T. Christian Cooper v. Sanders H. Campbell, Richard T. Mullen, Inc. D/B/A the Mullen Company ( 2018 )

AFFIRMED; Opinion Filed November 13, 2018.
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-17-00878-CV
T. CHRISTIAN COOPER, Appellant
V.
SANDERS H. CAMPBELL/RICHARD T. MULLEN, INC. D/B/A THE MULLEN
COMPANY, Appellee
On Appeal from the 162nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-12-15127
MEMORANDUM OPINION ON REHEARING
Before Justices Lang-Miers, Evans, and Schenck
Opinion by Justice Evans
Our memorandum opinion in this cause issued on July 18, 2018. Appellee timely moved
for rehearing. We grant the motion for rehearing, withdraw our opinion issued July 18, 2018 and
vacate the judgment of that date. Based on the supplemental record filed by appellee, we find that
we have jurisdiction to consider the merits of this appeal. This is now the opinion of the Court in
which we affirm the trial court’s judgment.
I. BACKGROUND
We provided a detailed recitation of the facts in our opinion on the first appeal of this case,
so do not recount all the facts here. See Cooper v. Campbell, No. 05-15-00340-CV, 2016 WL
4487924, at *1–3 (Tex. App.—Dallas August 24, 2016, no pet.). In the first appeal, Cooper and
appellee Sanders H. Campbell/Richard T. Mullen, Inc. d/b/a the Mullen Company’s (Mullen)
asserted issues and cross-issues which challenged multiple rulings by the trial court. Collectively,
the parties challenged the trial court’s rulings on: (1) Cooper’s motions for directed verdict,
judgment notwithstanding the verdict, and to modify the final judgment or for new trial and (2)
Mullen’s motion to modify the final judgment or for new trial. Cooper, 2016 WL 4487924, at *4.
This Court concluded as follows:
The trial court did not err when it denied Cooper’s motions for directed verdict,
judgment notwithstanding the verdict, and to modify the final judgment or for new
trial on the Mullen Co.’s promissory note claim. This part of the trial court’s final
judgment is affirmed.
However, the trial court erred when it denied the motion to modify the final
judgment or for new trial filed by Mullen Co. on the issue of equitable forfeiture.
The portion of the trial court’s final judgment granting equitable forfeiture and
reducing the Mullen Co.’s total recovery by $519,300 is reversed and the claim is
remanded to the trial court for further proceedings consistent with this opinion.
Finally, the trial court erred when it granted, in part, Cooper’s motion for directed
verdict on the Mullen Co.’s claim seeking an accounting. Accordingly, that ruling
of the trial court is reversed and that claim is remanded for further proceedings
consistent with this opinion.
Accordingly, the trial court’s final judgment is affirmed, in part, and reversed and
remanded, in part.
Id. at *14. We specifically concluded that,
Cooper did not identify or brief in the trial court the requirement that the trial court
conclude there was a ‘clear and serious’ breach of duty as a predicate to assessing
a sum that should be awarded as an equitable forfeiture. Cooper does not cite to
anything in the record, nor can we find anything in the record, to show that in the
fashioning of the equitable forfeiture award the trial court considered the
‘principles’ or ‘factors’ enumerated in ERI Consulting.
Id. at *13. Accordingly, this Court remanded the forfeiture claim to the trial court for consideration
of the factors explained by the Texas Supreme Court in ERI Consulting Eng’r, Inc. v. Swinnea,
318 S.W.3d 867, 874 (Tex. 2010). Id.
Prior to the remand of the first appeal, the trial judge, the Honorable Phyllis Lister Brown,
passed away. The Honorable Maricela Moore took the bench of the 162nd Civil District Court to
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which this case was assigned. The supplemental clerk’s record filed after we issued our now-
withdrawn opinion contains the trial court’s May 1, 2017 notice of jury trial set for June 1, 2017.
The supplemental record also contains the parties’ Rule 11 agreement filed on May 26, 2017 which
provided as follows:
We write jointly to propose an approach for the June 1 hearing in the above-
referenced matter. First, the trial record contains all necessary evidence for the
court’s resolution of the equitable forfeiture and accounting issues. Thus, although
previously there was discussion of an evidentiary hearing, the parties will not
introduce any new evidence at the hearing, but rather will rely on the evidence
presented at trial. The parties propose to limit the hearing to oral argument. We
propose two hours total, with each party having one hour. Second, we propose to
submit briefing by 12 pm noon on Wednesday, May 31, the day before the hearing.
We believe the briefing may aid the Court in making its decision.
On June 1, 2017, the trial court conducted a non-jury, final hearing to resolve the issues of
equitable forfeiture and the accounting. During the hearing, the trial court requested a courtesy
copy of the trial transcript because she did not have one to refer to when reading the briefs
submitted by the parties. On June 21, 2017, the trial court issued findings of fact and conclusions
of law which included the following findings of fact:
1. In connection with Mullen’s failure (found by the jury) to comply with its
fiduciary duty to Cooper in connection with the settlement of litigation with
Newnan Crossing Partnership, the Court considered the gravity and timing
of the breach, the level of intent or fault, whether Cooper received any
benefit from Mullen despite the breach, the centrality of the breach to the
scope of the fiduciary relationship, any other threatened or actual harm to
Cooper, the adequacy of other remedies, and whether forfeiture fits the
circumstances and will work to serve the ultimate goal of protecting the
relationship of trust.
2. The Court finds that Mullen did not commit a clear and serious breach of
his fiduciary duty owed to Cooper.
3. Mullen does not assert that the loan by Newnan Crossing Partnership to
Cooper gives rise to a claim against Cooper for breach of the Joint Venture
Agreement. Rather, Mullen seeks an accounting as an independent cause
of action.
The trial court concluded that Cooper was not entitled to equitable forfeiture. On June 21,
2017, the trial court also rendered a final judgment upon remand which ordered that Cooper take
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nothing upon his claim for equitable forfeiture. On July 17, 2017, Cooper filed a notice of appeal
regarding the trial court’s final judgment signed on June 21, 2017.
II. ANALYSIS
In our now-withdrawn opinion, we concluded we did not have jurisdiction in part because
the new judge had not heard any evidence but had to make factual decisions. See Masa Custom
Homes, LLC v. Shahin, 547 S.W.3d 332, 336, 338 (Tex. App.—Dallas 2018, no pet.). Based on
the supplemental record filed by appellee, we now conclude we have jurisdiction to consider the
merits of this appeal because the rule 11 agreement filed on May 26, 2017 adequately complies
with rule 263. See TEX. R. CIV. P. 263 (“Parties may submit matters in controversy to the court
upon an agreed statement of facts filed with the clerk, upon which judgment shall be rendered as
in other cases; and such agreed statement signed and certified by the court to be correct and the
judgment rendered theron shall constitute the record of the cause.”). Courts have held that “if the
parties stipulate all the facts of an action, though they are not in strict compliance with the rule,
the stipulation may be treated as a submission upon an agreed statement.” See Lambda Constr.
Co. v. Chamberlin Waterproofing and Roofing Sys., Inc., 784 S.W.2d 122, 125 (Tex. App.—
Austin 1990, writ. denied); see also State Farm Lloyds v. Kessler, 932 S.W.2d 732, 735 (Tex.
App.—Fort Worth 1996, writ denied). Here, the rule 11 agreement was sufficient to comply with
the requirements of rule 263 because the parties did not have any dispute as to material facts.
In five issues, Cooper appeals the final judgment as follows: (1) the trial court abused its
discretion by failing to consider evidence in the record and to analyze the forfeiture factors; (2) the
trial court abused its discretion to find Mullen’s breach of fiduciary duties was not clear and
serious; (3) the trial court erred in denying equitable forfeiture on the basis that Cooper did not
specifically plead it as a remedy in his counterclaims; (4) this Court should render judgment
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awarding equitable forfeiture; and (5) if the court declines to order equitable forfeiture of the entire
judgment, it should order equitable forfeiture of thirty percent of the judgment.
A. Standard of Review
Both parties agree that the granting or denial of equitable relief lies within the sound
discretion of the trial court. Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 428–29 (Tex.
2008). We will not disturb a trial court’s ruling on a claim seeking equitable relief unless it is
arbitrary, unreasonable, and unsupported by guiding rules and principles. Edwards v. Mid-
Continent Office Distrib., L.P., 252 S.W.3d 833, 836 (Tex. App.—Dallas 2008, pet. denied). If
the evidence is sufficient to support the trial court’s findings and conclusions, the trial court did
not abuse its discretion. Id.
B. Equitable Forfeiture Factors
In his first issue, Cooper asserts two main arguments: (1) the trial court abused its
discretion in denying his request for equitable forfeiture because the trial court’s findings of fact
and conclusions of law did not include any findings of fact regarding any of the factors and did
not mention any facts in the case or apply legal authorities, and (2) the trial court abused its
discretion because it made its decision prior to receiving the trial transcript and other documents.1
We disagree.
Cooper first argues that the trial court did not make any findings of fact regarding the
equitable forfeiture factors, did not mention any facts in the case, explain how the factors applied
to the facts, or cite any legal decisions applying the forfeiture factors. As an initial matter, we note
that the trial court listed all seven equitable forfeiture factors required by the Supreme Court in
ERI Consulting Engineer, 318 S.W.3d at 874–75 in its findings of fact and stated it considered
1
Cooper also raises a third sub-issue: the trial court abused its discretion to the extent it based its decision on
Cooper’s failure to specifically plead the remedy of equitable forfeiture in his counterclaims and not on an analysis of
the equitable forfeiture factors. As this issue overlaps with the third issue, we discuss this sub-issue below.
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them. In addition, the hearing transcript indicates that the trial court discussed with counsel these
factors during final hearing held on June 1, 2017. A trial court is not required to set out in detail
every reason or theory by which it arrived at its final conclusions. See Associated Tel. Directory
Publishers, Inc. v. Five D’s Publ’g Co., Inc., 849 S.W.2d 894, 901 (Tex. App.—Austin 1993, no
writ) (trial court did not err in declining to file additional findings of fact because defendant was
seeking explanations for how trial court reached its original findings and what evidence it relied
upon); Guaranty Bond State Bank v. Tucker, 462 S.W.2d 398, 404–05 (Tex. App.—Dallas 1970,
writ ref’d n.r.e.) (after bench trial, pursuant to party’s proper and timely requests, trial court
required to make findings on controlling or ultimate issue in the case, not evidentiary matters or
undisputed facts). There is no indication in the record that Cooper requested additional or amended
findings of fact or conclusions of law from the trial court. Cooper had ten days after the filing of
the original findings to request additional findings of fact related to ultimate or controlling issues.
See id.; TEX. R. CIV. P. 298. Based on all of the above, we overrule Cooper’s first argument.
In his second argument supporting the first issue, Cooper argues that the trial court abused
its discretion because it decided the equitable forfeiture issue without having received or reviewed
the trial transcript, proposed findings of fact and conclusions of law, and the submissions of
relevant case law. Cooper bases this conclusion solely upon its assertion that the trial court’s
decision to release the deposit on June 1, 2017 necessarily meant that the trial court had already
decided the equitable forfeiture issue. We disagree.
The transcript from the hearing on May 1, 2017 contains the trial court’s decision that it
will “release the funds 30 days from today.” When the parties attended the equitable forfeiture
final hearing on June 1, 2017, counsel for Mullen reminded the trial court of its prior statement.
The trial court then signed the Order to Release Deposit in Lieu of Supersedeas Bond on June 1,
2017, as it had previously agreed to do. Cooper also argues that releasing the deposit prior to a
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determination on the issue of the equitable forfeiture issue “would be both inefficient and
potentially inequitable because, absent a final determination of the amount, if any, of the equitable
forfeiture, it was impossible to determine how much, if anything, Mr. Cooper owed.” Cooper
concedes, however, that had the trial court decided that Cooper was entitled to equitable forfeiture
in full, then the deposit released to Mullen on June 1, 2017 would simply need to be returned.
Here, the trial court proceeded in accordance with its previously-stated decision on the
schedule it announced. Further, we note that the trial court did not sign its findings of fact and
conclusions of law until June 21, 2017, almost three weeks after the hearing, and well after the
court had received copies of the trial transcript and relevant case law.2 In addition, both the final
judgment upon remand and the trial court’s findings of fact and conclusions of law state that the
trial court considered the “evidence at trial and the argument of counsel.” Accordingly, we cannot
conclude that “by releasing the deposit on June 1, 2017, the day of the final hearing, the trial court
indicated it already had decided the equitable forfeiture issue” and we overrule Cooper’s second
argument supporting this issue. Accordingly, we overrule Cooper’s first issue.
C. Breach of Fiduciary Duty
In his second issue, Cooper asserts that the trial court abused its discretion in concluding
that Mullen’s breach of its fiduciary duties was not clear and serious.3 Cooper further argues that
the ERI Consulting equitable forfeiture factors all weigh heavily in favor of equitable forfeiture of
the entire judgment.
In our opinion on the first appeal, we pointed out that some facts are required to be found
by a jury, including whether the breach of fiduciary duty resulted in damages to the principal.
2
In the June 1, 2017 hearing transcript, counsel for Cooper offered to provide the trial court with copies of the
transcript on June 1, 2017.
The trial court concluded that “Mullen did not commit a clear and serious breach of his fiduciary duty owed to
3
Cooper.”
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Cooper, 2016 WL 4487924, at *10. Our opinion then directed that the judge, not the jury, “must
determine: (1) whether the fiduciary’s conduct was a ‘clear and serious’ breach of duty to the
principal; (2) whether any monetary sum should be forfeited; and (3) if so, what the amount should
be.” Id. Our opinion stated seven factors the trial court should consider to decide whether the
fiduciary breach was clear and serious, and pointed out “forfeiture is not justified in every instance
in which a fiduciary violates a legal duty because some violations are inadvertent or do not
significantly harm the principal.” Id. (citing Burrow v. Arce, 997 S.W.2d 229, 241 (Tex. 1999)
(“Some violations are inadvertent or do not significantly harm the client.” quoting RESTATEMENT
(THIRD) OF THE LAW GOVERNING LAWYERS § 49 cmt. b (1996)); Dernick Res., Inc. v. Wilstein,
471 S.W.3d 468, 482 (Tex. App.—Houston [1st Dist.] 2015, pet. denied) (“Forfeiture is not
justified in every instance in which a fiduciary violates a legal duty because some violations are
inadvertent or do not significantly harm the principal.”)).4
Mullen argues that one of the factors that a trial judge should consider is “whether or not
the breach of trust occasioned any loss.” Mullen argues that the facts described below alone justify
the trial court’s decision that Mullen’s failure to fulfill its fiduciary duty in connection with its
settlement with the partnership did not constitute a “clear and serious breach of fiduciary duty.”
As noted in this Court’s prior opinion, the breach at issue in this case involves Cooper’s
counterclaim for breach of fiduciary duty. In regard to this issue, the essential facts are as follows:
(1) Mullen executed a management agreement with Newnan Crossing; (2) Cooper and Mullen
were part of a joint venture which gave Cooper a 30% ownership interest in the Newnan Crossings
investment; (3) Cooper borrowed $600,000 from Newnan Crossing for a separate deal with The
4
Our opinion stated the factors as, “(1) the gravity and timing of the breach; (2) the level of intent or fault;
(3) whether the principal received any benefit from the fiduciary despite the breach; (4) the centrality of the breach to
the scope of the fiduciary relationship; (5) any other threatened or actual harm to the principal; (6) the adequacy of
other remedies; and (7) whether forfeiture fits the circumstances and will work to serve the ultimate goal of protecting
relationships of trust.” Cooper, 2016 WL 4487924, at *10.
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PNL Companies and executed a promissory note to Newnan Crossing; (4) Cooper received
distributions in the amounts of $1,388,959.57, $14,389, and $30,000 but did not apply any
distributions toward repayment of the note; (5) Newnan refused to pay approximately $1.8 million
in management fees pursuant to the management agreement; (6) Mullen sued Newnan Crossing to
recover the management fees; and (7) Mullen and Newnan Crossing settled their claims and
Mullen agreed to dismiss its claims against Newnan Crossing regarding the management
agreement in exchange for $300,000 and an assignment of any causes of action that Newnan
Crossing may have had against the joint venture or Cooper. Cooper, 2016 WL 4487924, at *2.
Mullen then sued Cooper for damages and asserted a claim on the promissory note as assignee of
the $600,000 note. Id. In his counterclaim, Cooper alleged that Mullen, as partner in the
Cooper/Mullen joint venture, did not consult with him about the settlement made between Mullen,
as party to the management agreement, and Newnan Crossing, or obtain his approval to the terms
of the settlement agreement as required by the Cooper/Mullen joint venture. Id. at 3. The jury
found in favor of Cooper on his counterclaim for breach of fiduciary duty but awarded no damages.
Id.
Following the remand of the first appeal, at the final hearing on equitable forfeiture the
trial court discussed the ERI Consulting equitable forfeiture factors. For example, the trial judge
stated on the record her recognition that an equitable forfeiture award required more than breach
of fiduciary duty as found by the jury, it requires the breach to be clear and serious:
[Trial Court]: I just wanted to be really clear, though, that what I feel like is being
argued is, because the note was obtained as a result of a breach of a fiduciary duty,
Mr. Mullen should disgorge the note completely. But that’s not the law. It --it --
that is just not the way it works under Texas law.
And I can’t ignore the fact that there are -- there are factors. There is a finding of
clear and serious, which means this is not just like any other breach. It has to be
more than that for me to award the relief that’s being sought.
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Mullen is correct that the jury’s determination that Cooper was not damaged by Mullen’s
breach of fiduciary duty supports the trial court’s determination that the fiduciary breach was not
clear and serious and did not justify forfeiture. See Cooper, 2016 WL 4487924, at *10; see also
Burrow v. Arce, 997 S.W.2d at 241; Wilstein, 471 S.W.3d at 482. Although the lack of trial court
findings on the clear and serious factors prevents insight into the trial court’s reasoning through
the factors, we have already overruled Cooper’s complaint about the lack of findings. See supra
section II.B. And our previous opinion stated, “trial court should consider factors” regarding
whether the fiduciary breach was clear and serious—see supra n. 4—we did not require findings
on each one but instead remanded for consideration of the factors. Cooper, 2016 WL 4487924, at
*13 (“[W]e conclude the claim of forfeiture should be remanded to the trial court for consideration
of the factors described by the Texas Supreme Court. See ERI Consulting, 398 S.W.3d at 875.”).
Notwithstanding that lack of specific findings, a trial court does not abuse its discretion when the
trial court bases its decision on conflicting evidence, as long as some evidence reasonably supports
the trial court’s decision. Miller v. Kennedy & Minshew, Prof'l Corp., 142 S.W.3d 325, 339 (Tex.
App.—Fort Worth 2003, pet. denied) (citing Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex.
2002)).
Based on the evidence and testimony described above, the trial court considered whether
it was appropriate to impose a forfeiture of the promissory note and determined that a decision
would not be equitable under these unique circumstances. We will not disturb a trial court’s ruling
on a claim seeking equitable relief unless it is arbitrary, unreasonable, and unsupported by guiding
rules and principles. Edwards, 252 S.W.3d at 836. As there is evidence to support the trial court’s
decision, we conclude that the trial court did not abuse its discretion in determining that Mullen’s
breach of its fiduciary duties was not clear and serious so we overrule Cooper’s second issue.
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D. Failure to Plead
In the trial court’s findings of fact and conclusions of law, it states the following
conclusions of law:
Cooper failed to plead a claim for equitable forfeiture, and a party must plead
forfeiture to be entitled to that remedy. The Court cannot grant relief, including
equitable forfeiture, that is not requested in a party’s pleadings. Lee v. Lee, 47
S.W.3d 767, 780 (Tex. App.—Houston [14th Dist.] 2001, pet. denied);
Longaker v. Evans, 32 S.W.3d 725, 733 n. 2 (Tex. App.—San Antonio 2000,
pet. withdrawn). While Mr. Cooper did file a counterclaim for breach of
fiduciary duty, he only sought damages.
In his third issue, Cooper argues that the trial court erred as a matter of law to the extent that it
based its judgment on this conclusion of law.5
Appellate courts review a trial court’s conclusions of law as a legal question. BMC
Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). The appellant may not
challenge a trial court’s conclusions of law for factual insufficiency; however, the reviewing court
may review the trial court’s legal conclusions drawn from the facts to determine their correctness.
Id. If the reviewing court determines a conclusion of law is erroneous, but the trial court rendered
the proper judgment, the erroneous conclusion of law does not require reversal. Id.
As stated above, we have already concluded that the trial court did not err in concluding
that Mullen did not commit a clear and serious breach of his fiduciary duty owed to Cooper. Thus,
the result would be the same—denial of Cooper’s equitable estoppel claim— whether or not the
trial court relied upon the above-described conclusion of law. Further, even if this Court were to
conclude that the trial court’s conclusion of law was erroneous, we would not be required to reverse
the judgment because we already determined the trial court did not commit harmful error in
rendering judgment based on its review of the ERI Consulting equitable forfeiture factors and
5
Cooper also raised this issue in the third sub-issue of the first issue. See supra n. 1.
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determining that Mullen’s breach of its fiduciary duties was not clear and serious. Accordingly,
we overrule Cooper’s third issue.
E. Forfeiture of Entire Judgment
In his fourth issue, Cooper argues that the Court should render judgment awarding
equitable forfeiture of the entire trial court judgment. In support of the assertion that the Court
should render judgment instead of remanding the case, Cooper reasserts the following arguments:
(1) the Court has authority to render judgment for Cooper because it failed to apply the ERI
Consulting factors and based its judgment on the erroneous conclusion of law; (2) the Court should
render judgment rather than remand because the trial court “directly contravened this Court’s
Mandate in failing to consider the equitable forfeiture factors;” and (3) it is appropriate to render
judgment because a remand would be futile because the trial court made its decision without
considering the record, evidence or the law. As we have already addressed each of these arguments
above, we need not repeat our analysis and we overrule Cooper’s fourth issue.
F. Forfeiture of Portion of Judgment
In his fifth issue, Cooper argues that the Court should, “at a minimum”, award him
equitable forfeiture of thirty percent of the judgment and thirty percent of the cash Mullen received
in the settlement based on the terms of the joint venture agreement. As we have previously held,
however, “[w]hether there was a ‘clear and serious’ breach of duty is the predicate to the
determination of whether there should be an equitable forfeiture in any amount.” Cooper, 2016
WL 4487924, at *11. In section C above, we concluded that the trial court did not abuse its
discretion in determining that Mullen’s breach of its fiduciary duties was not clear and serious.
Accordingly, as there was no clear and serious breach, there was no need for the trial court to
determine whether any amount should be forfeited or the amount that should be forfeited. We
overrule Cooper’s fifth issue.
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III. CONCLUSION
We resolve Cooper’s issues against him and affirm the trial court’s judgment.
/David Evans/
DAVID EVANS
JUSTICE
170878HF.P05
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
T. CHRISTIAN COOPER, Appellant On Appeal from the 162nd Judicial District
Court, Dallas County, Texas
No. 05-17-00878-CV V. Trial Court Cause No. DC-12-15127.
Opinion delivered by Justice Evans.
SANDERS H. CAMPBELL, RICHARD T. Justices Lang-Miers and Schenck
MULLEN, INC. D/B/A THE MULLEN participating.
COMPANY, Appellee
We WITHDRAW our opinion and VACATE our judgment of July 18, 2018. This is
now the judgment of the Court.
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellee SANDERS H. CAMPBELL, RICHARD T. MULLEN,
INC. D/B/A THE MULLEN COMPANY recover its costs of this appeal from appellant T.
CHRISTIAN COOPER.
Judgment entered this 13th day of November, 2018.
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