Edith Cherry, Carris Booker, and Caboe Returns & Investments, Inc. v. Travoy R. Hollie ( 2015 )

Opinion filed February 12, 2015
In The
Eleventh Court of Appeals
__________
No. 11-13-00039-CV
__________
EDITH CHERRY, CARRIS BOOKER, AND CABOE
RETURNS & INVESTMENTS, INC., Appellants
V.
TRAVOY R. HOLLIE, Appellee
On Appeal from the 352nd District Court
Tarrant County, Texas
Trial Court Cause No. 352-250906-11
MEMORANDUM OPINION
This is an appeal from a judgment of the trial court in favor of Travoy R.
Hollie in which it awarded Hollie actual and exemplary damages arising from the
unauthorized use of Hollie’s money and the misappropriation of stocks by Edith
Cherry and Carris Booker. We reverse and remand.
Hollie is Booker’s son. Booker was not involved in Hollie’s life when he
was a child, but Hollie and his father began to speak more frequently as he got
older. In 2007, Hollie was an over-the-road driver for C.R. England, Inc., an
authorized for-hire motor carrier. Booker called Hollie and asked if he could ride
with him because he “just want[ed] to get away.” Hollie “loved” that idea and
Booker rode with him for approximately thirty days. During that time, they talked
and connected. It was also during that time that Booker told Hollie that he was
broke and owed the IRS money. Hollie asked Booker whether he still invested
money in stocks, and Booker told him that he did. Booker explained that he had an
investment company and that Cherry, Hollie’s aunt, was the president because he
could not have any dealings with money due to his situation with the IRS. Booker
said that the company, Caboe Returns & Investments, Inc., was idle and that Hollie
could use the company to buy and sell stocks. Hollie offered to give Booker
$5,000 to go toward Booker’s debt to the IRS if Booker would invest in stock for
Hollie. Hollie wanted Booker to invest his money so that he could use the money
for his kids.
In February 2008, Hollie gave Booker access to his money through a
Comdata card issued by C.R. England, the company for which Hollie worked.
C.R. England deposited Hollie’s paycheck onto the card instead of issuing him a
check. Hollie could write checks from the account connected with the card, and he
could also withdraw money using the card at ATMs; he could not use the card to
make direct purchases from merchants. Hollie gave Booker permission to use the
card to withdraw money for several specific purposes: (1) to pay Hollie’s bills;
(2) to give money to Hollie’s children when Hollie directed Booker to do so; (3) to
set aside money for future stock purchases; and (4) to pay himself $5,000 to go
toward his debt to the IRS. Regarding the money for future stock purchases,
Hollie testified that he, Booker, and Cherry discussed how the stock would be
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purchased and determined that Hollie was to give the money to Booker and Booker
was to then give the money to Cherry. Cherry was to deposit that money into an
investment account with Banc of America and take that money from the Banc of
America account and deposit it into a stock trading account with Merrill Lynch. 1
The stock trading account was held in Caboe’s name. Booker recommended that
Hollie purchase stocks from Advanced Cell Technology (ACTC), and Hollie
agreed. Hollie estimated that Booker withdrew $20,000 from his Comdata card to
purchase the stock for him. Booker purchased a total of 400,000 shares. Hollie
believed that he would control the stock investments and that he would make any
final decisions in connection with the stock.
Cherry was the sole shareholder of Caboe, but both she and Booker were
officers. Cherry and Booker made Hollie secretary-treasurer of Caboe in August
2008. Hollie believed that he was a part owner of the company. Because of this
belief, Hollie transferred ownership of his truck to Caboe. He believed that he was
transferring the truck into his company and that he had control over transferring the
truck out of the company if and when he wanted. Hollie also signed a new
independent contractor agreement with C.R. England on November 21, 2008. He
did not sign the agreement individually but, rather, on behalf of Caboe; the new
agreement was therefore between Caboe and C.R. England. When he signed the
agreement, he believed that he owned Caboe, that he was signing for himself, and
that he represented Caboe. Cherry set up a bank account with Wachovia, account
number ending in 2032, for Hollie to use so that the money from C.R. England
related to the trucking operations could be deposited into the account. The
Wachovia 2032 account was in Caboe’s name. Hollie believed that the account
1
It appears from the record that Cherry would make deposits into a Banc of America investment
account from a Wachovia account ending in 4396. In 2009, the Banc of America investment account was
transferred into a Merrill Lynch investment account after a merger. All three accounts were held in
Caboe’s name.
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was opened for him and that he controlled the money in the account. Hollie,
Booker, and Cherry all had access to the account, and each had a separate debit
card for the account.
Cherry prepared tax returns and conducted audits for a living and, according
to Hollie, offered to prepare Hollie’s tax returns for 2003 through 2007 at no cost.
Hollie and Cherry talked about Cherry preparing his 2008 and 2009 tax returns, but
she never prepared them. As a result, Hollie hired Karen Frizell in May 2010 to
prepare his 2008 and 2009 tax returns. The relationship between Hollie and
Cherry turned sour when Hollie and Frizell tried to get information from Cherry
for Hollie’s tax returns. Cherry told Hollie to get out of the company, and he was
removed as secretary-treasurer. Hollie was not aware that Cherry removed him as
an officer of the company. After the disagreement with Cherry, Hollie wanted the
stock transferred from Caboe to him, but Cherry and Booker refused to transfer the
stock until he transferred the title of his truck out of Caboe’s name. Eventually,
Hollie was able to transfer the truck title out of Caboe’s name and into his own
name; however, Cherry and Booker would not transfer the stock to him. They did
offer to give him $19,600, the amount they claimed to have been used to purchase
the stock. Hollie sent a letter to Cherry and Booker telling them not to sell the
stock until he was present. In December 2010, the stock was transferred into a new
Merrill Lynch account. The new account was held by Cherry and Booker,
individually, as joint tenants with the right of survivorship.
During the preparation of Hollie’s tax returns, Frizell and Hollie discovered
that money had been taken out of the Comdata account as well as the Wachovia
2032 account without Hollie’s permission. Frizell ultimately testified that Cherry
and Booker used $31,120.30 of Hollie’s money without authorization. 2
2
Frizell testified to several different amounts as the amount that Booker and Cherry withdrew
without Hollie’s permission. The amount of $31,120.30 was the last amount that she calculated.
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Hollie filed suit against Booker, Cherry, and Caboe and alleged the
following causes of action: constructive fraud, breach of fiduciary duty,
conversion, common-law fraud and misrepresentation, violation of the Deceptive
Trade Practices Act (DTPA), breach of contract, and civil conspiracy. Hollie
sought declaratory judgment, actual damages, punitive damages, specific
performance, attorney’s fees, and prejudgment interest. Appellants filed a motion
for summary judgment, and the trial court granted Appellants’ motion as to
Hollie’s cause of action for declaratory judgment and denied Appellants’ motion as
to all other causes of action asserted by Hollie. The case proceeded to trial, and
after Hollie rested, Appellants moved for a directed verdict on each of Hollie’s
causes of action. The trial court granted Appellants’ motion as to Hollie’s claims
for breach of fiduciary duty and for a violation of the DTPA. The trial court
denied Appellants’ motion as to the remaining causes of action, and the case
proceeded on the following causes: conversion, common-law fraud and
misrepresentation, breach of contract, and civil conspiracy. At the conclusion of
the trial on the merits of the remaining claims, the trial court entered a judgment in
favor of Hollie in accordance with its findings of fact and conclusions of law. The
trial court awarded Hollie $114,320 in actual damages, $50,000 in exemplary
damages, $52,000 in attorney’s fees, prejudgment interest, and postjudgment
interest.
Appellants present two issues for our review. In their first issue, Appellants
contend that Hollie was not entitled to the “highest intermediate value” of shares in
the stock at issue. Appellants assert in their second issue that the evidence was
legally and factually insufficient to support the trial court’s judgment.
We will first address Appellants’ challenge to the sufficiency of the
evidence. Appellants specifically argue that there was insufficient evidence to
show that they conspired to accomplish any wrongful purpose, that Cherry herself
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converted $31,120, that Booker converted $31,120, that Booker’s breach of the
agreement damaged Hollie in the amount of $31,120 or $114,320, and that Cherry
acted in a manner which shocked the conscience. Appellants also argue that the
trial court awarded an incorrect amount of damages because the court could not
have concluded that all of the proceeds from Hollie’s trucking endeavors belonged
to him individually and, thus, that Hollie failed to show what specific money of his
was converted. Appellants ask us to vacate the awards of attorney’s fees and
punitive damages because the record does not support the judgment for actual
damages.
A trial court’s findings of fact in a bench trial are reviewed for legal and
factual sufficiency under the same standards used to review a jury’s answer.
Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). In considering a legal
sufficiency challenge, we review all the evidence in the light most favorable to the
trial court’s judgment and indulge every reasonable inference in its favor. City of
Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We credit any favorable
evidence if a reasonable factfinder could, and we disregard any contrary evidence
unless a reasonable factfinder could not. Id. at 821–22, 827. In reviewing a factual
sufficiency challenge, we consider all of the evidence and uphold the finding
unless it is so against the overwhelming weight of the evidence as to be clearly
wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).
Of the remaining causes of action presented to the trial court, there are only
three causes of action on which the trial court made findings of fact and
conclusions of law: breach of contract and conspiracy—as to the money and the
stock—and conversion as to the money. Because Appellants attack specific
findings that correspond with specific elements of each of these causes of action,
we will address each cause of action in turn beginning with Hollie’s claim against
Booker for breach of contract. We believe that it is important to note that the trial
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court did not make any findings regarding a breach of contract claim against
Cherry, a claim for conversion of the stock against Booker and Cherry, or a claim
for fraud against Booker and Cherry. The trial court also did not make any
findings on any cause of action against Caboe, and it did not enter a judgment
against Caboe. In the judgment, the trial court “ORDERED that all relief not
expressly granted in this judgment be denied.”
The trial court made the following pertinent findings of fact regarding the
breach of contract claim against Booker: (1) Hollie entered into an agreement with
Booker, whereby Booker would use Hollie’s money to invest by buying and
managing stocks for Hollie, to pay Hollie’s personal bills for a period of time, and
to make gifts to Hollie’s children at Hollie’s direction; (2) Booker breached the
agreement by withdrawing additional sums of money belonging to Hollie without
Hollie’s permission and by using the additional money for his own purposes;
(3) Booker also breached the agreement by “misappropriating the ACTC stock
purchased with Hollie’s money”; and (4) Booker’s breach of the agreement caused
damages to Hollie in the sum of $31,120, plus the appreciated value of the 400,000
shares of stock in the amount of $83,200.
Appellants argue that there was no evidence, or insufficient evidence, that
Booker’s alleged breach of the contract damaged Hollie in the sum of $31,120 or
$114,320 because Frizell was not always able to link withdrawals from the
Comdata card to expenditures by Booker and because Frizell agreed that she could
not account for all the money spent by Booker on Hollie’s expenses. We agree
that the evidence does not support a finding of damages for either of these
amounts. We note that Appellants’ complaint as to the $114,320 in damages
includes the $31,120. The amount of $114,320 was the total amount of actual
damages awarded by the trial court: $31,120 for money used without Hollie’s
permission and $83,200 for the appreciated value of the stock. Although
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Appellants do not challenge the evidence as to the $83,200 in this issue, Appellants
do challenge, in a separate issue, whether an award of $83,200, based on the
highest intermediate value of the stock between the date of conversion and the
lawsuit, is the proper measure of damages. We will address this issue later in our
opinion.
Here, the record shows that, after Frizell had reviewed various bank
statements, she calculated that Booker withdrew $28,686.75 from Hollie’s
Comdata card in 2008 and that $33,784.09 was withdrawn from the Wachovia
2032 account. Thus, Frizell determined that the total amount withdrawn by Cherry
and Booker was $62,470.84, a part of which was approved by Hollie. Frizell
deducted from the amount withdrawn an amount for Hollie’s authorized expenses,
including $16,553.76 to purchase stocks, $5,000 to Booker to help with the IRS
debt, $600 to Hollie’s children, $114.78 for a withdrawal by Hollie that Frizell
initially classified as a withdrawal by Booker, and $9,082 for Hollie’s bills. Frizell
used these deductions to conclude that Cherry and Booker used $31,120.30 of
Hollie’s money without Hollie’s permission.
However, Frizell also testified that she did not know how much money
Booker used from the Comdata card to pay Hollie’s bills, but she agreed that
Booker used money from that card for those authorized purposes. The amount of
$9,082 that Frizell calculated Booker used to pay Hollie’s bills was withdrawn
from the Wachovia 2032 account. While there is evidence that showed that
Booker’s breach of the agreement damaged Hollie in some amount, there is
factually insufficient evidence to support an award of $31,120 because Frizell
admitted that Booker used some of the $31,120 to pay Hollie’s bills from the
Comdata card but was unsure of what amount was used. The trial court’s finding
that Hollie was damaged by an amount of $31,120 is against the overwhelming
weight of the evidence and is clearly wrong and unjust. See Cain, 709 S.W.2d at
8
176. Because Frizell did not testify as to the amount of bills that were paid from
the Comdata card and did not testify as to what further amount should have been
deducted from the total amount withdrawn, we cannot determine from the record
the appropriate amount of damages regarding Booker’s breach of the agreement.
Therefore, we must remand the breach of contract cause of action to the trial court.
See TEX. R. APP. P. 44.1(b) (a court may not order a separate trial on unliquidated
damages if liability is contested).
We next address Appellants’ challenge to the trial court’s findings regarding
Hollie’s claim for conversion of his money as presented by Appellants.
Specifically, Appellants again raise a challenge to the amount of damages awarded
by the trial court, and they also contend that Hollie did not establish title or a
possessory right to the funds that Caboe received from C.R. England under the
independent contractor agreement.
Regarding the claim for conversion of money, the trial court found that
Hollie owned, possessed, and had an ongoing right to immediate possession and
control of the monies that he earned and received as income; that Hollie allowed
Booker access to his funds for use and safekeeping to Hollie’s benefit; that Hollie
intended for the funds to be segregated; that Booker kept the funds in substantially
the same form as they were received and in a substantially intact fund; that neither
Booker, Cherry, nor Caboe had a legitimate claim of title to Hollie’s funds; and
that Booker and Cherry wrongfully converted Hollie’s money causing damage to
Hollie in the amount of $31,120.
Conversion is “the wrongful exercise of dominion and control over another’s
property in denial of or inconsistent with his rights.” Waisath v. Lack’s Stores,
Inc., 474 S.W.2d 444, 446 (Tex. 1971). To establish conversion of property, the
plaintiff must prove that he owned, had legal possession of, or was entitled to
possession of the property. Ojeda v. Wal-Mart Stores, Inc., 956 S.W.2d 704, 707
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(Tex. App.—San Antonio 1997, pet. denied). Similarly, to establish a claim for
conversion of money, the plaintiff must show that the money is not the subject of a
title claim by its keeper. Paschal v. Great W. Drilling, Ltd., 215 S.W.3d 437, 456
(Tex. App.—Eastland 2006, pet. denied).
Here, the evidence showed that C.R. England deposited money into the
Wachovia 2032 account based on an independent contractor agreement that Caboe
held with C.R. England. Although Hollie signed the agreement on Caboe’s behalf,
the agreement named Caboe as the independent contractor. Thus, the money
deposited into the Wachovia 2032 account after the independent contractor
agreement became effective on November 21, 2008, belonged to Caboe, a separate
legal entity. The bank statements for the Wachovia 2032 account show that the
account was opened on October 15, 2008, and that an initial deposit of $200 was
made on that date. There is no evidence in the record as to the origin of the initial
$200 deposit. The next deposit into the account was on November 25, 2008, in the
amount of $369.54. This amount was an automated credit from C.R. England and
was made after Hollie signed the independent contractor agreement on behalf of
Caboe. Multiple deposits were subsequently made into the account by C.R.
England. Because Caboe was listed as the independent contractor in the agreement
and it was Caboe that C.R. England agreed to pay under the independent contractor
agreement, Hollie did not show that he had a right of possession to all of the
money in the Wachovia 2032 account. Therefore, the amount of $31,120 that
Frizell calculated was withdrawn from both the Comdata card and the Wachovia
2032 account without Hollie’s permission is not supported by the evidence.
Hollie failed to show that he was entitled to the money in the Wachovia
2032 account; therefore, the money from that account will not support an award for
conversion. As to the money from the Comdata account, Frizell admitted that she
did not deduct the amount of money Booker spent on Hollie’s bills out of the
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Comdata card from the total amount withdrawn; therefore, as we held with regard
to the breach of contract claim, the evidence is factually insufficient to support an
award of $31,120. Because we cannot determine from the record the amount of
Hollie’s money that was converted by Booker and Cherry from the Comdata card,
we must also remand the conversion cause of action, as to the money converted
from the Comdata account, to the trial court. See TEX. R. APP. P. 44.1(b) (a court
may not order a separate trial on unliquidated damages if liability is contested).
As to Hollie’s cause of action for conspiracy, Appellants contend that Hollie
did not prove that they had a meeting of the minds with respect to the
accomplishment of any wrongful purpose. The trial court found that Booker and
Cherry committed conversion in concert with one another as both had knowledge
of, agreed to, and intended a common objective and course of action constituting
conversion that resulted in damage to Hollie; that Booker and Cherry each
benefited from the actions of the other and that both performed acts to further the
conspiracy; that Booker and Cherry jointly and proximately caused actual damages
to Hollie in the sum of $31,120, plus the appreciated value of the stock in the
amount of $83,200, as a result of such conspiracy to commit conversion; that
Booker and Cherry committed the conspiracy wrongfully and in bad faith and that
such conduct was of a wanton and malicious nature; and that exemplary damages
in the amount of $50,000 would be appropriate to punish Booker and Cherry for
committing conspiracy wrongfully and in bad faith.
To prevail on a claim for civil conspiracy, a plaintiff must show that two or
more persons sought to accomplish an unlawful purpose or sought to accomplish a
lawful purpose by unlawful means that proximately caused damages to the
plaintiff. Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983). Civil
conspiracy is a derivative tort and is dependent on participation in an underlying
statutory violation or tort, other than negligence. Chu v. Hong, 249 S.W.3d 441,
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444–47 (Tex. 2008); Tri v. J.T.T., 162 S.W.3d 552, 557 (Tex. 2005); Tilton v.
Marshall, 925 S.W.2d 672, 681 (Tex. 1996). Here, the trial court found that
Cherry and Booker conspired to convert; thus, the underlying tort was conversion.
Because we have held that Hollie failed to show that he was entitled to the money
deposited into the Wachovia 2032 account by C.R. England, Booker and Cherry
could not have committed a conversion as to the Wachovia 2032 account.
However, the trial court’s finding that Booker and Cherry converted $31,120 of
Hollie’s money includes the money from Hollie’s Comdata account. Thus,
Booker’s unauthorized use of some of the money from the Comdata account would
support the underlying tort of conversion. 3 However, because we have found that
the damages that the trial court awarded in connection with the conversion cause of
action are not supported by sufficient evidence and because we must remand the
conversion cause of action to the trial court, we will also remand the conspiracy
cause of action as it relates to the conversion of money from the Comdata account.
To summarize, we hold that there was insufficient evidence to support an
award of damages in the amount of $114,320, based on our discussion regarding
the amount of $31,120 as it relates to the breach of contract cause of action and the
conversion cause of action, and we decline to address the sufficiency of the
evidence as it relates to the conspiracy cause of action because we are remanding
the underlying conversion cause of action. Therefore, as to Appellants’ second
issue, we overrule Appellants’ legal sufficiency challenge and sustain Appellants’
factual sufficiency challenge.
3
We note that, while the trial court found that neither Booker, Cherry, nor Caboe had a legitimate
claim of title to the stocks purchased with Hollie’s funds, the trial court did not specifically conclude that
Booker and Cherry converted the stock; the trial court found that Booker breached the agreement by
misappropriating the ACTC stock purchased with Hollie’s money and concluded that Booker’s breach
caused damage to Hollie in the amount of $114,320.
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In their first issue, Appellants contend that Hollie was not entitled to the
highest intermediate value of the stock. The highest intermediate value of the
stock can be the proper measure of damages in a conversion case. See Reed v.
White, Weld, & Co., 571 S.W.2d 395, 397 (Tex. Civ. App.—Texarkana 1978, no
writ). However, the trial court did not conclude that the stock was converted. The
trial court’s findings as to the stock are as follows: Booker and Cherry used
$16,553.76 of Hollie’s money to buy 400,000 shares of ACTC stock on behalf of
Caboe, utilizing Caboe’s brokerage account; the ACTC stock appreciated in value
after its purchase; the stock’s highest market value between the date of the stock
purchase in 2010 and the date the lawsuit was filed in 2011 was $83,200; and
Booker breached the agreement by misappropriating the ACTC stock purchased
with Hollie’s money. Because the trial court did not find that Booker and Cherry
converted the stock but, instead, found that Booker breached his agreement with
Hollie by misappropriating the stock, the highest intermediate value of the stock
cannot be the proper measure of damages. It does not appear from the record that
the parties ever presented arguments as to the proper measure of damages based on
Booker’s breach of the agreement by misappropriating the stock. Therefore, we
sustain Appellants’ first issue.
Appellants also argue that, if we reverse on the measure and amount of
damages, we must remand the trial court’s award of attorney’s fees and exemplary
damages so that the trial court can recalculate those awards while taking the new
amount of damages into consideration. We agree that the trial court must
reconsider the amount of its award of attorney’s fees and exemplary damages after
it determines the appropriate amount of actual damages to award.
In a cross-point, Hollie requests a hearing to receive evidence in the event
we sustain one of Appellants’ issues. Due to our disposition of this appeal,
Hollie’s cross-point is moot.
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We reverse the trial court’s judgment, and we remand this cause to the trial
court for further proceedings not inconsistent with this opinion.
JIM R. WRIGHT
CHIEF JUSTICE
February 12, 2015
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
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