Cox v. Southern Garrett, L.L.C.

• Decision Date: 11 October 2007
• Docket Number: No. 01-05-01091-CV.,01-05-01091-CV.
• Citation: 245 S.W.3d 574
• Parties: George Thomas COX, Appellant, v. SOUTHERN GARRETT, L.L.C., Southern Chemical Corp., Excelerate Trading, L.L.C., Roger Moyers, Stephen Korkmas, Wildebrand H. Spin, Fred Wood, Jan T. Spin, and ABC Chemical Corp., Appellees.
• Court: Texas Court of Appeals

245 S.W.3d 574

George Thomas COX, Appellant, v.SOUTHERN GARRETT, L.L.C., Southern Chemical Corp., Excelerate Trading, L.L.C., Roger Moyers, Stephen Korkmas, Wildebrand H. Spin, Fred Wood, Jan T. Spin, and ABC Chemical Corp., Appellees.

No. 01-05-01091-CV.

Court of Appeals of Texas, Houston (1st Dist.).

October 11, 2007.

Jeffrey Lee Dorrell, Law Offices of Jeffrey L. Dorrell, P.C., Houston, TX, for Appellant.

Jeffrey W. Chambers, Ware Snow Fogel & Jackson LLP, Timothy F. Lee, Eileen O'Neill, Thomas C. Fitzhugh IV, Ware, Jackson, Lee & Chambers, L.L.P., Mari Rose Lee Gianukos, Houston, TX, for Appellees.

Panel consists of Justices NUCHIA, KEYES, and HIGLEY.

OPINION

EVELYN V. KEYES, Justice.

Appellant, George Thomas Cox, appeals a take-nothing final judgment that the trial court granted in favor of appellees, Southern Garrett, L.L.C., Southern Chemical Corp., Excelerate Trading, L.L.C., Roger Moyers, Stephen Korkmas, Wildebrand H. Spin, Fred Wood, Jan T. Spin, and ABC Chemical Corp.In three issues on appeal, Cox argues that the trial court erred by (1) refusing to enforce Southern Garrett's membership regulations; (2) granting directed verdict on Cox's claim for breach of fiduciary duty; and (3) granting directed verdict on Cox's claim for piercing the corporate veil of Excelerate and ABC Chemical.

We affirm.

Background

This dispute turns on the construction of an agreement regarding termination of membership in a limited liability company.In 2002, Roger Moyers and Mark Brueggeman approached Cox about purchasing a methanol distribution business from Lyondell.At the time, Cox was the president of Garrett Oil.Moyers, Brueggeman, and Cox eventually formed Garrett Petrochemicals¹ to acquire the methanol distribution business from Lyondell.²Because Lyondell was exiting the methanol business, it suggested to Cox, Moyers, and Brueggeman that they should contact Southern Chemical to secure a methanol supply for Lyondell's existing customers.

Southern Chemical is one of the largest importers of chemicals in North America.Vey Spin serves as President of Southern Chemical, and Vey's son, Jan Spin, serves as a director.Cox had discussions with Southern Chemical that led to the formation of Southern Garrett, a limited liability company, around October 2002.Southern Garrett was owned equally by Moyers, Brueggeman, Cox, and Southern Chemical, each owning a 25% interest.The purpose of Southern Garrett was to acquire Lyondell's methanol distribution business and to diversify into other markets.

Although Southern Garrett had some rough times due to fluctuations in the methanol market, the company experienced success.However, Cox and Vey Spin had differences of opinion that culminated in an August 19, 2003 meeting in which the members discussed purchasing Cox's 25% interest in Southern Garrett.The evidence conflicted as to the terms of Cox's withdrawal from Southern Garrett.Cox believed that he had agreed to a buyout in the amount of $550,000 in the August 19 meeting, and he drafted a letter to Southern Garrett accepting the alleged offer.The other members of Southern Garrett, however, believed the buyout price for Cox's 25% interest was an amount to be determined once they had evaluated the financials of the company.

On August 25, 2003, Southern Garrett sent a letter proposing a buyout figure of $500,000 based on profits after certain deductions for bonuses for non-partner employees.The letter stated, "Your signed acceptance of the aforementioned items constitutes the full agreement that your ownership and consequently any rights to past, present, and future profits in [Southern Garrett] will be relinquished in full as of August 31, 2003."Cox refused to sign the letter.However, on September 29, 2003, Southern Garrett delivered a second letter to Cox, offering to buy him out effective August 31, 2003 for $506,208.91, along with a check in that amount.The letter contained a release of liability, which Cox did not sign.The memo line of the check read "G. Thomas Cox Buyout of Southern Garrett, L.L.C."Cox cashed the check on September 30, 2003.

On April 6, 2004, Cox sued the defendants after receiving a letter from Southern Garrett's accountants that said 2004 would be Cox's last year as a member.In his sixth amended petition, Cox alleged breach of fiduciary duty, breach of contract, conspiracy, common law fraud by non-disclosure, piercing the corporate veil, and conversion, and he sued for an accounting.The defendants denied the allegations, asserted affirmative defenses, and filed a counterclaim.³

After the close of Cox's case in chief, the defendants moved for directed verdict on a variety of Cox's claims.The trial court ruled as a matter of law that Cox had withdrawn from membership in Southern Garrett, and it granted a directed verdict on all of Cox's claims except the claim that Cox and Southern Garrett had entered into an agreement whereby Southern Garrett would purchase Cox's 25% interest for $550,000.After it granted the directed verdicts, the trial court made it clear to the parties that the court considered the case to be "a breach of contract case of plaintiff against Southern Garrett for the sum of $44,000 something" and that the only issue left to try was whether Cox and Southern Garrett had an agreement for Southern Garrett to pay Cox $550,000 for Cox's 25% interest.The question whether there was such an agreement was submitted to a jury, which answered the question in the negative.⁴Cox filed a motion to vacate or modify the judgment, or in the alternative, for new trial.The trial court denied Cox's motion for new trial on November 11, 2005.On appeal, Cox does not challenge the jury's finding that there was no such agreement.

Analysis

Standard of Review

A trial court may direct a verdict either when a plaintiff fails to present evidence raising a fact issue essential to its right of recovery or when the evidence conclusively proves a fact that establishes the movant's right to judgment as a matter of law.Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc.,29 S.W.3d 74, 77(Tex.2000);Cortez v. HCCI-San Antonio, Inc.,131 S.W.3d 113, 120(Tex.App.-San Antonio2004), aff'd,159 S.W.3d 87(Tex.2005).In reviewing the granting of a directed verdict, we follow the standard of review for assessing the legal sufficiency of the evidence.S.V. v. R.V.,933 S.W.2d 1, 8(Tex.1996);see generallyCity of Keller v. Wilson,168 S.W.3d 802(Tex.2005).In reviewing the trial court's granting of an instructed verdict, the evidence must be considered in the light most favorable to the party against whom the verdict is instructed.Texas Employers Ins. Ass'n v. Page,553 S.W.2d 98, 102(Tex.1977).We must determine if there is any conflicting evidence of probative value that raises a material fact issue.White v. Southwestern Bell Tel. Co.,651 S.W.2d 260, 262(Tex.1983).If there is any such evidence on any theory of recovery, a determination of that issue is for the jury.Szczepanik v. First S. Trust Co.,883 S.W.2d 648, 649(Tex.1994).We can consider any reason why the directed verdict should have been granted, even if not stated in the party's motion.Gonzales v. Willis,995 S.W.2d 729, 740(Tex.App.-San Antonio 1999, no pet.).

Membership Regulations

In his first issue, Cox argues that the "trial court erred when it refused to enforce Southern Garrett's Membership Regulations — the sole agreement among Southern Garrett's members — regarding the disposition and acquisition of membership interests."

He contends that the trial court erred by not enforcing this paragraph of the Membership Regulations because Moyers admitted at trial that he did not comply with paragraph 4.2 with respect to the disposition of Cox's interest.In effect, Cox argues that the evidence showed that the defendants breached a contract, namely the Membership Regulations.Cox further argues that a disposition of his 25% interest could not "become effective until [paragraph] 4.2 of the Regulations had been satisfied."Thus "any `attempted disposition' of Cox's 25% interest was `void' under Paragraph 4.2," and "[i]f the disposition of Cox's 25% interest in Southern Garrett was `void,' then, in accordance with the Regulations, ownership of Cox's original 25% of Southern Garrett still resides in Cox."(Emphasis added.)Cox argues that, because he is still a member in Southern Garrett, the "Regulations entitle Cox to receive membership distributions."

The defendants argue that paragraph 4.2 does not apply to Cox's withdrawal because it was meant to apply only to the disposition from a member to an outside party of Southern Garrett, i.e., a non-member.Because Cox, a member of Southern Garrett during the August 19, 2003 meeting, was attempting to sell his interest back to Southern Garrett, the operative section is paragraph 4.5 of the Membership Regulations, entitled "Distribution to Withdrawing Members."

Because the trial court granted a directed verdict on Cox's allegations that Southern Garrett's Membership Regulations had been breached and held that Cox had withdrawn from the company, despite Cox's contentions that he did not withdraw, we address Cox's arguments that as a matter of law "an agreement for Cox to sell his 25% interest . . . could [not] have become effective until [paragraph] 4.2 of the Regulations had been satisfied" and that "any `attempted disposition' of Cox's 25% interest was `void' under Paragraph 4.2."

In construing a contract, our primary concern is to ascertain and give effect to the intentions of the parties as expressed in the contract.Kelley-Coppedge, Inc. v. Highlands Ins. Co.,980 S.W.2d 462, 464(Tex.1998).To ascertain the parties' true intentions, we examine the entire agreement in an effort to harmonize and give effect to all of its provisions so that none will be rendered meaningless.MCI Telecomms. Corp. v. Tex. Utils. Elec. Co.,995 S.W.2d 647, 652(Tex.1999).Whether a...