Abel v. Alexander Oil Co.
| Citation | 474 S.W.3d 795 |
| Decision Date | 04 December 2014 |
| Docket Number | No. 14–13–00105–CV.,14–13–00105–CV. |
| Parties | Rena ABEL, Appellant v. ALEXANDER OIL COMPANY, Appellee. |
| Court | Court of Appeals of Texas |
Matthew Doss, Bill Youngkin, Bryan, for Appellant.
Joseph Greenberg, Steven Calen Haley, Brenham, for Appellee.
Panel consists of Justices McCALLY, BUSBY, and DONOVAN.
Rena Abel signed a personal guaranty for her son-in-law John Steele's sole proprietorship credit application to Alexander Oil Company. Alexander Oil extended credit to John's sole proprietorship, John Steele Trucking, which made payments on the account. Subsequently, Shannon Steele, Rena's daughter and John's wife, formed a limited liability company, John Steele Trucking, LLC, (JST LLC), which began using the Alexander Oil account to purchase fuel. JST LLC acquired more trucks and began purchasing much larger quantities of fuel from Alexander Oil. JST LLC began having financial problems and fell behind in paying its bills to Alexander Oil. Alexander Oil discovered that JST LLC had been formed and requested that the LLC, John, and Shannon sign personal guaranties for the entity, which they did.
When the debt remained unresolved, Alexander Oil sued JST LLC, John, Shannon, and Rena. This appeal concerns only Alexander Oil's claim on Rena's guaranty. After a jury trial, the jury found that John owed over $127,000 and JST LLC owed over $104,000 to Alexander Oil. The jury also found in favor of Rena on her affirmative defenses of material alteration and novation. However, the trial court disregarded the jury's answers to Rena's affirmative defense questions and granted a judgment notwithstanding the verdict (JNOV) to Alexander Oil on them. The trial court signed a judgment in favor of Alexander Oil, awarding it principal damages of $127,608.51 against Rena based on Rena's guaranty of John's sole proprietorship obligations, as well as damages against JST LLC, Shannon, and John, who are not parties to this appeal.
Rena urges six issues on appeal. In the dispositive issue of this appeal, Rena asserts the trial court erred in denying her JNOV motion seeking to disregard the jury's answer to the question regarding John's liability because there is a legal bar to recovery against her based on this answer. Because we determine that, as a matter of law, Alexander Oil may not recover against Rena based on the jury's answer to this question, we render a take-nothing judgment in Rena's favor. We affirm the trial court's judgment in all other respects.1
Alexander Oil supplies petroleum products and services in Brenham, Texas. In February 2006, John Steele, assisted by his wife Shannon, began to operate a sole proprietor trucking business, John Steele d/b/a John Steele Trucking. John Steele Trucking began buying fuel on an open account from Alexander Oil. The credit application and payment agreement for this account lists "Company Name: John Steele" and states that the form of the company is a sole proprietorship. The contemporaneous "Personal Guaranty" executed by Rena Abel to Alexander Oil, guarantees the applicant company's obligations as follows:
In consideration of any credit extended to the applicant Company [John's sole proprietorship], I (we, or either of us) personally and individually guarantee full and prompt payment to Alexander Oil Company of all amounts due by Company to Alexander Oil Company. This guarantee is an absolute, complete, continuing guaranty, and no notice of any indebtedness need be given to me (us) to be effective. This guaranty shall remain in force and effect until its revocation by I (we) in writing, but such revocation shall not affect my (our) guaranty obligation due on amounts owed as of the date of revocation. I (we) also agree that this guaranty included payment of all reasonable costs of collection including any court costs and/or attorney's fee and/or other litigation costs incurred in any collection efforts on this account.
John Steele Trucking continued to purchase fuel from Alexander Oil through this open account and timely paid its bills to Alexander Oil.
On September 17, 2008, Shannon formed JST LLC. Shannon filed the formation documentation with the Texas Secretary of State listing herself as the sole managing member of the LLC; John was an employee of the LLC. Shannon went to the courthouse and paid the fee to "have everything changed over to where they're owned by the company [JST LLC]." She changed the insurance and the bank accounts. Shannon had the JST LLC logo, address and TxDOT number placed on all trucks. In short, JST LLC took over the operations of John Steele d/b/a John Steele Trucking, and John ceased to operate his sole proprietorship. From that point forward, JST LLC purchased the fuel from Alexander Oil. However, no one connected with JST LLC either gave written notice to Alexander Oil that JST LLC had been formed or recalls advising Alexander Oil of the change. It is undisputed that, after the formation of JST LLC, John Steele Trucking, sole proprietorship, did not owe anything on its account with Alexander Oil.
JST LLC began having difficulties making payments on the account to Alexander Oil in December 2009. In late February 2010, Shannon met with Jay Alexander of Alexander Oil to discuss delinquencies on the open account. At this meeting, she informed Alexander Oil for the first time of the existence of JST LLC. After this meeting, on March 1, 2010, Alexander Oil began internally accounting for the open account in a different manner. It began posting invoices and payments after this date to JST LLC, although no new account was opened under the LLC's name. No further payments after this date were applied to the amount owed on the open account before March 1. No one at Alexander Oil informed the Steeles about this different treatment of the account, nor did Shannon or John ask that payments be applied in any other fashion to the account. The bills Shannon received from Alexander Oil continued to reflect a single account, with a single balance owed.
After Shannon's meeting with Jay Alexander, Alexander Oil requested that John and Shannon sign a guaranty and security agreement with Alexander Oil to secure Alexander Oil's business with JST LLC, which they did. In this guaranty, John and Shannon guaranteed "all debt now or in the future" on the open account. Alexander Oil did not ask Rena to sign the guaranty. Around December 20, 2010, Alexander Oil ceased doing business with JST LLC. At that time, pursuant to Alexander Oil's internal accounting documents, JST LLC owed Alexander Oil $102,844.04 for fuel purchased since March 1, 2010. According to Alexander Oil's records, as of March 1, 2010, the debt owed on the open account held by John Steele Trucking totaled $127,608.51. Alexander Oil provided a trial exhibit differentiating between the amounts owed by John Steele d/b/a John Steele Trucking and by JST LLC. The earliest invoice contained in the record in support of the debt for John Steele's sole proprietorship is dated December 21, 2009—over a year after JST LLC took over the business of the sole proprietorship.
Alexander Oil sought payment of the entire amount owed by both John's sole proprietorship and JST LLC from Rena based on her personal guaranty of the open account. When she refused to pay, Jay Alexander proposed that Rena give him the deed to land that she had inherited, he would obtain a loan, and he would return the deed to her when she and Shannon paid off the Alexander Oil debt. Rena refused and Alexander Oil filed suit against John and Shannon, individually and d/b/a John Steele Trucking, JST LLC, and Rena. Rena answered, asserting several affirmative defenses, including material alteration and novation, and a counter-claim for a declaratory judgment. John and Shannon answered and appeared pro se at trial; JST LLC did not appear and defaulted. Rena appeared and was represented by counsel.
Based upon the jury verdict, Rena proposed a take-nothing judgment as to Alexander Oil's guaranty claims against her. Alexander Oil filed objections and a JNOV motion. In this motion, Alexander Oil asserted, inter alia, that the answer to jury Question No. 2, material alteration, should be disregarded because the finding is not supported by the evidence.2 Alexander Oil also asserted that the answer to jury Question No. 3, novation, should be disregarded because there is no evidence of an agreement among all parties to accept a new contract.3 Rena then filed her own motion for JNOV, seeking to have the trial court disregard the jury's answer to Question No. 1, in which the jury had determined that John owed Alexander Oil $127,608.51. This question included the following relevant instructions:
(emphasis added). Rena asserted in her JNOV motion that, inter alia, there was a legal bar to recovery against her based on the jury's answer to this question.
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