Mandell Rhodes, Jr. v. Rissie Owens, Alvin Shaw and Charles Speier--Appeal from 241st District Court of Smith County

SUPREME COURT CASES

Laws-info.com » Cases » Texas » 12th District Court of Appeals » 2005 » Mandell Rhodes, Jr. v. Rissie Owens, Alvin Shaw and Charles Speier--Appeal from 241st District Court of Smith County

State: Texas

Court: Texas Northern District Court

Docket No: 12-05-00255-CV

Case Date: 11/16/2005

Plaintiff: First Equipment Company

Defendant: Premier Systems, Inc.--Appeal from County Court at Law of Dallas County

Preview:First Equipment Company v. Premier Systems, Inc.--
Appeal from County Court at Law of Dallas County
11th Court of Appeals
Eastland, Texas
Opinion
First Equipment Company
Appellant
Vs. No. 11-02-00337-CV Appeal from Dallas County
Premier Systems, Inc.
Appellee
This suit arises from a joint venture agreement between Premier Systems, Inc. and First Equipment Company. Based
on the jury s findings that First Equipment failed to comply with the agreement, the trial court awarded Premier net
actual damages in the amount of $39,041.85. We affirm.
Background Facts
Premier was formed in April 1998 by Terrance William Ploegstra and Bill Canavan, the sole owners. Ploegstra was the
president; Canavan was the vice president. Premier sold tier-one computer hardware such as Compaq, Hewlett
Packard, IBM, and Toshiba to medium-sized corporate accounts with 500 to 5,000 users. Premier s expertise was
designing and implementing networks. Ploegstra and Canavan had worked together since 1994, and First Equipment
had been their customer prior to their formation of Premier.
In 1998, First Equipment s primary business was financing authorized computer dealers like Premier. The dealers
purchased the hardware from the manufacturer and then sold the equipment to other companies. Herbert Arnold,
president of First Equipment, testified that he first talked to Ploegstra and Canavan about becoming employees of First
Equipment in 1996 in the hopes that First Equipment could obtain dealer status. However, even with Ploegstra and
Canavan as employees, tier-one manufacturers would not sell directly to First Equipment because First Equipment was
a financing company. About two years later in 1998, the idea of a joint venture was discussed. Around the time that the
joint venture terminated, First Equipment secured dealer status.
The Agreement
The purpose of the joint venture agreement was for Premier to market and sell computer equipment on behalf of the
joint venture and for First Equipment to provide administrative, accounting, financial, and other support to Premier.
Premier agreed to obtain all the licenses, permits, and manufacturer approvals necessary to market and sell the
computers; to hire and manage the necessary employees to carry out the business; to develop and service customers;
and to be responsible for the day-to-day activities of its employees. First Equipment agreed to provide Premier with
general accounting services; inventory space; management, administrative, and technical support; a line of credit; and a
means of reselling equipment acquired through trade-ins. The agreement defined general accounting services as
including billing, generation and monitoring accounts receivable and accounts payable, inventory control, payroll
services, benefits assistance, monthly statements, profit/loss statements, and cash management. The duration of the
agreement was for two years beginning May 1, 1998. Profits and losses were to be split equally between First
Equipment and Premier.
file:///C|/Users/Peter/Desktop/opinions/PDFs1/7406.html[8/20/2013 7:23:12 PM]

Undisputed Facts
The joint venture began in May 1998 and ended six months later in November 1998. Within the first 10 days, First
Equipment ceased billing, and Premier s office manager began sending the invoices. Premier leased office space from
First Equipment, and their offices were located down the hall from First Equipment s accounting department. While
both Premier and First Equipment used Peachtree accounting software, data was not shared electronically. Premier s
office manager used the software to generate invoices and delivered a paper copy to First Equipment. She did not use
it to enter any other data. First Equipment used the software to enter accounts receivable and accounts payable as well
as to prepare reports.
First Equipment had a warehouse. Problems arose quickly concerning the use of the warehouse and concerning
communication between warehouse employees and Premier. Premier began having equipment delivered to their office
address.
First Equipment loaned Premier $200,000.00, provided guarantees for Premier, secured a line of credit worth
$750,000.00 from Bank One, and purchased computer equipment from Premier. During the six-month duration of the
joint venture, Premier approached First Equipment about using a floor plan financing arrangement that was common
industry practice. Under the floor-plan financing, interest would not be charged for the first 30 days the computer
equipment was out on the sales floor. The idea was rejected by First Equipment. After the collapse of the joint venture
in early November, Premier secured floor-plan financing. For the six-month duration of the joint venture, Premier paid
$19,951.00 in interest. This included interest on the line of credit and the loan from First Equipment. After the collapse
of the joint venture, Premier paid less than $2,000.00 interest in 1999. This amount reflected the use of floor-plan
financing.
In October 1998, concerns arose about the working relationship between Ploegstra and Canavan. Ploegstra felt that he
was doing more work than Canavan. Ploegstra and Canavan agreed that Ploegstra would make more money and that
Canavan would continue to work fewer hours than and be compensated less than Ploegstra.
Arnold met with Ploegstra and Canavan on November 2, 1998, and presented them with two options for dealing with
the joint venture. Arnold had spent the weekend before the meeting concerned about the stability of Ploegstra and
Canavan s working relationship and had drafted both options. Plan A was entitled Focus on Selling and provided that
Arnold would immediately assume the overall responsibilities of running Premier, that First Equipment would purchase
19 percent of the common stock of Premier at the same price paid by Ploegstra and Canavan, and that First Equipment
would have the option of purchasing 32 percent more shares at the same price paid by Ploegstra and Canavan. First
Equipment would exercise its right to own 51 percent of Premier if, in First Equipment s opinion, it needed to take
control of Premier to liquidate and pay creditors. Plan B was entitled Liquidation and stated that the joint venture was
not working. Plan B called for the orderly liquidation of assets and liabilities. Ploegstra and Canavan rejected both
plans. Arnold also advised Ploegstra and Canavan that he was sending out a letter stating that First Equipment was
removing its guarantee.
Ploegstra and Canavan continued to operate Premier as they had before the November meeting with Arnold. They paid
all of Premier s debts by early January 1999, including the balance on the $200,000.00 loan from First Equipment and
the line of credit from Bank One. Premier continued to office in First Equipment s building and paid a lease of 150
percent more than it paid during the duration of the joint venture.
Premier hired a bookkeeper to re-create data for the six-month duration of the joint venture. Premier s 1998 tax return
took a CPA approximately nine months to prepare due to the inconsistencies between Premier s data and paper reports
furnished by First Equipment. Premier had only income statements and balance sheets from First Equipment which
were not backed up with any kind of ledgers or detail. First Equipment provided electronic data for the first time a few
months before the 2002 trial. The data was not compatible with the version of Peachtree software that Premier was
using.
During the six-month duration of the joint venture, First Equipment did not bill Premier for the accounting services
that First Equipment provided. After the termination of the joint venture, First Equipment billed Premier $24,000.00
file:///C|/Users/Peter/Desktop/opinions/PDFs1/7406.html[8/20/2013 7:23:12 PM]

for the six months of accounting services.
Arguments on Appeal
First Equipment has briefed 11 points of error. In all of its points of error, First Equipment makes blanket challenges
to the jury s damage awards by arguing that the evidence either established or conclusively established facts which
would not support the awards. First Equipment only cites authority for its first, third, and fourth points of error. While
references are made to the record on appeal, no authority is given for the remaining eight points of error. First
Equipment fails to recite any standard of review.
Standard of Review
At the conclusion of Premier s presentation of evidence, First Equipment moved for an instructed verdict. In the
interest of justice, First Equipment s challenges will be reviewed as challenges to the legal sufficiency of the evidence.
In considering a no evidence challenge to the legal sufficiency, the reviewing court considers the evidence and the
reasonable inferences from the evidence that tend to support the finding while disregarding the evidence and
reasonable inferences to the contrary. Lyons v. Millers Casualty Insurance Company of Texas, 866 S.W.2d 597
(Tex.1993); Robert W. Calvert, No Evidence and Insufficient Evidence Points of Error, 38 TEXAS L. REV. 361
(1960). In reviewing a challenge that the contrary proposition was established as a matter of law, the reviewing court
looks first at the evidence that supports the finding while ignoring all evidence to the contrary. Dow Chemical
Company v. Francis, 46 S.W.3d 237 (Tex.2001); Ellis v. City of Dallas, 111 S.W.3d 161 (Tex.App. - Eastland 2003, no
pet n). If there is no evidence to support the finding, then the reviewing court examines the entire record to determine if
the contrary proposition was established as a matter of law. Dow Chemical Company v. Francis, supra; Ellis v. City of
Dallas, supra.
Challenge to the Award for Increased Rent
In its first point, First Equipment contends that the jury s award of $6,000.00 for increased rent was erroneous because
the evidence conclusively established that [Premier] consented to the Venture s termination. We disagree.
The uncontroverted evidence was that First Equipment did not provide accounting services as agreed and that Ploegstra
and Canavan did not accept either Arnold s Plan A or Plan B for Premier. There was no evidence that Ploegstra and
Canavan agreed to terminate the joint venture. The first point of error is overruled.
Challenges to the Jury s Award for Accounting Expenses
In its third and fourth points, First Equipment contends that Premier should not be allowed to recover $25,000.00 for
accounting expenses because Premier was not entitled to any electronic data from First Equipment. First Equipment
argues that it owned the electronic data and that, therefore, Premier was not entitled to the electronic data or to
damages for the reentry of any accounting information.
We disagree. The electronic data was information kept in the course of general accounting and, as such, was a function
First Equipment was to perform for Premier under the joint venture agreement. The uncontroverted evidence was that
Premier s 1998 income tax return could not be prepared based solely on the paper data that had been provided by First
Equipment during the joint venture. The third and fourth points are overruled.
Remaining Challenges
In its remaining points, First Equipment contends that the evidence conclusively established that Premier incurred an
increase in rent voluntarily, that the evidence conclusively established that First Equipment provided accurate and
appropriate accounting services, that the award for Premier s extra expense for accounting practices was voluntary, that
the evidence conclusively established that the extra expense for accounting services was for the independent use and
benefit of Premier, that the evidence conclusively established that the electronic data could not be transferred due to
incompatibility between the parties accounting software, that the evidence conclusively established that the extra
file:///C|/Users/Peter/Desktop/opinions/PDFs1/7406.html[8/20/2013 7:23:12 PM]

accounting services were due to mistakes by Premier s office manager, and that the evidence conclusively established
that the joint venture made a profit. We disagree.
The uncontroverted evidence does not support First Equipment s contentions. These points are overruled.
Attorney s Fees
In the trial court s judgment, it awarded $15,000.00 attorney s fees to the party that was the prevailing party on appeal.
That part of the trial court s judgment has not been questioned on appeal. Because Premier Systems, Inc. is the
prevailing party on appeal, the trial court s judgment regarding attorney s fees is affirmed.
This Court s Holding
The judgment of the trial court is affirmed.
JIM R. WRIGHT
JUSTICE
January 30, 2004
Not designated for publication. See TEX.R.APP.P. 47.2(a).
Panel consists of: Wright, J., and
McCall, J., and Dickenson, S.J. //
file:///C|/Users/Peter/Desktop/opinions/PDFs1/7406.html[8/20/2013 7:23:12 PM]

Download 7406.pdf