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OIC Holdings, LLC v. Gleason

Court of Appeals of Texas, Fifth District, Dallas

May 14, 2019

OIC HOLDINGS, LLC AND OREGON ICE CREAM, LLC, Appellants
v.
THOMAS GLEASON AND JULIE GLEASON, Appellees

          On Appeal from the 366th Judicial District Court Collin County, Texas Trial Court Cause No. 366-05061-2015

          Before Justices Myers, Osborne, and Nowell

          MEMORANDUM OPINION

          ERIN A. NOWELL JUSTICE

         This appeal concerns the denial of a motion for judgment notwithstanding the verdict and the award of attorney's fees to the parties under separate contracts. OIC Holdings, LLC purchased Oregon Ice Cream, LLC from Thomas and Julie Gleason. As part of the purchase, the Gleasons entered into employment agreements with Oregon Ice Cream. After the sale, OIC sued the Gleasons for breach of the Purchase Agreement. The Gleasons filed a third-party claim against Oregon Ice Cream for breach of their employment agreements. The jury failed to find that either the Gleasons or Oregon Ice Cream breached the respective contracts.

         Both the Purchase Agreement and the employment contracts provided that the prevailing party in any dispute would be entitled to recover attorney's fees. By agreement, the attorney's fees issues were submitted to the trial court after trial. The trial court determined that the Gleasons were the prevailing parties under the contract with OIC and that Oregon Ice Cream was the prevailing party under the employment agreements with the Gleasons. The trial court overruled OIC's motion for judgment notwithstanding the verdict, rendered judgment that all parties take nothing on their claims, awarded the Gleasons over $2.2 million in attorney's fees from OIC, and awarded Oregon Ice Cream $200, 000 in attorney's fees from the Gleasons.

         OIC appeals the denial of its motion for judgment notwithstanding the verdict and the award of attorney's fees to the Gleasons. The Gleasons cross-appeal the award of attorney's fees to Oregon Ice Cream. We conclude that some evidence supports the jury's verdict and the trial court did not abuse its discretion by awarding attorney's fees to the Gleasons. We overrule OIC's issues on appeal. We also conclude that Oregon Ice Cream failed to timely designate an expert witness on attorney's fees pursuant to the trial court's scheduling order. We sustain the Gleasons' issue in their cross-appeal. Accordingly, we reverse that portion of the trial court's judgment awarding attorney's fees to Oregon Ice Cream and render judgment that Oregon Ice Cream take nothing. In all other respects, the trial court's judgment is affirmed.

         Background

         OIC entered into a Purchase Agreement with Thomas and Julie Gleason to purchase Oregon Ice Cream, LLC for approximately $33 million with adjustments to be determined after closing. As part of the transaction, Oregon Ice Cream entered into employment agreements to retain the Gleasons. Several disputes arose after the closing of the transaction regarding the adjustments under the Purchase Agreement. Eventually, OIC filed this lawsuit against the Gleasons for breach of the purchase agreement and other causes of action. The Gleasons, who had been fired by this time, filed counterclaims against OIC and a third-party claim against Oregon Ice Cream for breach of their employment agreements.

         The competing breach of contract claims were submitted to the jury and the jury determined that the Gleasons did not breach the Purchase Agreement and that Oregon Ice Cream did not breach the employment agreements. OIC moved for judgment notwithstanding the verdict arguing it conclusively proved the Gleasons breached one section of the purchase agreement. The trial court denied the motion.

         Pursuant to a stipulation entered into after trial began, the parties moved for awards of attorney's fees and submitted evidence of their fees to the trial court after the jury verdict. The trial court concluded that the Gleasons were the prevailing parties under the purchase agreement and awarded them over $2.2 million in attorney's fees. The court also determined that Oregon Ice Cream was the prevailing party under the employment agreements and awarded it $200, 000 in attorney's fees. The trial court rendered final judgment that OIC and the Gleasons take nothing on their claims and that the Gleasons and Oregon Ice Cream recover their attorney's fees as found by the court.

         On appeal, OIC contends the trial court erred by denying its motion for judgment notwithstanding the verdict (JNOV), by determining that the Gleasons were the prevailing parties under the Purchase Agreement, and by improperly conditioning the award of appellate fees for presentation of a response to a petition for review. The Gleasons cross-appeal complaining the trial court erred by awarding attorney's fees to Oregon Ice Cream because it did not timely disclose an expert witness as required by the trial court's scheduling order.

         Discussion

         A. JNOV

         We review a trial court's decision to grant or deny a motion for JNOV under the legal sufficiency standard of review. Helping Hands Home Care, Inc. v. Home Health of Tarrant Cty., Inc., 393 S.W.3d 492, 515 (Tex. App.-Dallas 2013, pets. denied); see also City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005) (test for legal sufficiency is same for directed verdict, JNOV, and appellate no-evidence review). We credit evidence favoring the jury verdict if reasonable jurors could and disregard contrary evidence unless reasonable jurors could not. Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009). We will uphold the jury's finding if it is supported by more than a scintilla of competent evidence. Id.

         A party challenging the legal sufficiency of an adverse finding on an issue on which that party had the burden of proof at trial must demonstrate that the evidence conclusively established all vital facts in support of the issue as a matter of law. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). The appellant must show there is no evidence to support the jury's finding and that the evidence conclusively establishes the opposite finding. Id. The ultimate test for legal sufficiency is whether the evidence would enable a reasonable and fair-minded fact finder to reach the verdict under review. City of Keller, 168 S.W.3d at 827.

         The jury refused to find that the Gleasons "fail[ed] to comply with Section 2.2 of the Purchase Agreement." OIC argues there is no evidence to support this adverse finding and that the evidence conclusively establishes that the Gleasons breached Section 2.2(a).[1] In particular, OIC claims the Gleasons issued approximately $507, 000 in company checks prior to closing, but did not include those outstanding checks in the calculations for the purchase price.

         Section 2.2 of the Purchase Agreement provides:

2.2 Purchase Price and Pre-Closing Transactions.
(a) Purchase Price. The purchase price for the Transferred Equity Interests is $33, 000, 000, less the outstanding amount of the Permitted Indebtedness at the Closing Date, less the Excess JG Separation Obligation, plus or minus the Adjustment Amount (the "Purchase Price"). At the Closing, Buyer shall deliver as payment on account of the Purchase Price an amount (the "Closing Payment") equal to (i) the Purchase Price plus (ii) Cash (after taking into account the payments to be made pursuant to Section 2.2(b)(i) below) less (iii) Indebtedness, if any, excluding Permitted Indebtedness and the Indebtedness satisfied pursuant to Section 2.2(b)(i) below. The Adjustment Amount shall be paid by Sellers or Buyer, as the case may be, in accordance with Section 2.5.
Cash is defined in the Purchase Agreement as:
"Cash" means the sum of all cash and cash equivalents of the Acquired Companies, less the aggregate amount of all checks issued by any Acquired Company to a third party that have not yet cleared, plus the aggregate amount of all checks issued to any Acquired Company that have been deposited in an ...

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