Chien v. Chen

• Decision Date: 21 September 1988
• Docket Number: No. 3-88-006-CV,3-88-006-CV
• Citation: 759 S.W.2d 484
• Parties: Jung Fu CHIEN, a/k/a Tomas Chien, Individually, et al., Appellants, v. Grace CHEN, et al., Appellees.
• Court: Texas Court of Appeals

Page 484

759 S.W.2d 484

Jung Fu CHIEN, a/k/a Tomas Chien, Individually, et al., Appellants, v. Grace CHEN, et al., Appellees.

No. 3-88-006-CV.

Court of Appeals of Texas Austin.

Sept. 21, 1988.

John F. Williams, James V. Sylvester, Austin, for appellants.

Elizabeth G. Bloch, Austin, for appellees.

Before POWERS, BRADY and CARROLL, JJ.

POWERS, Justice.

Tomas Chien and his five partners appeal from three orders for partial summary judgment rendered in their suit against Grace Chen and C. Woodrow Deal. ¹ The collective effect of the orders is to adjudge that Tomas and his partners take nothing on causes of action they had alleged against Chen and Deal. We will reverse the summary-judgment orders and remand the cause to the trial court.

THE CONTROVERSY

Tomas, a citizen of Taiwan residing in California, wished to invest in a certain tract of real property pointed out to him by Chen and Deal. Chen assisted Tomas in negotiating with the owners of the property. Tomas eventually purchased the property in 1981, accepting a conveyance wherein he is the sole grantee named. For serving as broker in the transaction, Deal received a commission. Deal is a licensed real-estate broker, but Chen is not.

In 1984, acting again on the advice of Chen and Deal, Tomas sold and conveyed the property to "S. Wei Lee, Trustee." In fact, Lee purchased the property for Chen, her undisclosed principal. Chen admits concealing from Tomas that she was the actual purchaser in the transaction; she denies, however, that she had any duty to divulge the fact to him. On taking conveyance from Lee, Chen sold and conveyed the property to the Chasewood Company, realizing a profit of some $700,000.

On the sale by Tomas to "S. Wei Lee, Trustee," Deal received a commission of $7,000 for serving as broker. Deal concedes the fee to be small but justified it on the ground that he knew he would also receive another and larger commission on Chen's resale to the Chasewood Company; and, indeed, he received a commission of $66,581 for serving as broker in that transaction.

On learning of the foregoing events, Tomas filed the present lawsuit against Chen and Deal seeking various forms of relief. Most of the issues on appeal require a consideration of the successive pleadings filed in the cause by Tomas and his partners. We shall therefore summarize the pleadings, noting here that the causes of action alleged against Chen and Deal remain basically the same throughout the series of amendments mentioned below.

Tomas initiated the lawsuit by an original petition filed September 17, 1985. The filing tolled the limitations period applicable to the four causes of action set up in the original petition against Chen and Deal: (1) for breach of contract; (2) for common-law fraud; (3) for statutory fraud involving a real-estate transaction, as authorized by Tex.Bus. & Com.Code Ann. § 27.01 (1987); and (4) for deceptive trade practice, as authorized consumers under the provisions of § 17.50 of the same code. ² In the original petition, Tomas designated himself as the sole plaintiff and nothing therein implies that he sued for another.

On July 31, 1986, a date more than two years after accrual of the various causes of action, Tomas filed a first amended original petition. In it, he alleged that he sued for himself and the five individuals named in footnote one, stating that they constituted a partnership and that they had authorized him to purchase the property and "handle" all partnership business connected therewith, which he had done. Tomas prayed recovery for himself and for his alleged partners as their "attorney in fact." These particular allegations were repeated in a second and a third amended original petition, where Tomas prayed recovery for himself and in a "representative capacity" for the alleged partnership and his alleged partners.

In Tomas's fourth and fifth amended original petitions, however, the five alleged partners and the partnership itself appear explicitly as plaintiffs in their own right. These petitions are signed by Tomas's attorney of record, who purported to act as such for the additional plaintiffs named therein. We must take as true the allegations respecting the partnership relation. ³

THE ORDERS FOR PARTIAL SUMMARY JUDGMENT

In response to several motions urged by Chen and Deal, the trial court rendered a series of orders for partial summary judgment. Collectively, these orders adjudicate the entire controversy. We shall interpret these orders, as best we can, in light of the summary-judgment record as it existed when the orders were rendered.

By order signed May 1, 1986, the trial court adjudged that Tomas take nothing against Chen on his causes of action for breach of contract and for deceptive-trade practice. The order refers to Tomas's original petition, wherein he is the only named plaintiff. It appears that no appeal is taken from this order.

By order signed October 27, 1986, the trial court adjudged that Tomas take nothing against Chen "based on a cause of action for breach of fiduciary duty arising out of a common law principal/agent relationship or out of a statutory real estate or broker relationship." The order is ambiguous because (1) it implies that the "breach of fiduciary relationship" is an independent cause of action and (2) it implies that only Tomas's claims are adjudicated, even though his partners and the partnership itself had appeared in the cause, as plaintiffs, in Tomas's fourth amended original petition (filed five days previously on October 22, 1986). We shall assume, for the purpose of discussion, that the order of October 27, 1986, adjudicates on the same basis the causes of action alleged by Tomas's partners.

By order signed February 4, 1987, the trial court adjudged that Tomas and his partners take nothing against Deal "based on any cause of action" that required an agency relationship between any of them and Deal. We so interpret the order because all the partners had appeared in the cause some months earlier and the order itself purports to run against Tomas in his "individual" and "representative" capacities.

By order signed March 23, 1987, the trial court adjudged that Tomas and his partners take nothing against Deal or Chen on the following grounds urged by Deal and Chen in their separate motions for summary judgment: (a) all causes of action alleged against Deal and Chen were barred by the two-year statute of limitations for personal actions, Tex.Civ.Prac. & Rem.Code Ann. § 16.003 (1986); (b) as a matter of law, neither Chen nor Deal was an "agent" having fiduciary duties in the transactions upon which the suit was founded; (c) recovery against Deal was precluded as a matter of law because the causes of action alleged against him belonged to the partnership entity and not to Tomas or any other partner; and (d) recovery against Deal for deceptive-trade practice was precluded, as a matter of law because no plaintiff was a "consumer" of services provided by Deal.

If we understand correctly the appellate record and the briefs of the parties, we are required to determine the validity of the summary-judgment orders of October 27, 1986, February 4, 1987, and March 23, 1987. We believe their validity depends ultimately on one or more of the following questions of law: (a) was Tomas authorized to prosecute causes of action for the benefit of the partners and the partnership? (b) did the filing of Tomas's original petition preserve the causes of action belonging to the partners or the partnership, as against the bar of limitations? (c) did the summary-judgment record establish as a matter of law that recovery could not be had against Chen or Deal for fraud, because neither was an "agent" having "fiduciary duties" in the transactions made the basis of the claim? and (d) did the summary-judgment record establish as a matter of law that no plaintiff was a "consumer" of services provided by Deal? Believing that each question requires an answer favorable to Tomas and his partners, we will reverse each of the three summary-judgment orders.

WHETHER TOMAS COULD PROSECUTE THE CAUSES OF ACTION ALLEGED

Under his amended pleadings, the causes of action alleged by Tomas belonged to the partners as such or to the partnership entity. This did not, in our view, preclude prosecution of the suit by Tomas through his original petition and its subsequent amendments.

Chen and Deal contend the "entity" theory of the partnership relation, expressed or implied in several provisions of the Texas Uniform Partnership Act, Tex.Rev.Civ.Stat.Ann. art. 6132b (1970 & Supp.1988), manifests a legislative intention to supplant entirely the common-law rules pertaining to suits brought to recover on causes of action that are properly the property of the partnership itself and not of any partner, such as Tomas. Consequently, they say, Tomas never had legal authority to prosecute the causes of action he alleged.

The "entity" theory holds, of course, that the partnership itself is a legal personality, quite distinct and independent of the legal personalities of the partners as natural or artificial persons themselves. The theory is opposed to the "aggregate" theory of the common law, which views the individual partners as acting collectively in partnership matters. Lewis, The Uniform Partnership Act, 24 Yale L.J. 617, 639 (1915); see also Comment, Alternative Remedies in Minority Partners' Suits on Partnership Causes of Action, 39 Sw.L.J. 1021, 1027 (1986). ⁴

That the trial court sustained the contention urged by Deal and Chen is evident in the court's summary-judgment order of March 23, 1987, holding that Tomas lacked the required authority and that the causes of action were, in consequence, barred by limitations.

Before we may evaluate the effect of the uniform act (art. 6132b), we should set out the various common-law rules that were supplanted thereby, according to the contention urged by Chen and Deal. A rather lengthy...