Opinion
NO. 14-19-00006-CV
03-02-2021
EDDIE PICARD, Appellant v. THERESA BADGETT, Appellee
On Appeal from the 125th District Court Harris County, Texas
Trial Court Cause No. 2014-73680
MEMORANDUM OPINION
This case involves the sale of a tax, bookkeeping, and financial services business. The dispute centers around the buyer's default on the note and the seller's reacquisition of the business. After a bench trial, the trial court rendered judgment for the seller.
In eight issues, the buyer Eddie Picard challenges the trial court's judgment for the seller Theresa Badgett. Picard contends (1) Badgett lacked standing or capacity to bring the lawsuit; (2) the parties did not create an enforceable contract; (3) Picard was not a party to the contract in his individual capacity and did not personally guarantee performance; (4) Picard established several affirmative defenses; (5) the trial court's award of damages and several findings of fact and conclusions of law are not supported by sufficient evidence, consequential damages are not recoverable, and the judgment does not conform to the pleadings; and (6) the trial court erred in awarding attorney's fees to Badgett. We affirm.
Background
The agreement that forms the basis of this lawsuit states, "This Asset Sale and Purchase Agreement . . . is made by and between EAP Ventures Ltd., ('Buyer') and Theresa Badgett and BTFS Management, Inc. (collectively 'Seller')" ("Purchase Agreement"). The Purchase Agreement includes a clause entitled "Acknowledgment and Guarantee" that states, "By signing below, Buyer and Seller acknowledge that they have read and understand this Agreement and have received a copy of it. The undersigned warrant that their signatures are legally sufficient to bind the Buyer and Seller, respectively, and personally guarantee performance hereunder." The Purchase Agreement was signed by "Theresa Badgett, Individual" as "Seller" and "Eddie Picard, Individual" and on behalf of "PMP Ventures, GP, LLC" as "Buyer." A signature line for "BTFS Management, Inc." under "Seller" was left blank, and PMP Ventures was designated as "General Partner."
Picard made a payment of $115,000 and signed a promissory note individually and on behalf of PMP Ventures as "Buyer," agreeing to pay "Seller" an additional $485,000 in monthly installments. Badgett signed the note individually as "Seller," and the signature line for BTFS Management again was left blank.
According to Picard, Badgett "never transferred the assets or clients of the business to [the] Buyer as contemplated by the agreement." Picard purchased the business in the middle of tax season, and Badgett told him that she would transfer the tax filing software to Picard after tax season but never did so. Badgett transferred the phone system to Picard, but had it transferred back after approximately one month. Badgett did not transfer her cell phone number or the business email address to Picard, which Picard contends was essential to the business transfer. The tax software likewise was never transferred to Picard, and according to Picard, Badgett did not make client introductions to him.
Badgett asserts that she "performed her obligations under the contract, conveying all the assets of an accounting, tax preparation, bookkeeping, auditing and/or other financial services business to a legal entity owned by Picard," but Picard failed to perform all the duties necessary to transfer the business, failed to obtain the license required to "serve as a financial advisor," and caused damages to the business and Badgett. According to Badgett, she never transitioned the financial services clients to Picard because she was not authorized to do so until Picard acquired his license, which never happened.
Picard operated the business at a loss, was forced to close it, and stopped making payments on the promissory note. Badgett reacquired the business and filed suit against Picard for breach of contract. By the time of trial, Badgett had control of all the business assets, including real estate, and all the employees were working for Badgett. After a bench trial, the trial court rendered judgment awarding damages and attorney's fees to Badgett.
Discussion
The issues can be divided into the following categories: (1) legal authority to bring the lawsuit (issue four), (2) contract formation (issue two), (3) contract interpretation (issue three), (4) breach of contract defenses (issues two, five, and six), and (5) damages and attorney's fees (issues one and eight). We first turn to whether Badgett had legal authority to bring the lawsuit.
We discuss the issues out of order for organizational purposes.
I. Legal Authority to Bring Lawsuit
In issue four, Picard contends that Badgett lacked standing to sue because the "Seller" was identified in the Purchase Agreement as both BTFS Management and Badgett. Picard also asserts "[i]f [his] standing arguments are construed as capacity arguments, . . . Badgett lacked capacity to sue on the [Purchase] Agreement without BTFS Management." Badgett contends that as the only seller who signed the Purchase Agreement, she was personally aggrieved and has standing and capacity to sue. We conclude that the issue is one of capacity, not standing.
Issues regarding standing and capacity to sue are both questions of law that we review de novo. Farmers Tex. Cty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237, 240 (Tex. 2020) (standing); Byrd v. Estate of Nelms, 154 S.W.3d 149, 155 (Tex. App.—Waco 2004, pet. denied) (capacity); Anderson v. New Prop. Owners' Ass'n of Newport, Inc., 122 S.W.3d 378, 384 (Tex. App.—Texarkana 2003, pet. denied) (capacity). A plaintiff must have both standing and capacity to bring a lawsuit. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). Standing involves whether a party has a sufficient relationship with the lawsuit to have a "justiciable interest" in its outcome; capacity is "a procedural issue dealing with the personal qualifications of a party to litigate." Id. A plaintiff has standing when she is personally aggrieved, regardless of whether she is acting with legal authority. Harrison v. Reiner, 607 S.W.3d 450, 459 (Tex. App.—Houston [14th Dist.] 2020, pet. filed). Conversely, capacity implicates the legal authority to act, regardless of whether a party has a justiciable interest in the controversy. Id. A party to a contract has a justiciable interest in an alleged breach, regardless of whether all proper parties have been joined in the lawsuit. See id. at 460 (holding party to surety bond contract had an enforceable interest as a party to sue for the contract's alleged breach).
Picard conflates standing with capacity. He relies on Nauslar v. Coors Brewing Co., 170 S.W.3d 242, 249 (Tex. App.—Dallas 2005, no pet.), for the proposition that issues regarding who has the primary right of action are questions of standing. In that case, neither of the plaintiffs were actual parties to the subject agreement. Id. at 247. The contracting party was a limited partnership. Id. The two plaintiffs were an individual who did not have a direct interest in the limited partnership and the limited partner. Id. Neither the general partner nor the limited partnership was a plaintiff in the lawsuit. Id. In this case, by contrast, Badgett herself is a party to the contract. Nauslar is distinguishable on this basis.
Moreover, the supreme court implicitly overruled Nauslar when it held that a limited partner in a partnership does indeed have constitutional standing to sue for an alleged loss in value of its interest in the partnership even if the limited partner does not have capacity to bring such a claim. Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 778 (Tex. 2020) ("[A] partner or other stakeholder in a business organization has constitutional standing to sue for an alleged loss in the value of its interest in the organization."); see also Lipshy v. Burk, No. 05-19-00493-CV, 2020 WL 6696368, at *2 (Tex. App.—Dallas Nov. 12, 2020, no pet. h.) (mem. op.).
We must construe the Purchase Agreement to determine the identity of the contracting parties. See Mission Grove, L.P. v. Hall, 503 S.W.3d 546, 552 (Tex. App.—Houston [14th Dist.] 2016, no pet.). We examine the instrument as a whole and not just isolated parts; no single provision is given controlling effect. See id. at 552, 554. The Purchase Agreement states that it "is made by and between EAP Ventures Ltd. ('Buyer') and Theresa Badgett and BTFS Management, Inc. (collectively 'Seller'). Buyer and Seller are occasionally referred to herein singularly as the 'Party' or collectively as the 'Parties.'" The "Seller Financing Addendum" attached to the Purchasing Agreement includes a section entitled "Promissory Note," which states, "At the time of closing Buyer agrees to pay Seller $115,000 and Buyer agrees to provide Seller with a Note as follows. . . ." As discussed, both the Purchase Agreement and the Seller Financing Addendum have signature blocks under "Seller" for "Theresa Badgett, Individual" and "BTFS Management, Inc.," but Badgett signed only the "Individual" signature blocks on both documents, and the signature blocks for BTFS Management are unsigned.
Picard contends that Badgett and BTFS Management together form a general partnership and Badgett is an individual stakeholder in the general partnership who cannot "recover personally for harms done to the legal entity." Given that Badgett is a named party to the Purchase Agreement, we do not agree that she is an individual stakeholder who cannot recover personally.
As a party to the Purchase Agreement, Badgett has standing; the question is whether she has the capacity to sue without BTFS Management. See Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 779 (Tex. 2020) ("[T]he question whether a claim brought by a partner actually belongs to the partnership is . . . a matter of capacity [not standing] because it is a challenge to the partner's legal authority to bring the suit."). As the party challenging capacity, Picard bore the burden of proof. See Christi Bay Temple v. GuideOne Specialty Mut. Ins. Co., 330 S.W.3d 251, 253 (Tex. 2010).
Picard raised the issue of capacity below by verified pleading. See Harrison, 607 S.W.3d at 459 ("[U]nlike standing, which may be raised at any time, a challenge to a person's capacity must be raised by verified pleading in the trial court.").
We must determine the effect, if any, of BTFS Management's not signing the Purchase Agreement and Seller Financing Addendum. The inclusion of a name in the opening sentence of an agreement generally will not bind a party that declines to sign the agreement. See, e.g., Willis v. Donnelly, 199 S.W.3d 262, 271 (Tex. 2006) (holding a person was not a party to an agreement when his name was included in the opening sentence "individually" but he crossed out the signature block and refused to sign in his personal capacity). Badgett's signature block was expressly designated as her "Individual" signature, and the BTFS Management signature block was unsigned, so nothing in the Purchase Agreement or Seller Financing Addendum indicates that she signed them on behalf of BTFS Management. Cf. Wolf v. Summers-Wood, L.P., 214 S.W.3d 783, 792 (Tex. App.—Dallas 2007, no pet.) ("If a person signs a contract in her corporate capacity, she is not individually a party to the contract."). And Picard does not contend or point to any evidence that BTFS Management is bound to the Purchase Agreement and Seller Financing Addendum as a non-signatory. We conclude under these circumstances that BTFS Management is not a party to the Purchase Agreement and Seller Financing Addendum.
Picard also argues Badgett and BTFS Management "must act together to enforce the Note," citing McAllen Hospitals, L.P. v. State Farm County Mutual Insurance Co. of Texas, 433 S.W.3d 535, 539 (Tex. 2014) (citing Tex. Bus. & Com. Code § 3.110(d)). The case Picard relies on involved insurance settlement checks made out to copayee patients and a hospital. Id. at 538. Because the checks were not endorsed by the hospital, the supreme court held, pursuant to the UCC, that the checks did not discharge the insurance company's obligation to pay the hospital. Id. at 539; see also Tex. Bus. & Com. Code § 3.110(d) ("If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them."). Here, the "Seller" identified in the Seller Financing Addendum is the payee, and this case does not involve a situation in which only one of multiple payees endorsed and cashed an instrument. Accordingly, the case law relied on by Picard is distinguishable. Moreover, because BTFS Management was not a party to the Seller Financing Addendum, we need not decide whether multiple payees on a note are required to establish capacity to enforce a note.
Other than arguing BTFS Management is a party to the Purchase Agreement and Seller Financing Addendum and should have been a plaintiff, Picard presented no evidence that Badgett lacked authority to sue without joining BTFS Management. Given that Badgett is the only party to the Purchase Agreement and Seller Financing Addendum on the seller's side, Picard has not met his burden to establish Badgett's lack of capacity. See Christi Bay Temple, 330 S.W.3d at 253 (holding court erred in dismissing church's claims when there was "no evidence that the church lacked capacity"). We overrule issue four.
II. Contract Formation
Turning to the merits of the case, in his second issue, Picard challenges the sufficiency of the evidence in support of the trial court's findings and rulings on Badgett's breach of contract claims. The trial court found, in relevant part, that the Purchase Agreement is an enforceable contract, Badgett "fully or substantially performed her contractual obligations under" the Purchase Agreement, Picard breached the Purchase Agreement, Picard is entitled to defenses of illegality and failure of consideration "in whole or in part," and Picard's other affirmative defenses failed.
We may review a trial court's findings for both legal and factual sufficiency. Summit Glob. Contractors, Inc. v. Enbridge Energy, Ltd. P'ship, 594 S.W.3d 693, 698 n.3 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (citing Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994)). We review a sufficiency challenge to court findings using the same standards applied in reviewing the evidence supporting jury findings. Id. at 698.
We sustain a legal sufficiency or "no evidence" challenge only when (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital fact. Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex. 2003); Summit Glob. Contractors, 594 S.W.3d at 698. A party attacking the legal sufficiency of an adverse finding on an issue on which he had the burden of proof must show that the evidence conclusively establishes all vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001); Summit Glob. Contractors, 594 S.W.3d at 698.
In reviewing factual sufficiency, we must examine the entire record, considering both the evidence in favor of and contrary to the challenged findings. 2900 Smith, Ltd. v. Constellation NewEnergy, Inc., 301 S.W.3d 741, 746 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (citing Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998), and Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986)). We may set aside the verdict for factual sufficiency only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id. The amount of evidence necessary to affirm a judgment is far less than the amount necessary to reverse a judgment. Id. We are not a factfinder. Id. (citing Mar. Overseas Corp., 971 S.W.2d at 407). If we determine the evidence is factually insufficient, we must detail the evidence relevant to the issue and state in what regard the contrary evidence greatly outweighs the evidence in support of the verdict; we need not do so when affirming a verdict. Id. (citing Gonzalez v. McAllen Med. Ctr., Inc., 195 S.W.3d 680, 681 (Tex. 2006) (per curiam)).
We apply these standards mindful that the factfinder is the sole judge of the credibility of the witnesses and the weight to be given to their testimony. See City of Keller v. Wilson, 168 S.W.3d 802, 819, 822 (Tex. 2005); Summit Glob. Contractors, 594 S.W.3d at 698-99. When, as here, there is a complete reporter's record of the trial, the trial court's findings of fact will not be disturbed on appeal if there is any evidence of probative force to support them. Summit Glob. Contractors, 594 S.W.3d at 699.
We review a trial court's conclusions of law de novo and will uphold them if the judgment can be sustained on any legal theory supported by the evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Summit Glob. Contractors, 594 S.W.3d at 699. We review the legal conclusions drawn from the facts to determine their correctness. BMC Software, 83 S.W.3d at 794; Summit Glob. Contractors, 594 S.W.3d at 699. Incorrect conclusions of law do not require reversal if the controlling findings of fact support the judgment under a correct legal theory. BMC Software, 83 S.W.3d at 794; Summit Glob. Contractors, 594 S.W.3d at 699.
We first address whether an enforceable contract was formed. Picard contends that no enforceable contract was formed because (1) the Purchase Agreement was not signed by BTFS Management, and (2) certain essential and material terms were missing from the contract.
A. Parties to the Purchase Agreement
Picard argues that BTFS Management was required to sign the Purchase Agreement for it to be binding. We have already held that BTFS Management is not a party to the Purchase Agreement. But according to Picard, the following language in the Purchase Agreement required BTFS Management to sign for a binding contract to be formed: "By signing below, Buyer and Seller acknowledge that they have read and understand this Agreement and have received a copy of it. The undersigned warrant that their signatures are legally sufficient to bind the Buyer and Seller, respectively, and personally guarantee performance hereunder."
Our sister court has noted, in a case relied on by Picard, that "[p]arties may provide that the signature of each party is a prerequisite to a binding written contract. Where parties to a written contract intend that it shall not be binding until . . . signed by the parties, the signatures of both parties are required to give effect to the contract." New York Party Shuttle, LLC v. Bilello, 414 S.W.3d 206, 214 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). In that case, the court of appeals held that the evidence was legally sufficient to support the trial court's finding that signatures were required to amend a settlement agreement. Id. at 215.
Picard also relies on In re Bunzl USA, Inc., 155 S.W.3d 202 (Tex. App.—El Paso 2004, no pet.). In that case, an employment agreement containing an arbitration clause was not signed by the party seeking to compel arbitration. Id. at 210. The agreement was signed only by the employee and not the employer. Id. The court of appeals held there was evidence supporting the trial court's finding that the parties did not intend to be bound until both parties signed the agreement because the agreement had a signature block that was never signed and the agreement stated, "No modification or amendment of any provision of this Agreement is effective unless it is in writing and signed by the parties to this Agreement." Id. at 211. Picard also cites Simmons, which similarly involves a contract that was signed only by one party. See Simmons & Simmons Const. Co. v. Rea, 155 Tex. 353, 355, 286 S.W.2d 415, 416 (1955). The party in that case who did not sign the agreement also expressly declined "to enter into the contractual agreement." Id. Here, by contrast, the Purchase Agreement was signed by both a buyer and a seller, and no language in the Purchase Agreement states that it had to be signed by both sellers identified in the opening paragraph for the Purchase Agreement to be enforceable.
We also note that the Purchase Agreement identified EAP Ventures as the "Buyer" in the opening paragraph, but the Purchase Agreement is signed by Picard and PMP Ventures as "Buyer."
Picard points to the following language in the Purchase Agreement in support of his argument that BTFS Management was required to sign: "The entire agreement of the Buyer and Seller relating to the sale and purchase of the Business Assets is set forth in this Agreement and can only be amended or modified in writing." But this language does not say anything about which parties must sign the Purchase Agreement, and as discussed, BTFS Management is not a party.
In this case, there is no evidence that to be binding, the Purchase Agreement had to be signed by BTFS Management. The language in the Purchase Agreement indicates that the signers agreed their signatures were legally sufficient to bind their performance under the terms of the Purchase Agreement. By signing, Badgett, Picard, and PMP Ventures all agreed to be bound. The Purchase Agreement does not state that BTFS Management was also required to sign.
B. Essential and Material Terms of the Purchase Agreement
Picard contends that the Purchase Agreement is not enforceable because it does not include the following "essential and material terms": (1) the critical assets being sold; (2) a description of land in the "Option to Purchase Office/Realty" section; (3) transition duties that contemplated the creation of additional contracts; and (4) collateral for seller financing. Badgett argues the Purchase Agreement includes all its essential and material terms because it includes the list of assets to be conveyed, the terms and conditions for performance, and the consideration to be paid.
To be enforceable, a contract must address all its essential and material terms with "a reasonable degree of certainty and definiteness." Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 237 (Tex. 2016); Altech Controls Corp. v. Malone, No. 14-17-00737-CV, 2019 WL 3562633, at *4 (Tex. App.—Houston [14th Dist.] Aug. 6, 2019, no pet.) (mem. op.). "[A] contract must at least be sufficiently definite to confirm that both parties actually intended to be contractually bound." Fischer, 479 S.W.3d at 237; Altech Controls Corp., 2019 WL 3562633, at *4. Even when intent is clear, the agreement's terms must also be sufficiently definite for a court to understand the parties' obligations and give an appropriate remedy for a breach. Fischer, 479 S.W.3d at 237; Altech Controls Corp., 2019 WL 3562633, at *4.
We determine the material terms of a contract on a case by case basis. Fischer, 479 S.W.3d at 237; Altech Controls Corp., 2019 WL 3562633, at *5. That being said, essential terms typically include such items as the names of the parties, the price to be paid, the service to be rendered and assets to be conveyed, the property at issue, and the time of performance. See Houston Cmty. Coll. Sys. v. HV BTW, LP, 589 S.W.3d 204, 212 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (citing City of Houston v. Williams, 353 S.W.3d 128, 138 (Tex. 2011), and Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 838 (Tex. 2010)). This list is not comprehensive or exclusive. See Fischer, 479 S.W.3d at 237; see also Altech Controls Corp., 2019 WL 3562633, at *5. Several principles of contract interpretation guide our analysis: (1) partial performance may remove uncertainty and establish that a contract enforceable as a bargain has been formed, even when some terms are missing or left to be agreed upon; (2) because the law disfavors forfeitures, we conclude terms are sufficiently definite whenever the language is reasonably susceptible to that interpretation; and (3) when construing an agreement to avoid forfeiture, we may imply terms that reasonably can be implied. See Houston Cmty. Coll. Sys., 589 S.W.3d at 213.
Assets. Picard complains that the Purchase Agreement does not describe the assets to be sold "with any particularity." The Purchase Agreement describes the assets as follows:
The sale and purchase shall consist of all the assets of the Business (tax, accounting and financial services) including equipment, furniture, leasehold improvements, computer hardware and software, business name, business phone numbers, business website, client lists, client files, goodwill, contract rights, business records, licenses, franchises, trade secrets, supplies, inventory and Seller related
business bank accounts (the "Business Assets") but not including deposits (except deposits for work not started), cash, accounts receivable or work-in-process existing as of date of Closing.This list of assets is comprehensive: it specifically enumerates what is included and what is excluded.
Also, the parties' performance demonstrates that a contract enforceable as a bargain was formed. Badgett testified that under the Purchase Agreement she was required to help with the transition by notifying clients and encouraging them to keep their business with the company, helping transition employees, forwarding emails, making all records accessible to Picard, notifying Picard "of any complaints that came up for tax purposes," and operating the business in a professional manner. She also testified that she was required to transfer financial clients to a fee-based billing system, but Picard was required to become licensed before the transfer could occur. Badgett also said that she expected Picard to prepare tax returns and take client appointments, which according to Badgett, he did not do.
Badgett had purchased a subscription for tax filing software for 2014, the year of the sale. Picard had the ability to prepare taxes on the software, but Badgett asserted that she later removed his ability to file tax returns because she discovered returns that she had not prepared were being filed with her preparer number. The software required an annual subscription that anyone could buy. Badgett said she renewed the subscription in May because she intended to open a practice more than 200 miles away from the company, as set forth in the Purchase Agreement's noncompete clause.
Picard transferred the television and internet service into his name and agreed to reimburse Badgett for utility bills in her name. Badgett testified that it was Picard's responsibility to transfer the other utilities, but he did not do so and never reimbursed her. Picard testified that his wife transferred the phone system to the business, but Badgett transferred it back to her name after a short period of time.
Picard complains that Badgett did not transfer email addresses to him, but Badgett testified that Picard created a new domain and email addresses for clients. Badgett also said the emails in existence when the Purchase Agreement was signed were on the server and Picard had access to them. According to Badgett, Picard was required to transfer the emails and phone system into his name or the name of his business. Based on these facts, the parties' performance supports an inference that the parties agreed on their respective obligations and that an enforceable contract was formed. See id.
Land Description. The Purchase Agreement included an "Option to Purchase Office/Realty" stating,
Seller hereby grants to Buyer an option to purchase the office building with all land (approximately 5 acres) or to purchase the office building with only the land around the office building (approximately ½ acre) at the discretion of the Buyer at the then fair market value determined by independent appraisal of Buyer's bank.The Purchase Agreement also includes the address of the building, so the only question left open involved the amount of land to be sold, which was left to the discretion of the buyer.
Picard argues that the Purchase Agreement was required to include "a detailed description of the real property under the option contract." We note that the option agreement is one section of a larger agreement. We do not agree that the lack of a legal description of the property renders the contract unenforceable. First, an option contract becomes enforceable after the option has been exercised. See, e.g., Scott v. Vandor, 671 S.W.2d 79, 88 (Tex. App.—Houston [1st Dist.] 1984, writ ref'd n.r.e.) ("As applied to the facts at bar, the option contract was rendered enforceable by the seller executing the general warranty deed and the deposit of it in escrow with the closer for the title company.").
Second, the option to purchase is an agreement on the future sale of an office building and surrounding land. A contract must define its essential terms with sufficient detail to allow a court to determine the obligations of the parties. Katy Int'l, Inc. v. Jiang, 451 S.W.3d 74, 83 (Tex. App.—Houston [14th Dist.] 2014, pet. denied) (citing Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000)). If a contract is not specific enough for the parties to understand their material obligations, it will fail for indefiniteness. Id. Whether an agreement fails for indefiniteness is a question of law. Id. at 84. When an agreement leaves material matters open for future adjustment and agreement that never occur, it is not binding on the parties and merely constitutes an agreement to agree. Id. However, not every detail must be spelled out in a contract. Id. Undefined contractual terms should be interpreted according to common usage, and so doing does not render the contract unenforceable. Id.
Here, the seller agreed to sell an office building at a specific address with approximately five acres or approximately one-half acre of land surrounding the building, depending on the buyer's preference, to the buyer at "the then fair market value determined by independent appraisal of Buyer's bank." These details set forth the material terms of the parties—they address the disposition of the building where the business was located and the surrounding realty and set forth the price to be paid. The terms of the option to purchase the office building and realty were specific enough for the parties to understand their material obligations if Picard chose to exercise the option. See id.
Transition Duties. Picard also contends that the Purchase Agreement included "transition duties which contemplated the creation of two new agreements" and rendered the Purchase Agreement unenforceable. We disagree. In the Purchase Agreement, "Seller [agreed] to be available for additional transitioning after the first thirty . . . days and the Buyer [agreed] to compensate Seller for such time at a rate to be determined." The parties also agreed to "have a separate agreement that covers wages to be paid in an employee/employer relationship if one was to arise." Moreover, "Seller [agreed] to complete the transition of all Financial Services clients . . . within 15 days after tax filing deadline" and "complete . . . a record change [with the software company] within 5 days of Buyer obtaining necessary license and registration with [the software company]." Buyer and Seller agreed to "have a separate agreement to cover compensation" if transition and licensing did not occur simultaneously. These references to some future agreement do not render the agreement unenforceable. See Fischer, 479 S.W.3d at 238 ("[A]n agreement that contains all of its essential terms is not unenforceable merely because the parties anticipate some future agreement.").
Collateral. Picard further complains that the note "gives Seller the right to purchase the related real estate back from buyer, but it fails to adequately describe the property to be repurchased." The note was attached as part of the Seller Financing Addendum. Under the Seller Financing Addendum, "In the event that the Seller acquires control of the practice back from Buyer due to default of Buyer on this note, Seller is hereby provided the right to purchase the related real estate back from buyer, both land and building (as originally purchased from Seller)."
We have already held that the Purchase Agreement included a sufficient description of the property. Moreover, the Seller Financing Addendum specifies that the seller has the option to purchase the property back "at the same price as the original purchase price, plus the then current fair market value of any additions to or investments in the property such as the cost of development from the date of close through the date of reacquisition." Accordingly, the parties agreed to the specific property to be repurchased (that property "originally purchased from Seller") and the price to be paid.
Picard also argues, without citing any authority, that the Seller Financing Addendum created an "unenforceable letter of intent with an agreement creating an enforceable promissory to follow." As an initial matter, this argument was inadequately briefed. See Tex. R. App. P. 38.1(i) ("The brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record."); see also In re Commitment of C.H., 606 S.W.3d 570, 576 (Tex. App.—Houston [14th Dist.] 2020, no pet.). But the Purchase Agreement and Seller Financing Addendum contain all the essential terms to establish each side's representative obligations and enforceable bargains. See, e.g., Foster v. Nat'l Collegiate Student Loan Tr. 2007-4, No. 01-17-00253-CV, 2018 WL 1095760, at *10 (Tex. App.—Houston [1st Dist.] Mar. 1, 2018, no pet.) (mem. op.). ("[T]he Credit Agreement and Note Disclosure Statement, taken together, evidence the essential terms of the loan, including the amount of the loan, and Foster's assent to the terms.") (citing Fort Worth Indep. Sch. Dist., 22 S.W.3d at 840). In addition to what we have discussed above, the Seller Financing Addendum contains the essential terms of the loan, including its amount, payment, and default terms, which enable a court to determine the obligations of the parties. See id.; see also Katy Int'l, Inc., 451 S.W.3d at 83-84.
Conclusion. We conclude that the Purchase Agreement is enforceable because it includes the essential and material terms enabling a court to determine the obligations of the parties. We overrule the portion of issue one involving contract formation. Picard also contends that the Purchase Agreement is unenforceable because the seller did not perform or tender performance. The failure to perform involves Picard's affirmative defense of prior material breach, not formation of the Purchase Agreement. We discuss that issue below, together with Picard's issues related to his other affirmative defenses.
III. Contract Interpretation
Picard contends in his third issue that the trial court erred in rendering judgment against him because he did not personally guarantee performance of the Purchase Agreement. He contends he signed the Purchase Agreement only in a representative capacity on behalf of EAP Ventures. He relies on his testimony that he "did not intend to provide a personal guaranty."
A guaranty agreement is a contract in which one party agrees to be responsible for the performance of another party even if he does not have direct control. Material P'ships, Inc. v. Ventura, 102 S.W.3d 252, 258 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). If a contract is subject to two or more reasonable interpretations, the contract is ambiguous, thereby creating a fact issue on the parties' intent. Id. By contrast, if the written instrument is worded so that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous, and the court will construe the contract as a matter of law. Id. Only after a court first determines a contract is ambiguous may the court consider the parties' interpretations and admit extraneous evidence to determine the true meaning of the instrument. Id. It is improper to use a party's testimony to create an ambiguity when a contract is otherwise unambiguous. Id. Picard does not contend that the Purchase Agreement is ambiguous. We turn to the language of the Purchase Agreement.
Personal Guaranty. In construing a guaranty, we examine and consider the entire writing to harmonize and give effect to all the provisions of the contract so that none of the provisions will be rendered meaningless. State v. Hunter, No. 14-18-00678-CV, 2020 WL 4211241, at *3 (Tex. App.—Houston [14th Dist.] July 23, 2020, no pet.) (mem. op.). A specific set of words is not required to show an intent to be liable on an obligation. Id. To be enforceable, a guaranty agreement must include (1) the parties involved, (2) a manifestation of intent to guarantee the obligation, and (3) a description of the obligation being guaranteed. Id.; Material P'ships, 102 S.W.3d at 261.
All these elements are present in the Purchase Agreement. As to the first element, the parties involved are listed as "EAP Ventures Ltd. ('Buyer') and Theresa Badgett and BTFS Management, Inc. (collectively 'Seller')," although BTFS Management is not a party for the reasons discussed above. The second element—a manifestation of intent to guaranty the obligation—is set forth in the paragraph entitled "Acknowledgment and Guarantee," which reads: "By signing below, Buyer and Seller acknowledge that they have read and understand this Agreement and have received a copy of it. The undersigned warrant that their signatures are legally sufficient to bind the Buyer and Seller, respectively, and personally guarantee performance hereunder." As discussed, under the "Buyer" signature block, Picard signed his name both over the signature line "Eddie Picard, Individual," and over the signature line "PMP Ventures GP, LLC," "Title: General Partner." Regarding the last element—a description of the obligation being guaranteed—the parties "personally guarantee[d] performance" under the Purchase Agreement, and the parties' obligations are set forth therein.
We have held that similar language is sufficient to bind an individual to a personal guaranty. See, e.g., Material P'ships, 102 S.W.3d at 259 ("I, personally, guaranty."). We noted in Material Partnerships that a signature followed by a corporate officeholder title will result in personal liability when the individual is clearly designated in the instrument as personal surety for the principal. Id. Here, Picard's first signature is not followed by a corporate officeholder title: it is followed by the word "Individual." And the language in the guaranty clause refers to a personal guaranty by "[t]he undersigned." The language is clear—it designates "[t]he undersigned" as a personal surety for the principal, and the signature designates Picard as an individual, not as a representative of EAP Ventures. The language in the Purchase Agreement shows a clear intent to bind Picard personally. See id.; see also Hunter, 2020 WL 4211241, at *3 (holding party's signature created not only corporate liability but also personal liability because the language of agreement reflected that the signor would be personally liable for the debt "upon default").
Picard contends, however, that the words "'personally guarantee performance' modify only the nouns Buyer and Seller and do not apply to Badgett or Picard." To the contrary, our reading of the sentence "The undersigned warrant that their signatures are legally sufficient to bind the Buyer and Seller, respectively, and personally guarantee performance hereunder" is that the signers (1) warrant they have the authority to bind the buyer and seller, and (2) personally guarantee performance. In other words, the subject of the sentence is "[t]he undersigned," which relates to the verbs "warrant" and "guarantee."
Not a Conditional Guaranty. Picard also argues that "any guaranty was a conditional guaranty" of collection, not a guaranty of payment, and thus "Badgett should have joined EAP Ventures or pursued EAP Ventures first." Texas law recognizes a distinction between a "guaranty of collection (or conditional guaranty)" and a "guaranty of payment (or unconditional guaranty)." Jamshed v. McLane Exp. Inc., 449 S.W.3d 871, 879-80 (Tex. App.—El Paso 2014, no pet.) (citing Cox v. Lerman, 949 S.W.2d 527, 530 (Tex. App.—Houston [14th Dist.] 1997, no pet.)). A guarantor of collection promises to pay the debt if it cannot be collected from the primary obligor after reasonable diligence. Id. at 880. A guarantor of payment is primarily liable and waives any requirement that the holder of the note take action against the maker as a condition precedent to the guarantor's liability. Id. (citing Cox, 949 S.W.2d at 530). A guaranty agreement is deemed to be a guaranty of payment unless the agreement specifies otherwise, which means the guarantor is jointly and severally liable on the debt and may be sued under the same terms as the principal obligor. Id. (citing Tex. Bus. & Com. Code § 3.419(e)). There is nothing in the language of the personal guaranty specifying that Picard's personal guaranty was a guaranty of collection or that it was conditioned upon the seller using reasonable diligence to collect from EAP Ventures after it failed to pay on the debt. See id. Based on the unconditional language of that personal guaranty, we conclude it was a guaranty of payment and not collection.
Liability of Principal. Picard contends that an indemnification clause in the Purchase Agreement resulted in zero liability and "[a] guarantor's liability on a debt is measured by the principal's liability unless the guaranty expressly sets out a more limited or extensive liability." See Pham v. Mongiello, 58 S.W.3d 284, 288 (Tex. App.—Austin 2001, pet. denied). Picard merely cites the indemnification clause in the Purchase Agreement and argues that the buyer had zero liability under the clause. The indemnification clause states:
Seller and Buyer each agree to indemnify, defend and hold harmless the other Party from any claims, demands, liabilities, losses, damages and expenses (including, without limitation, reasonable attorney's fees) asserted against the other Party and arising out of strict liability, negligence or wrongdoing of the indemnifying Party and its affiliates,
subsidiaries, officers, directors, employees, agents, independent contractors or assigns.
Picard does not make a cogent argument other than to cite the indemnification clause. We decline to make Picard's argument for him. See Tex. R. App. P. 38.1(i) ("The brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record."); see also Sklar v. Sklar, 598 S.W.3d 810, 827 (Tex. App.—Houston [14th Dist.] 2020, no pet.) (holding argument that did not include authority in support of assertion or cogent argument was inadequately briefed). We overrule issue three.
IV. Affirmative Defenses to Breach of Contract
Having concluded that Picard personally guaranteed performance under the Purchase Agreement, we address the challenges in issues two, five, and six to the sufficiency of the evidence in support of the trial court's findings on Picard's breach of contract affirmative defenses. Picard concedes that "payments on the promissory note were stopped" but contends that he established the following affirmative defenses to breach of contract: (1) illegality; (2) failure of consideration; (3) seller's material breach; (4) payment; and (5) statute of frauds. Picard had the burden of proof on these affirmative defenses. To successfully challenge the sufficiency of an adverse finding on an affirmative defense, Picard was required to conclusively establish all vital facts in support of that issue or demonstrate on appeal that the adverse finding is against the great weight and preponderance of the evidence. See Dow Chem. Co., 46 S.W.3d at 241-42; see also Fredieu v. W&T Offshore, Inc., 584 S.W.3d 200, 214 (Tex. App.—Houston [14th Dist.] 2018), aff'd W&T Offshore, Inc. v. Fredieu, 610 S.W.3d 884 (Tex. 2020).
A. Illegality
In its conclusions of law, the trial court stated that Picard is "entitled to a defense of illegality" and "entitled to a defense that the consideration for the Agreement has failed in whole or in part." Picard contends that these "conclusions" are findings of fact that precluded judgment against him as a matter of law. Badgett contends that illegality did not "preclude enforcement of the Agreement altogether" because the Purchase Agreement includes a severability clause that provides:
Findings of fact are ultimate determinations of what specifically occurred, who did or did not do certain acts, the value of services or property, and the answer to any other specific inquiry necessary to establish conduct or the existence or nonexistence of a relevant matter. Pac. Emp'rs Ins. Co. v. Brown, 86 S.W.3d 353, 356-57 (Tex. App.—Texarkana 2002, no pet.). Conclusions of law may be a statement of a principle of law or the application of the law to the ultimate facts in the case. Id. While an affirmative defense is normally a question of fact, in some circumstances, it may be proved so conclusively by the evidence at trial that it becomes a question of law. City Nat'l Bank of Sulphur Springs v. Smith, No. 06-15-00013-CV, 2016 WL 2586607, at *3 (Tex. App.—Texarkana May 4, 2016, pet. denied) (mem. op.) (citing Dixon v. Sw. Bell Tel. Co., 607 S.W.2d 240, 242 (Tex. 1980)).
If any provision contained in this Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
Badgett did not appeal the trial court's findings on illegality and failure of consideration, so we do not address the sufficiency of the evidence in support of these findings.
Severability is determined by the intent of the parties as evidenced by the language in the contract. Ross v. Union Carbide Corp., 296 S.W.3d 206, 218 (Tex. App.—Houston [14th Dist.] 2009, pet. denied). Generally, an illegal or unconscionable contract provision may be severed if it does not constitute the essential purpose of the agreement. Id. (citing In re Poly-Am., L.P., 262 S.W.3d 337, 360 (Tex. 2008)); see also Security Serv. Fed. Credit Union v. Sanders, 264 S.W.3d 292, 300 (Tex. App.—San Antonio 2008, no pet.) ("Under state-law contract principles, a court is generally authorized to sever an illegal or an unenforceable provision from a contract and enforce the remainder of the contract."). The issue is whether the parties would have entered into the agreement absent any illegal parts. Ross, 296 S.W.3d at 218. Therefore, the court must determine the central and essential purpose of the agreement. Id. Because an illegal or unconscionable contract provision generally may be severed, we do not agree with Picard that the trial court's finding on illegality precludes a judgment against him as a matter of law. We turn to the merits of the argument.
Picard contends that the sharing of financial services clients and commissions under the Purchase Agreement was illegal because Picard did not obtain the necessary license to receive commissions generated from financial services clients and Badgett thus was not allowed to share commissions and advisory fees. We presume without deciding that these portions of the Purchase Agreement were illegal because Badgett has not challenged that finding by the trial court.
We turn to whether these provisions of the Purchase Agreement were severable. Picard points to evidence that he would not have entered into the deal if the financial services portion were not included. However, we determine severability based on the language of the Purchase Agreement. See id. When two constructions of a contract are possible, we apply the one that does not result in a violation of law. See id. Whether the invalidity of a particular provision affects the rest of the contract depends upon whether the remaining provisions are independent or mutually dependent promises. In re Poly-Am., 262 S.W.3d at 360. Courts allow severance of illegal contract provisions when the invalid provisions were only a part of the many reciprocal promises in the agreement and did not constitute the main or essential purpose of the agreement. Id.
The Purchase Agreement provided for the sale of not only financial services but also tax and accounting services and included "equipment, furniture, leasehold improvements, computer hardware and software, business name, business phone numbers, business website, client lists, client files, goodwill, contract rights, business records, licenses, franchises, trade secrets, supplies, inventory and Seller related business bank accounts." Given the dual purposes of the Purchase Agreement—to sell the tax and accounting services business in addition to the financial services business—and the express provision allowing for severability of any "invalid, illegal or unenforceable provision," we conclude that the financial services portion of the Purchase Agreement was severable. See id. ("[T]he intent of the parties, as expressed by the severability clause, is that unconscionable provisions be excised where possible."). Severing the financial services portion of the Purchase Agreement from the remainder does not preclude Badgett's claims for breach of contract as to the other portions of the Purchase Agreement. See id.; see also Ross, 296 S.W.3d at 218. Moreover, the trial court's award of damages takes the illegality defense into account, as discussed below.
B. Failure of Consideration
Picard also contends that the trial court's finding that "the consideration for the Agreement has failed in whole or part" precludes a judgment against him. Valuable consideration for a contract may consist of either a benefit to the promisor or a detriment to the promisee. Texmarc Conveyor Co. v. Arts, 857 S.W.2d 743, 746 (Tex. App.—Houston [14th Dist.] 1993, writ denied). The burden is on the party challenging the breach of contract to show that there was no consideration. See id. Considering the trial court's findings and conclusions in context, as we must, the trial court obviously found that the consideration for the Purchase Agreement failed only in part because it awarded damages to Badgett. See, e.g., Credit Suisse AG v. Claymore Holdings, LLC, 610 S.W.3d 808, 823 (Tex. 2020) (considering award in the context of "the findings and conclusions as a whole" and concluding the trial court awarded equitable relief, not legal damages). Only a complete failure of consideration precludes a judgment for breach of contract. See Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 320-21 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) ("A complete failure of consideration constitutes a defense to an action for breach of contract."). Accordingly, we do not agree that the trial court's finding on failure of consideration "in whole or part" precluded a judgment against Picard for breach of contract.
C. Material Breach
Picard contends that his performance under the contract was excused based on Badgett's prior material breach. See Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 196 (Tex. 2004) ("[W]hen one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance."). Picard asserts that Badgett materially breached the Purchase Agreement by failing to transfer the business email and phone number and the financial services clients and by violating the noncompete clause.
As discussed, Badgett agreed that she was required to transfer financial clients, but Picard was required to become licensed before the transfer could occur, which he failed to do. Picard also had the ability to prepare taxes on Badgett's software, but Badgett asserted that she removed his ability to do so because returns that she had not prepared were being filed with her preparer number. The software required an annual subscription that anyone could buy.
Also according to Badgett, Picard himself was required to transfer the emails and phone system into his name or the name of his business. Picard testified that his wife transferred the phone system to the business but Badgett had it transferred back into her name after a short period of time. As for the email addresses, Badgett testified that Picard created a new domain and email addresses for clients. Badgett also said the emails in existence when the Purchase Agreement was signed were on a server that was accessible to Picard. Regarding the covenant not to compete, Badgett testified that she resumed her business only after Picard breached the Purchase Agreement and closed his business.
The court, as the factfinder, was entitled to weigh this evidence in concluding that Badgett did not materially breach the contract prior to Picard's breach. See Sklar, 598 S.W.3d at 820 ("[W]e may not substitute our judgment for that of the factfinder, who alone determines the credibility of the witnesses, the weight to be given their testimony, and whether to accept or reject all or any part of that testimony."). We conclude that Picard did not conclusively establish a prior material breach of contract or show that the trial court's finding was against the great weight and preponderance of the evidence.
D. Payment
Picard contends that Badgett was made whole when she reacquired the business and thus Picard did not owe her anything beyond what he initially paid. A defendant asserting the affirmative defense of payment must present evidence specifying the amount of the offsets or credits claimed. Queen v. RBG USA, Inc., 495 S.W.3d 316, 323 (Tex. App.—Houston [14th Dist.] 2016, pet. denied); Roberts v. Roper, 373 S.W.3d 227, 233 (Tex. App.—Dallas 2012, no pet.).
Picard points to his testimony that Badgett sold the real estate to him for approximately $389,000. But the note at issue in this case does not involve the sale of the real estate; instead, it involves the sale of the business pursuant to the Purchase Agreement. Testimony regarding the value of the real estate has no bearing on the payment of the note at issue in this case.
Picard also highlights Badgett's testimony that the business assets were worth $485,000 at the time of the sale and that Badgett maintained 80% of her clients after she reacquired the business. The Seller Financing Addendum states that Picard purchased the business for $600,000—he financed $485,000 and paid a $115,000 down payment. Picard did not present evidence of the value of the business at the time Badgett repossessed it, and thus Picard did not present evidence of the total amount of offsets or credits to which he claims he was entitled at that time. However, Badgett sought damages of $934,627.53 for principal, unpaid interest, and late fees due and owing under the note, but the trial court awarded damages of only $151,175.80. The trial court apparently gave Picard credit for the value of the business reacquired by Badgett, an issue that we address more fully below. Picard has not shown on this record that Badgett was made whole when she reacquired the business.
E. Statute of Frauds
Picard contends that the Purchase Agreement is unenforceable under the statute of frauds because the option to purchase real estate does not include a legal description and the Purchase Agreement is not capable of being performed within one year. See Tex. Bus. & Com. Code § 26.01(a) (requiring as a prerequisite to enforceability, certain agreements to be in writing and "signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him").
The statute of frauds applies to "a contract for the sale of real estate." Id. § 26.01(b). Although option contracts involving the sale of real estate are subject to the statute of frauds, a legal description is not required so long as the writing "furnish[es] the data to identify the property with reasonable certainty." Tex. Builders v. Keller, 928 S.W.2d 479, 481 (Tex. 1996); Krayem v. USRP (PAC), L.P., 194 S.W.3d 91, 93 (Tex. App.—Dallas 2006, pet. denied) (citing Hitchcock Props., Inc., v. Levering, 776 S.W.2d 236 (Tex. App.—Houston [1st Dist.] 1989, writ denied) (option contracts are contracts involving the sale of real estate and as such are subject to the statute of frauds)). For example, a contract that provides for the sale of "my ranch of 2200 acres" would be sufficient if evidence shows the rancher owned one ranch that included 2200 acres. Tex. Builders, 928 S.W.2d at 481-82. As noted, the Purchase Agreement includes the address of the office building that is the subject of the agreement with the option to purchase the building and "all land surrounding it (approximately five acres) or . . . only the land around the office building (approximately ½ acre)." This refers to a specific area of land that is ascertainable based on the land owned by the seller, all land or an identifiable half acre surrounding the building, unlike a situation in which a contract provides for the sale "of an unidentified portion of a larger, identifiable tract." See id. at 482.
Picard also contends that the Purchase Agreement cannot be performed in one year because it requires the seller to be available during the 12 months following the closing and imposes a covenant not to compete for five years, and the statute of frauds applies because the Purchase Agreement is not signed by a party, BTFS Management. But as we have held, BTFS Management was not a party, so the statute of frauds does not preclude enforcement of the Purchase Agreement on that basis. We overrule Picard's sufficiency challenges in issues two, five, and six to the trial court's findings on Picard's affirmative defenses.
Picard also argues that the statute of frauds precludes enforcement of the note because the note contains futuristic language setting the closing date in the future that "is insufficient to create an enforceable personal guaranty." See Fuller v. Wholesale Elec. Supply Co. of Houston, Inc., No. 14-18-00328-CV, 2020 WL 1528041, at *4 (Tex. App.—Houston [14th Dist.] Mar. 31, 2020, pet. filed) ("The statute of frauds in section 26.01(b)(6) does not apply when 'the parties do not fix the time of performance and the agreement itself does not indicate that it cannot be performed within one year.'"). But the personal guaranty is in the Purchase Agreement. The Purchase Agreement specifies that the closing was required to take place within 45 days after execution of the Purchase Agreement. We do not agree this is futuristic language precluding enforcement of the Purchase Agreement or Seller Financing Addendum because it specifies a set time for a closing date.
V. Sufficiency of Damages Award and Attorney's Fees Award
Having concluded that Picard did not successfully challenge the sufficiency of the trial court's adverse findings on his affirmative defenses, we turn to his challenges in issues one and eight to the damages and attorney's fees awarded by the court. He contends (1) the judgment must conform to the pleadings and Badgett only sued for breach of the note, not for breach of the Purchase Agreement; (2) consequential damages are not recoverable; (3) there is no evidence to support the damages award; and (4) the trial court erred in awarding Badgett attorney's fees.
A. The Petition
Picard contends that Badgett's petition does not allege a breach of the Purchase Agreement but only alleges a breach of the Seller Financing Addendum. According to Picard, the trial court's damages award is based on breach of the Purchase Agreement and thus is unsupported by the pleadings.
Generally, a judgment must conform to the pleadings. See Tex. R. Civ. P. 301; Deluxe Barber Sch., LLC v. Nwakor, 609 S.W.3d 282, 291 n.5 (Tex. App.—Houston [14th Dist.] 2020, pet. denied). A judgment unsupported by pleadings is typically void unless the claims in question were tried by express or implied consent of the parties. See Tex. R. Civ. P. 67; Nwakor, 609 S.W.3d at 291 n.5. Pleadings must give fair notice of the nature and basic issues so the opposing party can prepare a defense. Bos v. Smith, 556 S.W.3d 293, 305-06 (Tex. 2018). Fair notice is achieved if the opposing party can ascertain from the pleading the nature and basic issues of the controversy and what type of evidence might be relevant. In re Cordish Co., No. 14-20-00676-CV, 2021 WL 208297, at *3 (Tex. App.—Houston [14th Dist.] Jan. 21, 2021, no pet. h.). A petition is sufficient if a cause of action or defense may be reasonably inferred from what is specifically stated in the pleading, even if an element of the cause of action is not specifically alleged. Id.
Badgett's live petition states that Picard "personally guaranteed an asset sale and purchase agreement with an attached promissory note." Badgett also alleged in her petition that Picard failed to make payments under the note, and Badgett sought damages for payments "due, owing, and unpaid," plus principal and interest. The Purchase Agreement was attached to the petition as an exhibit, as was the Seller Financing Addendum. As mentioned, the note is within the addendum to the Purchase Agreement. The Purchase Agreement refers to the Seller Financing Addendum—"The purchase price shall be $560,000, payable per the financing addendum attached" and "Seller agrees to provide buyer with financing for such business . . . ." And the Seller Financing Addendum refers to the Purchase Agreement in the first paragraph—"Seller Financing Addendum To Contract Concerning Buyer's Purchase of the Business Known as Badgett Tax and Financial Services . . . ." (Emphasis added.) Thus, the Purchase Agreement and Seller Financing Addendum are part and parcel of each other. See, e.g., Rima Group, Inc. v. Janowitz, 573 S.W.3d 505, 509 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (contract and addendum referring to each other together made up parties' agreement). We conclude Badgett's petition put Picard on notice of her claim that he breached the Purchase Agreement and Seller Financing Addendum. See Nwakor, 609 S.W.3d at 291 n.5 (holding plaintiff's allegations put defendant on notice of constructive fraud claim even though petition did not use words "constructive fraud").
Moreover, Badgett's claim regarding breach of the Purchase Agreement was clearly at issue during trial. To determine whether the issue was tried by consent, we must examine the record for evidence of trial of the issue without objection. See Flowers v. Flowers, 407 S.W.3d 452, 458 (Tex. App.—Houston [14th Dist.] 2013, no pet.). An unpleaded issue is tried by consent when evidence on the issue is developed without objection under circumstances indicating both parties understood the issue was being contested. Adeleye v. Driscal, 544 S.W.3d 467, 484 (Tex. App.—Houston [14th Dist.] 2018, no pet.). Here, during trial, the parties and attorneys repeatedly referred to breach of contract claims specifically referencing the Purchase Agreement. Picard did not object or otherwise notify the court that only breach of the note was being tried. In fact, Picard's counsel affirmatively stated that Picard was being sued for breach of the guarantee, which is part of the Purchase Agreement. Picard's counsel also told the trial court it was unclear whether Badgett was suing on breach of the guarantee or breach of the note and did not take the position that Picard was only being sued for breach of the note. We conclude that under these circumstances, the issue was not only raised by Badgett's pleading but also tried by consent.
B. Consequential Damages
Picard contends that Badgett's costs incurred in resuming control of the business are unrecoverable consequential damages. The ultimate goal in measuring damages for a breach of contract is to provide just compensation for any loss or damage actually sustained as a result of the breach. Yazdani-Beioky v. Sharifan, 550 S.W.3d 808, 828-29 (Tex. App.—Houston [14th Dist.] 2018, pet. denied). The normal measure of damages in such a case is the benefit of the bargain measure, the purpose of which is to restore the injured party to the economic position she would have been in had the contract been performed. Id. The correct standard for assessing benefit of the bargain damages measures the difference between the value as represented and the value as received by the nonbreaching party. Id. at 829.
A party generally should be awarded neither less nor more than her actual damages. Sharifi v. Steen Auto., LLC, 370 S.W.3d 126, 148-49 (Tex. App.—Dallas 2012, no pet.). The facts of the case determine the proper measure of damages as well as any offsets. Id. To restore an injured party to the position she would have been in had the contract been performed, it must be determined what additions to the injured party's wealth have been prevented by the breach and what subtractions from her wealth have been caused by it. Id. Under the benefit of the bargain measure, lost profits on the bargain may be recovered if they are proved through competent evidence with reasonable certainty. Id. at 148-49 (citing Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994)).
Here, Badgett reacquired the business after Picard defaulted on the note. The trial court's award represents Badgett's expenses incurred in reacquiring the business and lost profits to the business that the trial court found were caused by Picard's breach. We conclude the trial court awarded a proper measure of damages, which was meant to restore the benefit of the parties' bargain. We turn to whether the trial court's award was supported by legally and factually sufficient evidence.
C. Sufficiency of the Evidence in Support of Damages
Picard complains that the trial court's findings "do not provide any basis for the $151,175.80 in damages." As discussed, the trial court could award Badgett expenses that she incurred in reacquiring the business plus lost profits, as a proper measure of damages, and reduce the award to account for severable illegal portions of the Purchase Agreement and a partial failure of consideration.
What constitutes reasonably certain evidence of lost profits is a fact intensive determination. Id. at 149 (citing ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010), and Szczepanik, 883 S.W.2d at 649)); see also Summit Glob. Contractors, 594 S.W.3d at 704 (citing Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 772 (Tex. 2003) ("[W]hether to award damages and how much is uniquely within the factfinder's discretion.")). Profits do not have to be susceptible to exact calculation. Sharifi, 370 S.W.3d at 149. But "opinions or estimates of lost profits must be based on objective facts, figures, or data from which . . . lost profits can be ascertained." Id. (citing Swinnea, 318 S.W.3d at 876). Supporting documentation may affect the weight of the evidence, but it is not required to support opinions or estimates of lost profits. Id.
While a factfinder may not arbitrarily assess an amount not authorized or supported by evidence at trial by "pull[ing] figures out of a hat," we will not disregard the factfinder's determination of damages merely because its reasoning in reaching its figures is unclear. Enright v. Goodman Distribution, Inc., 330 S.W.3d 392, 403 (Tex. App.—Houston [14th Dist.] 2010, no pet.). A factfinder generally has discretion to award damages within the range of evidence presented at trial. Id.; see also Gulf States Utilities. Co. v. Low, 79 S.W.3d 561, 566 (Tex. 2002).
As discussed, Badgett testified that after she reacquired the business, she maintained only 80% of her former clients, representing a 20% profit loss. Twenty percent of the $600,000 sales price of the business was $120,000. The trial court, as factfinder, was entitled to determine whether these lost profits resulted from Picard's breach.
Badgett also presented evidence that she incurred $20,512 in expenses to continue running the business after the sale date and subsequently reacquiring it. Picard characterizes these expenses as unrecoverable "expenses incurred in prosecuting or defending a suit," but the expenses were related to running the business and the cost of notices sent to Picard after his default on the note before the lawsuit was filed. They were not related to prosecuting or defending a lawsuit.
According to Badgett, she was not required to "generate revenue" by doing tax work as part of her transition duties. Despite this, she ended up preparing tax returns and taking client appointments after the sale because, according to her, Picard failed to do so. Badgett presented a spreadsheet showing that she incurred "consulting fees for work completed . . . @ $85/hr for 683 hours," totaling $58,055. Picard did not present any evidence to the contrary. Badgett also presented evidence that Picard removed a computer and monitor worth $400 from the business and that the business had $1,407 in accounts receivable that should have been reimbursed to Badgett after the sale as set forth in the Purchase Agreement.
Picard also complains about testimony from Badgett related to brokerage fees incurred in selling the business. We agree these fees are not a result of Picard's breach. However, the record does not show that the trial court awarded such fees.
The total of these purported damages amounts to over $200,000. The evidence provides a rational basis by which the trial court could have compensated Badgett for expenses incurred in reacquiring the business and lost profits caused by Picard's breach. See Enright, 330 S.W.3d at 403. Consistent with that evidence and a reduction for the trial court's findings of illegality and partial failure of consideration, the trial court awarded damages totaling $151,175.80. We conclude the damages award is supported by legally and factually sufficient evidence. We overrule issue one.
Badgett sought over $1.2 million in damages at trial. The trial court did not award any unpaid principal because Badgett reacquired the business. Badgett also sought other fees that the trial court did not award.
D. Attorney's Fees
Picard asks the court to reverse the attorney's fees award to Badgett and award fees to him if we conclude "that the trial court erred in rendering judgment against Picard." Because we conclude that the trial court did not so err, we overrule issue eight.
V. Other Sufficiency Challenges Not Adequately Briefed
In issue seven, Picard also challenges a laundry list of the trial court's findings and conclusions and "incorporates by reference the Statement of Facts and all argument sections in support of this argument." We have already disposed of the arguments in the other sections of Picard's brief. The only new argument Picard raises is to challenge without argument or authority the sufficiency of the evidence in support of certain findings and conclusions not addressed elsewhere. The failure to provide argument or authority to support a sufficiency challenge results in waiver for inadequate briefing. See Norra v. Harris Cty., No. 14-05-01211-CV, 2008 WL 564061, at *3 n.5 (Tex. App.—Houston [14th Dist.] Mar. 4, 2008, no pet.) (mem. op.) ("Norra has provided no argument or authority regarding the factual sufficiency of the evidence and has thus waived any such challenge.") (citing San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323, 338 (Tex. App.—Houston [14th Dist.] 2005, no pet.)). Picard's sufficiency challenges not challenged in the other sections of his appellate brief are not supported by argument or authority and thus are waived. See Tex. R. App. P. 38.1(h); see also Sklar, 598 S.W.3d at 827. We overrule issue seven.
Conclusion
Having concluded that Badgett had capacity and standing to bring this lawsuit, the Purchase Agreement is enforceable, Picard was personally bound by the Purchase Agreement, and the trial court's findings on Picard's affirmative defenses and damages are supported by legally and factually sufficient evidence, we affirm the judgment of the trial court.
/s/ Frances Bourliot
Justice Panel consists of Justices Bourliot, Hassan, and Poissant.