Michael Bridges v. the Lakes at King Estates, Inc., Ronald Voss, and Richard Voss ( 2018 )

NUMBER 13-16-00626-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
MICHAEL BRIDGES, Appellant,
v.
THE LAKES AT KING
ESTATES, INC., RONALD
VOSS, AND RICHARD VOSS, Appellees.
On appeal from the 347th District Court
of Nueces County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Contreras and Hinojosa
Memorandum Opinion by Chief Justice Valdez
Appellant Michael Bridges filed suit against appellees Ronald Voss and Richard
Voss for, among other things, breach of fiduciary duty to The Lakes at King Estates (the
Company)—a real estate development company that Bridges and the Vosses owned in
equal shares. The jury assessed damages against the Vosses in the amount of $1 each.
By three issues, Bridges contends: (1) the jury’s damage award of $2 dollars is legally
and factually insufficient; (2) the business judgement rule does not apply; and (3) all court
costs should be taxed against the Vosses. We affirm.
I. BACKGROUND
The Company acquired a loan to purchase undeveloped real property, which
Bridges and the Vosses personally guaranteed. The Company lacked sufficient funds to
repay the loan when it came due; therefore, to raise money to pay the bank debt, the
Company sold some of its properties to the Vosses, Bridges, and their related entities.
Thereafter, the bank threatened to foreclose on the Company’s remaining property if it
failed to pay the balance left on the debt. Ronald borrowed money, purchased the land,
and paid the debt to the bank, relieving the Vosses and Bridges from personal liability.
Bridges filed suit against the Vosses accusing them of self-dealing by selling the
Company’s properties for under market value to themselves or to entities they owned.
According to Bridges, the properties sold for only $2.75 million even though they were
worth $5.89 million. The Vosses filed a counter-suit for breach of fiduciary duty.
The jury found that the Vosses breached their fiduciary duties to the Company and
awarded $2.00 dollars to the Company. The jury also found that Bridges breached his
fiduciary duty to the Company and awarded $1.00 to the Company. Lastly, the jury found
that Bridges had not been provided a reasonable opportunity to examine and copy the
Company’s records and awarded him $4,875.00 in attorney’s fees. This appeal followed.
II. LEGAL AND FACTUAL SUFFICIENCY
2
By his first issue, Bridges contends that the evidence conclusively established that
he was entitled to $3.14 million dollars in damages. Bridges also argues that award of
$2.00
is against the great weight and preponderance of the evidence because it
is well below the minimum range of damages supported by the evidence,
meaning there is also no evidence to support the response given. The
[$2.00] figure is also manifestly unjust and shocks the conscience; [$2.00]
is an unjust damage figure in any case, especially one involving the
conveyance of millions of dollars of real property.
A. Standard of Review
When, as here, the party with the burden of proof at trial (Bridges) brings a legal
sufficiency issue complaining of an adverse finding, the party must show that the evidence
conclusively establishes all vital facts in support of the finding sought by the party. Dow
Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001); Sterner v. Marathon Oil Co., 767
S.W.2d 686, 690 (Tex. 1989). We first examine the record for evidence supporting the
adverse finding, ignoring all evidence to the contrary. Dow Chem. Co., 46 S.W.3d at 241;
Sterner, 767 S.W.2d at 690. If no evidence supports the finding, we next examine the
entire record to determine if the contrary proposition is conclusively established as a
matter of law. Dow Chem. Co., 46 S.W.3d at 241. Evidence is conclusive “only if
reasonable people could not differ in their conclusions, a matter that depends on the facts
of each case.” City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
When a party with the burden of proof at trial complains that an adverse finding is
factually insufficient, the party must demonstrate that the evidence of the adverse finding
is so weak or so against the great weight and preponderance of the evidence that it is
clearly wrong and unjust. Dow Chemical, 46 S.W.3d at 241. In conducting a legal and
3
factual sufficiency review, we must not substitute our opinion on witness credibility for that
of the fact finder. City of Keller, 168 S.W.3d at 819–20.
B. Discussion
At trial, Bridges testified that the Company’s properties were worth $5.89 million
but were only sold for $2.75 million. 1 Thus, Bridges argued the Vosses made a profit of
$3.14 million due to self-dealing. Bridges did not provide any other evidence supporting
a finding that the properties were worth $5.89 million.
Ronald testified that after the bank threatened foreclosure of the properties, the
Vosses wanted to sell the property to a third party, pay off the debt to the bank, and split
whatever profit was left. However, according to Ronald, Bridges refused to do so.
Instead, the Company sold the various properties to Bridges, the Vosses, and the related
entities owned by them. Ronald explained that pursuant to an agreement with the
purchasers of the land, the Company would put up fifty percent of the money to develop
the land and receive fifty percent of the net profits from that development.
According to Ronald, Bridges agreed to sell a parcel of property owned by the
Company referred to at trial as the Unit 3A property, which included 23.939 acres of land.
Ronald stated that Bridges was afforded the opportunity to purchase the Unit 3A property,
but he did not do so. The Unit 3A property was purchased by VOJO, a company partly
owned by Richard, and the Company received the profits. Bridges testified that he was
1 We note that, although Bridges testified that the properties sold for $2.75 million, the jury was free
to disbelieve his testimony. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); Dunn v. Bank-Tec.
South, 134 S.W.3d 315, 324 (Tex. App.—Amarillo 2003, no pet.) (“[I]t must be remembered that jurors are
free to believe or disbelieve any witness, regardless of whether the witness’ testimony is contradicted.”)
(citing Lance v. USAA, Ins. Co., 934 S.W.2d 427, 429 (Tex. App.—Waco 1996, no writ)). And, during his
testimony Bridges admitted that he had approximated the price based on the sales documentation of only
one of the six properties. Regarding the other properties, Bridges had no sales documentation on which to
base his opinion.
4
not informed of this sale. 2 However, during cross-examination by the Vosses’ trial
counsel, Bridges admitted that he knew of the arrangement to sell the Unit 3A property
for $529,889 and that he had signed the contract. Bridges stated that he had agreed to
the arrangement in early 2011.
Ronald testified that the sales price of the various properties sold by the company
had been based on appraisals that were required by the banks loaning money for the
purchases. Ronald stated that the Company “sold the land at full market price and
appraised price.” Ronald said, “The company's plan was to sell the land at appraised
value, market value, whatever that is and is pretty close all the time between the market
value and appraisal value and sell it so that we not only make money on the land but also
have the opportunity to make money on the development.” Ronald emphasized that for
each of the properties that the Company sold, the Vosses relied on appraisals that the
banks used to set the purchase price. Regarding another parcel of property, which
encompasses sixty-one acres, sold by the Company and purchased by Ronald, Ronald
testified that that parcel was sold for the appraised price and the money went to the
Company. The Company then paid off its debt to the bank, avoiding foreclosure.
Bridges testified that the he believed that the properties improperly sold by the
Company were worth $5.89 million, or in other words each acre was worth approximately
$57,266. 3 However, Ronald testified that each property was sold for the appraised market
2 Bridges testified that he had “no problem” to another sale of land by the Company to Ronald
because the sale had been disclosed to him. In addition, Bridges stated that he had no problem when the
Company sold single-family developed properties to the Vosses and that his objections were to the
Company’s sale of vacant non-developed properties to the Vosses.
3 At trial, when discussing which properties were worth $5.89 million, Bridges stated that he was
referring to the six exhibits “right here on the table.” However, the record does not show which of those
documents were on the table. The trial court states, “The six that he just went over,” however, the record
shows that Bridges had just discussed five exhibits including Plaintiff’s Exhibits 14, 15, 16, 17, and 18. The
5
value, and Richard testified that, at the time of the sales, the appraised market value of
each acre was approximately $25,000. The jury could have believed Richard and
disbelieved Bridges about the appraised market value of the property. See City of Keller,
168 S.W.3d at 819. The jury could have believed that the properties were worth and sold
for the appraised market value as stated by Richard and Ronald and that the properties
were not worth $5.89 million. See id. Under Richard’s valuation, the properties sold by
the Company to the Vosses were worth $2.57 million which is well under the $2.75 million
that Bridges claims that the Company received. Even if we were to include the value of
the Unit 3A property, our analysis would be the same, because Ronald and Richard
testified that the Company sold each of the properties for the appraised market value.
And, as previously stated, the jury could have disbelieved Bridges that the properties sold
for $2.75 million. Therefore, Bridges has not conclusively established all vital facts in
support of a finding that the Vosses profited from their self-dealing by $3.14 million. See
Dow Chemical Co., 46 S.W.3d at 241; Sterner, 767 S.W.2d at 690. Moreover, we cannot
conclude that Bridges has demonstrated that the adverse finding is so weak or so against
the great weight and preponderance of the evidence that it is clearly wrong and unjust. 4
See Dow Chemical, 46 S.W.3d at 242. We overrule Bridges’s first issue.
listed exhibits show that the Company sold 102.852 acres which Bridges claimed were improper. Thus, we
are left to guess that Bridges meant that the listed exhibits including one exhibit not referenced were worth
$5.89 million. The only other property that Bridges stated on direct-examination that he had a problem with
being sold was the Unit 3A property, which encompassed 23.939 acres. However, he later testified that he
agreed to allow the sale of the Unit 3A property.
In his brief, Bridges does not clarify which properties and how many acres he believes were sold
under their market value and states that he testified as to the “fair market value of the property that the
Vosses conveyed to themselves. . . .” The evidence showed that Bridges agreed to allow the Company to
convey certain property to the Vosses, which would not be included in the calculation of damages. Thus,
we will do our best to address the issue.
4 It appears that the jury awarded nominal damages.
6
II. THE BUSINESS JUDGMENT RULE
By his second issue, Bridges attacks question 6 in the jury charge, which applied
the business judgment rule. 5 Question 6 stated, “Were the sales of the subject properties
by the Company fair to the corporation and authorized, approved, or ratified by the board
of directors or the shareholders.” The jury answered, “Yes.”
Bridges argues that question 6 “failed to distinguish between interested versus
disinterested directors and shareholders, and was inappropriate because there was harm
to the corporation itself.” However, Bridges did not object to the question on that basis,
and he did not submit what he contends to be a properly worded question to the trial
court. Thus, any objection on that basis is waived. See TEX. R. CIV. P. 272, 274 (“Any
complaints to a question, definition or instruction, on account of any defect, omission, or
fault in pleading, is waived unless specifically included in the objections.”); Cruz v.
Andrews Restoration, Inc., 364 S.W.3d 817, 829 (Tex. 2012) (“Our procedural rules state
that a complaint to a jury charge is waived unless specifically included in an objection.”).
Next, Bridges argues that the business judgment rule does not apply because
there was harm to the corporation itself. At trial, Bridges did not object to jury question 6
on this basis. 6 Accordingly, this argument is waived. The rest of Bridges arguments are
multifarious and mostly relate to the previous arguments. Nonetheless, Bridges posed
5 The business judgment rule protects corporate officers and directors from liability “for alleged
breach of duties based on actions that are negligent, unwise, inexpedient, or imprudent if the actions were
‘within the exercise of their discretion and judgment in the development or prosecution of the enterprise in
which their interests are involved.’” Sneed v. Webre, 465 S.W.3d 169, 178 (Tex. 2015).
6 At trial, Bridges objected to question 6 on the basis that the business judgment rule does not apply
because “there was testimony about self-dealing.” Bridges does not make this argument on appeal.
7
only one objection to question 6, and none of his remaining appellate arguments re-urge
that objection. Thus, those arguments are waived. We overrule Bridges second issue.
III. COSTS
By his third issue, Bridges contends that the trial court should have recovered his
costs in this matter. Specifically, Bridges asserts that he was the prevailing party because
he recovered $4,875.00 in attorney fees. The Vosses respond that the trial court’s taxing
costs against the party incurring same was proper under the law because neither Bridges
nor the Vosses were wholly successful in the trial court.
Texas Rule of Civil Procedure 131 states that “[t]he successful party to a suit shall
recover of his adversary all costs.” TEX. R. CIV. P. 131. We review a trial court’s award
of costs for an abuse of discretion. Mitchell v. Bank of Am., N.A., 156 S.W.3d 622, 630
(Tex. App.—Dallas 2004, pet. denied). “A trial court does not abuse its discretion in taxing
costs against both sides where neither party was wholly successful in that one expected
to receive more while the other expected to pay less.” Mobil Producing Tex. & New Mex.,
Inc. v. Cantor, 93 S.W.3d 916, 920 (Tex. App.—Corpus Christi 2002, no pet.).
In Mobile Producing Texas & New Mexico, Inc., we concluded that the trial court
had not abused its discretion when it awarded costs to both parties. Id. We reasoned
that “Mobil hoped to recover more under its breach of contract claim” but “it recovered
under its unjust enrichment claim,” and “[a]ppellees, on the other hand, hoped to pay less
by obtaining a take nothing judgment.” Id.
Here, Bridges and the Vosses each recovered nominal damages for their breach
of fiduciary claims, neither party received damages in the amount that each party had
hoped to receive. And although Bridges may have received a little more than the Vosses
8
because he also recovered his attorney’s fees on his claim that he had not been provided
a reasonable opportunity to examine and copy the Company’s records, neither party
wholly prevailed. See id. Thus, we cannot conclude that the trial court abused its
discretion when it taxed the costs against the party incurring same. We overrule Bridges’s
third issue.
IV. CONCLUSION
We affirm the trial court’s judgment.
/s/ Rogelio Valdez
ROGELIO VALDEZ
Chief Justice
Delivered and filed the
29th day of November, 2018.
9