SMI/USA, Inc. v. Profile Technologies, Inc. ( 2001 )

SMI/USA Inc., et al. v. Profile Technologies, Inc.

    IN THE

TENTH COURT OF APPEALS

No. 10-99-011-CV

     SMI/USA, INC., ET AL.,

                                                                         Appellants

     v.

     PROFILE TECHNOLOGIES, INC.,

                                                                         Appellee

From the 170th District Court

McLennan County, Texas

Trial Court # 94-1700-4

DISSENTING OPINION

      The majority takes SMI et al to the mountain top but refuses to let them enter the promised land. There is no doubt that the majority agrees with SMI’s first issue on appeal. None of the findings of fact support the judgment. With this, I wholly agree. The majority then discusses whether the findings are necessary. The fatal flaw in the majority’s logic is that because the evidence presented through the plaintiff was not “controverted,” that the facts are “undisputed.”

      This is not correct. Uncontroverted evidence can be conflicting. Further, if evidence is introduced through the plaintiff’s witness, that could defeat the plaintiff’s claim, the defendant need not present any additional evidence to prevail. The evidence presented through the only witness was in conflict regarding whether the contracts had in fact, been canceled. If the findings of fact had actually resolved any of the disputed factual issues necessary in support of the plaintiff’s claim, we could imply all other findings necessary in support of the judgment. Not a single finding of fact has anything to do with the elements of the dispute which exist between Profile and SMI. Profile failed to secure any findings in support of the trial court’s judgment in its favor. This is no different than if they had presented this case to a jury and the jury answered “no” to questions inquiring about whether the contract had been terminated. In the absence of any finding in support of the judgment in favor of Profile, the only proper judgment, is that Profile take nothing from SMI and a declaration that the contract has not been terminated.

      The only issue presented to the trial court for resolution, as expressed by SMI’s attorney in the excerpt quoted in the majority opinion, is “whether or not the contracts are terminated and when.” The issue was not; could the contracts be terminated; or, will the court terminate the contracts. The judgment states, inter alia, the contracts are “as of the date of this Final Judgment, cancelled [sic] and of no further force or effect.” Thus, the language of the judgment supports the argument made by SMI that the contracts had not been previously terminated.

      Even a casual reading of the majority opinion will alert the reader that there was a real dispute as to whether the contracts had actually been canceled. Profile’s witness testified that in 1993, several letters purporting to terminate the contract had been sent to SMI. But, after those “termination” letters were sent, he continued to accept royalty payments. One of these letters was actually sent by his attorney, but it did not state any grounds for termination. Then, in 1994, Profile sued SMI for breach of the very contracts that it now asserts already had been terminated, seeking damages. Thereafter, Profile filed bankruptcy and sought to terminate the contracts in the bankruptcy proceeding. This relief was denied. While the evidence regarding the bankruptcy proceeding may not constitute a res judicata defense, it is still evidence that Profile, as of that date, did not consider the contracts to have terminated. This was the status as of 1997, when the bankruptcy proceedings were dismissed and this case, which had been abated during the bankruptcy, resumed.

      This state court action proceeded to trial in 1998 with a claim for damages for breach of the very contracts Profile was claiming had been terminated. Again, the testimony of Profile’s witness regarding the claims for damages was at least some evidence that he did not consider that the contracts had actually been terminated.

      This was an action to determine and declare the status of the parties with regard to these contracts. The declaratory judgment sought was not that the contracts could be validly terminated or even a judgment of termination, but rather a determination of whether the contracts had been terminated, and if so, when. Instead of deciding the issue presented by the parties by determining and declaring their status, the trial court, on its own, terminated the contract. This is obvious in the choice of terminology in the judgment that “as of the date of the judgment” the contracts are canceled and of no further force or effect. By deciding that as of the date of the judgment the contracts were terminated, the trial court resolved a factual issue about which Profile’s witness had presented conflicting evidence, that the contract had not previously been terminated. Upon SMI’s timely request, the trial court was required to file findings of fact and conclusions of law that would support the judgment in favor of Profile. This the trial court did not do. Profile failed to request additional findings of fact and conclusions of law that would support the judgment in its favor.

      Profile’s failure to secure findings of fact and conclusions of law that support the judgment then prevented SMI from being able to attack specific findings as lacking evidentiary support. Because there was no finding which supports the judgment, there were no findings to attack. Therefore, SMI was left with no alternative other than to generally attack the judgment. But, the majority tells SMI that a general attack on the judgment presents nothing for our review. This highlights SMI’s harm and is the reason the trial court is required to file findings of fact and conclusions of law in support of the judgment. Otherwise, the party cannot properly frame their complaint on appeal by attacking the sufficiency of the evidence to support a particular finding in support of the judgment.

      Because the judgment depends upon the resolution of a disputed fact issue, because the evidence on the issue was conflicting, because SMI timely requested findings of fact and conclusions of law, and because the trial court’s findings and conclusions do not support the judgment, I would hold that the judgment must be reversed and judgment rendered that Profile take nothing from SMI, and declare that as of the date of trial, the contracts had not been terminated. Because the majority does not, I respectfully dissent.

                                                                               TOM GRAY

                                                                               Justice

Dissenting opinion delivered and filed January 17, 2001

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