Sanders v. Flanders
Sanders v. Flanders
Opinion of the Court
Plaintiff-Appellant Eric Sanders appeals the district court’s grant of a judgment as a matter of law in favor of Defendant-Appellee Harold Flanders. Sanders retained Flanders to prepare and file various patent applications with the United States Patent and Trademark Office (“PTO”). Unsatisfied with Flanders’s work, Sanders sued Flanders, asserting various Texas state-law claims. Because Sanders failed to present legally sufficient evidence of a necessary element of each of his claims (damages), we AFFIRM.
I. Factual and Procedural Background
Flanders prepared numerous patent applications over a period of several years regarding Sanders’s invention of an effervescent mouthwash tablet and filed them with the PTO on Sanders’s behalf. None of these applications was approved. After discovering that he no longer had any applications pending and alleging that Flanders had misrepresented the status of the applications, Sanders sued Flanders claiming: (1) legal malpractice and professional negligence; (2) common-law fraud; (3) negligent misrepresentation; (4) breach of fiduciary duty; and (5) gross negligence. In connection with these claims, Sanders alleged that he suffered damages in the form of lost profits, out-of-pocket expenses, and attorney’s fees. In his filings in the district court, Sanders asserted that the conduct underlying, and the damages caused by, each of the causes of action were the same.
With respect to lost-profit damages, Sanders testified at trial that he lost potential investors as a result of Flanders’s conduct. Sanders also generally testified as to the existence of a pro forma model developed by potential investors and a case study performed by university students that evaluated the viability of a business model based on his invention. Sanders did not testify as to the substance of the pro forma model or viability study; he asserts that he was barred from doing so when the district court sustained Flanders’s hearsay objections to such evidence.
Sanders also testified that he had out-of-pocket costs that were “roughly” $40,000-$50,000, but he did not provide any additional evidence apart from this vague testimony to support this claim. With respect to attorney’s fees, Sanders testified that he paid Flanders’s fees in the amount of $10,-000-$15,000, but could not produce any evidence to support his claim that he paid such fees. Flanders testified that Sanders only had paid him approximately $3,800.
After Sanders rested his case, Flanders moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(a). The district court granted the motion, holding that Sanders failed to present legally sufficient evidence of causation and damages. Sanders appealed to the United States Court of Appeals for the Federal Circuit, which transferred the appeal to us based on Gunn v. Minton, — U.S. -, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013).
II. Jurisdiction
While the Federal Circuit has exclusive jurisdiction over claims arising under federal patent law, see 28 U.S.C. § 1295(a), state-law malpractice claims based on underlying patent issues “rarely, if ever, arise under federal patent law.” Gunn, 133 S.Ct. at 1065; see also MDS (Canada) Inc. v. Rad Source Techs., Inc., 720 F.3d 833, 841-43 (11th Cir. 2013) (applying
III. Discussion
We review a district court’s ruling on a motion for judgment as a matter of law de novo. E. Tex. Med. Ctr. Reg’l Healthcare Sys. v. Lexington Ins. Co., 575 F.3d 520, 525 (5th Cir. 2009). A judgment as a matter of law “is appropriate when ‘a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.’” Id. (quoting Fed.R.Civ.P. 50(a)(1)). In a diversity case, we apply the substantive law of the forum state. Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir. 2010).
To prevail on any of his five claims, Sanders had to demonstrate, inter alia, that Flanders’s conduct caused damages, a point he does not contest.
A lack of profit history will not render a plaintiff unable to secure lost profit damages; however, a plaintiff must establish his damages through “competent evidence with reasonable certainty.” Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 504 (Tex. 2001); see also Hiller v. Mfrs. Prod. Research Grp. of N. Am., Inc., 59 F.3d 1514, 1521-23 (5th Cir. 1995). The amount of lost profits sought need not be exact, but it cannot be uncertain or speculative. Wilkins, 47 S.W.3d at 505; Tex. Instruments, Inc. v. Teletron Energy Mgmt., 877 S.W.2d 276, 279 (Tex. 1994); see also Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994) (“[T]he injured party must do more than show that they suffered some lost profits.”); Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992) (“As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained”).
Sanders’s counsel acknowledged at oral argument that Sanders did not present competent evidence at trial with respect to the calculation of lost-profit damages, arguing instead that such evidence would have been presented had it not been for the district court’s erroneous hearsay rulings.
B. Out-of-Pocket Expenses
Sanders “estimated” that he spent $40,-000-$50,000
C. Attorney’s Fees
Similarly, Sanders presented no evidence to support his estimate that he paid $10,000-$15,000 to Flanders in legal fees.
IV. Conclusion
Because Sanders failed to present legally sufficient evidence of damages, the district court correctly granted judgment as a matter of law in favor of Flanders.
AFFIRMED.
Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
. Although Gunn involved only a legal-malpractice claim, the fact that Sanders raises other claims in addition to his legal-malpractice theory is not a material difference. By Sanders’s own assertions, all of his claims present the type of hypothetical, backward-looking questions that do not implicate significant matters of federal patent law such that exclusive jurisdiction lies in the Federal Circuit. See USPPS, Ltd. v. Avery Dennison Corp., 541 Fed.Appx. 386, 390 (5th Cir. 2013) (unpublished) (observing that a party’s claims for fraud and breach of fiduciary duty, rather than malpractice, did not command a different result than that in Gunn because this difference "does not cause the underlying hypothetical patent issues to be of substantial importance to the federal system as a whole, as required for exclusive federal jurisdiction under Gunn ”).
. See Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113, 117 (Tex. 2004) (legal malpractice); Fed. Land Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) (negligent misrepresentation); Beck v. Law Offices of Edwin J. (Ted) Terry, Jr., P.C., 284 S.W.3d 416, 429 (Tex.App.-Austin 2009, no pet.) (breach of fiduciary duty); Newman v. Tropical Visions, Inc., 891 S.W.2d 713, 721 (Tex.App.-San Antonio 1994, no writ) (gross negligence); Airborne Freight Corp., Inc. v. C.R. Lee Enters., Inc., 847 S.W.2d 289, 296 (Tex.App.-El Paso 1992, no writ) (common-law fraud).
.To the extent Sanders argues in his briefs that competent evidence had been presented, such evidence was far too speculative. Specifically, as the only potential evidence of lost-profit damages, Sanders’s testimony did not contain any specific amount of lost profits or describe any means by which lost profits could be calculated. See Szczepanik, 883 S.W.2d at 648-50 (explaining the need to present evidence of how lost-profit damages were calculated and stating that showing that accounts were lost is insufficient). Indeed, similar to the situation in Holt where a plaintiff’s bare assertion that he had lost contracts did not demonstrate lost profits with reasonable certainty, Sanders’s assertion that he lost potential investors falls far short of establishing a reasonable certainty of lost profits. See Holt, 835 S.W.2d at 87.
. Because of this conclusion, we need not address whether Sanders’s mere passing reference to his hearsay argument in his brief constituted waiver of this issue. See Douglas W. ex rel. Jason D.W. v. Hous. Indep. Sch. Dist., 158 F.3d 205, 210 n. 4 (5th Cir. 1998) (”[F]ailure to provide any legal or factual analysis of an issue on appeal waives that issue.”).
. It is not even clear what the $40,000-$50,000 estimate of "out of pocket” expenses includes given this exchange at trial: "Q: So sum total of the fees you paid Mr. Flanders,
. In the trial court, Sanders asserted that his damages were the same for the various theories of recovery and never sought “disgorgement” of fees as a remedy. On appeal, Sanders’s arguments concerning the recovery of attorney's fees focus only on his legal malpractice theory, and he therefore has waived any argument that such fees could be disgorged under a breach-of-fiduciary-duty claim. See Bailey v. Shell W. E&P, Inc., 609 F.3d 710, 722 (5th Cir. 2010) ("Issues not briefed on appeal are waived.”).
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