Edward Jarzombek, Jr. v. Boone Maurer ( 2000 )

98-00810 Jarzombek v Maurer.wpd No. 04-98-00810-CV Edward JARZOMBEK, Jr., Appellant v. Boone MAURER, Appellee From the 218th Judicial District Court, Karnes County, Texas Trial Court No. 96-08-00112-CVK Honorable Stella Saxon, Judge Presiding

Opinion by: Catherine Stone, Justice

Sitting: Phil Hardberger, Chief Justice

Catherine Stone, Justice

Sarah B. Duncan, Justice

Delivered and Filed: March 29, 2000

REVERSED AND RENDERED

This case arises out of a well conversion project. Boone Maurer sued Edward Jarzombek for violations of the Texas Deceptive Trade Practices Act ("DTPA") after Jarzombek's company unsuccessfully tried to convert Maurer's oil well to a water-producing well. Following a bench trial, judgment was entered in favor of Maurer. On appeal, Jarzombek challenges the legal and factual sufficiency of the evidence to support the judgment and complains about certain evidentiary rulings. Because we find that Jarzombek's complained-of conduct is not actionable under the DTPA, we reverse the trial court's judgment and render a take-nothing judgment in favor of Maurer.

Factual and Procedural Background

In 1994, Maurer contacted Jarzombek, president of J-B Drilling Company, about the possibility of converting his existing oil well to a water-producing well. According to Maurer, Jarzombek indicated he was familiar with Maurer's well, a Carrizo formation oil well, because he had "done a lot of work in the Carrizo formations." Maurer testified Jarzombek told him that such wells historically "produce a lot of water." Maurer further testified Jarzombek told him that he would "probably have more water than [he would know] what to do with." Shortly after this initial conversation, Jarzombek surveyed Maurer's well and determined that a ten-horsepower single phase 230 volt motor pump should be installed to extract water. Based on Jarzombek's apparent experience and familiarity with the well, Maurer hired J-B Drilling to complete the conversion work and paid J-B Drilling $5,000 for the project. The recommended ten-horsepower pump, however, never worked properly. Ultimately, Maurer hired other well servicers, who discerned the source of the problem - the wrong size motor and pump and improper installation - and made the well operational.

Litigation ensued. Maurer brought a DTPA action against Jarzombek individually, claiming that Jarzombek misrepresented the well's potential production, the necessity of the ten-horsepower pump, his familiarity with the area, and his level of skill and experience in water well conversion work.⁽¹⁾ Following a bench trial, the trial court found that Jarzombek violated the DTPA by misrepresenting the type of equipment needed for Maurer's project. The trial court determined that Jarzombek's misrepresentations regarding the proper equipment were a producing cause of actual damages of $1,242, the additional expense Maurer incurred to make the well operational. In total, the trial court awarded Maurer $1,242 in actual damages, $7,800 in attorneys fees, and $2,000 in additional damages under section 17.50 (b)(1), plus prejudgment interest. The trial court issued findings of fact and conclusions of law in support of its judgment.

False, Deceptive, or Misleading Acts or Practices

In his first point of error, Jarzombek challenges the sufficiency of the evidence to support the trial court's findings that he engaged in any false, deceptive, or misleading act or practice. Jarzombek's argument under this point of error is three-fold: First, Jarzombek contends the trial court erred in rendering judgment against him individually because he was, at all times during the events which form the basis of Maurer's claims, acting as a corporate agent of J-B Drilling Company. In that capacity, Jarzombek argues he is shielded from personal liability absent Maurer's attempt to disregard the corporate entity through a claim to pierce the corporate veil or similar theory. Next, to the extent he can be held individually liable for actions taken in his corporate capacity, Jarzombek argues that his alleged misrepresentations are not actionable under the DTPA. Third, Jarzombek challenges the trial court's findings that his statements, if considered misrepresentations, are the producing cause of Maurer's damages. We discuss these arguments in the order presented.

Individual Liability

Jarzombek's first contention rests upon a misconception about the nature and scope of the protections afforded by the corporate entity. As this court explained in Leitch v. Hornsby, 885 S.W.2d 243, 250 (Tex. App.-San Antonio 1994), rev'd on other grounds, 935 S.W.2d 114 (Tex. 1996), the nature of the corporate entity shields agents from liability for certain corporate acts. The corporate entity, however, does not insulate an agent from liability for fraudulent or tortious acts committed while working for the corporation. See id.; see also Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex. 1985); Light v. Wilson, 663 S.W.2d 813, 815 (Tex. 1983) (J. Spears, concurring); Guilbeau v. Anderson, 841 S.W.2d 517, 519 (Tex. App.-Houston [14th Dist.] 1992, no writ). Stated differently, an individual is always responsible for his or her own tortious conduct. This rule also applies when the agent is a shareholder of the principle corporation. Light, 663 S.W.2d at 815. Because an agent may be sued individually for his own wrongdoing, it is not necessary to disregard the corporate entity in order to reach the individual. Leitch, 885 S.W.2d at 250; Barclay v. Johnson, 686 S.W.2d 334, 337-38 (Tex. App.-Houston [1st Dist.] 1985, no writ). That is, it is necessary to disregard the corporate entity only where the individual's liability is merely derivative of the corporation's liability. Leitch, 885 S.W.2d at 249-50. Because Jarzombek can be liable in his individual capacity for tortious conduct committed while working in his corporate capacity, we turn to the question of whether Jarzombek engaged in any false, deceptive, or misleading acts or practices that were a producing cause of Maurer's damages.

Misrepresentations

In order to recover damages under the DTPA, Maurer had the burden to prove that Jarzombek committed false, misleading, or deceptive acts which were a producing cause of actual damages to him. See Tex. Bus. & Com. Code Ann. § 17.46 (Vernon Supp. 2000). Misrepresentations constitute false, misleading, or deceptive acts within the meaning of section 17.46 of the DTPA. See Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995). Whether the facts about which Maurer complains rise to the level of misrepresentations is a question of law. Chilton Ins. v. Pate & Pate Enter., Inc., 930 S.W.2d 877, 890 (Tex. App.-San Antonio 1996, writ denied). Here, the trial court found that Jarzombek made several misrepresentations to Maurer during the course of their dealings,⁽²⁾ but ultimately concluded that only the misrepresentations regarding the equipment - the size of the motor and the pump - were a producing cause of actual damages. Our discussion therefore focuses solely on Jarzombek's conduct regarding the improper equipment. See Tex. Bus. & Com. Code Ann. § 17.46 (Vernon Supp. 2000) (recovery under DTPA limited to false, misleading, or deceptive acts, which are producing cause of damage to plaintiff).

As noted, after Jarzombek surveyed Maurer's well, he indicated that a ten-horsepower single phase 230 volt motor pump would be the proper size pump for the conversion project. In accordance with Jarzombek's initial assessment, the ten-horsepower pump was installed. The record establishes that Jarzombek's recommendation proved to be ineffective, thereby preventing J-B Drilling from fulfilling its contractual promise to convert Maurer's well. It is well settled that the failure to perform the terms of a contract, without more, is not a false, misleading, or deceptive act under section 17.46 of the DTPA. See e.g., Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996); Crim Truck & Track v. Navistar Int'l, 823 S.W.2d 591, 596 (Tex. 1992); Ashford Dev. v. USLife Real Estate Serv. Corp., 661 S.W.2d 933, 935 (Tex. 1983); Munawar v. Cadle Co., 2 S.W.3d 12, 18 (Tex. App.-Corpus Christi 1999, pet. denied); Enterprise-Laredo Associates v. Hachar's, Inc., 839 S.W.2d 822, 828-29 (Tex. App.-San Antonio 1992), writ denied, 843 S.W.2d 476 (Tex. 1992). The instant case falls squarely within this settled rule because the record does not establish that Jarzombek engaged in fraudulent or deceptive behavior, the "without more" component needed to pursue such a claim under the DTPA. See e.g., Crawford, 917 S.W.2d at 15 (holding that failure to publish yellow page advertisement was not actionable as misrepresentation under DTPA action, but actionable only as breach of contract claim); Helms v. Southwestern Bell Tel. Co., 794 F.2d 188, 191 (5th Cir. 1986) (rejecting DTPA misrepresentation claim based on telephone company's failure to correctly print advertisement, finding that "misrepresentation" was nothing more than telephone company's failure to perform its promise to correctly print advertisement). Rather, the record establishes that Jarzombek simply committed errors in judgment regarding the appropriate equipment necessary to complete the project. Indeed, James Pawlik, the well servicer who installed the proper size motor and pump, indicated that presumably a ten-horsepower pump would have worked, but a "professional" would have conducted tests to make the proper determination, something Jarzombek either failed to do or failed to do properly. That certain steps were not taken to insure that J-B Drilling's contractual promise was fulfilled does not give rise to a misrepresentation claim under the DTPA. See Crawford, 917 S.W.2d at 15. Because Maurer asserts, in essence, a breach of contract claim for J-B Drilling's failure to convert his well, recovery under the DTPA was not proper. Point of error number one is sustained.

In light of the foregoing holding, we need not address Jarzombek's other contentions brought forward on appeal. See Tex. R. App. P. 47.1. The judgment of the trial court is reversed and judgment is rendered that appellee Boone Maurer take nothing from appellant Edward Jarzombek, Jr. on Boone Maurer's claims for violations of the Texas Deceptive Trade Practices Act.

Catherine Stone, Justice

DO NOT PUBLISH

1. J-B Drilling filed for bankruptcy in 1995.

2. The trial court found that Jarzombek misrepresented the following facts:

• the amount of water available in the old well, and the amount of water capable of production;

• his competence, knowledge and experience in [conversion] work; and

• the type of wiring needed for the installation as well as his knowledge and experience regarding the water well conversion work concerning the high water temperature in the well. Such failure resulted in failing to account for the high water temperature in sizing the motor and pump. The motor installed was manufactured to operate with a water temperature not to exceed 86F, not the 140F, approximately, of the well.