IN THE SUPREME COURT OF TEXAS 444444444444 NO 04 0194 444444444444 EMZY T BARKER III AND AVA BARKER D B A BRUSHY CREEK BRAHMAN CENTER AND BRUSHY CREEK CUSTOM SIRES PETITIONERS v WALTER W ECKMAN INDIVIDUALLY AND AS NOMINEE AND TRUSTEE ECKMAN INC AND LARRY ECKMAN RESPONDENTS 4444444444444444444444444444444444444444444444444444 ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS 4444444444444444444444444444444444444444444444444444 Argued November 17 2005 JUSTICE JOHNSON delivered the opinion of the Court We address two issues in this appeal from a suit for breach of a bailment agreement The first is when the statute of limitations begins to run for breach of the agreement The second is whether the case must be remanded for a new trial as to attorney s fees when the amount of actual damages is reduced on appeal because of trial court error As to the first issue we hold that the statute of limitations runs from the date the agreement is breached As to the second we hold that subject to harmless error analysis a reduction in actual damages requires the case to be remanded for a new trial on attorney s fees Determining that the trial court committed error which was not harmless as to the award of attorney s fees we reverse the court of appeals judgment and remand the case to the trial court for further proceedings consistent with this opinion I Background Emzy and Ava Barker owned Brushy Creek Custom Sires a business that boarded and provided other services for Brahman bulls Between 1981 and 1995 Walter Eckman owned interests in two bulls and in semen of a third that were boarded at Brushy Creek Eckman his co owners and Brushy Creek agreed that Brushy Creek would board the bulls collect store and sell semen from the bulls and then distribute the sales proceeds to Eckman and his co owners according to their interests As a result of disclosures in bankruptcy proceedings of a co owner of one of the bulls Eckman became convinced that Brushy Creek had breached its agreement as to sales handling of proceeds from sales and accounting for his shares of bull semen By a letter dated October 25 1995 Eckman s attorney demanded that the Barkers deliver the semen owned by Eckman to a different storage facility compensate Eckman properly for his share of prior sales and repay overcharges for storage of the semen The Barkers delivered the semen as requested but refused Eckman s monetary demands Eckman and the Barkers signed a tolling agreement dated December 29 1995 to see if Eckman s monetary claims could be resolved without litigation Eckman was not satisfied with the accounting provided by the Barkers however and sued them 1 In his suit Eckman alleged that the Barkers breached their bailment agreement at various times through the years by 1 collecting proceeds of sales without crediting him for his share 2 delivering semen without collecting proceeds 3 failing to notify him of delivery or sales of semen 1 Eckman sued both individually and as nominee and trustee of a family trust Trust beneficiaries Larry Eckman and Eckman Inc were also plaintiffs For ease of reference we refer to the plaintiffs collectively as Eckman Emzy and Ava Barker were both named as defendants as was their company Brushy Creek Custom Sires W e refer to the defendants collectively as the Barkers 2 4 charging storage for units of semen that should have been sold and 5 delivering inadequate false and misleading accounting for storage sale and shipment The Barkers defended in part on the basis that Eckman s claims were barred by the four year statute of limitations See TEX CIV PRAC REM CODE 16 004 a 3 16 051 Their motion for summary judgment urging limitations was denied as was a motion for directed verdict during trial Following trial the case was submitted to the jury by three questions 1 did the Barkers fail to comply with a bailment agreement 2 if so what were Eckman s damages and 3 what were Eckman s necessary attorney s fees The jury answered the first question Yes found Eckman s damages to be 111 983 58 and found Eckman s attorney s fees for preparation and trial to be 222 000 with additional fees of 22 500 for appeal The Barkers moved for judgment notwithstanding the verdict on the basis that any of Eckman s damages based on events that took place more than four years before the tolling agreement were barred by the four year statute of limitations The trial court denied the motion for JNOV as well as the Barkers motion for new trial and the Barkers appealed The court of appeals held that Eckman s cause of action for each of the Barkers separate breaches of the agreement accrued at the time of each breach Thus the court of appeals held that damages for breaches such as failure to sell semen failure to pay Eckman s share of proceeds to him and excessive charges for storage of semen were barred if those actions took place more than four years before execution of the tolling agreement The appeals court held that all but 16 180 14 of Eckman s damages were barred by limitations and reduced the compensatory damages accordingly The attorney s fees award was not reduced S W 3d 3 Eckman and the Barkers filed petitions for review Eckman complains that the court of appeals erred in reducing his damages on the basis of limitations because the cause of action for all his damages accrued at the time of his demand in October 1995 The Barkers urge that the court of appeals erred in affirming the award of attorney s fees to Eckman in light of the reduction in Eckman s damages II Eckman s Petition Statute of Limitations In contending that the court of appeals erred by reducing his damages based on limitations Eckman first asserts that the Barkers failed to preserve error on the issue He then makes two arguments on the merits By his first argument on the merits he asserts that the cause of action for breach of a bailment agreement does not accrue until a bailor makes demand or receives actual notice of a breach By his second argument he urges that there was some evidence that the statute of limitations did not begin running immediately as to each individual breach as each breach occurred through the years because he did not receive notice of the breaches and because Eckman did not discover and could not with reasonable diligence have discovered the breaches We conclude that the court of appeals correctly held that damages for breaches which took place more than four years before Eckman filed suit were barred by
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