Beverly Foundation v. W.W. Lynch

• Decision Date: 30 October 2009
• Docket Number: No. 07-08-0387-CV.,07-08-0387-CV.
• Citation: 301 S.W.3d 734
• Parties: The BEVERLY FOUNDATION, Appellant, v. W.W. LYNCH, San Marino, L.P. and Sofamco, Inc., Appellees.
• Court: Texas Court of Appeals

301 S.W.3d 734

The BEVERLY FOUNDATION, Appellant, v. W.W. LYNCH, San Marino, L.P. and Sofamco, Inc., Appellees.

No. 07-08-0387-CV.

Court of Appeals of Texas, Amarillo, Panel B.

October 30, 2009.

Rehearing Overruled January 11, 2010.

Joe B. Abbey, Attorney at Law, Garland, TX, Michael L. Jones, Henry & Jones, L.L.P., Dallas, TX, for Appellant.

Michael F. Pezzulli, Christopher Lee Barnes, Jack B. Krona, Pezzulli Barnes, L.L.P., Dallas, TX, Dusty J. Stockard, Maston C. Courtney, Courtney, Countiss, Brian & Bailey, LLP, Amarillo, TX, for Appellees.

Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.

Opinion

BRIAN QUINN, Chief Justice.

The Beverly Foundation (a non-profit corporation) appeals from a summary judgment denying it recovery against W.W. Lynch (Lynch), San Marino, L.P. (San Marino), and Sofamco, Inc. (Sofamco). The dispute concerns a purported oil and gas drilling venture from which Beverly was excluded, contrary to an alleged oral agreement. Per the oral agreement, Sofamco was to convey to it a 1/8 working interest in the oil and gas leases the venture acquired. Beverly eventually sued the aforementioned parties for fraud, breached fiduciary duty, and conspiracy.¹ As relief, it sought a constructive trust, exemplary damages, and attorney's fees. Thereafter, each of the defendants filed traditional or no evidence motions for summary judgment. Beverly responded with its own motion for partial summary judgment. The trial court granted those of the defendants without specifying the grounds upon which it acted and denied that of Beverly. The latter now attacks the judgment via four issues. We overrule each and affirm.

Summary Judgment For San Marino and Lynch

We start our review by addressing the demand for a constructive trust. The latter is a form of equitable relief. Ginther v. Taub, 675 S.W.2d 724, 728 (Tex. 1984). It is not an independent cause of action, however, but rather a remedy. In re Estate of Arrendell, 213 S.W.3d 496, 504 (Tex.App.-Texarkana 2006, no pet.). Because it is a remedy, one seeking it first must have a cause of action warranting its imposition. Troxel v. Bishop, 201 S.W.3d 290, 297 (Tex.App.-Dallas 2006, no pet.).

Beverly believed itself victimized by the alleged fraud, breached fiduciary duty and conspiracy of its three opponents and, therefore, entitled to a constructive trust. The motion for summary judgment filed by Lynch and San Marino addressed each of those possible causes of action. Nonetheless, Beverly has restricted its appellate efforts to the allegation of breached fiduciary duty. That is, it does not assert that the trial court erred in rejecting its causes of action sounding in fraud or conspiracy. So, we too restrict our focus to that topic as well.

Beverly's first appellate foray into the breach involved San Marino. The latter allegedly was not entitled to summary judgment because it "offered no evidence to support its argument" that it lacked a fiduciary or confidential relationship with Beverly. Instead, according to Beverly, San Marino "attempt[ed] to improperly place the burden on Beverly of proving its claims in response to a Motion for Summary Judgment." And, since San Marino failed to proffer any evidence negating an element of Beverly's claim, no judgment could have been entered. These arguments could have merit had San Marino filed only a traditional motion for summary judgment. But, it did not. It also sought one on the basis that Beverly had "no evidence" to prove either the existence of a fiduciary relationship, a breach of that relationship, or San Marino's receipt of any proceeds "as a result of any breach...." Given the "no evidence" allegation, Beverly actually had the burden to tender some admissible evidence illustrating the presence of each element attacked. TEX.R. CIV. P. 166a(i) (stating that the trial court must grant a no-evidence motion for summary judgment unless the non-movant presents evidence sufficient to create a material issue of fact). And, its first contention is overruled.

Next, Beverly asserted that summary judgment in favor of Lynch was unwarranted because there existed evidence that Lynch had a confidential relationship with Abbey. Assuming arguendo that to be true, it is of no moment. The suit was not between Abbey and Lynch but rather Beverly and Lynch. So, evidence of a prior relationship between Lynch and Abbey alone is not evidence of a prior relationship between Lynch and a corporation for which Abbey acts as a trustee, i.e. Beverly.² The contention is overruled.

Next, Beverly suggested that evidence of Lynch's prior relationship with Abbey constituted some evidence that San Marino had a confidential relationship with Beverly. This argument lacks foundation for the same reasons stated above. Furthermore, Beverly failed to cite us to any evidence developing the legal or business relationship or connection between Lynch or San Marino (an entity that appears to be a limited partnership). Nor did we find any of record. Consequently, we can only guess at whether Lynch could act for, bind, or otherwise have his acts attributed to San Marino, and that is not legitimate basis to reverse the judgment. The contention is overruled.

Summary Judgment for Sofamco

As previously mentioned, Sofamco also moved for summary judgment on Beverly's purported claim of breached contract.³ Through it, Sofamco alleged that there was no evidence of 1) an agreement between it and Beverly to act as joint venturers, 2) a written agreement to convey an interest as required by the Statute of Frauds, and 3) an agreement capable of performance within one year of its execution. Again, the motion was granted without the trial court specifying the grounds upon which it relied.

On appeal, Beverly argued that there was sufficient evidence of a joint venture between it and Sofamco, that the Statute of Frauds was inapplicable, that Sofamco attempted to foist upon it the burden to defeat the Statute of Frauds, and that summary judgment was granted on causes of action outside the scope of Sofamco's motion. We disagree and overrule each proposition for the reasons that follow.

Oral Joint Venture Agreement

In attempting to illustrate how the trial court erred in denying the claim of breached contract, Beverly actually focused upon its demand for a constructive trust. Allegedly, in breaching the agreement, Sofamco also violated various fiduciary duties arising from the contract. Furthermore, the contract at issue encompassed a supposed oral joint venture agreement between Beverly and Sofamco. Per this alleged agreement, Sofamco obligated itself to convey to Beverly a working interest in certain mineral leases. Because it failed to do so, it not only breached the joint venture agreement but also violated the aforementioned fiduciary duties owed to Beverly as a joint venturer. Next, violating those fiduciary duties allegedly entitled Beverly to the imposition of a constructive trust on Sofamco's interest in the same leases. And, finally, because the record contained some evidence illustrating the validity of the claims, Beverly believed the trial court was barred from granting Sofamco a summary judgment. We disagree.

The argument before us was founded upon a twofold proposition. First, we were told that Beverly "entered into an oral joint venture with [Glen] Soderstrom" and Sofamco.⁴ Second, Beverly averred that it was entitled to relief "... as a result of the breach of the fiduciary relationship between Abbey and [Glen] Soderstrom." (Emphasis added). And, to establish the accuracy of these propositions, we were referred to the affidavit of Joe Abbey. But, our reading of that affidavit did not lead us to the same conclusions reached by Beverly.

It is quite true that Abbey alluded to an oral agreement involving the formation of "a joint venture." Yet, according to him, the parties who "entered into" the agreement were "The Beverly Foundation and Glen Soderstrom," not Beverly and Sofamco. So, unless Sofamco and Soderstrom are one and the same entity, which no one suggested or proved, Soderstrom's own agreement to join Beverly in a venture is not evidence that Sofamco joined it as well.

That Abbey described Sofamco as Soderstrom's "nominee" also failed to constitute evidence that the corporation was a party to the venture. This is so because in calling the company Soderstrom's "nominee," Abbey neglected to provide factual data explaining what that term meant. Being one's "nominee" could mean many things including that Sofamco was intended to be a mere recipient of some grant or conveyance. Thompson v. Meyers, 211 Kan. 26, 505 P.2d 680, 684 (1973) (stating that the word nominee has more than one meaning including that of a person who is named or designated as a recipient of a grant or conveyance). Or, it could be that Sofamco was selected to act for Soderstrom in some limited way. BLACK'S LAW DICTIONARY 1149 (9th ed. 2009) (defining nominee as one designated to represent another in a limited sense). So too could it mean that the parties intended for Sofamco to be the recipient of property but otherwise insulated from the acts of Soderstrom. See e.g. Petrocana, Inc. v. William H. Kenny Consultants, Ltd., 595 So.2d 384, 385 (La.Ct.App.1992) (wherein Flynn designated Kenny Consultants as his nominee to receive mineral leases acquired in furtherance of a mutual project with Petrocana and holding that as a nominee Kenny Consultants was not responsible for Flynn's refusal to abide by his agreement to transfer Petrocana an overriding royalty interest in the leases). More importantly, none of those situations alone (even if they applied here) would allow us to reasonably deduce that because Sofamco may have been Soderstrom's nominee it ipso facto agreed to join the joint venture or assume any contractual and fiduciary obligation Soderstrom may have owed Beverly. So, without evidence developing the role of a "nominee" or otherwise illustrating that Soderstrom...