In Davis v. White, a lawyer sued his former partner over the application of a receivable. No. 02-13-00191-CV, 2016 Tex. App. LEXIS 3075 (Tex. App.—Fort Worth March 24, 2016, no pet. history). A jury awarded the plaintiff over $300,000 in actual damages and $2.8 million in exemplary damages. The trial court awarded the plaintiff his actual damages, but applied the exemplary damages cap, and limited that award to around $550,000. The plaintiff appealed, arguing that the cap should not have been applied because he pleaded and proved that the defendant’s actions fell within the “misapplication of fiduciary property” exception to the cap listed in Texas Civil Practice and Remedies Code section 41.008(c)(10). The court of appeals disagreed, holding that the plaintiff did not plead facts in support of the capbuster “in relation to his punitive damages claim.” The plaintiff also argued that he would have pled the capbuster  and would have introduced proof of a violation of Penal Code section 32.45 if the defendant had pled the punitive damages cap. Following Texas Supreme Court precedent, the court of appeals held that the defendant did not need to plead the cap to be entitled to its application. Moreover, the court of appeals held that in light of the plaintiff’s concession that he did not plead and prove the capbuster, the trial court did not err in applying the cap and reducing the jury’s exemplary damages award.

Interesting Note: The author has previously written on the issues highlighted in this opinion.  Click here to read my previous article.  Misapplication of fiduciary property or property of a financial institution is a charge that has been in existence in Texas for over forty years. Tex. Penal Code Ann. § 32.45.  A person commits the offense of misapplication of fiduciary property by intentionally, knowingly, or recklessly misapplying property he holds as a fiduciary in a manner that involves substantial risk of loss to the owner of the property. Id. at § 32.45(b). Plaintiffs in civil litigation involving fiduciaries often seek punitive or exemplary damages. One important protection for defendants is the statutory cap on the amount of exemplary damages. The Texas Civil Practice and Remedies Code permits exemplary damages of up to the greater of: (1) (a) two times the amount of economic damages; plus (b) an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or (2) $200,000. Tex. Civ. Prac. & Rem. Code Ann. § 41.008(b). As shown above, this cap need not be affirmatively pleaded as it applies automatically and does not require proof of additional facts. Zorrilla v. Aypco Constr., II, LLC, 469 S.W.3d 143 (Tex. 2015).

These limits do not apply to claims supporting misapplication of fiduciary property or theft of a third degree felony level if “the conduct was committed knowingly or intentionally.” Tex. Civ. Prac. & Rem. Code Ann. § 41.008(c)(10). Accordingly, if a defendant is found liable for one of these crimes with the required knowledge or intent, it cannot take advantage of the statutory exemplary damages caps. It is important to note that even though a defendant does not have to plead the cap, a plaintiff must plead and prove “the defendant intentionally or knowingly engaged in felonious conduct under criminal statutes expressly excluded from the cap under section 41.008(c).”  Zorrilla, 469 S.W.3d at 157. The Texas Pattern Jury Charge has a form question that a plaintiff can use to submit this capbusting question to the jury.

In the end, as the Davis case illustrates, it is very important for a plaintiff who wants to bust the exemplary damages cap to: (1) plead a capbusting provision in relation to its punitive damages claim, (2) introduce evidence regarding the capbusting offense, (3) request a question on the capbusting provision in the charge, and (4) secure findings that support its application.  If all of these things are done, a trial court should apply the capbuster and award a jury’s full finding of exemplary damages.


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Photo of David Fowler Johnson David Fowler Johnson

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David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law