GILL-HUDSON, INC., Appellant v. JOHN WALTERS, SUNSET HOMES, INC., KIM GILL, FOSSIL VILLAGE 45 ACRE JOINT VENTURE, AND RICHARD STRAUSS, Appellees

SUPREME COURT CASES

Laws-info.com » Cases » Texas » 5th District Court of Appeals » 1993 » GILL-HUDSON, INC., Appellant v. JOHN WALTERS, SUNSET HOMES, INC., KIM GILL, FOSSIL VILLAGE 45 ACRE JOINT VENTURE, AND RICHARD STRAUSS, Appellees

State: Texas

Court: Texas Northern District Court

Docket No: 05-92-01826-CV

Case Date: 08/31/1993

Plaintiff: GILL-HUDSON, INC., Appellant

Defendant: JOHN WALTERS, SUNSET HOMES, INC., KIM GILL, FOSSIL VILLAGE 45 ACRE JOINT VENTURE, AND RICHARD STRAU

Preview:GILL-HUDSON, INC., Appellant v. JOHN WALTERS,
SUNSET HOMES, INC., KIM GILL, FOSSIL
VILLAGE 45 ACRE JOINT VENTURE, AND
RICHARD STRAUSS, Appellees
AFFIRMED in part, REVERSED in part, and REMANDED.
Opinion filed August 31, 1993.
S
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-92-01826-CV
GILL-HUDSON, INC., Appellant
V.
JOHN WALTERS, SUNSET HOMES, INC., KIM GILL, FOSSIL
VILLAGE 45 ACRE JOINT VENTURE, AND RICHARD STRAUSS, Appellees
On Appeal from the 193rd District Court
Dallas County, Texas
Trial Court Cause No. 91-01957-L
O P I N I O N
Before Chief Justice McGarry and Justices Lagarde and Barber
Opinion By Justice Barber
Gill-Hudson, Inc. appeals a take-nothing judgment entered in favor of John Walters. Gill-Hudson brought this
suit against John Walters, Sunset Homes, Inc., Kim Gill, Fossil Village 45 Acre Joint Venture, and Richard Strauss. Of
the named defendants, Walters was the only one remaining in the lawsuit at the end of the trial. FN:1 Gill-Hudson
proceeded against Walters on his written guaranty of defendant Sunset Homes' indebtedness to Gill-Hudson and on the
theory that Walters conspired with defendant Kim Gill to breach the latter's fiduciary duty to Gill-Hudson. The jury
concluded that Walters did not owe Gill-Hudson anything pursuant to his written guaranty. The jury also found that
Walters did not conspire with Gill to breach the latter's fiduciary duty to Gill-Hudson. Gill-Hudson contends that the
evidence adduced at trial was either legally or factually insufficient to support these jury findings. FN:2 We affirm in
part and reverse in part.
I. FACTUAL BACKGROUND
Gill-Hudson, Inc. was formed in May 1989 to acquire a tract of land in Crowley, Texas. The land was improved
with a home, a sixteen-unit apartment complex, a country store, a convenience store with gas pumps, and a lounge.
John Freiberger, Kim Gill, and Chuck Hudson were the original shareholders and officers of the corporation. The three
men agreed that Freiberger would provide the capital for the purchase of the property, Gill and Hudson would improve
and manage the property, and the three of them would split the profits.
Gill approached John Walters, an individual involved in the construction business, and asked him to renovate the
apartments. Walters testified that he agreed to renovate the apartments if Gill-Hudson supplied the materials and paid
him a percentage of the profits. Walters improved the apartments and collected rents. The occupancy rate increased
steadily throughout 1989. Freiberger testified that he was impressed with Walters's work.
In the fall of 1989, Gill received an option on some lots in Haltom City. Gill thought that the market was good for
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starter homes. Gill proposed to Freiberger that Gill-Hudson finance Walters and Walters's corporation, Sunset Homes,
Inc., in the building of single-family residences in Haltom City. The parties agreed that Gill-Hudson would loan money
to Sunset Homes in exchange for a percentage of the profits.
Freiberger testified that over the next year, Gill-Hudson loaned Sunset Homes as much as $1,000,000. Freiberger
testified that Gill was to administer the loans to Sunset Homes. As security for the loans, Walters, as president of
Sunset Homes, executed two promissory notes payable to Gill-Hudson in the combined principal amount of $501,000.
Walters also executed a document personally guaranteeing the payment of all of Sunset Homes' indebtedness to Gill-
Hudson, including the debt secured by the two promissory notes.
Within several months of the execution of the promissory notes, however, Freiberger became alarmed about Gill-
Hudson's business dealings with Sunset Homes. Sunset Homes had defaulted on the payment of the promissory notes.
Gill and Walters had failed to provide Freiberger with accountings despite repeated requests for the same. In January
1991, Freiberger learned that Sunset Homes did not own the lots on which it was building. Gill-Hudson made demand
for payment on the two promissory notes and accelerated the balance due. Freiberger testified that Sunset Homes did
not make any payments thereafter.                                                                                          The parties also introduced evidence as to involvement with Gill in the
negotiation of a lease for the lounge on the Crowley property. Gill and Walters approached Bobby Osborn separately
in April 1990 about leasing the lounge. Later that same month, Gill executed a lease agreement for the lounge with
another person, Joyce McCorver. The three-year lease provided that McCorver was to pay $1310 per month rental.
McCorver paid the stipulated rent each month. Nevertheless, Gill re-leased the lounge to Bobby Osborn and Carl
Holliman for a five-year term on February 1, 1991, thereby terminating McCorver's lease more than two years early.
The lease with Osborn and Holliman provided for a lower rent than that paid by McCorver--only $910 per
month. Holliman and Osborn also had the option to buy the lounge at the end of the five-year period if they made a
$5000 deposit. Holliman and Osborn made the $5000 deposit, making the check payable to Walters at Gill's
instruction. When asked why Gill had Holliman and Osborn write the check payable to him, Walters testified that Gill
was concerned about Sunset Homes' short cash position. Plaintiff's counsel then read the following excerpt from
Walters's deposition taken several months earlier:
Q. What did Kim Gill tell Bobby Osborn in connection with this check.
A. Make the check out to John Walters.
Q. Why?
A. No response.
Q. Do you know?
A. Yeah. He--Kim told him to make it out to me. We went over to the side during the negotiation when we were
doing this, and he said, "Have them made the check out to you because I need the money. If I put it through Gill-
Hudson, I can't get any money."
Walters testified that he cashed the $5000 check, kept $2000, and gave Gill the remaining $3000, all pursuant to Gill's
instructions.
II. STANDARD OF REVIEW
Legal sufficiency points of error assert a complete lack of evidence on an issue and are designated "matter of
law" points where the complaining party had the burden of proof at trial. Raw Hide Oil & Gas, Inc. v. Maxus
Exploration Co., 766 S.W.2d 264, 275-76 (Tex. App.--Amarillo 1988, writ denied). In reviewing a "matter of law"
challenge, we employ a two-prong test. First, we consider the evidence and inferences which tend to support the
challenged finding and disregard all evidence and inferences to the contrary. Sterner v. Marathon Oil Co., 767 S.W.2d
686, 690 (Tex. 1989); Jacobs v. Danny Darby Real Estate, Inc., 750 S.W.2d 174, 175 (Tex. 1988). If there is more than
a scintilla of probative evidence to support the jury's finding, we must overrule the point. See Anderson v. City of
Seven Points, 806 S.W.2d 791, 795 n.3 (Tex. 1991). If there is no evidence to support the finding, we must then
examine the entire record to determine if the contrary proposition is established as a matter of law. Sterner, 767
S.W.2d at 690. If the contrary proposition is established as a matter of law, we generally sustain the point and reverse
and render in favor of the complaining party. West End Apt. Ltd. v. Rothpletz, 732 S.W.2d 371, 374 (Tex. App.--
Dallas 1987, writ ref'd n.r.e.).
Factual sufficiency points of error concede conflicting evidence on an issue, yet maintain that the evidence against
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the jury's finding is so great as to make the finding erroneous. Raw Hide Oil & Gas, 766 S.W.2d at 275. If the
complaining party had the burden of proof, factual sufficiency points of error are designated as "great weight and
preponderance of evidence" points. Id. at 275-76. In reviewing such points of error, we consider and weigh all the
evidence, both that in support of and contrary to the challenged finding. Levinge Corp. v. Ledezma, 752 S.W.2d 641,
643 (Tex. App.--Houston [1st Dist.] 1988, no writ). If we conclude that the finding is so against the great weight and
preponderance of the evidence as to be manifestly erroneous or unjust, we must set aside the judgment and remand the
cause for a new trial. In re King's Estate, 244 S.W.2d 660, 661 (Tex. 1951); Levinge Corp., 752 S.W.2d at 643.
The jury is the sole judge of the witnesses' credibility and the weight to be given their testimony. Pilkington v.
Kornell, 822 S.W.2d 223, 230 (Tex. App.--Dallas 1988, writ denied); Clancy v. Zale Corp., 705 S.W.2d 820, 826 (Tex.
App.--Dallas 1986, writ ref'd n.r.e.). The jury may believe one witness and disbelieve another. McGalliard v.
Kuhlmann, 722 S.W.2d 694, 697 (Tex. 1986). The jury may resolve inconsistencies in any witness's testimony. Id. at
697. If the jury has evidence sufficient that reasonable minds could differ, we may not substitute our judgment for that
of the jury. Clancy, 705 S.W.2d at 826.
III. GUARANTY
In its first and second points of error, Gill-Hudson contends that the evidence was either legally or factually
insufficient to support the jury's answer to Jury Question No. 1. Jury Question No. 1 was asked and answered as
follows:
What sum of money, if any, do you find John Walters owes Gill-Hudson, Inc. pursuant to his written guaranty of
the indebtedness of Sunset Homes?
Answer in dollars and cents, if any.
ANSWER: $0
Gill-Hudson argues (1) that a certified public accountant testified that the outstanding principal balance owed on the
promissory notes was $502,995.10 and (2) that Walters admitted that Sunset Homes still owed Gill-Hudson
approximately $350,000. Gill-Hudson asks us to reverse the trial court's take-nothing judgment and render judgment in
the amount of $350,000.
Walters did not file a brief in response to the points relied upon by Gill-Hudson. FN:3 Walters's answer to the
lawsuit consisted of a general denial and a denial that all just and lawful offsets, payments, and credits had been
allowed on the notes and guaranty. FN:4 Therefore, we review the evidence to determine whether Gill-Hudson
established Walters was not completely absolved of liability on his personal guaranty when all lawful offsets, credits,
and payments on the notes were allowed.
A. Applicable Law
A guaranty creates a secondary obligation whereby the guarantor promises to answer for the debt of another and
may be called upon to perform once the primary obligor has failed to perform. Dann v. Team Bank, 788 S.W.2d 182,
183 (Tex. App.--Dallas 1990, no writ). A guarantor's liability on a debt is measured by the primary obligor's liability
unless a more extensive or a more limited liability is expressly set forth in the guaranty agreement. Houston Furniture
Distrib., Inc. v. Bank of Woodlake, N.A., 562 S.W.2d 880, 884 (Tex. Civ. App.--Houston [1st Dist.] 1978, no writ).
B. Evidence Adduced at Trial
The evidence adduced at trial showed that Sunset Homes executed two promissory notes payable to the order of
Gill-Hudson in the principal amounts of $327,000 and $174,000. Walters executed a guaranty agreement wherein he
personally guaranteed the payment of all indebtedness Sunset Homes owed to Gill-Hudson, including the debt secured
by the two promissory notes. Sunset Homes defaulted on its obligation to make payment on the notes. Gill-Hudson
made demand for payment, thus accelerating the balance due. Sunset Homes failed to make any payments thereafter.
The parties presented extensive testimony and introduced nearly sixty documents to show the payments, offsets,
and credits made by Sunset Homes prior to the demand for payment. The evidence presented is as follows:
(1) With respect to Gill-Hudson's loans to Sunset Homes and Sunset Homes' repayments thereof, Freiberger
testified, "Oh, I think over the time period there was maybe as much as seven hundred thousand or eight hundred
thousand or a million dollars, some of which was paid back, but I don't know."
(2) Robert Malphurs, C.P.A. for both Gill-Hudson and Sunset Homes,       audited the accounts between the
parties and testified that as of October 11, 1990, the outstanding principal balance Sunset Homes owed Gill-Hudson on
the promissory notes was $502,995.10. A summary of Malphurs's report was admitted into evidence as Plaintiff's
Exhibit 18.
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Malphurs testified that shortly after he prepared the report, he presented his       findings to Gill and Walters.
Walters rejected the report, claiming that some payments made to Gill and to third persons on Gill's behalf were not
reflected in the report. Malphurs testified that he subsequently prepared another report which showed that Sunset
Homes had paid $71,794.23 to Gill and to others on Gill's behalf. A copy of this second report was admitted into
evidence as Plaintiff's Exhibit 20. It is unclear to what extent, if any, the information contained in the latter report was
incorporated into the earlier report.
(3) While Malphurs was on the stand, Gill-Hudson also introduced into       evidence Plaintiff's Exhibit 26, a
check tracing schedule that Malphurs prepared showing monies that Sunset Homes had disbursed to Gill and Walters
from May 2, 1989, through November 27, 1990. The schedule reflected that Sunset Homes had paid $70,296 to Gill
and to others on Gill's behalf. Some of the information contained in this check tracing schedule appears to overlap with
some of the information contained in Plaintiff's Exhibit 20. It is unclear, however, to what extent, if any, the
information contained in this check tracing schedule was incorporated into Malphurs's audit.
(4) During trial, Walters testified that Malphurs's conclusion that Sunset       Homes owed Gill-Hudson
$502,995.10 was inaccurate because Malphurs did not credit Sunset Homes with $32,000 in payments or with two
mortgages totalling $119,000 that Sunset Homes had pledged to a bank as security for loans that the bank previously
had made to Gill-Hudson. When asked how much Sunset Homes owed Gill-Hudson on the promissory notes, Walters
testified: "At this time it's a little hard to tell because I don't know what the interest is. I haven't gotten any information
from them in quite some time. It's somewhere around $350,000.00."
(5) Walters introduced into evidence Plaintiff's Exhibits 27 through 46 and       Plaintiff's Exhibit 83, checks
written by Walters to Gill. Plaintiff's Exhibit 79 summarizes these checks and reflects that Walters and Sunset Homes
had paid $24,340.81 to Gill. These checks to Gill do not appear to overlap with those appearing in Plaintiff's Exhibits
20 or 26.
(6) Walters introduced into evidence Plaintiff's Exhibits 47 through 78, checks       written to third parties on
Gill's behalf. Plaintiff's Exhibit 80 summarizes these checks and reflects that Walters and Sunset Homes had paid
$47,399.58 to others on Gill's behalf. These checks do not appear to overlap with those appearing in Plaintiff's Exhibits
20 or 26.
(7) Finally, Walters introduced into evidence Plaintiff's Exhibits 81 and 82,       checks written by Sunset
Homes to Cash and indorsed by Gill. Both of these checks were incorporated into the summaries found in Plaintiff's
Exhibits 20 and 26.
C. Application of Law to the Facts
The record contains no evidence that Walters owes Gill-Hudson nothing pursuant to his written guaranty of the
indebtedness of Sunset Homes. To the contrary, Malphurs testified, based on his audit, that the outstanding principal
balance owed on the promissory notes was $502,995.10. Gill-Hudson and Sunset Homes both introduced other
testimony and documents concerning payments and offsets made. It is unclear to what extent, if any, such payments
were incorporated into Malphurs's audit. It is also unclear to what extent the information reflected in the various
documents is repetitious. Even if we were to construe the evidence in the light most favorable to Walters by assuming
that none of the payments were incorporated into Malphurs's audit and that none of the payments were reflected in
more than one document, and we credited the $502,995.10 balance with all payments and credits testified to, Sunset
Homes would still owe Gill-Hudson $138,164.48. FN:5 Moreover, Walters admitted that Sunset Homes still owes Gill-
Hudson "somewhere around $350,000" on the promissory note.
Although we find no evidence to support the jury's finding that Walters owed nothing pursuant to his written
guaranty of the indebtedness of Sunset Homes, we cannot, after reviewing all the evidence, determine the extent of
Walters's liability as a matter of law. This is a question of fact for the jury. Therefore, we overrule Gill-Hudson's
matter of law point.
While we cannot "find facts," we can "unfind facts" if the jury finding was so against the great weight and
preponderance of the evidence. Pool v. Ford Motor Co., 715 S.W.2d 629, 634 (Tex. 1986). We hold that the jury's
finding that Walters owed nothing on his written guaranty of Sunset Homes' indebtedness was so against the great
weight and preponderance of the evidence as to be manifestly unjust. There was no evidence indicating that no money
was owed. Moreover, the evidence adduced at trial established that Sunset Homes still owes Gill-Hudson between
$138,164.48 and $502,996.10 on the promissory notes, thereby rendering Walters liable to the same degree pursuant to
his guaranty agreement. Because we hold the jury finding to be against the great weight and preponderance of the
evidence, we reverse this portion of the judgment and remand it for a new trial. We sustain Gill-Hudson's second point
of error.
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IV. CONSPIRACY
In its third and fourth points of error, Gill-Hudson contends that the evidence was either legally or factually
insufficient to support the jury's answer to Jury Question No. 2. Jury Question No. 2 was asked and answered as
follows:
Do you find that John Walters conspired with Kim Gill to breach Kim Gill's fiduciary duty to Gill-Hudson, Inc.?
Answer "Yes" or "No".
ANSWER: No
Gill-Hudson asserts that Walters conspired with Gill to terminate the first lease on the lounge and to re-lease the same
at a reduced rate so that they could split the $5000 deposit, thereby depriving Gill-Hudson of corporate profits to
which it was entitled. FN:6 Again, Walters did not file a brief in response to the points relied upon by Gill-Hudson.
With respect to this cause of action, Walters's answer consisted solely of a general denial.
A. Applicable Law
Typically, fiduciary status is imposed upon persons that exercise control over a corporation's affairs, including
officers, directors, and controlling shareholders. International Banker Life Ins. Co. v. Holloway, 368 S.W.2d 567, 576
(Tex. 1963); Lewis v. Knutson, 699 F.2d 230, 235 (5th Cir. 1983). Three broad duties stem from such fiduciary status:
the duty of obedience, the duty of due care, and the duty of loyalty. Gearhart Indus., Inc. v. Smith Internat'l, Inc., 741
F.2d 707, 719 (5th Cir. 1984). The fiduciary's duty of loyalty requires him to act in good faith and prohibits him from
allowing his personal interest to prevail over the corporation's interest. Gearhart Indus., 741 F.2d at 719. For example,
a fiduciary is not permitted to appropriate corporate property for his benefit or for the benefit of another. Dunagan v.
Bushey, 263 S.W.2d 148, 152 (Tex. 1953).
An actionable civil conspiracy is a combination by two or more persons to accomplish an unlawful purpose or to
accomplish a lawful purpose by unlawful means. Great Nat'l Life Ins. Co. v. Chapa, 377 S.W.2d 632, 635 (Tex. 1964);
Central Sav. and Loan Ass'n v. Stemmons Northwest Bank, N.A., 848 S.W.2d 232, 241 (Tex. App.--Dallas 1992,
n.w.h.). The elements of a civil conspiracy are: (1) two or more persons; (2) an object to be accomplished; (3) a
meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as a
proximate result. Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983); Central Sav. and Loan Ass'n, 848
S.W.2d at 241. The "meeting of the minds" element requires proof of intent to participate in the purpose of the
conspiracy. Times Herald Printing Co. v. A.H. Belo Corp., 820 S.W.2d 206, 216 (Tex. App.--Houston [14th Dist.]
1991, no writ); see Roberts v. Harvey, 663 S.W.2d 525, 527 (Tex. App.--El Paso 1983, no writ).
A civil conspiracy need not be shown by direct evidence and is ordinarily established by circumstantial evidence.
Kirby v. Cruce, 688 S.W.2d 161, 164 (Tex. App.--Dallas 1985, writ ref'd n.r.e.). Vital facts may not be proved,
however, by unreasonable inferences or by piling inference upon inference. Schlumberger Well Surveying Corp. v.
Nortex Oil & Gas Corp., 435 S.W.2d 854, 858 (Tex. 1968).
B. Evidence Adduced at Trial
The evidence adduced at trial showed that Gill and Walters separately approached Bobby Osborn in April 1990
about leasing the lounge on the Crowley property. Later that same month, Gill executed a three-year lease for the
lounge with Joyce McCorver. Approximately ten months later, Gill re-leased the lounge to Bobby Osborn and Carl
Holliman for a five-year term, thereby terminating McCorver's lease more than two years early. The lease with Osborn
and Holliman provided for a lower rent than that paid by McCorver and included an option to buy the lounge at the
end of the five-year period in exchange for a $5000 deposit.
Holliman and Osborn made the $5000 deposit, making the check payable to Walters at Gill's instruction. When
asked why Gill had Holliman and Osborn make the check payable to him, Walters testified as follows:
A. Well, at the time that this was going on, Jack Freiberger had a conversation with Kim [Gill] where Sunset
Homes had advanced almost thirty thousand dollars to, like, pay back some loans.
Q. Excuse me. You're speaking of a conversation that Mr. Freiberger had with Mr. Gill?
A. That's correct, and myself.
Q. All right. Go ahead.
A. And there was thirty thousand dollars. We had paid down a loan. We paid--Sunset Homes had paid twelve
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thousand five hundred dollars down on a partial loan on the apartments, and other money we had paid for construction
and some other things to the tune of about thirty thousand dollars. Mr. Freiberger said that we needed to pay back
Sunset Homes some of that money because of the short cash position, and that's how that transpired with the five
thousand dollar check that was given--
(Emphasis added.) Plaintiff's counsel then read the following excerpt from Walters's deposition taken several months
earlier:
Q. What did Kim Gill tell Bobby Osborn in connection with this check?
A. Make the check out to John Walters.
Q. Why?
A. No response.
Q. Do you know?
A. Yeah. He--Kim told him to make it out to me. We went over to the side during the negotiation when we were
doing this, and he said, "Have them make the check out to you because I need the money. If I put it through Gill-
Hudson, I can't get any money."
Walters testified that he cashed the $5000 check, kept $2000, and gave Gill the remaining $3000, all pursuant to Gill's
instructions.
C. Application of Law to the Facts
In reviewing Gill-Hudson's "matter of law" point first, we conclude that there is some evidence to suggest that
Walters did not have the requisite intent to participate in the purpose of the conspiracy--evidence which supports the
jury's finding that Walters did not conspire with Gill to breach the latter's fiduciary relationship to Gill-Hudson.
Walters testified that Gill directed Osborn and Holliman to make the check payable to him because Freiberger and Gill
were concerned about Sunset Homes' short cash position. Gill-Hudson had loaned Sunset Homes up to $1,000,000 and,
therefore, had an obvious interest in Sunset Homes' financial stability. Gill was to administer loans to Sunset Homes on
behalf of Gill-Hudson. Walters testified that he had a "very loose relationship" with Gill and Freiberger, and the record
is replete with evidence of transactions between the parties that were not properly documented. The jury could have
concluded that Walters kept the money from the lease of the lounge because he believed the money to be a loan from
Gill-Hudson designed to protect its financial interest in Sunset Homes. The jury could have concluded that Walters did
not have the intent to participate in the purpose of the conspiracy; i.e., that Walters did not intend to divert the profits
from the lease of the lounge--profits rightfully belonging to Gill-Hudson--for his benefit or for Gill's benefit. Because
there is more than a scintilla of evidence to support the jury's finding, we overrule Gill-Hudson's legal insufficiency
point.
In reviewing Gill-Hudson's factual sufficiency point, we consider and weigh all the evidence, both that in support
of and contrary to the challenged finding. See Levinge Corp., 752 S.W.2d at 643. After Walters testified that Gill
directed Osborn and Holliman to make the check payable to him because Gill-Hudson was concerned about Sunset
Homes' short cash position, counsel for Gill-Hudson read the excerpt from deposition wherein Walters stated that Gill
directed Osborn and Holliman to make the check payable to him rather than Gill-Hudson because Gill wanted the cash
for his own personal use. Such testimony tends to establish that Walters conspired with Gill to deprive Gill-Hudson of
its corporate assets, thereby breaching Gill's fiduciary duty to the corporation. However, the jury is the sole judge of
the witness's credibility and the weight to be given their testimony. Pilkington, 822 S.W.2d at 230. The jury could have
chosen to disregard this testimony and to believe Walters's earlier testimony that suggested that he did not have the
requisite intent. See McGalliard, 722 S.W.2d at 692. We conclude there was probative evidence to support the jury's
finding that Walters did not conspire with Gill to breach the latter's fiduciary duty to Gill-Hudson. The finding was not
so against the overwhelming weight of the evidence as to be clearly erroneous. We overrule Gill-Hudson's factual
insufficiency point.
CONCLUSION
The judgment of the trial court is affirmed in part and reversed in part. We reverse that portion of the judgment in
favor of Walters with respect to his guaranty of Sunset Homes' indebtedness to Gill-Hudson. We remand that cause of
action to the trial court for further proceedings consistent with this opinion. In all other respects, the judgment of the
trial court is affirmed.
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WILL BARBER
JUSTICE
Do Not Publish
Tex. R. App. P. 90
921826F.U05
FN:1 Fossil Village 45 Acre Joint Venture was amended out of the case. Richard Strauss was nonsuited prior to trial.
Sunset Homes filed bankruptcy prior to trial and was nonsuited. Kim Gill filed bankruptcy during trial and was
subsequently nonsuited.
FN:2 Gill-Hudson's points of error are styled as "no evidence" and "insufficient evidence" points. When the party
having the burden of proof appeals from an adverse fact finding in the trial court, the points of error should be styled
as "matter of law" and "great weight and preponderance of evidence" points. Croucher v. Croucher, 660 S.W.2d 55, 58
(Tex. 1983). Because we liberally construe the points of error in order to obtain a just, fair, and equitable adjudication
of the rights of the litigants, we construe Gill-Hudson's points of error as "matter of law" and "great weight and
preponderance of evidence" points. Pool v. Ford Motor Co., 715 S.W.2d 629, 633 (Tex. 1986); Holley v. Watts, 629
S.W.2d 694, 696 (Tex. 1982).
FN:3 Any statement made by an appellant in his original brief as to the facts or the record may be accepted by the
court as correct unless challenged by the opposing party. Tex. R. App. P. 74(f). In this case, appellee Walters did not
file a brief or otherwise challenge appellant Gill-Hudson's recitation of the facts. Although we could have accepted as
true Gill-Hudson's recitation of the facts, we have read the record in its entirety. We find that Gill-Hudson's recitation
of the facts is consistent with the testimony adduced at trial.
FN:4 Although Walters pleaded the affirmative defense that all just and lawful offsets, payments, and credits had not
been allowed on the notes and guaranty, Walters did not deny execution of the guaranty or plead any other matter
constituting an affirmative defense. See Tex. R. Civ. P. 94. Although Walters proffered some testimony that
constituted evidence of other affirmative defenses, including failure of consideration, fraud, economic duress, and
usury, opposing counsel objected to the evidence on the ground that Walters did not plead such affirmative defenses.
Walters did not obtain jury findings with respect to these affirmative defenses. Because these affirmative defenses
were not pleaded, tried by consent, or the subject of jury findings, they were waived. Petroleum Anchor Equip., Inc. v.
Tyra, 419 S.W.2d 829, 834 (Tex. 1967); Cooper v. Boyar, 567 S.W.2d 555, 558 (Tex. Civ. App.-- Waco 1978, writ
ref'd n.r.e.); Conrad v. Judson, 465 S.W.2d 819, 827 (Tex. Civ. App.--Dallas 1971, writ ref'd n.r.e.), cert. denied, 405
U.S. 1041, 92 S. Ct. 1312 (1972).
FN:5 To arrive at the $138,164.48 figure, we have added the amounts of all payments purportedly made and subtracted
that figure from Malphurs's $502,995.10 figure.
                                                                                                                             $ 71,794.23   Plaintiff's Exhibit 20
                                                                                                                             32,000.00     Walter's testimony re: cash payments
+119,000.00                                                                                                                                Walter's testimony re: mortgages pledged to bank
+ 70,296.00                                                                                                                                Plaintiff's Exhibit 26
+ 24,340.81                                                                                                                                Plaintiff's Exhibit 79
+ 47,399.58                                                                                                                                Plaintiff's Exhibit 80
                                                                                                                             $364,830.62
                                                                                                                             $502,995.10   Outstanding principal owed, as concluded by Malphurs in audit
-                                                                                                                            364,830.62    Payments purportedly made
$138,164.48
FN:6 Gill-Hudson, in the last sentence of the argument in support of its third and fourth points, asserted that Walters
conspired with Gill to breach the latter's fiduciary duty in connection with the administration of the loans to Sunset
Homes. We assume that Gill-Hudson refers to the payments that Sunset Homes made directly to Gill and to others on
Gill's behalf. In briefing its argument, however, Gill-Hudson did not refer this Court to any portions of the record that
support this contention. Accordingly, Gill-Hudson has preserved nothing for appellate review. See Tex. R. App. P.
74(f); Catherman v. First State Bank, 796 S.W.2d 299, 304 (Tex. App.--Austin 1990, no writ).
File Date[08-31-93]
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