Court Opinion

ID: 3122068
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:18:46.056999+00
Date Added: 2024-06-11T12:47:03.738453
License: Public Domain

Opinion issued August 30, 2012

                                       In The

                                Court of Appeals
                                      For The

                           First District of Texas
                            ————————————
                               NO. 01-11-00675-CV
                             ———————————
                           BRYAN L. SIMS, Appellant
                                          V.
              LOUISIANA TRANSPORTATION, INC., Appellee

                On Appeal from the County Court at Law No. 2
                            Harris County, Texas
                       Trial Court Case No. 931,244

                           MEMORANDUM OPINION

      Appellant, Bryan Sims, challenges the trial court’s judgment, entered after a

jury trial, in favor of appellee, Louisiana Transportation, Inc. (“LTI”), in LTI’s suit

against Sims for breach of contract. In two issues, Sims contends that the evidence
is legally and factually insufficient to support the jury’s findings that LTI’s breach

of contract was excused and his breach of contract was not excused.

      We affirm.

                                    Background

      On January 4, 2007, LTI, which operates a transportation business, entered

into a Consultant’s Agreement with Sims for him, as an independent contractor, to

provide LTI consulting services in LTI’s development of a “break bulk” business.

LTI agreed to pay Sims $6,234 per month “for each month worked,” reimburse

him for reasonable business expenses, and pay him a bonus of one-half percent to

one percent of certain revenue if he achieved a sales target minimum of $1,250,000

per quarter. The Consultant’s Agreement was for a one-year term, which would

renew annually. In the event that either party desired to terminate the agreement,

“cancellation [would] require 30 day written notice.”

      Two days after executing the Consultant’s Agreement, Sims executed a

Demand Promissory Note as “an addendum to the Consulting Agreement,” which

evidenced that LTI had agreed to “loan” him $20,000. The Promissory Note

provided,

      PAYBACK AMOUNT $20,000 plus interest due 12/31/07 less and
      except any principal amounts deducted pursuant to bonus
      compensation distribution set forth in [the] Consulting Agreement
      unless termination of Consulting Agreement at which time Demand
      Promissory Note is in default and hereinabove default provisions
      would be in force. It is agreed and understood that loan funding will
                                          2
      be in 4 installments of $5,000 distributed on the tenth day of each
      month until fully funded.

The Promissory Note further provided that the “entire principal and any accrued

interest shall be fully and immediately payable UPON demand of any holder

thereof.” Sims authorized LTI “to deduct the payback amount” from his “bonus

compensation to be paid pursuant to the Consulting Agreement.”

      On January 4, 2008, LTI and Sims executed a Renewal and Amendment to

the Consultant’s Agreement, which provided that the Consultant’s Agreement was

amended, among other things, to grant Sims a 2% commission in “all revenue . . .

in excess of the annual revenue budget in place for new accounting year.” The

Renewal Agreement also reaffirmed that “[a]ll bonus proceeds [were] to be

applied” to the Promissory Note.

      On March 10, 2008, LTI sent Sims a letter stating that it had “elected to

terminate and not renew” the Consultant’s Agreement. On March 18, 2008, LTI

and Sims executed a Commissioned Agent Agreement, which provided that Sims

would work for LTI in the capacity of a commissioned agent and his commission

would be increased to 8%.

      LTI subsequently filed suit against Sims, alleging that he had breached the

Consultant’s Agreement and Promissory Note by not repaying the $20,000 loan.

LTI sought to recover its damages in the amount of $20,000, plus interest and

attorney’s fees. Sims filed verified and general denials and a counter-claim for
                                       3
breach of contract against LTI, alleging that LTI had agreed to pay him a “sign-on

bonus” of $20,000. Sims further alleged that LTI had breached the Consultant’s

Agreement by not providing him 30-days’ notice of termination, not paying him

compensation in the amount of $56,106 “for the remaining months under the

[Consultant’s] [A]greement,” and not reimbursing him for out-of-pocket expenses

in the amount of $1,850. Sims also asserted a fraud claim against LTI, alleging

that LTI had made material false representations to him. Sims sought actual and

exemplary damages and attorney’s fees.

      At trial, both parties introduced into evidence the relevant contractual

documents described above. Additionally, Sims and Ralph Castille, vice president

of LTI, testified.

      Sims testified that, under the Consultant’s Agreement, he had the ability to

“earn” a bonus if he reached certain target sales goals. For example, if he made a

quarterly sales target of $1,250,000, i.e., annual sales of $5 million, he was entitled

to receive a bonus of approximately $25,000 for the year. Sims agreed that the

express terms of the Promissory Note reflected that he owed LTI $20,000 less any

amount deducted for any bonus compensation he earned; if he earned a bonus, it

“would go to pay this note”; he would be in default of the Promissory Note if he

failed to pay it; and “if [he] failed to earn a bonus, [he] still owed the $20,000 to

[LTI].”   Sims acknowledged that he received the $20,000 from LTI in four

                                          4
separate monthly payments of $5,000, he had never paid LTI the $20,000 or earned

any portion of it, and LTI had demanded repayment. He also agreed that he had

sold “far short” of the $5 million sales target under the Consultant’s Agreement in

2007, he had not been paid any bonuses for 2007, and he had never asked for a

bonus for his work in 2007.

      Sims noted that the parties’ Renewal Agreement modified the Consultant’s

Agreement because they were not “making quite as much money” as expected.

Sims explained that this occurred because LTI had him performing duties other

than developing business. Under the Renewal Agreement, Sims’s bonus program

was “reworked,” but any bonus he earned was still to be applied to the Promissory

Note. Sims did not meet the sales targets in the Renewal Agreement or earn any

bonus in 2008 prior to LTI’s termination of the contract.

      Sims further testified that, despite the express terms of the above written

documents, he and LTI had a different “oral agreement” that the $20,000 payment

was actually a sign-on bonus that he was not required to repay, even though he

never earned a bonus under the terms of the Consultant’s Agreement.            Sims

asserted that, prior to entering into the Consultant’s Agreement, he had asked for a

sign-on bonus, and Castille told him, “[W]e can’t call it a bonus and we’ll have to

call it” something else “to circumvent the people at headquarters.” Sims also

asserted that because LTI had included the $20,000 payment in a 1099 tax form

                                         5
that it submitted to the Internal Revenue Service (“IRS”), “it [was] no longer a

loan.”

         Sims stated that LTI terminated the Consultant’s Agreement on March 10,

2008 without providing him a reason for doing so, and he orally complained that

he had not been given 30-days’ notice.        Sims noted that, in LTI’s contract

termination letter, it did not make any mention of the outstanding loan. However,

Sims agreed that, shortly after the contract terminated, he voluntarily entered into

the Commissioned Agent Agreement with LTI.               After entering into the

Commissioned Agent Agreement, Sims did not send any business to LTI, and he

agreed that he “dropped” the agreement.

         Sims asserted that LTI was indebted to him under the Consultant’s

Agreement for $1,850 for reimbursable expenses, and he introduced into evidence

a letter from LTI admitting that it owed him this amount. Sims agreed that LTI

had paid him for every month that he had worked. He also agreed that the

Consultant’s Agreement allowed either party to terminate the agreement at any

time with 30-days’ notice.

         Castille testified that the $20,000 payment made by LTI to Sims was

“always a loan” and LTI had agreed to provide it to Sims so that he could resolve

some personal tax liabilities. Castille explained that the Promissory Note was “tied

to the bonus,” so that, if Sims achieved sales goals, any bonus revenue earned

                                          6
under the Consultant’s Agreement would “retire a portion of the debt associated

with the loan.” Castille noted that he had discussed this fact with Sims before he

signed the Promissory Note, and Sims “understood.”

      Castille stated that Sims never achieved the sales targets prescribed in the

Consultant’s Agreement and Renewal Agreement, even though he had represented

he could achieve them. And Sims never repaid the loan. Castille noted that LTI

had been disappointed in Sims’s performance in 2007. Accordingly, LTI, in the

Renewal Agreement, agreed to “focus” Sims’s duties, incentivize Sims by

increasing his bonus percentage, and decrease Sims’s sales targets. Castille also

noted that the Renewal Agreement also specifically mentioned applying Sims’s

bonus proceeds to repay the Promissory Note.

      Castille explained that when Sims continued to underperform in 2008, LTI

decided to terminate the Consultant’s Agreement, but LTI looked for

“alternatives.” During Castille’s conversation with Sims in which he informed

Sims that LTI intended to terminate the Consultant’s Agreement, he offered Sims

the opportunity to work with LTI as a commissioned agent. At that time, Sims told

Castille that he would consider this offer. Shortly thereafter, Sims entered into the

Commissioned Agent Agreement with LTI.

      Castille acknowledged that LTI had not provided Sims 30-days’ notice

before terminating the Consultant’s Agreement, but he explained that this was

                                         7
because LTI was “interested” in pursing the “agency agreement” with Sims.

Castille explained that the Commissioned Agent Agreement represented an

“opportunity” for Sims and a “win-win” for both Sims and LTI. Castille noted

that, under the Commissioned Agent Agreement, Sims could have achieved higher

bonuses than he was previously entitled to receive under the other agreements. In

light of Sims’s agreement to the change in the parties’ relationship, LTI did not

provide Sims 30-days’ notice or compensate Sims for any period following

termination of the Consultant’s Agreement. And, at the time that he and Sims

discussed termination of the Consultant’s Agreement and entering into the agency

agreement, Sims did not raise any concern about not receiving 30-days’ notice.

Rather, Sims understood that LTI’s offer of an agency agreement represented “a

great opportunity” and Sims “agreed to the agency agreement with the valuable

consideration that was being offered to him by taking” an existing “book of

business” and “grow[ing] it to the levels” that Sims thought were achievable.

      LTI offered, and the trial court admitted, into evidence an internal e-mail in

which Castille had indicated to others at LTI that, if Sims ultimately chose not to

enter into the Commissioned Agent Agreement, LTI could “discuss some debt

forgiveness in lieu of notice.” Castille explained that, if Sims had not signed the

Commissioned Agent Agreement, LTI was “going to honor the 30 day notice” and

                                         8
address compensation for that period, which would have been applied to the

Promissory Note.

      In regard to LTI’s submission of the 1099 tax form to the IRS, Castille

explained that the $20,000 payment had been included on the tax form because it

was “a loan tied to a bonus” and LTI’s accounting department instructed how the

payment should be handled for tax purposes.         Castille noted that Sims had

originally complained to him about LTI’s inclusion of the payment on the 1099 tax

form because Sims considered it a “loan.” To Castille’s knowledge, LTI never

issued a new 1099 tax form, and this issue remained with LTI’s “accounting and

legal” departments. Castille acknowledged that LTI owed Sims approximately

$1,850 in expenses, and he stated that this issue, along with the outstanding debt

owed by Sims, was addressed by LTI’s legal department.

      The jury found that both Sims and LTI failed to comply with the

Consultant’s Agreement, “which included as an addendum the Demand

Promissory Note.” The jury further found that Sims’s failure to comply was not

excused but that LTI’s failure to comply was excused. The trial court had

instructed the jury that Sims’s failure to comply was excused if (1) LTI

“previous[ly] fail[ed] to comply with a material obligation of the same agreement”;

(2) LTI waived compliance; or (3)(a) LTI “by words or conduct made a false

representation or concealed material facts,” “with knowledge of the facts or with

                                        9
knowledge or information that would lead a reasonable person to discover the

facts,” and with the intention that [Sims] would rely on the false representation or

concealment in acting or deciding not to act” and (b) Sims did not know and had

no means of knowing the real facts and relied to his detriment on the false

representation or concealment of material facts.       The trial court had further

instructed the jury that LTI’s failure to comply was excused if (1) “compliance

[was] waived by [Sims],”1 (2) “the parties agreed that a new agreement would take

[the Consulting Agreement’s] place,” or (3) Sims “previous[ly] fail[ed] to comply

with a material obligation of the same agreement.”

      The jury awarded LTI damages in the amount of $18,150 for Sims’s breach,

necessarily deducting the portion of reimbursable expenses that LTI had

acknowledged that it owed to Sims.        The jury also found that LTI had not

committed fraud against Sims. And, the trial court entered judgment in favor of

LTI, awarding it damages of $18,150 for breach of contract and its attorney’s fees,

costs, and interest.

                               Standard of Review

      We will sustain a legal-sufficiency or “no-evidence” challenge if the record

shows one of the following: (1) a complete absence of evidence of a vital fact, (2)

1
      The trial court had further instructed the jury that “[w]aiver is an intentional
      surrender of a known right or intentional conduct inconsistent with claiming the
      right.”
                                         10
rules of law or evidence bar the court 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 scintilla, or (4) the evidence establishes conclusively the opposite of

the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In

conducting a legal-sufficiency review, a “court must consider evidence in the light

most favorable to the verdict, and indulge every reasonable inference that would

support it.” Id. at 822. If there is more than a scintilla of evidence to support the

challenged finding, we must uphold it. Formosa Plastics Corp. USA v. Presidio

Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998).            “‘[W]hen the

evidence offered to prove a vital fact is so weak as to do no more than create a

mere surmise or suspicion of its existence, the evidence is no more than a scintilla

and, in legal effect, is no evidence.’” Ford Motor Co. v. Ridgway, 135 S.W.3d
598, 601 (Tex. 2004) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63

(Tex. 1983)). However, if the evidence at trial would enable reasonable and fair-

minded people to differ in their conclusions, then jurors must be allowed to do so.

City of Keller, 168 S.W.3d at 822; see also King Ranch, Inc. v. Chapman, 118
S.W.3d 742, 751 (Tex. 2003). “A reviewing court cannot substitute its judgment

for that of the trier-of-fact, so long as the evidence falls within this zone of

reasonable disagreement.” City of Keller, 168 S.W.3d at 822.

                                         11
      In conducting a factual-sufficiency review, we must consider, weigh, and

examine all of the evidence which supports and which is contrary to the jury’s

determination. Plas–Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.

1989). We note that each party seeking to establish the affirmative defense of

excuse for its failure to comply bore the burden of proof on that defense. See

Trencor, Inc. v. Cornech Mach. Co., 115 S.W.3d 145, 153 (Tex. App.—Fort Worth

2003, pet. denied) (citing TEX. R. CIV. P. 94) (stating that excuse is affirmative

defense upon which defendant has burden of proof). When a party is challenging

the factual sufficiency of a finding on an issue upon which that party had the

burden of proof, that party must demonstrate that the adverse finding is against the

great weight and preponderance of the evidence. Dow Chem. Co. v. Francis, 46
S.W.3d 237, 242 (Tex. 2001). When a party attacks the factual-sufficiency of an

adverse finding on an issue on which it did not have the burden of proof at trial, it

must show that there is insufficient evidence to support the adverse finding.

Vongontard v. Tippit, 137 S.W.3d 109, 112 (Tex. App.—Houston [1st Dist.] 2004,

no pet.). The jury is the sole judge of the witnesses’ credibility and the weight to

be given to their testimony. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d
757, 761 (Tex. 2003).

                                         12
                                  LTI’s Breach

      In his first issue, Sims argues that the evidence is legally and factually

insufficient to support the jury’s finding that LTI’s failure to comply with the

Consultant’s Agreement was excused because there is no evidence that he waived

his right to recover under the Consultant’s Agreement, he failed to comply with a

material obligation prior to LTI’s failure to comply, or he agreed to a novation of

the Consultant’s Agreement.

      In regard to waiver, Sims asserts that there is no evidence that he

“intentionally relinquished his to right to recover his $1,850 in expense money,”

his “compensation for the 30 day notice period in March 2007 for $6,234,” or his

“remaining nine months of the Consultant’s Agreement totaling $56,106.” Sims

notes that he testified that he was never told that, when LTI terminated the

Consultant’s Agremeent and he agreed to enter into the Commissioned Agent

Agreement, that agreement would “replace the Consultant’s Agreement thereby

giving up his aforementioned rights.”

      Waiver is the intentional relinquishment of a known right or intentional

conduct inconsistent with claiming that right. Jernigan v. Langley, 111 S.W.3d
153, 156 (Tex. 2003). To prove waiver, a party must show that the other party to

the contract had knowledge of the right and remained silent or inactive for an

unreasonable period of time or engaged in intentional conduct inconsistent with

                                        13
that right. Tenneco, Inc. v. Enter. Prod. Co., 925 S.W.2d 640, 643 (Tex. 1996);

Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987). The

elements of waiver include (1) an existing right, benefit, or advantage held by a

party; (2) the party's actual knowledge of its existence; and (3) the party's actual

intent to relinquish the right, or intentional conduct inconsistent with the right.

Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). The

question of waiver is ordinarily one of fact. Tenneco, 925 S.W.2d at 643. Because

waiver is largely a matter of intent, a court must consider the words, acts, and

conduct of the parties. See Mandell v. Mandell, 214 S.W.3d 682, 692 (Tex.

App.—Houston [14th Dist.] 2007, no pet.); Robinson v. Robinson, 961 S.W.2d
292, 299 (Tex.App.-Houston [1st Dist.] 1997, no writ); see also EZ Pawn Corp. v.

Mancias, 934 S.W.2d 87, 89 (Tex. 1996).

      First, we note that LTI never disputed that it owed Sims $1,850 in

reimbursable expenses under the Consultant’s Agreement. LTI acknowledged this

amount in correspondence to Sims prior to litigation, and it continued to

acknowledge this debt throughout the litigation and trial. However, LTI also

presented evidence that it retained this payment in light of Sims’s refusal to honor

his debt reflected by the Promissory Note. The jury necessarily found that the

$20,000 payment from LTI to Sims constituted a loan or an advance that was to be

earned pursuant to the Consultant’s Agreement or repaid by Sims.           And, as

                                        14
discussed below, LTI presented ample evidence that the $20,000 payment

consitued a loan for which LTI was entitled to recover. Second, the matters that

the parties primarily contested at trial were whether the $20,000 payment

represented a sign-on bonus and whether Sims was entitled to damages for LTI’s

failure to provide 30-days’ notice of termination. Sims concedes in his appellate

briefing that the jury found that LTI failed to comply “on the only ground . . .

alleged, that LTI terminated [the Consultant’s Agreement] without giving him 30

days written notice.” Thus, in considering the sufficiency of the evidence to

support the jury’s finding of excuse, we analyze the evidence that Sims waived his

right to seek damages for LTI’s failure to provide him 30-days’ notice of

termination of the Consultant’s Agreement.

      LTI presented evidence, through the testimony of Castille, that when it

terminated the Consultant’s Agreement, Sims did not object to LTI’s not providing

him 30-days’ notice or compensation for that notice period.       Rather, Castille

testified that he and Sims discussed transitioning their relationship from the

Consultant’s Agreement to a commissioned-agency relationship. Castille further

testified that, after thinking about LTI’s proposal, Sims expressed that “he was in

agreement with that particular change,” and, based upon this fact, notice was not

necessary.   LTI also introduced into evidence internal LTI correspondence

demonstrating that Castille had raised the issue of compensating Sims for the

                                        15
notice period with others at LTI, and the decision to compensate Sims was

dependent upon whether Sims chose to enter into a new agency relationship with

LTI. If not, according to Castille, LTI would have provided Sims compensation

for the notice period through “debt forgiveness.” Castille also explained that LTI

had offered Sims a new agency relationship on an “eat-what-you-kill basis” and

the “sky [was] the limit in terms of the compensation [Sims] could make” under

the new Commissioned Agent Agreement.             Castille noted that Sims had an

“entrepreneurial spirit,” and he anticipated that Sims might have a “better focus”

and improved performance under the new agreement. LTI even granted Sims

rights to an existing book of business, and it told him that it would “throw in all the

business and customers that had been created while he was . . . on the salary” under

the Consultant’s Agreement. Castille’s testimony supports an implied finding that

Sims, by accepting from LTI an increased percentage on his commissions,

revenues from and access to existing business, and other valuable consideration,

agreed to enter into a new relationship, which necessarily terminated the

Consultant’s Agreement. Thus, LTI was not required to provide 30-days’ notice of

termination of the Consultant’s Agreement, and Sims waived any right to

compensation in exchange for maintaining a modified business relationship with

LTI. In sum, when asked if LTI had was required to give Sims 30-days’ notice of

termination of the Consultant’s Agreement, Castille specifically testified,

                                          16
      With the understanding that the conversation [Sims] and I had was
      that he was going to agree to the agency agreement and was going to
      take over the existing business at 8% commission; and because he was
      entering into this second agreement, that the 30-day notice situation
      would not be required.

      Although Sims offered contrary testimony that he had orally complained

about a lack of notice, LTI presented sufficient evidence to create a fact issue on

whether Sims, by agreeing to enter into the Commissioned Agent Agreement,

intentionally waived his right to 30-days’ notice of termination of the Consultant’s

Agreement.2    Accordingly, we hold that the evidence is legally and factually

sufficient to support the jury’s implied finding that Sims waived his right to 30-

days’ notice of termination of the Consultant’s Agreement finding and, thus, its

express finding that LTI’s breach was excused.

      We overrule Sims’s first issue.

                                  Sims’s Breach

      In his second issue, Sims argues that that the evidence is legally and

factually insufficient to support the jury’s finding that Sims’s failure to comply

with the Consultant’s Agreement was not excused because, among other things,

there is “uncontroverted evidence” of LTI’s prior material breach and LTI waived

its right to repayment of the $20,000.

2
      Sims presented no evidence that he would have been entitled to compensation for
      the entire remaining year on the Consultant’s Agreement. The terms of the
      documents support, at most, a claim for compensation during the 30-day notice
      period.
                                         17
      Sims’s argument concerning LTI’s prior material breach is based upon his

assertion that the $20,000 payment constituted a sign-on bonus rather than a loan

or advance that Sims was required to earn. LTI presented documentary evidence

and testimony that the payment from LTI was a loan, which Sims was required to

repay. Also, as addressed above, the evidence supports the jury’s implied finding

that, by entering into the Commissioned Agent Agreement, Sims agreed to waive

any required notice of termination of the Consultant’s Agreement. Thus, there is

legally and factually sufficient evidence to support the jury’s finding that LTI did

not commit a prior material breach of the Consultant’s Agreement that excused

Sims’s breach.

      Sims’s argument concerning LTI’s alleged waiver of its right it to seek

repayment of the $20,000 is primarily based upon the evidence that LTI submitted

to the IRS a 1099 tax form that included the payment, Sims paid taxes on this

payment, Sims always disputed that he had received a loan, and LTI never issued a

corrected 1099 tax form. However, LTI presented ample evidence demonstrating

that the $20,000 payment constituted a loan. Castille also testified that the tax

treatment of the payment had been handled according to LTI’s accounting

department, and Sims did not present any evidence that this tax treatment

converted the payment from a loan to a bonus that he was not required to repay.

Additionally, LTI presented evidence that, when LTI made the $20,000 advance to

                                        18
Sims, all parties expected that Sims would earn that amount during the term of the

Consultant’s Agreement and would pay the Promissory Note by earning his bonus.

Thus, there is legally and factually sufficient evidence to support the jury’s finding

that Sims’s failure to comply with the Consultant’s Agreement was not excused by

any waiver by LTI of its right to seek repayment of the $20,000.

      Finally, Sims’s argument concerning fraud is based upon his testimony that

Castille informed him that the contractual documents had been drafted in such a

way as to “circumvent” “headquarters,” as well his other testimony that he

understood the $20,000 payment to be a sign-on bonus, which Sims was not

required to repay. However, Castille disputed that any such conversation occurred,

and the jury could have considered the contrary documentary evidence in rejecting

Sims’s fraud allegations. Thus, there is legally and factually sufficient evidence to

support the jury’s finding that Sims’s failure to comply with the Consultant’s

Agreement was not excused by LTI’s commission of fraud. In sum, we hold that

the evidence is legally and factually sufficient to support the jury’s finding that

Sims’s failure to comply with the Consultant’s Agreement was not excused.

      We overrule Sims’s second issue.

                                         19
                                   Conclusion

      We affirm the judgment of the trial court.

                                             Terry Jennings
                                             Justice

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

                                        20