Court Opinion

ID: 9779049
Source: CourtListenerOpinion
Date Created: 2023-08-29 21:34:28.58337+00
Date Added: 2024-06-11T07:33:20.063297
License: Public Domain

BLEIL, Justice,
dissenting.
My primary disagreement is with the majority’s decision that InterFirst did something for which liability for punitive damages attaches. I also disagree with the majority’s conclusion that there is sufficient evidence to support a “bad faith” finding. For clarity’s sake, I address the sufficiency of the evidence issue first.
SUFFICIENCY OF THE EVIDENCE
The conclusion of a dissenting justice with regard to the sufficiency of the evidence may be of marginal value because, as the majority is well aware, courts of appeals are the final authority on fact questions. See Pool v. Ford Motor Co., 716 S.W.2d 629, 634 (Tex.1986); Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Texas L.Rev. 361, 368 (1960). Nevertheless, conscience compels me to assail the majority’s conclusion that the evidence sufficiently supports a finding of a “bad faith” breach of duty on the part of InterFirst, which gives rise to punitive damages.
The majority sorts through thousands of pages of the statement of facts before keying in on a few sentences which it concludes, without explanation, support the findings of self-dealing and bad faith. However, before it arrives at this conclusion, the majority opines that:
There was no statutory self-dealing.
The fact that InterFirst lent money to Southwest Pump did not constitute self-dealing or bad faith.
The restrictions on Southwest Pump’s dividend payments did not form a part of an alleged “conspiracy to force the sale of the stock.”
Minor gifts of pecans to InterFirst, and dove hunts, and luncheon dates by bank officers with William and Sally Estes do not show any neglect by the bank of its fiduciary duty.
The fact that Sally Estes wished to buy additional stock in Southwest does not show bad faith on InterFirst’s part.
The loan restrictions placed on Southwest Pump were not inconsistent with InterFirst’s duties.
The charging of a $6,000.00 fee for the sale of stock did not indicate bad faith.
InterFirst’s advertising brochure does not establish any deceit on its part.
*911Furnishing certain real estate appraisals was not detrimental to the trusts.
InterFirst’s furnishing the names of three Dallas trust attorneys did not evidence self-dealing or bad faith.
After setting forth all of this “non-breaching” conduct on the part of InterFirst, the majority appears to focus on part of Robert Kain’s testimony quoted in its opinion. The majority, in effect, says, “Aha! This is the malevolent evidence.”
As stated by the majority, no “Chinese Wall” existed between the departments of InterFirst. But realism must enter into our review of the evidence. Surely we must consider that Robert Kain, a former loan officer, knew nothing about the sale of the stock until six months after the sale, and provided no input into the decision to make the sale. Had a trust officer, or some other officer involved in the sale of the stock, said the bank sold the stock because of an improper motive, I could more easily join in the majority’s “Aha.” However, it is not so easy when the “Aha” evidence takes the form of an opinion of a former loan officer who had nothing to do with the sale of the stock by the trust department, who in fact did not know about the sale of stock until several months after its sale. Would the majority still cling to Kain’s testimony had he been a janitor or elevator operator? A janitor would have known just as much about the sale of the stock as did Kain.
In light of all the evidence, Kain’s opinion plus the circumstances surrounding the sale are not enough to prove any intent required to show bad faith. I fully agree with the concurring opinion that the evidence of bad faith and self-dealing is “tenuous at best” but I fail to see that this same evidence “barely rises to the level required to impose liability.” The majority abdicates its duty to find the evidence in this case insufficient. If it cannot find the evidence insufficient under the facts of this case, it is difficult to imagine an instance in which it could find the evidence insufficient.
PUNITIVE DAMAGES
My other primary disagreement with this decision centers on the issue of exemplary damages. I am persuaded by my review of this case that the law does not authorize an award of punitive damages in this instance. In attempting to articulate my difference of opinion with the majority, I find that the majority neglects to set out what is required to justify the imposition of punitive damages.
Because the majority seems unclear whether this action is in the nature of one based on a contract, a tort, or equity, it is understandable that the basis of the majority’s decision on punitive damages is nebulous. An action for breach of a fiduciary duty has commonly been treated as an action sounding in tort, contract and equity. See D. Dobbs, Remedies § 10.4, at 684 (1973). Recently a sister court of appeals held that “[b]reach of fiduciary duty is a tort.” Douglas v. Aztec Petroleum Corp., 695 S.W.2d 312 (Tex.App.-Tyler 1985, no writ). The Aztec decision provided no basis for its statement, which is so readily embraced by today’s majority. I believe that the basis of the majority’s punitive damage decision is this: InterFirst’s conduct, an intentional breach of a fiduciary duty, was a simultaneous breach of contract and a tort.
The majority errs in two fundamental areas concerning punitive damages:
I.

Absence of a Jury Finding of Independent Tort Precludes Recovery of Punitive Damages

Punitive damages are not recoverable in a breach of contract case even where the contract has been breached maliciously. Amoco Production Co. v. Alexander, 622 S.W.2d 563 (Tex.1981). Thus, a distinct tort, separate and apart from the malicious breach of the contract, must be pled and proved. Texas Nat. Bank v. Karnes, 717 S.W.2d 901 (Tex.1986); Texas Power & Light Co. v. Barnhill, 639 S.W.2d 331 (Tex. *912App.-Texarkana 1982, writ ref’d n.r.e.). While it is not necessary for a tort and the contract to arise out of separate and distinct transactions, Barnhill, 639 S.W.2d at 334, this does not change the well-established rule that the tort must be an independent one, and must be found by the jury as such. International Bank, N.A. v. Morales, 736 S.W.2d 622 (1987); Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986). The jury did not find — nor was it asked to find —that the breach was accompanied by an independent tort. Therefore, the punitive damages are not allowable.
II.

No Pleading of Intentional Tort and Limitations Precludes Any Recovery for Intentional Tort

When suit was filed against InterFirst, many causes of action were pled against it. It pled as an affirmative defense the applicable statutes of limitations.1 Thereafter and prior to trial, the allegations of the intentional torts of conspiracy and fraud were nonsuited.2
Because the sale of stock was in December 1980, and suit was not filed until Au*913gust 1984, it seems almost a certainty that the attorneys nonsuited the intentional tort actions of conspiracy and fraud because as a matter of law those actions were barred by the two-year limitations period in Tex. Civ.Prac. & Rem.Code Ann. § 16.003 (Vernon 1986). Strangely, although the intentional torts were abandoned before trial, this Court resurrects an unnamed intentional tort as the sole basis for upholding punitive damages.
In addition to the above two specific reasons why punitive damages are not properly allowable, I also disagree with the rationale given by the majority to support the award of punitive damages. The majority seems to rest its decision on the case of Texas Bank and Trust Co. v. Moore, 595 S.W.2d 502 (Tex.1980), which it cites for the proposition that exemplary damages are proper when an intentional breach of fiduciary duty has occurred. Moore dealt only slightly with the issue of punitive damages. The fact situation was vastly different than the one now before this Court. Moore was found to have overreached his aunt, Maggie Littell, during the last years of her life, at a time when she was confused and in ill health. Moore took possession of much of her estate and “handled the affairs” of Littell. Littell relied and depended upon her nephew. After Littell died, Moore claimed that she had intended to give him the property he had managed for her, including her bank accounts and personal jewelry.
The court held that “a fiduciary relationship was established as a matter of law under the undisputed evidence in this record; and, secondly, that the presumptive unfairness and invalidity of the transactions in question stand unrebutted in any respect by Moore.” The Supreme Court held on the issue of punitive damages:
We also disagree with the Court of Civil Appeals in the reversal of the award of exemplary damages in the sum of $5,000 as found by the jury. This follows from our conclusion that Moore did not overcome the presumption that his self-dealing with the funds of Mrs. Littell was unfair, and that the case of the Bank against Moore as a breaching fiduciary is established by this record. As we said in International Bankers Life Ins. Co. v. Holloway, supra, in recognizing the right to a recovery of exemplary damages, “[w]e should not say to defaulting fiduciaries that the most for which they can be held accountable in equity are the profits which would have remained theirs had they not been called to account.” Id. at 584.
Moore does not require that punitive damages be recovered in all cases, or in this case.
The Moore decision, as well as the intermediate appellate court decision (Moore v. Texas Bank and Trust Co., 576 S.W.2d 691 (Tex.Civ.App.-Eastland 1979), rev’d, 595 S.W.2d 502 (Tex.1980)), which it reversed, makes it clear that the focus of that case was on presumptions, not damages. When a fiduciary relationship is established, a presumption arises that a gift from the principal to the fiduciary is unfair and invalid. The Supreme Court reversed the Court of Civil Appeals on the ground that a fiduciary relationship had been established as a matter of law by undisputed evidence, and the bank did not need to submit an issue on breach of the fiduciary duty because Moore had failed to overcome the presumption of unfairness. Punitive damages had been reversed by the Court of Civil Appeals because it found that the bank had failed to maintain its cause of action; the Supreme Court, in finding that the bank had set forth a cause of action, reinstituted the action for punitive damages. The malice in Moore lay in the unre-butted presumption of unfairness in a situation involving a gift from a principal to a fiduciary. That situation does not exist here.
*914What, then, is the applicable law? That is a difficult question to answer. Cases such as Burk Royalty Co. v. Walls, 616 S.W.2d 911 (Tex.1981), have shed light on the question of when punitive damages are allowed based upon gross negligence. However, that type of case does not assist us here because we are not dealing with gross negligence. We must look to other types of punitive damages cases.
Punitive damages are allowable when the wrongful act is willful, malicious or fraudulent. International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 667 (Tex.1963). However, the fact that an act is unlawful is not by itself a ground for an award of punitive damages. Rather, the act complained of must not only be unlawful or wrongful, it also must partake of a wanton and malicious nature. Ogle v. Craig, 464 S.W.2d 95 (Tex.1971); Killian v. Trans Union Leasing Corp., 657 S.W.2d 189 (Tex.App.-San Antonio 1983, writ ref’d n.r. e.).3
A recent case seems to reaffirm the Moore holding. In Manges v. Guerra, 673 S.W.2d 180 (Tex.1984), the Supreme Court upheld exemplary damages against Mang-es, holding that “[rjecovery against a breaching fiduciary is not limited to an accounting of profits received by the fiduciary, but can also include exemplary damages.” Manges, 673 S.W.2d at 184.
There seems to be a common thread in the breach of fiduciary duty cases — malice. In Manges, the jury found that he “willfully, wantonly, maliciously and unconscionably breached his fiduciary duty.” Manges, 673 S.W.2d at 184-185. In Holloway, the jury found that “the defendants acted with malice.” Holloway, 368 S.W.2d at 584. The thread of malice does not tie into the facts of our case or the conduct of InterFirst.
It is unfortunate that the majority does no more than pay lip service to Learned Hand’s belief, “[t]he law ought not make trusteeship so hazardous that responsible individuals and corporations will shy away from it.” Dabney v. Chase Nat. Bank of City of New York, 196 F.2d 668 (2d Cir. 1952). The majority’s decision achieves precisely what it says the law ought not.

. In this case limitations was pled, and as a matter of law, more than two years had elapsed between the 1980 stock sale and the 1984 suit filing. Although limitations is ordinarily a fact question, the two-year statutory period may be shown so conclusively that it is established as a matter of law. Cf. Texas & N.O.R. Co. v. Burden, 146 Tex. 109, 203 S.W.2d 522 (1947).

. Originally the plaintiffs alleged the following cause of action:
CONSPIRACY
26. Prior to December 19, 1980, InterFirst acting by and through certain of its officers and employees, specifically defendants Nelson and Landrum, entered into a concert of action and conspiracy with Sally R. Estes, William C. Estes and J.J. French, Jr.
27. The purpose of the conspiracy was to place under the ownership and control of Sally R. Estes the 968.5 shares of stock held by the two trusts w’hich are the subject of this litigation.
28. The defendant-conspirators undertook to accomplish their purpose by illegal means, i.e., to obtain the trusts’ 968.5 shares of stock for the benefit or control of Sally R. Estes without paying fair value therefor and to do so as secretly and clandestinely as possible so as to avoid detection.
29. The purpose of the conspiracy was fulfilled and the conspirators were successful. As a result, the trusts were damaged in an amount of at least $3,300,000 plus interest thereon.
30. The conspirator defendants acted with actual malice, or alternatively, with reckless disregard for the interests of the trusts and the beneficiaries, and the plaintiff beneficiaries are entitled to recover exemplary damages from all defendants, jointly and severally, which they seek in the amount of $40,000,-000.
31. In the alternative, plaintiffs allege that their injury occurred at the date the conspiracy culminated, i.e., November 10, 1981,
when the fair market value for the 968.5 shares of stock acquired on that date by Sally Estes was at least $7,000,000. Should it be determined, for whatever reason, that Southwest Pump Company nor its minority shareholders are not entitled to damages as a result of the transactions whereby Southwest Pump Company, acting under the illegal domination and control of Sally R. Estes and William C. Estes acquired the 968.5 shares of stock and thereafter, again acting under the illegal domination and control of Sally R. Estes and William C. Estes, sold said stock to Sally R. Estes in her capacity as independent executrix, then plaintiffs are entitled to recover for the trusts the difference between the actual fair market value on the date Mrs. Estes acquired the stock and the value originally paid.
FRAUD
32. Defendants’ entry into the combination and conspiracy described in paragraphs 26 through 31, above, constituted fraud in a transaction involving the stock in a corporation, in violation of § 27.01 of the Business and Commerce Code of Texas. Plaintiff beneficiaries and the trusts have been defrauded.
33. As a result of the fraud committed by defendants, the trusts have suffered damages in an amount of at least $3,300,000, or in the alternative, at least $6,500,000.
34. Pursuant to the provisions of § 27.01(c), Texas Business and Commerce Code, plaintiffs as persons defrauded, are entitled to recover exemplary damages not to exceed twice the amount of actual damages, or at least $6,600,000, from the defendants jointly and severally, or in the alternative, $13,000,000.
In taking their nonsuit, the plaintiffs moved as follows:
PLAINTIFFS’ NON-SUIT AS TO CERTAIN CLAIMS
Sara M. Risser, et al., plaintiffs, hereby move to dismiss and do non-suit the following claims only that said plaintiffs have pleaded in their Original Petition:
(a) Conspiracy, as set forth in paragraphs 26, 27, 28, 29, 30 and 31 of the Original Petition; *913(b) Fraud, as sét forth in paragraphs 32, 33 and 34 of the Original Petition; and (c) Constructive Trust, as set forth in paragraph 37 and in the prayer of the Original Petition.

. In Ogle v. Craig, 464 S.W.2d 95 (Tex.1971), the contention was made that a breach of fiduciary duty under circumstances showing bad faith was sufficient grounds for assessing punitive damages because bad faith amounts to "fraud and/or malice.” This contention was rejected by the Supreme Court: "acts violative of the rights of another may be said to be wrongful and, indeed, may be motivated by bad faith and improper motive. But there must be more to support legal redress to the extent of the punishment implicit in the assessment of punitive damages." Ogle, 464 S.W.2d at 98.
In International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex.1963), certain officers of a corporation conspired to realize a personal profit from corporate transactions and to sell personally owned corporate stock in competition with the sale of the corporation’s own stock. In addressing the exemplary damages issue, the Supreme Court stated that "[t]he acts of the defendants supporting the recovery are acts which equity considers to be wilful and fraudulent, regardless of what may have been the actual motive of the defendants; here, of course, the jury has found that the defendants acted with malice.” Holloway, 368 S.W.2d at 584. Holloway does not say that punitive damages attach for all breaches of fiduciary duty, no matter what that breach might be.