IN THE SUPREME COURT OF TEXAS444444444444NO. 04-0194444444444444EMZY T. BARKER, III AND AVA BARKER D/B/A BRUSHY CREEK BRAHMANCENTER AND BRUSHY CREEK CUSTOM SIRES, PETITIONERSv.WALTER W. ECKMAN, INDIVIDUALLY AND AS NOMINEE AND TRUSTEE, ECKMAN,INC., AND LARRY ECKMAN, RESPONDENTS4444444444444444444444444444444444444444444444444444ON P ETITION FOR REVIEW FROM THECOURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS4444444444444444444444444444444444444444444444444444Argued November 17, 2005JUSTICE JOHNSON delivered the opinion of the Court.We address two issues in this appeal from a suit for breach of a bailment agreement. Thefirst is when the statute of limitations begins to run for breach of the agreement. The second iswhether the case must be remanded for a new trial as to attorney’s fees when the amount of actualdamages is reduced on appeal because of trial court error. As to the first issue we hold that thestatute 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 remandedfor a new trial on attorney’s fees. Determining that the trial court committed error which was notharmless as to the award of attorney’s fees, we reverse the court of appeals’ judgment and remandthe case to the trial court for further proceedings consistent with this opinion.Eckman sued both individually and as nominee and trustee of a family trust. Trust beneficiaries Larry Eckman1and Eckman, Inc. were also plaintiffs. For ease of reference, we refer to the plaintiffs collectively as “Eckman.” Emzyand Ava Barker were both named as defendants, as was their company, Brushy Creek Custom Sires. We refer to thedefendants collectively as “the Barkers.”2I. BackgroundEmzy and Ava Barker owned Brushy Creek Custom Sires, a business that boarded andprovided other services for Brahman bulls. Between 1981 and 1995, Walter Eckman owned interestsin two bulls and in semen of a third that were boarded at Brushy Creek. Eckman, his co-owners, andBrushy Creek agreed that Brushy Creek would board the bulls, collect, store, and sell semen fromthe bulls, and then distribute the sales proceeds to Eckman and his co-owners according to theirinterests. 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 ofproceeds 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 thesemen owned by Eckman to a different storage facility, compensate Eckman properly for his shareof prior sales and repay overcharges for storage of the semen. The Barkers delivered the semen asrequested, but refused Eckman’s monetary demands. Eckman and the Barkers signed a tollingagreement dated December 29, 1995 to see if Eckman’s monetary claims could be resolved withoutlitigation. Eckman was not satisfied with the accounting provided by the Barkers, however, and suedthem. In his suit, Eckman alleged that the Barkers breached their bailment agreement at various1times 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;3(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 yearstatute of limitations. See TEX. CIV . PRAC. & REM. CODE §§ 16.004(a)(3), 16.051. Their motion forsummary 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 failto comply with a bailment agreement; (2) if so, what were Eckman’s damages; and (3) what wereEckman’s necessary attorney’s fees. The jury answered the first question “Yes,” found Eckman’sdamages 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 ofEckman’s damages based on events that took place more than four years before the tolling agreementwere barred by the four-year statute of limitations. The trial court denied the motion for JNOV aswell 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’ separatebreaches of the agreement accrued at the time of each breach. Thus the court of appeals held thatdamages 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 fouryears before execution of the tolling agreement. The appeals court held that all but $16,180.14 ofEckman’s damages were barred by limitations and reduced the compensatory damages accordingly.The attorney’s fees award was not reduced. ___ S.W.3d ___.4Eckman and the Barkers filed petitions for review. Eckman complains that the court ofappeals erred in reducing his damages on the basis of limitations because the cause of action for allhis damages accrued at the time of his demand in October 1995. The Barkers urge that the court ofappeals erred in affirming the award of attorney’s fees to Eckman in light of the reduction inEckman’s damages.II. Eckman’s Petition – Statute of LimitationsIn 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 twoarguments on the merits. By his first argument on the merits he asserts that the cause of action forbreach of a bailment agreement does not accrue until a bailor makes demand or receives actual noticeof a breach. By his second argument he urges that there was some evidence that the statute oflimitations did not begin running immediately as to each individual breach as each breach occurredthrough the years because he did not receive notice of the breaches and because Eckman did notdiscover and could not, with reasonable diligence,
View Full Document
Unlocking...