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Major Franchise Owner Hit with $30.7M Jury Verdict

February 16, 2024 Michelle Casady

A case hinging on an alleged oral promise for compensation was recently decided in favor of a retired employee who alleged he had been defrauded by his former boss, who owned about 150 Popeyes restaurants across Texas, Oklahoma and Florida.

The panel of six Dallas County jurors heard eight days of testimony and deliberated for two hours before deciding Jerry “Scott” Stockton wasn’t lying when he told them his former employer, Guillermo Perales and his company Sun Holdings, had promised to pay him 5 percent of the annual operating profits of the restaurants he helped oversee. Stockton was awarded about $15.6 million in compensatory damages and $15.1 million in punitive damages.

Stockton’s lead attorney, Daniel Charest of Burns Charest, said he told the jury during opening statements that deciding who was credible would decide the whole case.

“I said, ‘One person says a promise was made and one person said it never happened. But the good news is it’s not just a he said-she said. We have witnesses who corroborate our story and they don’t have anyone,’” Charest told The Lawbook. “I told them, “If you don’t believe [Stockton], don’t find for him. But when you hear from him, you will believe him.’”

Charest said he believes delivering on the promise of corroboration, plus having a client he described as “salt of the earth,” carried the day.

Michael Hurst of Lynn Pinker Hurst & Schwegmann, who represents Perales, was traveling Friday and unavailable for an interview but issued a statement to The Lawbook that the jury’s verdict will be challenged.

“We very much appreciate the attention the jury gave to this case, and respect the jury’s decision based upon what the jurors were actually allowed to see and hear,” he said. “Because of what we believe is a flawed claim based upon a largely one-sided narrative, we intend to challenge the verdict in the trial court. If a judgment is entered, we will appeal, and expect that any judgment will be reversed as to all parties.”

Perales also issued a statement to The Lawbook insisting he “never promised Stockton 5 percent of anything, let alone operating profits of the Popeye’s units.” Perales said he paid Stockton “a very good market salary” and “very nice bonuses” that included performance-based rewards.

“The money damages were not based on real world or accounting calculations and didn’t factor many significant costs such as rent, interest, non-controllable expenses, supervisors, [general and administrative costs], etc.,” the statement reads. “This 5 percent calculation done in court without allowing me to even rebut it, in reality, exceeds 50 percent of net profits.”

The issue of damages experts was the subject of motion practice weeks before trial, Charest said. Perales had been designated as the damages expert for the defense originally.

“In his deposition, he didn’t present very well as a damages expert,” Charest said.

Then on Jan. 4 — 30 days before trial and nearly three years after the close of discovery — the defense designated two new damages experts.

“Ultimately the judge struck their expert,” Charest said. “Then they went to trial with their defendant as their damages expert, and we got some rulings in limine that I think would have cabined his testimony. But the truth is they never really asked him about damages, and I don’t tactically know why that is.”

Stockton, who filed suit in 2019, had alleged that he served as the “key operator” for Perales’ Popeyes restaurants, which is essentially someone who ensures the franchisees are in compliance with corporate requirements and is dispatched to address issues at specific restaurants when they arise.

He alleged that he was encouraged to delay collecting his share of the operating profits until he retired, but in 2018 when he did retire Perales denied the request for compensation.

Charest said in his view the thrust of the defense’s case, made during opening statements to the jury, was that Stockton was lying.

“Their opening was this was a lawsuit that was created in a lawyer’s office, and it was really kind of salacious,” he said. “And when [the jury] heard from Mr. Stockton, that’s obviously not something he would do. I think they overpromised in that respect, went all-in on ‘it’s a big lie,’ and I don’t think anyone was buying it.”

County Court at Law No. 4 Judge Dianne K. Jones presided over the bifurcated trial. The jury returned its verdict on compensatory damages Feb. 13 and its verdict on punitive damages Feb. 14.

Perales is also represented by Mary Nix of Lynn Pinker Hurst & Schwegmann. Sun Holdings is represented by Byron Henry of Scheef & Stone, who did not respond to a message seeking comment Friday.

Stockton was also represented by Spencer Cox, Larry Vincent and Chase Hilton of Burns Charest.

The case number is CC-19-02768-D.

Michelle Casady

Michelle Casady is based in Houston and covers litigation and appeals — including trials, breaking news and industry trends — for The Texas Lawbook.

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