Denson v. Dallas County Credit Union

Decision Date15 August 2008
Docket NumberNo. 05-07-00547-CV.,05-07-00547-CV.
Citation262 S.W.3d 846
PartiesChuck DENSON and ABCD Auto, Inc., Appellants, v. DALLAS COUNTY CREDIT UNION and Jennifer Naughton, Appellees.
CourtTexas Court of Appeals

Eric Roberson, Patrick J. Mulligan, Reid Stewart, Law Office of Patrick J. Mulligan, Dallas, David George, Connelly, Baker, Wotring & Jackson, L.L.P., Houston, for appellants.

Randy Roberts, Blalack & Williams, P.C., Jennifer N. Stephens, Lewis R. Sifford, Sifford, Anderson & Co., P.C., Dallas, for appellees.

Before Justices MORRIS, WHITTINGTON, and O'NEILL.

OPINION

Opinion by Justice O'NEILL.

This case involves the alleged tortious conduct and breach of contract by appellee Dallas County Credit Union and its president, appellee Jennifer Naughton, against appellant Chuck Denson, the owner of appellant ABCD Auto, Inc. The Credit Union filed both a traditional and no-evidence motion for summary judgment on all claims. Naughton filed a no-evidence summary judgment motion. The trial court granted both summary judgments against appellants, but did not specify the grounds for granting them. On appeal, appellants contend (1) their claims are not barred by the doctrine of illegality; (2) Denson has standing to bring the claim; (3) the trial court erred in granting summary judgment against Naughton; (4) the trial court erred in granting summary judgment in favor of the Credit Union; and (5) the nondelegable-duty doctrine does not apply to this case. We affirm in part and reverse and remand in part.

Background

Because the facts of the case are well-known to the parties, we only briefly recite the background here. TEX.R.APP. P. 47.1. Appellant Chuck Denson owned ABCD Auto, Inc., a car dealership, which was not licensed to sell cars in Dallas County. In 2003, appellants entered into an agreement with the Credit Union through its alleged agent Otis Chapman1 in which appellants found cars for the Credit Union's customers, and the Credit Union then financed the loans. The profits from the car sales were split three ways with one-third going to ABCD Auto, Inc., one-third going to Denson personally, and one-third going to Chapman.

Appellants allege that on many of the loans, Chapman told appellants the cars sold for a lower amount when the Credit Union had actually financed the sales for a greater amount. This resulted in appellants receiving their percentage of the profit from the lower amount.

Appellants brought suit against the Credit Union, Naughton as president of the Credit Union, and Chapman. The claims included breach of contract, fraud, assisting in a breach of fiduciary duty, and civil conspiracy. Naughton filed a no-evidence motion for summary judgment, and the Credit Union filed both a traditional and no-evidence motion for summary judgment on appellants' claims. The trial court granted both parties' motions and severed Chapman's claims making the summary judgments final and appealable. This appeal followed.

Standard of Review

When, as here, the trial court does not specify the grounds on which it granted the summary judgment, we must affirm if any of the grounds specified in the motion have merit. Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003); Preston Gate, L.P. v. Bukaty, 248 S.W.3d 892, 895 (Tex.App.-Dallas 2008, no pet.). In a no-evidence motion for summary judgment, the non-movant has the burden of presenting evidence that raises a genuine issue of material fact on the challenged elements. See TEX.R. CIV. P. 166a(i). We review a no-evidence motion for summary judgment under the same legal sufficiency standard used to review a directed verdict. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003). Our inquiry focuses on whether the non-movant produced more than a scintilla of probative evidence to raise a fact issue on the challenged elements. Id. at 751; Preston Gate, L.P., 248 S.W.3d at 896.

To prevail on a summary judgment motion brought under Texas Rule of Civil Procedure 166a(c), a movant must show there is no genuine issue as to any material fact, and it is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c); Little v. Tex. Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex.2004); Schwartz v. Schwartz, 247 S.W.3d 804, 806 (Tex. App.-Dallas 2008, no pet.). A matter is conclusively established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence. Triton Oil & Gas Corp. v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex.1982). A defendant may meet this burden by either: (1) disproving at least one essential element of each theory of recovery, or (2) conclusively proving all elements of an affirmative defense. Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex. 1993). Where a party moves for summary judgment on the grounds of an affirmative defense, such as the illegality of a contract, the movant must expressly present and conclusively prove each essential element of the affirmative defense. Villanueva v. Gonzalez, 123 S.W.3d 461, 464 (Tex.App.-San Antonio 2003, no pet.); see also TEX.R. CIV. P. 94 (illegality must be pleaded as affirmative defense). After the movant has established a right to summary judgment, the burden shifts to the nonmovant to present evidence creating a fact issue. Schwartz, 247 S.W.3d at 806. If the nonmovant fails to create a fact issue, summary judgment is appropriate.

Naughton No-Evidence Summary Judgment

Appellants assert Naughton, serving as the Credit Union's president, perpetuated a fraud, assisted Chapman in breaching his fiduciary duty, and acted in a conspiracy by misrepresenting sales amounts of vehicles.2 The trial court granted a no-evidence summary judgment in her favor without specifying the grounds on which it found no evidence. Thus, we may affirm if any of the grounds specified in the motion have merit.

1. Fraud

To prove fraud, a party must show (1) the defendant made a material misrepresentation, (2) which was false, (3) which the defendant knew was false or made recklessly without knowledge of the truth at the time it was made, (4) and the defendant made the representation with the intention that the party rely on it, (5) and the party acted in reliance on the statement, and (6) it resulted in injury. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex. 1998).

In response to Naughton's second amended no-evidence motion for summary judgment, appellants filed objections, special exceptions, and a fourth submission of evidence in opposition of summary judgment. Specifically, they claim they were damaged by such fraud and cite to paragraphs two through five and ten and eleven of Chuck Denson's third affidavit for support. After reviewing these portions of the affidavit, we conclude appellants failed to produce more than a scintilla of evidence that any fraud resulted in injuries or damages. The cited paragraphs in Denson's affidavit discuss alleged misrepresentations by Chapman, not Naughton. The affidavit also discusses injuries such as loss of personal credit due to the default of floor-planned vehicles for a grand opening sale, which occurred without Denson's vehicles. He stated "I liquidated the vehicles at a loss after receiving this news." While this may be evidence of injury and damages caused by a breach of contract for the grand opening sales, appellants withdrew any such claim against Naughton when they filed their second amended petition. See TEX.R. CIV. P. 65 (noting amended pleading supersedes and supplants earlier pleading); Seung Ok Lee v. Ki Pong Na, 198 S.W.3d 492, 494 (Tex.App.-Dallas 2006, no pet.). Thus, these statements failed to produce more than a scintilla of probative evidence to raise a fact issue on the challenged element of damages. See Preston Gate, L.P., 248 S.W.3d at 896.

Appellants also provided a chart in their response describing the "alleged area of no evidence" and their "responsive genuine issue of fact." The chart contains a section for fraud, which states "Naughton is liable directly for her fraudulent promises made with no intent to perform that she would insure each loan document was correct before she signed the check, as a co-conspirator for the Fraud of Chapman in each false representation of loan amount. See Genuine Issue number 3, above." This statement is not evidence of any injury or damage caused by her alleged fraud, and appellants citation to Genuine Issue number 3 references back to a portion of their response that has nothing to do with damages or injuries from Naughton's alleged fraud. Rather, this section claims damages caused by an alleged breach of the grand opening sales agreement, which as noted above, do not apply to Naughton. Thus, appellants failed to provide more than a scintilla of evidence to raise a genuine issue of material fact regarding damages or injuries resulting from Naughton's alleged fraud. Accordingly, the trial court properly granted her no-evidence motion for summary judgment on this cause of action.

2. Conspiracy

To prevail on their conspiracy claim, appellants needed to bring forth evidence of the following elements: (1) two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages as a proximate result. Preston Gate, L.P., 248 S.W.3d at 898; Prospect High Income Fund v. Grant Thornton, L.L.P., 203 S.W.3d 602, 616 (Tex.App.-Dallas 2006, pet. denied). Again, appellants cite to the Denson affidavits as evidence. However, a review of the cited evidence reveals no meeting of the minds between Naughton and Chapman to commit any unlawful act. Although he claimed Naughton and Chapman had "private meetings" behind closed doors and Denson was not allowed in the office when the meetings occurred, this is not evidence of a conspiracy. Likewise, nothing in the Hedrick, Vitelea, or Meza affidavits indicates any meeting of...

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