Appeal from the 281st District Court Harris County, Texas
Trial Court Case No. 2012-61491
consists of Justices Keyes, Higley, and Lloyd.
OPINION ON REHEARING
Carter Higley Justice
Khoury sued Prentis B. Tomlinson, Jr., alleging securities
violations under the Texas Securities Act, common-law fraud,
and breach of contract. The jury found in favor of Khoury on
all three claims. In response to Tomlinson's motion for
judgment notwithstanding the verdict, the trial court
disregarded the jury's findings of liability on
Khoury's securities violations and breach of contract
claims. In three issues on appeal, Khoury argues that the
trial court erred by disregarding the jury's findings on
his securities and breach of contract claims and that, as a
result, he is entitled to judgment recovering his
attorneys' fees. In seven issues on cross-appeal,
Tomlinson argues the trial court erred by denying his motion
for judgment notwithstanding the verdict on Khoury's
filed a motion for rehearing for our December 22, 2016
opinion. We grant the motion for rehearing, withdraw our
prior opinion and judgment, and issue this opinion and a new
judgment in their place. We deny the motion for en banc
reconsideration as moot.
reverse and remand.
is the president and CEO of PetroGulf, Ltd., a company
"formed in August 2008 to be a physical trader of fuel
oil and crude oil from Iraq into selective markets in the
region." On December 9, 2008, Tomlinson met with Khoury
and presented him with an 11-page business plan, seeking
investment in PetroGulf. The business plan offered to pay
investors 14% interest on their investment along with sharing
10% of net profits. The business plan identified its initial
goal was "to build an ongoing business to purchase,
transport and sell fuel oil from Iraq initially to Syria and
Kurdistan." After that, the goal was to expand into
business plan makes repeated reference to a contract in Syria
and sale of fuel oil within Syria. It states PetroGulf's
business plan begins with "purchas[ing], transport[ing]
and sell[ing] fuel oil from Iraq initially to Syria and
Kurdistan. The business plan stated, "We intend to
complete delivery of 15, 000 metric tons [of fuel oil] to
Kurdistan by the end of December 2008 and to complete the
delivery under our contract to Syria by the end of February
2009." The business plan reported on known needs for oil
in Syria. It explicitly asserted PetroGulf had a contract for
oil sale in Syria and offered investors 10% of the profits
obtained from that contract. It stated that the purpose of
the proposed arrangement with investors was to
"implement an initial contract for the export of Fuel
Oil from Iraq into Syria."
result of the meeting and the investment document, Khoury
invested $400, 000 in PetroGulf. Khoury obtained the money by
taking out a loan from Garantia Financiera Vital y Accidentes
S.A. When he was asked to whom PetroGulf should send its
interest payments, Khoury said to send the payments to
of the investment, the parties signed a note, and Khoury
signed a subscription agreement. In the subscription
agreement, Khoury acknowledged that PetroGulf had "made
available to him . . . the opportunity to obtain the
information necessary to evaluate the merits and risks of the
investment." He also represented in the subscription
agreement that all of his questions had been satisfactorily
answered and that he had "carefully evaluated . . . the
risks associated with this investment."
ultimately became dissatisfied with his investment and the
lack of disclosures of PetroGulf's financial information.
As a result, Khoury met with Tomlinson on January 9, 2012.
During that meeting, Tomlinson agreed to personally repay
Khoury the amount loaned to PetroGulf. They agreed that
Tomlinson would repay the debt over a four or five year
period. Khoury testified at trial that they had agreed that
Tomlinson would elect whether to pay over four or five years.
A week later, Khoury sent an email to Tomlinson summarizing
what agreements they had made. Tomlinson replied, writing,
"We are in agreement."
did not make any of the payments he had agreed to make.
Khoury brought suit alleging breach of contract, securities
violations under the Texas Securities Act,  and common-law
fraud. In his live answer, Tomlinson asserted that any
recovery for breach of contract was barred by the Statute of
trial, Tomlinson was asked about the Syrian contract
discussed in the business plan. He admitted that he had
declined the Syrian contract before he met with Khoury to
solicit his investment. He also admitted that the
representations about the Syrian contract "should not
have been in" the business plan.
Tomlinson also acknowledged at trial that he had sent the
email responding to Khoury's summary of their January 9
meeting. He claimed that his statement in the email of his
being in agreement with Khoury referred to an agreement
entirely different from the terms identified in the email to
which he responded.
jury found in favor of Khoury on all of his claims, awarding
the same amount ($400, 000) for each claim. The jury also
awarded attorneys' fees. For the breach of contract
claim, the jury found that Tomlinson had obligated himself to
repay the investment amount to Khoury. It also found that
Tomlinson breached that agreement.
trial, Tomlinson filed a motion for judgment notwithstanding
the verdict, seeking to overturn the jury's findings in
favor of Khoury on each of Khoury's claims. For
Khoury's breach of contract claim, Tomlinson argued that
the jury's findings of liability should be overturned
because the contract was barred by the Statute of Frauds and
because the contract was too indefinite to be enforceable.
Statute of Frauds argument, Tomlinson acknowledged his email
constituted a writing but argued the email was not signed.
Tomlinson attached a copy of his email to his motion.
the Texas Securities Act claim, Tomlinson argued the trial
court should disregard the jury's finding of liability
and damages because the note in question was not a security,
any misrepresentations he made were not material, the claim
was barred by the limitations period, and there was
insufficient proof of damages. The trial court granted the
motion for the Texas Securities Act claim and breach of
contract claim. It denied the motion for the fraud claim.
Standard of Review
motion for judgment notwithstanding the verdict is premised
on the legal sufficiency of the evidence to support a claim,
rulings on a motion for JNOV and directed verdict are
reviewed under the same legal-sufficiency test as are
appellate no-evidence challenges. JSC Neftegas-Impex v.
Citibank, N.A., 365 S.W.3d 387, 395 (Tex. App.-Houston
[1st Dist.] 2011, pet. denied); see also In re
Humphreys, 880 S.W.2d 402, 404 (Tex. 1994)
("[Q]uestions of law are always subject to de novo
review."). Such a no-evidence challenge "'will
be sustained when (a) there is a complete absence of evidence
of a vital fact, (b) the court is barred by rules of law or
of evidence from giving weight to the only evidence offered
to prove a vital fact, (c) the evidence offered to prove a
vital fact is no more than a mere scintilla, or (d) the
evidence conclusively establishes the opposite of the vital
fact.'" King Ranch, Inc. v. Chapman, 118
S.W.3d 742, 751 (Tex. 2003) (quoting Merrell Dow Pharms.,
Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)).
legal-sufficiency review, "we must view the evidence in
a light that tends to support the finding of disputed fact
and disregard all evidence and inferences to the
contrary." Wal-Mart Stores, Inc. v. Miller, 102
S.W.3d 706, 709 (Tex. 2003). With that evidence, we review
"whether the evidence at trial would enable reasonable
and fair-minded people to reach the verdict under review. . .
. [L]egal-sufficiency review in the proper light must credit
favorable evidence if reasonable jurors could, and disregard
contrary evidence unless reasonable jurors could not."
City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.
case also involves questions of statutory interpretation and
contract construction. We review those questions de novo.
See Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex.
2011) (statutory interpretation); J.M. Davidson, Inc. v.
Webster, 128 S.W.3d 223, 229 (Tex. 2003) (contract
second issue, Khoury argues the trial court erred by granting
the judgment notwithstanding the verdict on his breach of
contract claim. Tomlinson presented two grounds for why the
jury's finding on liability should have been overturned.
First, Tomlinson argued that the contract was barred by the
Statute of Frauds. Second, Tomlinson argued that the contract
was too indefinite to be enforceable.
Statute of Frauds
promise by one person to answer for the debt . . . of another
person" "is not enforceable unless the promise or
agreement, or a memorandum of it, is (1) in writing; and (2)
signed by the person to be charged with the promise or
agreement . . . ." Tex. Bus. & Com. Code Ann. §
26.01(a)(1)-(2), (b)(2) (Vernon 2015).
parties agreed at trial that they met on January 9, 2012, and
that they entered into an agreement. The evidence shows that,
a week later, Khoury sent Tomlinson an email listing the
terms of their agreement and requesting Tomlinson's
confirmation of those terms. Tomlinson acknowledged at trial
that he received the email and sent the responding email,
writing, "We are in agreement."
email shows that Tomlinson's name does not appear in the
body of the email that he wrote. His name and email address
do appear, however, in the "from" field for the
email. The question before us is whether the name or email
address in the "from" field constitutes a signature
for purposes of the Statute of Frauds. See id.
undisputed by the parties that their email correspondence is
governed by the Texas Uniform Electronic Transactions Act
("UETA"). See Tex. Bus. & Com. Code
Ann. §§ 322.001-.021 (Vernon 2015). Subject to
exceptions not applicable to this case, UETA "applies to
electronic records and signatures relating to a
transaction." Id. § 322.003(a). "A
record or signature may not be denied legal effect or
enforceability solely because it is in electronic form."
Id. § 322.007(a). "If a law requires a
signature, an electronic signature satisfies the law."
Id. § 322.007(d). We must construe and apply
UETA in a manner "to be consistent with ...