Dionisio Balderas Moreno v. The State of Texas--Appeal from 368th District Court of Williamson County

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State: Texas

Court: Criminal Court of Appeals

Docket No: 03-07-00713-CR

Case Date: 07/08/2010

Plaintiff: BRUCE J. COSSETT a/k/a FRANCIS CAHILL

Defendant: THE STATE OF TEXAS (Other)

Preview:Guy L.M. Floyd, F.P.C.S., Inc., Floor P.C.S., Ltd. and Floors, Inc. v. Philip Vipone--Appeal from 407th Judicial District Court of Bexar County
MEMORANDUM OPINION No. 04-05-00559-CV GUY L. M. FLOYD, F.P.C.S., INC., FLOOR P.C.S., LTD., AND FLOORS, INC., Appellants v. Philip VIPOND, Appellee From the 407th Judicial District Court, Bexar County, Texas Trial Court No. 2004-CI-14903 Honorable Janet Littlejohn, Judge Presiding Opinion by: Sandee Bryan Marion, Justice Sitting: Alma L. L pez, Chief Justice Sandee Bryan Marion, Justice Rebecca Simmons, Justice Delivered and Filed: June 21, 2006 AFFIRMED IN PART, REVERSED IN PART AND REMANDED BACKGROUND Guy L. M. Floyd and his children founded a flooring supply business named Floor P.C.S., Ltd. (the "Partnership"). The Partnership's general partner is F.P.C.S., Inc. (the "Corporation") (the Partnership and the Corporation will be collectively referred to as the "Company"). In December 2002, the Company and Floyd hired Philip Vipond as the vice president of the Corporation. During Floyd's and Vipond's negotiation for employment, Vipond told Floyd he was interested in buying the Company if Floyd ever decided to sell his interest. As a result of these discussions, on January 1, 2003 the parties entered into three agreements: 1) an employment contract between Vipond and the Partnership; 2) an option agreement in which Floyd granted Vipond rights to purchase stock and a limited partnership interest; and 3) a shareholder agreement and covenant not to compete between Vipond, Floyd, and the Company. Under the option agreement, Vipond received five percent of the issued and outstanding shares of the Corporation and five percent of the limited partnership units of the Partnership. However, before Vipond and Floyd entered into the agreements, Floyd began discussing the sale of the Company with a competitor, Floors, Inc. On May 27, 2004, Floyd notified Vipond that he had received an offer from Floors. During the negotiations of the sale, Floyd disclosed to Floors the gross profit percentages for individual customers and the Company's customer lists. On August 16, 2004, Floyd fired Vipond. Floyd did not pay Vipond his full severance pay and bonus amount as required by the employment contract. In December 2004, Floyd signed the final sales agreement with Floors. Vipond was not paid any ownership interest after the sale of the Company to Floors.

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Vipond filed a petition for declaratory judgment alleging the covenant not to compete was unenforceable because, among other things, Floyd and the Partnership breached a fiduciary duty, disclosed confidential information, and failed to pay severance pay. Floyd and the Company counterclaimed alleging breach of contract, theft of trade secrets, unfair competition, tortious interference, and breach of fiduciary duty. Floors intervened in the suit. After a bench trial, the trial court declared Floyd materially breached the covenant not to compete, the covenant not to compete was unenforceable against Vipond by Floyd and the Company, and Floyd breached his fiduciary duty to Vipond. The trial court awarded Vipond severance pay in the amount of $19,707.69, bonus commissions in the amount of $9,816.31, which was offset by money Vipond owed Floyd for work done on Vipond's home, and the trial court awarded attorney's fees in the amount of $90,000 to Vipond. Floyd, the Company, and Floors (collectively "appellants") complain of the trial court's judgment in seven issues on appeal. We affirm in part and reverse in part. COMPANY'S BREACH OF CONTRACT CLAIM In their first issue, appellants contend the Company should not be prevented from pursuing a breach of contract claim against Vipond because the trial court did not hold that the Company breached the contract, but only that Floyd, individually, breached the contract. In their third issue on appeal, appellants elaborate on their argument in issue one claiming the trial court erred in holding Floyd breached a duty to Vipond because Floyd's and Vipond's promises were not made to each other, but made to the Company. (1) Relevant to this argument are the following three conclusions of law: Conclusion 5: The promises contained in the Covenant Not to Compete with regard to the nondisclosure of confidential information are related, mutually dependent and reciprocal material promises to the other promises and consideration of Philip Vipond, Guy L. M. Floyd, Floor P.C.S., Ltd., and F.P.C.S., Inc., with regard to the Covenant Not to Compete, Option Agreement, and Employment Agreement. Conclusion 6: The release of confidential information, at least as early as April 26, 2004, by Guy L. M. Floyd to Floors, Inc., was a material breach of the Covenant Not to Compete. Conclusion 7: The material breach of the Covenant Not to Compete by Guy L. M. Floyd renders it unenforceable by Guy L. M. Floyd, Floor P.C.S., Ltd., and F.P.C.S., Inc. against Philip Vipond. According to appellants, the trial court erred in preventing the Company from enforcing the covenant not to compete against Vipond for three reasons: (1) Floyd's promise not to disclose Company information is independent of Vipond's promises not to disclose Company information and not to compete with the Company; (2) any breach by Floyd was not material because the trial court did not award damages to Vipond for the breach of the covenant not to compete; and (3) the trial court confused the parties. ENFORCEMENT OF COVENANT NOT TO COMPETE BY THE COMPANY Appellants assert the trial court erred in holding the Company is not permitted to enforce the covenant not to compete because Floyd's and Vipond's promises not to compete were independent of each other. Appellants also claim that Floyd's and Vipond's promises were made to the Company and the covenant not to compete "does not include a promise by Floyd to Vipond that Floyd will not disclose the Company's confidential information." We apply well-established rules of contract interpretation and construction to resolve this issue. Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783, 787 (Tex. App.-Dallas 2005, no pet.). For a court to be able to construe a contract as a matter of law, the contract must be unambiguous. See Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). Neither party complains that the covenant not to compete is ambiguous. The primary concern of a court in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Here, the Shareholder Agreement and Covenant Not to Compete states: "[I]n the event that either Floyd or Vipond shall breach this covenant, then the Corporation or Limited Partnership or their successors or assigns, may be entitled to seek...enforcement of this covenant not to compete." The covenant also states that "the provisions [of the covenant
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not to compete] may be assigned, in whole or in part, by the Corporation, Limited Partnership or both." The covenant not to compete gives explicit instructions that the Company, not Floyd or Vipond, has the right to seek relief for a breach. Also, the covenant is clear that the Company has the exclusive right to assign the contract. It necessarily follows that Floyd's and Vipond's promise not to compete as stated in the contract was not to each other, but to the Company. Because Floyd's and Vipond's promise not to compete was made to the Company and the Company had the sole right to seek relief for any breach of that promise, Floyd's breach does not prevent the Company from seeking relief from Vipond for any breach by Vipond. Therefore, we conclude the trial court erred in concluding that the covenant was unenforceable by the Company against Vipond. (2) CONTRADICTORY TESTIMONY CONCERNING VIPOND COMPETING WITH THE PARTNERSHIP In their second issue, appellants claim the trial court erred in making one finding of fact and failing to make additional findings of fact. Specifically, appellants complain of the trial court's finding that states, "The testimony was contradictory on whether Vipond competed with the Partnership beginning in early August, 2004." Appellants claim this finding of fact should be read broadly to state, "the evidence was unclear whether Vipond ever competed." However, appellants' interpretation is a broad variation of the trial court's more specific finding. We review fact findings for legal and factual sufficiency. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). If there is more than a scintilla of evidence to support the finding, the no-evidence challenge fails. Id. at 795. We reverse the ruling for factual insufficiency of the evidence only if the ruling is so against the great weight and preponderance of the evidence as to be manifestly erroneous or unjust. Minucci v. Sogevalor, S.A., 14 S.W.3d 790, 794 (Tex. App.--Houston [1st Dist.] 2000, no pet.). Here, Floyd fired Vipond on August 16, 2004. Vipond began working for another flooring company, Miller Brothers, Inc., on September 15, 2004. Vipond testified that he recruited the Company's former clients, Newmark and Eagle Valley Homes, to be customers of Miller Brothers. Vipond testified that "the agreement was broken" and he did not believe the covenant not to compete was in effect. He later stated that if the covenant not to compete was still in effect, he had been violating it since September 15, 2004. Vipond's testimony is contradicted by Floyd, who stated in his affidavit that Vipond had materially breached the covenant not to compete in August 2004. Further, appellants concede the evidence was "contradictory regarding competition in early August." A review of the record reveals there is sufficient evidence to support the trial court's finding. Appellants also contend the trial court erred in failing to make additional findings of fact and conclusions of law on the issue of whether Vipond breached the covenant not to compete and what remedies the Company or Floors is entitled to based on that breach. However, the failure to request additional findings of fact and conclusions of law constitutes a waiver on appeal of the trial court's lack of such findings and conclusions. Robles v. Robles, 965 S.W.2d 605, 611 (Tex. App.--Houston [1st Dist.] 1998, pet. denied). Therefore, because appellants did not file a request for additional findings or conclusions with the trial court, they have not preserved this error for review. ATTORNEY'S FEES In their last four issues, appellants claim Vipond failed to segregate his fees, there was no proof of an award of damages, and the evidence is legally and factually insufficient to support the trial court's determination that the attorney's fees are reasonable and necessary. We do not address these complaints because, in light of our disposition of appellants' complaint concerning the Company's ability to sue Vipond, the award of attorney's fees should be remanded for reconsideration. CONCLUSION On appeal, appellants do not challenge that portion of the trial court's judgment (1) awarding Vipond severance salary compensation in the amount of $19,707.69 and bonus compensation in the amount of $9,816.31, offset by the amount of $9,961.70 which Vipond owes to Floors P.C.S., Ltd.; (2) ordering that F.P.C.S., Inc. as the general partner of Floors P.C.S., Ltd. wind up Floors P.C.S., Ltd.; and (3) ordering that a $300,000 loan be treated as a prior partial distribution of a partnership interest to Floyd. Therefore, we affirm that portion of the judgment. However, because we conclude that the trial court erred in holding that the Company may not seek relief from Vipond for any breach of the covenant
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to not compete, we reverse that portion of the judgment stating that "[a]ll relief requested in this cause and not expressly granted is denied." We also reverse the trial court's award of attorney's fees to Vipond. The cause is remanded for further proceedings. Sandee Bryan Marion, Justice 1. Also, in their third issue, appellants assert the trial court erred in concluding that Floyd breached his fiduciary duty to Vipond. We do not address this complaint because the court did not award damages, payable by Floyd, to Vipond for any such breach. See Cortez ex rel. Estate of Puentes v. HCCI-San Antonio, Inc., 131 S.W.3d 113, 123 (Tex. App.-San Antonio 2004) (a "none" answer on the damages issue renders the liability issue immaterial), aff'd, 159 S.W.3d 87 (Tex. 2005); Canales v. Nat'l Union Fire Ins. Co., 763 S.W.2d 20, 23 (Tex. App.--Corpus Christi 1988, writ denied) ("the general rule [is] that where the jury finds no damages, findings on issues of liability are immaterial and harmless"). 2. Because we hold the trial court erred according to appellants' first reason, we will not address appellants' second and third reasons.

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