Court of Appeals of Texas, Second District, Fort Worth
Appeal from the 342nd District Court Tarrant County, Texas
Trial Court No. 342-268794-13
Sudderth, C.J.; Gabriel and Pittman, JJ.
T. PITTMAN JUSTICE
jury found that Appellee Mark Thompson and Appellee and
Cross-Appellant E.G. Helzer (E.G.) committed fraud against
Appellant CLC Roofing, Inc. (CLC). The trial court granted
Thompson's motion for judgment notwithstanding the
verdict (JNOV) and granted E.G.'s motion in part,
reducing the jury's award on the claims against him. In
its appeal, CLC complains of both the JNOV for Thompson and
the reduction in damages in the final judgment. In his
appeal, E.G. challenges the evidence supporting the
jury's fraud findings against him. Because we hold that
the evidence does not support a fraud finding against either
Thompson or E.G., we affirm the trial court's JNOV for
Thompson and reverse the trial court's final judgment
CLC has a Business Relationship with JEH Company to
Purchase Roofing Shingles.
dispute arose from CLC's business relationship with JEH
Company (JEH), which sold roofing and building supplies. JEH
was owned by E.G.'s brother Jim Helzer. E.G. was
JEH's chief operating officer, and Thompson was a JEH
Cross, CLC's owner, had a business and occasionally
social relationship with Thompson that predated Cross's
founding of CLC. In late 2011, Cross and Thompson discussed
CLC starting a bulk buy program with JEH. Cross ultimately
negotiated an oral bulk buy agreement with JEH through E.G.
Under the program, CLC used a line of credit to buy bulk
quantities of roofing shingles from JEH. JEH agreed to hold
the purchased shingles until needed by CLC. The parties never
reduced their agreement to writing.
lender required JEH to sign a "Landlord's
Release" (the Release) under which JEH acknowledged the
lender's security interest in the roofing shingles CLC
bought from JEH. It agreed to hold the lender's
collateral-specific invoiced, receipted shingles-"with
reasonable care for separation and security" in the yard
at JEH's Mansfield location. E.G. signed the Release for
JEH. Thompson was aware of the Release but was not a party to
it and did not sign it.
made multiple bulk buys with JEH. In its last and largest
bulk buy, made on June 28, 2012 (the June 2012 bulk buy), CLC
ordered 12, 000 shingle bundles for $339, 428.70.
periodically provided CLC with inventory reports showing how
many shingles remained from the bulk buys. These reports were
put together by JEH employee Michelle Collins. When CLC
wanted an update, Thompson forwarded the request to Collins,
who then sent an inventory report to CLC. Collins added
shingles to the inventory report when E.G. gave her the
details of another CLC bulk buy and subtracted from it when
CLC ordered shingles from its bulk buy supply. She did not
independently verify that the number of shingles the report
showed as remaining from CLC's bulk buys were physically
present at JEH's Mansfield location. Cross relied on the
inventory reports to decide how many jobs he could or needed
to sell and how to price them.
not fill the bulk buys by taking CLC's money and using it
to order shingles from its vendors. Instead, it filled the
bulk buys with shingles it already had in its inventory,
including shingles for which it had not yet paid its vendors.
December 2012, in order to pay down debt, JEH returned over
$700, 000 worth of shingles to one of its vendors, including
some shingles that JEH had allocated for CLC's bulk buy
and for which CLC had paid JEH. JEH did not replenish the
inventory it was supposed to have set aside for CLC to ensure
it had shingles segregated to fill CLC's June 2012 bulk
buy. Instead, as CLC ordered shingles from what Cross
believed was CLC's stored bulk buy shingles, JEH would
fill the orders by pulling inventory from its Mansfield
location and its other locations. The inventory report
provided to CLC in January 2013 did not reflect that JEH had
returned some of CLC's shingles or that JEH did not have
the remainder of the June 2012 bulk buy shingles set aside
for CLC. At some point, Thompson learned about the return to
JEH's vendor and that it included some of CLC's
shingles, but he did not tell Cross. Despite meeting with
Cross in March 2013, E.G. did not tell Cross about the
JEH and Jim Helzer File for Bankruptcy and CLC Sues E.G. and
2013, JEH and Jim Helzer filed for bankruptcy. In July 2013,
CLC learned that some of its shingles had been returned to
JEH's vendor. Out of the 12, 000 bundles CLC paid for in
the June 2012 bulk buy, there were 8, 468 bundles CLC never
received, with a value of $239, 535.52. However, CLC received
a payment of $51, 321.40 from JEH's bankruptcy case.
sued E.G. and Thompson for fraud, fraud by nondisclosure, and
breach of fiduciary duty. The case was tried to a jury. At the
close of evidence, the trial court granted a directed verdict
for Thompson and E.G. on the breach of fiduciary duty claims.
jury found that E.G. committed fraud by material
misrepresentation with respect to the June 2012 bulk buy and
that Thompson did not. It further found that both Thompson
and E.G. committed fraud by material omission with respect to
the June 2012 bulk buy. The jury awarded CLC $362, 857.87 in
actual damages; exemplary damages of $725, 715.74 against
E.G.; and exemplary damages of $362, 857.87 against Thompson.
and E.G. both filed motions for judgment notwithstanding the
verdict. Both asserted that no evidence supported a fraud
finding. E.G. also argued that the evidence only supported a
finding of $239, 523.52 in actual damages, the value of the
shingles CLC did not receive. He further asserted that the
parties had stipulated that E.G. was entitled to a $51,
321.40 credit for the amount CLC received in the bankruptcy.
And, he contended that because actual damages must be
reduced, the exemplary damages award also had to be reduced.
trial court granted Thompson's motion and granted
E.G.'s motion in part, sustaining the fraud findings
against E.G. but reducing the jury's award. Because the
trial court reduced the actual damages award, it also reduced
the exemplary damages award. In its final judgment, the trial
court awarded CLC $188, 202.12 in actual damages and $376,
404.24 in punitive damages, plus prejudgment interest and
first issue, CLC argues that the trial court erred in
granting Thompson's JNOV motion and setting aside the
jury's finding that Thompson committed fraud by omission.
Thompson counters that the law does not support the duty to
disclose relied on by CLC and that there was no evidence that
he engaged in any actionable nondisclosure. We agree.
We Review the Trial Court's JNOV Under a Legal
party's motion and reasonable notice, a trial court may
disregard a jury verdict and render a JNOV if no evidence
supports the jury findings on an issue necessary to liability
or if a directed verdict would have been proper. See
Tex. R. Civ. P. 301; Tiller v. McLure, 121 S.W.3d
709, 713 (Tex. 2003); Fort Bend Cty. Drainage Dist. v.
Sbrusch, 818 S.W.2d 392, 394 (Tex. 1991).
determine whether the trial court erred by rendering a JNOV,
we test legal sufficiency by viewing the evidence in the
light most favorable to the verdict. See Ingram v.
Deere, 288 S.W.3d 886, 893 (Tex. 2009); Wal-Mart
Stores, Inc. v. Miller, 102 S.W.3d 706, 709 (Tex. 2003).
This means we must credit evidence favoring the jury verdict
if reasonable jurors could and must disregard contrary
evidence unless reasonable jurors could not. See Tanner
v. Nationwide Mut. Fire Ins., 289 S.W.3d 828, 830 (Tex.
2009); Cent. Ready Mix Concrete Co. v. Islas, 228
S.W.3d 649, 651 (Tex. 2007). We will uphold the trial
court's JNOV if no evidence supports the jury's
finding on a vital fact or if the evidence conclusively
establishes the opposite of a vital fact. City of Keller
v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005).
The Trial Court Did Not Err in Granting Thompson's JNOV
argues that the evidence established that Thompson made
representations he later learned were false or misleading but
did not disclose what he had learned and that Thompson
voluntarily disclosed information without disclosing the
whole truth. CLC primarily complains of Thompson's
failure to disclose the following information:
(1) To fill the June 2012 bulk buy, JEH used shingles it
already had in its inventory rather than ordering the
shingles for the bulk buy from its vendors;
(2)JEH failed to keep CLC's bulk buy shingles segregated
and on hold for CLC, which CLC alleges Thompson knew before