Court of Appeals of Texas, Houston (14th Dist.).

CONTINENTAL CASUALTY COMPANY, Appellant

v.

Dr. Eric SCHEFFEY, Appellee

No. 14-93-01003-CV.

|

Feb. 8, 1996.

OPINION

ANDERSON, Justice.

*1 Continental Casualty Company (“CNA”) appeals from a judgment awarding Dr. Eric Scheffey $5 million in compensatory damages for injury to business relationships. CNA raises 37 points of error. Dr. Scheffey raises two cross-points challenging the remittitur, and a conditional cross-point regarding the jury charge. We reverse and render judgment that Dr. Scheffey take nothing.

CNA is a workers’ compensation insurance carrier. Testimony at trial showed that, from 1989-92, several employees of CNA told third parties that Dr. Scheffey was a bad doctor, had been arrested for selling narcotics, and had sold drugs in his office. During this same time, CNA refused to approve treatment Dr. Scheffey prescribed for certain existing patients. Testimony also indicated that, from 1989 forward, certain unidentified insurance companies refused to authorize physician referrals to Dr. Scheffey. During 1988-91, articles appeared in several Houston news publications regarding Dr. Scheffey’s drug problems and alleged malpractice.

Dr. Scheffey, an orthopedic surgeon, admits he was addicted to cocaine from 1983-85. In 1985, Dr. Scheffey pled guilty to a charge of possessing a controlled substance and received deferred adjudication, conditioned upon fulfillment of ten years probation. In 1989, Dr. Scheffey filed suit against CNA under several theories of liability. The case was tried in 1991 under theories of breach of the duty of good faith and fair dealing under the Texas Insurance Code and disparagement of professional reputation. Although the jury found in Dr. Scheffey’s favor, the Texarkana court of appeals reversed the judgment and remanded for a new trial based on error in the exclusion of evidence, error in the refusal to set a hearing on CNA’s motion to recuse the trial judge, and on Dr. Scheffey’s lack of standing to bring suit under article 21.21 of the Insurance Code. CNA Ins. Co. v. Scheffey, 828 S.W.2d 785, 790, 792-93 (Tex.App.-Texarkana 1992, writ denied).

The case went to trial again in 1993 and it is from this judgment that CNA now appeals. The only claim submitted to the jury was whether CNA tortiously interfered with Dr. Scheffey’s practice.¹ The jury found tortious interference and awarded Dr. Scheffey $5.705 million in compensatory damages and $5.705 million in punitive damages. After denying CNA’s motion for judgment notwithstanding the verdict and to disregard jury findings, the trial court suggested a remittitur, which Dr. Scheffey accepted. The trial court then entered judgment for Dr. Scheffey for $5 million in compensatory damages.

CNA groups points of error 1, 3, 4, 12, and 35-37 together for discussion. Under these points, CNA challenges the legal and factual sufficiency of the evidence supporting the findings of liability. CNA maintains the jury charge limited liability to tortious interference by defamatory statements and that there is no or insufficient evidence to support the finding that the alleged defamatory statements proximately caused damage to Dr. Scheffey.

*2 When both “no evidence” and “insufficient evidence” points of error are raised, we should rule on the “no evidence” point first.

Glover v. Texas Gen. Indem. Co., 619 S.W.2d 400, 401 (Tex.1981). In reviewing a “no evidence” point, we must examine only the evidence and inferences that tend to support the verdict, and disregard all evidence and inferences to the contrary. Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex.1992); Jacobs v. Darby Real Estate, Inc., 750 S.W.2d 174, 175 (Tex.1988). If there is any evidence of probative force supporting the finding, we must uphold it. Southern States Transp., Inc. v. State, 774 S.W.2d 639, 640 (Tex.1989). If, however, the evidence is so weak as to do no more than create a mere surmise or suspicion of the existence of the finding, the evidence is no more than a scintilla and constitutes no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983). If the court of appeals sustains a no evidence point, it is the court’s duty to render judgment for appellant. Vista Chevrolet, Inc. v. Lewis, 709 S.W.2d 176, 176 (Tex.1986).

If we find some evidence to support the verdict, we will then review the claim of factually insufficient evidence. International Piping Sys. Ltd. v. M.M. White & Assoc., Inc., 831 S.W.2d 444, 447 (Tex.App.-Houston [14th Dist.] 1992, writ denied). In reviewing a factual sufficiency challenge, we must consider all of the evidence in the record, both supporting and contrary to the judgment. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.1989). After considering and weighing all the evidence, we should set aside the verdict only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1976). If we sustain the point finding the evidence factually insufficient, we must reverse the judgment of the trial court and remand for a new trial. Glover, 619 S.W.2d at 402.

CNA asserts Dr. Scheffey failed to meet his burden of proving, as an essential element of his claim, that any defamatory statements allegedly made by CNA employees were a proximate cause of actual damage or loss to his business. CNA first contends the jury charge limited the jury to finding tortious interference only as a result of defamatory statements and the evidence shows no harm resulted from the alleged defamatory statements. Second, CNA asserts, as a matter of law, the jury could not draw the inferences on which Dr. Scheffey’s causation argument depends, and those inferences are, in any event, directly contrary to the evidence. In response to CNA’s contentions, Dr. Scheffey argues the charge allowed the jury to find liability for tortious interference either by defamatory statements or by non-defamatory statements about Dr. Scheffey.

The jury charge contained three questions regarding liability. First, the jury was asked whether any CNA employees, “acting within the course and scope of their authority, tortiously interfered with an ongoing business relationship(s) or prospective business relationship(s) of the Plaintiff by making a defamatory statement or statements about the Plaintiff.” Jury question two inquired whether the statements made by CNA employees were false or were made with knowledge of their falsity. Question three asked if CNA’s tortious interference was a proximate cause of actual damage to Dr. Scheffey’s business.

*3 Only jury questions one and three refer to tortious interference. Question three does not mention defamatory statements and, thus, is very broad. Question one is phrased rather awkwardly in that it asks if CNA tortiously interfered “by making a defamatory statement or statements about the Plaintiff.” Without referring to the instructions given in the charge, this jury question could be interpreted to encompass tortious interference by defamatory statement or by other non-defamatory statements about Dr. Scheffey. The instructions given, however, indicate questions one and three are not to be read so broadly. In pertinent part, these instructions provide:

You are instructed that “Tortious interference” is interference with a business relationship or prospective business relationships by a slanderous statement as defined in this charge, and is established by finding, by a preponderance of the evidence, that the Defendant, not a party to the contract or agreement, willfully and intentionally made a slanderous statement(s) calculated to cause damage to the Plaintiff’s existing business relationship(s) or prospective business relationship(s) when the statement(s) were made with the unlawful purpose of causing damage and loss, without legal right or justifiable excuse on the part of the Defendant, which has proximately caused actual damage and loss to the Plaintiff. You are further instructed that the Plaintiff must prove, by a preponderance of the evidence, that there was a reasonable probability that, but for the Defendant’s slanderous statement(s), Plaintiff would have continued in his current business relationship(s) or would have entered in prospective business relationship(s) in the future. [Emphasis added]

You are instructed that a slanderous statement is a false statement of fact made to a third party, other than the Plaintiff, which tends to injure the Plaintiff’s reputation and thereby exposes him to public hatred, contempt or ridicule, or to impeach his honesty, integrity, virtue, sanity, health, or reputation.

By submitting these detailed instructions, the trial court limited the jury’s determination to tortious interference with existing and prospective business relationships by defamatory statements. In evaluating the sufficiency of the evidence, we must consider whether the evidence supports the jury’s finding in light of the actual questions and instructions given. See Larson v. Cook Consultants, Inc., 690 S.W.2d 567, 568 (Tex.1985). Therefore, we must first determine if any evidence supports the finding of tortious interference as limited by the trial court’s instruction.

Dr. Scheffey offers the following evidence in support of the finding of tortious interference even if limited to defamatory statements: (1) the testimony of several existing patients who heard statements from CNA employees regarding Dr. Scheffey’s arrest for selling narcotics and his sale of drugs in his office; (2) Dr. Scheffey’s testimony that 25-50 other patients could testify similarly to those who did testify; and (3) the testimony of two legal assistants who heard the alleged defamatory statements.

*4 The patients who testified to hearing the alleged defamatory statements, however, also testified they did not believe the statements, they did not stop seeing Dr. Scheffey, and they would not have stopped seeing Dr. Scheffey even if they had believed the defamatory statements. Although there are other statements Dr. Scheffey alleges as damaging, Dr. Scheffey agrees these other statements are not false statements and, thus, do not constitute defamation.

Although Dr. Scheffey refers to testimony by two legal assistants, the record contains actual testimony by only one. Nata Carlton testified that during July 1989 she was a legal secretary for Doug Cherry & Associates, a personal injury law firm. Carlton stated that Junie Wolfe, a CNA adjuster, refused to pay for treatment for a client of the firm by Dr. Scheffey and said Scheffey had “sold cocaine to an undercover DEA agent and had been arrested and … was going to lose his license.”

The other legal assistant is Berta Flores. Although Flores did not testify, another witness testified to a telephone conversation between Flores and Julie Lahr, a CNA adjuster, during which Lahr said Dr. Scheffey was arrested for selling drugs to a DEA agent. This witness, Jackie DeLozier, also testified that other insurance companies made comments about Dr. Scheffey and refused to pay for treatment by Dr. Scheffey.

The testimony from or about the two legal assistants indicates they did indeed hear the alleged defamatory statements. Furthermore, the testimony from Carlton indicates CNA refused to pay for treatment of a client of the law firm for which Carlton worked. This testimony does not, however, establish that any person did not receive treatment from Dr. Scheffey as a result of the legal assistants’ hearing the alleged defamatory statements.

CNA contends the testimony of the six patients and the legal assistants constitutes no evidence the defamatory statements proximately caused damage to Dr. Scheffey. CNA further contends the jury could only find proximate cause from these statements if it engaged in impermissible inference stacking. We agree the evidence does not support a finding of proximate cause. The testimony of the patients and legal assistants indicates that, although many witnesses heard the defamatory statements, none believed the statements and none stopped using Dr. Scheffey’s services as a result of hearing these statements.

To support a finding that Dr. Scheffey suffered damages resulting from tortious interference by defamatory statements, the jury had to infer from the testimony of the witnesses who heard the defamatory statements that other patients who did not testify also heard the defamatory statements and, as a result, discontinued seeing Dr. Scheffey. The jury would also have to infer that potential patients heard the defamatory statements and, as a result, did not ever seek treatment from Dr. Scheffey. Based on the evidence, these inferences are absolute speculation and the evidence is therefore legally insufficient to support the jury’s finding of tortious interference by defamatory statements. Accordingly, we sustain CNA’s first and third points of error.

*5 Having found no evidence to support the jury’s affirmative finding to the limited questions on liability for tortious interference, we must address Dr. Scheffey’s conditional cross-point challenging the jury charge. Dr. Scheffey contends the trial court erred in submitting the broad form issue with a limiting instruction and in not submitting the requested individual questions on tortious interference and defamation. Dr. Scheffey asserts the pleadings and proof supported the submission of individual questions, or at least, a broad question unlimited by the instruction regarding tortious interference by slanderous statements.

Rule 278 prohibits reversal of a judgment for failure to submit a question or instruction unless a substantially correct question or instruction is requested and tendered by the complaining party. Tex.R. Civ. P. 278. An objection to the trial court’s failure to submit a question will preserve error only if the question is one relied upon by the opposing party. Tex.R. Civ. P. 278.

Dr. Scheffey claims he tendered proposed jury questions separately submitting the issues of tortious interference and defamation. CNA, however, argues Dr. Scheffey failed to preserve error because he did not submit proposed questions or instructions regarding tortious interference based on nondefamatory statements.

In reviewing the transcript, we find a page of instructions and eight questions marked “refused” by the trial judge. Although the source of these proposed instructions and questions is unidentified, in all likelihood these were submitted by Dr. Scheffey because CNA’s proposed questions and instructions, found in another part of the transcript, are labeled as defendant’s proposed questions.

Dr. Scheffey contends he offered proposed questions that broadly submitted the claims of tortious interference with ongoing and with prospective business relationships, with no instruction limiting these questions to tortious interference by slanderous statements. The proposed questions in the record include the following questions: (1) whether defendant’s tortious interference with plaintiff’s ongoing business relationships was a proximate cause of actual damage; (2) whether defendant tortiously interfered with prospective contractual relations plaintiff would have had with his patients; (3) whether defendant’s tortious interference with plaintiff’s ongoing relationships was a proximate cause of actual damage; (4) the amount of actual damages; (5) the amount of punitive damages; (6) whether defendant’s agents made one or more slanderous statements about the plaintiff; (7) whether the defendant had a qualified privilege to make the statements; and (8) another question about the amount of punitive damages. The proposed instructions submitted by Dr. Scheffey must have continued for more than one page because the instruction regarding tortious interference, found at the bottom of the page, states: “You are instructed that ‘Tortious interference’ is”. There is no second page of instructions in the record.

*6 These proposed questions do not include all of the elements for the two tortious interference claims. Furthermore, because the record does not contain all of the proposed instructions, including the instruction regarding tortious interference, we cannot say that Dr. Scheffey preserved error by submitting proposed questions or instructions regarding tortious interference based on non-defamatory statements. Thus, we must overrule Dr. Scheffey’s cross-point to the extent it claims error by the trial court in refusing to submit proposed questions and instructions.

Dr. Scheffey objected to the limiting instruction actually submitted to the jury, and we must now determine whether the trial court erred in submitting this instruction. Rule 278 mandates the submission of questions and instructions raised by the written pleadings and evidence. Tex.R. Civ. P. 278. If matters are timely raised and properly requested as part of the charge, reversal of the judgment is indicated only “when a party is denied proper submission of a valid theory of recovery or a vital defensive issue raised by the pleadings and evidence.” Exxon Corp. v. Perez, 842 S.W.2d 629, 631 (Tex.1992). The trial court must explain legal terms and must determine whether instructions aid the jury in answering the questions. Tex.R. Civ. P. 277. An appellate court reviews the submission of particular instructions under an abuse of discretion standard. Harris v. Harris, 765 S.W.2d 798, 801 (Tex.App.-Houston [14th Dist.] 1989, writ denied). The court must first determine if the instruction is improper, Tex.R. Civ. P. 277, and if it is, the court must then determine if the error was harmless. Tex.R.App. P. 81(b)(1). To determine harm, the court must “consider the pleadings of the parties, the evidence presented at trial, and the charge in its entirety.” Island Recreational Dev. Corp. v. Republic of Tex. Sav. Ass’n, 710 S.W.2d 551, 555 (Tex.1986). Error is reversible only if, viewed in light of the totality of the circumstances, it amounted to such a denial of the rights of the complaining party as was reasonably calculated to cause and probably did cause rendition of an improper judgment. Id.

To determine whether the trial court erred in submitting the limiting instruction, we must determine whether any evidence supports the submission of a tortious interference issue not limited to defamatory statements. To establish tortious interference with existing or prospective business relationships, the plaintiff must prove (1) there was a relationship subject to interference, or a reasonable probability the parties would have entered a business relationship; (2) the act of interference was willful and intentional, or the defendant acted maliciously by intentionally preventing that relationship from occurring with the purpose of harming the plaintiff; (3) such intentional act was a proximate cause of plaintiff’s damage; (4) the defendant’s actions were not justified or privileged; and (5) the plaintiff suffered actual damage as a result of the interference. Exxon Corp. v. Allsup, 808 S.W.2d 648, 659 (Tex.App.-Corpus Christi 1991, writ denied). The malice required is not ill will, but instead is “an unlawful act, done intentionally without just cause or excuse.” Id. Legal justification or privilege are affirmative defenses on which the defendant has the burden of proof.¹ Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.1989).

*7 Dr. Scheffey claims the record shows CNA refused to approve referrals from other physicians to Dr. Scheffey and that this is evidence of tortious interference. The primary evidence regarding damages was the significant decline in the number of Dr. Scheffey’s new patients in 1992-93. The record indicates only one physician, Dr. McAmis, testified about an insurance industry prohibition on referrals to Dr. Scheffey, but McAmis could not recall which insurance companies refused authorization or if CNA was one of them. Consequently, this testimony does not support the submission of a question on tortious interference not limited to defamatory statements.

Dr. Scheffey also claims the testimony by some of his existing patients that CNA refused to approve the treatment prescribed by Dr. Scheffey is evidence of tortious interference. Relying on the testimony by several existing patients, Dr. Scheffey maintains CNA’s lack of approval prevented these patients from receiving the prescribed treatment and prevented Dr. Scheffey from receiving payment for these surgeries. Our review of the evidence leads us to conclude otherwise.

Of the existing patients who testified,² all but one continued to see Dr. Scheffey and received treatment, including surgery, despite CNA’s statements and lack of approval. The only existing patient who did not have the surgery recommended by Dr. Scheffey was Brenda Scott, who had been injured in 1988. Scott entered into a settlement with CNA in 1990. Scott conceded, once she received the settlement, she could not recover additional monies for her 1988 injury. Scott further testified she did not begin seeing Dr. Scheffey until after the settlement with CNA. Dr. Scheffey testified Scott needed additional surgery, but CNA refused to approve payment for it. There was evidence CNA had a clear, legal, non-tortious justification for refusing treatment for Scott (the 1988 settlement); Dr. Scheffey, however, offered no more than inferences that the refusal of further monies for Scott’s treatment after the settlement was a malicious act motivated by CNA’s intent to interfere with his business relationship with Scott.

The testimony by other existing patients showed CNA’s refusal to approve Dr. Scheffey’s treatment did not prevent them from receiving treatment or preclude Dr. Scheffey from obtaining payment for these services. Further testimony from Brenda Scott showed CNA’s refusal to pay for additional treatment occurred after CNA had settled with Scott on her worker’s compensation claim. Thus, the testimony of Dr. Scheffey’s existing patients does not show CNA’s refusal to approve treatment by Dr. Scheffey was tortious interference that harmed Dr. Scheffey. Because there was no evidence of tortious interference based on non-defamatory statements by CNA, the trial court properly limited the jury question to tortious interference by defamatory statements. We overrule Dr. Scheffey’s conditional cross-point. Having sustained CNA’s challenge to the finding of proximate cause, we need not address CNA’s remaining points of error.

*8 Having held there is no evidence supporting the jury’s finding of tortious interference with existing or prospective business relationships by defamatory statements and no evidence of tortious interference by non-defamatory statements, we reverse and render judgment that Dr. Scheffey take nothing on his claims.

	Footnotes
1		At the time of submission of the charge, Dr. Scheffey asserts that he submitted jury questions on three theories of recovery: defamation, tortious interference with prospective business relationships, and tortious interference with ongoing business relationships.
1		Under the defense of legal justification, one is privileged to interfere with another’s business relations if it is done in a bona fide exercise of one’s own rights, or if one has an equal or superior right in the subject matter. Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 939 (Tex.1991).
2		In his brief, Dr. Scheffey also refers to evidence regarding Antonio Sanchez. Sanchez did not testify; however, Junie Wolfe, a CNA adjuster, did testify that Sanchez was a claimant against Transportation Insurance Company, a company within the CNA group. Wolfe testified that Sanchez was awarded a settlement and that there was no referral to Dr. Scheffey. Wolfe had no recollection of any other details about the Sanchez case. This is no evidence that CNA refused to approve treatment by Dr. Scheffey or on what basis there was no referral to Dr. Scheffey. Thus, this testimony is no evidence of tortious interference with any existing or prospective relationship between Dr. Scheffey and Sanchez.