he knew several attorneys who had tried to run similar
          2
         LRS invoiced its law firm clients for LRS’s services. Those firms in turn recouped the
medical review expenses from claimants’ settlement or judgment recoveries, if successful. If a
claimant’s case was not successful, then the medical review expense would be a loss to the firm.

                                               5
businesses and failed. Another factor allegedly contributing to LRS’s lack of
profitability was the high rent it paid for office space in a downtown Houston
building, the same building in which Lee Murphy officed. LRS also had fifty to
seventy employees, representing approximately $3 million in payroll expenses in
2012 and $4 million in 2013. Clark testified that his firm paid approximately $5.5
million into LRS in 2013 to cover the company’s expenses. Murphy denied that
LRS existed solely for Lee Murphy’s or Clark Love’s benefit. LRS had twenty-
five different law firm clients, although Murphy acknowledged that most of those
clients had “relationships” with Lee Murphy and/or Clark Love.

      The jury found that LRS failed to comply with the Contract, causing
$820,000 in damages, and that LRS and Lee committed fraud against QTAT,
causing $2,946,853.10 in damages. The jury found against QTAT on its quantum
meruit claim.

      LRS and Lee moved for judgment notwithstanding the verdict (“JNOV”) on
QTAT’s fraud claim, challenging the legal sufficiency of the evidence supporting
all fraud elements: existence of an actionable misrepresentation; knowledge of
falsity; intent; reliance; and damages. LRS also moved for JNOV on QTAT’s
breach of contract claim, arguing that there was no evidence of QTAT’s
compliance with the Contract, LRS’s breach, or QTAT’s damages.

      The trial court signed an amended final judgment: (1) awarding QTAT
$820,000 in compensatory damages against LRS for breach of contract and
implicitly denying LRS’s motion for JNOV on QTAT’s contract claim;
(2) granting JNOV on QTAT’s fraud claim and ordering that QTAT take nothing
for fraud; and (3) awarding pre- and post-judgment interest and costs of court.3

      3
          The jury awarded zero attorney’s fees.

                                                   6
      LRS and QTAT both appeal.

                                    LRS’s Appeal

      In its sole issue on appeal, LRS argues that no legally sufficient evidence
supports the jury’s damages finding on QTAT’s contract claim.

      When reviewing the legal sufficiency of the evidence, we consider the
evidence in the light most favorable to the challenged finding and indulge every
reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d
802, 822 (Tex. 2005). We must credit favorable evidence if a reasonable fact
finder could and disregard contrary evidence unless a reasonable fact finder could
not. See id. at 827. To sustain a challenge to the legal sufficiency of the evidence
supporting a jury finding, the reviewing court must find that:          (1) there is a
complete lack of evidence of a vital fact; (2) the court is barred by rules of law or
evidence from giving weight to the only evidence offered to prove a vital fact;
(3) there is no more than a mere scintilla of evidence to prove a vital fact; or (4) the
evidence conclusively established the opposite of a vital fact. Volkswagen of Am.,
Inc. v. Ramirez, 159 S.W.3d 897, 903 (Tex. 2004).

      Question 2 instructed the jury to consider as damages “[t]he difference, if
any, between the amount LRS agreed to pay QTAT under the Agreement and the
amount LRS actually paid QTAT under the Agreement.” The jury answered,
“$820,000.”

      Before turning to the parties’ arguments, we summarize LRS’s payment
obligations under the Contract. LRS agreed to: (1) pay QTAT’s reasonable and
necessary invoices; and (2) split any net profits 25% to QTAT and 75% to LRS.
Specifically, the Contract provided in relevant part:

           The parties agree LRS shall pay QTAT for its reasonable
      and necessary invoices on a monthly basis. QTAT agrees to produce
                                           7
      detailed invoices in the manner requested by LRS. The invoices shall
      be “at cost,” and shall not include any profit margin for QTAT
      but shall include the actual necessary costs associated with QTAT
      hiring its employees for LRS projects. . . .
             The intent of the parties is to split net profits 25% to QTAT
      and 75% to LRS. Net profits, if any, shall be calculated after
      deduction of all overhead, expenses and fixed asset costs necessary to
      run the LRS business/QTAT business including furniture, computers,
      phones, office supplies, employees, rent, insurance, parking, etc. LRS
      shall be entitled to an offset or credit of all QTAT invoices which
      have been paid. QTAT agrees to wait to be paid its share of any net
      profit until LRS realizes its actual accounts receivable and has the
      ability to calculate the same. . . . QTAT shall only share in net profits
      related to invoices where QTAT has done substantially all of the work
      because the parties agreed that this would substantially reduce the
      overall overhead and expenses. (Emphasis added).
      The parties focus primarily on the second of LRS’s payment obligations:
the agreement to split any net profits. To this end, LRS contends that QTAT
presented no evidence of the relevant measure of damages set forth in the charge.
See Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 784 (Tex. 2020) (court
reviews evidentiary sufficiency using the measure submitted in the charge).
According to LRS, QTAT’s damages expert “repeatedly admitted that his damages
calculation was ‘an alternative to the contract’ and is ‘not what’s due under the
contract.’” LRS further argues that QTAT presented no other evidence to support
the jury’s $820,000 damage award.

      The jury was free to consider any evidence establishing by a preponderance
the difference, if any, between the amount LRS agreed to pay QTAT and the
amount LRS actually paid QTAT. LRS agreed to pay QTAT’s reasonable and
necessary invoiced costs. QTAT invoiced LRS for $821,108.53, which LRS did
not pay. Those unpaid invoices included costs for “Operational Deployment” and
“Monthly Operating Expenses.”        Khan testified that the invoices represented

                                         8
QTAT’s “actual costs” “[d]eployed for this project,” meaning “[e]verything,
running the entire show, which would be the rent, the electricity, the computers,
the new server for the office.” Khan testified that Lee told her that LRS would
reimburse those “deployment costs.”

         LRS does not dispute that it failed to pay these invoices, nor does it take
issue with the reasonableness, necessity, or timeliness of the invoices or their
amounts.      There is no evidence the invoices included a profit margin.      LRS
nonetheless contends that QTAT cannot recover the invoiced amounts under the
Contract because the only costs LRS promised to pay were those “actual necessary
costs associated with QTAT hiring its employees for LRS projects.” Under LRS’s
interpretation of the Contract, LRS was obligated to reimburse on a monthly
invoiced basis only QTAT’s payroll expenses. Anything beyond that, such as
QTAT’s deployment or overhead expenses, would be deducted when and if LRS
realized net profits. According to LRS, QTAT cannot recover its deployment or
overhead expenses because LRS never realized net profits.

         LRS’s interpretation of the Contract is not consistent with the agreement’s
terms.     We “interpret contract language according to its plain, ordinary, and
generally accepted meaning unless the instrument directs otherwise.” URI, Inc. v.
Kleberg County, 543 S.W.3d 755, 764 (Tex. 2018) (internal quotation omitted).
The Contract provides that “LRS shall pay QTAT for its reasonable and necessary
invoices on a monthly basis” and that QTAT’s invoices “shall be ‘at cost,’ and
shall not include any profit margin for QTAT but shall include the actual necessary
costs associated with QTAT hiring its employees for LRS projects.” The jury
reasonably could have found based on the Contract’s plain language that QTAT
and LRS agreed that LRS would pay QTAT’s “reasonable and necessary invoices .
. . ‘at cost,’” which would include—but not be limited to—costs associated with

                                          9
hiring employees, so long as those invoiced costs did not include a profit margin.
Khan testified that the unreimbursed invoices represented QTAT’s “actual costs.”
Because LRS does not point to evidence suggesting that the $821,108.53 included
a profit margin, the evidence supports the jury’s finding that LRS failed to pay
QTAT’s reasonable and necessary invoices, as required under the Contract. The
$820,000 awarded by the jury is less than the total amount of unreimbursed
invoices and thus falls within the range of damages presented at trial. E.g., MEMC
Pasadena, Inc. v. Riddle Power, LLC, 472 S.W.3d 379, 408 (Tex. App.—Houston
[14th Dist.] 2015, no pet.) (“A jury thus has broad discretion to award damages
within the range of evidence presented at trial.”).

      We overrule LRS’s sole issue on appeal.

                                  QTAT’s Appeal

A.    Fraud

      In QTAT’s first issue, it argues that the trial court erred in granting JNOV on
the jury’s fraud findings.

      We review a trial court’s ruling on a motion for JNOV under the same
standard used for any motion that would render judgment as a matter of law. See
Cent. Ready Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007) (citing
City of Keller, 168 S.W.3d at 823). This standard requires that we credit evidence
favoring the jury verdict if reasonable jurors could and disregard contrary evidence
unless reasonable jurors could not. Id. We view the evidence presented in the
light most favorable to the nonmovant, indulging every reasonable inference and
resolving any doubts against the movant. City of Keller, 168 S.W.3d at 824. To
the extent that the trial court’s ruling was based on a pure question of law, our
review is de novo. See In re Humphreys, 880 S.W.2d 402, 404 (Tex. 1994).

                                          10
      The jury found that LRS and Lee committed fraud. The jury was instructed:

            Fraud occurs when:
                   1)    A party makes a material misrepresentation, and
                   2)    The misrepresentation is made with knowledge of
                         its falsity or made recklessly without any
                         knowledge of the truth and as a positive assertion,
                         and
                   3)    The misrepresentation is made with the intention
                         that it should be acted on by the other party, and
                   4)    The other party relies on the misrepresentation and
                         thereby suffers injury.
             “Misrepresentation” means 1) a false statement of fact or 2) a
      promise of future performance made with an intent, at the time the
      promise was made, not to perform as promised or 3) a statement of
      opinion based on a false statement of fact or 4) a statement of opinion
      that the maker knows to be false or 5) an expression of opinion that is
      false, made by one who has, or purports to have, special knowledge of
      the subject matter of the opinion. “Special knowledge” means
      knowledge or information superior to that possessed by the other party
      and to which the other party did not have equal access.
      QTAT argues that LRS and Lee made the following material
misrepresentations, contained within the Contract:

            • LRS would share 25% of net profits on invoices where QTAT did
              substantially all of the work.
            • Lee’s intent was to turn a profit as soon as possible.
            • Lee/LRS intended to align LRS’s interests with QTAT’s interests.
      QTAT contends that these statements are promises of future performance
made without any intent to perform (example 2 in the jury instruction). See
Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d
41, 48 (Tex. 1998). QTAT posits that these are not representations of LRS’s

                                        11
expected profitability—which would not be actionable4—but rather constitute
actionable promises to try to be profitable. However, according to QTAT, LRS
intentionally underpriced its services so that it would never turn a profit. Thus,
QTAT continues, LRS did not even try to be profitable and the jury could infer that
Lee had no present intent to perform the promise when he signed the Contract.

       “A promise to do an act in the future is actionable fraud when made with the
intention, design and purpose of deceiving, and with no intention of performing the
act.” Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986). In
analogizing the promises at issue in this case with other contractual promises found
to be fraudulent, QTAT principally relies on Chicago, Texas & Mexican Central
Railway Co. v. Titterington, 19 S.W. 472 (Tex. 1892), and Luera v. Maynes, No.
07-99-00325-CV, 2000 WL 1051895 (Tex. App.—Amarillo July 27, 2000, pet.
denied) (not designated for publication).         In Titterington, a railroad company
contractually promised to build a depot on the plaintiff’s land but then made no
attempt to build the depot. Titterington, 19 S.W. at 472. In Luera, a mechanic
agreed to repair the plaintiff’s truck but then made no attempt to make any repairs.
Luera, 2000 WL 1051895, at *1. In both cases, the lack of any effort to perform
was probative evidence of fraud. See Titterington, 19 S.W. at 473; Luera, 2000
WL 1051895, at *2.

       LRS argues that QTAT’s cases are inapplicable and that we should look
instead to “best efforts” cases. At oral argument, LRS pointed to a case from the
Fifth Circuit, Kevin M. Ehringer Enterprises, Inc. v. McData Services Corp., 646
F.3d 321 (5th Cir. 2011). In that case, the federal appeals court applied Texas law
in analyzing whether a plaintiff could prevail on a fraudulent inducement claim
       4
          Fry v. Farm & Ranch Healthcare, Inc., No. 07-05-0221-CV, 2007 WL 4355055, at *3
(Tex. App.—Amarillo Dec. 13, 2007, no pet.) (mem. op.) (“Predictions and opinions regarding
the future profitability of a business generally cannot form a basis for a claim of fraud.”).

                                             12
based on breach of a “best efforts” clause in a contract.          Id. at 325-27.    In
conducting its analysis, the Fifth Circuit primarily relied on an opinion from the
Dallas Court of Appeals, CKB & Associates, Inc. v. Moore McCormack Petroleum,
Inc., 809 S.W.2d 577 (Tex. App.—Dallas 1991, writ denied) (op. on reh’g).

      In CKB, CKB agreed to use its best efforts to refine Moore’s crude oil into
specific volumes of refined products, as set out in a schedule specifying
percentages of total refinery output for each product. Id. at 578. However, instead
of refining the crude oil to produce the quantities specified in the contract, CKB
operated the refinery to produce the highest dollar yield on the crude. Id. at 579,
582. Moore sued for, and successfully moved for summary judgment on, breach of
contract. Id. at 580. In affirming that CKB was liable, the appellate court noted
that “[b]est efforts is a nebulous standard. Under some circumstances, a party
could use best efforts to achieve a contractual goal and fall well short. Under
different circumstances, an effort well short of one’s best may suffice to hit a
target.” Id. at 581. Therefore, the CKB court determined that “to be enforceable, a
best efforts contract must set some kind of goal or guideline against which best
efforts may be measured.” Id. If the contract sets out such goal or guideline, “[a]
contracting party that performs within the guidelines fulfills the contract regardless
of the quality of its efforts. When a party misses the guidelines, courts measure the
quality of its efforts by circumstances of the case . . . and by comparing the party’s
performance with that of an average, prudent, comparable [party].” Id. at 582
(citations omitted). The court ultimately concluded that CKB breached the best
efforts clause because it made no efforts to meet the production standards specified
in the contract, stating: “As a matter of law, no efforts cannot be best efforts.” Id.

      Having surveyed the principles set forth in CKB, the Fifth Circuit concluded
that the contractual “best efforts” provisions at issue in its case were too indefinite

                                          13
to be enforceable. McData Services agreed to use its best efforts to “(i) further the
promotion, marketing, licensing, and sale of [Ehringer’s] Products; (ii) maintain an
adequate inventory of sales literature; (iii) respond promptly to all inquiries from
customers; (iv) permit Ehringer to visit McData’s customers and to visit McData’s
place of business and inspect its relevant documents upon reasonable notice; and
(v) participate and exploit Product capabilities at industry trade events.” McData
Servs., 646 F.3d at 327. But there was no goal or guideline by which to measure
performance. Id. Because the “best efforts” clause was too indefinite and vague to
provide a basis for enforcement, the plaintiff’s claim for fraudulent inducement
could not rest on the alleged breach of that clause coupled with an alleged intent
not to perform. Id. Just like the provisions at issue in McData Services, LRS
argues that Lee’s stated intent to realize a profit as soon as possible is too indefinite
to be an enforceable promise.

      Although we do not find CKB, McData Services, or other “best efforts”
cases on-point, we agree with LRS’s principal contention. A promise to “try to be
profitable,” which is how QTAT interprets the Contract, is too indefinite to be
actionable as fraud. See, e.g., LaPree v. LaPree, No. 03-20-00465-CV, 2022 WL
548285, at *5 (Tex. App.—Austin Feb. 24, 2022, no pet.) (mem. op.) (alleged
promise that funds were “going to be community property” was not a definite
promise of future action); Cadle Co. v. Davis, No. 04-09-00763-CV, 2010 WL
5545389, at *8 (Tex. App.—San Antonio Dec. 29, 2010, pet. denied) (mem. op.)
(promise that parties would “get this behind us” too vague to support fraud); CMS
Energy Res. Mgmt. Co. v. Quicksilver Res., Inc., No. 02-07-00260-CV, 2009 WL
1815776, at *10 (Tex. App—Fort Worth June 25, 2009, no pet.) (mem. op.) (“We
have reviewed the record extensively and we cannot locate, nor does Quicksilver
point to, any specific promise or misrepresentation by CMS during the March 26

                                           14
telephone conversation that is definite enough, that is specific enough, that is not
conditional, and that is not mere trade talk so as to constitute an actionable
misrepresentation to support a claim for fraudulent inducement.”) (emphasis
added).5

       QTAT’s cases are distinguishable and illustrate why the alleged promise
here is unenforceable. In each case relied upon by QTAT, there was a definite
promise—to build a depot or to repair a vehicle. See Titterington, 19 S.W. at 473;
Luera, 2000 WL 1051895, at *2. Those are certain, ascertainable commitments to
perform. We have no similar promise here. Lee did not promise in the Contract to
make a profit, run LRS a certain way, price services at a certain threshold, or make
any other definite promise on which QTAT could justifiably rely. See, e.g., Cadle,
2010 WL 5545389, at *8 (“Promises must be specific and definite enough for it to
be reasonable to rely upon them.”).

       Further, we are skeptical that Lee’s statement—“It is my intent to realize a
profit as soon as possible.”—is a promise at all. Black’s Law Dictionary defines
promise as “[t]he manifestation of an intention to act or refrain from acting in a
specified manner, conveyed in such a way that another is justified in understanding
that a commitment has been made; a person’s assurance that the person will or will
not do something.” “Promise,” Black’s Law Dictionary (11th ed. 2019) (emphasis
added). Again, Lee did not manifest an intention to act (or cause LRS to act) in a
specified manner. This statement is not a commitment by LRS to make a profit.

       Rather, Lee’s statement is more akin to an opinion that he hopes LRS will be
profitable, or an assertion of expectation that LRS would realize a profit “as soon

       5
          For this reason, we consider LRS’s “best efforts” cases inapplicable. Not only did Lee
not promise to use best efforts to make LRS profitable, he did not make a definite promise at all.
It is the purported promise itself that is too indefinite, not the lack of a goal or guideline by
which to measure the promised performance.

                                               15
as possible.” Such statements are not actionable as fraud. See Transp. Ins. Co. v.
Faircloth, 898 S.W.2d 269, 276 (Tex. 1995) (recognizing that “an expression of
opinion about monetary value is not a representation of fact which gives rise to an
action for fraud”); Paull v. Capital Res. Mgmt., Inc., 987 S.W.2d 214, 218-19 (Tex.
App.—Austin 1999, pet. denied) (holding statements that an investment was “low
risk” and would “produce large revenues for a long time” were merely dealers’
talk); see also CMS Energy, 2009 WL 1815776, at *9-11 (statement that one party
would “work towards the best use of the supply” of the other party’s natural gas
was, at most, a conditional, indefinite, speculative promise or mere trade talk and
would not support an action for fraudulent inducement).

       Lee’s statement that “[i]t remains [his] intent to have QTAT’s interests
aligned with LRS” is similarly unactionable as fraud. QTAT principally relies on
this statement as additional evidence that Lee fraudulently promised to try to be
profitable.6 As just explained, there is no merit to QTAT’s position. But even if
we considered Lee’s statement regarding an alignment of interests as a separate
promise, it too is not specific or definite enough to support a claim for fraud. See,
e.g., Cadle, 2010 WL 5545389, at *8.

       In conclusion, there is no evidence that Lee or LRS made a material
misrepresentation, specifically a definite promise to perform a certain act in the
future with no present intent to perform. We therefore hold that the trial court did

       6
         According to QTAT, Lee promised to align QTAT’s and LRS’s interests, which “meant
that Lee and LRS would not be dissuaded from turning a profit based on any conflict of interest.
It also meant that Lee and LRS would operate in a way that maximized not only LRS’s overall
profits, but particularly those profits allocable to QTAT’s share of net profits by charging
appropriate rates for QTAT’s services, timely billing and collecting those charges, and deducting
from revenues only those expenses actually necessary to LRS’s and QTAT’s joint work.”
(Emphasis added.)

                                               16
not err in granting JNOV on QTAT’s fraud claim, and we overrule QTAT’s first
issue.

B.       Discovery and Summary-Judgment Rulings

         QTAT’s second issue is contingent upon our disposition of issue one. If we
were to find that QTAT’s fraud claim failed for legally insufficient evidence of
damages, then QTAT argues in its second issue that the trial court reversibly erred
in refusing to compel certain discovery relating to LRS’s financial records. These
records, according to QTAT, were necessary to prove its damages model “with
precision.” Because we disposed of QTAT’s first issue on a different basis (i.e., no
material misrepresentation rather than lack of damages), we need not address
QTAT’s second issue, and we overrule it as moot. See Tex. R. App. P. 47.1.

         Similarly, QTAT’s third issue is also rendered moot by our disposition of
issue one. In its third issue, QTAT contends that the trial court erred in disposing
of its conspiracy theory on summary judgment. In moving for summary judgment,
the defendants argued, among other things, that an LLC cannot conspire with its
members, citing Bradford v. Vento, 48 S.W.3d 749, 761 (Tex. 2001). On appeal,
QTAT claims that an agent can conspire with its principal, if the agent stands to
personally benefit, and that the trial court therefore erred in granting summary
judgment on that ground. Agency principles notwithstanding, QTAT’s conspiracy
theory still fails for failure of an underlying tort. See Agar Corp., Inc. v. Electro
Circuits Int’l, LLC, 580 S.W.3d 136, 141 (Tex. 2019) (civil conspiracy is not an
independent tort but requires an underlying tort that has caused damages).
QTAT’s brief expressly and exclusively predicates its conspiracy theory on the
underlying tort of fraud (allegedly committed by Lee and LRS), which we have
already held to be unmeritorious. Accordingly, we need not address QTAT’s third
issue, and we overrule it as moot. See Tex. R. App. P. 47.1.

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C.    Leave to Amend Pleading

      In its fourth issue, QTAT argues that the trial court erred in refusing to allow
QTAT to amend its petition to add veil-piercing theories. We review the denial of
a motion for leave to amend pleadings for abuse of discretion.           See Tex-Air
Helicopters, Inc. v. Galveston Cty. Appraisal Review Bd., 76 S.W.3d 575, 581
(Tex. App.—Houston [14th Dist.] 2002, pet. denied). A trial court abuses it
discretion only when it makes a decision without reference to any guiding rules or
principles. Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex. 1999) (per curiam).

      The trial court’s docket control order set the pleading deadline for November
2, 2018. The court granted QTAT leave to file a third amended petition on
November 14, 2018, and the third amended petition was filed November 29. On
December 17, 2018, QTAT moved for leave to further amend its petition to add
veil-piercing theories of alter ego and sham to perpetuate a fraud.           Several
defendants objected, arguing that the proposed amendment was unfairly prejudicial
and surprising. After a hearing, the trial court denied leave.

      The general rule regarding pleading amendments is that the parties may
freely amend if the amended pleading is filed at least seven days before trial. See
Tex. R. Civ. P. 63; Sosa v. Cent. Power & Light, 909 S.W.2d 893, 895 (Tex. 1995)
(per curiam). Trial courts, however, have discretion to impose different pleading-
amendment deadlines. See Tex. R. Civ. P. 166. Regardless whether the pleading-
amendment deadline is that imposed by the general civil practice rule or by a
docket-control or similar order, the principle governing late-filed pleading
amendments is the same: “After the time for filing amended pleadings has passed,
the trial court abuses its discretion in denying leave to file an amended pleading
unless (1) the party opposing the amendment presents evidence of surprise or
prejudice, or (2) the amendment asserts a new cause of action or defense, and thus

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is prejudicial on its face, and the opposing party objects to the amendment.” In re
Park Mem’l Condo. Ass’n, No. 14-11-00818-CV, 2011 WL 4452834, at *1 (Tex.
App.—Houston [14th Dist.] Sept. 27, 2011, orig. proceeding) (mem. op.).

      An amended pleading is not prejudicial as a matter of law solely because it
asserts a new cause of action. See In re Estate of Parrimore, No. 14-14-00820-
CV, 2016 WL 750293, at *11 (Tex. App.—Houston [14th Dist.] Feb. 25, 2016, no
pet.) (mem. op.) (citing Tanglewood Homes Ass’n v. Feldman, 436 S.W.3d 48, 64
(Tex. App.—Houston [14th Dist.] 2014, pet. denied)).               An amendment is
prejudicial on its face if: (a) it asserts a new substantive matter that reshapes the
nature of the trial itself; (b) the opposing party could not have anticipated it in light
of the development of the case up to the time the amendment was requested; and
(c) the opposing party’s presentation of its case would be detrimentally affected by
the amendment. See id. (citing Tanglewood Homes, 436 S.W.3d at 64-65). To
determine if the amendment is prejudicial on its face, we must evaluate it in the
context of the entire case. See id.

      Here, prior to the proposed amendment, QTAT had pleaded conspiracy and
aiding and abetting but no other theories of derivative liability. In the amendment,
QTAT sought to disregard LRS’s corporate fiction to reach its members
individually.   The defendants objected, arguing that such theories were new
matters that would reshape the nature of the upcoming trial, which was scheduled
to commence in approximately two-and-a-half months. The defendants asserted
that there was no overlap between the elements of the live claims and those
necessary to prove alter ego or sham to perpetuate a fraud. The defendants also
contended that they had already completed key discovery and to allow QTAT to
amend its pleading would require further discovery, including additional
depositions, thus delaying trial. Finally, the defendants pointed out that the trial

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court had already granted QTAT leave to amend its petition after the pleading
deadline passed, and if QTAT desired to allege new theories of derivative liability,
it could have done so then.

      The trial court agreed with the defendants, telling QTAT’s counsel:

      Well, my concern is that now we’re opening up a different facet of
      discovery, I think, that had not been previously contemplated or gone
      through. . . . But if you start going into alter ego and this kind of
      sham business theory, then you need to start going into their
      operations, how they’re incorporated, how they worked, all that stuff,
      which, I think, opens up into a facet of discovery[.]
The court denied QTAT’s motion a month after the hearing.

      We conclude that QTAT has not demonstrated that the trial court abused its
discretion in denying QTAT leave to amend its petition to add new theories of
derivative liability. See, e.g., Flo Trend Sys., Inc. v. Allwaste, Inc., 948 S.W.2d 4,
7 (Tex. App.—Houston [14th Dist.] 1997, no writ) (no abuse of discretion to deny
leave: “Allwaste argued at the hearing that this new theory of alleged liability
would necessitate new witnesses, more depositions, new pleadings and it was a
complete and prejudicial surprise that Allwaste could have avoided by pleading
this theory earlier in the case. The trial court agreed with Allwaste . . . . ”).

      We overrule QTAT’s fourth issue.

D.    Evidentiary Ruling

      QTAT argues in its fifth and final issue that the trial court erred by not
allowing QTAT to present a specific factual theory to the jury. QTAT wanted to
argue to the jury that LRS structured its business the way it did (i.e., allegedly
underpricing services and not turning a profit) because LRS “was simply a
mechanism of financing [Clark Love’s and Lee Murphy’s] expenses so that they
could take on more cases” on the mass tort dockets and thus make more money.
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The trial judge told QTAT, “At the end of the day, we’re not going to get into how
much money any of the law firms or anybody made off this [transvaginal mesh]
docket.” QTAT contends that the trial court abused its discretion “by giving
Cross-Appellees the ability to repeatedly pose the rhetorical question ‘why would
anyone do this’ while forbidding QTAT from providing an obvious answer.”

         QTAT’s fifth issue is conditioned upon other relief. QTAT asserts that “[i]f
the Court remands this case for additional proceedings, it should do so with the
instruction that QTAT be allowed to discuss Cross-Appellees’ back-end fees
earned off of QTAT’s work.” Because we are not remanding the case on any
ground, we overrule QTAT’s fifth issue as moot. See Tex Star Motors, Inc. v.
Regal Fin. Co., 401 S.W.3d 190, 204 (Tex. App.—Houston [14th Dist.] 2012, no
pet.).

                                      Conclusion

         We affirm the trial court’s judgment.

                                         /s/     Kevin Jewell
                                                 Justice

Panel consists of Justices Jewell, Zimmerer, and Wilson.             (Zimmerer, J.,
concurring)

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