Uniform Manufacturing, Inc. v. Earl's Apparel, Inc. and Stanley Jeans Corp. ( 2007 )

Opinion filed August 23, 2007

Opinion filed August 23, 2007

                                                                        In The

    Eleventh Court of Appeals

                                                                   __________

                                                          No. 11-06-00105-CV

                                                    __________

                        UNIFORM MANUFACTURING, INC., Appellant

                                                             V.

         EARL=S APPAREL, INC. AND STANLEY JEANS CORP., Appellees

                                           On Appeal from the 3rd  District Court

                                                        Houston County, Texas

                                                  Trial Court Cause No. 02-0165

                                             M E M O R A N D U M  O P I N I O N        

Uniform Manufacturing, Inc. (UMI) filed suit against Larry Earl Beard d/b/a Earl=s Apparel, Inc. alleging breach of contract and conversion.  Beard answered that he was not liable in the capacity in which he was sued.  Earl=s Apparel, Inc. and Stanley Jeans Corp. filed a plea in intervention alleging counterclaims against UMI.  The trial court entered judgment that UMI take nothing on its claims and that Stanley Jeans recover $9,460.50 in damages from UMI.  The trial court further ordered Stanley Jeans to return to UMI Aall fabric and manufactured goods the subject of this suit, on hand . . . within thirty (30) days after the judgment is paid in full.@  UMI appeals. We affirm.

In four issues on appeal, UMI argues that the evidence is factually insufficient to support the trial court=s findings.  Findings of fact in a case tried to the court have the same force and effect as a jury=s verdict on questions and are reviewable for legal and factual sufficiency.  Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). In analyzing a factual sufficiency challenge, we must consider and weigh all of the evidence and determine whether the evidence in support of a finding is so weak as to be clearly wrong and unjust or whether the finding is so against the great weight and preponderance of the evidence as to be clearly wrong and manifestly unjust.   Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001); Pool v. Ford Motor Co., 715 S.W.2d 629 (Tex. 1986);  In re King=s Estate, 244 S.W.2d 660 (Tex. 1951).   The trier of fact is the sole judge of the witnesses= credibility and the weight to be given their testimony.  City of Keller v. Wilson, 168 S.W.3d 802, 819‑21 (Tex. 2005);  Nat=l Freight, Inc. v. Snyder, 191 S.W.3d 416, 425 (Tex. App.CEastland 2006, no pet.). 

Stanley Jeans manufactured garments for various companies.  Earl=s Apparel was a wholesale company that warehoused and distributed apparel.  Stanley Jeans and Earl=s Apparel were located in the same office building.  UMI entered into an agreement with Stanley Jeans in which Stanley Jeans would manufacture garments for UMI with fabric supplied by UMI.  Beard, president of Stanley Jeans, testified that, based upon the agreement, UMI would pay for the work performed by Stanley Jeans and then Stanley Jeans would ship the garments directly to UMI customers.  Stanley Jeans charged UMI $4.25 for each pair of jeans it manufactured.  After some time, Stanley Jeans began shipping the garments to UMI customers before receiving payment from UMI.  UMI would send a purchase order to Stanley Jeans, Stanley Jeans would manufacture and ship the jeans, and then Stanley Jeans would send an invoice to UMI.  UMI was responsible for the shipping charges.    On January 31, 2002, Beard sent a fax to Aaron Nathan Tucker, president of UMI, which stated:

I am faxing manifest sheets on order # 263, 278, 295, 319, 356 & 368.  approx 1800 pair.  These are the last orders I will cut at this price.  The new price per pair should you decide for me to cut more will be 5.00 per pair.  I will cut up what short flat fold pieces I can for 5.00 but, no more flat fold goods.  20 yards & up useable fabric only on rolls.  

In response, Tucker sent a letter to Beard on February 15, 2002, which stated that UMI Adeclined to accept [Stanley Jeans] proposed price increase for current and future orders@ and to Acancel all outstanding orders . . . and request the immediate and complete transfer of all fabric owned by [UMI].@

Beard testified that the price increase applied only to future orders.  At the time Beard sent the fax, Stanley Jeans was in the process of manufacturing two large outstanding orders.  Beard testified that, after receiving the letter from Tucker, Stanley Jeans completed manufacture on the garments that had already been Acut@ but did not Acut@ any more fabric. Stanley Jeans completed 2,364 garments at $4.25 each on the outstanding purchase orders and sent an invoice to UMI for payment. 

Tucker testified that his understanding of the January 31 fax was that the purchase orders referenced in the fax were the last orders Stanley Jeans would manufacture at $4.25 and that other orders, including the two outstanding orders, would be billed at $5.00 each.   Tucker stated that UMI did not want Stanley Jeans to cut any more garments at the $5.00 price and requested Stanley Jeans to return all UMI fabric.  Tucker further testified that, when he sent the February 15 letter, he did not know whether Stanley Jeans had begun work on outstanding purchase orders.  In his February 15 letter, Tucker requested Aany other outstanding bills for current work please have these forwarded to my attention immediately.@ Tucker testified that UMI suffered damages in the amount of $13,241.78 from Stanley Jeans=s failure to return UMI=s fabric. 

UMI first argues that the evidence is factually insufficient to support the trial court=s finding that UMI wrongfully repudiated its contracts with Stanley Jeans when it cancelled all outstanding purchase orders. In the findings of fact, the trial court stated that the January 31 fax informed UMI of Stanley Jeans=s intent to increase its price on future purchase orders.  The trial court also found that Stanley Jeans had begun working on outstanding purchase orders at the time UMI instructed Stanley Jeans to stop working on outstanding purchase orders.

A party repudiates a contract if the party manifests, by words or actions, a definite and unconditional intention not to perform the contract according to its terms. Builders Sand, Inc. v. Turtur, 678 S.W.2d 115, 120 (Tex. App.CHouston [14th Dist.] 1984, no writ).  Beard=s January 31 fax indicates that he would not Acut@ any new orders at $4.25.  Beard testified that the price increase was only for future orders and that there were two purchase orders in progress at the time of the fax.  Stanley Jeans completed the garments in progress on the two outstanding purchase orders for the agreed-upon $4.25 price.  Tucker testified that he did not know if any purchase orders were in progress at the time he sent the February 15 letter cancelling all outstanding orders and that his intention in sending the letter was for Stanley Jeans to stop working immediately for UMI.  The trial court=s finding that UMI repudiated the contract by cancelling all outstanding orders was not so weak as to be clearly wrong and unjust and is not so against the great weight and preponderance of the evidence as to be manifestly unjust. UMI=s first issue on appeal is overruled.

Appellant next argues that the evidence is factually insufficient to support the trial court=s finding that the actions of Stanley Jeans in response to UMI=s cancellation of outstanding purchase orders was commercially reasonable.  The purpose of damages, including the remedies provided under the Texas Business and Commerce Code, is to place the injured party in as good a position as it would enjoy if the other party had fully performed under the contract. Lakewood Pipe of Tex., Inc. v. Conveying Techniques, Inc.,  814 S.W.2d 553, 555 (Tex. App.CHouston [1 Dist.] 1991, no writ); Stewart & Stevenson Servs., Inc. v. Enserve, Inc., 719 S.W.2d 337, 343 (Tex. App.CHouston [14th Dist.] 1986, writ ref=d n.r.e.).

Tex. Bus. & Com. Code Ann. ' 2.704(b) (Vernon 1994) states:

Where the goods are unfinished an aggrieved seller may in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization either complete the manufacture and wholly identify the goods to the contract or cease manufacture and resell for scrap or salvage value or proceed in any other reasonable manner.

In an action in which the seller seeks damages pursuant to Section 2.704(b), it is the buyer=s burden to show that the seller acted unreasonably in either completing manufacture and reselling or in ceasing manufacture.  Lakewood Pipe, 814 S.W.2d at 556. 

Beard testified that, after UMI cancelled all outstanding orders, Stanley Jeans did not Acut@ any more garments.  Stanley Jeans completed the garments that were in progress.  Beard stated that he completed the manufacturing process because Stanley Jeans Ahad a lot of money invested in them already.@  Beard further explained that it would be unreasonable to ship the partially completed garments to another manufacturer.  Beard stated, ANo manufacturer wants to get a partially sewn garment and try to finish it. It would be most efficiently done by [Stanley Jeans].@ The evidence is factually sufficient to support the trial court=s finding that the actions of Stanley Jeans were commercially reasonable.  UMI=s second issue on appeal is overruled.

In its fifth issue on appeal, UMI challenges the trial court=s finding that Stanley Jeans did not convert any property belonging to UMI.  A conversion occurs when one person makes an unauthorized, wrongful assumption and exercises dominion and control over the personal property of another to the exclusion of or inconsistent with the owner=s rights.  Waisath v. Lack=s Stores, Inc., 474 S.W.2d 444, 447 (Tex. 1971); Paschal v. Great Western Drilling, Ltd., 215 S.W.3d 437 (Tex. App.CEastland 2006, pet. denied).  As previously discussed, the trial court found that UMI wrongfully repudiated its contracts with Stanley Jeans.  Tex. Bus. & Com. Code Ann. ' 2.703 (Vernon 1994) provides that, when a buyer wrongfully repudiates the contract, the seller may withhold delivery of the goods. Section 2.703 also allows the seller to complete the manufacture as provided in Section 2.704. 

The evidence shows that Stanley Jeans was in the process of manufacturing the garments when UMI repudiated the contract.  Stanley Jeans continued manufacture on those garments that had been Acut.@ Section 2.703 allows Stanley Jeans to withhold the goods.  UMI=s fifth issue on appeal is overruled.

In the sixth issue on appeal, UMI argues that the evidence is factually insufficient to support the trial court=s finding that Stanley Jeans did not breach any contract with UMI.  UMI specifically argues under this issue that the evidence is sufficient to show Athat Stanley Jeans was in breach of contract when it failed to return all of UMI@s fabric and was responsible to UMI for the market price of that fabric.@

The trial court found that Stanley Jeans Adid not breach any contract with [UMI].@ As discussed in the first and second issues, the trial court found that UMI wrongfully repudiated its contracts with Stanley Jeans and that, because of the repudiation, Stanley Jeans acted in a commercially reasonable manner in completing the garments in progress. After completing the garments in progress, Stanley Jeans did not Acut@ any additional garments for UMI.  The evidence is factually sufficient to support the trial court=s finding that Stanley Jeans did not breach any contract with UMI.

The trial court also found that the Aevidence did not establish the amount of fabric shipped to [Stanley Jeans] from [UMI] and its suppliers.@ UMI submitted an inventory report listing fabric that UMI believes Stanley Jeans has in its possession.  UMI suppliers shipped the fabric directly to Stanley Jeans.  Beard testified that he counted the contents of the first shipment of flat fold goods and that the shipment was twenty percent short.  Beard informed Tucker that he could not count each shipment. Beard testified that he could not accurately determine the amount of material received.  Tucker testified that his inventory report would include any material used in completing the garments on the outstanding purchase orders.  The trial court=s finding that UMI did not establish the amount of fabric shipped to Stanley Jeans is not so weak as to be clearly wrong and unjust and is not so against the great weight and preponderance of the evidence as to be manifestly unjust.  UMI=s sixth issue on appeal is overruled.

In the third issue on appeal, UMI contends that the trial court=s judgment is not sufficiently definite and certain so as to protect the rights of UMI.  The judgment states that:

[Stanley Jeans] is ordered to return to [UMI] all fabric and manufactured goods the subject of this suit, on hand, at the expense of [UMI] within thirty (30) days after the judgment is paid in full.  When Stanley Jeans returns the fabric and goods, it will also forward to [UMI] a notarized list of the items returned in as much detail as possible.

A judgment must be sufficiently definite and certain to define and protect the rights of all litigants, or it should provide a definite means of ascertaining such rights to the end that ministerial officers can carry the judgment into execution without ascertainment of facts not therein stated.  Stewart v. USA Custom Paint & Body Shop, Inc., 870 S.W.2d 18, 20 (Tex. 1994). 

UMI complains that the judgment does not provide the Aamount@ of fabric to be returned.  The judgment provided that Stanley Jeans would recover $9,460.50 in damages for the garments completed pursuant to the outstanding purchase orders.  The trial court found that UMI did not establish the amount of fabric shipped to Stanley Jeans.  The judgment requires Stanley Jeans to return all fabric and manufactured goods in Stanley Jeans=s possession and to provide an accounting of the fabric and goods returned.  A judgment that settles all the legal issues and rights between the parties is sufficient even though further proceedings may be necessary in the execution of it or some incidental or dependent matter may still remain to be settled.  See Hinde v. Hinde, 701 S.W.2d 637, 639 (Tex. 1985).  UMI=s third issue on appeal is overruled.

The fourth issue on appeal concerns whether the statute of limitations barred UMI=s suit  for conversion against Stanley Jeans.  In its original petition, UMI filed suit against Larry Earl Beard d/b/a Earl=s Apparel.  Earl=s Apparel filed a plea in intervention on October 4, 2002.  In a first amended plea in intervention filed on January 15, 2003, Stanley Jeans joined as an intervenor.   UMI filed a second amended original petition on June 14, 2004, naming Stanley Jeans and Earl=s Apparel as defendants.

The conclusions of law state that any right to recover damages for conversion from Stanley Jeans is barred by the statute of limitations.  Stanley Jeans and Earl=s Apparel are located in the same office building and both operate in the apparel industry.  Misidentification occurs when two separate legal entities with similar names actually exist and the plaintiff sues the wrong one because he is mistaken about which entity is the correct defendant.   Chilkewitz v. Hyson, 22 S.W.3d 825, 828 (Tex. 1999).   In cases of misidentification where the wrong legal entity is sued, the limitation period may be equitably tolled if the plaintiff can prove that the proper defendant was not prejudiced by the mistake in pleading.  Diamond v. Eighth Ave. 92, L.C., 105 S.W.3d 691, 695 (Tex. App.CFort Worth 2003, no pet.).   To be entitled to equitable tolling, the plaintiff must show that the correct defendant had notice of the suit, was cognizant of the facts, and was not misled or disadvantaged by the mistake.  Chilkewitz, 22 S.W.3d at 830; Diamond, 105 S.W.3d at 695.  Stanley Jeans and Earl=s Apparel are similar entities, but they do not operate under a similar trade name.  Flour Bluff Indep. Sch. Dist. v. Bass, 133 S.W.3d 272, 274 (Tex. 2004).  The doctrine of misidentification does not toll the statute of limitations.

Moreover, the trial court concluded that UMI did not prove the amount or value of the fabric that was shipped to Stanley Jeans.  The trial court further concluded that Stanley Jeans was entitled to withhold delivery of the goods until UMI paid Stanley Jeans for the work completed after UMI repudiated the contracts.  Therefore, the trial court considered UMI=s claim for conversion against Stanley Jeans.  See Soto v. Soto, 936 S.W.2d 338, 343 (Tex. App.CEl Paso 1996, no writ.)  UMI=s fourth issue on appeal is overruled.     

The judgment of the trial court is affirmed.

JIM R. WRIGHT

August 23, 2007                                                                       CHIEF JUSTICE

Panel consists of:  Wright, C.J.,

McCall, J., and Strange, J.