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Williams Farms Produce Sales, Inc. v. R&G Produce Sales, Inc.

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

January 30, 2014

WILLIAMS FARMS PRODUCE SALES, INC., Appellant,
v.
R&G PRODUCE SALES, INC., Appellee.

On appeal from the County Court at Law No. 1 of Cameron County, Texas.

Before Chief Justice Valdez and Justices Benavides and Longoria

MEMORANDUM OPINION

ROGELIOVALDEZ Chief Justice

By one issue, which we address as two, appellant, Williams Farms Produce Sales, Inc. (Williams Farms), challenges the trial court's denial of its plea to the jurisdiction. In its first issue, Williams Farms argues that the trial court erred by denying its plea to the jurisdiction because appellee, R&G Produce Company (R&G), filed sham pleadings when it listed the amount in controversy within the trial court's jurisdictional limit even though its expert report and testimony from its owner revealed that its damages exceeded that amount. In its second issue, Williams Farms argues that the trial court erred by denying its plea to the jurisdiction because the increase in damages in R&G's amended pleadings were not due to the passage of time. We affirm.

I. Background

On May 28, 2008, R&G filed a suit on sworn account in Cameron County Court at Law No. 1, listing Edward May and Williams Farms as defendants. The petition alleged that Williams Farms, using Edward May as a broker, accepted goods from R&G and became "bound to pay [R&G] its designated charges . . . ." R&G claimed that it was a farmer of grape tomatoes and that Williams Farms had failed to pay the amount due in a series of contracts for the purchase of tomatoes. In its prayer, R&G listed as damages the alleged amount due on the contract, which was $490, 725, reasonable attorney's fees, pre- and postjudgment interest, cost of suit, and "all other relief in law or in equity to which Plaintiffs may be justly entitled."

On September 26, 2008, R&G filed a third amended petition[1] in which it added a negligence claim against defendant Edward May for his role as broker and a joint enterprise claim against both defendants alleging that they had an agreement and a common purpose to "commit a tort against [R&G] while acting within the scope of the enterprise." R&G added no damages to its third amended petition beyond what it requested in the earlier petitions. Williams Farms responded by filing requests for disclosures, which demanded that R&G disclose the amount of, and any method of calculating, economic damages. R&G subsequently filed its responses to these requests and attached an expert report from Dr. John Brown listing damages, resulting from the breach of contract and negligence of both defendants, of $2, 264, 431, assuming production had remained constant, and $3, 880, 142, assuming production had doubled. Then, on January 27, 2009, R&G filed a fourth amended petition in which it added an individual negligence claim against Williams Farms and requested damages in total "up to the court's jurisdictional limit of one million dollars, exclusive of [pre- and postjudgment interest, ] costs of suit, and all other relief at law or in equity to which Plaintiff may be justly entitled." R&G argues that it was entitled to these damages because it "was never paid what it was owed—literally its 'seed money'—it was forced to suspend operations, including its plans to double its production in the 2008-2009 production season."

On March 4, 2009, Williams Farms filed a plea to the jurisdiction arguing that the trial court lacked subject matter jurisdiction over the case because the amount in controversy listed in R&G's pleadings was a sham and R&G's expert report showed that their alleged damages exceeded the county court's $1, 000, 000 jurisdictional limit.[2] In its response, R&G argued that it had alleged an amount in controversy within the court's jurisdictional limit in all of its pleadings and denied "in the strongest terms possible that its pleadings in particular, or its case in general, [were] fraudulent or [were] otherwise 'a sham to obtain jurisdiction in this court.'" At the hearing on the plea to the jurisdiction, Williams Farms called the owner of 99 percent of R&G, Gracie Lopez, who testified that the amount of damages listed in the expert report was "what we would have made if Williams Farms would have paid us the [money] they owed us." She also stated, "I'm asking for whatever [my attorney] has cited, or asked for." Defense counsel asked Lopez if she understood how R&G "would cut damages or reduce damages that... Dr. Brown talks about from two, three or five million dollars, do you know how he would calculate it to cut it down to under a million, or to a million?" Further, defense counsel asked, "Have you ever calculated damages in this particular case that total one million dollars or less?" Lopez responded "I don't know" to both questions. Later, R&G's attorney asked Lopez if the one million dollars requested in the fourth amended pleadings "was the amount of damages R&G was seeking from both defendants for all causes of action, " to which she replied, "yes sir."

Defense counsel then called Roel Canales, one percent owner of R&G. When asked "Would you be able to explain to us how the plaintiff would calculate damages, or reduce damages from what Dr. Brown says they are to a million dollars, " Canales responded, "Well, my answer would be I'm the grower for R&G, and I can calculate more than that." Defense counsel then asked him "how you reduce damages from the amounts calculated by Dr. Brown to a million dollars?" Canales answered, "I haven't seen it, and I don't know."

I've looked at the live petitions, expert report, and then the discovery that's gone on in this case from the beginning to the end. Things have changed, and I can't expect people to dismiss, go to another court, file another suit when I think the case law says that this court at the beginning had jurisdiction, and I'm going to make a finding that there was no bad faith in this case, no sham. I think everything was on the up and up .... I'm also going to make a finding that we had two witnesses here, and from their testimony, I make a finding that there was no bad faith [or] sham as far as this case has developed, and I can't expect—new causes come up with new facts. I don't know those facts. That's up to a jury to decide on those facts.

Ultimately, the trial court denied the plea to the jurisdiction, and the case proceeded in the county court at law.[3] After a trial, the jury found in favor of R&G and determined that it incurred $2, 332, 596.44 in damages. The trial court ordered Williams Farms to pay R&G the amount of damages found by the jury plus prejudgment interest and attorney's fees. This appeal followed.

II. Sham Pleadings

Williams Farms contends that the trial court erred when it found that the amount in controversy listed in R&G's pleadings was not a sham and was within the court's jurisdictional limit. Williams Farms argues that the trial court therefore did not ...


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