From the 408th Judicial District Court, Bexar County, Texas Trial Court No. 2018-CI-03330 Honorable Angelica Jimenez, Judge Presiding Opinion by: Rebeca C. Martinez, Chief Justice Sitting: Rebeca C. Martinez, Chief Justice Irene Rios, Justice[1] Lori I. Valenzuela, Justice Delivered and Filed: October 16, 2024 AFFIRMED IN PART; AFFIRMED AS MODIFIED IN PART; REVERSED AND RENDERED IN PART; AND REMANDED Appellants/cross-appellees Gulf View Private Investment Inc. (“Gulf View”), Neil Whitesell, Vincent Costantino, and Adam Arters (collectively “the Whitesell Appellants”), Innova Aerospace Service & Support, LLC (“Innova”), and Sierra Industries, LLC (“Sierra”) appeal from a judgment, rendered in large part in accordance with a jury verdict, that awards appellee/cross-appellant GC System, A.S. $4,035,511 in actual damages and $1,833,267 in attorneys’ fees. In five issues, all appellants contend that: (1) the evidence is legally and factually insufficient to support the jury’s finding of liability and/or corresponding damages for GC System’s claims of (a) breach of contract; (b) violations of the Texas Theft Liability Act (“TTLA”); (c) negligence; (d) fraud; (e) violations of the Texas Uniform Fraudulent Transfer Act (“TUFTA”); and (f) negligent misrepresentation; (2) the trial court violated the one-satisfaction and economic loss rules in rendering judgment on the jury’s verdict because the judgment awards duplicative damages for the same contractual violations and tort injuries; (3) the trial court abused its discretion by overruling appellants’ objection to the testimony of Radek Kindl, a GC System executive, on the ground that he lacked personal knowledge; (4) the trial court erred in awarding attorneys’ fees; and (5) inconsistencies in five aspects of the judgment necessitate reformation. In the Whitesell Appellants’ sole discrete issue, they contend that the evidence is legally insufficient to pierce the corporate veils of Innova and Sierra. In three cross-issues, GC System argues that the trial court: (1) erred in sustaining appellants’ motions for judgment notwithstanding the verdict (j.n.o.v.) and disregarding the jury’s award of some of the mitigation damages; (2) abused its discretion in awarding it less than all of the attorneys’ fees that it sought; and (3) erred in determining the appropriate post-judgment interest. We affirm in part, affirm as modified in part, reverse and render in part, and remand. BACKGROUND[2] Factual Background In May 2016, GC System, a company headquartered in the Czech Republic, purchased a 1979 Cessna Citation (the “Aircraft”) from Petr Mara for $500,000. After purchasing the Aircraft, GC System sought a company to perform modifications to it. Later in May 2016, Mara, acting on behalf of GC System, and James Coggeshall, a regional sales representative with Sierra executed five proposals for modifications relating to: (1) an XR extended fuel tank; (2) an Eagle wing modification; (3) wi-fi; (4) SkyStep cabin steps; and (5) replacement of the original avionics. GC System paid Sierra $1,036,428.51 as an advance, and it delivered the Aircraft to Sierra’s facility in Uvalde, Texas on July 10, 2016. At the time, Sierra estimated that the work would be completed by January 2017. A year before GC System’s purchase of the Aircraft, Whitesell, an investor, began negotiating with Mark Huffstutler, an aviation entrepreneur. Huffstutler owned various aviation entities, including Sierra and Lancair. Sierra performed modification services, some maintenance, repair, and overhaul (“MRO”) services, and some Supplemental Type Certificate (“STC”) development. STCs are essentially patents issued by the Federal Aviation Administration (“FAA”) for customized aircraft parts, and as such, they have the potential to be a lucrative asset. Whitesell, through a wholly-owned entity known as Innovative Capital Holdings, Inc. (“ICH”), and Huffstutler, through a wholly-owned entity known as SkyWay Group, Inc., formed SkyWay Aviation Group, Inc. (“SWAG”) with each wholly-owned entity taking a fifty-percent ownership interest. As part of the agreement, Huffstutler placed Sierra in SWAG. The parties vehemently dispute Whitesell’s motivation and business decisions regarding his interest in Sierra. According to GC System, Whitesell “disdained the MRO business line,” placed “moles” within Sierra, redirected Sierra’s resources to STC development, and simultaneously starved SWAG — and by extension Sierra — of necessary capital but infused it with “loans”[3] that functionally reduced Huffstutler’s ownership interest. According to appellants, Sierra was an underperforming entity at the time of acquisition. Costantino, Gulf View’s chief financial officer, and Arters, Gulf View’s director of finance, provided management services to Whitesell’s various entities, including SWAG in the hopes of boosting Sierra’s performance. Meanwhile, Sierra transferred the Aircraft from its facility in Uvalde, Texas to its facility at the San Antonio International Airport. Sierra had also fallen behind on the five modifications. It blamed the Aircraft’s age and the presence of “squawks” — an aviation industry term for defects that need to be repaired — that were discovered during the modification process. GC System blamed the Whitesell Appellants’ stranglehold on Sierra’s finances for the benefit of STC development. In March 2017, representatives from both parties met at Sierra’s San Antonio facility, and they executed a memorandum of understanding wherein the scope of the work was curtailed and the estimated completion date was pushed back to mid-July 2017. By July 2017, the amended modification work on the Aircraft had not been completed. Additionally, Innova, through an asset transfer agreement, assumed all of Sierra’s contractual obligations, including the amended modification work on the Aircraft. In November 2017, ICH, at Whitesell’s direction, stopped loaning SWAG money, and consequently, Innova shuttered. GC System demanded that Innova transfer the Aircraft to Lancair so that it could complete the modification work. Innova representatives suggested that GC System execute a mutual release of liability. GC System characterized Innova’s suggestion as “ransom,” and it refused to execute it. Instead, GC System sought and obtained an order from a state district court for return of the Aircraft. In December 2017, the Aircraft was transferred to Lancair for completion. In December 2020, Lancair delivered the Aircraft to a European aviation company for additional work. The European aviation company returned the Aircraft to GC System on April 13, 2021. Procedural Background In February 2018, GC System sued appellants on several claims, including breach of contract. On August 30, 2018, the trial court signed an “agreed” order granting GC System’s motion for partial summary judgment. The order found that Sierra and Innova breached three proposals. It expressly disclaimed any ruling on damages, attorneys’ fees, or any of GC System’s other claims. In April 2022, GC System’s request for contractual damages, request to pierce Sierra’s and Innova’s corporate veils and hold the Whitesell Appellants liable, and claims for violations of TTLA and TUFTA, negligence, fraud, and negligent misrepresentation were tried to a jury over the course of a month. In a 10-2 verdict, the jury substantially found in GC System’s favor. Notably, the jury awarded GC System both out-of-pocket and mitigation damages on its breach of contract claim. After the verdict and in accordance with an agreement by the parties, the parties tried GC System’s request for attorneys’ fees to the bench. Additionally, appellants moved that GC System elect between an award of out-of-pocket and mitigation damages. The trial court signed a final judgment that comports with the jury’s verdict, except that it awards GC System no mitigation damages. All parties filed post-judgment motions, which were overruled by operation of law, and all parties filed timely notices of appeal. SUFFICIENCY OF THE EVIDENCE In appellants’ first issue, they contend that the evidence is legally and factually insufficient to support the jury’s finding of liability and/or corresponding damages for all of GC System’s claims. Standards of Review In a legal-sufficiency challenge, we consider whether the evidence at trial would enable a reasonable and fair-minded factfinder to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We “must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not.” Id. We will only reverse the judgment if: (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. Id. at 810. We view evidence in the light most favorable to the ruling on a legal sufficiency challenge, indulging every reasonable inference in the trial court’s favor. Id. at 822. The record contains more than a mere scintilla of evidence if reasonable minds could form differing conclusions about a vital fact’s existence. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). Conversely, the record is insufficient when the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence. Id.; Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004). In a factual-sufficiency challenge, we consider and weigh all the evidence, and can set aside a verdict only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and manifestly unjust. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761–62 (Tex. 2003). GC System contends that appellants’ factual sufficiency challenges are conclusory and therefore waived. Specifically, GC System argues that “[o]ften by just a conclusory statement, [a]ppellants appear to complain of the factual sufficiency of almost every [j]ury finding. But the substance of their arguments is almost entirely ‘no evidence’ — legal insufficiency.” Appellants’ reply brief argues that in Lion Copolymer Holdings, LLC v. Lion Polymers, LLC, 614 S.W.3d 729, 732 (Tex. 2020) (per curiam), the Texas Supreme Court “approved the appellant’s ‘intertwined’ analysis of its legal and factual sufficiency complaints.” Appellants further argue that “[a]s to countervailing evidence, there was none to discuss, because as Sierra/Innova repeatedly pointed out, the record contains no evidence to support the jury’s findings.” In Lion Copolymer, the Texas Supreme Court observed that an appellant had adequately briefed a factual sufficiency challenge where the appellant, inter alia, “listed the evidence that [the appellee] relied on to support its claim” against the appellant, and “subsequently weighed each of these pieces of evidence against countervailing evidence.” Id. at 733 (emphasis added). Appellants’ arguments that “the record contains no evidence to support the jury’s findings” are properly categorized as legal — not factual — sufficiency challenges, see City of Keller, 168 S.W.3d at 827, and we will faithfully apply the legal sufficiency standard of review to those arguments. Rather than categorically hold that appellants inadequately briefed all factual sufficiency challenges, we will, in accordance with Lion Copolymer, weigh supporting and countervailing evidence in those instances where appellants’ briefing directs us to such. Claims Before turning to appellants’ sufficiency challenges, we provide a brief outline in chart form of the jury’s verdict, the parties’ limited stipulation of certain potential damages, the judgment, and the mitigation damages that GC System seeks by its cross-appeal:
Claim Verdict Stipulation JudgmentGG System’s Cross Appeal
