Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Appellant Dennis Watts appeals a judgment rendered on a jury verdict in favor of appellee Susan Green awarding actual and exemplary damages arising from Green’s investment in pay telephones promoted by Watts. Watts owned and operated an insurance business under the name Senior Benefit Plans (SBP), selling health insurance, life insurance and annuities. Several agents were associated with SBP. Most rented office space from Watts while a few maintained offices elsewhere. Watts testified the agents were not his employees, but contracted directly with insurance companies to offer their products and are paid commissions directly by those companies. In 1996 Nathan Grimes became one of the agents associated with SBP. Not long after, he sold Susan Green a health insurance policy. She eventually placed all of her savings in investments through Grimes. Watts and several agents associated with SBP contracted with a company called TSI to sell its telephones in a program that involved the sale of pay telephones by TSI, acting through agents such as Watts and Grimes, to investors who were offered the option of operating the telephones personally or leasing them to a management company who would operate the telephones and make a fixed monthly payment to the lessor. Among other sales materials, Watts and other SBP agents made use of a flier to tout the pay telephone investment. The one-page document, introduced as plaintiff’s exhibit 6, did not expressly refer to pay telephones but recited several benefits of an unspecified investment. Its heading read “You Can’t Beat It!!!!” Grimes met with Green concerning the telephone investment program, using in his presentation to her the “You Can’t Beat It!!!!” flier as well as other sales materials. Green agreed to liquidate all the other investments she had made through Grimes, incurring a penalty, and Green purchased eight telephones from TSI, which she then leased to a company named Phoenix. Phoenix turned out to be bankrupt, as did their successor lessee, ETS. Grimes persuaded Green to keep the telephones that were generating lease payments by offering documentation of insurance. He provided a document entitled “Equipment Purchaser’s Buy Back Guarantee Certificate.” Green was not able to recover the capital she invested or any insurance proceeds and received a total of only $2,749.14 in lease payments. She brought suit against Watts and Grimes asserting claims for negligence, fraud, violation of the Deceptive Trade Practices Act, breach of fiduciary duty and negligent representation. She also alleged Watts was liable for Grimes’ conduct under theories of agency, conspiracy and joint enterprise. The jury found in Green’s favor and held that she suffered actual damages in the amount of $25,000, she should be awarded exemplary damages of $27,750 from Watts and $47,250 from Grimes, and her reasonable and necessary attorney’s fees were $30,000. Watts perfected appeal from that judgment. Grimes did not appeal. HOLDING:Affirmed in part and reversed in part. Watts challenges the trial court’s judgment and the legal and factual sufficiency of the evidence supporting the jury’s answers. Watts’s first point of error challenges the jury finding he committed fraud against Green. The court sustains the point, concluding the evidence is legally insufficient to support the jury’s finding. The court notes that Green does not identify any representation made by Watts to Green, but seeks to impute to Watts the general conduct of Grimes, alleging Watts was the “architect of the entire plan to sell these fraudulent products.” But, as submitted, the trial court’s fraud question thus required the jury to find Watts made a material misrepresentation. The court finds that there is no evidence that Green took any action to her injury in reliance on any misrepresentation Watts made in their limited conversations. Her investments were already made, and the question before her at the time was whether to agree to Phoenix’s assignment of her lease to ETS. The court similarly concludes that the “You Can’t Beat It!!!!” flier cannot form the basis for Watts’s liability on a fraud theory. Even assuming that the statements in the flier could be seen as representations by Watts to Green that satisfy the other elements of fraud, the court finds that there is no evidence Green acted in reliance on the flier. The court states that its disposition of Watts’ first point of error requires also that it sustain his fifth point, in which he challenges the legal and factual sufficiency of the evidence supporting the award of exemplary damages to Green. Having found no evidence that fraud committed by Watts caused harm to Green, the court states that it must conclude the award of exemplary damages is not supported by legally sufficient evidence. Watts also challenges the legal and factual sufficiency of the evidence supporting the jury’s finding that he and Grimes were engaged in a joint enterprise. The court reviews the evidence and finds that the jury had ample evidence from which it could infer at least an implied agreement between Watts and Grimes concerning sale of pay phones and a common purpose to do so. Therefore, the court concludes that the trial court’s judgment awarding exemplary damages against Watts must be reversed; otherwise, the judgment is affirmed. OPINION:Arnot, C.J.; Wright and McCall, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.