Bowman v. El Paso CGP Co.

• Decision Date: 03 June 2014
• Docket Number: No. 14–13–00441–CV.,14–13–00441–CV.
• Citation: 431 S.W.3d 781
• Parties: Richard BOWMAN, Appellant v. EL PASO CGP COMPANY, L.L.C., Appellee.
• Court: Texas Court of Appeals

431 S.W.3d 781

Richard BOWMAN, Appellant

v.EL PASO CGP COMPANY, L.L.C., Appellee.

No. 14–13–00441–CV.

Court of Appeals of Texas,

Houston (14th Dist.).

May 8, 2014.

Rehearing Overruled June 3, 2014.

Mark Alan Junell, Houston, for Appellant.

Basil Paul Nichols, Houston, for Appellee.

Panel consists of Justices McCALLY, BUSBY, and DONOVAN.

OPINION

SHARON McCALLY, Justice.

El Paso CGP Company, L.L.C. (El Paso),¹ a judgment creditor, sued Richard Bowman for allegedly fraudulent transfers that El Paso's judgment debtor, Atasca Resources, Inc., made to Bowman. El Paso moved for a traditional summary judgment on its own claim, and the trial court awarded El Paso a judgment against Bowman for $987,915.82. Bowman appealed.

In this appeal, we must determine if there is genuine issue of material fact about whether Atasca received “reasonably equivalent value” from Bowman in exchange for Atasca's transfers to Bowman of $794,628.94. We hold there is a genuine issue of material fact because there is some evidence that the transfers to Bowman were loans or loan repayments ² and that Bowman repaid Atasca more money than he took.

Accordingly, we reverse the trial court's judgment and remand for a new trial.

I. Background

El Paso obtained a judgment against Atasca and then sued Bowman for allegedly fraudulent transfers that Atasca made to Bowman. The trial court signed a partial summary judgment order for El Paso, declaring as a matter of law that Atasca was insolvent from December 31, 2003, through June 30, 2012. Then El Paso moved for summary judgment on its claim against Bowman for fraudulent transfers. El Paso relied solely on Section 24.006(a) of the Texas Uniform Fraudulent Transfer Act (TUFTA):

A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.

Tex. Bus. & Com.Code Ann. § 24.006(a).³

El Paso filed evidence with its motion, including some of Bowman's interrogatory responses and a document that Bowman produced during discovery, titled “RB Payments to and Disburments [sic] from ARI, Period 01/01/02–01/23/08.” The document contains about ninety-five rows of entries under three columns titled “Date,” “To ARI,” and “From ARI.” The “Date” entries begin with October 28, 2002, and end with January 23, 2008. The document indicates that the entries under the “To ARI” heading total $2,178,056.94, and the entries under the “From ARI” heading total $1,208,628.94. Bowman produced this document to El Paso in response to El Paso's interrogatory asking Bowman to “describe each and every payment or distribution, or transfer of any interest in any property or asset, from Atasca or any of its affiliates to you from January 1, 2001 through the present.” Bowman answered the interrogatory, stating that “[t]ransfers to Atasca from Bowman were loans to Atasca, and transfers from Atasca to Bowman consisted of loan repayments, salary payments, expense reimbursement and/or distributions.” Using this document produced by Bowman, El Paso added the thirty-one entries in the “From ARI” column during the period of Atasca's insolvency (as set by the earlier partial summary judgment order) and sought judgment based on the sum of $794,628.94. ⁴

El Paso also filed evidence showing that Bowman was the sole shareholder and president of Atasca, and Bowman admitted to using the money from Atasca to pay for his personal expenses. Bowman testified at his deposition that the transfers to and from Atasca were loans or repayment of loans, but none of these purported loans were documented with promissory notes, none were secured, and none had repayment schedules, interest rates, or other definite terms. Bowman testified, “It was just continuous dollars back and forth.”

In his affidavit filed in response to El Paso's motion, Bowman testified, “The transfers complained about by El Paso were loans to me from Atasca.” He testified further about the transfers between him and Atasca: “[A]ll loans to me were repaid to Atasca.... From 2004–2007, I paid more money to Atasca than I received. As of 2008, I had transferred over $1.8 million to Atasca. The net transfers between me and Atasca ended with a positive balance in favor of Atasca.” Bowman also attached the affidavit of his and Atasca's accountant, Melina Pinner, who testified similarly that the transfers to Bowman were loans, all loans were repaid, and it was a common practice for Atasca and Bowman to transfer money to each other since the company's inception.

The trial court granted El Paso a final summary judgment against Bowman, awarding El Paso $987,915.82. Bowman appealed.

II. Standard of Review

We review de novo the trial court's decision to grant a summary judgment. Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex.2009). A movant for a traditional summary judgment, such as El Paso, must show that there is no genuine issue of material fact and that El Paso is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009). A plaintiff, such as El Paso, satisfies this burden by conclusively proving all elements of its claim. See Cullins v. Foster, 171 S.W.3d 521, 530 (Tex.App.-Houston [14th Dist.] 2005, pet. denied) (citing MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986)). Evidence is conclusive only if reasonable people could not differ in their conclusions. Kane v. Cameron Int'l Corp., 331 S.W.3d 145, 147 (Tex.App.-Houston [14th Dist.] 2011, no pet.).

We consider the evidence in the light most favorable to Bowman, indulging reasonable inferences and resolving doubts in Bowman's favor. Id. We credit evidence favorable to Bowman if reasonable fact finders could and disregard contrary evidence unless reasonable fact finders could not. Mann Frankfort, 289 S.W.3d at 848.

III. Analysis

In his first issue, Bowman contends the trial court erroneously granted summary judgment because a genuine issue of material fact exists as to whether the transfers to Bowman were made for reasonably equivalent value—in particular, Bowman transferred more money to Atasca than the company transferred to him.⁵El Paso responds that the payments from Atasca to Bowman (1) were not loans under Texas law; (2) did not include value to Atasca; and (3) did not include reasonably equivalent value to Atasca. El Paso contends that the payments from Bowman to Atasca are irrelevant for purposes of TUFTA Section 24.006(a).

We hold that El Paso failed to conclusively prove that Atasca did not receive reasonably equivalent value for the transfers at issue.

A. Whether there is Evidence that the Transfers to Bowman Were Loans

El Paso contends that the transfers to Bowman were not loans as a matter of law, citing a few cases concerning loan agreements that lack material terms. See, e.g., T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992) (“In a contract to loan money, the material terms will generally be: the amount to be loaned, maturity date of the loan, the interest rate, and the repayment terms.”). El Paso argues that because the transfers to Bowman were not legally enforceable loans as a matter of law, Atasca received nothing of value from Bowman in return for the transfers to Bowman.

In T.O. Stanley Boot, a business sued a bank for breach of contract because the bank did not provide the business with a line of credit. See id. at 221. In other words, the bank had not performed its alleged obligation to fund a loan to the business. The Texas Supreme Court held that the alleged contract failed for indefiniteness because the business introduced evidence of only one material term—the amount to be loaned. Id.

However, “the law favors finding an agreement sufficiently definite where one side has already performed its side of the bargain.” Vela v. Vela, No. 14–12–00822–CV, 2013 WL 6700270, at *6 (Tex.App.-Houston [14th Dist.] Sept. 24, 2013, no pet.) (mem. op.). In Vela, this court held that the plaintiff was entitled to summary judgment on her claim for the breach of an oral loan agreement. Id. at *7. The plaintiff testified by affidavit that she gave the defendant $110,000, thus showing a material term-the amount to be loaned. Id. at *5. This court held that the loan agreement did not fail for indefiniteness although there was no direct evidence of an interest rate, maturity date, or repayment terms. See id. at *5–6. The interest rate was not a material term because the plaintiff did not seek recovery of interest on the loan. Id. at *6. For an oral loan agreement with no specified repayment terms or date for repayment, this court concluded “payment is due on demand and demand may be made within a reasonable time.” Id. at *5. Because there was evidence that the plaintiff demanded repayment at a reasonable time, the contract did not fail for indefiniteness. See id. at *6.

Here, Bowman and Pinner testified by affidavit that all the transfers El Paso relied upon were loans from Atasca to Bowman. El Paso's evidence shows the amount of each transfer, thus satisfying the material term of the amounts loaned. Bowman and Pinner testified that all loans were repaid, and El Paso's evidence shows transfers from Bowman to Atasca, thus satisfying the material term of the maturity dates and repayment terms. Because Atasca did not attempt to collect interest from Bowman, an interest rate is not a material term. See id.

El Paso did not conclusively establish that the transfers to Bowman were not loans as a matter of law.

B. Whether Atasca Received No Value as a Matter of Law for the Transfers to Bowman

El Paso acknowledges, “For a loan, the value that is exchanged is...