Opinion
No. 05-07-00239-CV
Opinion Filed July 29, 2008.
On Appeal from the County Court at Law No. 2 Dallas County, Texas, Trial Court Cause No. 03-15644-B.
Before Justices MOSELEY, BRIDGES, and LANG-MIERS.
OPINION
This is a breach of contract case filed by a former employee, Tracy L. Dieterich, against his former employer, Arthur J. Gallagher Co. ("the Company"). The Company appeals the trial court's judgment following a jury trial in which the jury found that the Company breached its contract with Dieterich and awarded him back pay, vacation pay, and automobile reimbursement. We affirm.
Factual Procedural Background
The Company is in the business of brokering insurance and benefit plans to employers. It hired Dieterich as a producer, or broker, in October 2001. The Company and Dieterich signed an Executive Agreement in which the Company agreed to employ Dieterich for an initial term of six months. The agreement provided for automatic six-month renewals unless either party gave notice within thirty days of the end of the six-month term that it wished to terminate the employment relationship at the end of the six-month term. In November 2002, the Company notified Dieterich that it intended to terminate the agreement at the end of the six-month term. After it sent that notice, it also reduced Dieterich's salary. Dieterich complained about the salary reduction, but continued to work at the Company until the end of the six-month term.
The Company also reserved the right to terminate Dieterich's employment prior to the end of any six-month term for cause. That provision is not an issue in this appeal.
The Company initially stated the termination would be effective thirty days from the notice, or December 2002. However, pursuant to their agreement, The Company did not terminate Dieterich's employment until the end of the six-month term.
Dieterich sued the Company for breach of contract, contending that the Executive Agreement prohibited the Company from reducing his salary during the notice period, and sought damages for back pay, vacation pay, and automobile reimbursement. The Company contended that the agreement specifically allowed it to modify Dieterich's entitlements at any time, but, even if it did not, Dieterich agreed to modify the agreement by continuing to work at the reduced salary. The trial court submitted the issue to the jury, which found in favor of Dieterich. The jury awarded Dieterich $14,581 in back pay, $3,125 in vacation pay, and $447 in automobile reimbursement. It also awarded him attorney's fees in the amounts of $20,273 for trial, $4,500 for an appeal to the court of appeals, and $3,650 for an appeal to the Texas Supreme Court. The trial court rendered final judgment in accordance with the jury verdict.
Dieterich also alleged other causes of action, all of which were nonsuited and are not before us.
The Company raises eleven issues on appeal: (1) — (2) the trial court erred by submitting questions one, two, and three to the jury because the contract unambiguously provides that the Company may modify Dieterich's salary at any time and Dieterich's acceptance of the reduced salary, instead of quitting, is a modification of the agreement as a matter of law; (3) — (5) the evidence is legally and factually insufficient to support the jury's findings on questions one, two, and three; (6) the evidence is factually insufficient to support the damages award; (7) the trial court erred by awarding attorney's fees; (8) the trial court erred by awarding pre- and post-judgment interest and court costs; (9) Dieterich made improper and incurable jury arguments; (10) the trial court erred by allowing the attorney's fees expert to refresh his recollection with a document excluded from evidence; and (11) the reporter's and clerk's records are incomplete and inaccurate.
Record on Appeal
We address the Company's eleventh issue first. It complains that the trial court did not provide a complete record of the trial proceedings because several pleadings were requested but not included in the record on appeal. This argument is moot because we ordered the district clerk to file a supplemental record containing those pleadings and the record is now complete.
The Company also argues that the record is inaccurate. It contends that the court reporter improperly attached a complete copy of a transcript of a video deposition, part of which was played to the jury, instead of transcribing only the portions of the deposition actually introduced. However, when the Company offered the video deposition into evidence, counsel for the Company "waive[d] the reporting of the deposition testimony" and marked a copy of the entire deposition for record purposes only. As a result, this issue presents nothing for our review. Tex. R. App. P. 33.1(a).
We resolve appellant's eleventh issue against it.
Breach of Contract
A. Preservation of Error
In subparts of its first and second issues, the Company argues that the trial court erred by submitting questions one, two, and three to the jury, because those questions asked the jury to interpret the meaning of an unambiguous contract. Dieterich contends that the Company did not object to the jury charge on this basis and cannot now complain about the submission of those questions. The Company contends that it properly objected. We agree with Dieterich.
The Company made the following objection to the jury charge:
Defendant objects to the submission of any charge to the jury on the grounds that the evidence established that Mr. Dieterich accept[ed] the modification, worked under the modification and as a matter of law cannot then thereafter sue on the breach.
The issue raised on appeal-that the Executive Agreement is unambiguous and its meaning should not have been submitted to the jury-is not the objection the Company made to the jury charge. To complain about charge error, a party must make a specific objection before the court reads the charge to the jury. Tex. Rs. Civ. P. 272, 274; Mitchell v. Bank of Am., N.A., 156 S.W.3d 622, 627-28 (Tex.App.-Dallas 2004, pet. denied); Sec. Sav. Ass'n v. Clifton, 755 S.W.2d 925, 929 (Tex.App.-Dallas 1988, no writ); Tubb v. Bartlett, 862 S.W.2d 740, 748 (Tex.App.-El Paso 1993, writ denied). Because the Company did not object to the submission of questions one, two, and three on the basis that the Executive Agreement is not ambiguous, we conclude that the Company has not preserved this issue for our review. See Mitchell, 156 S.W.3d at 627-28; Clifton, 755 S.W.2d at 929.
We resolve these subparts of issues one and two against the Company.
B. Legal and Factual Sufficiency of the Evidence
In additional subparts of issues one and two, and in issues three, four, and five, the Company argues that the evidence is legally and factually insufficient to support the jury's findings.
1. Standard of Review
When we review legal sufficiency, we review the evidence in a light that tends to support the finding of the disputed facts and disregard all evidence and inferences to the contrary. Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex. 2001); Joplin v. Borusheski, 244 S.W.3d 607, 610 (Tex.App.-Dallas 2008, no pet.). We must credit the favorable evidence if reasonable jurors could and disregard the contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Joplin, 244 S.W.3d at 610. When reviewing a finding for factual sufficiency, we consider all of the evidence and will set aside the finding 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. 1986) (per curiam); Joplin, 244 S.W.3d at 610.
2. Provisions of the Executive Agreement
The provisions of the Executive Agreement at issue here state:
EMPLOYMENT AND REMUNERATION
* * *
Paragraph Two. The Company agrees that the Executive shall be entitled to the semi-monthly payment of compensation and, to the extent provided for in accordance with Company policy, the following: an annual paid vacation, and various employee benefit plans. It is understood and agreed that the Company may from time to time modify the specific terms and conditions of these entitlements. The Company agrees that the Executive shall be entitled to reimbursement for traveling, entertainment and other expenses reasonably incurred by the Executive in the performance of his employment obligations and responsibilities. It is understood and agreed that the Company's liability in this regard shall be limited by the terms and conditions of the Company policy in effect on the date that the expense is incurred.
* * *
TERM/TERMINATION OF EMPLOYMENT RELATIONSHIP
Paragraph Six. Company agrees to employ Executive for a term of six(6) months from the date of the execution of this Agreement. At the end of the initial six month term and any subsequent six month term, the Executive's employment with the [C]ompany shall be automatically renewed for a term of six months unless either party, not less than thirty (30) days prior to the end of any six month term (the "Notice Period"), notifies the other party that the notifying party wishes to terminate employment at the end of the six month term; provided, however, that the Company shall have the right to terminate the employment of Executive at any time prior to the end of any six month term, with no liability on the part of the Company. . . .
Paragraph Seven. The Company agrees to continue in effect during the Notice Period the compensation and benefits to which the Executive may be entitled under Paragraph Two of this Agreement. It is understood and agreed that at the expiration of the Notice Period, the Executive's entitlement to such remuneration shall cease.3. The Parties' Intent
The Company argues that the evidence is legally and factually insufficient to support the jury's "yes" answers to questions one and two:
QUESTION NO. 1:
Did Tracy L. Dieterich and Arthur J. Gallagher Company (Gallagher) agree that the compensation or salary paid by Gallagher to Tracy L. Dieterich would not be reduced during the "Notice Period" in Paragraph 6 of the Executive Agreement between Tracy L. Dieterich and Gallagher?
In deciding whether the parties reached an agreement, you may consider what they said and did in light of the surrounding circumstances, including any earlier course of dealing. You may not consider the parties' unexpressed thoughts or intentions.
QUESTION NO. 2:
Did Gallagher fail to comply with the agreement?
We disagree.
Dieterich testified that he was contacted by a recruiter for the Company to see whether he had an interest in working for the Company to help expand its Dallas office. He agreed to meet with Mike Brewer, the Executive Vice President, and Bob Smith, the Dallas Branch Manager. Dieterich offered as evidence the Company's written offer of employment to him. The letter offered Dieterich a producer position, earning $150,000 annual base salary plus a guaranteed bonus to bring the salary to $180,000, the salary Dieterich stated he would need to accept the job. Dieterich accepted the offer, signed the Executive Agreement, and began to work for the Company in October 2001. He testified that he understood that the Executive Agreement allowed the Company to change his entitlements "from time to time," but that it did not allow the Company to change his compensation during the notice period. He based this understanding on paragraph two of the agreement, which stated that those entitlements would "continue in effect" during the notice period. Dieterich also testified that his salary remained at $180,000 until two months into the notice period, when the Company, without notice to him, reduced his salary. He sent a memo to the new Dallas branch manager, Jerry Guy, inquiring about the "mistake." The memo stated that he understood the Company could not change his base salary, based on the Executive Agreement, because he was within the notice period.
The Company offered the testimony of Guy and Brewer. Guy testified that the Executive Agreement allowed it to modify Dieterich's salary at any time, including during the notice period. He said that the Company modified Dieterich's salary as allowed under paragraph two of that agreement and continued to pay him at the reduced salary during the notice period. Both Guy and Brewer testified that the Executive Agreement did not limit the amount the Company could reduce Dieterich's salary during the notice period.
By its answers to questions one and two, the jury determined that the Company and Dieterich agreed that Dieterich's salary would not be reduced during the notice period and that the Company breached the Executive Agreement by reducing his salary during the notice period. We conclude that the evidence is legally and factually sufficient to support those findings.4. Question Three
The Company argues that when it reduced Dieterich's salary, it modified the Executive Agreement and Dieterich accepted the modification as a matter of law when he continued to work at the reduced salary. It argues that the evidence is legally and factually insufficient to support the jury's finding that Dieterich did not agree to the modification:
QUESTION NO. 3:
Was Gallagher's failure to comply excused?
INSTRUCTIONS:
* * *
4) Failure to comply with one agreement is excused if the parties agreed that a new agreement would take its place.
The jury answered "no" to question three.
Contract modification is an affirmative defense, and the Company bore the burden of proof to show the contract was modified. See Intec Sys., Inc. v. Lowrey, 230 S.W.3d 913, 918 (Tex.App.-Dallas 2007, no pet.) (citing Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984)); see also Barrand, Inc. v. Whataburger, Inc., 214 S.W.3d 122, 145 (Tex.App.-Corpus Christi 2006, pet. denied). A contract modification must satisfy the elements of a contract: a meeting of the minds supported by consideration. Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 228 (Tex. 1986); Barrand, 214 S.W.3d at 145. Whether the Company and Dieterich modified the Executive Agreement depends on their intent. Hathaway, 711 S.W.2d at 228-29. Notice of the modification and the certainty of its imposition must be shown. See id. at 229. The Company bore the burden of showing that it gave Dieterich notice of the proposed modification and that he accepted the modification. See id.
The evidence showed that the Company paid Dieterich an annual base salary of $150,000 beginning in October 2001 through January 15, 2003. It also showed that the Company reduced Dieterich's salary on his January 31, 2003 paycheck by more than one-third and made it retroactive to January 1, 2003. Guy testified that he discussed Dieterich's lack of production with him and told him that an adjustment in compensation was an option the Company might make. But Guy did not testify that the Company notified Dieterich of the certainty of a reduced salary. See Hathaway, 711 S.W.2d at 229 ("To have knowledge of a modification, the employee must know the nature of the changes and the certainty of their imposition."); Price Pfister, Inc. v. Moore Kimmey, Inc., 48 S.W.3d 341, 350 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). Dieterich testified that the Company did not notify him that his salary was being reduced and that he found out that his salary was reduced when he received his paycheck. He also stated that he contacted Guy about getting the "mistake" corrected. We conclude that the evidence is legally and factually sufficient to support the jury's finding that the Company's failure to comply with the employment agreement was not excused.
We resolve issues one, two, three, four, and five against appellant.5. Damages
In its sixth issue, the Company argues that the evidence is factually insufficient to support the jury's award of damages for vacation pay and automobile reimbursement.
Dieterich testified that he did not take vacation in 2003 and that the Company owed him for one-half of a two-week vacation, or five days, based on his base salary of $150,000. He estimated that amount to be approximately $3,125. On cross-examination, the Company's branch manager calculated Dieterich's weekly salary based on an annual income of $150,000 and arrived at $2,885. The jury returned a verdict of $3,125 in damages for vacation pay.
On appeal, the Company contends that Dieterich was actually paid through the entire month of April 2003, instead of through April 16, 2003, the end of the six-month term, and, as a result, has already been compensated for his vacation pay because he was overpaid by $4,788. But these calculations were based on a $100,000 annual salary, the amount of the salary after the reduction, not a $150,000 annual salary. We conclude, therefore, that the jury's finding on vacation pay is not so against the overwhelming weight of the evidence as to be clearly wrong and unjust.
The Company also contends that the evidence is factually insufficient to support the jury's award of $447 in damages for automobile reimbursement. We disagree. Dieterich testified that the Company owed him $447.19 for automobile reimbursement, and the Company did not offer any evidence to dispute this amount. We conclude, therefore, that the jury's finding is not so against the overwhelming weight of the evidence as to be clearly wrong and unjust.
We resolve appellant's sixth issue against it.
Attorney's Fees
We next address the Company's seventh and tenth issues. In two subparts of its seventh issue, it argues that the trial court improperly submitted the issue of attorney's fees to the jury because Dieterich did not segregate his attorney's fees, and the evidence is legally and factually insufficient to support the award. In its tenth issue, it argues that the attorney's fee award must be reversed because Dieterich's expert was allowed to refresh his memory with a document that had not been provided in discovery.
A. Segregation of Fees
In the proper case, a failure to segregate attorney's fees may result in the recovery of zero attorney's fees. Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 389 (Tex. 1997). However, a failure to object to the fact that the attorney's fees are not segregated as to specific claims waives the objection on appeal. Id.; Lamajak, Inc. v. Frazin, 230 S.W.3d 786, 797 (Tex.App.-Dallas 2007, no pet.). In this case, the Company did not object to the charge as submitted. Having failed to object to the charge, the Company cannot complain about the failure to segregate attorney's fees. Solis, 951 S.W.2d at 389; Lamajak, Inc., 230 S.W.3d at 797.
We also note that the Company submitted a proposed jury instruction on attorney's fees which did not ask the jury to segregate the fees.
B. Legal and Factual Sufficiency of the Evidence
The Company also argues that the evidence is legally and factually insufficient to support the award of attorney's fees because Dieterich's attorney, Robert Jenkins, did not offer any evidence of the Anderson factors. It also contends that Jenkins's testimony about the fees charged by Dieterich's prior attorney is "simply a bald conclusion without any factual basis" because Jenkins did not have personal knowledge about the former attorney's experience, ethics, morality, truthfulness, or billing habits.
See Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (factors to be considered in determining an award of attorney's fees are (1) time and labor involved, novelty and difficulty of questions involved, and skill required; (2) likelihood that lawyer will be precluded from accepting other employment; (3) fee customarily charged for similar services; (4) amount involved and results obtained; (5) time limitations imposed by client or circumstances; (6) nature and length of professional relationship with client; (7) experience, reputation, and abilities of lawyers performing services; and (8) whether fee is fixed or contingent).
Initially, we note that evidence of each of the Anderson factors is not required to support an award of attorney's fees. Lamajak, Inc., 230 S.W.3d at 797. Additionally, Jenkins testified, without objection, as an expert witness on attorney's fees. An expert is not required to have personal knowledge of the matters about which he testifies. See Tex. Rs. Evid. 602, 703. An expert on attorney's fees may testify that he reviewed an attorney's file and offer an opinion that the fees charged for that work were reasonable and necessary. See Brazos Elec. Power Co-op., Inc. v. Weber, 238 S.W.3d 582, 584 (Tex.App.-Dallas 2007, no pet.).
Here, Jenkins testified that he reviewed the former attorney's file, his level of experience, the type of work he did on the case, the number of hours he worked, and his billing rate. He opined that the former attorney's fees were reasonable and necessary. Jenkins also testified about his own representation of Dieterich. He testified about his level of experience, his fee arrangement with Dieterich, and the type of work he did on the case. Jenkins testified that, although the case seemed relatively simple at first, it involved numerous continuances, discovery, and multiple attempts at summary judgment over a three-year period. He testified that their combined fees of $17, 873.77 up until the time of trial were reasonable and necessary for the work done on the case. Jenkins also estimated trial fees at $1,200 per day based on an eight-hour day. We also note that the trial lasted at least two days. We conclude that this testimony is sufficient to support the jury's award of attorney's fees.
The Company does not challenge the award of attorney's fees for an appeal to the court of appeals or the Texas Supreme Court.
We resolve appellant's seventh issue against it.
C. Document Used to Refresh Recollection
At a pretrial hearing, the Company objected when Dieterich offered as evidence any document about attorney's fees that had not been produced during discovery. The trial court ruled that if such a document had not been produced, it would be excluded. At trial, Jenkins was asked to calculate the total attorney's fees incurred on Dieterich's behalf in this case by multiplying the number of hours each attorney billed by that attorney's billing rate. Jenkins did not have a calculator and was not able to testify about the total fees without referring to a summary he had prepared. He used the summary to refresh his recollection about the total amount of attorney's fees. See Tex. R. Evid. 612. The Company objected to this use of the document because it had not been produced in discovery, but the trial court overruled the objection and allowed Jenkins to refresh his recollection using the document.
We note that Jenkins did not testify about any matters contained in the document other than the actual calculation of the total fees. We cannot conclude that the trial court erred by allowing this use of the document. But, even if it was error, the Company has not shown how the error resulted in the rendition of an improper verdict because the jury could have used Jenkins's testimony about the number of hours worked and the billing rate to make its own calculation.
We resolve appellant's tenth issue against it.
Incurable Jury Argument
We next address the Company's ninth issue, in which it contends it is entitled to a new trial because, during closing argument, Dieterich asked the jurors to place themselves in his shoes. The Company complains about the following closing arguments:
Ask yourself, if you're making $150,000 a year and you are reduced to $100,000 a year, does your salary continue in effect or was it changed?
Well, ask yourself, if you're an employee and you have an employment agreement, and that agreement says you are going to have this salary because of the offer letter you have a salary of $150 [sic] a year, and they reserve the right to reduce that at any time to any amount, what's that contract worth to you as an employee. What protections does this contract provide?
Although the Company did not object to these arguments at the time they were made, it raised the issue in its motion for new trial. This was sufficient to preserve the issue for our review. See Taylor v. Am. Fabritech, Inc., 132 S.W.3d 613, 624 (Tex.App.-Houston [14th Dist.] 2004, pet. denied). It also complains about the following jury argument:
[T]ake your common sense, read the documents, the Executive Agreement and the offer letter, and you decide what "continue in effect" means to you. And if this contract was presented to you under the circumstances it was presented to Mr. Dieterich. . . . And you decide what that contract means and whether it was breached or not.
The Company objected to this argument, and the trial court sustained the objection. However, the Company did not request a curative instruction. It argues on appeal that all of these arguments were so prejudicial that no instruction from the trial court could undo the damage they had already caused. In other words, it contends that these jury arguments were incurable. See Otis Elevator v. Wood, 436 S.W.2d 324, 333 (Tex. 1968).
Incurable jury argument is rare. See Living Ctrs. of Tex. v. Penalver, No. 06-0929, 2008 WL 204502, at *2 (Tex. Jan. 25, 2008). The complaining party "must show that the argument by its nature, degree, and extent constituted such error that an instruction from the court or retraction of the argument could not remove its effects." Id. at *2-3. The test is whether the argument "was reasonably calculated to cause such prejudice to the opposing litigant that a withdrawal by counsel or an instruction by the court, or both, could not eliminate the probability that it resulted in an improper verdict." Id. Incurable jury argument has been found in arguments that appeal to prejudice; make unsupported, extreme, and personal attacks on opposing parties and witnesses; and accuse the opposing party of manipulating a witness without evidence of witness tampering. Id. (citing Std. Fire Ins. v. Reese, 584 S.W.2d 835, 840 (Tex. 1979)). The complaining party must explain on appeal why opposing counsel's argument was incurable based on an evaluation of the whole case, from voir dire to closing argument. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001); Luna v. N. Star Dodge Sales, Inc., 667 S.W.2d 115, 220 (Tex. 1984); World Wide Tire Co. v. Brown, 644 S.W.2d 144, 146-47 (Tex.App.-Houston [14th Dist.] 1982, writ ref'd n.r.e.).
The Company correctly argues that appeals to the jury to place themselves in the shoes of a litigant generally are improper. See Bookhout v. McGeorge, 65 S.W.2d 512, 520 (Tex.Civ.App.-Dallas 1933, writ dism'd). However, the Company does not explain why the arguments were incurable based on an evaluation of the whole case. And after examining the entire record, we cannot say that the error was so harmful that its effect could not have been removed by a proper curative instruction. See Fambrough v. Wagley, 140 Tex. 577, 585, 169 S.W.2d 478, 482 (1943).
We resolve appellant's ninth issue against it.
Based on our disposition of issues one through seven, nine, and ten, we do not need to reach issue eight.
Conclusion
We affirm the trial court's judgment.