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Lennon II Family Limited Partnership v. Gideo

Court of Appeals of Texas, Second District, Fort Worth

August 29, 2019

Lennon II Family Limited Partnership, Appellant
v.
Gregory Gideo; Southern Underground, LLC; AGL Constructors-Joint Venture; Archer Western Contractors, LLC; Granite Construction Company; and The Lane Construction Corporation, Appellees

          On Appeal from the 442nd District Court Denton County, Texas Trial Court No. 15-09569-442

          Before Gabriel, Birdwell, and Bassel, JJ.

          MEMORANDUM OPINION

          Dabney Bassel, Justice.

         I. Introduction

         This case involves a dispute about whether Appellees Gregory Gideo; Southern Underground, LLC; AGL Constructors-Joint Venture (AGL); Archer Western Contractors, LLC; Granite Construction Company; and The Lane Construction Corporation improperly and without authorization utilized land owned by Appellant Lennon II Family Limited Partnership (Lennon II) by removing approximately 170, 000 cubic yards of select fill soil and then dumping approximately 68, 000 cubic yards of steel-reinforced concrete and asphalt millings and rubble without permission from Lennon II's principal, Chelsey Everett Lennon (Mr. Lennon).

         The case proceeded to trial. After Lennon II's case-in-chief, the trial court granted a directed verdict on Lennon II's fraud claims. The jury charge included questions on, inter alia, Lennon II's claims for trespass and conversion and on Gideo's counterclaim for breach of contract. The jury found that Gideo and AGL had not trespassed but that they had converted Lennon II's property. However, when asked to assess the fair market value of the converted property, the jury answered "$0.00." On Gideo's counterclaim, the jury found that there was an agreement but that Lennon II had not breached it. In accordance with the jury's verdict, the trial court rendered final judgment that Lennon II and Gideo take nothing on their respective claims and counterclaim.

         Lennon II raises five issues on appeal, which we will resolve as follows:

• The trial court did not err by directing a verdict on Lennon II's fraud claims. The record contains no evidence of an affirmative misrepresentation or of facts that would create the duty necessary to support a claim of fraud by nondisclosure. Likewise, there is no evidence of reliance.
• The jury's assessment of "$0.00" damages on the conversion claim reflected the failure of Lennon II to present evidence of the fair market value of the converted property.
• The jury's zero finding on conversion damages renders Lennon II's challenge to AGL's status as a bona fide purchaser moot.
• The evidentiary mix does not support Lennon II's claim that the jury's negative finding on its trespass claim was against the great weight and preponderance of the evidence.
• Lennon II contends that the refusal of the trial court to submit proper jury charge instructions permitted the jury to find that Lennon II stood in breach of a legally unenforceable contract. But the jury found no breach of the contract; thus, the trial court's failure to instruct the jury as Lennon II wanted was harmless. Further, unenforceability of the contract does not mean that actions taken in reliance on it constitute a trespass.

         Therefore, we affirm.

         II. Background

         A. Gideo meets Mr. Lennon and they make their first deal.

         Lennon II is a Texas limited partnership that was created in 1995. Lennon, LLC is Lennon II's general partner with a 1% ownership interest. At all relevant times, Mr. Lennon was Lennon, LLC's manager, as well as one of Lennon II's limited partners.[1] Since 1995, Lennon II has been the owner of approximately 38 acres (the Property) in Denton County. There is no dispute that Mr. Lennon had legal authority to act on behalf of Lennon II with regard to the Property.[2]

         Gideo has been in the excavation and dirt business since the early 1980s, often doing business as Southern Underground, LLC, a company formed, owned, and operated exclusively by Gideo. At trial, Gideo explained that he often does work for trade or barter, such as in exchange for dirt. Thus, Gideo said that he accumulates dirt and holds it to be sold at a later date.

         Gideo testified that he met Mr. Lennon in the fall of 2007. Gideo said that he would see Mr. Lennon walking the Property, so he decided to ask Mr. Lennon if his cows could graze there. Mr. Lennon and Gideo ultimately agreed to let Gideo's cows graze there, and Mr. Lennon let Gideo move his travel trailer onto the Property, and in exchange Gideo would look after the Property and clean up refuse that had been dumped on it (Cattle-Grazing Agreement). Gideo testified that Mr. Lennon and he "made a cattle grazing contract out there on the -- at the [Property] one day, made a couple of copies. We both signed it." The contract was handwritten, and Gideo testified that it was "definitely" Mr. Lennon's idea to have something in writing, but at trial Gideo could not find his copy of the contract.

         Gideo testified that from 2008 through 2015, he and Mr. Lennon became such good friends that Gideo could show up at Mr. Lennon's house unannounced. They would often go out to eat at McDonald's or IHOP®, and Gideo said that Mr. Lennon came over to his house for Thanksgiving one year and that it was "probably the happiest time I ever saw him." Gideo testified that he "[n]ever, never" lied to Mr. Lennon.

         Gideo estimated that over the course of their relationship, he and Mr. Lennon had walked the Property "a hundred times." During these walks, Gideo said that Mr. Lennon talked a lot about his desire to develop the Property. Gideo testified that Mr. Lennon loved seeing the adjacent land-which belonged to Mr. Lennon's sister-in-law-being developed into a subdivision and that he would frequently ask questions about aspects of development. According to Gideo, Mr. Lennon wanted to develop the Property in a similar fashion to the residential development on the adjacent land. Gideo averred that Mr. Lennon wanted a 7-Eleven® included in the development but he also wanted to leave some of the trees for a residential development and that he even wanted to have the first street on the Property named "Lennon Lane." During one of these conversations in the summer of 2013, Gideo informed Mr. Lennon that it would cost approximately $1 million to grade and clear the Property for development. Mr. Lennon, as Gideo testified, did not want to spend his money to grade and clear the Property.

         B. Gideo and Mr. Lennon make their second deal, which allowed Gideo to execute a contract with J.D. Abrams to use the Property and borrow dirt from it.

         Also around the summer of 2013, Gideo had become aware of a road project near the Property to be performed by J.D. Abrams, LP, which would require about 20, 000 cubic yards of dirt. Gideo negotiated an agreement with J.D. Abrams to pay $2, 000 per month to Lennon II[3] to use a corner of the Property as a "lay-down area" and to pay Gideo $25, 000 to "put up all the fence," install a "storm sewer across the lot," run a water line "up to their office," and install "all new gates." Finally, J.D. Abrams would borrow 20, 000 cubic yards of dirt that it would have to fill back in.

         At trial, Gideo introduced a handwritten document dated July 3, 2013. The document contained two hand-drawn ovals with "Borrow?" written inside of each. Gideo testified that these represented the two areas on the Property where J.D. Abrams would be able to borrow dirt. Gideo also testified that the document was "all" Mr. Lennon's drawing and that such a drawing was what Mr. Lennon did for all of his agreements with Gideo:

Q. Back off from that a little bit. And this is a -- this is a handwritten agreement. Tell us whose idea it was to have a handwritten agreement.
A. It was [Mr. Lennon's].
Q. And there's a drawing. There's a drawing of the land. Whose idea was it to make this agreement in the form of a drawing?
A. It's all [Mr. Lennon]. I mean, that's the way all three of them were, even -- even the cattle grazing. I mean, this is what this guy does.
I mean, he wants to sit with you, talk it through. He'll mark what he feels like, and he's in control. He doesn't -- if you -- if he -- if you try to say something that he don't like, it's struck. It doesn't happen.
Q. Okay. So as you were doing this handwritten agreement in the form of this map, just give us an idea of how it would be. He's got some writing on it; you've got some writing on it. Tell us how that would happen.
A. He -- he would -- he would -- he'd get a piece of paper, and he would get one piece of paper. And he'd get a pen, and he'd say, okay, draw it like the -- what the property -- he called it the property. I called it the farm.
He'd say, draw the, like, perimeter on it. I'd say, well, I'm going to put the creek through here. I'll draw the barbecue stand here and J.D. Abrams over here, and here's where we want to borrow. And I made them two little areas.
And then he would take the pencil, and he would write what he wanted, like Goldfield Road and 2181. He would write whatever he wanted. [Emphasis added.]

         Following this July 3, 2013 document, Gideo signed a "property usage and release agreement" with J.D. Abrams (J.D. Abrams Contract), which among other things, allowed J.D. Abrams to set up a concrete batch plant on 7.5 acres of the Property. Although Gideo was listed as the owner of the Property, [4] Gideo testified that he did not hide anything from Mr. Lennon and that he was authorized by Mr. Lennon to enter into the J.D. Abrams Contract because of the July 3, 2013 handwritten document. Indeed, Gideo testified that Mr. Lennon "didn't want to deal with [J.D.] Abrams. He wanted to deal with me. We made our deal. And I told him, you know, now that I know where we can take the borrow, I'll go to [J.D.] Abrams." At trial, Lennon II did not challenge the terms of, or Gideo's authority to enter into, the J.D. Abrams Contract and made no claim against Gideo or his company based on that agreement.

         C. Gideo attempts to broker a deal with AGL.

         By 2014, AGL had a contract with the Texas Department of Transportation (TxDOT) to begin a road construction project (I-35 Express Project), which was described at trial as a "design/build project."[5] In March 2014, Gideo approached AGL to inquire about supplying dirt and leasing the Property for AGL to use for a concrete batch plant.[6] A series of text messages between Gideo and Andy Svehla, AGL's assistant project manager on the I-35 Express Project, showed that AGL wanted a written agreement with Lennon II. Yet without any written agreement from Lennon II, in August 2014, Gideo and AGL entered into an agreement whereby Gideo sold 50, 000 cubic yards of his own "Select Borrow Fill Material"[7] at $4.00 per cubic yard ($200, 000 total) (AGL Contract). The AGL Contract recited, inter alia, that Gideo would be responsible for loading the select fill into AGL's trucks and obtaining any required permits.

         Svehla, who was involved in negotiating the deal, testified extensively as to how the $4.00 per cubic yard price was negotiated and what the price included. Svehla testified that the price included not just the select fill dirt, but also Gideo's services for excavating and loading the dirt. This testimony went as follows:

Q. And you evaluated how much it cost per cubic yard.
A. Right. Not just material, but the labor and the trucking combined as well.
Q. So to get to the total costs per cubic yard, you had to look at whether y'all had to go pick it up and excavate it, right?
A. Correct.
Q. You had to look at whether you had to haul it.
A. Correct.
Q. And that -- then the price of the dirt gave you the total cost per cubic yard.
A. Correct.
Q. Now, in this particular case, when AGL went to the Lennon property, did AGL ever excavate the dirt?
A. No.
Q. Did AGL load the dirt onto its trucks?
A. No.
Q. So if we look at the Lennon/Gideo property, we see that you picked up C1 material, dirt.
A. Yes.
Q. And you paid $4 a cubic yard.
A. Correct.
Q. It included the cost of loading.
A. Yes.
Q. And then you all had to pay the truckers to drive it to wherever you needed it. Fair?
A. Fair.
Q. Now, the total there is $8.69. But if we look at your material costs, Andy, you paid $4 a cubic yard for this dirt to Mr. Gideo, and if you had purchased it from the Denton landfill, you only paid $1.60.
A. Correct.
Q. Why did you pay more money for this dirt?
A. That's a good question.
Q. Well, this dirt includes the fact -- the load cost is included in the price that you pay Mr. Gideo, correct?
A. Right. Yes, correct. We didn't have to provide the equipment or the labor to load it.
Q. In your opinion, in evaluating what you all paid for dirt, did you pay a fair market value for the dirt you purchased from this property?
A. On the high end of the market value.

         Gideo testified that the 50, 000 cubic yards of select fill in the August 2014 AGL Contract was his own soil that he had moved onto the Property, so after the first 50, 000 cubic yards of select fill was exhausted, he "asked [Mr. Lennon] if we could have some dirt from the [Property]."

         In late September 2014, when AGL began considering purchasing additional fill from the Property, it did "not want to write a change order until [it got] something from the owner." At trial Svehla clarified AGL's September 2014 concerns:

Q. (BY [LENNON II'S COUNSEL]) Bates 10 -- Mr. Svehla, do you have some concerns about Mr. Gideo's authority from the owner in September -- on September 26th of 2014, authority to sell another 100, 000 cubic yards of select fill?
A. What was the date?
Q. September of 2014, September 26th.
A. I wouldn't call them concerns, but I was doing my due diligence to make sure that Mr. Gideo and Mr. Lennon were both on the same page as far as the additional 100, 000 cubic yards.
Q. Mr. Svehla, why -- after receiving the first 50, 000 cubic yards of dirt that was in this stockpile, why did AGL want to enter into a secondary agreement to buy more dirt?
A. Because we needed more dirt on the project.
Q. And did -- what was the purpose in -- was there a different purpose? Since the first purpose was a stockpile and the second purpose of the contract involved some excavation, were there different concerns with that?
A. Well, the first 50, 000 belonged to Mr. Gideo, and then the next 100, 000 that we entered into the agreement was coming directly from the [P]roperty.

         During October 2014, AGL and Gideo communicated about the amount of select fill to be purchased and the status of Gideo's communications with the "landowner." At the end of October 2014, AGL provided Gideo a change order to discuss with the "owner, and try to get him to approve it." Also at the end of October 2014, AGL drafted an agreement between Gideo and the landowner (AGL's Proposed Agreement) that AGL viewed as protecting its interests.

         D. The November 3, 2014 meeting and commencement of the AGL project.

         Representatives of AGL did meet with Mr. Lennon. On November 3, 2014, there was a meeting on the Property with Mr. Lennon, Gideo, Svehla, and AGL's truck manager on the I-35 Express Project, Kody Swesey. Gideo testified that the purpose of the meeting was so "AGL could meet [Mr.] Lennon and also get an idea of where we were going to excavate and what the next step of our work would be." According to Gideo, he met Mr. Lennon that morning, they drove around the Property[8] and met with AGL, and after the meeting everyone "had a game plan" about what was going to happen next:

Q. All right. And you -- can you tell us briefly what happened at the meeting there with the AGL people and Mr. Lennon?
A. [Mr. Lennon] met me that morning over by the barn or the camper. We drove around the property. We met the AGL group. We talked, drove around --
Q. All right.
A. -- discussed what the plans were.
Q. Okay. And at the end of the meeting, did you have an understanding about whether AGL was satisfied with the meeting with Mr. Lennon?
A. I do.
Q. And what was your idea about that?
A. We had -- me, [Mr. Lennon, ] and AGL had a game plan of what our next step would be.

         Swesey testified that at the meeting he told Mr. Lennon that "it's lucky that we need this particular material while you're developing, or it would cost you $8 to $10 a cubic yard to remove it." Swesey noted that Mr. Lennon was actively involved at the meeting, including mentioning that he wanted to keep some of the trees. So Swesey left the meeting believing that Mr. Lennon was aware of and comfortable with the project and that he had given Gideo authority to act on the project:

Q. Okay. Do you recall Mr. Lennon being adamant about leaving the trees on the Swisher Road frontage?
A. Yes.
Q. Do you recall him being adamant about leaving the trees on the west side of the property?
A. Not all the trees, but some trees.
Q. And is there anything that happened during your drive-around that gave you the impression that Mr. Gideo did not have Mr. Lennon's authority to be out there directing traffic and doing this work?
A. No.
Q. In fact, it was your impression that Mr. Lennon knew what was going on and had given Mr. Gideo that authority; isn't that true?
A. Yes.

         Svehla did acknowledge that there was no specific discussion at the meeting about AGL's Proposed Agreement or the additional 100, 000 cubic yards of select fill. At trial, Svehla did not testify to any statements he made to Mr. Lennon during the meeting, nor did Lennon II offer testimony that any statements were made.

         The day after the November 3, 2014 meeting, AGL communicated internally by e-mail about what AGL and Gideo wanted in a change order. The e-mail stated that Gideo was "currently working with an engineer to design the property for a future development, so he wants to know how much material we will actually be using." Svehla was told to "[l]ock it down as a purchase, not borrow, for 100K CY."

         A few days later, Gideo reported to AGL that Mr. Lennon would not sign AGL's Proposed Agreement. Instead, Gideo stated that he and Mr. Lennon had drawn up another handwritten agreement. That handwritten agreement (Development Plan) was a central focus at the trial. Specifically, Gideo testified that he and Mr. Lennon met at Mr. Lennon's home where Mr. Lennon instructed Gideo to use different color ink pens to memorialize their agreement. Gideo testified that the Development Plan contained a date "11/12/14," which was the day that the work would start. The Development Plan stated that Gideo would remove or uproot "all interior" trees and mulch them, remove a minimum of six inches of top soil, cut a new grade that drained the Property to the west, and seed the Property with grass. The Development Plan also stated that "[a]t [c]ompletion Lenoun [sic] gets his property ready for development[;] Gideo gets trees/mulch borrow/soil and use of property." Gideo testified that "Gideo gets borrow/soil" meant that Mr. Lennon had given him permission to take the soil and sell it to AGL.[9] The Development Plan also contained the following:

PROJECT AGREEMENT DATE
11-11-2014
C.E. Lennon (Owner)

[Gideo's signature] (Contractor) Greg Gideo Gideo testified that Mr. Lennon handwrote this portion of the Development Plan, except the last line where Gideo had signed it, wrote contractor, and printed his name. Finally, the Development Plan provided, "Estimated completion for Lennon is 12/2015."

         Lennon II's trial representative agreed that the Development Plan contained Mr. Lennon's handwriting and his signature. Gideo believed that the Development Plan was an agreement to go forward clearing trees and mulch and selling soil to AGL to offset his costs of preparing the Property for development. In addition to this document, Gideo directly testified that Mr. Lennon had given him permission to sell dirt to AGL. So on November 12, 2014, Gideo, as Southern Underground, signed a "contract change order" with AGL for an additional 100, 000 cubic yards of select fill at $4.00 per cubic yard ($400, 000).

         At trial, Lennon II highlighted an e-mail from the lawyer who worked for AGL who had drafted AGL's Proposed Agreement that Mr. Lennon would not sign, in which the lawyer stated that Mr. Lennon's refusal to sign AGL's Proposed Agreement "[m]akes me worried." The lawyer then articulated his two concerns: "The two big (and really only) things I had on there protecting us is 1) the owner warrants that he owns the property, and 2) that it is understood that we are not obligated to bring back all the material. Regarding 2, its [sic] not to say that we won't bring it back, but we don't want to be liable for refilling his hole . . . ." Finally, the lawyer was critical of whoever was helping Mr. Lennon: "On a separate note, if the property owner's lawyer drafted up what you attached, I feel sorry for the property owner . . . ."

         Subsequently on the same e-mail chain, Svehla addressed these two concerns. He provided a Denton County Appraisal District link that apparently indicated Lennon II's ownership of the Property, and he stated that he had confirmed that AGL would not be responsible for bringing the select fill back to the Property.

         E. The additional ...


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