Preview
Filed
11 November2 P4:40
Gary Fitzsimmons
District Clerk
Dallas District
CAUSE NO. 04-01100-M
CRAIG DYER, IN THE DISTRICT COURT OF
Plaintiff
Vv 298" JUDICIAL DISTRICT
DYER CUSTOM INSTALLATION, INC.
(DCI), JOSEPH GEETING, SUSAN
LAMBERT, LARRY DYER and
RICHARD GEETING
Defendants DALLAS COUNTY, TEXAS
PRO PLUMBING & APPLIANCE IN THE DISTRICT COURT
INSTALLATION, INC. f/k/a DYER
CUSTOM INSTALLATION, INC.
Plaintiff,
vs. 298" JUDICIAL DISTRICT
CRAIG DYER, MELISA CONTRERAS
and THE ESTATE OF LARRY DYER
Defendants, DALLAS COUNTY, TEXAS
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL
COMES NOWPLAINTIFF, CRAIG DYER (“Dyer”) individually and on behalf of
Dyer Custom Installation, Inc., and files this Response to Motion for New Trial (the “MNT”)
and shows the Court as follows:
|
INTRODUCTION
A The Defendants’ Request
The Defendants, Dyer Custom Installation, Inc. (“DCI”) and its former or current
officers and directors, Joseph Geeting (“Geeting”), Richard Geeting (“R. Geeting”) and
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 1
Lauri Geeting (“L. Geeting”), ask this Court to set aside a jury verdict in favor of Dyer and
DCI.'More specifically, the Defendants request a new trial due to the following findings of
the jury: Questions 1-3 and 5-7 (related to the 80/20 Agreement between Dyer and
Geeting, Geeting’s failure to comply, Dyer’s performance and Geeting’s preventing Dyer
from tendering same, the market value of the stock of DCI in February 2004, and
damages for Geeting’s failure to comply)*; Questions 8-9 (Geeting’s fraudulent
inducement of Dyer into the December 2002 Agreement and damages)*; Questions
10-11 (Geeting’s statutory fraud regarding the transfer of 10 shares of DCI and
damages); Questions 18-21 (each of Defendants’ breaches of fiduciary duty to DCI and
damages for same); Question 23 (related to Geeting’s profit for his breach of fiduciary
duty); Questions 25-26 (related to conversion by Geeting as to DCI and damages to DC!
from Geeting); Question 27 (related to attorneys’ fees); and Question 38 (related to the
finding of no damages against Dyer as to conversion).
4 The conflict of interest between DCI and its former officers and directors who have breached their
fiduciary duties to DCI is evident here when DCI’s lawyer is asking (on behalf of DCI) the Court to enter a
JNOV against it and in favor of the officers and/or directors who breached their fiduciary duties to DCI.
2 The 80/20 Agreement was the agreement Dyer alleged he had with Geeting for the right to purchase
from Geeting 60% of the shares of DCI owned by Geeting at the expiration of 3 years.
3. The December 2002 Agreement was the agreement relating to the restructuring of the ownership of
DCl's shares.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 2
B. Defendants’ Motion is premature.
Defendants filed their Motion for New Trial and set it for hearing prior to the court
signing a Final Judgment in this case. However, “[a] motion for new trial must, by its very
nature, seek to set aside an existing judgment and request relitigation of the issues.”
Barry v. Barry, 193 S.W.3d 72, 74 (Tex.App.—Houston [1* Dist] 2006, no pet.)(emphasis
added). When a motion for new trial is prematurely filed, it shall be deemed filed on the
date of but subsequent to the time of the signing of the judgment. Tex.R.Civ.P. 306c.
This motion cannot be “heard” prior to a final judgment.
c Defendants’ “Introduction” distorts the facts.
The Defendants’ “Introduction” in its motion for JNOV, like many of the other filings
by the Defendants throughout this litigation, contains numerous mischaracterizations and
distortions, some of which the Plaintiff will briefly address here. First, the Defendants
claim that Plaintiff ignored the Court’s Scheduling Orders and Tex. R. Civ. P. 63 in filing its
Second and Third Amended Petitions, while at the same time relying upon those
pleadings which would “ignore that same scheduling order.”
Purportedly, Plaintiff's 2009 amendments “changed the landscape of the original
lawsuit and ultimately resulted in both surprise and prejudice to Defendants, which in turn
resulted in a jury charge that incorporated new causes of action asserted for the first
time.” This is simply not the case. As the Court is well aware, since Plaintiff's First
Amended Petition filed in this case in 2005, the facts pled in the case have remained
virtually identical, including the allegation “That Plaintiff would enter into a shareholder's
4 If the Defendants had truly believed that leave of Court was required to amend according to the
superseded 2006 Scheduling Order, than they would have sought such leave before filing their Third
Amended Answer on September 30, 2009! They did not.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 3
agreement allowing Plaintiff to repurchase...an additional 60% of the shares which were
owned by Geeting at fair market value after the expiration of three (3) years (allowing
Plaintiff to become 80% owner of his business).” (Plaintiffs First Amended Original
Petition at para. 4.05 number 5 and Plaintiffs Third Amended Petition at para. 4.05
number 5). Furthermore, in answering the 2005 Petition, the Defendants specifically
denied, among other things, the following:
1 It was never proposed that Plaintiff be allowed the option of buying
60% of Joseph Geeting’s interest in DCI at a fair market value after the
expiration of three (3) years, as alleged in Plaintiff's First Amended Original
Petition, page 3;
2 It was never proposed that Plaintiff would enter into a shareholder
agreement allowing Plaintiff to repurchase an additional 60% of the shares
that were owned by Joseph Geeting at fair market value after the expiration
of three (3) years (allowing Plaintiff to become an 80% owner in DCI) as
alleged on page 4 of Plaintiff's First Amended Petition;
3 It was never agreed that Plaintiff would own more than 50% of the
shares of DCI as alleged on page 4 of Plaintiff's First Amended Original
Petition.
(Defendant's Second Amended Answer; para. 2.13). In short, Plaintiff pled its breach of
the 80/20 Agreement in 2005, Defendants knew it—and specifically denied it. Not
surprisingly however, the Defendants make no mention of Plaintiff's 2005 petition
whatsoever in their filing.
Instead, the Defendants complain about the Court's decision to allow the Second
and Third Amended Petitions filed in 2009, still well over a year before the June 2010 trial
setting. In doing so, the Defendants argue that the Second Amended Petition and the
5 Moreover, there is no doubt that an opposing attorney of reasonable competence, could, with the
Plaintiff's 2005 pleading before him, ascertain the nature and the basic issues of the controversy and the
testimony that would probably be relevant, including the 80/20 Agreement, the fraudulent inducement and
the claim regarding the 1% interest.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 4
Third Amended Petition filed in 2009 were filed in violation of the Court's prior 2006 and
2007 Scheduling Orders because they were filed without leave of Court. However, while
the 2006 Scheduling Order did contain a deadline to amend pleadings, that scheduling
order was superseded by the 2007 Scheduling Order. In the 2007 Agreed Scheduling
Order, signed by the Court, the parties agreed that “Any deadline not specifically
identified in this Scheduling Order shall be determined by the Local Rules of Court and
the Texas Rules of Civil Procedure.” The 2007 Agreed Scheduling Order did not
specifically identify a pleadings deadline. Accordingly, the parties agreed, and the Court
ruled, that the deadline to amend pleadings was governed by both the Local Rules of
Court and the Texas Rules of Civil Procedure. While the Local Rules of the Civil Courts
of Dallas County Texas do not contain any rules regarding the deadline to amend
pleadings, the Texas Rules of Civil Procedure do. Rule 63 provides a right to amend
without leave of Court within 7 days before trial. These pleadings, filed over a year
before the June 2010 trial setting, were timely under Rule 63 and gave Defendants more
than adequate time to prepare their defenses in this cause. No doubt recognizing this,
the Court permitted these pleadings.°
Finally, in their Introduction the Defendants suggest that because the jury found
that all parties breached their fiduciary duties to DCI, that Dyer “should not be rewarded
for essentially changing his case after discovery was concluded and the evidence was
presented.” As set forth above, Dyer did not change his case at all, much less after
discovery was concluded and the evidence was presented. The Defendants had fair
6 Defendants wrongfully suggest that the Court breached a promise it made to them to undo “an injustice”
in allowing questions in the charge not predicated on timely pleadings and that in turn were prejudicial and
not supported by the evidence. Plaintiffs believe that the Court did no such thing.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 5
notice of the claims against them and years to prepare a defense. Put simply, their
defenses failed because they committed wrongdoing. It would be absurd to allow
Geeting to escape the damages he caused by breaching his agreements, by fraud, by
oppressing Dyer as a shareholder and by breaching his fiduciary duties to DCI. Given
the circumstances, it would also be absurd to allow Geeting to remain in control of DCI
pending the appeal of this case and that is why Plaintiff has asked that the Court appoint
a receiver for DCI in the interim. That way further harm to DCI can be prevented.
Il.
ARGUMENTS AND AUTHORITIES
A Standard of Review
Granting a new trial is proper only for “ good cause.” Tex.R.Civ.P. 320; In re
Columbia Medical Center of Las Colinas, Subsidary, L.P., 290 S.W.3d 204, 210
(Tex.2009). The amount of discretion Texas trial courts have to overturn jury verdicts
and grant new trials broad but has limits. /d. “The good cause for which Rule 320 allows
trials courts to grant new trials does not mean just any cause. If it did, the rule would not
have specified “good” cause...[T]he fact that the right to jury trial is of such significance as
to be provided for in both the Federal and Texas Constitution counsels against courts
setting aside jury verdicts for less than specific, significant and proper reasons.” /d at 210
n.3
The trial court’s discretion does not permit it “to substitute his or her own views for
that of a jury without a valid basis.” /d at 212.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 6
B. Defendants’ Point of Error No. 1 is not good cause for New Trial
As set forth above, and incorporated herein by reference, Plaintiff alleged the
80/20 Agreement as early as 2005 in its First Amended Petition. Since 2005, the facts
pled in this case have remained virtually identical, including the allegation “That Plaintiff
would enter into a shareholder's agreement allowing Plaintiff to repurchase...an
additional 60% of the shares which were owned by Geeting at fair market value after the
expiration of three (3) years (allowing Plaintiff to become 80% owner of his business).
(Plaintiff's First Amended Original Petition at | 4.05 number 5 and Plaintiffs Third
Amended Petition at 4] 4.05 number 5). In answering the First Amended Petition,
Defendants specifically denied this fact, among other things from that Petition.
Defendant's argument in light of these pleadings, has no merit.
As the Court well knows, Texas follows the “fair-notice” standard for pleading.
Low v. Henry, 221 S.W.3d 609, 612 (Tex. 2007); Horizon/CMS Healthcare Corp. v. Auld,
34 S.W.3d 887, 896 (Tex. 2000).Fair notice has been given if the pleadings are
sufficiently specific that “an opposing attorney of reasonable competence, could with the
pleading before him, ascertain the nature and the basic issues of the controversy and the
testimony which will probably be relevant.” Brewster v. Columbia Med. Ctr. of McKinney
Subsidiary, L.P., 269 S.W.3d 314, 319 (Tex. App.--Dallas 2008, no pet.); See also,
Roark v. Allen, 633 S.W.2d 804, 810 (Tex.1982); Schoellkopf v. Pledger, 778 S.W.2d
897, 899-99 (Tex.App.-Dallas 1989, writ. denied). The courts should entertain causes of
action which are reasonably inferred from those specifically plead. Brewster v. Columbia
Med. Ctr. of McKinney Subsidiary, L.P., 269 S.W.3d 314, 319 (Tex. App.--Dallas 2008, no
pet.); See also, McGraw v. Brown Realty Co., 195 S.W.3d 271, 275 (Tex.App.-Dallas
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 7
2006, no pet.) (“A petition is sufficient if a cause of action or defense can be inferred from
what is specifically stated.”). Here, there is no doubt that the Defendants could, and in fact
did, ascertain from the Plaintiff's First Amended Petition filed in 2005 the nature and basic
issues of the controversy and evidence that might be relevant. They specifically denied
them in their Second Amended Answer. However, even if the notice-pleading
requirements and the Defendants’ own admissions were ignored, the 80/20 claim was
timely alleged in 2009 in the Second and Third Amended Petitions. As set forth above,
while the 2006 Scheduling Order contained a pleading deadline, that Scheduling Order
was superseded by the Court’s 2007 Scheduling Order (and the parties’ agreement).
The 2007 Scheduling Order provided that “Any deadline not specifically identified in this
Scheduling Order shall be determined by the Local Rules of Court and the Texas Rules of
Civil Procedure.” Since there are no local rules setting deadlines to amend however,
Tex. R. Civ. P. 63 prevails. It provides a right to amend without leave of Court within 7
days before trial. The Second and Third Amendments were filed more than a year
before the June 2010 trial setting. Defendants’ argument to the contrary lacks merit.’
Finally, this Court had the inherent right to change or modify the Scheduling Order.
See, In re Estate of Henry, 250 S.W.3d 518, 526 (Tex.App.-Dallas 2008, no pet.). Here,
the Court not only allowed the Third Amended Petition it also implicitly modified its
previous scheduling orders in so doing. See, /d. The Court acted well within its wide
discretion in doing so. First, as set forth above, Defendants were on notice for years of
the claims regarding the 80/20 Agreement. The Defendants did not and could not prove
7 This is further reflected by many of the Defendants’ filings made after the expiration of the very
deadlines it now argues were mandated by the Scheduling Orders including the Defendants’ Second
Amended Answer filed on March 13, 2008 (after the June 2007 trial setting) and Defendants’ Third
Amended Answer filed on September 30, 2009.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 8
that they were surprised or prejudiced by the amendments (filed over a year before trial)
nor, as set forth above, did the amendments state new claims. See, Graham v. Adesa,
Inc., 145 S.W.3d 769, 775-776 (Tex.App.--Dallas 2004, pet. denied). Further, and
importantly, if the court had not changed or modified the scheduling orders, there would
have been a violation of due process. As the Court will remember, at the time the 2006
and 2007 Scheduling Orders were signed, neither Contreras nor the Estate of Larry Dyer
were parties to this lawsuit. In fact, at the time Contreras was added as a party all of the
deadlines specifically identified in the Agreed Scheduling Order had long since passed
including the discovery deadline. If the 2006 or 2007 Scheduling Orders governed to
preclude Contreras (or the Estate of Larry Dyer) from exercising her rights as a litigant;
ie. denying her the opportunity to amend her pleadings or conduct discovery; that would
have constituted a violation of due process.
c Defendants’ Point of Error No. 2 is not good cause for New Trial
a Geeting waived the limitations defense.
The statute of limitations is an affirmative defense. Tex.R.Civ.P. 94. The defendant
thus bears the initial burden to plead, prove, and secure findings to sustain its plea of
limitations. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988).This
burden includes establishing when the plaintiffs cause of action accrued to demonstrate
the bar of limitations. Holland v. Lovelace, S.W.3d 2011 WL 3805519
(Dallas 2011, nwh); Prestige Ford Garland Ltd. P'ship v. Morales, 336 S.W.3d 833, 836
(Tex. App.Dallas 2011, no pet.). When, as here, the jury was not asked to determine
when the cause of action accrued for purposes of supporting a limitations defense, the
defense is waived unless the date of accrual was conclusively established under the
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 9
evidence. /d. The evidence in this case does not conclusively establish the date of
accrual of the breach of contract claim. The 80/20 Agreement gave Dyer the option to
purchase 60% of the DCI stock held by Geeting after four years but did not require him to
exercise that option at that time. Accordingly, Geeting has waived the limitations
defense. Holland, id at pps. 8-11.
b. The 2005 pleading sets forth the allegation.
The statute of limitations for a breach of contract claim is four years. Tex. Civ. Prac. and
Rem. Code Section 16.051. Defendants contend that limitations on the claim for breach
of the 80/20 Agreement ran in February 2008 because Geeting failed to perform under
the Agreement in 2004. Even if the Defendants had conclusively established that the
cause of action accrued in February 2004, which is denied, and February 2008 was the
limitations cut-off, the allegations set forth in Plaintiff's First Amended Petition in 2005
were sufficient to, and did in fact, put Geeting on fair notice of the claim against him.
Accordingly, the action was timely filed in 2005.
Cc. Furthermore, the 2009 Third Amended Petition relates back to
the 2005 filing.
Even if the Court determines that the breach of contract claim was not actually filed
until the Third Amended Petition in 2009, that amendment relates back to the 2005 First
Amended Petition under Tex. Civ. Prac. & Rem. Code §16.068.Section 16.068 provides
in this regard as follows:
Amended and Supplemental Pleadings
If a filed pleading relates to a cause of action, cross action, counterclaim, or
defense that is not subject to a plea of limitation when the pleading is filed, a
subsequent amendment or supplement to the pleading that changes the
facts or grounds of liability or defense is not subject to a plea of limitation
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 10
unless the amendment or supplement is wholly based on a new, distinct, or
different transaction or occurrence.
Tex. Civ. Prac.& Rem. Code Ann. § 16.068 (West). Section 16.068 provides that new
facts or claims raised in a subsequent pleading relate back to a timely filed pleading and
are not barred unless the amendment or supplemental pleading “is wholly based on a
new, distinct, or different transaction or occurrence.” /d.
The Dallas Court of Appeals has recently determined that “[A] ‘transaction’ is
defined as a set of facts that gives rise to the cause of action premised thereon.”
(Emphasis added). Brewster v. Columbia Med. Ctr. of McKinney Subsidiary, L.P., 269
S.W.3d 314, 317-18 (Tex.App.-Dallas 2008, no pet.). Here, the Plaintiff clearly alleged
the same set of facts in 2005 as it did in 2008, including, among other things, the
allegation “That Plaintiff would enter into a shareholder's agreement allowing Plaintiff to
repurchase...an additional 60% of the shares which were owned by Geeting at fair
market value after the expiration of three (3) years (allowing Plaintiff to become 80%
owner of his business).” (Plaintiff's First Amended Original Petition at | 4.05 number 5
and Plaintiff's Third Amended Petition at 4.05 number 5). Under such circumstances,
there can be no question but that if not already sufficiently pled in 2005, the 2009
amendment relates back to that pleading. See, e.g. J.K. and Susie Wadley Research Inst.
and Blood Bank v. Beeson, 835 S.W.2d 689, 697 (Tex.App.-Dallas 1992, writ denied)
(wife's claim in amended petition relates back to decedent's claim because both arose
from the same blood transfusion).
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 11
D. Defendant's Point of Error No. 3 is not good cause for New Trial
Craig Dyer testified as to the existence of the 80/20 Agreement. His testimony was
supported by the testimony of Melissa Contreras, and also Lauri Geeting, one of the
Defendants. This is factually sufficient evidence to support the Jury’s answer to
Question No. 1.
E Defendants’ Point of Error No. 4 is not good cause for New Trial
The Defendants also contend that Plaintiff provided factually insufficient evidence
concerning separate consideration for the 20/20 Agreement as referenced above.
There was evidence that the 80/20 Agreement was a written agreement that was signed
by Joseph Geeting. Therefore, the 80/20 Agreement presumptively imported
consideration and the burden was on the Defendants’ to plead and prove the absence of
consideration. Simpson v. MBank, N.A., 724 S.W. 2d 102, 107 (Tex. App.—Dallas 1987,
writ re’f n.r.e.). The Defendants neither obtained a jury finding that there was a lack of
consideration nor did they establish as a matter a law that there was a lack of
consideration. The Defendants improperly attempt to shift the burden of proof in this
point. The court should not grant a new trial on this tactic.
F Defendants’ Point of Error No. 5 is not good cause for New Trial
The jury found in Question in answer to Question No. 2 that Joseph Geeting failed
to comply with the 80/20 Agreement. The Defendants do not contend there is any
evidence that Geeting complied with the 80/20 Agreement. Instead, they argue that
Plaintiff first had to tender performance before Geeting needed to comply. Geeting took
actions designed to and having the effect of depriving Plaintiff of his right as an owner of
the business to access the contracts, books and records. Geeting’s obligation of
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 12
compliance was not limited to selling the stock when Dyer exercised his option. Geeting
acted to prevent Dyer from exercising his option. Geeting, the jury found, defrauded
Dyer into altering their 50/50 ownership of the company. Further, Geeting admitted that
he had destroyed tapes of every meeting conducted in the case and he claims to have
lost or destroyed the work logs that pertain to Craig Dyer. Finally, he denies the
existence of the 80/20 contract that the jury found to exist. All of this evidence supports
the jury finding that Joseph Geeting did not comply with the 80/20 Agreement.
G Defendants’ Point of Error No. 6 is not good cause for New Trial
See Response in Section II.B. above.
Defendants’ Point of Error No. 7 is not good cause for New Trial
Contrary to Defendants’ claim, Dyer testified that he was ready, willing and able to
timely perform his contractual obligations under the 80/20 Agreement. The jury had the
prerogative of believing his testimony. The Court should not grant a new trial on this
claim.
l Defendants’ Point of Error No. 8 is not good cause for New Trial
The jury’s answer that Geeting prevented Dyer from tendering performance is also
supported by the evidence that the Defendants’ repeatedly refused to provide the records
and books to the Plaintiff so that he could determine the value of the company and
thereby, determine the value of the stock. Geeting also engaged in other conduct
teferenced above. This evidence factually supports the jury's finding that Joseph
Geeting interfered with Craig Dyer’s tender of performance under the 80/20 Agreement.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 13
J Defendants’ Point of Error No. 9 is not good cause for New Trial
Defendants contend that there was factually insufficient evidence, in fact no
evidence, that would allow the jury to find that the market value of the stock that Plaintiff
had the right to repurchase from Joseph Geeting in February 2004, was $23,823.00. In
the cross examination of Joseph Geeting, Plaintiff obtained testimony that the value of
DCl’s stock in 2007 was approximately $79.41per share. In further cross examination,
Mr. Geeting admitted that Dyer would have needed to pay him $23,823.00 in order to buy
him down to 20%. Apart owner of a business may testify as to the market value as to the
market value of that business’s stock. See Akin, Gump, Strauss, Hauer & Feld, LLP v.
Nat'l Dev. & Research Corp., 232 S.W.2d 883, 893-94 (Tex. App--Dallas 2007), rev'd on
other grounds, 299 S.W.3d 106 (Tex. 2009); Vector Indus., Inc. v. Dupre, 793 S.W.2d 97,
103 (Tex. App. — Dallas 1990, no writ). This evidence was sufficient to support the jury's
answer.
K, Defendants’ Point of Error No. 10 is not good cause for New Trial
The Defendants claim there was factually insufficient evidence to support the jury's
findings of damages in answer to Question No. 7. The evidence supported the jury's
findings that if Geeting had complied with the 80/20 Agreement, Dyer would have owned
80% of DCI in February of 2004. Dyer’s damages were the loss of the benefit of the
bargain. Kristina Knowles, the CPA for DCI, testified that from 2004 through 2008,
Geeting’s wages were $240,667.24, Richard Geeting’s part-time wages amounted to
$85,750, and the retirement account was $166,269. These amounts total $492,686.24.
If Dyer had 80% of the stock, he likely would have received those benefits. The evidence
factually supports the jury’s findings, which were within this total.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 14
L Defendants’ Point of Error No. 11 is not good cause for New Trial
The Defendants first contend that fraudulent inducement was not alleged in the
Third Amended Petition and the allowance of a trial amendment was prejudicial and a
surprise. In its First Amended Petition, as in its 2009 petitions, Plaintiff alleges fraud in
the sale and transfer of stock. The timelines of the allegations is covered in the
Introduction and IIB above.
Fraudulent inducement is a particular species of fraud that arises in the context of
acontract and requires the existence of a contract as part of its proof. Haase v. Glazner,
62 S.W.3d 795, 798 (Tex. 2001). The elements for fraudulent inducement are the same
as the elements for fraud. See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688
(Tex. 1990); see also In Re First MeritBank N.A., 52 S.W.3d 749, 758 (Tex. 2001). To
prove fraudulent inducement, the Plaintiff must establish the same elements of fraud as
they relate to a contract. Sanson Lonestar, Ltd. Partnership v. Hooks, S.W.3d - 2011
W.L. 3918093, *11 (Tex. App.—Houston [1st District] 2011, no pet. history). Plaintiff's
factual allegations showed that the alleged fraud pertained to the 2002 Agreement.
Therefore, Geeting was not prejudiced or surprised by the trial amendment.
M Defendants’ Point of Error No. 12 is not good cause for New Trial
Defendants next claimed that the claim was barred by limitations. See Introduction
and Section IIB above.
Moreover, as a matter of law, limitations does not begin to run on fraud until the
fraud is discovered or could have been discovered by the exercise of reasonable
diligence. Little v. Smith, 943 S.W.2d 414, 420 (Tex. 1997). The fact that a plaintiff may
suspect wrongdoing on behalf of the defendant does not establish as a matter of law that
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 15
he had discovered the fraud or that he could have discovered the fraud in the exercise of
reasonable diligence. Limitations are an affirmative defense. Holland v. Lovelace,
S.W.2d, 2011 WL 3805519, *8 (Tex. App. — Dallas Aug. 30, 2011, no pet. list). Geeting
had the burden to plead, prove and secure findings to support his affirmative defense.
That burden included establishing when the plaintiff's cause of action occurred. If the
Geetings intended to rely on the statute of limitations, they should have obtained a fact
finding from the jury as to the date Dyer knew of the fraud or could have discovered the
fraud by the exercise of reasonable diligence. Geeting’s failure to submit this issue or
obtain a jury finding is fatal to his assertion respecting this issue.
N Defendants’ Point of Error No. 13 is not good cause for New Trial
Next, the Defendants’ claim that there is no evidence to support the jury’s finding in
Question No. 8, that Geeting fraudulently induced Dyer into the December 2002
Agreement. The evidence shows that Joseph Geeting claimed to have stepped out of the
operations of DCI for the 5 to 6 months prior to the December 2002 Agreement, but the
jury could reasonably infer from the evidence that he was using computer spyware to spy
on the company’s records. Furthermore, he was moving the company’s money around
into a separate secret bank account at Bank One without telling anybody. When the
company got into financial straits, he came back with the proposal purportedly to save the
company. The evidence shows that Geeting represented that the constraints of a
commercial loan required that Dyer had to own less than 20% of the corporation in order
to obtain a loan for the company. The evidence showed that after Dyer transferred
shares he owned to reduce his ownership interest to 19%, the Defendants made no effort
to get a commercial loan. This is some evidence of promissory fraud, i.e., no pretext of
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL. Page 16
performance. Joseph Geeting further testified that all representations in his proposal
were material that he had intended for the Plaintiff to rely on and that he knew that the
Plaintiff did rely on them, and that it was his intent at all times to obtain 51% of permanent
ownership notwithstanding his representations to the Plaintiff that a temporary ownership
change was necessary to apply for the loan. Geeting also claimed that not everything in
the 2002 plan was true, but when asked on cross examination what part was not true, he
could not point out the lie. Instead, he then claimed it was a sales pitch. The jury could
believe Dyer and disbelieve Geeting. This evidence factually supports the jury’s answer
to Question No. 8.
°. Defendants’ Point of Error No. 14 is not good cause for New Trial
The Defendants claim that no evidence was factually insufficient to support any
finding by the jury to Question No. 9 concerning expectancy damages with regard to the
December 2002 Agreement. Had the fraud not occurred, the Plaintiff would have
maintained a 50% ownership. As a 50% owner, he would have been entitled to 50% of
all the profits. Based upon the profits that the CPA for DCI testified to over the
intervening years, 50% of the profits would have been $149,169.00, which is the amount
that the Plaintiff requested. The jury’s finding is within that amount. A jury can make a
fact finding of damages within the range of the evidence. Parallax Corp., N.V. v. City of
El Paso, 910 S.W.2d 86, 92 (Tex.App.—El Paso 1995, writ denied); see Waterways on
the Intercoastal, 283 S.W.2d at 44-45 & n.15; Exxon Pipeline Co. v. Zwahr, 35 S.\W.3d
705 (Tex.App.—Houston [1* Dist.] 2000,) rev'd on other grounds, 88 S.W.3d 623
(Tex.2002); cf. Callejo v. Brazos Elec. Power Coop, Inc., 755 S.W.2d 73, 75 (Tex.1988).
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 17
P Defendants’ Point of Error No. 15 is not good cause for New Trial
The Defendants claimed that the evidence was factually insignificant that Joseph
Geeting made any false representation of an existing fact or false promise with respect to
the December 2002 Agreement. The evidence discussed in response to Question No. 8
also supports the jury's finding to Question No. 10.
Q Defendants’ Points of Error Nos. 16 and 17 are not good cause for New Trial
The Defendants argue that there was factually insignificant evidence, in fact no
evidence, to support the damages found by the jury in answer to Question No. 11. The
evidence that supports the jury’s damage finding in Question No. 8 also supports the
jury's damages answer to Question No. 11. There is no obligation for the jury to find the
same amount of damages in answer to Question No. 11 in answer to Question No. 8.
R. Defendants’ Point of Error No. 18 is not good cause for New Trial
The Defendants contend that the evidence is overwhelming that the conduct of
Joseph Geeting, Lauri Geeting and Richard Geeting was within the business judgment
rule and therefore insufficient to factually support the jury’s answer to Question No. 18.
However, the evidence showed that Craig Dyer was entitled to compensation from DCI
for work that he had performed on behalf of DCI, but that Joseph Geeting, Lauri Geeting
and Richard Geeting refused to have DCI pay him the money that it owed him.
Furthermore, the evidence showed that Joseph Geeting removed DCI’s money, which
could be interpreted by the jury to be an effort to interfere with the operations of the
company and to set up Joseph Geeting’s takeover of the company with their help.
Moreover, the evidence regarding the establishment of deals between DCI and THOC
supported the jury's finding that the Geetings violated their fiduciary duties to DCI. The
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 18
fact that there was some evidence that the Defendants’ actions came within the business
judgment rule did not require the jury to do find that they did.
Ss Defendants’ Point of Error No. 19 is not good cause for New Trial
There is no basis to the Defendants’ claim that Mr. Oncken’s conduct during the
trial caused the rendition of an improper judgment. Any error that he might have made
was corrected by the Court. Nothing he did created an impair prejudice that likely
influenced the jury’s verdict.
Ti, Defendants’ Point of Error No. 20 is not good cause for New Trial
The Defendants contend that the jury’s answers to Questions 19-21, which
covered damages that DCI is entitled to for breaches of fiduciary duty by the Geetings,
were unsupported by factually sufficient evidence. However, the evidence shows that
the individual Defendants spent $500,000.00 to deny the Plaintiff his rights to go through
the books and records, to fight him on the ownership of stock and to litigate the case
through trial. The jury could find that this was an improper usage of DCI’s funds. The
amount of damages that DCI found for Joseph Geeting, Lauri Geeting and Richard
Geeting was within that evidence.
U Defendants’ Point of Error No. 21 is not good cause for New Trial
The Defendants contend that Plaintiff failed to present factually sufficient evidence
to support the $10,000.00 jury award in Question No. 23 against Joseph Geeting for
transactions in which he breached his fiduciary duties to DCI. The evidence shows that
Joseph Geeting took a $10,000.00 write off in his income taxes as a result of the THOC
transaction which was a write off that DCI should have gotten. That evidence supports the
jury's award.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 19
Vv Defendants’ Point of Error No. 22 is not good cause for New Trial
The Defendants again contend that Plaintiff provided factually insufficient
evidence to support the jury’s answer to Question Nos. 25 & 26, which involve Geeting’s
converting any personal property that DCI owned. The evidence shows that at a time
that Geeting was supposedly out of the picture, he bought a computer from Best Buy for
$922.00 with DCI’s money. DCI had not scheduled the purchase of a new computer.
The evidence supports the jury's finding that Geeting converted a computer purchase
with DCI’s money for his own use.
W. Defendants’ Point of Error No. 23 is not good cause for New Trial
Defendants first claimed that the predicate causes of action were not timely
pleaded or moved. See answers related to Question Nos. 1-3, 5 and 10-11.
Xx Defendants’ Point of Error No. 24 is not good cause for New Trial
Defendants next claimed that the jury’s award of attorneys’ fees was not factually
supported because the fees were not segregated. Legal services that advance both a
recoverable and unrecoverable claim need not be segregated. Tony Gullo Motors |, LP
v. Chapa, 212 S.W.3d 299, 313-14 (Tex. 2006). Mr. Madden’s testimony showed that
the actions for which the Plaintiff requested attorneys’ fees advanced the claims under
the 80/20 Agreement and statutory fraud as well as the other claims. Moreover, there is
no authority that the court can disregard the jury's finding of attorneys’ fees because the
evidence was not segregated. The court can disregard a question only when there is no
evidence to support it or because the fact was established to the contrary as a matter of
law. See Brown v. Bank of Galveston, 963 S.W.2d, 511, 513 (Tex. 1998); Gallas v. Car
Biz, Inc., 914 S.W.2d, 592, 593 (Tex. App.—Dallas 1995, writ denied). Mr. Madden's
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 20
testimony was sufficient evidence of what the amount of the attorneys’ fees should be.
See Tony Gullo Motors |, LP, 212 S.W.3d at 314. Furthermore, the court can grant a
partial new trial on a part that is clearly seperable without unfairness to the parties.
Tex.R.Civ.P. 380. The award of attorney's fees has been held to be a seperable matter.
See Satellite Earth Stations East, Inc. v. Davis, 756 S.W.2d 385, 387 (Tex.App.-Eastland
1988, writ denied).
vy Defendants’ Point of Error No. 26 is not good cause for New Trial
The Defendants contend that because the jury found that Craig Dyer wrongfully
exercised dominion or control over the property including checks belonging to DCI, in
Question No. 37 they could not answer zero to Question No. 38. The evidence also
showed, however, that Craig Dyer was entitled to be paid by DCI the entire amount of the
DCl checks. A jury could find that it was improper for Craig Dyer to issue those checks to
himself, but that such action did not damage DCI because it owed him the amount of
money paid.
z Defendants’ Point of Error No. 26 is not good cause for New Trial
The Defendants contend that Plaintiff cannot assert any equitable claims because
he comes before this court with unclean hands. Plaintiff seeks equitable relief with
regard to oppression of his shareholder rights only against the individual Defendants, not
against DCI. Plaintiff's conduct that might be held to be unclean hands related to his
obligations to DCI, not against the individual Defendants. The fact that the court might
have a basis for denying equitable relief to the Plaintiff against DC/ does not justify the
denial of equitable relief against the other Defendants. This argument does not show
good cause for a new trial.
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 21
Ml.
CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests that the court deny in toto
Defendants’ Motion for New Trial.
Respectfully submitted,
ae LE
Mitchell Madden
State Bar No. 12789350
Thomas V. Murto III
State Bar No. 14740500
LAW OFFICES OF MITCHELL MADDEN
1755 Wittington Place, Suite 300
Dallas, Texas 75234
(972) 484-7780
(972) 484-7743 Facsimile
Jeffrey Uzick
State Bar No. 204919200
Kevin Oncken
State Bar No. 15280050
UZICK & ONCKEN, P.C.
238 Westcott
Houston, Texas 77007
(713) 869-2900
(713) 869-6699 Facsimile
ATTORNEYS FOR PLAINTIFF CRAIG DYER
CERTIFICATE OF SERVICE
| hereby certify that on the 2° day of November 2011, a true and correct copy of
the foregoing was forwarded via facsimile and via certified mail, return receipt requested
to opposing counsel.
Z a LD
Thomas V. Murto III
PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 22
Preview
Filed 11 November2 P4:40 Gary Fitzsimmons District Clerk Dallas District CAUSE NO. 04-01100-M CRAIG DYER, IN THE DISTRICT COURT OF Plaintiff Vv 298" JUDICIAL DISTRICT DYER CUSTOM INSTALLATION, INC. (DCI), JOSEPH GEETING, SUSAN LAMBERT, LARRY DYER and RICHARD GEETING Defendants DALLAS COUNTY, TEXAS PRO PLUMBING & APPLIANCE IN THE DISTRICT COURT INSTALLATION, INC. f/k/a DYER CUSTOM INSTALLATION, INC. Plaintiff, vs. 298" JUDICIAL DISTRICT CRAIG DYER, MELISA CONTRERAS and THE ESTATE OF LARRY DYER Defendants, DALLAS COUNTY, TEXAS PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL COMES NOWPLAINTIFF, CRAIG DYER (“Dyer”) individually and on behalf of Dyer Custom Installation, Inc., and files this Response to Motion for New Trial (the “MNT”) and shows the Court as follows: | INTRODUCTION A The Defendants’ Request The Defendants, Dyer Custom Installation, Inc. (“DCI”) and its former or current officers and directors, Joseph Geeting (“Geeting”), Richard Geeting (“R. Geeting”) and PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 1 Lauri Geeting (“L. Geeting”), ask this Court to set aside a jury verdict in favor of Dyer and DCI.'More specifically, the Defendants request a new trial due to the following findings of the jury: Questions 1-3 and 5-7 (related to the 80/20 Agreement between Dyer and Geeting, Geeting’s failure to comply, Dyer’s performance and Geeting’s preventing Dyer from tendering same, the market value of the stock of DCI in February 2004, and damages for Geeting’s failure to comply)*; Questions 8-9 (Geeting’s fraudulent inducement of Dyer into the December 2002 Agreement and damages)*; Questions 10-11 (Geeting’s statutory fraud regarding the transfer of 10 shares of DCI and damages); Questions 18-21 (each of Defendants’ breaches of fiduciary duty to DCI and damages for same); Question 23 (related to Geeting’s profit for his breach of fiduciary duty); Questions 25-26 (related to conversion by Geeting as to DCI and damages to DC! from Geeting); Question 27 (related to attorneys’ fees); and Question 38 (related to the finding of no damages against Dyer as to conversion). 4 The conflict of interest between DCI and its former officers and directors who have breached their fiduciary duties to DCI is evident here when DCI’s lawyer is asking (on behalf of DCI) the Court to enter a JNOV against it and in favor of the officers and/or directors who breached their fiduciary duties to DCI. 2 The 80/20 Agreement was the agreement Dyer alleged he had with Geeting for the right to purchase from Geeting 60% of the shares of DCI owned by Geeting at the expiration of 3 years. 3. The December 2002 Agreement was the agreement relating to the restructuring of the ownership of DCl's shares. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 2 B. Defendants’ Motion is premature. Defendants filed their Motion for New Trial and set it for hearing prior to the court signing a Final Judgment in this case. However, “[a] motion for new trial must, by its very nature, seek to set aside an existing judgment and request relitigation of the issues.” Barry v. Barry, 193 S.W.3d 72, 74 (Tex.App.—Houston [1* Dist] 2006, no pet.)(emphasis added). When a motion for new trial is prematurely filed, it shall be deemed filed on the date of but subsequent to the time of the signing of the judgment. Tex.R.Civ.P. 306c. This motion cannot be “heard” prior to a final judgment. c Defendants’ “Introduction” distorts the facts. The Defendants’ “Introduction” in its motion for JNOV, like many of the other filings by the Defendants throughout this litigation, contains numerous mischaracterizations and distortions, some of which the Plaintiff will briefly address here. First, the Defendants claim that Plaintiff ignored the Court’s Scheduling Orders and Tex. R. Civ. P. 63 in filing its Second and Third Amended Petitions, while at the same time relying upon those pleadings which would “ignore that same scheduling order.” Purportedly, Plaintiff's 2009 amendments “changed the landscape of the original lawsuit and ultimately resulted in both surprise and prejudice to Defendants, which in turn resulted in a jury charge that incorporated new causes of action asserted for the first time.” This is simply not the case. As the Court is well aware, since Plaintiff's First Amended Petition filed in this case in 2005, the facts pled in the case have remained virtually identical, including the allegation “That Plaintiff would enter into a shareholder's 4 If the Defendants had truly believed that leave of Court was required to amend according to the superseded 2006 Scheduling Order, than they would have sought such leave before filing their Third Amended Answer on September 30, 2009! They did not. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 3 agreement allowing Plaintiff to repurchase...an additional 60% of the shares which were owned by Geeting at fair market value after the expiration of three (3) years (allowing Plaintiff to become 80% owner of his business).” (Plaintiffs First Amended Original Petition at para. 4.05 number 5 and Plaintiffs Third Amended Petition at para. 4.05 number 5). Furthermore, in answering the 2005 Petition, the Defendants specifically denied, among other things, the following: 1 It was never proposed that Plaintiff be allowed the option of buying 60% of Joseph Geeting’s interest in DCI at a fair market value after the expiration of three (3) years, as alleged in Plaintiff's First Amended Original Petition, page 3; 2 It was never proposed that Plaintiff would enter into a shareholder agreement allowing Plaintiff to repurchase an additional 60% of the shares that were owned by Joseph Geeting at fair market value after the expiration of three (3) years (allowing Plaintiff to become an 80% owner in DCI) as alleged on page 4 of Plaintiff's First Amended Petition; 3 It was never agreed that Plaintiff would own more than 50% of the shares of DCI as alleged on page 4 of Plaintiff's First Amended Original Petition. (Defendant's Second Amended Answer; para. 2.13). In short, Plaintiff pled its breach of the 80/20 Agreement in 2005, Defendants knew it—and specifically denied it. Not surprisingly however, the Defendants make no mention of Plaintiff's 2005 petition whatsoever in their filing. Instead, the Defendants complain about the Court's decision to allow the Second and Third Amended Petitions filed in 2009, still well over a year before the June 2010 trial setting. In doing so, the Defendants argue that the Second Amended Petition and the 5 Moreover, there is no doubt that an opposing attorney of reasonable competence, could, with the Plaintiff's 2005 pleading before him, ascertain the nature and the basic issues of the controversy and the testimony that would probably be relevant, including the 80/20 Agreement, the fraudulent inducement and the claim regarding the 1% interest. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 4 Third Amended Petition filed in 2009 were filed in violation of the Court's prior 2006 and 2007 Scheduling Orders because they were filed without leave of Court. However, while the 2006 Scheduling Order did contain a deadline to amend pleadings, that scheduling order was superseded by the 2007 Scheduling Order. In the 2007 Agreed Scheduling Order, signed by the Court, the parties agreed that “Any deadline not specifically identified in this Scheduling Order shall be determined by the Local Rules of Court and the Texas Rules of Civil Procedure.” The 2007 Agreed Scheduling Order did not specifically identify a pleadings deadline. Accordingly, the parties agreed, and the Court ruled, that the deadline to amend pleadings was governed by both the Local Rules of Court and the Texas Rules of Civil Procedure. While the Local Rules of the Civil Courts of Dallas County Texas do not contain any rules regarding the deadline to amend pleadings, the Texas Rules of Civil Procedure do. Rule 63 provides a right to amend without leave of Court within 7 days before trial. These pleadings, filed over a year before the June 2010 trial setting, were timely under Rule 63 and gave Defendants more than adequate time to prepare their defenses in this cause. No doubt recognizing this, the Court permitted these pleadings.° Finally, in their Introduction the Defendants suggest that because the jury found that all parties breached their fiduciary duties to DCI, that Dyer “should not be rewarded for essentially changing his case after discovery was concluded and the evidence was presented.” As set forth above, Dyer did not change his case at all, much less after discovery was concluded and the evidence was presented. The Defendants had fair 6 Defendants wrongfully suggest that the Court breached a promise it made to them to undo “an injustice” in allowing questions in the charge not predicated on timely pleadings and that in turn were prejudicial and not supported by the evidence. Plaintiffs believe that the Court did no such thing. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 5 notice of the claims against them and years to prepare a defense. Put simply, their defenses failed because they committed wrongdoing. It would be absurd to allow Geeting to escape the damages he caused by breaching his agreements, by fraud, by oppressing Dyer as a shareholder and by breaching his fiduciary duties to DCI. Given the circumstances, it would also be absurd to allow Geeting to remain in control of DCI pending the appeal of this case and that is why Plaintiff has asked that the Court appoint a receiver for DCI in the interim. That way further harm to DCI can be prevented. Il. ARGUMENTS AND AUTHORITIES A Standard of Review Granting a new trial is proper only for “ good cause.” Tex.R.Civ.P. 320; In re Columbia Medical Center of Las Colinas, Subsidary, L.P., 290 S.W.3d 204, 210 (Tex.2009). The amount of discretion Texas trial courts have to overturn jury verdicts and grant new trials broad but has limits. /d. “The good cause for which Rule 320 allows trials courts to grant new trials does not mean just any cause. If it did, the rule would not have specified “good” cause...[T]he fact that the right to jury trial is of such significance as to be provided for in both the Federal and Texas Constitution counsels against courts setting aside jury verdicts for less than specific, significant and proper reasons.” /d at 210 n.3 The trial court’s discretion does not permit it “to substitute his or her own views for that of a jury without a valid basis.” /d at 212. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 6 B. Defendants’ Point of Error No. 1 is not good cause for New Trial As set forth above, and incorporated herein by reference, Plaintiff alleged the 80/20 Agreement as early as 2005 in its First Amended Petition. Since 2005, the facts pled in this case have remained virtually identical, including the allegation “That Plaintiff would enter into a shareholder's agreement allowing Plaintiff to repurchase...an additional 60% of the shares which were owned by Geeting at fair market value after the expiration of three (3) years (allowing Plaintiff to become 80% owner of his business). (Plaintiff's First Amended Original Petition at | 4.05 number 5 and Plaintiffs Third Amended Petition at 4] 4.05 number 5). In answering the First Amended Petition, Defendants specifically denied this fact, among other things from that Petition. Defendant's argument in light of these pleadings, has no merit. As the Court well knows, Texas follows the “fair-notice” standard for pleading. Low v. Henry, 221 S.W.3d 609, 612 (Tex. 2007); Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex. 2000).Fair notice has been given if the pleadings are sufficiently specific that “an opposing attorney of reasonable competence, could with the pleading before him, ascertain the nature and the basic issues of the controversy and the testimony which will probably be relevant.” Brewster v. Columbia Med. Ctr. of McKinney Subsidiary, L.P., 269 S.W.3d 314, 319 (Tex. App.--Dallas 2008, no pet.); See also, Roark v. Allen, 633 S.W.2d 804, 810 (Tex.1982); Schoellkopf v. Pledger, 778 S.W.2d 897, 899-99 (Tex.App.-Dallas 1989, writ. denied). The courts should entertain causes of action which are reasonably inferred from those specifically plead. Brewster v. Columbia Med. Ctr. of McKinney Subsidiary, L.P., 269 S.W.3d 314, 319 (Tex. App.--Dallas 2008, no pet.); See also, McGraw v. Brown Realty Co., 195 S.W.3d 271, 275 (Tex.App.-Dallas PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 7 2006, no pet.) (“A petition is sufficient if a cause of action or defense can be inferred from what is specifically stated.”). Here, there is no doubt that the Defendants could, and in fact did, ascertain from the Plaintiff's First Amended Petition filed in 2005 the nature and basic issues of the controversy and evidence that might be relevant. They specifically denied them in their Second Amended Answer. However, even if the notice-pleading requirements and the Defendants’ own admissions were ignored, the 80/20 claim was timely alleged in 2009 in the Second and Third Amended Petitions. As set forth above, while the 2006 Scheduling Order contained a pleading deadline, that Scheduling Order was superseded by the Court’s 2007 Scheduling Order (and the parties’ agreement). The 2007 Scheduling Order provided that “Any deadline not specifically identified in this Scheduling Order shall be determined by the Local Rules of Court and the Texas Rules of Civil Procedure.” Since there are no local rules setting deadlines to amend however, Tex. R. Civ. P. 63 prevails. It provides a right to amend without leave of Court within 7 days before trial. The Second and Third Amendments were filed more than a year before the June 2010 trial setting. Defendants’ argument to the contrary lacks merit.’ Finally, this Court had the inherent right to change or modify the Scheduling Order. See, In re Estate of Henry, 250 S.W.3d 518, 526 (Tex.App.-Dallas 2008, no pet.). Here, the Court not only allowed the Third Amended Petition it also implicitly modified its previous scheduling orders in so doing. See, /d. The Court acted well within its wide discretion in doing so. First, as set forth above, Defendants were on notice for years of the claims regarding the 80/20 Agreement. The Defendants did not and could not prove 7 This is further reflected by many of the Defendants’ filings made after the expiration of the very deadlines it now argues were mandated by the Scheduling Orders including the Defendants’ Second Amended Answer filed on March 13, 2008 (after the June 2007 trial setting) and Defendants’ Third Amended Answer filed on September 30, 2009. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 8 that they were surprised or prejudiced by the amendments (filed over a year before trial) nor, as set forth above, did the amendments state new claims. See, Graham v. Adesa, Inc., 145 S.W.3d 769, 775-776 (Tex.App.--Dallas 2004, pet. denied). Further, and importantly, if the court had not changed or modified the scheduling orders, there would have been a violation of due process. As the Court will remember, at the time the 2006 and 2007 Scheduling Orders were signed, neither Contreras nor the Estate of Larry Dyer were parties to this lawsuit. In fact, at the time Contreras was added as a party all of the deadlines specifically identified in the Agreed Scheduling Order had long since passed including the discovery deadline. If the 2006 or 2007 Scheduling Orders governed to preclude Contreras (or the Estate of Larry Dyer) from exercising her rights as a litigant; ie. denying her the opportunity to amend her pleadings or conduct discovery; that would have constituted a violation of due process. c Defendants’ Point of Error No. 2 is not good cause for New Trial a Geeting waived the limitations defense. The statute of limitations is an affirmative defense. Tex.R.Civ.P. 94. The defendant thus bears the initial burden to plead, prove, and secure findings to sustain its plea of limitations. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988).This burden includes establishing when the plaintiffs cause of action accrued to demonstrate the bar of limitations. Holland v. Lovelace, S.W.3d 2011 WL 3805519 (Dallas 2011, nwh); Prestige Ford Garland Ltd. P'ship v. Morales, 336 S.W.3d 833, 836 (Tex. App.Dallas 2011, no pet.). When, as here, the jury was not asked to determine when the cause of action accrued for purposes of supporting a limitations defense, the defense is waived unless the date of accrual was conclusively established under the PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 9 evidence. /d. The evidence in this case does not conclusively establish the date of accrual of the breach of contract claim. The 80/20 Agreement gave Dyer the option to purchase 60% of the DCI stock held by Geeting after four years but did not require him to exercise that option at that time. Accordingly, Geeting has waived the limitations defense. Holland, id at pps. 8-11. b. The 2005 pleading sets forth the allegation. The statute of limitations for a breach of contract claim is four years. Tex. Civ. Prac. and Rem. Code Section 16.051. Defendants contend that limitations on the claim for breach of the 80/20 Agreement ran in February 2008 because Geeting failed to perform under the Agreement in 2004. Even if the Defendants had conclusively established that the cause of action accrued in February 2004, which is denied, and February 2008 was the limitations cut-off, the allegations set forth in Plaintiff's First Amended Petition in 2005 were sufficient to, and did in fact, put Geeting on fair notice of the claim against him. Accordingly, the action was timely filed in 2005. Cc. Furthermore, the 2009 Third Amended Petition relates back to the 2005 filing. Even if the Court determines that the breach of contract claim was not actually filed until the Third Amended Petition in 2009, that amendment relates back to the 2005 First Amended Petition under Tex. Civ. Prac. & Rem. Code §16.068.Section 16.068 provides in this regard as follows: Amended and Supplemental Pleadings If a filed pleading relates to a cause of action, cross action, counterclaim, or defense that is not subject to a plea of limitation when the pleading is filed, a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 10 unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence. Tex. Civ. Prac.& Rem. Code Ann. § 16.068 (West). Section 16.068 provides that new facts or claims raised in a subsequent pleading relate back to a timely filed pleading and are not barred unless the amendment or supplemental pleading “is wholly based on a new, distinct, or different transaction or occurrence.” /d. The Dallas Court of Appeals has recently determined that “[A] ‘transaction’ is defined as a set of facts that gives rise to the cause of action premised thereon.” (Emphasis added). Brewster v. Columbia Med. Ctr. of McKinney Subsidiary, L.P., 269 S.W.3d 314, 317-18 (Tex.App.-Dallas 2008, no pet.). Here, the Plaintiff clearly alleged the same set of facts in 2005 as it did in 2008, including, among other things, the allegation “That Plaintiff would enter into a shareholder's agreement allowing Plaintiff to repurchase...an additional 60% of the shares which were owned by Geeting at fair market value after the expiration of three (3) years (allowing Plaintiff to become 80% owner of his business).” (Plaintiff's First Amended Original Petition at | 4.05 number 5 and Plaintiff's Third Amended Petition at 4.05 number 5). Under such circumstances, there can be no question but that if not already sufficiently pled in 2005, the 2009 amendment relates back to that pleading. See, e.g. J.K. and Susie Wadley Research Inst. and Blood Bank v. Beeson, 835 S.W.2d 689, 697 (Tex.App.-Dallas 1992, writ denied) (wife's claim in amended petition relates back to decedent's claim because both arose from the same blood transfusion). PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 11 D. Defendant's Point of Error No. 3 is not good cause for New Trial Craig Dyer testified as to the existence of the 80/20 Agreement. His testimony was supported by the testimony of Melissa Contreras, and also Lauri Geeting, one of the Defendants. This is factually sufficient evidence to support the Jury’s answer to Question No. 1. E Defendants’ Point of Error No. 4 is not good cause for New Trial The Defendants also contend that Plaintiff provided factually insufficient evidence concerning separate consideration for the 20/20 Agreement as referenced above. There was evidence that the 80/20 Agreement was a written agreement that was signed by Joseph Geeting. Therefore, the 80/20 Agreement presumptively imported consideration and the burden was on the Defendants’ to plead and prove the absence of consideration. Simpson v. MBank, N.A., 724 S.W. 2d 102, 107 (Tex. App.—Dallas 1987, writ re’f n.r.e.). The Defendants neither obtained a jury finding that there was a lack of consideration nor did they establish as a matter a law that there was a lack of consideration. The Defendants improperly attempt to shift the burden of proof in this point. The court should not grant a new trial on this tactic. F Defendants’ Point of Error No. 5 is not good cause for New Trial The jury found in Question in answer to Question No. 2 that Joseph Geeting failed to comply with the 80/20 Agreement. The Defendants do not contend there is any evidence that Geeting complied with the 80/20 Agreement. Instead, they argue that Plaintiff first had to tender performance before Geeting needed to comply. Geeting took actions designed to and having the effect of depriving Plaintiff of his right as an owner of the business to access the contracts, books and records. Geeting’s obligation of PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 12 compliance was not limited to selling the stock when Dyer exercised his option. Geeting acted to prevent Dyer from exercising his option. Geeting, the jury found, defrauded Dyer into altering their 50/50 ownership of the company. Further, Geeting admitted that he had destroyed tapes of every meeting conducted in the case and he claims to have lost or destroyed the work logs that pertain to Craig Dyer. Finally, he denies the existence of the 80/20 contract that the jury found to exist. All of this evidence supports the jury finding that Joseph Geeting did not comply with the 80/20 Agreement. G Defendants’ Point of Error No. 6 is not good cause for New Trial See Response in Section II.B. above. Defendants’ Point of Error No. 7 is not good cause for New Trial Contrary to Defendants’ claim, Dyer testified that he was ready, willing and able to timely perform his contractual obligations under the 80/20 Agreement. The jury had the prerogative of believing his testimony. The Court should not grant a new trial on this claim. l Defendants’ Point of Error No. 8 is not good cause for New Trial The jury’s answer that Geeting prevented Dyer from tendering performance is also supported by the evidence that the Defendants’ repeatedly refused to provide the records and books to the Plaintiff so that he could determine the value of the company and thereby, determine the value of the stock. Geeting also engaged in other conduct teferenced above. This evidence factually supports the jury's finding that Joseph Geeting interfered with Craig Dyer’s tender of performance under the 80/20 Agreement. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 13 J Defendants’ Point of Error No. 9 is not good cause for New Trial Defendants contend that there was factually insufficient evidence, in fact no evidence, that would allow the jury to find that the market value of the stock that Plaintiff had the right to repurchase from Joseph Geeting in February 2004, was $23,823.00. In the cross examination of Joseph Geeting, Plaintiff obtained testimony that the value of DCl’s stock in 2007 was approximately $79.41per share. In further cross examination, Mr. Geeting admitted that Dyer would have needed to pay him $23,823.00 in order to buy him down to 20%. Apart owner of a business may testify as to the market value as to the market value of that business’s stock. See Akin, Gump, Strauss, Hauer & Feld, LLP v. Nat'l Dev. & Research Corp., 232 S.W.2d 883, 893-94 (Tex. App--Dallas 2007), rev'd on other grounds, 299 S.W.3d 106 (Tex. 2009); Vector Indus., Inc. v. Dupre, 793 S.W.2d 97, 103 (Tex. App. — Dallas 1990, no writ). This evidence was sufficient to support the jury's answer. K, Defendants’ Point of Error No. 10 is not good cause for New Trial The Defendants claim there was factually insufficient evidence to support the jury's findings of damages in answer to Question No. 7. The evidence supported the jury's findings that if Geeting had complied with the 80/20 Agreement, Dyer would have owned 80% of DCI in February of 2004. Dyer’s damages were the loss of the benefit of the bargain. Kristina Knowles, the CPA for DCI, testified that from 2004 through 2008, Geeting’s wages were $240,667.24, Richard Geeting’s part-time wages amounted to $85,750, and the retirement account was $166,269. These amounts total $492,686.24. If Dyer had 80% of the stock, he likely would have received those benefits. The evidence factually supports the jury’s findings, which were within this total. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 14 L Defendants’ Point of Error No. 11 is not good cause for New Trial The Defendants first contend that fraudulent inducement was not alleged in the Third Amended Petition and the allowance of a trial amendment was prejudicial and a surprise. In its First Amended Petition, as in its 2009 petitions, Plaintiff alleges fraud in the sale and transfer of stock. The timelines of the allegations is covered in the Introduction and IIB above. Fraudulent inducement is a particular species of fraud that arises in the context of acontract and requires the existence of a contract as part of its proof. Haase v. Glazner, 62 S.W.3d 795, 798 (Tex. 2001). The elements for fraudulent inducement are the same as the elements for fraud. See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990); see also In Re First MeritBank N.A., 52 S.W.3d 749, 758 (Tex. 2001). To prove fraudulent inducement, the Plaintiff must establish the same elements of fraud as they relate to a contract. Sanson Lonestar, Ltd. Partnership v. Hooks, S.W.3d - 2011 W.L. 3918093, *11 (Tex. App.—Houston [1st District] 2011, no pet. history). Plaintiff's factual allegations showed that the alleged fraud pertained to the 2002 Agreement. Therefore, Geeting was not prejudiced or surprised by the trial amendment. M Defendants’ Point of Error No. 12 is not good cause for New Trial Defendants next claimed that the claim was barred by limitations. See Introduction and Section IIB above. Moreover, as a matter of law, limitations does not begin to run on fraud until the fraud is discovered or could have been discovered by the exercise of reasonable diligence. Little v. Smith, 943 S.W.2d 414, 420 (Tex. 1997). The fact that a plaintiff may suspect wrongdoing on behalf of the defendant does not establish as a matter of law that PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 15 he had discovered the fraud or that he could have discovered the fraud in the exercise of reasonable diligence. Limitations are an affirmative defense. Holland v. Lovelace, S.W.2d, 2011 WL 3805519, *8 (Tex. App. — Dallas Aug. 30, 2011, no pet. list). Geeting had the burden to plead, prove and secure findings to support his affirmative defense. That burden included establishing when the plaintiff's cause of action occurred. If the Geetings intended to rely on the statute of limitations, they should have obtained a fact finding from the jury as to the date Dyer knew of the fraud or could have discovered the fraud by the exercise of reasonable diligence. Geeting’s failure to submit this issue or obtain a jury finding is fatal to his assertion respecting this issue. N Defendants’ Point of Error No. 13 is not good cause for New Trial Next, the Defendants’ claim that there is no evidence to support the jury’s finding in Question No. 8, that Geeting fraudulently induced Dyer into the December 2002 Agreement. The evidence shows that Joseph Geeting claimed to have stepped out of the operations of DCI for the 5 to 6 months prior to the December 2002 Agreement, but the jury could reasonably infer from the evidence that he was using computer spyware to spy on the company’s records. Furthermore, he was moving the company’s money around into a separate secret bank account at Bank One without telling anybody. When the company got into financial straits, he came back with the proposal purportedly to save the company. The evidence shows that Geeting represented that the constraints of a commercial loan required that Dyer had to own less than 20% of the corporation in order to obtain a loan for the company. The evidence showed that after Dyer transferred shares he owned to reduce his ownership interest to 19%, the Defendants made no effort to get a commercial loan. This is some evidence of promissory fraud, i.e., no pretext of PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL. Page 16 performance. Joseph Geeting further testified that all representations in his proposal were material that he had intended for the Plaintiff to rely on and that he knew that the Plaintiff did rely on them, and that it was his intent at all times to obtain 51% of permanent ownership notwithstanding his representations to the Plaintiff that a temporary ownership change was necessary to apply for the loan. Geeting also claimed that not everything in the 2002 plan was true, but when asked on cross examination what part was not true, he could not point out the lie. Instead, he then claimed it was a sales pitch. The jury could believe Dyer and disbelieve Geeting. This evidence factually supports the jury’s answer to Question No. 8. °. Defendants’ Point of Error No. 14 is not good cause for New Trial The Defendants claim that no evidence was factually insufficient to support any finding by the jury to Question No. 9 concerning expectancy damages with regard to the December 2002 Agreement. Had the fraud not occurred, the Plaintiff would have maintained a 50% ownership. As a 50% owner, he would have been entitled to 50% of all the profits. Based upon the profits that the CPA for DCI testified to over the intervening years, 50% of the profits would have been $149,169.00, which is the amount that the Plaintiff requested. The jury’s finding is within that amount. A jury can make a fact finding of damages within the range of the evidence. Parallax Corp., N.V. v. City of El Paso, 910 S.W.2d 86, 92 (Tex.App.—El Paso 1995, writ denied); see Waterways on the Intercoastal, 283 S.W.2d at 44-45 & n.15; Exxon Pipeline Co. v. Zwahr, 35 S.\W.3d 705 (Tex.App.—Houston [1* Dist.] 2000,) rev'd on other grounds, 88 S.W.3d 623 (Tex.2002); cf. Callejo v. Brazos Elec. Power Coop, Inc., 755 S.W.2d 73, 75 (Tex.1988). PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 17 P Defendants’ Point of Error No. 15 is not good cause for New Trial The Defendants claimed that the evidence was factually insignificant that Joseph Geeting made any false representation of an existing fact or false promise with respect to the December 2002 Agreement. The evidence discussed in response to Question No. 8 also supports the jury's finding to Question No. 10. Q Defendants’ Points of Error Nos. 16 and 17 are not good cause for New Trial The Defendants argue that there was factually insignificant evidence, in fact no evidence, to support the damages found by the jury in answer to Question No. 11. The evidence that supports the jury’s damage finding in Question No. 8 also supports the jury's damages answer to Question No. 11. There is no obligation for the jury to find the same amount of damages in answer to Question No. 11 in answer to Question No. 8. R. Defendants’ Point of Error No. 18 is not good cause for New Trial The Defendants contend that the evidence is overwhelming that the conduct of Joseph Geeting, Lauri Geeting and Richard Geeting was within the business judgment rule and therefore insufficient to factually support the jury’s answer to Question No. 18. However, the evidence showed that Craig Dyer was entitled to compensation from DCI for work that he had performed on behalf of DCI, but that Joseph Geeting, Lauri Geeting and Richard Geeting refused to have DCI pay him the money that it owed him. Furthermore, the evidence showed that Joseph Geeting removed DCI’s money, which could be interpreted by the jury to be an effort to interfere with the operations of the company and to set up Joseph Geeting’s takeover of the company with their help. Moreover, the evidence regarding the establishment of deals between DCI and THOC supported the jury's finding that the Geetings violated their fiduciary duties to DCI. The PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 18 fact that there was some evidence that the Defendants’ actions came within the business judgment rule did not require the jury to do find that they did. Ss Defendants’ Point of Error No. 19 is not good cause for New Trial There is no basis to the Defendants’ claim that Mr. Oncken’s conduct during the trial caused the rendition of an improper judgment. Any error that he might have made was corrected by the Court. Nothing he did created an impair prejudice that likely influenced the jury’s verdict. Ti, Defendants’ Point of Error No. 20 is not good cause for New Trial The Defendants contend that the jury’s answers to Questions 19-21, which covered damages that DCI is entitled to for breaches of fiduciary duty by the Geetings, were unsupported by factually sufficient evidence. However, the evidence shows that the individual Defendants spent $500,000.00 to deny the Plaintiff his rights to go through the books and records, to fight him on the ownership of stock and to litigate the case through trial. The jury could find that this was an improper usage of DCI’s funds. The amount of damages that DCI found for Joseph Geeting, Lauri Geeting and Richard Geeting was within that evidence. U Defendants’ Point of Error No. 21 is not good cause for New Trial The Defendants contend that Plaintiff failed to present factually sufficient evidence to support the $10,000.00 jury award in Question No. 23 against Joseph Geeting for transactions in which he breached his fiduciary duties to DCI. The evidence shows that Joseph Geeting took a $10,000.00 write off in his income taxes as a result of the THOC transaction which was a write off that DCI should have gotten. That evidence supports the jury's award. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 19 Vv Defendants’ Point of Error No. 22 is not good cause for New Trial The Defendants again contend that Plaintiff provided factually insufficient evidence to support the jury’s answer to Question Nos. 25 & 26, which involve Geeting’s converting any personal property that DCI owned. The evidence shows that at a time that Geeting was supposedly out of the picture, he bought a computer from Best Buy for $922.00 with DCI’s money. DCI had not scheduled the purchase of a new computer. The evidence supports the jury's finding that Geeting converted a computer purchase with DCI’s money for his own use. W. Defendants’ Point of Error No. 23 is not good cause for New Trial Defendants first claimed that the predicate causes of action were not timely pleaded or moved. See answers related to Question Nos. 1-3, 5 and 10-11. Xx Defendants’ Point of Error No. 24 is not good cause for New Trial Defendants next claimed that the jury’s award of attorneys’ fees was not factually supported because the fees were not segregated. Legal services that advance both a recoverable and unrecoverable claim need not be segregated. Tony Gullo Motors |, LP v. Chapa, 212 S.W.3d 299, 313-14 (Tex. 2006). Mr. Madden’s testimony showed that the actions for which the Plaintiff requested attorneys’ fees advanced the claims under the 80/20 Agreement and statutory fraud as well as the other claims. Moreover, there is no authority that the court can disregard the jury's finding of attorneys’ fees because the evidence was not segregated. The court can disregard a question only when there is no evidence to support it or because the fact was established to the contrary as a matter of law. See Brown v. Bank of Galveston, 963 S.W.2d, 511, 513 (Tex. 1998); Gallas v. Car Biz, Inc., 914 S.W.2d, 592, 593 (Tex. App.—Dallas 1995, writ denied). Mr. Madden's PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 20 testimony was sufficient evidence of what the amount of the attorneys’ fees should be. See Tony Gullo Motors |, LP, 212 S.W.3d at 314. Furthermore, the court can grant a partial new trial on a part that is clearly seperable without unfairness to the parties. Tex.R.Civ.P. 380. The award of attorney's fees has been held to be a seperable matter. See Satellite Earth Stations East, Inc. v. Davis, 756 S.W.2d 385, 387 (Tex.App.-Eastland 1988, writ denied). vy Defendants’ Point of Error No. 26 is not good cause for New Trial The Defendants contend that because the jury found that Craig Dyer wrongfully exercised dominion or control over the property including checks belonging to DCI, in Question No. 37 they could not answer zero to Question No. 38. The evidence also showed, however, that Craig Dyer was entitled to be paid by DCI the entire amount of the DCl checks. A jury could find that it was improper for Craig Dyer to issue those checks to himself, but that such action did not damage DCI because it owed him the amount of money paid. z Defendants’ Point of Error No. 26 is not good cause for New Trial The Defendants contend that Plaintiff cannot assert any equitable claims because he comes before this court with unclean hands. Plaintiff seeks equitable relief with regard to oppression of his shareholder rights only against the individual Defendants, not against DCI. Plaintiff's conduct that might be held to be unclean hands related to his obligations to DCI, not against the individual Defendants. The fact that the court might have a basis for denying equitable relief to the Plaintiff against DC/ does not justify the denial of equitable relief against the other Defendants. This argument does not show good cause for a new trial. PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 21 Ml. CONCLUSION For the foregoing reasons, Plaintiff respectfully requests that the court deny in toto Defendants’ Motion for New Trial. Respectfully submitted, ae LE Mitchell Madden State Bar No. 12789350 Thomas V. Murto III State Bar No. 14740500 LAW OFFICES OF MITCHELL MADDEN 1755 Wittington Place, Suite 300 Dallas, Texas 75234 (972) 484-7780 (972) 484-7743 Facsimile Jeffrey Uzick State Bar No. 204919200 Kevin Oncken State Bar No. 15280050 UZICK & ONCKEN, P.C. 238 Westcott Houston, Texas 77007 (713) 869-2900 (713) 869-6699 Facsimile ATTORNEYS FOR PLAINTIFF CRAIG DYER CERTIFICATE OF SERVICE | hereby certify that on the 2° day of November 2011, a true and correct copy of the foregoing was forwarded via facsimile and via certified mail, return receipt requested to opposing counsel. Z a LD Thomas V. Murto III PLAINTIFF’S RESPONSE TO MOTION FOR NEW TRIAL Page 22