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KMG Kanal-Muller-Gruppe Deutschland GmbH & Co. KG v. Davis3/10/2005
This is an appeal of the trial court's award of $1,000,000 to plaintiff/appellee, Robert C. Davis, after the jury determined that defendants/appellants, KMG Kanal-Muller-Gruppe Deutschland GmbH & Co. KG (KMGD) and KMG International GmbH & Co. KG (KMGI) made a negligent misrepresentation to Davis in regard to his employment, a misrepresentation on which Davis relied and from which he sustained damages.
In eight issues, appellants contend (1) the trial court erred in denying KMGD's special appearance; (2) the trial court erred in overruling appellants' motion to exclude the expert testimony of Keith Fairchild; (3) whether Davis was a member of the company Inliner Advantage was a question of law, not fact, which was previously answered in the negative by the trial court in summary judgment and should not have been submitted to the jury; (4) there was no evidence to support the jury's answer that Davis was a member of Inliner Advantage or that appellants made any negligent representation to Davis; (5) the damages question should not have been submitted to the jury because there was no evidence to support it, the measure of damages used was improper, and the damages question impermissibly commingled past and future damages; (6) the jury provided irreconcilable answers to questions six and seven; (7) the trial court erred in denying appellants' motion for directed verdict; and (8) prejudgment interest was improperly awarded. We modify the judgment and, as modified, affirm.
Factual Background
KMGD, a German company, manufactures and licenses a technology to repair broken sewer and drainage pipes extending from residences to sewage treatment plants without having to remove the pipes---a technology known as the Inliner Cured-In-Place Pipe System. KMGI, a subsidiary of KMGD created to market the technology internationally, granted an exclusive license to a Houston-based company, Inliner U.S.A., to repair pipes in the United States using Inliner technology and to sublicense others to perform such repairs. Inliner U.S.A. hired Davis in 1991. Six years later, after problems developed between KMGI and Inliner U.S.A., KMGI terminated the licensing agreement with Inliner U.S.A. and filed suit against the company. In the meantime, Davis had left his job at Inliner U.S.A.
KMGI created a new company---Inliner Advantage---to replace Inliner U.S.A. as the exclusive license-holder for the United States and hired Davis to serve as the new company's general manager. The parties signed an employment agreement that set out Davis's base salary, granted him a membership interest in Inliner Advantage equal to five percent of the company's outstanding capital interest at the time of issuance, and guaranteed him incentive compensation for the execution of each sublicense---ten percent of the license fee or $10,000, whichever was greater, payable after the sublicensee had generated over $100,000 from installations.
After Inliner Advantage lost money during its first year of operations, KMGI sought to merge the company with another that was more financially secure. KMGI originally entered into contract negotiations with Reynolds, Inc., which was already sub-licensed by KMGI, and attempted to amend Davis's employment contract specifically to exclude any incentive compensation to Davis based on the negotiations with Reynolds, Inc. Davis refused to sign, and KMGI ultimately contracted with Johnson Suisse PTE, Ltd. and Johnson Pacific PTE, Ltd. to create a third business---Inliner Technologies, Inc.---to replace Inliner Advantage and to take over the tasks of marketing and licensing Inliner technology in the United States and, in addition, Canada. Johnson Suisse hired Davis
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