Spoljaric v. Percival Tours, Inc.
1986 Tex. LEXIS 949, 708 S.W.2d 432, 29 Tex. Sup. Ct. J. 280 (1986)
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Rule of Law:
A promise of future performance constitutes actionable fraud if the promise was made with no intention of performing at the time it was made. While failure to perform is not, by itself, evidence of intent, fraudulent intent can be inferred from the promisor's subsequent acts and other circumstantial evidence.
Facts:
- In March 1978, Ralph Spoljaric began working for Percival Tours, Inc. under a two-year written contract as vice president of finance.
- As his contract neared its end in December 1979, Spoljaric negotiated a new oral employment agreement with company president Jessie L. Upchurch for a higher salary.
- About two weeks later, Upchurch promised Spoljaric and another executive, Mario Balestrieri, that he would implement a bonus plan to induce them to remain with the company.
- Spoljaric drafted a proposed bonus plan at Upchurch's request and submitted it for approval.
- For the next eight months, whenever Spoljaric inquired about the plan's status, Upchurch claimed his New York lawyers were reviewing it.
- During this time, Upchurch had his corporate secretary draft an amended version of the plan, which Upchurch approved but never showed to Spoljaric.
- In October 1980, a new president, Robert Jackson, was hired. Jackson informed Spoljaric he had no knowledge of any bonus plan.
- At Spoljaric's request, Jackson presented the original draft plan to Upchurch, who reviewed it and stated, 'I have no intention of signing this,' which prompted Spoljaric to quit.
Procedural Posture:
- Ralph Spoljaric sued Percival Tours, Inc. and its president, Jessie Upchurch, in a Texas trial court for fraudulent misrepresentation and breach of an oral contract.
- A jury found for Spoljaric, determining Upchurch had made a fraudulent promise and breached the contract, and awarded actual and punitive damages.
- The trial court ordered a remittitur of the punitive damages, which Spoljaric accepted under protest, and entered a judgment on the verdict.
- Upchurch, as appellant, appealed the judgment to the intermediate court of appeals.
- The court of appeals reversed the trial court's judgment, rendering judgment for Percival Tours on the grounds that there was no evidence to support the jury's finding of fraudulent intent.
- Spoljaric, as appellant, then brought the case before the Supreme Court of Texas for review.
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Issue:
Does circumstantial evidence, including a promisor's prolonged inaction, evasive statements, and subsequent denial of a promise, constitute legally sufficient evidence for a jury to find that the promisor had no intention of performing at the time the promise was made?
Opinions:
Majority - McGee, Justice
Yes, circumstantial evidence can be legally sufficient to support a finding of fraudulent intent. A promise of future performance is fraudulent if made with a present intent not to perform. While intent must exist at the time of the promise, it can be inferred from subsequent acts. Here, the evidence showed Upchurch made the promise to prevent two key executives from leaving, delayed implementation for eight months with false excuses about lawyers, secretly drafted an alternative plan without telling Spoljaric, and ultimately made a statement that could be construed as a denial of the promise. The combination of these circumstantial facts, when viewed with the ultimate failure to perform, constitutes more than a scintilla of evidence supporting the jury's finding of fraudulent intent.
Dissenting - Wallace, Justice
No, there was no evidence to support a jury finding that Upchurch did not intend to keep his promise at the time it was made in December 1979. The dissenting justices would affirm the court of appeals' opinion which found the evidence legally insufficient to prove fraudulent intent.
Analysis:
This decision is significant because it reinforces that fraudulent intent for a future promise can be established entirely through circumstantial evidence. It clarifies for Texas law that while a simple breach of contract is not fraud, a collection of 'slight' circumstantial evidence surrounding the breach—such as suspicious timing, delay tactics, and subsequent denials—can be sufficient for a jury to infer the promisor's fraudulent state of mind at the time the promise was made. This lowers the evidentiary burden for plaintiffs in promissory fraud cases, as they do not need direct proof of the defendant's state of mind, which is rarely available.
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