Court Opinion

ID: 3121326
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:06:56.880445+00
Date Added: 2024-06-11T11:53:07.934514
License: Public Domain

COURT OF APPEALS
                            SECOND DISTRICT OF TEXAS
                                 FORT WORTH

                               NO. 02-10-00133-CV

NATIONAL WESTERN LIFE                              APPELLANT AND APPELLEE
INSURANCE COMPANY

                                        V.

SHEILA NEWMAN                                      APPELLEE AND APPELLANT

                                     ----------

          FROM THE 415TH DISTRICT COURT OF PARKER COUNTY

                                     ----------

              MEMORANDUM OPINION ON REHEARING1
                                     ----------

      We have considered Appellee Sheila Newman’s motion for rehearing. We

deny the motion but withdraw our August 11, 2011 opinion and judgment and

substitute the following.

      Appellant National Western Life Insurance Company (National Western)

appeals the trial court’s judgment against it for the fraudulent acts of its agent,

      1
       See Tex. R. App. P. 47.4.
Lynn Strickland, Jr., upon appellee Shelia Newman.      Newman filed a cross-

appeal, however, for ease of reading, we will refer to National Western as the

appellant and Newman as the appellee.        We will reverse the trial court’s

judgment and render judgment that Newman take nothing.

                             I. Background Facts

      In late 2005, Newman decided to invest a large amount of her savings.

She was uneducated in investing so she researched companies online and

chose to purchase an annuity from National Western because ―[i]t was a

reputable company that had been in business for many years.‖ Newman called

National Western, who told her an agent would contact her.

      Soon after, Strickland called Newman and made an appointment to speak

with her at her home. Strickland told Newman that if she invested $200,000, she

could live off the interest received. He also told her that if she invested that

amount, she would receive a $20,000 bonus.         Strickland gave Newman a

business card with his phone number and told her to call him when she had

decided whether to invest.

      In November 2005, Newman phoned Strickland and agreed to the

$200,000 amount.     Strickland told her to get two cashier’s checks, one for

$75,000 and another for $125,000. He also told Newman to make both checks

out to Lone Star Financial ―in order for him to be able to handle the money.‖

Lone Star Financial is owned by Strickland. In January 2006, Strickland went to

Newman’s house, where he gave her a two-page application for the annuity. The

                                   2
first page contained a section for Newman’s personal information, which she

filled out. The first page also contained blanks for identifying the type of plan, the

beneficiary, and a blank for the amount of money submitted with the application.

Newman left the amount blank because Strickland ―was in a hurry that day . . .

and [she] trusted that he would take care of it.‖ At the bottom of the first page

was the following statement:

      I have read the statements above and to the best of my knowledge
      and belief they are true and correct. Any statement made by either
      the agent of this application or by any other person shall not be
      binding on [National Western] unless such statement is reduced to
      writing by [National Western] and made a part of the annuity
      contract. I have received and read a copy of the annuity information
      brochure and understand the features of the plan of insurance
      applied for.

Below that, Newman and Strickland signed the application. The back page of the

application contained only one short section entitled ―Agent’s Section,‖ where

Strickland signed, and under that, in bold, the statement, ―***ALL CHECKS

MUST     BE    PAYABLE      TO    NATIONAL       WESTERN        LIFE   INSURANCE

COMPANY***.‖ Strickland was also supposed to give Newman a document titled

―Consumer Disclosure Signatures.‖ That document contained the statement, ―If

you have any questions after you receive your annuity Policy, please contact

your agent or call National Western’s Customer Service Department at 1-800-

922-9422. We want to be sure that you read all 10 pages of this Disclosure and

are aware of the benefits and features explained herein.‖ Newman’s initials were

next to the statement that the policy had been explained to her, and Newman’s

                                      3
and Strickland’s signatures were under the statement that she had received a

copy of the Disclosure and had reviewed it with her agent. Newman testified at

trial that she did not recall ever seeing the disclosure and that her signature on it

was forged.

      Strickland later deposited the $75,000 check into Lone Star Financial’s

account. Strickland filled out the amount section of Newman’s application for

$125,000 and endorsed the $125,000 check over to National Western. National

Western, in turn, issued Newman a policy in the amount of $125,000. National

Western sent Strickland a copy of the insurance policy for him to hand-deliver to

Newman.

      Between January 2006 and December 2007, Newman drew on the annuity

a number of times. She also received checks from National Western, some that

she received in the mail and some that she claims were hand-delivered by

Strickland, although they were all addressed to her. Newman claims she never

received an annual statement or interest statement, although they were also sent

to her home address. Newman testified she tried for several years to get a copy

of her policy from Strickland, but he would give her excuses and cancel

appointments. When she threatened to go to National Western, he told her not

to call the company directly because ―they would not have the information and it

would be confusing.‖

      Finally in December 2007, Newman complained to National Western that

she never received a copy of her $200,000 policy.           National Western told

                                     4
Newman that her policy was only for $125,000. National Western contacted

Strickland about Newman’s complaint. He responded that ―the amount of the

annuity Mrs. Newman bought was for [$]125,000. I talk to Mrs. Newman about 2

or 3 times a month[.] She never complained about anything . . . .‖ Strickland

provided National Western with a copy of the delivery receipt, purportedly signed

by Newman, stating that she had received the copy of her policy on February 6,

2006. At trial, Newman denied receiving the copy National Western sent in 2006

and claimed her signature on the receipt was forged. National Western sent

Newman a letter reaffirming receipt of only the $125,000 check, and provided her

a copy of the check and another copy of her policy. After Newman’s complaint

that she did not receive her policy, National Western terminated Strickland’s

contract. Newman demanded that National Western reimburse her $200,000.

National Western refused.

       Newman filed suit against Strickland and National Western. After striking

Strickland’s answer as sanctions for failing to appear at scheduled depositions,

the trial court rendered judgment against Strickland, awarding Newman treble

damages under the Deceptive Trade Practices Act. See Tex. Bus. & Com. Code

Ann. §§ 17.46, 50 (West 2011). The case against National Western proceeded

to a jury trial.

       After hearing the evidence, the jury made the following relevant findings:

       (1) Strickland had authority to act for National Western.

                                     5
        (2) Strickland knowingly engaged in false, misleading, unfair, or
        deceptive acts or practices that Newman relied on to her detriment.

        (3) Strickland committed fraud against Newman.

        (4) Strickland was not an independent contractor.

        (5) National Western had the right to control Strickland with respect
        to Strickland’s fraudulent acts.

        (6) National Western ratified Strickland’s conduct.

        (7) Newman’s damage resulted from gross negligence attributable
        to National Western.

The jury awarded actual damages of $112,736.49 ($200,000 plus a $20,000

bonus less the amount Newman withdrew on the policy).            At the bifurcated

punitive damages phase, the jury found clear and convincing evidence that

Newman’s damages ―resulted from gross negligence‖ and awarded Newman

$150,000,000 in punitive damages. Newman elected to recover for fraud, and

the trial court entered judgment on the verdict for the actual damages awarded

and prejudgment interest, attorney’s fees, and the punitive damages found by the

jury.

        National Western filed both a motion for judgment non obstante veredicto

and a motion for new trial. The trial court refused to rule on each of these

motions. This appeal followed.

                                  II. Discussion

A. Jury Question One

                                     6
      All of Newman’s claims against National Western were predicated on its

position that Strickland was acting within the scope of authority that binds

National Western. Our analysis of National Western’s issues is complicated by

the trial court’s submission of Jury Question One:

           Did Lynn Strickland, Jr. have the authority to act for National
      Western Insurance Company?

            Actual authority for another to act for a party must arise from
      the party’s agreement that the other act on behalf and for the benefit
      of the party to act on behalf of [National Western]. If a party so
      authorizes another to perform an act, that other party is also
      authorized to do whatever else is proper, usual, and necessary to
      perform the act expressly authorized.

            Apparent authority exists if a party (1) knowingly permits
      another to hold himself out as having authority to act on behalf of
      another, in this case, [National Western] or, (2) through lack of
      ordinary care, bestows on another such indications of authority that
      lead a reasonably prudent person to rely on the apparent existence
      of authority to act on behalf of [National Western] to his detriment.
      Only the acts of the party sought to be charged with responsibility for
      the conduct of another may be considered in determining whether
      apparent authority of another to act for the party exists. When a
      person has notice of the limitations of an actor’s authority, then that
      such person cannot detrimentally rely on the apparent existence of
      the authority of the actor to act for the party.

      National Western objected to this question:

            Judge, we object to Jury Question No. 1. The defendant
      believes that this particular question, the way it’s phrased, applies to
      only the general grant of authority given an agent in the normal
      course of his business in which it carries out those implied duties
      and in-kind things as authorized.

             We believe that it needs to include specific acts such as
      ―deposited the money into his account for his own use.‖ Otherwise,
      if we do not—if we word it this way, what will happen is—the
      practical effect is we will stand up and say—and they will as well—

                                     7
      that the contract between the agent and National Western let him
      solicit the contract and collect monies.

             When you do that, they’re going to jump up and say ―We win
      automatically almost as a matter of law because he can do those
      things.‖ But he couldn’t take the money for his own use which is
      what this case is about. So what we’ll have to argue to the jury is
      ―Wait a minute, it says here you have the authority to act for us. But
      wait a minute. You’re saying he wasn’t authorized to take the money
      for his own use.‖ That’s incongruent with what is in this question.

      Newman contends that National Western’s objections at trial to Jury

Question One were confusing and limited only to apparent authority. As a result,

Newman argues National Western did not properly preserve its complaint

concerning Jury Question One as an issue for appeal. However, the above-

quoted objections contain no such limitation.

      The real question before us is not whether there was a proper objection to

the charge; instead, the question is what is the import of the jury’s answer to that

question. The fact that Strickland had authority to act for National Western was

never in doubt. National Western and Strickland had a contract that specifically

authorized Strickland to procure applications and collect monies on behalf of

National Western. Jury Question One is immaterial to any element of Newman’s

causes of action, and the jury’s answer lends nothing to establish liability on the

part of National Western. The question fails to assist Newman in establishing

National Western’s liability because it fails to connect any authority Strickland

had to the injury-producing acts that the jury found Strickland to have committed.

See Gaines v. Kelly, 235 S.W.3d 179, 184 (Tex. 2007) (―The relevant issue . . . is

                                     8
not merely the existence of an agency relationship, but rather the scope of that

agency.‖).    Jury Question One and its answer cannot be considered as

contributing anything to the basis of this judgment or the outcome of this appeal.

      National Western claims throughout its argument on appeal that there is no

evidence to support any finding that it authorized Strickland’s misdeeds,

controlled his fraudulent actions, or ratified his conduct after the fact. Despite our

conclusion that the submission of Jury Question One serves no useful purpose,

we will address National Western’s legal sufficiency challenge to the questions

contained in the court’s charge that are relevant to Newman’s causes of action.

B.   Strickland had no authority to bind National Western through his
     fraudulent acts.

      The law does not presume agency. Tex. Cityview Care Ctr., L.P. v. Fryer,

227 S.W.3d 345, 352 (Tex. App.—Fort Worth 2007, pet. dism’d). The party

alleging agency has the burden to prove its existence. Id. An agent must have

the authority (either actual or apparent) to bind the principal. Id. Thus, absent a

showing that Strickland had the authority to bind National Western through his

actions, or a showing that National Western ratified Strickland’s conduct after the

fact, National Western cannot be liable for Strickland’s fraud.

      An agent’s authority to act on behalf of a principal depends on some

communication by the principal either to the agent (actual or express authority) or

to the third party (apparent or implied authority). Gaines, 235 S.W.3d at 182.

Actual authority is authority that the principal intentionally confers upon the agent,

                                      9
or intentionally allows the agent to believe he has, or by want of ordinary care

allows the agent to believe himself to possess. Tex. Cityview Care Ctr., 227
S.W.3d at 352. Apparent authority is based on estoppel, arising either from a

principal knowingly permitting an agent to hold himself out as having authority or

by a principal’s actions which lack such ordinary care as to clothe the agent with

the indicia of authority, thus leading a reasonably prudent person to believe that

the agent has the authority he purports to exercise. Gaines, 235 S.W.3d at 182.

      1. Actual authority

      We first address Newman’s argument that National Western did not

preserve error as to actual authority. A no-evidence point is preserved through

any one of the following: (1) a motion for instructed verdict; (2) a motion for

judgment notwithstanding the verdict; (3) an objection to the submission of the

issue to the jury; (4) a motion to disregard the jury’s answer to a vital fact issue;

or (5) a motion for new trial. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847
S.W.2d 218, 220 (Tex. 1992).        National Western filed a motion for directed

verdict on the issue of actual authority, a motion for new trial, and a motion for

judgment notwithstanding the verdict. Even if National Western did not preserve

error by properly objecting to the jury charge as Newman claims, it has

sufficiently preserved its issue of actual authority for our review.

      In its first issue, National Western argues that there is no evidence to

support the jury’s finding that Strickland had the authority to act for National

Western when he committed fraud. We may sustain a legal sufficiency challenge

                                      10
only when (1) the record discloses 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 establishes

conclusively the opposite of a vital fact. Uniroyal Goodrich Tire Co. v. Martinez,

977 S.W.2d 328, 334 (Tex. 1998), cert. denied, 526 U.S. 1040 (1999); Robert W.

Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Tex. L.

Rev. 361, 362–63 (1960).      In determining whether there is legally sufficient

evidence to support the finding under review, we must consider evidence

favorable to the finding if a reasonable factfinder could and disregard evidence

contrary to the finding unless a reasonable factfinder could not. Cent. Ready Mix

Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson,

168 S.W.3d 802, 807, 827 (Tex. 2005).

      The jury made an affirmative finding that Strickland had the authority to act

for National Western.   As stated above, the contract between Strickland and

National Western established that Strickland did have authority to act for National

Western. Specifically, he had the authority to ―procure applications for insurance

and annuity contracts‖ by virtue of his contract with National Western. 2 This,

      2
        Newman argues that Strickland was a managing general agent of
National Western as defined in chapter 4053 of the insurance code because his
contract with the company is titled ―General Agent Manager Contract and
Schedule of Commissions.‖ See Tex. Ins. Code Ann. § 4053.001(3) (West 2009)
(defining managing general agent). A managing general agent may ―accept or
process on the insurer’s behalf insurance policies produced and sold by other

                                    11
however, is not sufficient to establish liability for Strickland’s fraud. That is, the

mere fact that Strickland had some authority to act for National Western does not

establish that Strickland’s fraud was within the scope of that authority.        See

Gaines, 235 S.W.3d at 184 (―The relevant issue then is not merely the existence

of an agency relationship, but rather the scope of that agency.‖). The same

contract which established Strickland’s authority also explicitly limited that

authority to what was ―expressly stated in [the] contract‖ and specifically forbade

Strickland from, among other things, ―perpetrat[ing] any fraud against [National

Western], our policyholders, prospective policyholders or applicants.‖           The

contract explicitly stated that all monies collected by Strickland belonging to

National Western would be held in a fiduciary trust, not used for any personal

purpose, and would be immediately paid to the principal.            In other words,

Strickland’s actual authority did not extend beyond procuring contracts for

National Western and accepting payment to be sent to National Western.

      Newman argues that Strickland’s fraudulent acts were incidental to his

authorized duties, and thus should be attributable to National Western. As the

supreme court has said, ―In determining a principal’s vicarious liability, the proper

question is not whether the principal authorized the specific wrongful act; if that

were the case, principals would seldom be liable for their agents’ misconduct.‖

agents.‖ Id. Chapter 4053, however, does not apply to ―life, health, and accident
insurance, including variable life insurance and variable annuity contracts.‖ Id.
§ 4053.003(1) (West 2009). Any argument Newman makes that chapter 4053
imbued Strickland with the actual authority to defraud is without merit.

                                      12
Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96, 99 (Tex. 1994). Therefore, the

proper test for actual authority is whether the agent’s acts were within the course

and scope of his agency. Id.; Lyon v. Allsup’s Convenience Stores, Inc., 997
S.W.2d 345, 347 (Tex. App.—Fort Worth 1999, no pet.).            ―If an employee

deviates from the performance of his duties for his own purposes, the employer

is not responsible for what occurs during that deviation.‖ Lyon, 997 S.W.2d at

347 (holding that employee’s defamation and intentional infliction of emotional

distress were deviations from employee’s duties and were not done in the

furtherance of employer’s business); see also Gaines, 235 S.W.3d at 185

(―Because an agent’s authority is presumed to be co-extensive with the business

entrusted to his care, it includes only those contracts and acts incidental to the

management of the particular business with which he is entrusted.‖). For an

employee’s acts to be within the scope of employment, the conduct must be of

the same general nature as that authorized or incidental to the conduct

authorized. Minyard Food Stores, Inc. v. Goodman, 80 S.W.3d 573, 579 (Tex.

2002) (holding that employer was not liable for employee’s defamation of other

employee because it was not furthering employer’s business or accomplishing a

purpose of employee’s job); Millan v. Dean Witter Reynolds, Inc., 90 S.W.3d 760,

767–68 (Tex. App.—San Antonio 2002, pet. denied) (holding that investment

company was not vicariously liable for broker’s embezzlement from client that in

no way related to his authorized duties and, thus, greatly exceeded the scope of

his authority); Lyon, 997 S.W.2d at 347.      In cases involving serious criminal

                                    13
activity, an employer is not liable for intentional and malicious acts that are

unforeseeable considering the employee’s duties. Millan, 90 S.W.3d at 768.

      In a postsubmission letter brief, Newman relies on Coats for her

proposition that liability attaches because National Western authorized Strickland

to make representations on its behalf. But the facts of Coats are not analogous

to the present case.         In Coats, the agent of the insurance company

misrepresented the benefits of the insurance policy he sold. 885 S.W.2d at 97.

The jury found that that the agent had authority to explain, on the company’s

behalf, the benefits of the policy. Id. at 99 (―The misrepresentation . . . was made

in the course of explaining the terms of the policy—a task the jury specifically

found to be within the scope of Harrell’s authority.‖). The jury also found that the

agent did not make the misrepresentations knowingly. Id. The agent in Coats

was within the scope of his authority at the time of the injury-producing act and

furthered the purpose of his agency. Here, Strickland’s misconduct took place

outside the authority granted him by National Western. He did not exceed his

authority when he described the terms of the annuity policy. Unlike the agent in

Coats, he could have delivered exactly what he promised. Strickland’s wrongful

acts did not further his principal’s business.

      Other cases provide more guidance. In Morrow v. Daniel, 367 S.W.2d
715, 718 (Tex. App.—Dallas 1963, no writ), the court held that although the

agent was acting within the scope of his employment when he fraudulently

induced the plaintiff into purchasing stock in the principal’s company, he was not

                                      14
acting as an agent when he told the principal that the plaintiff was not purchasing

stock, gave plaintiff forged stock certificates, and used the plaintiff’s money for

his own purposes. In the first act of fraud (inducing the plaintiff to purchase

stock), the agent’s acts were in the furtherance of the principal’s business—

namely, selling stock and funding the corporation. The second act of fraud,

however, was fraud on the principal as well as the plaintiff. Id. at 716.

      Similarly, in Millan, the agent was a broker whose authority permitted him

to ―open [brokerage] accounts for clients, receive deposits to these accounts, and

purchase and sell securities as directed by clients.‖ 90 S.W.3d at 768. The

agent took deposits made by his client (who was also his mother), deposited

them into a fictitious account, withdrew on that account, and stole his client’s

statements to hide his fraud. Id. at 763. The court of appeals in that case held

that the agent’s fraudulent acts were not in the scope of his authority and were

not related to his duties. Id. at 768.

      Like the agents in Morrow and Millan, Strickland was authorized to accept

payment from the principal’s customers.       And like the agents in Morrow and

Millan, Strickland was not authorized to retain the funds he received for his

personal use. Nor could Strickland’s acts be considered to be in furtherance of

National Western’s business or accomplishing his job because National Western

was deprived of the money which Strickland retained.         There is a distinction

between defrauding a customer to reap a benefit for the principal and defrauding

a customer to reap a benefit for oneself. Compare Coats, 885 S.W.2d at 99

                                         15
(holding that agent’s misrepresentation was made in the course of his authorized

duty to secure policies for his principal) with Minyard Food Stores, 80 S.W.3d at

579 (employee’s defamation of coworker during investigation, in which he was

required to participate, did not further employer’s business or accomplish the

purpose of his job). When Strickland deviated from his duty to accept payment

on behalf of National Western, he did so solely for his own personal gain.

      Newman notes that the jury found in two questions that Strickland was not

an independent contractor and that National Western retained the right to control

Strickland’s actions. However, the scope of Strickland’s authority is set forth in

his contract with National Western. ―A contract expressly providing that a person

is an independent contractor is determinative of the relationship absent evidence

that the contract is a mere sham or subterfuge designed to conceal the true legal

status of the parties or that the contract has been modified by a subsequent

agreement between the parties.‖ Farlow v. Harris Methodist Fort Worth Hosp.,

284 S.W.3d 903, 911 (Tex. App.—Fort Worth 2009, pet. denied) (citing

Newspapers, Inc. v. Love, 380 S.W.2d 582, 588–90, 592 (Tex. 1964)). Newman

does not point to any evidence to support the jury’s findings, or to support any

finding that the contract between National Western and Strickland was a sham

designed to conceal the true status of the parties to the contract or that the

contract had been subsequently modified. To the contrary, Newman testified that

Strickland informed her that he was an independent contractor.        She further

testified that at the time she signed the contract, she understood that statement

                                    16
on the application which said that Strickland’s statements were not binding on

National Western until reduced to writing by National Western in the annuity

policy.

      Further, Newman does not claim that National Western retained the right

to control how Strickland procured applications or accepted payments. Instead,

Newman focuses on the fact that National Western’s referral procedure resulted

in Strickland being sent to Newman’s home. The referral to Newman’s home

was not, however, the injury-producing event. See Exxon Corp. v. Tidwell, 867
S.W.2d 19, 23 (Tex. 1993) (noting that in determining whether duty exists in

retained control cases, focus is on whether retained control was specifically

related to the alleged injury). Had Strickland performed his duties consistent with

his contract after being referred to and meeting with Newman, there would have

been no fraud. An entity’s liability must arise from its own injury-causing conduct.

Id. The injury-producing event occurred when Strickland convinced Newman to

write two checks to his company instead of National Western; sign an application

with critical information (i.e., the amount of the policy) left blank; and not to

contact National Western with her concerns. Because National Western did not

retain control over those aspects of Strickland’s job that led to Newman’s injury,

liability cannot be based on the right to control. We therefore hold that there is

no evidence to support the jury’s findings that Strickland was not an independent

contractor and that National Western retained the right to control. The evidence

conclusively establishes the opposite: Strickland was an independent contractor

                                     17
and National Western did not retain the right to control Strickland’s fraudulent

acts. See Newspapers, Inc., 380 S.W.2d at 592 (―When . . . the parties . . . have

entered into a definite contract that expressly provides for an independent

contract relationship and does not vest in the principal . . . the right to control the

details of the work, evidence outside the contract must be produced to show that

despite the terms of the primary contract the true operating agreement was one

which vested the right of control in the alleged master.‖).

      Newman points to evidence that National Western was aware of previous

bad conduct by Strickland and chose to continue to employ him.               Newman

argues that by retaining Strickland as an agent after receiving complaints against

him, National Western, by lack of ordinary care and despite the language of his

contract, allowed Strickland to believe that he had the authority to request checks

from customers made out to his own companies so that he could retain those

funds for his own personal use and delay the delivery of contracts to conceal his

wrongdoing.

      The evidence presented at trial included four customer complaint files, only

two of which contained complaints prior to Newman’s dealings with Strickland. A

customer complained in 2003 that he had not received copies of his policies.

National Western investigated the complaint and refunded the customer’s

contributions.   In 2005, another customer complained that Strickland had

retained about $10,000 of her money and had told her to write a check to ―Estate

Services of Texas,‖ which the customer claimed was owned by Strickland.

                                      18
Strickland insisted that he had written her a check for the funds, wrote a new

check for the amount, and claimed no knowledge of any check written to Estate

Services of Texas. The customer then withdrew her complaint.

      Even assuming these complaints are evidence that Strickland had retained

money and withheld policies in the past, they are not evidence that National

Western allowed Strickland to believe that he had the authority to retain checks

from customers made out to his own companies or to delay the delivery of

contracts. Nor are they evidence of Strickland’s subjective belief that he had the

authority to do so. See Austin Area Teachers Fed. Credit Union v. First City

Bank-N.W. Hills, N.A., 825 S.W.2d 795, 799 (Tex. App.—Austin 1992, writ

denied) (considering testimony that the agent believed that his action was

authorized in holding that implied authority existed). The complaint files show

that National Western investigated all complaints and that Strickland attempted to

conceal any misconduct that may have occurred by telling National Western that

he had not done the complained-of acts. While there is evidence that National

Western was aware of Strickland’s practice of requesting checks in the name of

his own company, there is no evidence that National Western acquiesced to any

practice Strickland may have had of retaining the funds.       Nor are the files

evidence that National Western retained the right to control Strickland’s actions

despite the contractual language. See Farlow, 284 S.W.3d at 911 (noting that

the exercise of control that must occur so as to convert an independent

contractor to an employee ―must be so persistent and the acquiescence therein

                                    19
so pronounced as to raise an inference that at the time of the act or omission

giving rise to liability, the parties by implied consent and acquiescence had

agreed that the principal might have the right to control the details of the work‖)

(quoting Newspapers, Inc., 380 S.W.2d at 592).

      There is no evidence that National Western intentionally conferred, or

intentionally allowed Strickland to believe, or by want of ordinary care allowed

Strickland to believe that he possessed the authority to defraud National Western

clients or the company itself. See Gaines, 235 S.W.3d at 182 (holding that agent

had actual authority to deliver and explain loan documents but did not have

actual authority to negotiate terms of the loans); Morrow, 367 S.W.2d at 719

(holding that agent had authority to sell stock and accept payment but did not

have authority to retain the funds he received). Nor were Strickland’s acts in

furtherance of his duties as an agent of National Western. Because there is no

evidence of actual authority, we next turn to apparent authority.

      2. Apparent authority

      The principal’s full knowledge of all material facts is essential to establish a

claim of apparent authority. Gaines, 235 S.W.3d at 182. Only the conduct of the

principal is relevant. Id.; see also Zarzana v. Ashley, 218 S.W.3d 152, 161 (Tex.

App.—Houston [14th Dist.] 2007, no pet.) (―[A]ny of the agent’s representations

are wholly irrelevant in determining apparent authority.‖). The standard is that of

a reasonably prudent person, using diligence and discretion to ascertain the

agent’s authority. Gaines, 235 S.W.3d at 182–83.

                                     20
      Apparent authority is not available when the other party has notice of the

limitations of the agent’s power. See Douglass, 504 S.W.2d at 779. As stated

above, Newman admits that she was aware that Strickland was an independent

contractor. She also testified that had she read the application, she would have

known that she could not rely on Strickland’s statements. That application also

stated in bold, capital letters that all checks should be made out to National

Western. It was incumbent upon Newman to protect herself by reading what she

signed. In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 233 (Tex. 2008) (orig.

proceeding).   Although fraud may be an excuse to ignorance of a contract’s

terms in some cases, id., the fraud Strickland committed on Newman was for the

amount of the annuity, not the extent of his agency or ability to bind National

Western. It is notice of the limitations of his agency that is relevant to the issue

of apparent authority. See Douglass, 504 S.W.2d at 779.

      Further, there is no evidence that National Western was aware that

Newman had given Strickland a second check for $75,000. It is undisputed that

Newman received the product that National Western received payments for—a

$125,000 annuity. Newman testified that she never spoke to anyone at National

Western concerning an amount until after Strickland’s fraud was discovered.

National Western therefore did not have the full knowledge necessary to

establish apparent authority. National Western’s acceptance of the $125,000

check endorsed over from Lone Star Financial is no evidence that it was aware

of the second check for $75,000 that Strickland kept for himself. By Newman’s

                                     21
own admission, there was no conduct by National Western that could have

reasonably led Newman to believe that National Western had authorized

Strickland’s actions.

      To hold the principal liable, the act of the agent must be done in the

furtherance of the principal’s business and for the accomplishment of the object

for which the agent is employed. ITT Consumer Fin. Corp. v. Tovar, 932 S.W.2d
147, 158 (Tex. App.—El Paso 1996, writ denied). When Strickland devised a

scheme to steal money from both Newman and National Western, he far

exceeded his authorized duties and was not acting in furtherance of his

employment. See Saenz v. Family Sec. Ins. Co. of Am., 786 S.W.2d 110, 111

(Tex. App.—San Antonio 1990, no writ) (―It is inconceivable that an employee

could plan and execute a fraud upon his employer and be in the furtherance of

his employment.‖).

      To determine Strickland’s apparent authority, we must examine the

conduct of National Western and the reasonableness of Newman’s assumptions

about Strickland’s authority. Newman argues that the acts of National Western

we should rely upon to establish apparent authority are that National Western

contracted with Strickland in the first place and ―sent him to [Newman’s] house‖

to procure an application and accept payment. This is merely evidence of the

existence of an agency relationship and not of the scope of that relationship.

Strickland had authority to serve as an intermediary to contact potential

customers, deliver paperwork, explain product terms, and collect payment.

                                   22
Newman entirely failed to produce evidence that connected this authorized

conduct and Strickland’s alleged apparent authority to misappropriate funds from

both Newman and National Western. In her effort to supply that evidence, her

theme was that she trusted National Western because of their reputation, and

they sent Strickland to her home. All injury-causing acts or statements were

attributed to Strickland and not National Western. If this level of proof were

sufficient, then an insurance company could do nothing to avoid liability for the

acts of rogue agents who engage in criminal acts outside the scope of their

authority. Newman’s subjective trust and the fact that Strickland was an agent

referred as a result of her call to National Western is not sufficient evidence to

support a reasonable belief that Strickland was authorized to convert funds to his

personal use to the detriment of both the principal and its customer. See Fryer,
227 S.W.3d at 353 (―[A] party dealing with an agent must ascertain both the fact

and the scope of the agent’s authority, and if the party deals with the agent

without having made such a determination, she does so at her own risk.‖).

      Further, as we stated above, none of these acts were the cause of

Newman’s damages. Newman was injured because she followed Strickland’s

instructions to write two checks to Lone Star Financial, sign an incomplete

application, and not contact National Western because they would not have her

information. None of these directions may be attributable to National Western

because there is no evidence that National Western was aware of them or

authorized them. And Newman, by her own testimony, did not contact National

                                    23
Western regarding the nondelivery of her policy.      There is no evidence that

National Western was aware that Newman had not received it, nor was there

evidence that Newman ever informed National Western that the signed delivery

receipt it received was a forgery.

      There is, in sum, no evidence of any conduct by National Western that

would have reasonably led Newman to believe that Strickland was authorized to

defraud her. We therefore hold that the evidence is legally insufficient to support

a finding of vicarious liability through actual or apparent authority. We sustain

National Western’s first issue.

C. National Western did not ratify Strickland’s acts.

      In its second issue, National Western argues that there is legally and

factually insufficient evidence to support the jury’s finding that National Western

ratified Strickland’s fraudulent acts. ―Ratification may occur when a principal,

though he had no knowledge originally of the unauthorized act of his agent,

retains the benefits of the transaction after acquiring full knowledge.‖ Land Title

Co. of Dallas, Inc. v. F.M. Stigler, Inc., 609 S.W.2d 754, 756 (Tex. 1980).

Newman argues that because National Western did not return Newman’s funds

after she told them in December 2007, that her annuity should have been for

$200,000, it ratified Strickland’s conduct.

      When Newman contacted National Western in December 2007, she told it

that she had paid its agent $200,000. In response, National Western contacted

Strickland. Strickland denied that he had received the additional $75,000 and

                                      24
produced a policy receipt purportedly signed by Newman. National Western told

Newman that it believed that she had only applied and paid for a $125,000

policy. It included in its letter a copy of the delivery receipt. There is no evidence

in the record that Newman informed National Western that the receipt was a

forgery or otherwise spoke to National Western again until she had retained

counsel.

      National Western had in front of it an application for a $125,000 annuity

signed by Newman, a check for $125,000 signed by Newman, a receipt of the

policy it believed was signed by Newman, multiple withdrawal requests on the

policy signed by Newman, and two years without any complaint by Newman that

she had not received her policy or her statements. In light of the information it

had, we cannot say it was unreasonable for National Western to believe that

Newman had contracted for, paid for, and accepted a $125,000 annuity, not a

$200,000 policy as she later claimed. Nor can we say that this was enough

information to rise to the level of the ―full knowledge‖ required to establish

ratification. See Gibson v. Bostick Roofing & Sheet Metal, Co., 148 S.W.3d 482,

492 (Tex. App.—El Paso 2004, no pet.) (holding that principal did not ratify

conduct of purported agent when he investigated the plaintiff’s complaint of

nonpayment, the agent told the principal that ―he would take care of the

payment,‖ and the principal was never informed of the agent’s fraud). There is

no evidence that National Western was aware of the $75,000 check until

Newman sent it to them, and after that, there was no evidence that National

                                      25
Western knew that Newman had made the check to Lone Star Financial in order

to procure a contract with National Western. There is no evidence that National

Western knew that Newman had signed the application with the annuity amount

blank and that Strickland had filled it in later. There is no evidence that National

Western knew that the policy receipt was a forgery, that Newman had not

received her policy statements, or that it should have known she had not

received them when they had evidence that she had received checks delivered

to the same address.

      The critical factors in discerning whether a principal has ratified an

unauthorized act by his agent is the extent of the principal’s knowledge of the

transaction and his actions in light of that knowledge. See Land Title Co. of

Dallas, 609 S.W.2d at 756. National Western did not have full knowledge of the

material facts of the transaction required to ratify Strickland’s conduct. National

Western’s refusal to pay Newman $200,000 is not affirmation of Strickland’s

fraud. In this case, Strickland’s conduct was fraud on the principal as well as on

Newman. Since the agent’s act is fraud upon the principal, it is incapable of

ratification, because no principal would confer authority to practice a fraud upon

itself. See Saenz, 786 S.W.2d at 111; Lincoln Fire Ins. Co. v. Taylor, 81 S.W.2d
1059, 1060 (Tex. App.—Fort Worth 1935, writ dism’d).

                                     26
      We therefore hold that there is no evidence that National Western ratified

Strickland’s fraudulent acts.3 We sustain National Western’s second issue and

hold that there is no basis for holding National Western vicariously liable for

Strickland’s fraud. Because our holdings on National Western’s first two issues

are dispositive, we do not need to reach the rest of National Western’s issues.

See Tex. R. App. P. 47.1.

D. Newman cannot recover on her alternate theories of recovery.

      Newman argues in her motion for rehearing that she should be allowed to

seek recovery under one of the alternate theories of recovery on which the jury

returned favorable findings. See Boyce Iron Works, Inc. v. Sw. Bell Tel. Co., 747
S.W.2d 785, 787 (Tex. 1988).      We first note that it seems that a judgment

      3
        To the extent that Newman argues that National Western ratified
Strickland’s conduct by continuing to employ him, we note that this is not
sufficient evidence of ratification. See, e.g., Durand v. Moore, 879 S.W.2d 196,
203 (Tex. App.—Houston [14th Dist.] 1994, no writ) (holding that an employer
may not be liable for exemplary damages under a theory of ratification when the
only evidence of ratification was ―[t]he mere retention of an employee‖); see also
Allen v. Ctr. Operating Co., L.P., No. CIV.A. 302CV1764P, 2003 WL 22364328,
at *8 (N.D. Tex. Oct. 1, 2003) (relying on Durand in holding that employer did not
ratify employee’s assault by not terminating employee). Although there was
evidence that National Western had received complaints about Strickland prior to
his dealings with Newman, the evidence was also that those complaints had
been investigated and resolved. The first complaint was for undelivered policies
and resulted in a full refund by National Western. The second complaint was
withdrawn ―due to a misunderstanding.‖ The third complaint involved Strickland’s
deceased partner’s failure to return funds to the policyholder. Strickland claimed
he was unaware of the failure, and when he was made aware, he returned the
amount to the policyholder. Retaining Strickland after investigating these
complaints is not evidence that National Western approved or ratified Strickland’s
acts.

                                    27
rendered in this court is the proper remedy, not remand to the trial court. See

Transp. Ins. Co. v. Faircloth, 898 S.W.2d 269, 280 (Tex. 1995) (evaluating

alternative theories of liability and rendering a take nothing judgment on all

theories submitted to the jury).

      The jury returned findings favorable to Newman on whether Strickland

violated the Deceptive Trade Practices Act and whether Strickland breached a

contract with Newman.       However, to hold National Western liable for those

actions necessitates a finding that National Western is vicariously liable for

Strickland’s actions. See Qantel Bus. Sys., Inc. v. Custom Controls Co., 761
S.W.2d 302, 305 (Tex. 1988) (noting that ―traditional common law theories of

vicarious liability, such as agency or respondeat superior‖ provide the only bases

for creating vicarious liability under the DTPA); Sw. Land Title Co. v. Gemini Fin.

Co., 752 S.W.2d 5, 8 (Tex. App.—Dallas 1988, no writ) (holding that there was

no evidence of actual or apparent authority of agent by which to hold principal

liable for breach of contract).    The only jury findings on that issue are in

Questions One, Nine, and Eleven. Question One, as we stated above, fails to

connect any authority Strickland had to the injury-producing acts that the jury

found Strickland to have committed and does nothing to establish liability on the

part of National Western.      Question Nine asks whether Strickland was an

independent contractor. We stated above that he was not as a matter of law.

Question Eleven asks whether National Western ratified Strickland’s conduct. As

we held above, it did not.     Thus, there is no jury finding by which National

                                    28
Western can be held vicariously liable for Strickland’s bad acts on any of

Newman’s theories of recovery. Accordingly, we render judgment that Newman

take nothing against National Western on her alternate theories of recovery. See

Transp. Ins. Co., 898 S.W.2d at 280 (rendering a take nothing judgment on

alternative theories because there was no evidence to support recovery under

any of the theories); Beal Bank, S.S.B. v. Schleider, 124 S.W.3d 640, 652 (Tex.

App.—Houston [14th Dist.] 2003, pet. denied) (rendering a take nothing judgment

under the plaintiff’s alternative theory of recovery when there was no evidence to

support the jury’s findings on that theory).

E. Newman’s request for sanctions was properly dismissed.

      Newman filed a postjudgment motion to sanction National Western for

allegedly failing to produce documents in pretrial discovery regarding customer

complaints against Strickland. During discovery, Newman made the following

relevant requests for production:

            Request for Production No. 20: A copy of all complaints made
      by anyone about you to the Texas Department of Insurance [TDI].

             ....

           Request for Production No. 25: Your complete file on
      Defendant Lynn Strickland and or Lone Star Financial.

             ....

            Request for Production No. 28: Produce all documents
      surrounding all complaints to you or the complete complaint file
      regarding Lynn Strickland or Lone Star Financial.

                                      29
      In its response to request no. 20, National Western filed multiple

objections, including that ―[Newman] is in an equal or superior position to obtain

such information from the public records or available from [TDI] which is more

convenient, less burdensome or less expensive.‖ National Western produced

documents purporting to respond to requests nos. 25 and 28. It later ―informally

supplemented‖ its response with more documents relevant to requests 25 and

28.

      Newman claims that in January 2010, she learned of a complaint against

Strickland that had not been disclosed by National Western. She requested files

from TDI in April 2010, and those files included documents which National

Western did not produce during discovery. She then filed a motion for sanctions

against National Western, requesting that the court require National Western to

―disclose its dishonest conduct‖ to TDI; strike National Western’s request for

findings of fact and conclusions of law; and grant a monetary sanction of

$75,000.

      National Western filed a response and a plea to the jurisdiction. After a

hearing on the motion and the plea to the jurisdiction, the trial court dismissed

Newman’s motion for lack of jurisdiction. In her single issue on appeal, Newman

argues that the trial court incorrectly dismissed her motion for sanctions and

erred in refusing to sanction National Western.

      We review a trial court’s determination whether to impose sanctions under

an abuse of discretion standard. Am. Flood Research, Inc. v. Jones, 192 S.W.3d
30
581, 583 (Tex. 2006); Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). To

determine whether a trial court abused its discretion, we must decide whether the

trial court acted without reference to any guiding rules or principles; in other

words, we must decide whether the act was arbitrary or unreasonable. Low v.

Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire, 134 S.W.3d 835, 838–39 (Tex.

2004). An appellate court cannot conclude that a trial court abused its discretion

merely because the appellate court would have ruled differently in the same

circumstances. E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549,

558 (Tex. 1995); see also Low, 221 S.W.3d at 620. An abuse of discretion does

not occur when the trial court bases its decisions on conflicting evidence and

some evidence of substantive and probative character supports its decision.

Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex. 2009); Butnaru v. Ford

Motor Co., 84 S.W.3d 198, 211 (Tex. 2002).

      Assuming (without deciding) that the trial court did have jurisdiction to hear

Newman’s motion, we cannot say it erred in failing to sanction National Western.

National Western demonstrated that it directed Newman to retrieve the

documents from TDI in its response to her request for production. Newman does

not claim that there are other documents that National Western allegedly

withheld that were not in the documents she received from TDI. If Newman had

contacted TDI as National Western suggested, she would have received all the

documents prior to trial and would not have suffered any prejudice. However,

Newman chose not to contact TDI until after trial.       We cannot say that not

                                    31
imposing sanctions under these facts is unjust. See Tex. R. Civ. P. 215.2(b)

(requiring the order of sanctions to be just); see also Spohn Hosp. v. Mayer, 104
S.W.3d 878, 882 (Tex. 2003) (holding that a ―just‖ sanction must be directed to

remedying the prejudice caused). Newman also argued that National Western

should have been sanctioned because Newman filed two motions for sanctions.

We disagree with Newman’s implicit contention that a court should grant

sanctions against a party solely because a party has repeatedly moved for them.

We overrule Newman’s sole issue.

                                  Conclusion

      Having sustained National Western’s two dispositive issues and overruled

Newman’s sole issue, we reverse the trial court’s judgment and render judgment

that Newman take nothing.

                                                 PER CURIAM

PANEL: GABRIEL, J.; LIVINGSTON, C.J.; and McCOY, J.

DELIVERED: October 13, 2011

                                   32