Shaoguang He v. Wen Hong Jiang, No. 01-06-00255-CV (Tex.App.- Houston [1st Dist.] Aug. 9, 2007)(Opinion on rehearing by Justice Keyes)(jury verdict reversed, breach of contract, elements of contact, fraud) (Before Justices Nuchia, Keyes and Higley)
Appeal from 190th District Court of Harris County
Trial court judge: Hon. Jennifer Elrod
Appellant's Attorneys: Morris Tabak, Jamal A. Asafi
Appellee's Attorney: Kevin D. Jewell
MEMORANDUM OPINION ON REHEARING BY JUSTICE EVELYN KEYES
We issued our opinion and judgment in this case on May 3, 2007. Jiang filed a motion for rehearing on June 18, 2007. We deny Jiang's motion for rehearing. However, our prior opinion and judgment of May 3, 2007 are vacated, set aside, and annulled, and this opinion and judgment are issued in their stead.
Appellant, Shaoguang He, appeals from a judgment rendered upon a jury's award of damages for breach of contract and fraud in favor of appellee, Wen Hong Jiang. In two issues, He argues that (1) the statute of frauds bars Jiang's recovery and (2) the evidence is legally insufficient to support the judgment.
We reverse and render.
Facts and Procedural History
He and Jiang first met each other in 2001 in Houston. Sometime thereafter, He and Jiang entered into an agreement.
According to He, Jiang approached him about doing some investment work for her. He agreed, testifying that Jiang had agreed to pay him $100,000 per year for his work. At the end of one year, Jiang refused to pay He for his work because she had not yet made any profits on her investments, but she agreed that she would pay him at the end of the following year for two years' work. At the end of two years, however, Jiang did not pay He for his work.
According to Jiang's testimony, she and He had entered into an agreement whereby He would borrow money from Jiang, make interest payments at specified intervals, and ultimately return the principal to Jiang.
From December 2001 through July 2002, Jiang made seven payments to He pursuant to their alleged agreement totaling $453,000. Of this, $200,000 was given to He directly; $100,000 was wired to a company named De Li Industries; and $153,000 was wired to another company named Guanging Honda, of which He is a shareholder. Of the $200,000 sent to He directly, the transfer of $150,000 is memorialized in two writings (1) signed by He and given to Jiang on June 21, 2002. The first writing ("first Agreement of Cooperation") provided:
Agreement of Cooperation
I received $50,000.00 (fifty thousand dollars) from Wenhong Jiang to purchase U.S. stocks. Stocks will be purchased through mutual consultation. I will return premium along with the interest to Wenhong Jiang when profits are realized.
Shaoguang He (signature)
The second writing ("second Agreement of Cooperation") provided:
Agreement of Cooperation
I received $100,000.00 (one hundred dollars) [sic] from Wenhong Jiang. (The first part of $33,400.00 was received on 3/25/2002; the second part of $66,600.00 was received on 5/7/2002.) The term of the agreement is one year. I agree to pay the interest of $6000.00 every 70 days and there will be five times for such payments. Afterwards I will pay the interest by days. The date to start to calculate interest is 3/25/2002. The first pay date for the interest is 7/16/2002. I agree to return premium along with interest after one year.
Shaoguang He (signature)
Ten days after Jiang's last payment to He, He executed a third writing: (2)
Profits of $100,000.00:
360 days per year:
Every 70 days, interest earned: $6,000.00
For one year (360 days), interest earned: $6,000.00 x 1 + $857.00 = $6,857.00
Profit of the first $33,400.00:
42 days x $33,400.00 x 0.000857 (profit per day of $1.00) = $1,202.00
Profit due to Wenhong Jiang by 7/16 is:
$6,000.00 + $1,202.00 = $7,202.00
Shaoguang He (signature)
(Note: based on the opinion of Wenhong Jiang, the profit of $7,202.00 will be put into the toy business, starting to calculate interest on $7,202.00 from 7/17. Starting to calculate interest on $153,000.00 from 7/12).
From January 2002 through January 2004, He made twelve payments to Jiang totaling $220,510. When Jiang did not pay He for the investment work he had done for her, He filed suit against Jiang alleging breach of contract. In her second amended original answer, Jiang alleged counterclaims for breach of contract and fraud.
In considering the evidence, the jury was required to consider several questions about the facts and to answer "yes" or "no." The jury found that He and Jiang had entered into an agreement but that only He had failed to comply with that agreement, and it awarded to Jiang $232,500 in damages. The jury also found that He had committed fraud against Jiang, and it awarded an additional $41,900 in direct and consequential damages.
On November 30, 2005, He filed a motion for judgment notwithstanding the verdict and a motion to disregard jury findings, arguing that "[a] directed verdict would have been proper in this case, because there is no evidence to support any of the answers to the jury questions. Accordingly, the jury's answers should be disregarded and a take nothing judgment on the entire case should be entered." On December 19, 2005, the trial court denied He's motions, and, based on the jury's findings, rendered (a) a take-nothing judgment against He and in favor of Jiang on He's breach of contract claim and (b) a judgment in favor of Jiang and against He on Jiang's breach of contract and fraud claims for $274,400.
On June 16, 2006, He filed a motion for a new trial alleging that Jiang had presented no evidence to support her causes of action against him. The record does not reflect whether the court ruled on this motion. Consequently, it was overruled by operation of law. See Tex. R. Civ. P. 329b(c).
In his second issue, He contends that the evidence is legally insufficient to support the trial court's judgment for breach of contract and fraud. In conducting a legal sufficiency review, we consider all the evidence in the light most favorable to the prevailing party. Scottsdale Ins. Co. v. Nat'l Emergency Servs., Inc., 175 S.W.3d 284, 300 (Tex. App.--Houston [1st Dist.] 2004, pet. denied). We indulge every reasonable inference in that party's favor and disregard all evidence and inferences to the contrary. Id. When, as here, the complaining party challenges the legal sufficiency of the evidence underlying an adverse finding on which he did not have the burden of proof, he must demonstrate that there is no evidence to support the finding. Id. If more than a scintilla of evidence supports the finding, the no-evidence challenge fails and the finding is legally sufficient. Id. (citing Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex. 2001)).
Breach of Contract
He argues that the evidence supporting the breach of contract portion of the judgment is insufficient because (1) no verbal or written agreement existed in which He agreed to pay $232,500 to Jiang and (2) Jiang testified that she had lost the $232,500 because she had met He, not because he had breached any agreement.
The elements of a breach of contract claim are that (1) a valid contract existed; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) the plaintiff was damaged as a result of the breach. Hussong v. Schwan's Sales Enters., Inc., 896 S.W.2d 320, 326 (Tex. App.--Houston [1st Dist.] 1995, no writ). Whether a particular agreement constitutes a valid contract is generally a question of law. Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 678 (Tex. App.--Houston [1st Dist.] 1996, no writ). A valid contract is formed by an offer, an acceptance, a meeting of the minds, each party's consent to the terms, and, in the case of a written contract, execution and delivery of the contract with the intent that it be mutual and binding. Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 17 (Tex. App.--Houston [1st Dist.] 2005, pet. denied). However, if an alleged agreement is so indefinite such it is impossible for a court to fix the legal obligations and liabilities of the parties, the agreement cannot constitute an enforceable contract. Shaw v. Palmer, 197 S.W.3d 854, 856 (Tex. App.--Dallas 2006, pet. denied); accord T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992) ("In order to be legally binding, a contract must be sufficiently definite in its terms so that a court can understand what the promisor undertook.").
At trial, Jiang testified that He proposed an agreement whereby He would borrow money from Jiang, make interest payments at specified intervals, and ultimately return the principal to Jiang. Thus, according to her testimony, Jiang entered into a loan agreement with He.
In our original opinion, we held that Jiang did not present sufficient evidence from which the jury could have identified the material terms of the alleged contract because she did not present any evidence regarding how much money she had agreed to loan to He. In her motion for rehearing, Jiang challenges this finding, arguing that the amount she transferred to He--$453,000--was legally sufficient evidence of the amount she agreed to loan to him. In his response to Jiang's motion for rehearing, He concedes this point. He argues, however, that Jiang's breach of contract claim still fails because Jiang did not present legally sufficient evidence of the remaining elements of a contract to loan money.
In a contract to loan money, the material terms are generally (1) the amount to be loaned; (2) the maturity date of the loan; (3) the interest rate; and (4) the terms of repayment. Farah, 927 S.W.2d at 678. Regarding the $33,400 and $66,600 loaned to He and memorialized in the second Agreement of Cooperation, there is legally sufficient evidence of a contract to loan money. According to the agreement, He received a total of $100,000 from Jiang, which is evidence of the amount Jiang agreed to loan to He. The agreement also states, "I [He] agree to return premium along with interest after one year." Assuming that use of the word "premium" was a mistake in translation and that the parties intended it to read "principal," this language is evidence of the loan's maturity date. The agreement further states that He agrees to pay $6,000 in interest every 70 days and that, thereafter, he will "pay the interest by days"; that interest will begin to accrue on March 25, 2002; and that the first interest payment will be made on July 16, 2002. (3) This is evidence of the interest rate and the terms of repayment. We conclude, therefore, that there is legally sufficient evidence of a contract to loan money for the $100,000. See Scottsdale, 175 S.W.3d at 300.
Regarding the remaining five transfers of money to He and companies selected by He totaling $353,000, Jiang failed to present any evidence regarding the maturity dates, interest rates, and terms of repayment for these transfers or to show that they fell within the terms provided by the second Agreement of Cooperation. (4) Because all three terms are material in a contract to loan money and it is impossible to ascertain these terms, the alleged loan agreement or agreements for the amounts totaling $353,000 cannot constitute an enforceable contract. See Shaw, 197 S.W.3d at 856 (noting that if alleged agreement is so indefinite that it is impossible for court to fix legal obligations and liabilities of parties, agreement cannot constitute enforceable contract); Farah, 927 S.W.2d at 678 (setting out material terms of contract to loan money). We conclude, therefore, that Jiang failed to present legally sufficient evidence of one or more contracts to loan money for the remaining $353,000 that Jiang transferred to He and companies selected by He. See Scottsdale, 175 S.W.3d at 300.
In short, although the record shows that Jiang transferred $453,000 to He and companies selected by He, the evidence is sufficient only to show a contract to loan $100,000. The record also shows that from May 2002 to January 2004, He returned to Jiang $212,010, (5) $112,010 more than Jiang sent to He pursuant to the second Agreement of Cooperation. The evidence, therefore, is insufficient to show that Jiang was damaged by any breach of contract that He may have committed. See Hussong, 896 S.W.2d at 326. Because damages are an essential element of breach of contract, we conclude that the evidence is legally insufficient to establish Jiang's counterclaim for breach of contract. See id.
We sustain the breach of contract portion of He's second issue.
He contends that the evidence supporting the fraud portion of the judgment is insufficient because Jiang testified that she had lost the $232,500 because she had met He, not because he made any false representations to her.
To recover on an action for fraud, the party must prove: (1) a material representation was made; (2) it was false; (3) when the speaker made the representation, he knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made it with the intention that it should be acted upon by the party; (5) the party acted in reliance upon it; and (6) the party thereby suffered injury. Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).
Jiang did not produce evidence on all of the elements of fraud. At trial, Jiang testified that He proposed an agreement whereby He would borrow money from Jiang, make interest payments at specified intervals, and ultimately return the principal to Jiang. Jiang failed to present any evidence, however, that these statements were false. See Solis, 951 S.W.2d at 390. Rather, the record shows that from May 2002 to January 2004, He returned to Jiang $212,010, $112,010 more than Jiang sent to He pursuant to the second Agreement of Cooperation. Thus, the evidence is legally insufficient to establish the fraud portion of the judgment. See Scottsdale, 175 S.W.3d at 300.
We sustain the fraud portion of He's second issue. (6)
We reverse and render a take-nothing judgment against Jiang and in favor of He with respect to Jiang's counterclaims for breach of contract and fraud.
Evelyn V. Keyes
Panel consists of Justices Nuchia, Keyes, and Higley.
1. Both writings were written in Mandarin and translated into English for trial.
2. This writing was written in Mandarin, as well, and translated into English for trial.
3. The "Calculation Methods" writing memorialized on July 15, 2002 clearly refers to the calculation of the returns due to Jiang from He on this $100,000.
4. The first Agreement of Cooperation executed the same day as the second Agreement of Cooperation memorializes an agreement to transfer $50,000 from Jiang to He "to purchase U.S. stocks . . . through mutual consultation." It, therefore, appears to be a stock purchase agreement and not a loan. However, it also references the return of a "premium" and "interest" when "profits are realized," but it does not set any rate or amount of interest, any maturity date, or any terms of repayment. There is no written evidence of any of the terms under which the remaining $303,000 was transferred to He from Jiang. Nor did the testimony at trial elucidate these terms.
5. In January 2002, He transferred $3,500 to Jiang. Almost a month later, He transferred $5,000 to Jiang. Thus, the total amount of money Jiang received from He is $220,510.
6. Because our resolution of He's second issue is dispositive of his first issue, we need not reach his first issue. See Tex. R. App. P. 47.1.