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Altech Controls Corp. v. Malone

Court of Appeals of Texas, Fourteenth District

August 6, 2019

ALTECH CONTROLS CORPORATION AND RICHARD ALSENZ, Appellants
v.
PAUL MALONE, Appellee

          On Appeal from the 240th District Court Fort Bend County, Texas Trial Court Cause No. 07-DCV-160856

          Panel consists of Justices Christopher, Bourliot, and Spain.

          MEMORANDUM OPINION

          Charles A. Spain Justice.

         This appeal arises from a final judgment rendered after a jury verdict in favor of appellee Paul Malone on breach-of-contract and fraud claims. Appellants Altech Controls Corporation and Richard Alsenz present six issues: (1) whether the trial court should have rendered judgment in favor of Altech Controls and Alsenz on Malone's breach-of-contract claims because a contract was not formed as a matter of law and Malone did not submit a jury question on contract formation; (2) whether, in the alternative, a new trial must be had on Malone's breach-of-contract claims; (3) whether Malone's fraud claim against Alsenz fails as a matter of law under the Formosa Plastics line of authority; (4) whether Malone had standing to bring claims against Alsenz when the claims were not disclosed, or were abandoned, in Malone's personal bankruptcy; (5) whether a new trial is necessary because the trial court struck Altech Controls's counterclaims; and (6) whether a new trial is necessary because the trial court granted a directed verdict on Alsenz's claims for breach of a fiduciary duty.

         We overrule the first and second issues because there is a deemed finding on contract formation and evidence supports the existence of a contract; consequently, we do not disturb the trial court's final judgment with respect to Malone's breach-of-contract claims. Because the damages awarded on Malone's breach-of-contract and fraud claims were the same, we do not address Alsenz's third issue that pertains to Malone's fraud claim. See Tex. R. Civ. P. 47.1. Altech Controls and Alsenz withdraw their fourth issue in their reply brief.[1] We overrule the fifth issue because we conclude Altech Controls's counterclaims could not have been presented at trial when no attorney appeared for Altech Controls. We overrule the sixth issue because Alsenz presented no evidence that Malone injured him or benefitted from any breach of fiduciary duty Malone owed to Alsenz.

         We affirm the trial court's judgment as appealed.

         I. Background

         Alsenz is the founder and Chief Executive Officer of Altech Controls, a company that develops, manufactures, and markets technology for supermarket refrigeration systems. Malone is a psychologist by training.

         Alsenz finds it difficult to relate to people. In the early 1990s, his company was having trouble with high employee turnover and employee conflicts. A student who had worked with Malone referred Alsenz to Malone to learn about managing people. Alsenz worked with Malone for several years. Alsenz also had Malone come to Altech Controls to teach the company's employees about teambuilding. In 1995, Alsenz asked Malone to come to work full-time for Altech Controls to serve as general manager with an emphasis on developing a company vision. Malone initially declined but Alsenz persisted, and Malone ultimately agreed to take on the role. Malone's starting annual salary was set at $150, 000, with 70% paid in cash and 30% set aside for investment in stock.

         Over time, Altech Controls's business declined, and as a result, Malone deferred a significant portion of his salary. Because of the company's financial difficulties, Malone also charged thousands of dollars in company expenses to his corporate and personal credit cards. In addition, because no stock option plan existed during Malone's employment, Malone did not purchase or receive any stock options with the portion of his salary that was set aside for this purpose. Malone did not receive other compensation in lieu of stock.

         In 2006, Malone decided to leave Altech Controls. Malone met with Alsenz, an attorney, and an Altech Controls accountant in the attorney's office. At the conclusion of the meeting, Malone and Alsenz signed a brief agreement; in its entirety, the agreement is as follows:

AGREEMENT RE: ALTECH TECHNOLOGY INC.
1. Ownership of company, Alsenz 70%, Malone 25%, other 5%
2. Above accounts for all amounts owed to May 1, 2004
3. Deferred salaries for Malone from that point to June 1, 2006 estimated at $234, 000.
Deferred salaries and Royalty for Alsenz estimated at $95, 000 for same period. Above accure [sic] interest from date incurred at same rate at [sic] bank rate and subject to audit.
4. Company obligated on Malone and Alsenz credit cards used for legitimate company use.
5. Company will give Malone note for deferred salary from May 1, 2004 to date plus any future deferred salary.
6. Malone will receive ½ salary and agrees to stay at least through July, 2006. Unpaid salary added to note balance. Once he leaves Malone will be paid at least $4, 000 per month on note.
7. Company will receive assignment of all Malone stock if note plus $408, 545 with interest paid not later than 6/01/08. If not, Malone keeps stock and Company obligated on note.
[/s/Richard Alsenz] [/s/Paul ...

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