Court of Appeals of Texas,

Houston (14th Dist.).

Larry DUBOSE and Virginia City Dancehall & Saloon, Inc., Appellants,

v.

Ronnie REED and Brenda Reed, Appellees.

No. 14-94-00546-CV.

|

July 13, 1995. .

Before YATES, FOWLER and DRAUGHN.², JJ.

YATES, J.

OPINION

*1 This is a personal injury case. Appellees Ronnie Reed (Reed) and his wife, Brenda, sued appellants Larry Dubose (Dubose) and his night-club, the Virginia City Dancehall & Saloon (Virginia City), after Reed was kicked in the arm by a horse allegedly owned by appellants. The Reeds pled causes of action for strict liability, negligence, and fraud. The jury returned a verdict in favor of the Reeds on all causes of action and awarded actual and exemplary damages totaling nearly $360,000.00. Dubose and Virginia City appeal from the jury’s verdict raising nine points of error. We affirm the trial court’s judgment as modified.

Facts

On April 1, 1989, appellants purchased two draft horses, “Jim” and “Jeff” (the horses), together with a wagon and harnesses. The parties dispute whether the horses were jointly owned by Virginia City and Dubose. Dubose was President and sole shareholder of Virginia City at the time of the purchase. In 1991, Reed was a committeeman for the Grand Entry Committee of the Houston Livestock Show & Rodeo (the Rodeo). As a committeeman, Reed agreed to supply two wagons for the grand entry at the Rodeo. Reed used the wagon and horses purchased by appellants. The previous year, Reed used the same wagon and horses at the Rodeo. The parties dispute whether Reed’s presence at the Rodeo in 1991 was as a volunteer or as appellants’ employee. On March 1, 1991, prior to the seventeenth performance of the Rodeo, Reed was kicked by “Jim.” The horse had been bathed that morning and tied to a trailer when he started “acting up.” Jerry Morris, who was hired by Reed to drive the wagon at the Rodeo, moved “Jim” down toward the end of the trailer. As Reed was returning from an errand, he rounded the end of the trailer where he was suddenly confronted by “Jim”. The horse got startled and whirled in a half-circle kicking Reed with both feet in the left arm and ribs. The kick broke Reed’s arm. Reed was taken to the hospital where doctors performed surgery on Reed’s arm, inserting a steel plate. The arm did not heal properly and over a period of fifteen months, required a series of surgeries, including a bone graft.

Suit and Trial

The Reeds filed suit alleging strict liability, negligence, and fraud. The Reeds alleged that appellants: (1) knew that the horse, “Jim,” had abnormally dangerous propensities; (2) alternatively, were negligent in failing “to provide safe equipment and employee assistance” and in failing “to provide substitute draft horses with a safe and tractable nature to replace ‘Jim’;” and (3) made “false and untrue representations concerning the existence of insurance coverage to pay loss of wages and medical expenses in the event [Reed] was injured on the job.” The Reeds also alleged that Reed was an employee of appellants and that he was injured in the course and scope of his employment. After a three-day trial, the jury returned a verdict in favor of the Reeds on all issues. Based solely on the fraud finding, the jury awarded Reed: (1) $59,000.00 in past medical expenses; and (2) $100,000.00 in exemplary damages. Based on the strict liability and negligence findings, the jury awarded Reed past damages of: (1) $100,000.00 for pain and suffering; (2) $10,000.00 for mental anguish; (3) $10,000.00 for physical impairment; and (4) $65,800.00 for past loss of earnings. The jury also awarded Brenda Reed $15,000.00 for loss of household service and loss of consortium sustained in the past. The trial court entered judgment in accordance with the jury’s verdict, awarding the Reeds pre- and post-judgment interest and assessing costs against appellants.¹ After their motion for new trial was denied, appellants perfected this appeal. In points of error one through six, appellants attack the legal and factual sufficiency of the evidence in support of the jury’s liability findings. Appellants objected on sufficiency grounds to all the liability questions in the charge.

*2 When both legal and factual sufficiency points are raised, we must first review the legal sufficiency to determine if there is any evidence of probative value to support the jury’s findings. Glover v. Texas Gen. Indem. Co., 619 S.W.2d 400, 401 (Tex. 1981); In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). That review requires us to consider only the evidence and inferences that tend to support the jury’s findings and to disregard all evidence and inferences to the contrary. Sherman v. First Nat’l Bank, 760 S.W.2d 240, 242 (Tex. 1988). When there is more than a scintilla of evidence, we may not overturn the jury’s findings on legal sufficiency grounds. Id. If the findings are supported by legally sufficient evidence, we must then review the factual sufficiency of the evidence by weighing and considering the evidence both in support of, and contrary to, the challenged findings. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965). The jury’s findings must be upheld unless they are so against the great weight and preponderance of the evidence as to be manifestly unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1988). Because the trier of fact is the sole judge of the credibility of the witnesses and the weight to be given their testimony, we may not substitute our judgment for that of the trial court’s simply because we may disagree with the factfinder’s conclusions. Herbert v. Herbert, 754 S.W.2d 141, 142 (Tex. 1988); Forscan v. Dresser Indus., 789 S.W.2d 389, 394 (Tex. App.-Houston [14th Dist.] 1989, writ denied).

Strict Liability

In point of error three, appellants contend the evidence is legally and factually insufficient to support the jury’s finding that appellants were strictly liable. In answer to question three, the jury found that “on the occasion in question” both Dubose and Virginia City owned the horse “Jim,” “which they knew or had reason to know ha[d] dangerous propensities abnormal to its class.” See Marshall v. Ranne, 511 S.W.2d 255, 258-59 (Tex. 1974); Restatement (Second) of Torts § 509 (1977) Appellants do not attack the jury’s finding that appellants knew or had reason to know that “Jim” had abnormally dangerous propensities, nor do they assail the jury’s finding that Virginia City owned the horse. Instead, appellants attack only the jury’s finding that Dubose owned the horse. In doing so, they argue that it was Virginia City, not Dubose, who owned “Jim.”

Initially, we observe that appellants make passing reference to the fact that the Reeds neither pled nor proved that Virginia City was the “alter ego” of Dubose. See Castleberry v. Branscum, 721 S.W.2d 270, 273 (Tex. 1986) (holding that question of whether the corporate fiction should be disregarded is one of fact); see also Vallone v. Vallone, 644 S.W.2d 455, 458 (Tex. 1983) (holding that consideration of whether a corporation is an alter ego for purposes of determining status of property held in the corporation’s name is an issue of fact). However, appellants did not object to the charge on grounds that Reed failed to prove “alter ego” and therefore, did not preserve error on this point. See Tex. R. Civ. P. 274. Even if appellants had preserved error, Dubose would still not be absolved from liability because he does not contest his participation in the tort. A corporate agent who knowingly participates in tortious or fraudulent acts may be held individually liable to third persons even though he performed the act as an agent for the corporation. Gulbeau v. Anderson, 841 S.W.2d 517, 519 (Tex. App.-Houston [14th Dist.] 1992, no writ); Grierson v. Parker Energy Partners, 737 S.W.2d 375, 377 (Tex. App.-Houston [14th Dist.] 1987, no writ) Under such circumstances, the corporate veil need not be pierced in order to impose personal liability. Id. Here, Dubose does not deny that he gave Reed permission to use the horse at the 1991 Rodeo nor does he complain about the jury’s finding that he knew or had reason to know of the horse’s abnormally dangerous propensities. Thus, Dubose cannot escape individual liability by claiming that the horse belonged solely to Virginia City.

*3 In any event, the evidence supports the jury’s finding that both Virginia City and Dubose owned the horse. Question three was phrased in both the conjunctive and disjunctive; that is, question three asked whether Dubose “and/or” Virginia City owned the horse, “Jim.” In other the words, the jury could find that Dubose and Virginia City jointly owned the horse in question or that either Dubose, individually, or Virginia City owned the horse. As previously stated, the jury found that Dubose and Virginia City jointly owned “Jim.”

There is no question that Virginia City owned the horses. The $4,000.00 that was paid for the horses, wagon, and harnesses consisted of a $2,500.00 check from Virginia City and $1,500.00 cash from Virginia City’s safe. According to Virginia City’s general manager, Michael Van Alstine, the cash came from a previous sale of horses owned by Virginia City. Van Alstine testified that Virginia City wrote checks to Reed and his company, R & M Cattle, to take care of all of Virginia City’s horses, including “Jim” and “Jeff”. He also testified that the horses were listed as assets on Virginia City’s corporate tax return.

The issue is whether the jury could reasonably have concluded that Dubose owned “Jim” jointly with Virginia City. The record contains conflicting evidence on this point. Dubose denied that he had any ownership interest in the horses. Van Alstine testified that Dubose did not own the horses or have any ownership interest in the other horses owned by Virginia City. Van Alstine also testified that Virginia City paid for the horses and that they “belonged” to Virginia City. He further testified that one of the horses (he did not know which one) was sold after Reed got hurt and that money from the sale was placed in Virginia City’s operating account and not given directly to Dubose.

On the other hand, the testimony of both Reed and Dubose reflect that Dubose coveted the horses for several years before purchasing them. Dubose’s name appears on the bill of sale for the horses. There is no reference in that document to Virginia City or to Dubose as President of Virginia City. Dubose testified that he read the bill of sale at the time of purchase and that he retained that document in his records until trial. Reed testified that he was present during the transaction, that he saw the seller write the bill of sale, and that he heard Dubose say afterwards, “these are now my wagons and horses.” Dubose denied this, testifying that the bill of sale was prepared by the seller before the purchase and that it was mistakenly made out to him. However, Dubose made no attempt to correct the alleged error. Although Reed acknowledged that he did not actually know whether Dubose or Virginia City owned the horses, he stated that Dubose claimed that he owned the horses and the club. Jerry Morris testified that Dubose owned the horses. While Morris did not actually know whether Dubose or Virginia City paid for the horses, Morris stated that Dubose told him that the horses were his. He also testified that Dubose had the right to dictate how the horses were to be used. Finally, while the horses were used to promote Virginia City, promotion of the company benefitted Dubose.

*4 The jury is free to resolve inconsistencies and conflicts in the evidence. See McGalliard v. Kuhlman, 722 S.W.2d 694, 697 (Tex. 1986). We hold that the bill of sale together with Dubose’s representations of ownership, constitute legally and factually sufficient evidence to support the jury’s finding that both Dubose and Virginia City owned “Jim.” We overrule appellants’ third point of error.

Fraud

In point of error four, appellants contend the evidence is legally and factually insufficient to support the jury’s answer to question four that Dubose committed fraud. The jury was instructed on the elements of fraud. See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990). The jury was further instructed that “misrepresentation means a false statement of fact or promise of future performance with an intent not to perform as promised.”

In Plaintiff’s Second Amended Original Petition, the Reeds allege that “the defendants are guilty of fraud in making false and untrue representations concerning the existence of insurance coverage to pay loss of wages and medical expenses in the event [Reed] was injured on the job.” In other words, the Reeds allege that Dubose misrepresented that he had some kind of insurance coverage that would cover employee injuries that occurred on the job. According to Reed, if he had known that Dubose did not have insurance that would cover him at the Rodeo, he would have asked for more compensation to purchase his own insurance.

Appellants argue that the Reeds’ allegation of fraud is based on Dubose’s alleged misrepresentation that Virginia City had a general liability policy. Because Virginia City had a general liability policy and because Reed understood that the policy covered only employees and patrons who are injured at the club, appellants assert there was no misrepresentation, no reliance, and no actionable fraud. We agree.

When viewed in the light most favorable to the verdict, Reed’s testimony at trial shows that prior to his injury, Reed: (1) knew that Dubose had only a general liability insurance policy; and (2) understood that policy to cover only employees and patrons injured at the club. On direct examination, Reed testified that when he started working at the club in 1989, Dubose told him that “all his employees was [sic] covered under workmans’ comp.” However, Reed testified that three or four months later, after Reed hurt his knee chasing a patron, Dubose stated that he did not have “workmans’ comp.,” but that he had “a general liability type policy that would basically do the same thing.” When next asked if he was covered by that policy, Reed replied, “Cover me or anybody else in the club as far as I knew.” He added that there were “numerous incidents where people did get hurt around the club.”

On cross-examimation, Reed admitted that he knew prior to his injury that Dubose did not have worker’s compensation but that Dubose “assured” him that he (Dubose) had a general liability policy. Although he did not read Virginia City’s general liability policy, Reed testified that a general liability policy “generally covers your premises or any employees or people on your premises.” Reed also stated that he had a general liability policy for his ranching and hauling operations and that he knew this type of policy was not workers’ compensation or health insurance.

*5 Viewing the evidence in the light most favorable to the verdict, the only representation made by Dubose was that he had a general liability policy. Because Dubose in fact had a general liability policy at the time, his statements to Reed were true. Even if could be said that Dubose misrepresented that his general liability policy would cover an employee who was injured off the premises, Reed could not have relied on that misrepresentation because he knew prior to his injury that a general liability policy did not provide such coverage.

There is also testimony by Reed that Dubose telephoned him at the hospital after his injury, stating that he (Dubose) did not have insurance but that “everything would be taken care of.” In addition, Dubose’s deposition testimony reflects that after Reed was hurt, Dubose told Reed that he “took care of workmans’ comp. through the club.” Assuming these were misrepresentations regarding insurance coverage, Reed could not have relied on them because they were made after Reed’s injury.

Accordingly, we hold there is no evidence that Dubose misrepresented insurance coverage or that Reed relied on any alleged misrepresentation. We sustain appellants’ fourth point of error.

Other Liability Issues

In points of error one and two, appellants attack the jury’s finding that Reed was an employee and that he was injured in the course and scope of his employment. In points of error five and six, appellants attack the jury’s negligence findings. The parties agree that the “employee” and “course and scope” issues are relevant to the negligence and fraud issues. We need not address these issues for two reasons. First, the Reeds’ negligence claim was pled only in the alternative to their strict liability claim, which we have already held is supported by sufficient evidence. Second, the jury’s finding that Reed was an employee who was injured in the course of his employment does not effect our holding that there was no evidence to support the misrepresentation and reliance jury findings. In other words, even if Reed was injured on the job, Dubose is not liable for fraud because there is no evidence to support the jury’s findings of misrepresentation or reliance. Thus, because we have determined that the strict liability finding should be affirmed and there is no evidence to support all of the necessary fraud elements, it is unnecessary to address the “employee,” “course and scope,” and negligence issues raised by appellants in points of error one, two, five and six.

Evidentiary Issues

In points of error seven and eight, appellants contend the trial court erred in excluding certain evidence relating to the Reeds’ fraud claim and in refusing to allow them to make a bill of exceptions regarding this evidence. Specifically, appellants contend the trial court should have allowed them to put on evidence showing that Reed’s medical expenses and lost wages were covered by other insurance and to prove that Reed did not rely on, and thus, was not damaged by, Dubose’s alleged misrepresentations regarding insurance coverage. The trial court excluded this evidence under the collateral source rule. Because we have held that the fraud finding cannot stand, we need not address these evidentiary points. In point of error nine, appellants contend the trial court erred in excluding testimony regarding Reed’s reputation for truthfulness.

*6 Near the end of the trial, appellants called Stephanie Gibbons to the stand. Gibbons had known Reed since 1989 and had worked for him in the past. At the conclusion of his direct examination, appellants’ counsel asked Gibbons whether she had an “opinion as to the reputation of Ronnie Reed for truth and honesty in his community around, the people he deals with?” The trial court sustained the objection of the Reeds’ counsel, but allowed appellants’ counsel to make a bill of exceptions. By way of that bill, Gibbons testified that Reed’s reputation in the community for truth and veracity was that he was “nontrustworthy.” To obtain reversal of a judgment based upon error of the trial court in the admission or exclusion of evidence, a party must show: (1) the trial court did in fact commit error; and (2) the error was reasonably calculated to cause and probably did cause rendition of an improper judgment. Gee v. Liberty Mut. Ins. Co., 765 S.W.2d 394, 396 (Tex. 1989). The admission or exclusion of evidence is a matter within the discretion of the trial court. Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 108 (Tex. 1985) (orig. proceeding); Tracy v. Annie’s Attic, Inc., 840 S.W.2d 527, 531 (Tex. App.-Tyler 1992, writ denied).

Appellants argue that because Reed’s testimony was the “cornerstone” of his case, evidence of his reputation for truthfulness based on the testimony of someone who had known him was relevant and admissible. We agree. Tex. R. Civ. Evid. 608(a) clearly provides that evidence of character for untruthfulness is admissible in the form of opinion or reputation. The question is whether exclusion of this evidence was harmful error.

Without supporting argument, appellants allege that the “exclusion of Ms. Gibbons’ [sic] regarding the ‘nontrustworthiness’ of Plaintiffs’ cornerstone witness is such an error.” The determination of whether error in the exclusion of evidence is harmful is entrusted to the sound discretion of the reviewing court. McCraw v. Maris, 828 S.W.2d 756, 757-58 (Tex. 1992). In making this determination, the court must review the entire record. Id. While the complaining party is not required to prove that a different judgment would necessarily have resulted “but for” the exclusion of the evidence, he must show that the exclusion of evidence probably resulted in the rendition of an improper judgment. Id.

Appellants’ mere statement that error was harmful does not amount to such a showing. First, Gibbons’ motive for testifying against Reed was placed in issue by her testimony that Reed did not pay her for work she performed at the Rodeo the previous year. Second, there was additional evidence from which the jury could have assessed Reed’s credibility. Reed’s own testimony and that of several other witnesses placed Reed’s credibility in issue. The jury had the opportunity to view Reed’s appearance and demeanor and that of the other witnesses both on direct and cross examination in judging Reed’s truthfulness. Third, during further questioning by the court on appellants’ bill, Gibbons testified that she based her opinion on the fact that Reed had lied to her and another person about working for the Department of Public Safety (DPS). However, the jury heard evidence on this matter. During cross-examination, Reed testified that as a former city patrolman he worked with DPS but was never a DPS officer. He admitted, however, that he might have told someone that he was a DPS officer.

*7 Clearly, the evidence presented enabled the jury make a fair and accurate judgment regarding Reed’s credibility. Based on our review of the record, we cannot say that one witness’ opinion regarding the plaintiff’s truthfulness was determinative of the outcome of this case. Therefore, we hold that the trial court did not commit harmful error by excluding Gibbons’ testimony. See Tex. R. App. P. 81(b)(1); McCraw, 828 S.W.2d at 757-58. We overrule appellants’ ninth point of error.

Accordingly, we affirm the trial court’s judgment as modified herein. We affirm that portion of the judgment awarding the Reeds $200,800.00 in actual damages on the basis of strict liability. We reverse that portion of the judgment awarding the Reeds $159,000.00 in actual and exemplary damages for fraud and render judgment that the Reeds take nothing on that claim.

	Footnotes
2		* The Honorable Joe L. Draughn sitting by assignment.
1		Although the jury found in question seven that Reed was twenty percent negligent, the trial court did not reduce the jury award accordingly. The Reeds suggest the trial court’s action was proper. Because appellants do not contest damages, we need not address this issue. Tex. R. App. P. 52(a), 74(d).