Court of Appeals of Texas, Eighth District, El Paso
DAVID J. QUICK, Appellant
PLASTIC SOLUTIONS OF TEXAS, INC., A TEXAS CORPORATION; PLASTIC SOLUTIONS MOLDING, INC., A TEXAS CORPORATION; KURT H. RUPPMAN, SR., INDIVIDUALLY, and FAIRFIELD ENTERPRISES, INC. Appellees.
from the 380th District Court of Collin County, Texas
Chew, C.J., McClure, and Carr, JJ.
Kenneth R. Carr, Justice.
David J. Quick, appeals a take-nothing judgment on various
contract claims he brought against Appellees, Plastic
Solutions of Texas, Inc. ("PST"), Plastic Solutions
Molding, Inc. ("PSMI"), Kurt H. Ruppman, Sr.
(collectively, the "PST Defendants"), and Fairfield
Enterprises, Inc. ("Fairfield"). We affirm the
judgment of the trial court.
is a certified public accountant. In 1994, he started his own
accounting practice. Shortly thereafter, Quick met Appellee
Kurt Ruppman, Sr. who, at the time, was serving as president
of Piper Plastics. Ruppman left Piper Plastics in late 1994
and started PST. Ruppman began experimenting with the use of
very cold temperatures in the manufacture of hot-fill PET
(Polyethylene Terephthalate) plastic bottles. He developed a
process by which preform plastic bottles were heated,
stretched with a stretch rod, injected with liquid nitrogen
at high pressure, and molded. Ruppman referred to the process
as "cryogenic," because of the cold temperatures
involved, due to the presence of liquid nitrogen. Ruppman
applied for and received a patent for his process.
this time, Quick did some work for Ruppman by preparing
projections and forecasts for potential business pursuits.
Ruppman informed Quick that he was not able to pay him for
such services, but suggested that he might work for an
interest in the company. Quick was impressed with
Ruppman's knack for ideas and saw a potential financial
gain in working for an interest in his business. In February
or March of 1995, Quick and Ruppman discussed an agreement,
which Quick had prepared, that would grant him a royalty
interest in PST. The two discussed various terms, but never
executed the agreement. Nevertheless, Quick believed that he
had an oral agreement for 5 percent of the gross margin of
Ruppman's business. In return, according to Quick, he was
to provide various services to PST.
in late 1995, Ruppman entered into a series of agreements
with the Ball Corporation ("Ball"), in which Ball
acquired exclusive licensing rights to Ruppman's patented
process. Under the agreements (collectively, the "Ball
Agreements"), Ball paid a total of $1.5 million to PST
during 1995 and 1996. PST was obligated to use its best
efforts to develop a commercially viable process for
manufacturing bottles using the cryogenic technology. If PST
could do so, Ball was obligated to commit to firm orders for
production machinery or market sub-licenses of the patented
technology. Ball and PST were to split any sub-licensing
revenue. During the following months, Ruppman attempted to
develop such a commercially viable process to manufacture PET
bottles, using the cryogenic technology.
well-known in the container industry. Due to its
participation with Ball, many people in the plastics industry
were interested in PST's cryogenic technology. PST had
very high expectations for the relationship with Ball and
believed that Ball, which had become the exclusive
sub-licensor of the technology, would be successful in
licensing it. Ball, in turn, appeared to believe that the
licensing would be successful, and it represented to PST that
it was a good technology.
in late 1996 or early 1997, Quick assisted Ruppman in
locating two eventual investors in PST--J. Lewis Partners
("Lewis Partners") and ELK Trust. The deal which
the parties discussed was a loan to PST in exchange for a
royalty interest. Quick prepared a proposed royalty agreement
for Lewis Partners, ELK Trust, and himself based on a
contract that Ruppman had previously used and given to him.
Lewis Partners and ELK Trust ultimately loaned a total of
$650, 000 to PST, and PST granted each a royalty interest in
revenues generated by income from licensed patents, products,
and technical information. Quick and Ruppman and PST entered
into an agreement, entitled "Royalty Revenue
Agreement" (the "Agreement"), on January 23,
Agreement defines the participants as Quick on the one hand
and Ruppman and PST on the other, and it is signed by Quick
and by Ruppman, as president of PST. The Agreement grants
Quick a 3 percent interest in Net Royalty Income Revenue,
which is calculated by deducting legal fees and costs
incurred in enforcing PST's patent rights or defending
PST against claims for infringement. Paragraph 1.7 of the
Agreement defines "Royalty Income Revenue" as:
[I]ncome derived from Licensed Products which are covered by
one or more claims of an issued and existing Licensed Patent
or which are manufactured by any licensee through use of a
Licensed Process covered by one or more claims of an issued
and existing Licensed Patent paid to PST's Royalty
spring of 1997, Ruppman attended a conference known as
"Bev Pak." The major plastics companies and
numerous companies from around the world attended. PST, Ball,
and others gave a presentation regarding the cryogenic
technology. Following Ruppman's portion of the
presentation, Ball representatives announced that they could
not talk about the technology and would not license it,
because it was too premature. The Ball announcement had a
significantly negative impact on PST's business.
PST's plans for significant licensing revenue from Ball
vanished, and the relationship between PST and Ball
deteriorated. The two companies disputed whether the
technology was commercially viable. Ultimately, an arbitrator
concluded that the technology had not been commercially
viable. PST settled the dispute by repurchasing the licensing
rights granted to Ball.
of 1997, PST was cash broke and needed additional investment.
At the time, PSMI, a wholly-owned subsidiary of PST, which
was started by Ruppman as a small manufacturing operation,
was manufacturing flower pot carrying trays, high density
bottles for fertilizer, and PET water bottles. This brought
in approximately $40, 000 to $50, 000 a month.
Ruppman's request, Quick approached Lewis Partners to
solicit additional investment, but they refused. Thereafter,
Quick approached his parents, the Quicks,  and his aunt and
uncle, the Bollners, about investing. In exchange for a
royalty interest in certain revenue streams of the PST
Defendants, the Quicks and the Bollners agreed to a loan
totaling $100, 000. Unlike Quick's royalty agreement, the
Bollners' and Quicks' agreements defined the royalty
interest to include net manufacturing of PSMI.
the time the Bollners and the Quicks entered into their
agreements, PSMI's manufacturing revenue dropped, due to
the fact that PSMI's handful of customers were
experiencing problems of their own. By the fall of 1997, PST
and PSMI were in dire financial condition. PST was no longer
able to make the payments required under the Quicks' and
Bollners' notes. This put a strain on the relationship
between Ruppman and Quick.
October 1997, PST received $200, 000 from a nitrogen supply
company known as "BOC." BOC was willing to provide
money to help PST stay afloat, in the hopes that PST could
commercially develop the cryogenic technology, which used
liquid nitrogen. BOC ultimately agreed to provide PST with
$1.5 million for a potential marketing agreement and a share
in revenue. However, this infusion of cash was made on the
condition that the money be repaid as a loan at BOC's
election. BOC tried unsuccessfully to license PST's
cryogenic technology and eventually opted to cancel the
agreement and sought repayment from PST. PST and Ruppman were
ultimately unsuccessful in convincing the bottling industry
to use the technology.
April 1998, PST was again in desperate financial condition
and was about to shut down. Ruppman met John Albers, a
potential investor. After reviewing PST's and PSMI's
financials, Albers, through Appellee Fairfield, began to
invest in the companies, keeping them alive. Ultimately,
Albers, through Fairfield, invested over $20 million in PST
and PSMI. The PST Defendants continued to try to license the
cryogenic technology, but without success. Their focus
changed from licensing to manufacturing.
May of 1998, Quick stopped providing any services for the PST
Defendants. In November of 2002, Quick visited Ruppman at the
PST/PSMI facility. Quick believed that the company had
expanded and appeared to be doing well. He and his uncle,
Daniel Bollner, became suspicious that the PST Defendants had
not been honest with them regarding potential royalty income.
Bollner sent Ruppman a letter inquiring about his interest.
Ruppman responded that none of the royalty provisions had
been triggered and that there were no current plans to use
the cryogenic technology.
Quick filed this lawsuit, asserting claims against PST
Defendants in tort, contract, and for a declaratory judgment
as to the Agreement. The PST Defendants counterclaimed for
usury and sought a declaratory judgment that no sums were
owed to Quick. Quick subsequently brought claims against
Fairfield, based on a vicarious liability theory. Fairfield
brought a no-evidence motion for summary judgment on all of
Quick's claims against it, which the trial court granted.
The PST Defendants moved for partial summary judgment, based,
among other things, on the defense of limitations. The trial
court granted the motion as to all contract claims prior to
June 1, 2000. Quick has not appealed that order.
a bench trial, the trial court entered a take-nothing
judgment against Quick. The court concluded that the
"unambiguous and proper construction of the term
'Net Royalty Income Revenue' is limited to licensing
income PST received on or after January 23, 1997," which
is the date of the Agreement. The court also concluded that
the scope of the technology defined in the Agreement was
ambiguous. The court found that the intention of the parties
in that respect was that PST was only obligated to pay a
royalty for licensing income received on or after January 23,
1997, "from the heat-set/barrier blow molding technology
process PST was trying to market in January of 1997, which
used nitrogen at the blow molding stage in bottle
manufacturing, and that process alone." The court found
that PST had received no such income since the date of the
Agreement. The court also concluded that Quick's claim
for breach of contract was barred by failure of consideration
and prior material breach. Finally, the trial court awarded
Fairfield attorney's fees, pursuant to the Uniform
Declaratory Judgments Act.
appeal, Quick challenges the trial court's construction
of the Agreement, the court's findings and conclusions as
to failure of consideration and prior material breach, and
the court's award of attorney's fees to Fairfield.
The claims that are relevant to this appeal are Quick's
claims for declaratory judgment, for an accounting of the
income derived from the PST Defendants' products, and
breach of contract.
Standard of Review
and factual sufficiency of the evidence standards of review
govern an appeal of a non-jury trial on the merits. IKB
Indus. (Nigeria) Ltd. v. Pro-Line Corp., 938 S.W.2d 440,
445 (Tex. 1997). When a party appeals from a non-jury trial,
it must complain of specific findings and conclusions of the
trial court. Carrasco v. Stewart, 224 S.W.3d 363,
367 (Tex. App.--El Paso 2006, no pet.); see also Serrano
v. Union Planters Bank, N.A., 162 S.W.3d 576, 580 (Tex.
App.--El Paso 2004, pet. denied). A general complaint against
the trial court's judgment does not present a justiciable
question. Carrasco, 224 S.W.3d at 367;
Serrano, 162 S.W.3d at 580.
"no-evidence," or legal-insufficiency, point is a
question of law which challenges the legal sufficiency of the
evidence to support a particular fact finding.
Serrano, 162 S.W.3d at 579. There are two separate
"no-evidence" claims. Id. When the party
with the burden of proof suffers an unfavorable finding, the
point of error challenging the legal sufficiency of the
evidence should be that the fact or issue was established as
"a matter of law." Id. When the party
without the burden of proof suffers an unfavorable finding,
the challenge on appeal is one of "no evidence to
support the finding." Id. (citing In re
Estate of Livingston, 999 S.W.2d 874, 879 (Tex. App.--El
Paso 1999, no pet.)). An appellate court will sustain a
legal-sufficiency, or "no-evidence," challenge, if
the record shows: (1) the complete absence of a vital fact,
(2) that the court is barred by rules of law or evidence from
giving weight to the only evidence offered to prove a vital
fact, (3) that the evidence offered to prove a vital fact is
no more than a scintilla, or (4) that the evidence
establishes conclusively the opposite of the vital fact.
Carrasco, 224 S.W.3d at 367 (citing City of
Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005)).
review a trial court's conclusions of law de
novo. Austin Hardwoods, Inc. v. Vanden Berghe,
917 S.W.2d 320, 322 (Tex. App.--El Paso 1995, writ denied).
Erroneous conclusions of law are not binding on the appellate
court, but, if the controlling findings of fact will support
a correct legal theory, are supported by the evidence, and
are sufficient to support the judgment, then the adoption of
erroneous legal conclusions will not mandate reversal.
Heritage Resources, Inc. v. Hill, 104 S.W.3d 612,
621 (Tex. App.--El Paso 2003, no pet.).
of fact made by the trial judge, sitting as the fact finder,
enjoy the same status as findings of a jury. Anderson v.
City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991);
Heritage Resources, 104 S.W.3d at 619. Where the
party with the burden of proof is challenging the factual
sufficiency of the findings, the appropriate complaint is
that the adverse findings are "against the great weight
and preponderance of the evidence." Tate v.
Tate, 55 S.W.3d 1, 5 (Tex. App.--El Paso 2000, no pet.).
In reviewing a factual sufficiency point, we must consider
all of the evidence and determine whether the adverse finding
was so against the great weight and preponderance of the
evidence that it was clearly wrong and unjust. Ortiz v.
Jones, 917 S.W.2d 770, 772 (Tex. 1996). We do not pass
upon the witnesses' credibility, nor do we ...