v.
JOHN MECOM, III AND ROBERT GILES, APPELLEES
| [1] | In The Court of Appeals Sixth Appellate District of Texas at Texarkana |
| [2] | No. 06-99-00104-CV |
| [3] | Keywords: Property of the estate, automatic stay, alter ego, corporate
denuding |
| [4] | August 23, 2000 |
| [5] | TEXAS-OHIO GAS, INC., APPELLANT v. JOHN MECOM, III AND ROBERT GILES, APPELLEES |
| [6] | On Appeal from the 157th Judicial District Court Harris County, Texas
Trial Court No. 97-55610-A |
| [7] | Before Cornelius, C.J., Grant and Ross, JJ. |
| [8] | The opinion of the court was delivered by: Ben Z. Grant Justice |
| [9] | Justice Grant |
| [10] | OPINION |
| [11] | This appeal arises out of a contractual agreement between Texas- Ohio
Gas, Inc. and Olympic Gas Marketing for the sale of natural gas.
Texas-Ohio brought suit against John W. Mecom, III, Robert N. Giles, and
six other individuals, all of whom were employees and/or shareholders of
Olympic Gas Marketing and its related entities (the Olympic entities).
Texas-Ohio alleged that Mecom, Giles, and the other defendants were
involved in a conspiracy that fraudulently induced Texas-Ohio to sell
over $700,000 worth of natural gas to Olympic Gas Marketing, an
insolvent entity. The trial court dismissed with prejudice all claims
against Mecom and Giles without specifying the grounds for the
dismissal. On appeal, Texas-Ohio challenges the trial court's orders of
dismissal and makes the following contentions: |
| [12] | (1) the trial court erred in dismissing Texas-Ohio's claims as a Rule
13 sanction because the trial court failed to recite in the dismissal
orders the particulars for good cause justifying a Rule 13 sanction; |
| [13] | (2) the trial court erred in dismissing Texas-Ohio's claims as a Rule
13 sanction because there was insufficient evidence that the petition
was groundless and filed in bad faith or for the purpose of harassment; |
| [14] | (3) the trial court erred in dismissing Texas-Ohio's claims on the
pleadings for failure to state a cause of action; and |
| [15] | (4) The trial court's dismissal orders cannot properly be construed as
orders for summary judgment. |
| [16] | In cross-points, Mecom and Giles make the following contentions: |
| [17] | (1) Texas-Ohio's deemed admissions resolve the justiciable case and
controversy between the parties, and thereby deprive the courts of
subject matter jurisdiction; |
| [18] | (2) Texas-Ohio's claims are subject to the automatic stay provisions
of the Bankruptcy Code, and; |
| [19] | (3) sanctions should be imposed on Texas-Ohio for making misleading
statements in its brief before this Court. |
| [20] | I. FACTUAL BACKGROUND |
| [21] | From March 1996 through October 1996, Texas-Ohio sold natural gas to
GM Hydrocarbons pursuant to a contractual agreement and was duly paid.
At that time, John Mecom, III was the president of GM Hydrocarbons,
Robert Giles was the vice-president, and David Geick was a manager. In
October 1996, the parent company of the Olympic entities, Olympic Energy
Corporation (OEC), acquired GM Hydrocarbons and assumed its contractual
obligations. Pursuant to the acquisition, Mecom and Giles became
shareholders of OEC, and Mecom, Giles, and Geick all became employees of
the Olympic entities. |
| [22] | According to Texas-Ohio, on or about November 1996, Geick falsely
represented to Texas-Ohio that GM Hydrocarbons had been merged into
Olympic Gas Marketing (OGM). Based on this representation, Texas-Ohio
was allegedly led to believe that, in doing business with OGM, it would
be doing business with a new and larger corporation. In fact, there was
no merger. GM Hydrocarbons became wholly owned by OEC, but it continued
operating as a separate entity and allegedly continued trading natural
gas in its own name. OGM was wholly owned by Olympic Natural Gas (ONG),
which in turn was wholly owned by OEC. *fn1
Thus, GM Hydrocarbons and OGM were separate entities that were both
ultimately wholly owned by OEC. There was no merger, and OGM never owned
the assets of GM Hydrocarbons. Indeed, Texas-Ohio contends that OGM was
nothing more than an insolvent shell. *fn2 |
| [23] | According to Texas-Ohio, once Geick had misrepresented that a merger
had taken place, OGM and its related entities were allowed to take
advantage of the credit relationship GM Hydrocarbons had established
with Texas-Ohio. Over a short period of time, the Olympic entities
purchased large quantities of natural gas from Texas-Ohio on credit.
From November 1996 through February 1997, OGM and its related entities
purchased $1,101,618 worth of natural gas from Texas-Ohio. As
representatives of OGM, Mecom and Giles signed written confirmations for
some of these purchases. The Olympic entities failed to pay for the
natural gas in breach of their contractual obligations. *fn3
And, on June 7, 1997, the Olympic entities entered Chapter 7 bankruptcy
proceedings. *fn4 |
| [24] | In November 1997, Texas-Ohio filed this lawsuit against Mecom, Giles,
and six other employees and/or shareholders of the Olympic entities
alleging fraud, fraudulent inducement, negligent misrepresentation, and
tortious interference with a contract. Texas- Ohio's claims were
generally based on its allegation that the defendants participated
individually and as co-conspirators in a fraudulent scheme that induced
Texas-Ohio to sell natural gas to the Olympic entities, which the
defendants knew to be insolvent. Within two months after this lawsuit
was filed, Mecom and Giles filed identical motions to dismiss. The
record does not reflect whether a hearing was held on the motions to
dismiss, *fn5 but no reporter's record
of any such hearing has been filed in this appeal. On July 7, 1998, the
trial court dismissed with prejudice all claims against Mecom and Giles
without specifying the grounds for dismissal. Texas-Ohio filed a motion
to reconsider, and a hearing was held on the matter on September 18,
1998. On April 6, 1999, the trial court ordered a severance of all
claims against Mecom and Giles and entered final judgment pursuant to
the earlier dismissal orders. |
| [25] | On appeal before this Court, Texas-Ohio contends that the trial court
committed reversible error in ordering the dismissal of its claims;
Mecom and Giles contend that the trial court could have properly
dismissed the claims as a Rule 13 sanction on the basis of defective
pleadings, or as a summary judgment. Because the trial court failed to
specify the grounds for dismissal, we must determine whether dismissal
was proper on any of the grounds asserted by Mecom and Giles. |
| [26] | II. RULE 13 SANCTIONS |
| [27] | We begin our analysis by considering whether it would have been proper
for the trial court to have dismissed Texas-Ohio's claims as a sanction
under Rule 13 of the Texas Rules of Civil Procedure. Texas- Ohio
contends that dismissal as a Rule 13 sanction would have been improper
(a) because the dismissal orders did not recite the particulars for good
cause justifying a Rule 13 sanction, and also (b) because Mecom and
Giles failed to prove that the claims were groundless and filed either
in bad faith or for the purpose of harassment. |
| [28] | The imposition of Rule 13 sanctions is within the discretion of the
trial court; thus, we set aside its decision only on a showing of a
clear abuse of discretion. See GTE Communications Sys. Corp. v. Tanner,
856 S.W.2d 725, 730 (Tex. 1993); Stewart v. Transit Mix Concrete &
Materials Co., 988 S.W.2d 252, 257-58 (Tex. App.-Texarkana 1998, pet.
denied). A trial court abuses its discretion when it acts in an
unreasonable and arbitrary manner or when it acts without reference to
any guiding rules or principles. Downer v. Aquamarine Operators, Inc.,
701 S.W.2d 238, 241-42 (Tex. 1985); Stewart, 988 S.W.2d at 257-58. |
| [29] | A. Particularized Findings under Rule 13 |
| [30] | Rule 13 of the Texas Rules of Civil Procedure clearly states, "No
sanctions under this rule may be imposed except for good cause, the
particulars of which must be stated in the sanction order." Tex. R.
Civ. P. 13. Trial courts are not at liberty to ignore the clear and
unambiguous language of this rule. When imposing Rule 13 sanctions, the
trial court is required to make particularized findings of good cause
justifying the sanctions. Failure to comply with this clear directive is
an abuse of discretion. Tarrant County v. Chancey, 942 S.W.2d 151,
155-56 (Tex. App.-Fort Worth 1997, no writ); Friedman and Assocs., P.C.
v. Beltline Road, Ltd., 861 S.W.2d 1, 3 (Tex. App.-Dallas 1993, writ
dism'd by agr.); Zarsky v. Zurich Management, Inc., 829 S.W.2d 398 (Tex.
App.-Houston [14th Dist.] 1992, no writ); GTE Communications Sys. Corp.
v. Curry, 819 S.W.2d 652, 653-54 (Tex. App.-San Antonio 1991, no writ);
Kahn v. Garcia, 816 S.W.2d 131 (Tex. App.-Houston [1st Dist.] 1991, no
writ). Therefore, in the present case, it would have been an abuse of
discretion for the trial court to enter Rule 13 sanction orders
dismissing Texas-Ohio's claims without setting out the findings of good
cause justifying the sanctions. |
| [31] | However, Texas-Ohio waived this error by failing to timely object to
the form of the orders. Generally, to preserve error for appeal, a party
must timely present its objection to the trial court with sufficient
specificity. See Tex. R. App. P. 33. Texas-Ohio made no objection to the
trial court concerning the lack of particularized findings in the
sanctions orders. *fn6 |
| [32] | Texas-Ohio has cited several cases for the proposition that the trial
court's noncompliance with the particularity requirement of Rule 13 will
render a sanction order unenforceable. Yet, none of the cases cited by
Texas-Ohio hold that this type of error by the trial court cannot be
waived. See Murphy v. Friendswood Dev. Co., 965 S.W.2d 708 (Tex.
App.-Houston [1st Dist.] 1998, no pet.); Zarsky, 829 S.W.2d at 398-400;
Kahn, 816 S.W.2d at 131-34; Watkins v. Pearson, 795 S.W.2d 257 (Tex.
App.-Houston [14th Dist.] 1990, writ denied). In fact, the appellate
courts that have specifically addressed the issue of waiver have
consistently held that a complaining party may waive the particularity
requirement of Rule 13 by failing to make a timely complaint. Alexander
v. Alexander, 956 S.W.2d 712 (Tex. App.-Houston [14th Dist.] 1997, pet.
denied); Land v. AT & S Transp., Inc., 947 S.W.2d 665 (Tex.
App.-Austin 1997, no writ); Campos v. Ysleta Gen. Hosp., Inc., 879
S.W.2d 67 (Tex. App.-El Paso 1994, writ denied); McCain v. NME Hosps.,
Inc., 856 S.W.2d 751 (Tex. App.-Dallas 1993, no writ). Pursuant to these
precedents, we hold that, by failing to make a timely objection,
Texas-Ohio waived its complaint regarding the particularity of the
sanction orders. Accordingly, we conclude that the trial court's failure
to make the particularized findings required by Rule 13 would not have
been reversible error under the facts of the present case. |
| [33] | B. Requirements of Rule 13 |
| [34] | We next focus on whether there was a sufficient showing in the record
to support a Rule 13 sanction. Rule 13 authorizes trial courts to impose
sanctions against an attorney, a represented party, or both, who filed a
pleading that is either: (1) groundless and brought in bad faith; or (2)
groundless and brought to harass. Emmons v. Purser, 973 S.W.2d 696, 700
(Tex. App.-Austin 1998, no pet.); Monroe v. Grider, 884 S.W.2d 811, 817
(Tex. App.-Dallas 1994, writ denied); see also Tex. R. Civ. P. 13;
Tanner, 856 S.W.2d at 730-31. "Groundless" means no basis in
law or fact and not warranted by a good faith argument for the
extension, modification, or reversal of existing law. Tex. R. Civ. P.
13; Tanner, 856 S.W.2d at 730. |
| [35] | In their motions to dismiss, Mecom and Giles contended that "this
entire action is a groundless attempt to extend corporate debt
liabilities to individuals . . . ." On appeal before this Court,
Mecom and Giles have more specifically focused their argument on Article
2.21, § A(2) of the Texas Business Corporation Act. They contend that
Tex. Bus. Corp. Act Ann. art. 2.21, § A(2) (Vernon Supp. 2000), is the
exclusive means to hold a shareholder liable for a contractual
obligation of the corporation and that liability will not be imposed
under this statute unless the shareholder used the corporation to commit
actual fraud for his own personal benefit. As such, Mecom and Giles
contend that Texas-Ohio's claims are barred by Article 2.21, § A(2) and
are therefore groundless. *fn7 |
| [36] | Article 2.21 provides the following, in relevant part: |
| [37] | (A) A holder of shares, an owner of any beneficial interest in shares,
or a subscriber for shares whose subscription has been accepted, or any
affiliate thereof or of the corporation, shall be under no obligation to
the corporation or to its obligees with respect to: |
| [38] | (2) any contractual obligation of the corporation or any matter
relating to or arising from the obligation on the basis that the holder,
owner, subscriber, or affiliate is or was the alter ego of the
corporation, or on the basis of actual fraud or constructive fraud, a
sham to perpetrate a fraud, or other similar theory, unless the obligee
demonstrates that the holder, owner, subscriber, or affiliate caused the
corporation to be used for the purpose of perpetrating and did
perpetrate an actual fraud on the obligee primarily for the direct
personal benefit of the holder, owner, subscriber, or affiliate . . . .
Tex. Bus. Corp. Act Ann. art. 2.21, § A(2) (Emphasis added.). |
| [39] | Article 2.21 further states that the liability imposed on
shareholders, beneficial owners, subscribers, and affiliates under
Section A (above) "is exclusive and preempts any other
liability," except when the individual "expressly assumed,
guaranteed, or agreed to be personally liable to the obligee for the
obligation" or "is otherwise liable to the obligee for the
obligation under this Act or another applicable statute." Tex. Bus.
Corp. Act Ann. art. 2.21, § B(1), (2) (Vernon Supp. 2000). |
| [40] | A careful reading of Article 2.21 leads us to the conclusion that
Mecom and Giles are indeed within the class protected by the statute and
that this statute is the exclusive means for Texas-Ohio to recover in
the present case. All of Texas-Ohio's claims are attempting to hold
shareholders personally liable for a "matter relating to or arising
from" a contractual obligation of the corporation. *fn8
Moreover, Texas-Ohio is not alleging that Mecom and Giles agreed to be
personally liable or are otherwise liable under the Business Corporation
Act or another applicable statute. As such, Article 2.21, § A(2) is
exclusive and preempts any other liability that otherwise could have
been imposed under the facts of the present case. *fn9
Thus, if Texas-Ohio's claims are barred by Article 2.21, § A(2), they
are groundless as a matter of law. Cf. McCain, 856 S.W.2d at 758
(plaintiff's claims alleging violations of Article 21.21 of the Texas
Insurance Code were groundless as a matter of law because Article 21.21
applies only to those engaged in the business of insurance and none of
the defendants were so engaged). |
| [41] | In examining Texas-Ohio's second amended petition, we find that
Texas-Ohio asserted claims for fraud, fraudulent inducement, negligent
misrepresentation, and tortious interference with a contract. Article
2.21 states that no shareholder shall be liable for any matter relating
to or arising from a contractual obligation of the corporation unless
the shareholder "caused the corporation to be used for the purpose
of perpetrating and did perpetrate an actual fraud on the obligee"
primarily for his direct personal benefit. Tex. Bus. Corp. Act Ann. art.
2.21, § A(2) (Emphasis added.). By definition, Texas-Ohio's allegation
of negligent misrepresentation is not in the nature of an actual fraud
claim, while the allegations of fraud and fraudulent inducement are. A
claim of tortious interference with a contract does not necessarily
require an act of fraud, but the means of interference may involve
fraud, as is alleged in the present case. See Rambo v. Federated Dep't
Stores, Inc., 329 S.W.2d 890 (Tex. Civ. App.-Dallas 1959, writ ref'd
n.r.e). Therefore, we conclude that Article 2.21, on its face, bars
Texas-Ohio's claim for negligent misrepresentation and renders this
claim groundless as a matter of law. |
| [42] | Mecom and Giles contend that Texas-Ohio's claims for fraud, fraudulent
inducement, and tortious interference with a contract are also
groundless based on the facts alleged in the present case. According to
Mecom and Giles, Texas-Ohio is not alleging that either of them
personally committed actual fraud, but rather Texas-Ohio is alleging
that they participated in a conspiracy and thus should be held liable
for the alleged fraudulent statements made by their co- conspirators.
Mecom and Giles contend that, as a matter of law, the agents of a
corporation cannot form a conspiracy with themselves and that no
argument has been offered as to why this law should be modified,
extended, or revised. Mecom and Giles further contend that Texas-Ohio is
not alleging in its petition that the scheme to defraud was committed
primarily for their own personal benefit as required by Article 2.21.
For these reasons, Mecom and Giles argue that Texas-Ohio's claims for
fraud, fraudulent inducement, and tortious interference are also
groundless. |
| [43] | We disagree. Mecom and Giles are incorrect in stating that the agents
of a corporation cannot form a conspiracy as a matter of law. Mecom and
Giles rely on Fojtik v. First National Bank of Beeville, in which the
Corpus Christi Court of Appeals stated "a corporation cannot
conspire with itself, no matter how many of its agents may participate
in the corporate action." Fojtik v. First Nat'l Bank of Beeville,
752 S.W.2d 669, 673 (Tex. App.-Corpus Christi 1988), writ denied, 775
S.W.2d 632 (Tex. 1989). However, in Fojtik, the court ultimately held
that a corporate agent can conspire with its corporation if the agent is
not acting in his corporate capacity. Id. We, too, conclude that this is
the law. Although agents of a corporation cannot form a conspiracy while
acting in their corporate capacity, agents can conspire with each other
if they are acting in a different capacity or for a personal purpose of
their own. *fn10 See, e.g., Boone v.
Federal Express Corp., 59 F.3d 84 (8th Cir. 1995); Greenberg v. Mount
Sinai Med. Ctr. of Greater Miami, Inc., 629 So.2d 252 (Fla. Dist. Ct.
App. 1993); Koster v. P & P Enter., Inc., 539 N.W.2d 274 (Neb.
1995). |
| [44] | Furthermore, the fact that Texas-Ohio failed to allege in its petition
that the fraud was committed for Mecom's and Giles's own personal
benefit did not render Texas-Ohio's claims groundless. This merely
indicates that Texas-Ohio's petition may have been defective for failing
to plead an element of a cause of action. Pleadings that are defective
in this manner should be remedied through special exceptions; they are
not groundless so as to justify Rule 13 sanctions. *fn11
See Tex. R. Civ. P. 90; Peek v. Equipment Serv. Co. of San Antonio, 779
S.W.2d 802, 805 (Tex. 1989). |
| [45] | Because we have determined that Texas-Ohio's claims for fraud,
fraudulent inducement, and tortious interference are not groundless
under Article 2.21, *fn12 we need
not reach the issue of whether these claims were filed in bad faith or
for the purpose of harassment. We conclude that it would have been an
abuse of discretion for the trial court to dismiss Texas-Ohio's claims
for fraud, fraudulent inducement, and tortious interference as a Rule 13
sanction. However, because we have determined that the claim for
negligent misrepresentation is groundless as a matter of law, we must
further determine whether the trial court could have reasonably found
that this claim was filed in bad faith or for the purpose of harassment
so as to justify a Rule 13 sanction. |
| [46] | Courts must presume that pleadings are filed in good faith, and the
burden is on the party moving for sanctions to overcome this
presumption. Tanner, 856 S.W.2d at 731; see Tex. R. Civ. P. 13. In
deciding whether a pleading was filed in bad faith or for the purpose of
harassment, the trial court must measure a litigant's conduct at the
time the relevant pleading was signed. Aldine Indep. Sch. Dist. v. Baty,
999 S.W.2d 113, 116-17 (Tex. App.-Houston [14th Dist.] 1999, no pet.);
Monroe, 884 S.W.2d at 817. Moreover, the trial court must examine the
facts available to the litigant and the circumstances existing at the
time the pleading was signed. Emmons, 973 S.W.2d at 700; McCain, 856
S.W.2d at 757. The plaintiff's petition alone cannot establish that a
case was brought in bad faith or to harass. Aldine Indep. Sch. Dist.,
999 S.W.2d at 117; Emmons, 973 S.W.2d at 700; McCain, 856 S.W.2d at 757.
Rule 13 generally requires that the trial court hold an evidentiary
hearing to make a determination about the motives and credibility of the
person signing the petition. McCain, 856 S.W.2d at 757; New York
Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co., 856 S.W.2d 194,
205 (Tex. App.-Dallas 1993, no writ); Home Owners Funding Corp. v.
Scheppler, 815 S.W.2d 884, 889 (Tex. App.-Corpus Christi 1991, no writ).
Under some circumstances, the trial court may be able to make such a
determination by taking judicial notice of items in the case file. But
see Emmons, 973 S.W.2d at 701. |
| [47] | In the present case, there was no evidentiary hearing on the matter,
nor did the trial court take judicial notice of any items in the file.
The trial court had no evidence to determine that Texas-Ohio filed its
petition in bad faith or to harass. *fn13
Therefore, because there is insufficient evidence in the record to
support Rule 13 sanctions for any of Texas-Ohio's claims, we conclude
that it would have been an abuse of discretion for the trial court to
dismiss Texas-Ohio's claims on the basis of Rule 13. *fn14 |
| [48] | III. DEFECTIVE PLEADINGS |
| [49] | The next issue presented for review is whether the trial court would
have been in error if it dismissed Texas-Ohio's claims on the pleadings
for failure to state a cause of action. |
| [50] | On January 29, 1998, Mecom and Giles filed objections and special
exceptions to Texas-Ohio's first amended petition. *fn15
The record reflects that a hearing was held on the special exceptions on
March 20, 1998, but no reporter's record of the proceeding has been
filed in this appeal, and the record does not contain a ruling on the
special exceptions. On April 6, 1998, Texas-Ohio filed a second amended
petition, and thereafter, Mecom and Giles filed first amended objections
and special exceptions to Texas-Ohio's second amended petition. |
| [51] | The record reflects that Mecom and Giles asserted special exceptions
to Texas-Ohio's pleadings in two separate motions. However, these
motions were not before the trial court when it ordered the dismissal of
Texas-Ohio's claims. The dismissal orders stated that the trial court
heard the motions to dismiss, and it was those motions on which it ruled
in granting the dismissals. The trial court did not dismiss Texas-Ohio's
claims based on the special exceptions. |
| [52] | Moreover, the motions to dismiss cannot reasonably be construed as
additional objections to defective pleadings. Although the motions to
dismiss did state that the "Plaintiff has failed to state a cause
of action," Mecom and Giles apparently retreated from this argument
after Texas-Ohio filed its response to the motions to dismiss. In its
response to the motions to dismiss, Texas-Ohio argued that the motions
to dismiss were an attempt to have the case dismissed on the pleadings
without first successfully challenging the pleadings via special
exceptions. In reply, Mecom and Giles argued that Texas-Ohio was
attempting "to divert the Court with its mischaracterization [of
the motions to dismiss] . . . ." Mecom and Giles pointed out that
they filed a separate motion for special exceptions and that a separate
hearing had been set on that matter. They then went on to state that
"Defendants' Motions requesting dismissal and sanctions under Rules
13 and 215 . . . are not based solely on allegedly vague pleadings . . .
. Rather, in accordance with the requirements of Rule 13 . . . dismissal
is appropriate because Plaintiff's pleadings are 'groundless and brought
in bad faith or . . . for the purpose of harassment.'" (Emphasis
added.) In reviewing the record in its entirety, it is clear that the
motions to dismiss were not based on allegedly defective pleadings.
Therefore, it would have been error for the trial court to dismiss the
case for defective pleadings because that issue was not before the trial
court at the time dismissal was ordered. |
| [53] | Furthermore, even if the motions to dismiss could be construed as
being based on defective pleadings, it would have been error for the
trial court to dismiss the case on that basis. Although the Federal
Rules of Civil Procedure provide for a motion to dismiss for failure to
state a cause of action, the Texas Rules of Civil Procedure do not
contain an analogous provision. See Fed. R. Civ. P. 12(b)(6); see also
Fort Bend County v. Wilson, 825 S.W.2d 251, 253 (Tex. App.-Houston [14th
Dist.] 1992, no writ). In Texas, such a complaint is considered to be a
general demurrer, which is prohibited by Rule 90. See Tex. R. Civ. P.
90; see also Centennial Ins. Co. v. Commercial Union Ins. Co., 803
S.W.2d 479, 482 (Tex. App.-Houston [14th Dist.] 1991, no writ). Under
the Texas Rules of Civil Procedure, the proper way for a defendant to
urge that a plaintiff has failed to plead a cause of action is by
special exception. Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex.
1983); Texas Dep't of Corrections v. Herring, 513 S.W.2d 6, 10 (Tex.
1974). And, the trial court cannot dismiss the case at the same time it
sustains special exceptions. Friesenhahn v. Ryan, 960 S.W.2d 656, 658-
59 (Tex. 1998). Once special exceptions are sustained, the trial court
must give the party against whom the exceptions are sustained an
opportunity to amend before dismissing the case. Id. |
| [54] | In the present case, special exceptions were filed before the trial
court ordered dismissal; however, there was no written order indicating
that the court sustained the exceptions and subsequently provided Texas-
Ohio with the opportunity to amend. The party asserting the special
exceptions waives the exceptions if the record does not reflect that the
party obtained a ruling thereon, Smith v. Grace, 919 S.W.2d 673, 678
(Tex. App.-Dallas 1996, writ denied); R.I.O. Sys., Inc. v. Union Carbide
Corp., 780 S.W.2d 489 (Tex. App.-Corpus Christi 1989, writ denied), and
the ruling must be in the form of a written order. Moreover, a docket
entry generally may not take the place of a written order. See, e.g.,
Faulkner v. Culver, 851 S.W.2d 187, 188 (Tex. 1993); Estate of Townes v.
Wood, 934 S.W.2d 806, 806-07 (Tex. App.-Houston [1st Dist.] 1996, orig.
proceeding); First Nat'l Bank v. Birnbaum, 826 S.W.2d 189, 190 (Tex.
App.-Austin 1992, no writ); Grant v. American Nat'l Ins. Co., 808 S.W.2d
181, 184 (Tex. App.-Houston [14th Dist.] 1991, no writ). |
| [55] | There is a docket notation in the present case that states,
"Defendant's motion on special exceptions granted. Plaintiff to
replead w/in 14 days. No order signed." The record does not contain
a written order on the special exceptions. Thus, the trial court erred
if it dismissed Texas-Ohio's claims on the pleadings for failure to
state a cause of action. *fn16 |
| [56] | IV. SUMMARY JUDGMENT |
| [57] | As the third and final alleged basis for the dismissal, Mecom and
Giles contend that dismissal would have been proper as a no-evidence
summary judgment. Thus, we must decide whether the trial court could
have reasonably construed Mecom's and Giles's motions to dismiss as
motions for summary judgment, and if so, whether a no-evidence summary
judgment would have been proper. |
| [58] | Rule 166a(i) of the Texas Rules of Civil Procedure allows a party to
move for summary judgment on the ground that there is no evidence of one
or more essential elements of a claim or defense on which the non-movant
will bear the burden of proof at trial. Tex. R. Civ. P. 166a(i); see
also State v. Heal, 917 S.W.2d 6, 9 (Tex. 1996). The court must grant a
proper no-evidence summary judgment motion unless the non-movant
produces summary judgment evidence raising a genuine issue of material
fact. See Heal, 917 S.W.2d at 9. |
| [59] | Although the trial court in the present case ordered dismissal based
on documents which were entitled motions to dismiss and motions to
abate, we acknowledge that motions can be misnamed. Courts should look
to the substance of a motion rather than the title to determine its
nature. State Bar of Texas v. Heard, 603 S.W.2d 829, 833 (Tex. 1980);
Wilson v. Kutler, 971 S.W.2d 557, 559 (Tex. App.-Dallas 1998, no writ);
see also Speer v. Stover, 685 S.W.2d 22 (Tex. 1985). A motion's
substance is to be determined from the body of the instrument and its
prayer for relief. Mercer v. Band, 454 S.W.2d 833, 836 (Tex. Civ.
App.-Houston [14th Dist.] 1970, no writ). The body and prayer of Mecom's
and Giles's motions discussed dismissal and did not mention or request a
summary judgment. There is nothing in the motion to put Texas-Ohio on
notice that it needed to come forward with evidence to support its
claims to avoid a no-evidence summary judgment. As such, the substance
of the motions indicate that they were not motions for summary judgment. |
| [60] | In their brief before this Court, Mecom and Giles cite Perry v. S.N.,
973 S.W.2d 301 (Tex. 1998), and represent that "The Texas Supreme
Court has explicitly held that a motion to dismiss may be interpreted as
[a] motion for summary judgment even when no summary judgment evidence
is presented." The Supreme Court did not so hold in Perry, or in
any other case. Perry did not involve a motion to dismiss, it did not
involve a no-evidence summary judgment motion, nor did it ever even
suggest that a motion to dismiss may be construed as a motion for
summary judgment. *fn17 |
| [61] | Therefore, we conclude that the motions to dismiss could not
reasonably be construed as no-evidence motions for summary judgment. It
would have been an abuse of discretion for the trial court to have
ordered summary judgment in the present case. Furthermore, because
dismissal would have been improper as a Rule 13 sanction for defective
pleadings, or on the basis of granting a summary judgment, we conclude
that the trial court committed reversible error in dismissing
Texas-Ohio's claims. |
| [62] | IV. SUBJECT MATTER JURISDICTION |
| [63] | By cross-point, Mecom and Giles contend that this Court is without
subject matter jurisdiction and that Texas-Ohio's appeal should be
dismissed. Specifically, Mecom and Giles contend that certain admissions
that were deemed against Texas-Ohio by the trial court resolved the
justiciable case and controversy between the parties, and thereby
deprived the courts of subject matter jurisdiction. |
| [64] | The Texas Supreme Court has stated, "Subject matter jurisdiction
requires that the party bringing the suit have standing, that there be a
live controversy between the parties, and that the case be justiciable."
State Bar of Texas v. Gomez, 891 S.W.2d 243, 245 (Tex. 1994). If a court
is without subject matter jurisdiction, any judgment rendered by it is
void. Mapco, Inc. v. Forrest, 795 S.W.2d 700, 703 (Tex. 1990). As a
component of subject matter jurisdiction, standing may be raised for the
first time on appeal, and it may not be waived by the parties. Texas
Ass'n of Business v. Texas Air Control Board, 852 S.W.2d 440, 445 (Tex.
1993). |
| [65] | The trial court granted Mecom's and Giles's motions to dismiss on July
7, 1998. In August 1998, Mecom and Giles filed a motion to determine the
sufficiency of Texas-Ohio's responses to requests for admissions. In
this motion, Mecom and Giles argued that several of Texas-Ohio's
responses were evasive or incomplete and that the responses in question
should be deemed admitted as a matter of law. The following year, on
April 6, 1999, the trial court ordered these admissions deemed against
Texas-Ohio. |
| [66] | Among the admissions deemed were admissions that "[Mecom and
Giles are] not liable to Texas-Ohio Gas, Inc. for the $716,618 claim set
forth in the Proof of Claim dated March 23, 1998 [which Texas-Ohio filed
in the bankruptcy court in connection with Olympic's bankruptcy]."
*fn18 Mecom and Giles contend that
this amounts to admissions by Texas-Ohio that Mecom and Giles are not
liable in their individual capacities for the contractual obligation
which forms the very basis of this lawsuit. As such, Mecom and Giles
contend that these admissions resolved the justiciable case or
controversy and deprived the courts of subject matter jurisdiction. |
| [67] | We disagree. These deemed admissions relate to a contractual claim
against the Olympic entities that Texas-Ohio filed in Olympic's bankruptcy
action. Thus, Texas-Ohio has merely admitted that Mecom and Giles are
not liable for the bankruptcy claim which was based on a contract
between Texas-Ohio and Olympic. Such an admission is undisputed and does
not affect the outcome of the present case. In the case at hand,
Texas-Ohio has not attempted to hold Mecom and Giles liable on its
contract with OGM. Instead, Texas-Ohio has attempted to hold Mecom and
Giles liable for an allegedly fraudulent conspiracy in which they
participated for their own personal benefit. Although Texas- Ohio has
sued Mecom and Giles for damages that arose from the natural gas
contract, the claims against Mecom and Giles sound in tort, not in
contract. Mecom and Giles can be held liable for these tort claims,
despite the fact that they are not liable for the contractual claim
filed against Olympic in bankruptcy court. Therefore, we conclude
that the deemed admissions did not resolve the justiciable case or
controversy, Texas-Ohio has standing to appeal, and this Court has
subject matter jurisdiction to hear the appeal. |
| [68] | V. BANKRUPTCY STAY |
| [69] | In their next cross-point, Mecom and Giles contend that, if this case
is reversed and remanded, Texas-Ohio's claims should be stayed, subject
to the automatic stay provisions of the Bankruptcy Code. Section
362(a)(3) of the Bankruptcy Code provides that the filing of a bankruptcy
petition "operates as a stay, applicable to all entities, of . . .
any act to obtain possession of property of the estate or of property
from the estate or to exercise control over property of the estate . . .
." 11 U.S.C.A. § 362(a)(3) (West 1993). The debtor's estate is
comprised of all the debtor's legal or equitable interests in property
as of the commencement of the bankruptcy action, including rights
of action which are bestowed by federal or state law. In re
MortgageAmerica, 714 F.2d 1266, 1273-74 (5th Cir. 1983); Audio Data
Corp. v. Monus, 789 S.W.2d 281, 286 (Tex. App.-Dallas 1990, no writ);
see also 11 U.S.C.A. § 541(a)(1) (West 1993). As such, the automatic
stay of Section 362(a) is far-reaching "and should apply to almost
any type of formal or informal action against the debtor or the property
of the estate . . . . [The stay] does not extend, however, to separate
legal entities such as corporate affiliates, partners in debtor
partnerships or to co-defendants in pending litigation." Patton v.
Bearden, 8 F.3d 343, 349 (6th Cir. 1993) (quoting 2 Collier on Bankruptcy
¶ 362.04 (15th ed. 1993)). Moreover, the automatic stay provision does
not extend to actions against nondebtors simply because of their
relationship to the debtor. In re Tierra Petroleum, 232 B.R. 889 (Bankr.
E.D. Texas, 1999) (automatic stay did not protect debtor corporation's
principals simply because of their relationship to debtor); see also
Cortland Line Co. v. Israel, 874 S.W.2d 178, 180-81 (Tex. App.-Houston
[14th Dist.] 1994, writ denied) (automatic stay did not protect debtor
corporation's officers who were sued in their individual capacities). |
| [70] | An action against a nondebtor may be stayed, however, where the assets
of the bankruptcy estate would be jeopardized by allowing the
court proceeding to go forward against the nondebtor. Paine v. Sealey,
956 S.W.2d 803, 807 (Tex. App.-Houston [14th Dist.] 1997, no pet.);
Beutel v. Dallas County Flood Control Dist., 916 S.W.2d 685, 692 (Tex.
App.-Waco 1996, writ denied); see also S.I. Acquisition , Inc. v.
Eastway Delivery Serv., Inc., 817 F.2d 1142, 1147-50 (5th Cir. 1987). In
S.I. Acquisition, the Fifth Circuit Court of Appeals established the
following guidelines for determining whether the automatic stay
provisions should be extended to an action against a nondebtor: |
| [71] | (1) a section 362(a)(3) stay applies to a cause of action that under
state (or federal) law belongs to the debtor; |
| [72] | (2) the section 362(a)(3) stay applies to a cause of action that seeks
to recover property of the estate where the property is held or
controlled by a person or entity other than the debtor; and |
| [73] | (3) in applying the above rules we do so by keeping in mind the Bankruptcy
Code's general policies of securing and preserving the debtor's property
and of ensuring equal distribution of the debtor's assets to
similarly-situated creditors. S.I. Acquisition, Inc., 817 F.2d at 1150
(Emphasis added.). |
| [74] | Based on these principles, the Fifth Circuit has recognized that the
Section 362(a)(3) stay applies to actions against nondebtor defendants
under the Texas Fraudulent Transfers Act, under the corporate trust fund
doctrine or denuding of assets, *fn19
and under the remedy of alter ego or single business enterprise. See In
re Schimmelpenninck, 183 F.3d 347 (5th Cir. 1999); S.I. Acquisition,
Inc., 817 F.2d at 1149-53; In re MortgageAmerica, 714 F.2d at 1275-77. |
| [75] | Mecom and Giles rely on the Schimmelpenninck case in arguing that
Texas-Ohio's claims "belong to" the Olympic entities and as
such should be subject to the automatic stay provisions of Section
362(a)(3). In Schimmelpenninck, the Fifth Circuit held that the
plaintiff's alter ego and single business enterprise claims against the
debtor's wholly owned subsidiary were subject to the automatic stay
provisions of Section 362(a)(3). Schimmelpenninck, 183 F.3d at 352. In
reaching this conclusion, the Fifth Circuit relied heavily on the fact
that the plaintiff in Schimmelpenninck advanced a general grievance
applicable to all the creditors and not a personal grievance exclusive
to the plaintiff. Id. at 352, 359. The court stated that determination
of whether a claim is general or personal should aid courts in
considering the first two principles of the S.I. Acquisition test, i.e.,
in considering whether the action "belongs to" the corporate
debtor or whether the action seeks "recovery or control of
property" of the corporate debtor. Schimmelpenninck, 183 F.3d at
359. The court stated, "A [bankruptcy] trustee can assert
the general claims of creditors, but is precluded from asserting those
creditor claims that are personal." Id. (Emphasis added.). This
rule is in accordance with the public policy underlying the Bankruptcy
Code. If a claim is generally applicable to all creditors, allowing a bankruptcy
trustee to assert the claim ensures equal distribution of the debtor's
assets to similarly situated creditors. The same is not true for
personal claims. |
| [76] | After carefully considering the case law on this issue, we conclude
that Texas-Ohio's claims of fraud could not be asserted by the bankruptcy
trustee because these claims involve misrepresentations directed at
Texas-Ohio personally and are not claims generally applicable to all
creditors. Therefore, the automatic stay provisions of Section 362 do
not extend to the claims asserted in the case at hand. |
| [77] | VI. APPELLATE SANCTIONS |
| [78] | The final matter we must decide is whether sanctions should be imposed
on Texas-Ohio for making misleading statements in its brief before this
Court. Mecom and Giles have requested that sanctions be imposed against
Texas-Ohio for misleading this Court regarding facts central to this
litigation. Specifically, Mecom and Giles complain about the following
alleged misrepresentations: (1) Texas-Ohio implied in its brief, without
directly stating, that Mecom and Giles had not filed special exceptions
when they indeed had; (2) Texas-Ohio repeatedly stated in its brief that
the Olympic entities were placed in voluntary bankruptcy,
although Mecom and Giles have proof from outside the record that the
bankruptcy was in fact involuntary; and (3) in its reply brief,
Texas-Ohio stated that it objected to the trial court about the lack of
particularized findings of good cause when the record reflects
otherwise. |
| [79] | Attorneys owe to the courts duties of scrupulous honesty,
forthrightness, and the highest degree of ethical conduct. Inherent in
this high standard of conduct is compliance with both the spirit and
express terms of the rules of conduct. In re J.B.K., 931 S.W.2d 581, 583
(Tex. App.-El Paso 1996, no writ). The Texas Disciplinary Rules of
Professional Conduct prohibit a lawyer from knowingly making a false
statement of material fact to a tribunal. Tex. Disciplinary R. Prof'l
Conduct 3.03(a)(1), reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G
app. A (Vernon 1998) (Tex. State Bar R. art. X, § 9); see also Sherman
v. State, 12 S.W.3d 489, 492 (Tex. App.-Dallas 1999, no pet.). A court
that receives information clearly establishing that a lawyer has
violated Texas Disciplinary Rules of Professional Conduct should take
appropriate action. Ex parte Lafon, 977 S.W.2d 865, 868 (Tex.
App.-Dallas 1998, no pet.); In re Maloney, 949 S.W.2d 385, 388 (Tex.
App.-San Antonio 1997, no writ); Johnson v. Johnson, 948 S.W.2d 835, 841
(Tex. App.-San Antonio 1997, writ denied). We retain the inherent power
to sanction attorneys who engage in misconduct before our Court. Public
Util. Comm'n of Texas v. Cofer, 754 S.W.2d 121, 124 (Tex. 1988);
Johnson, 948 S.W.2d at 840; Kutch v. Del Mar College, 831 S.W.2d 506,
509 (Tex. App.-Corpus Christi 1992, no writ). |
| [80] | We reviewed the contentions of misrepresentations in the present case.
We caution counsel for Texas-Ohio against such practices; however, we
recognize the possibility that these errors were not made in bad faith,
and on that basis we decline to sanction the attorneys. This cross-point
is overruled. |
| [81] | VII. CONCLUSION |
| [82] | In conclusion, we find no proper basis for the trial court's
dismissal: (1) it would have been error for the trial court to dismiss
the claims as a Rule 13 sanction because the fraud and fraudulent
inducement claims are not groundless, and there was no evidence that any
of the claims were brought in bad faith or for harassment; (2) it would
have been error for the trial court to dismiss the claims on the basis
of defective pleadings because that matter was not before the trial
court at the time dismissal was ordered, and because Mecom and Giles
waived their special exceptions by failing to obtain a written order
sustaining them; and (3) it would have been error for the trial court to
dismiss the claims as a no-evidence summary judgment because there was
no motion for summary judgment filed in the trial court. |
| [83] | Mecom's and Giles's cross-points are further overruled: (1) Texas-
Ohio's deemed admissions did not deprive the courts of subject matter
jurisdiction; (2) Texas-Ohio's claims are not subject to the automatic
stay provisions of the Bankruptcy Code; and (3) we choose not to
impose sanctions on Texas-Ohio for making misleading statements in its
brief before this Court. |
| [84] | We reverse the trial court's judgment and remand the cause for trial. |
| [85] | Date Submitted: July 11, 2000 |
| [86] | Publish |
|
|
|
| Opinion Footnotes | |
|
|
|
| [87] | *fn1 In July 1996, Olympic Gas
Marketing (OGM) merged into Olympic Natural Gas (ONG). Thus, OGM did not
exist as a separate entity at the time the alleged misrepresentation was
made by Geick in November 1996. During that time, it appears that the
existing Olympic entities were doing business as OGM. In December 1996,
OGM was again incorporated as a separate corporate entity. Thereafter,
OGM was wholly owned by ONG, and in turn, ONG was wholly owned by OEC. |
| [88] | *fn2 A co-defendant's deposition
testimony reflects that OGM had only $1,000 in capital and all of its
assets were encumbered. |
| [89] | *fn3 In 1997, the Olympic entities
paid $165,000 in cash payment and renegotiated the payment terms,
thereby reducing the monies owed from $1,101,618 to $716,618. |
| [90] | *fn4 Throughout the litigation of
this case, Texas-Ohio has stated and continues to state that the Olympic
entities were placed in voluntary bankruptcy. However, Mecom and
Giles have maintained that the bankruptcy was involuntary, and
they have asked us to take judicial notice of a petition for involuntary
bankruptcy which is not in the record. Because it is not a
deciding factor in the issues before us, we decline to take judicial
notice of the petition. |
| [91] | *fn5 In its initial appellate brief,
Texas-Ohio stated that a hearing was held on the motions to dismiss on
April 18, 1998. However, in its reply brief, Texas-Ohio stated that
there was no evidentiary hearing held on the motion. Mecom and Giles do
not address this issue. |
| [92] | *fn6 In its reply brief, Texas-Ohio
stated that it objected to the trial court about the lack of
particularized findings of good cause. Texas-Ohio further suggested that
it preserved error on this point in both its motion for reconsideration
and its motion for new trial. However, after carefully reviewing the
record, we find that Texas-Ohio has misrepresented the record. We find
nothing in the record to indicate that Texas-Ohio ever raised this issue
in the trial court. |
| [93] | *fn7 Texas-Ohio argues that Tex.
Bus. Corp. Act Ann. art. 2.21 was not before the trial court at the time
it ordered the dismissal, and as such, it would have been improper for
the trial court to dismiss its claims based on that statute. We
disagree. Although Mecom and Giles did not specifically mention Article
2.21 in the motions to dismiss, they did argue that they should not be
held personally liable for corporate obligations. Furthermore, in their
amended answer, which was filed before dismissal, Mecom and Giles
stated, "Plaintiff's claims are barred by the Texas Business
Corporation Act." We find that the issue of whether individuals can
be held liable for corporate debts under Article 2.21 was properly
before the trial court at the time of dismissal. |
| [94] | *fn8 We note that Article 2.21
limits liability for contractual obligations of the corporation and also
limits liability for torts "relating to or arising from" such
contractual obligations. See Tex. Bus. Corp. Act Ann. art. 2.21 cmt.
(Vernon Supp. 2000); Menetti v. Chavers, 974 S.W.2d 168, 174 (Tex.
App.-San Antonio 1998, no pet.). |
| [95] | *fn9 In its reply brief, Texas-Ohio
argued that Article 2.21 does not apply to the present case because OGM
was not incorporated at the time the alleged misrepresentation was made.
By its express terms, Article 2.21 limits the liability of "[a]
holder of shares, an owner of any beneficial interest in shares, or a
subscriber for shares whose subscription has been accepted, or any
affiliate thereof or of the corporation . . . ." Mecom and Giles
were shareholders of OEC, which clearly was incorporated, and OEC
ultimately wholly owned OGM. As such, Article 2.21 applies to limit the
liability of Mecom and Giles regardless of whether OGM itself was
incorporated. |
| [96] | *fn10 In addition to Fojtik, which
was cited by Mecom and Giles, several other Texas cases have used
language tending to suggest that a corporate agent cannot conspire with
other corporate agents or with the corporation itself. In Fojtik, the
Corpus Christi Court of Appeals took the statement quoted above from the
Dallas Court of Appeals in the case of Christopher v. General Computer
Sys., Inc., 560 S.W.2d 698, 709 (Tex. Civ. App.-Dallas 1977, writ ref'd
n.r.e.). And, in Wilhite v. H.E. Butt Co., 812 S.W.2d 1, 5 (Tex.
App.-Corpus Christi 1991, no writ), overruled on other grounds, Cain v.
Hearst Corp., 878 S.W.2d 577 (Tex. 1994), the Corpus Christi court again
quoted the above statement and then went on to hold that the plaintiff
could not prevail on a conspiracy claim against a corporation where all
the people involved in the alleged conspiracy were management personnel
or employees of the corporation. In Atlantic Richfield Co. v. Misty
Prods., Inc., 820 S.W.2d 414, 421 (Tex. App.-Houston [14th Dist.] 1991,
writ denied), the Fourteenth Court of Appeals stated that "an
employee or agent of the parent corporation and an employee or agent of
the wholly owned subsidiary, acting within the course and scope of their
employment or agency relationship, cannot conspire." This statement
from Atlantic Richfield Co. is much more in line with our holding today,
but it does not go far enough. We hold that corporate agents can
conspire with one another even if they are purportedly acting as
employees of the corporation, if they are in fact acting primarily for
their own personal benefit. Mecom and Giles may have been acting as
Olympic employees in making the gas purchases from Texas-Ohio, but there
were allegations that they were acting primarily for their own personal
benefit, and thus were ultimately acting in their individual capacity,
not in their corporate capacity. |
| [97] | *fn11 We address whether the trial
court could have properly dismissed Texas-Ohio's claims for defective
pleadings in part III of the opinion. |
| [98] | *fn12 We do not address the merits
of these claims. We hold only that, based on the current record, these
claims are not barred by Article 2.21. |
| [99] | *fn13 It should also be noted
that, at the hearing on the motion to reconsider, the trial judge
stated, "I don't necessarily believe that the lawsuit was filed in
bad faith or for the purpose of harassment." |
| [100] | *fn14 Mecom and Giles contend that
there was sufficient evidence that Texas-Ohio's claims were brought in
bad faith or for the purpose of harassment based on the following: (1)
Texas-Ohio's admissions which were deemed by the trial court; (2) a
letter Texas-Ohio's attorney sent to the Olympic entities stating,
"Personal liability of . . . [Olympic's] officers perhaps is
unfortunate, but I assure you candidly that my client's outrage at
Olympic's cavalier treatment of . . . [Texas-Ohio] will be remedied one
way or another"; (3) Texas-Ohio's failure to properly replead in
response to special exceptions; (4) Texas-Ohio's consistent statements
asserting that the Olympic bankruptcy was voluntary when it in fact was
not; and (5) Texas-Ohio's failure to state a cause of action under
Article 2.21, § A(2). This so-called evidence was not sufficient to
establish bad faith. The deemed admissions, the letter from Texas-Ohio's
attorney, and the bankruptcy petition were not in the record at
the time the trial court entered its dismissal orders. There is not a
proper order in the record indicating that Mecom's and Giles's special
exceptions were sustained and that Texas-Ohio was ordered to replead.
And, failure to state a cause of action is not evidence of bad faith
because a finding of bad faith cannot be based on the pleading at issue. |
| [101] | *fn15 The special exceptions filed
by Mecom and Giles complained about the following: (1) plaintiff failed
to specifically plead the elements of fraud, negligent
misrepresentation, and tortious interference with a contract; (2)
plaintiff failed to allege that Mecom and Giles were parties to the
contractual agreement; (3) plaintiff failed to plead a cause of action
for civil conspiracy because the agents of a corporation cannot form a
conspiracy as a matter of law; (4) plaintiff failed to plead a cause of
action for tortious interference because a person who induces the breach
cannot be an agent of a contracting party; (5) plaintiff failed to state
a maximum amount of damages; and (6) plaintiff failed to join the
contracting party, OGM, as a defendant. |
| [102] | *fn16 Even if the trial court had
entered a valid order and even if this issue had been raised in the
motions to dismiss, it still would have been error for the trial court
to dismiss the claims of fraud and fraudulent inducement with prejudice
on the basis of defective pleadings. If a pleading defect cannot be
cured by amendment, dismissal may be with prejudice. See, e.g., Joseph
E. Seagram & Sons, Inc. v. McGuire, 814 S.W.2d 385, 386 (Tex. 1991).
However, a trial court should not dismiss a plaintiff's claims with
prejudice if the pleadings state a valid cause of action and the
pleading defect could be cured by amendment. Kutch v. Del Mar College,
831 S.W.2d 506, 508 (Tex. App.-Corpus Christi 1992, no writ); Hajdik v.
Wingate, 753 S.W.2d 199, 202 (Tex. App.-Houston [1st Dist.] 1988), aff'd
on other grounds, 795 S.W.2d 717 (Tex. 1990); Atkinson v. Reid, 625
S.W.2d 64, 66 (Tex. App.-San Antonio 1981, no writ). Under such
circumstances, the proper remedy is to dismiss without prejudice. Id. In
the instant case, valid causes of action for fraud and fraudulent
inducement were pleaded. Thus, the trial court's ruling dismissing these
claims with prejudice would not be sustainable on the basis of defective
pleadings. |
| [103] | *fn17 Perry does stand for the
proposition that a trial court may grant a motion for summary judgment
for the plaintiff's failure to state a cause of action when special
exceptions have been filed and the plaintiff has been given an
opportunity to amend. However, a summary judgment motion was not filed
in the present case. |
| [104] | *fn18 Texas-Ohio's response to
this requested admission was "Plaintiff can neither admit nor deny
this request as it is vague and confusing. Mecom [or Giles] is not the
debtor in the bankruptcy matter, and Plaintiff has sued Mecom
[and Giles] in this lawsuit for fraud." Texas-Ohio has not
challenged the trial court's action in finding this response to be
insufficient and in deeming the admissions. |
| [105] | *fn19 In the present case,
Texas-Ohio has alleged that the defendants denuded the corporation and
therefore benefitted personally from their fraud. Such an allegation
supports Texas-Ohio's cause of action for fraud, which requires proof
that the individual shareholders acted primarily for their own direct
personal benefit. Tex. Bus. Corp. Act Ann. art. 2.21, § A(2). An
allegation of denuding the Olympic entities can also support a separate
cause of action, which could be brought by Olympic against the
individual shareholders. There is no dispute that this second type of
cause of action would be stayed pursuant to the Bankruptcy Code
because it involves a general claim that "belongs to" the bankruptcy
trustee of the Olympic estate. Texas-Ohio is not pursuing the second
type of cause of action. Texas-Ohio is not suing for the assets taken
from the corporation, but is suing for the personal damages it suffered
when it was allegedly fraudulently induced to sell gas to the Olympic
entities. |