EnVen Energy Corporation and EnVen Energy Ventures, LLC v. David M. Dunwoody, Jr. ( 2023 )

Affirmed and Memorandum Opinion filed April 18, 2023.
In The
Fourteenth Court of Appeals
NO. 14-21-00699-CV
ENVEN ENERGY CORPORATION AND ENVEN ENERGY VENTURES,
LLC, Appellants
V.
DAVID M. DUNWOODY, JR., Appellee
On Appeal from the 151st District Court
Harris County, Texas
Trial Court Cause No. 2019-39608
MEMORANDUM OPINION
Appellants EnVen Energy Corporation and EnVen Energy Ventures, LLC
(collectively EnVen) appeal from the final judgment in favor of appellee David M.
Dunwoody, Jr., signed following a lengthy jury trial. Finding no error, we affirm.
BACKGROUND
EnVen is an oil and gas exploration company operating in the Gulf of
Mexico. Steven Weyel served as EnVen’s Chief Executive Officer (CEO). Weyel
hired Dunwoody in 2013. In 2015, EnVen transitioned from a limited liability
partnership to a corporation. EnVen named Dunwoody its president at that time.
As president, Dunwoody reported directly to Weyel. EnVen enjoyed considerable
success as an operator in the Gulf of Mexico under their leadership.
EnVen instituted a 2015 Incentive Award Plan (2015 Plan) governing the
distribution of the pool of EnVen stock shares reserved for employee awards. The
2015 Plan remained in place at all relevant times. The 2015 Plan established a
stock reserve of about 1.8 million shares of which 37.5% was allocated to EnVen’s
top three executives. The remainder was held for future awards. Under the 2015
Plan, Dunwoody received 31% of the 2015 equity award, which amounted to two-
thirds of the 46% amount Weyel received. David Carmony, chief operating
officer, received a 23% share, which was half the amount Weyel received. These
amounts matched the split that was granted under a previous plan in 2014. This
split was referred as the 60/40/30 split.
Dunwoody signed an Employment Agreement in 2015. The Employment
Agreement covered multiple topics, including his compensation. The Employment
Agreement divided Dunwoody’s compensation into different categories. In the
first, Base Compensation, Dunwoody would receive $450,000 base pay each year.
Bonuses were the second category and these would be based on various
performance measures. Finally there would be Equity Compensation based on the
2015 Plan and any other equity incentive award plan adopted by EnVen.
The Employment Agreement provided that in the event Dunwoody
terminated his employment with EnVen for “Good Reason,” he would receive
certain benefits, which collectively made up the defined term “Severance.”
“Severance” included (1) a “Separation Amount” based on a percentage of
Dunwoody’s Base Compensation and Target Bonus Amount divided into twelve
2
equal monthly payments; (2) a lump-sum payment of the pro-rata bonus amount
owed to executives in the termination year at the time the other executives receive
their bonuses; (3) Dunwoody and his family had the right to participate in EnVen’s
health plan at EnVen’s expense for a period of 18 months; (4) reimbursement by
EnVen if Dunwoody and his family elected to participate in EnVen’s company
health plan pursuant to COBRA for an additional 18-month period; and (5) the
immediate vesting of Dunwoody’s unvested shares of EnVen stock.
The Employment Agreement defined when Dunwoody would have “Good
Reason” to terminate. “Good Reason” existed if any of the following
circumstances occurred: (1) an action by EnVen that “results in the material
diminution of [Dunwoody’s] position, duties or authorities from those in effect
immediately prior to such change in title, assignment or action by” EnVen; (2)
EnVen failed to continue Dunwoody’s participation in the 2015 Plan “unless [a
substitute plan has been instituted] on a basis not materially less favorable to
[Dunwoody], unless any such failure to continue in effect any plan or participation
relates to a discontinuance of such plans or participation on a management-wide or
Company-side basis;” or (3) EnVen’s “material breach of any material provision of
this [Employment] Agreement . . . .”
The Employment Agreement also provided “Good Reason” would not exist
unless Dunwoody gave EnVen thirty days’ notice and EnVen failed to cure the
problem within that period of time. Additionally, Dunwoody had to comply, for
the twelve-month period following his termination, with “Restrictive Covenants”
found in Section 8 of the Employment Agreement. These included non-
competition, non-disparagement, and non-disclosure provisions.
Finally, the Employment Agreement protected Dunwoody’s Severance
amount from being reduced for any reason. The Employment Agreement provided
3
that Dunwoody “shall not be required to mitigate the amount of any payment or
benefit provided for in this Agreement by seeking other employment or otherwise,
nor . . . shall the amount of any [such] payment or benefit . . . be reduced by any
compensation or benefit earned by Executive . . ., by any retirement benefits, or be
offset against any amount claimed to be owing by [Dunwoody] to [EnVen], or
otherwise.”
Weyel’s relationship with Dunwoody publicly soured after Dunwoody asked
Weyel’s thoughts on a leadership succession plan and the timing for such a plan to
go into effect. Weyel testified that he was “beyond offended” at Dunwoody’s
inquiry. Weyel’s relationship with Dunwoody deteriorated from that point. Weyel
lashed out at Dunwoody in profanity-laden tirades in front of other EnVen
executives. Weyel also hired a friend, John Wilkirson, for the long vacant CFO
position and began what Dunwoody believed was a campaign to reduce
Dunwoody’s role and compensation.
Dunwoody’s equity share decreased after 2015. This comparative change in
equity ownership was concealed from Dunwoody because Weyel kept the equity
award changes confidential. This resulted from EnVen including only the number
of shares Dunwoody received in his Restricted Stock Unit Grant Notices, not the
total shares distributed, or the number awarded to other executives. As a result of
this tactic Dunwoody did not know that his share was being diluted.
On May 9, 2019, Dunwoody delivered his Notice of Existence of Good
Reasons to EnVen’s board. EnVen responded that Good Reason did not exist.
EnVen’s response continued that “there [was] nothing to cure and no separation
amount [was] owed” Dunwoody. At that point, Dunwoody notified EnVen in
writing that due to EnVen’s breach and repudiation, he considered his Employment
Agreement terminated and he filed suit.
4
Dunwoody alleged that EnVen breached the Employment Agreement and
repudiated its Severance obligation after Dunwoody resigned for three Good
Reasons: (1) EnVen materially reduced his equity award; (2) EnVen materially
diminished Dunwoody’s authority within the company; and (3) EnVen violated the
non-disparagement covenant in Dunwoody’s Employment Agreement.
Several rulings by the trial court affected the course of the litigation. In an
order granting a motion for partial summary judgment, the trial court determined
that “prior to terminating his employment, [Dunwoody] complied with and
satisfied the notice and cure requirements contained” in his Employment
Agreement. The trial court refused to revisit that ruling during the trial. The trial
court granted Dunwoody’s motion for directed verdict ruling that there was “no
genuine issue of material fact about whether [Dunwoody] elected to terminate” the
Employment Agreement. In granting this motion, the trial court observed that
Dunwoody’s notice of termination letter “speaks for itself” that he considered the
Employment Agreement terminated. The trial court also agreed with Dunwoody
that there was no need to submit a breach question to the jury because “EnVen was
obligated to vest [Dunwoody’s] shares immediately” and that, if the jury finds
Dunwoody had “Good Reason” for his termination, then “EnVen breached [the
Employment Agreement] as a matter of law.” In other words, the only issue for
the jury to resolve was the existence of “Good Reason” under the Employment
Agreement. On the question of damages, the trial court had previously rejected
EnVen’s argument that the jury should be asked about the “value of the things
[EnVen] claim[ed] that Dunwoody avoided” because EnVen failed to plead this
defensive issue, failed to disclose evidence of the alleged savings in their pretrial
disclosures, and failed to introduce evidence during the trial on the value of the
alleged savings.
5
At the conclusion of the evidence, the jury found that Dunwoody had Good
Reason to resign based on EnVen’s material breaches of the equity participation
and non-disparagement clauses of his Employment Agreement. It further found
that Dunwoody did not consent to or waive those breaches. The jury also found
that (1) EnVen repudiated the Employment Agreement before Dunwoody
terminated it; (2) EnVen materially breached the Employment Agreement by
failing to vest Dunwoody’s shares upon termination; (3) Dunwoody complied with
the Employment Agreement’s confidentiality and non-disparagement provisions;
and (4) Dunwoody was entitled to damages. On the value of the only disputed
element of Dunwoody’s damages, the jury found that the value of Dunwoody’s
unvested stock was $5,161,699.38.1 EnVen then filed multiple post-trial motions
which were denied. The trial court signed a final judgment and this appeal
followed.
ANALYSIS
I. Because the evidence was undisputed that Dunwoody did not compete
with EnVen, he did not waive his right to collect his Severance by not
submitting the issue to the jury.
EnVen argues in its first issue that Dunwoody waived his right to collect his
Severance benefits because he “declined to obtain a jury finding on an essential
condition to Severance.” In EnVen’s view, the non-competition requirement
contained in section 8 of Dunwoody’s Employment Agreement, titled “Restrictive
Covenants,” functioned as a condition precedent to his right to collect his
Severance benefits. As a result, EnVen argues Dunwoody was required to submit
his compliance with the non-competition requirement to the jury and, when he did
1
The trial court had previously determined the amounts of the undisputed elements of
Dunwoody’s damages which included Dunwoody’s separation payment, pro-rata bonus, health
plan benefit, and COBRA benefit.
6
not, he waived any right to collect those benefits.
Dunwoody responds that the non-competition restrictions2 contained in his
Employment Agreement were not condition precedents to his recovery but merely
covenants because the non-competition restrictions continued after much of the
Severance was already owed to Dunwoody. Ultimately, Dunwoody asserts the
answer to whether the non-competition restriction functions as a covenant or a
condition precedent does not matter because it was undisputed at trial that
Dunwoody complied with the requirement at all relevant times. We agree with
Dunwoody.
In civil cases, a party has a right to a jury trial to determine disputed
questions of fact. In re Commitment of Harris, 541 S.W.3d 322, 330 (Tex. App.—
Houston [14th Dist.] 2017, no pet.). “Uncontroverted questions of fact need not be
and should not be submitted to the jury for its determination.” Id. (quoting Clark
v. Nat’l Life & Accident Ins. Co., 200 S.W.2d 820, 822 (Tex. 1947)).
Having reviewed the record, we have found no evidence disputing
Dunwoody’s testimony that he complied at all relevant times with the non-
competition restrictions in his Employment Agreement. David Williams, EnVen’s
Executive Vice President, testified that he knew Dunwoody “was doing everything
he could to honor” the non-competition restrictions in his Employment Agreement
and that Dunwoody was being careful to not violate it. In addition, EnVen
admitted an email exchange into evidence, Exhibit 2092, wherein Dunwoody’s
attorney told EnVen’s attorneys that “Dunwoody has not engaged and does not
intend to engage in any activities prohibited by Section 8(c) of the Employment
2
The restrictions found in section 8(c) of Dunwoody’s Employment Agreement
encompassed both refraining from competitive employment and specified types of investments
in a competitive entity.
7
Agreement.” EnVen, as part of their defense strategy that Dunwoody never
terminated the Employment Agreement, pointed out to the trial court that
Dunwoody admitted he was complying with Section 8’s restrictions by returning
confidential documents and following the non-competition restrictions. Finally,
EnVen recognized this lack of dispute during its closing argument to the jury when
it argued that Dunwoody never terminated the Employment Agreement because he
treated it as if it was still in effect. Because there was no dispute over whether
Dunwoody complied with the restrictions found in Section 8(c) of his Employment
Agreement, Dunwoody was not required to submit a question on his compliance
with the restrictions to the jury. Id.; see Gupta v. E. Idaho Tumor Inst., Inc., 140
S.W.3d 747, 756 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (“When the
evidence is undisputed or the evidence conclusively proves performance or non-
performance of the contract terms, the trial court should not submit the issue to the
jury.”) (emphasis added). We overrule EnVen’s first issue on appeal.
II. The trial court did not abuse its discretion when it excluded some of
EnVen’s proposed email exhibits.
EnVen makes two different arguments within its second appellate issue. We
address each argument separately. In the first part of its second issue, EnVen
argues the trial court abused its discretion when it excluded emails EnVen argues
were relevant to its contention that Dunwoody could not collect his Severance
benefits because he did not comply with the non-disparagement provisions found
in his Employment Agreement. In EnVen’s view, Dunwoody violated the
provision when he sent disparaging emails to Weyel and others. In response,
Dunwoody argues that the trial court did not abuse its discretion when it excluded
some, but not all, of EnVen’s proposed email exhibits because EnVen failed to
produce the proposed exhibits during discovery. Dunwoody additionally argues
that EnVen did not preserve this issue because its argument on appeal does not
8
comport with its argument to the trial court.
We review the trial court’s decision to admit or exclude evidence under
an abuse of discretion standard. Katy Springs & Mfg., Inc. v. Favalora, 476
S.W.3d 579, 610 (Tex. App.—Houston [14th Dist.] 2015, pet. denied). A trial
court exceeds its discretion when it acts in an arbitrary or unreasonable manner or
without reference to guiding rules or principles. Bowie Mem’l Hosp. v. Wright, 79
S.W.3d 48, 52 (Tex. 2002); Barnhart v. Morales, 459 S.W.3d 733, 742 (Tex.
App.—Houston [14th Dist.] 2015, no pet.). When reviewing matters committed to
the trial court’s discretion, a reviewing court may not substitute its own judgment
for that of the trial court. Barnhart, 459 S.W.3d at 742. Thus, the question is not
whether this court would have admitted the evidence. Id. Rather, an appellate
court will uphold the trial court’s evidentiary ruling if there is any legitimate basis
for the ruling. Jones v. Mattress Firm Holding Corp., 558 S.W.3d 732, 737 (Tex.
App.—Houston [14th Dist.] 2018, no pet.).
In an effort to defend against Dunwoody’s allegation that EnVen, through
Weyel, disparaged him, EnVen sought to admit 28 Dunwoody emails that it
asserted showed the existence of a “locker room” atmosphere in EnVen’s offices.
Dunwoody objected that the proposed exhibits had not been produced during
discovery. The trial court announced it would review the emails to see if they
should be excluded for some other reason. The trial court then reviewed the 28
emails outside the presence of the jury and initially excluded ten because they were
sexually graphic, racist, or referenced alcohol in violation of a motion in limine.
The trial court then told the parties the remaining 18 emails were too many and
instructed EnVen to pick the seven best and let Dunwoody know during the next
lunch break. EnVen responded that it intended to only offer seven out of the
original 28 but some of the excluded emails were among the seven. It asked the
9
trial court to reconsider because the excluded emails were relevant. The trial court
declined. On appeal, EnVen argues that the excluded emails were relevant because
they were “directly probative of whether Dunwoody disparaged others.” EnVen
then argued that the excluded emails were not unfairly prejudicial.
Dunwoody responds that EnVen waived this issue because its argument on
appeal is not the same argument it offered for admission of the documents in the
trial court. See Moran v. Mem’l Point Prop. Owners Ass’n, 410 S.W.3d 397, 407
(Tex. App.—Houston [14th Dist.] 2013, no pet.) (holding complaints on appeal
must comport with the objections made in the trial court to preserve error). We
need not reach the question of whether EnVen waived this argument because, even
if they did not, we conclude the trial court did not abuse its discretion when it
excluded the emails because it could have reasonably determined the emails were
unduly prejudicial or cumulative of other emails that were admitted into evidence.
See Tex. R. Evid. 403 (court “may exclude relevant evidence if its probative value
is substantially outweighed by a danger of one or more of the following: unfair
prejudice, confusing the issues, misleading the jury, undue delay, or needlessly
presenting cumulative evidence”). We overrule the first argument raised in
EnVen’s second issue.
III. The trial court did not err when it granted a directed verdict concluding
that Dunwoody was excused from performing post-termination
obligations.
In the second part of EnVen’s second issue, EnVen argues the trial court
erred when it granted a directed verdict concluding that Dunwoody was excused
from performing any post-termination contractual obligations, such as providing a
release, because of EnVen’s prior material breach of the Employment Agreement.
In support of this contention, EnVen argues that Dunwoody did not treat the
Employment Agreement as terminated after EnVen’s breach because, in their
10
view, he continued to abide by the Employment Agreement’s non-competition
provisions and returned EnVen’s confidential information. EnVen makes this
argument even though it recognizes the principle that “a party elects to continue
the contract if it insists on performance by the party in default, seeks to benefit
from the contract, or otherwise treats the contract as continuing.” See Koonce v.
Barclays Capital Real Estate Inc., No. 01-10-00194-CV, 2011 WL 13385435, at
*8 (Tex. App.—Houston [1st Dist.] Dec. 22, 2011, no pet.).
A directed verdict is warranted when the evidence is such that no other
verdict can be rendered and the moving party is entitled, as a matter of law, to
judgment. Tanglewood Homes Ass’n v. Feldman, 436 S.W.3d 48, 66 (Tex. App.—
Houston [14th Dist.] 2014, pet. denied). When reviewing a directed verdict, an
appellate court views the evidence in the light most favorable to the party against
whom the verdict was rendered. Szczepanik v. First S. Trust Co., 883 S.W.2d 648,
649 (Tex. 1994). When reviewing a directed verdict on a legal issue, we consider
all the evidence presented at trial, viewing it in the losing party’s favor “as much as
the record allows.” S.V. v. R.V., 933 S.W.2d 1, 8 (Tex. 1996). We may consider
any reason why the directed verdict should have been granted, even if not stated in
the party’s motion. Industrial III, Inc. v. Burns, No. 14-13-00383-CV, 2014 WL
4202495, at *8 (Tex. App.—Houston [14th Dist.] Aug. 26, 2014, pet. denied)
(mem. op.).
In this case, the following events are undisputed. Dunwoody sent his notice
of the existence of “Good Reason” under the terms of his Employment Agreement
on May 9, 2019. This notice began the thirty-day period for EnVen to cure the
problems pointed out in Dunwoody’s notice. On June 6, 2019, EnVen sent a
response letter to Dunwoody. EnVen notified Dunwoody that it did not believe
“any Good Reason exists” and that there were “accordingly no issues requiring
11
cure.” It also denied that it owed Dunwoody a Separation Amount under the
Employment Agreement. EnVen continued that it had fully performed its
obligations under the Employment Agreement and it believed Dunwoody remained
bound by all restrictions surviving the termination of his employment. On June 7,
2019, Dunwoody filed suit against EnVen alleging that EnVen had breached and
anticipatorily repudiated the Employment Agreement by failing to pay him “his
Separation Payment and Pro-Rata Bonus, to vest his unvested incentive awards, or
to provide any of the additional benefits owed upon [his] termination for Good
Reason.” On June 10, 2019, Dunwoody sent a letter to EnVen in which he
asserted that EnVen had elected to treat his Employment Agreement “as terminated
upon the expiration of the 30-day cure period following the Notice [of Good
Reason], specifically June 8, 2019,” and he concurred “that the Agreement
terminated as of that date.”
When a party to a contract commits a material breach of a contract, the non-
breaching party must elect between two courses of action, either continuing
performance or ceasing performance and filing suit for damages. Gupta, 140
S.W.3d at 756. EnVen points out no evidence in the record demonstrating that,
after June 7, 2019, Dunwoody insisted EnVen perform the Employment
Agreement, sought any benefits from the Employment Agreement, or in any
manner treated the Employment Agreement as continuing. Instead, the undisputed
evidence detailed above establishes that Dunwoody exercised the second option, he
ceased performance and filed suit seeking damages caused by EnVen’s breach. By
exercising the second option, Dunwoody was excused from fully performing the
Employment Agreement. See id. at 757, n. 7 (“The election affects only whether
the non-breaching party itself is then required to perform fully.”). We conclude the
trial court did not err when it granted a directed verdict that Dunwoody was
12
excused from further performance of the terms of this Employment Agreement.
We overrule the second argument raised in EnVen’s second issue.
IV. The final judgment signed by the trial court does not include excessive
damages.
EnVen argues in its third issue that the damages awarded in the final
judgment are excessive and Dunwoody received a windfall because the trial court
“failed to subtract the costs Dunwoody avoided by escaping his ongoing Severance
obligations.” Specifically, EnVen argues Dunwoody’s damages calculation was
defective because it did not account for the “costs he avoided by terminating the
[Employment] Agreement and avoiding future performance.” The only avoided
“costs” EnVen asserts Dunwoody avoided were (1) honoring his non-competition
obligations, employment and investment, for one year after termination; (2)
signing a release of noncontractual claims; and (3) returning company information
and meeting the confidentiality requirements. Building on this argument, EnVen
asserts that there was insufficient evidence supporting the award, there was charge
error because the charge did not instruct the jury to account for avoided costs, and
the damages awarded were excessive. As explained below, we disagree.
Because this is a breach of contract case, we are required to examine and
apply the terms of the Employment Agreement. When construing a contract, we
may not limit our review to only one part of the contract. Instead, when construing
a written contract, our primary goal is to ascertain the true intentions of the parties
as expressed in the instrument. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223,
229 (Tex. 2003). We give contract terms their plain, ordinary, and generally
accepted meanings unless the contract itself shows them to be used in a technical
or different sense. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex.
2005). We construe contracts from a utilitarian standpoint, bearing in mind the
13
particular business activity sought to be served, and we avoid, when possible and
proper, a construction that is unreasonable, inequitable, or oppressive. Frost Nat’l
Bank v. L & F Distrib., Ltd., 165 S.W.3d 310, 312 (Tex. 2005). We examine and
consider the entire writing in an effort to harmonize and give effect to all
provisions of the contract so that none will be rendered meaningless. J.M.
Davidson, Inc., 128 S.W.3d at 229. Courts are not authorized to rewrite
agreements to insert additional provisions the parties could have included, or to
remove provisions that the parties, for whatever reason, would prefer to ignore.
Tenneco, Inc. v. Enterprise Prod. Co., 925 S.W.2d 640, 646 (Tex. 1996). In other
words, courts cannot make, or remake, contracts for the parties. HECI Exploration
Co. v. Neel, 982 S.W.2d 881, 888 (Tex. 1998).
Whether a contract is ambiguous is a question of law for the court to decide
by examining the agreement as a whole in light of the circumstances present when
the contract was entered. Lane-Valente Indus. (Nat’l), Inc. v. J.P. Morgan Chase,
N.A., 468 S.W.3d 200, 205 (Tex. App.—Houston [14th Dist.] 2015, no pet.). A
contract is unambiguous if it can be given one certain or definite legal
interpretation. Id. The fact that the parties disagree about a contract’s meaning
does not necessarily show that it is ambiguous. Id. Also, lack of clarity does not
create an ambiguity. Universal Health Servs., Inc. v. Renaissance Women’s
Group, P.A., 121 S.W.3d 742, 746 (Tex. 2003). Additionally, parol evidence is not
admissible for the purpose of creating an ambiguity. Material Partnerships, Inc. v.
Ventura, 102 S.W.3d 252, 258 (Tex. App.—Houston [14th Dist.] 2003, pet.
denied). When a contract is not ambiguous, a court construes it as a matter of law.
Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). Having
reviewed the entire Employment Agreement, we conclude that Dunwoody’s
Employment Agreement is not ambiguous.
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To recover on a breach-of-contract claim, a plaintiff must have sustained
damages as a result of the defendant’s breach. West v. Triple B. Servs., LLP, 264
S.W.3d 440, 446 (Tex. App.—Houston [14th Dist.] 2008, no pet.). The goal in
measuring damages for a breach-of-contract claim is to provide just compensation
for any loss or damage actually sustained as a result of the breach. Parkway
Dental Assocs., PA v. Ho & Huang Props., LP, 391 S.W.3d 596, 607 (Tex. App.—
Houston [14th Dist.] 2012, no pet.). By operation of this rule, a party generally
should be awarded neither less nor more than his actual damages. Sharifi v. Sheen
Automotive, LLC, 370 S.W.3d 126, 148 (Tex. App.—Dallas 2012, no pet.). The
facts of the case determine the proper measure of damages as well as any allowable
offsets. Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d
480, 481 n.1 (Tex. 1984). The normal measure of damages for a breach of contract
claim is expectancy or benefit-of-the-bargain measure. Qaddura v. Indo-European
Foods, Inc., 141 S.W.3d 882, 888 (Tex. App.—Dallas 2004, pet. denied). The
purpose of this measure is to restore the injured party to the economic position he
would have occupied had the contract been performed. Id. “The benefit of the
bargain is measured by the prevailing party’s anticipated receipts and losses caused
by the breach less any cost or other loss he has avoided by not having to perform.”
Id. at 889. Dunwoody, as the plaintiff, had the burden of proving with some
degree of certainty a factual basis to support the damages awarded. Lakewood
Pipe of Texas, Inc. v. Conveying Techniques, Inc., 814 S.W.2d 553, 556 (Tex.
App.—Houston [1st Dist.] 1991, no writ).
We conclude that Dunwoody met this burden. Turning first to EnVen’s list
of Dunwoody’s allegedly avoided costs, it was undisputed that Dunwoody did not
compete with EnVen and did not bring any claims that would have been barred by
the signing of the release. In addition, the jury found that Dunwoody complied
15
with the Employment Agreement’s confidential information provision. As a result,
there were no actual avoided costs or losses to be accounted for in Dunwoody’s
damages calculation or in the jury charge. See Qaddura, 141 S.W.3d at 889(stating that benefit of the bargain damages are measured by the prevailing party’s
anticipated receipts and losses caused by the breach minus any cost or other loss
actually avoided not any possible cost or loss that might have been avoided).
In addition, section 7(f) of the Employment Agreement prohibits
Dunwoody’s Severance from being reduced by EnVen’s proposed hypothetically
avoided costs. This section provides in its entirety:
No Duty to Mitigate. [Dunwoody] shall not be required to mitigate
the amount of any payment or benefit provided for in this
[Employment] Agreement by seeking other employment or otherwise,
nor, except as provided in the 18-Month Plan Participation Benefit or
the 24-Month Plan Participation Benefit, shall the amount of any
payment or benefit provided for in this [Employment] Agreement be
reduced by any compensation or benefit earned by [Dunwoody] as a
result of employment by another employer or self-employment, by
any retirement benefits, or be offset against any amount claimed to be
owing by [Dunwoody] to [EnVen], or otherwise.
This expansive contractual language the parties chose for their contract
prevents the deduction of any real or hypothetical avoided costs from Dunwoody’s
Severance. See Bennett v. Comm’n for Lawyer Discipline, 489 S.W.3d 58, 69
(Tex. App.—Houston [14th Dist.] 2016, no pet.) (applying “Texas’s fundamental
public policy in favor of a broad freedom to contract, which allows parties to
allocate risks as they see fit as long as their agreement does not violate the law or
public policy.”). To hold otherwise would ignore the language of the parties’
contract and would not place Dunwoody in the same position he would have been
in if the contract had been fully performed. See id. at 68–69 (stating that courts are
not authorized to rewrite agreements even if one of the parties has come to dislike
16
one of its provisions).
Finally, as we explained above in section III of this opinion, Dunwoody was
excused from any post-termination requirements because of EnVen’s prior material
breach of the Employment Agreement. Because Dunwoody was excused from
these post-termination requirements, there were no costs avoided.
In summary, sufficient evidence supported the damages awarded by the jury
and included in the final judgment, there was no charge error, and the damage
award was not excessive. We overrule EnVen’s third issue.
V. EnVen has not shown that Dunwoody failed to establish Good Reason in
its fourth issue on appeal.
In its fourth issue, EnVen makes multiple arguments that Dunwoody failed
to establish Good Reason. We conclude none of EnVen’s arguments have merit.
A. Dunwoody adequately pled and disclosed his disparagement
claim.
EnVen initially argues in its fourth issue that the trial court erred when it
refused to disregard the jury’s finding that EnVen breached the non-disparagement
provision in Dunwoody’s Employment Agreement because Dunwoody did not
properly plead or disclose the claim. As a result, in EnVen’s view, the final
judgment does not conform to the pleadings as required by Rule 301 of the Texas
Rules of Civil Procedure. See Tex. R. Civ. P. 301 (stating that the “judgment of
the court shall conform to the pleadings”). EnVen additionally argues that
Dunwoody failed to properly disclose his disparagement claim as required by
Rules 193 and 194 of the Rules of Civil Procedure. See Tex. R. Civ. P. 193, 194
(establishing requirement that parties respond to written discovery, provide a
complete response, and disclose the legal theories and factual bases of that party’s
claims). As explained below, we disagree.
17
EnVen initially argues that Dunwoody failed to plead his disparagement
claim because, in EnVen’s view, Dunwoody buried the accusation within a
different section of his amended pleading. Specifically, EnVen asserts that the
following is insufficient to assert a disparagement claim:
28. Mr. Weyel routinely criticized and disparaged Mr.
Dunwoody to his co-workers and third parties. The deliberate and
sustained effort to squeeze Mr. Dunwoody out of the Company’s
affairs coincided with his discovery of behavior by EnVen’s CEO that
independently supported Mr. Dunwoody’s Good Reason for
terminating the [Employment] Agreement. These included
unprovoked, physically aggressive verbal attacks by Mr. Weyel, at
times while he was visibly impaired by alcohol. These attacks were
witnessed by other company executives as well as by third parties
with whom the Company maintained business relationships, and they
occurred both inside and out of EnVen’s offices. Mr. Weyel’s
belligerent conduct created a toxic and unprofessional environment
within EnVen’s management which rendered it impossible for Mr.
Dunwoody to remain at the Company. In fact, Mr. Dunwoody
operated in constant anxiety of this behavior, further effecting [sic] his
ability to do his job. Mr. Dunwoody has also learned that Mr. Weyel
routinely emailed his colleagues and even third parties behind his
back to make false and disparaging comments about Mr. Dunwoody’s
work performance or ability. Mr. Weyel’s verbal attacks and
disparagement of Mr. Dunwoody not only served to undermine and
materially diminish Mr. Dunwoody’s authority, but it also violated the
non-disparagement covenant in Mr. Dunwoody’s Employment
Agreement (the breach of which serves as an independent basis for
Mr. Dunwoody’s Good Reasons for resignation).
We disagree this detailed paragraph describing Weyel’s disparagement of
Dunwoody, which ended by plainly stating that it served as an independent basis
for Dunwoody’s Good Reasons for resignation, constitutes inadequate notice. See
Tex. R. Civ. P. 47(a) (stating that a pleading “sets forth a claim for relief” if it
contains “a short statement of the cause of action sufficient to give fair notice of
the claim involved”). EnVen did not specially except to Dunwoody’s Third
18
Amended Petition. See Tex. R. Civ. P. 91 (stating that a special exception is used
to “point out any defect, omission, obscurity, duplicity, generality, or other
insufficiency in the allegations in the pleading excepted to.”). As a result, we
liberally construe Dunwoody’s amended petition to determine whether he
adequately pleaded his disparagement claim. See Zarate v. Rodriguez, 542 S.W.3d
26, 36 n.4 (Tex. App.—Houston [14th Dist.] 2017, pet. denied). We conclude that,
based on the very specific paragraph 28 quoted above, Dunwoody did.
We turn next to EnVen’s argument that Dunwoody failed to adequately
disclose his disparagement claim as required by Rule 194 of the Texas Rules of
Civil Procedure. See Tex. R. Civ. P. 194(b)(3). Dunwoody served his amended
disclosure responses on November 20, 2020, approximately six months before
trial. In response to the requirement that he disclose the legal theories and provide
a summary of the factual basis of his claims, Dunwoody began by incorporating by
reference his Third Amended Original Petition. We conclude this was sufficient to
provide fair notice to EnVen of Dunwoody’s addition of disparagement as a Good
Reason for his departure from EnVen. See Tex. R. Civ. P. 59 (permitting
incorporation by reference into pleadings); In re Alford Chevrolet-Geo, 997
S.W.2d 173, 180 (Tex. 1999) (orig. proceeding) (“The primary objective of
discovery is to ensure that lawsuits are decided by what the facts reveal, not what
facts are concealed.”) (internal quotations omitted).
B. Dunwoody substantially complied with the notice requirement
found in Section 7(i) of this Employment Agreement.
In the next part of its Fourth Issue EnVen argues that Dunwoody failed to
provide the thirty-day notice of his disparagement claim as required by his
Employment Agreement. This issue was raised pre-trial when Dunwoody filed a
motion for partial summary judgment in part on the issue of contractual notice.
19
The motion was filed ten days after Dunwoody filed his Third Amended Petition.
In his motion Dunwoody argued that he had complied with the Good Reason
reasonable notice requirements found in section 7(i) of his Employment
Agreement. EnVen did not respond to the motion. The trial court subsequently
granted the motion in part, concluding that “prior to terminating his employment,
Plaintiff David M. Dunwoody, Jr. complied with and satisfied the notice and cure
requirements contained in Section 7(i) of the Employment Agreement.”
EnVen sought to revisit the contractual notice issue during trial. The trial
court reaffirmed its partial summary judgment and declined to allow EnVen to
introduce evidence on the notice issue during the trial. On appeal, EnVen does not
directly challenge the trial court’s partial summary judgment but instead argues the
trial court’s partial summary judgment order was too narrow to cover Dunwoody’s
disparagement claim. It then revives its notice argument asserting that “notice was
a live issue, and the record is clear (and uncontroverted) that Dunwoody did not
provide notice of this claim.” We disagree with both of EnVen’s arguments.
Section 7(i) of Dunwoody’s Employment Agreement required Dunwoody to
provide EnVen with “reasonable notice” detailing the existence of his Good
Reason for terminating his employment. Dunwoody was further required to give
EnVen thirty days to cure those issues. It is undisputed that Dunwoody sent a
Good Reason notice letter on May 9, 2019. In his letter Dunwoody detailed his
contentions that EnVen had provided Good Reason by decreasing his equity
compensation and by reducing his authority as president. Dunwoody also included
a final paragraph in the letter titled “Other Actions to Consider.” This paragraph
provides:
I believe these points are more than sufficient to constitute Good
Reason for termination as they relate to my Employment Agreement.
With that said, they are not an exhaustive list of my concerns
20
regarding the direction and management of the Company, which I am
willing to expand upon in a confidential setting should the board
desire additional information. Among other concerns, I am aware of
questionable instances of expense reimbursement by an executive and
I have concerns regarding aspects of the Company’s budgetary
approval process. Additionally, while there are other actions that have
been taken against me that would further substantiate the occurrence
of Good Reason under, and breach of, my employment agreement, I
believe the documentation of these additional actions would not be in
the interest of all parties involved.
EnVen rejected Dunwoody’s notice less than thirty days later. In the rejection
letter EnVen refused to acknowledge the existence of any Good Reason, made no
effort to respond to every point raised in Dunwoody’s letter, asserted there was
nothing to cure, and notified Dunwoody that it would not pay Dunwoody any
Severance as defined in Dunwoody’s Employment Agreement.
We conclude that Dunwoody’s Good Reason notice letter provided EnVen
with “reasonable notice” that he believed multiple Good Reasons existed for him
to terminate his contract and receive Severance. Dunwoody also offered to provide
more detailed information in a confidential setting, which EnVen declined. The
fact EnVen chose not to accept the opportunity to learn more details does not
eliminate the fact it received written notice that Dunwoody believed Good Reason
existed. That was sufficient. See James Constr. Group, LLC v. Westlake Chem.
Corp., 650 S.W.3d 392, 396 (Tex. 2022) (stating that Texas law generally
recognizes that “a party’s substantial compliance with contractual notice conditions
is sufficient to satisfy those conditions”). Finally, the trial court’s partial summary
judgment order, quoted above, was broad enough to cover all of Dunwoody’s
claims. We overrule this part of EnVen’s fourth issue.
C. EnVen was not entitled to re-litigate during trial an issue resolved
by summary judgment.
21
Next, EnVen alternatively argues that the trial court “improperly forbade
EnVen from pursuing its [lack of notice] defense.” In making this argument,
EnVen does not substantively challenge the trial court’s partial summary judgment.
It instead simply argues that the trial court should have allowed EnVen to amend
its answer, introduce evidence on the notice issue, and submit the notice issue to
the jury. We again disagree.
EnVen asserts that the trial court erred when it denied EnVen’s request to
advance a claim at trial that was already decided as a matter of law through a
partial summary judgment. The answer is clear that the trial court committed no
error when it refused to allow EnVen to pursue the contractual notice issue during
trial because that question had been resolved through a summary judgment. See
Robles v. Consol. Graphics, Inc., 965 S.W.2d 552, 558 n.5 (Tex. App.—Houston
[14th Dist.] 1997, pet. denied) (“Because the court had already decided the issue of
illegal double commissions in the first summary judgment dealing with Robles’s
claims, that issue was not before the court in the second summary judgment and
the trial court properly refused to consider it.”); Martin v. First Republic Bank,
Fort Worth, 799 S.W.2d 482, 488 (Tex. App.—Fort Worth 1990, writ denied)
(“The issues determined on a motion for summary judgment are final, although the
judgment is interlocutory.”). We overrule this part of EnVen’s fourth issue.
D. The trial court did not misinterpret Section 7(i)(ii) of Dunwoody’s
Employment Agreement.
EnVen next argues that the trial court reversibly erred because it
misinterpreted Section 7(i)(ii) of Dunwoody’s Employment Agreement. We again
disagree.
This argument requires this Court to interpret Dunwoody’s Employment
Agreement. We apply the same standard set out in section IV above. We have
22
already determined that the Employment Agreement is not ambiguous. In this
situation, it is the trial court, not the jury, which construes the contract. Am. Mfrs.
Mut. Ins. Co., 124 S.W.3d at 157.
Section 7(i)(ii) provides Dunwoody had Good Reason to resign if, without
Dunwoody’s written consent, EnVen failed
to continue in effect any plan in which Executive participates that is
material to Executive’s total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan or the failure by the
Company to continue Executive’s participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable
to Executive, unless such failure to continue in effect any such failure
to continue in effect any plan or participation relates to a
discontinuance of such plans or participation on a management-wide
or Company-wide basis . . . .
Throughout most of the pre-trial proceedings of this case EnVen took the
position that the Employment Agreement was not ambiguous. Then, a short time
before the trial commenced, EnVen shifted its position. The trial court rejected
EnVen’s ambiguity argument and construed the Employment Agreement as a
matter of law. The trial court included the following question and instructions in
the jury charge:
Did EnVen fail to continue Dunwoody’s participation in an equity
compensation plan “on a basis not materially less favorable” to
Dunwoody, as that phrase is used in Section 7(i)(ii) of the
Employment Agreement?
Answer “Yes” to this question if you find that EnVen materially
reduced Dunwoody’s share of the management equity award year
over year.
Material means a reasonable person would attach importance to the
fact or a change of condition in the context of the total mix of
information relevant to such fact of change of condition.
23
The jury answered “Yes.” The jury also found that Dunwoody did not provide
written consent to a reduction in his equity award.
In EnVen’s view, the trial court erred when it interpreted Dunwoody’s
Employment Agreement in this way and then excluded evidence not relevant to
this interpretation. EnVen continues that the jury was asked the wrong question as
a result, the trial court should have submitted the meaning of the Employment
Agreement to the jury, and there was legally insufficient evidence to support the
verdict under a proper interpretation of Section 7(i)(ii).
EnVen’s board adopted the 2015 Plan when EnVen converted to a
corporation. The 2015 Plan created a reserve of shares to award various
employees. In 2015, EnVen issued “37.5% of the amount of the Reserve” and the
issued shares were divided among the three top EnVen executives. Weyel received
46 percent, Dunwoody 31 percent, and Carmony 23 percent. The 2015 Plan was
never changed or discontinued.
Turning to the key terms used in Section 7(i)(ii), “basis” is defined as
“foundation” or “base.” Merriam-Webster Dictionary New Edition 58 (2004). The
same dictionary defines “Participation” as “take part in something” or “share.” Id.
at 525. It also defines “Continue” as “to maintain without interruption.” Id. at
157. We conclude that the plain language of section 7(i)(ii) of Dunwoody’s
Employment Agreement protects Dunwoody’s right over time to take part in
EnVen’s 2015 Plan at a base level not materially less favorable to Dunwoody. In
other words, the 2015 Plan established the basis for Dunwoody’s participation in
EnVen’s equity plan and Dunwoody’s relative share, as compared to the other top
executives, could not be reduced in future years. We conclude that the trial court
did not err when it determined the only way to measure EnVen’s compliance with
24
Section 7(i)(ii) was by a year over year comparison of Dunwoody’s share of the
equity awards.
EnVen’s reference to Section 5(a) of Dunwoody’s Employment Agreement
does not change our analysis because it can be harmonized with Section 7(i)(ii).
See J.M. Davidson, Inc., 128 S.W.3d at 229. Section 5(a) guarantees Dunwoody’s
initial right to participate in EnVen’s equity compensation plan and other benefits
“on a basis at least as favorable to [Dunwoody] as may be provided to similarly
situated [EnVen] senior executives . . . .” Section 7(i)(ii) establishes when
Dunwoody has Good Reason to resign based on EnVen’s handling of the equity
compensation plan. EnVen argues that Section 5(a) and Section 7(i)(ii), by both
using the word “Basis,” established only that the methodology used for
Dunwoody’s equity award would be the same as the methodology used for the
other top EnVen executives. If we were to adopt EnVen’s proffered interpretation,
which would measure EnVen’s compliance with the Employment Agreement by
comparing Dunwoody’s equity award against other executives’ awards in a single
year, we would eliminate the Employment Agreement’s use of the word
“continue” in Section 7(i)(ii). This we cannot do. See Hand & Wrist Center of
Houston, P.A. v. Lowery Masonry, LLC, No. 14-19-00539-CV, 2020 WL 7626179,
at *4 (Tex. App.—Houston [14th Dist.] Dec. 22, 2020, no pet.) (mem. op.) (stating
that eliminating words from a contract “is not reasonable”). By using the word
“continue,” the Employment Agreement established a temporal aspect to the
required comparison which dictates a comparison of Dunwoody’s share of the
equity awards over time. The fact EnVen now dislikes the Employment
Agreement’s language does not authorize this court to rewrite the contract in the
guise of interpreting it. See Bennett, 489 S.W.3d at 70. Finally, interpreting
Dunwoody’s Employment Agreement to require a comparison of Dunwoody’s
25
share of the equity award over time rather than using some other method, such as
total value or the same methodology as other executives in a single year, is not an
absurd result. See Lawrence v. CBD Services, Inc., 44 S.W.3d 544, 553 (Tex.
2001) (recognizing Texas’s strong public policy in favor of preserving freedom of
contract); Wal-Mart Stores Texas LLC v. Shirey, No. 14-18-00545-CV, 2020 WL
548323, at *5 (Tex. App.—Houston [14th Dist.] Feb. 4, 2020, pet. denied) (mem.
op.) (“We bear in mind Texas’s fundamental public policy in favor of a broad
freedom of contract, which allows parties to allocate risks as they see fit as long as
their agreement does not violate the law or public policy.”). We overrule this part
of EnVen’s fourth issue. Because we have determined that the trial court did not
misinterpret Dunwoody’s Employment Agreement, we need not reach the next part
of EnVen’s fourth issue arguing that the trial court’s misinterpretation led to other
errors.
E. The exception found in Section 7(i)(ii) does not apply.
EnVen next argues that the trial court erred when it failed to apply the
exception found in Section 7(i)(ii) which provides that Good Reason does not exist
if EnVen “fails to continue” Dunwoody’s participation in the equity award plan
because the “failure to continue in effect any plan or participation relates to a
discontinuance of such plans or participation on a management-wide or Company-
wide basis.” In EnVen’s view, EnVen discontinued participation in the 2015 plan
in 2016 when no equity compensation awards were made. EnVen also asserts that
it then “adopted a market-based compensation plan for all executives” in 2017 and
distributed the equity awards under that new plan in 2017, 2018, and 2019.
The record evidence does not support EnVen’s argument. EnVen’s own
witnesses, CEO Weyel and general counsel Jeff Starzec, testified that the 2015
26
Equity Award Plan was never discontinued and remained in place at the time of
trial. Because the evidence was undisputed that the 2015 Plan was never
discontinued, the trial court did not err when it ruled as a matter of law that the
exception found in Section 7(i)(ii) was inapplicable and should not go to the jury.
The undisputed fact that EnVen did not distribute any equity awards in 2016 is
simply not relevant because Dunwoody did not allege Good Reason arose in 2016,
only in 2017, 2018, and 2019. We overrule this part of EnVen’s fourth issue.
F. Legally sufficient evidence supports the jury’s finding that
Dunwoody did not consent to the reductions of his equity awards
in 2017, 2018, and 2019.
Finally, in the last part of EnVen’s fourth issue, EnVen argues there is no
evidence supporting the jury’s finding that Dunwoody did not provide written
consent to the reductions in his equity awards in 2017, 2018, and 2019. Even if we
assume for purposes of appeal that Dunwoody bore the burden to prove that he did
not consent to the changes in his equity awards, there is more than a scintilla of
evidence supporting the jury’s finding that Dunwoody did not consent.
When an appellant attacks the legal sufficiency of an adverse finding on an
issue on which it did not have the burden of proof, the appellant must demonstrate
on appeal that there is no evidence to support the adverse finding. Univ. Gen.
Hosp., L.P. v. Prexus Health Consultants, LLC, 403 S.W.3d 547, 550 (Tex. App.—
Houston [14th Dist.] 2013, no pet.). In conducting a legal-sufficiency review, we
must consider the evidence in the light most favorable to the appealed finding and
indulge every reasonable inference that supports it. Id. at 550–51 (citing City of
Keller v. Wilson, 168 S.W.3d 802, 821–22 (Tex. 2005)). The evidence is legally
sufficient if it would enable reasonable and fair-minded people to reach the
decision under review. Id. at 551. This Court must credit favorable evidence if a
27
reasonable trier of fact could, and disregard contrary evidence unless a reasonable
trier of fact could not. Id. The trier of fact is the sole judge of the witnesses’
credibility and the weight to be given their testimony. Id.
This Court may sustain a legal sufficiency (or no-evidence) issue only if the
record reveals one of the following: (1) the complete absence of evidence of a vital
fact; (2) the court is barred by rules of law or evidence from giving weight to the
only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital
fact is no more than a scintilla; or (4) the evidence established conclusively the
opposite of the vital fact. Id. Evidence that is so weak as to do no more than
create a mere surmise or suspicion that the fact exists is less than a scintilla. Id.
The plain language of Dunwoody’s Employment Agreement provides that
the occurrence of any of the events specified in Section 7(i) would not constitute
“Good Reason” if Dunwoody gave “written consent.” The documents relevant to
whether Dunwoody gave his “written consent” are the Restricted Stock Unit Grant
Notices Dunwoody signed in 2017, 2018, and 2019. Each Notice disclosed only
the exact number of shares granted to Dunwoody. The Notices did not inform
Dunwoody of the total number of shares issued, the distribution of those shares
among EnVen’s top executives, or the assumed value of the shares. Because the
Notices did not contain this type of information, we conclude that more than a
scintilla of evidence supports the jury’s finding that Dunwoody did not give
written consent to a material reduction in his share of the management equity
award. See Ford v. Culbertson, 308 S.W.2d 855, 865 (Tex. 1958) (explaining that
waiver “occurs where one in possession of any right whether conferred by law or
by contract, with full knowledge of the material facts, does or forbears to do
something, the doing of which or the failure of forbearance to do which is
inconsistent with the right or his intention to rely upon it”); Shannon v. Memorial
28
Drive Presbyterian Church U.S., 476 S.W.3d 612, 627 (Tex. App.—Houston [14th
Dist.] 2015, pet. denied) (holding that former employee did not expressly waive
her rights under a confidentiality and anti-disparagement agreement with her
former employer when she signed an authorization permitting former employers to
provide full details concerning her past employment). We overrule this final part
of EnVen’s fourth issue.
CONCLUSION
Having overruled all of the issues raised by EnVen in this appeal, we affirm
the trial court’s judgment.
/s/ Jerry Zimmerer
Justice
Panel consists of Justices Zimmerer, Hassan, and Poissant.
29