Hall v. Douglas

• Decision Date: 29 August 2012
• Docket Number: No. 05–10–01102–CV.,05–10–01102–CV.
• Citation: 380 S.W.3d 860
• Parties: Michael H. HALL and Emajean Haggard Hall, Trustee, Appellants, v. James R. DOUGLAS, Jr., Barbara Douglas, Douglas Properties, Inc., Douglas/Hall, Ltd., Douglas Properties/Development, Inc., and Graham Mortgage Corporation, Appellees.
• Court: Texas Court of Appeals

380 S.W.3d 860

Michael H. HALL and Emajean Haggard Hall, Trustee, Appellants,

v.James R. DOUGLAS, Jr., Barbara Douglas, Douglas Properties, Inc., Douglas/Hall, Ltd., Douglas Properties/Development, Inc., and Graham Mortgage Corporation, Appellees.

No. 05–10–01102–CV.

Court of Appeals of Texas,

Dallas.

Aug. 29, 2012.

Jeffrey M. Travis, Richard J. Pradarits, Travis & Calhoun, P.C., Dallas, TX, Hastings Lyle Hanshaw, Collin D. Kennedy, Hanshaw Kennedy, LLP, Frisco, TX, for Appellants.

Luke Madole, Timothy Patrick Chastain, Thomas F. Allen, Jr., Carrington, Coleman, Sloman & Blumenthal, L.L.P., Richard Illmer, Brown, McCarroll, L.L.P., Dallas, TX, Elizabeth G. Bloch, Brown, McCarroll, L.L.P., Austin, TX, for Appellees.

Before Justices BRIDGES, FRANCIS, and LANG.

OPINION

Opinion By Justice BRIDGES.

Appellants Michael H. Hall (“Hall”) and Emajean Haggard Hall (the “Trustee”) appeal from the trial court's order granting summary judgment in favor of appellees James R. Douglas, Jr., Barbara Douglas, Douglas Properties, Inc., Douglas/Hall, Ltd., Douglas Properties/Development, Inc. (collectively referred to as the “Douglas Appellees”) and Graham Mortgage Corporation (“Graham”). In six issues, appellants argue the trial court erred by granting: (1) Graham's motion for partial summary judgment regarding the Trustee's fraud claim; (2) the Douglas Appellees' no-evidence motion for summary judgment against the Trustee; (3) the Douglas Appellees' no-evidence motion for summary judgment against Hall; (4) the Douglas Appellees' traditional motion for summary judgment against Hall because he had standing to bring his claims; (5) Graham's motion for summary judgment for appellants' remaining claims; and (6) sustaining appellees' objections to the testimony of Hall and Bettie Miller offered in support of appellants' responses to motions for summary judgment. We affirm.

Background

In 2003, appellee Hall ¹ entered into an agreement with Douglas Properties, Inc. and James R. Douglas, Jr. to form a limited partnership known as Douglas/Hall, Ltd. (“DHL”). The parties agreed that Douglas Properties, Inc. would be the general partner, owning a one percent interest, and Hall and Douglas would be limited partners, owning 50 and 49 percent interests, respectively. The purpose of the partnership was to “acquire, own, operate, manage, and develop” a 320 acre tract of land in Collin County, Texas (the “Hall Tract”), owned by the Trustee. Hall was the beneficiary of the trust under which the land was being held. The DHL partnership agreement contained provisions regarding a “development loan” and contained provisions regarding the general partner's obligation to develop the Hall Tract.

In June 2003, the Trustee sold the Hall Tract to DHL. In connection with its purchase of the Hall Tract from the Trustee, DHL signed a promissory note in the amount of $9,090,335.27 payable to the Trustee. The Trustee's promissory note was secured by a deed of trust on the Hall Tract (“Trustee's Deed of Trust”). In addition, DHL signed a promissory note in the amount of $1.5 million payable to Graham. The note was secured by a deed of trust on the Hall Tract in favor of Graham (“Graham Deed of Trust”). The Trustee's Deed of Trust recites that lien priority belonged to Graham under the Graham Deed of Trust and refers to Graham's lien as a “prior lien.”

In 2005, DHL borrowed $3,074,000 from Graham (“2005 Loan”). DHL used a portion of the proceeds of this loan to pay the balance due on the $1.5 million promissory note payable to Graham. As part of this transaction, the Trustee signed a subordination of her lien, providing that her lien would become “second, subordinate, and inferior” to a 2005 deed of trust lien signed by DHL to secure payment of the 2005 Loan.

In November 2006, DHL borrowed another $3.5 million from Graham (“2006 Loan”). This loan was secured by a second deed of trust lien in favor of Graham on the Hall Tract. The Trustee again subordinated her lien. Hall signed a “Consent of Partners” authorizing Douglas Properties, Inc. as general partner of DHL to undertake actions to complete the loan transaction. The agreements between DHL and Graham for both the 2005 Loan and the 2006 Loan included a provision regarding advances from the loan proceeds. In a paragraph entitled “Future Advances,” both agreements provided that advancements could be made to DHL “for the sole purpose of paying the costs (including the payment of accrued interest under the Note) reasonably and necessarily incurred by Borrower in connection with the ownership, operation and development of the Property into single-family residential lots, a minimum of one acre each.” The “Property” referred to in this provision was the Hall Tract.

In August 2008, appellants filed this lawsuit against the Douglas Appellees, Graham, and others,² alleging fraud in a real estate transaction, common law fraud, conspiracy to defraud, breach of fiduciary duty, and breach of the partnership agreement. Appellants also sought judicial foreclosure of the promissory note payable by DHL to the Trustee and the deed of trust securing that note. Graham then initiated foreclosure proceedings under the deeds of trust securing the 2005 Loan and the 2006 Loan, and appellants filed an application for a temporary injunction against foreclosure, pending trial on the merits. The trial court granted the temporary injunction, and Graham appealed. In Graham Mortg. Corp. v. Hall, 307 S.W.3d 472, 474–77 (Tex.App.-Dallas 2010, no pet.), this Court affirmed the trial court's grant of the temporary injunction.

A couple of months later, in April 2010, Graham and the Douglas Appellees filed their motions for summary judgment in the trial court. The Douglas Appellees filed a traditional and no-evidence motion for summary judgment. Graham filed a partial no-evidence motion for summary judgment regarding the Trustee's fraud claims against Graham. The trial court granted both motions. In June of 2010, Graham filed its motion for summary judgment on the remaining claims, and the trial court granted that motion as well. In conjunction with the motions for summary judgment, the trial court also granted many of the objections to and motion to strike portions of appellants' summary judgment evidence.

Analysis

1. Summary Judgment Standard

The standards for reviewing a traditional summary judgment are well established. The party moving for summary judgment has the burden of showing no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. SeeTex.R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). In deciding whether a disputed material fact issue exists, precluding summary judgment, evidence favorable to the non-movant will be taken as true. Nixon, 690 S.W.2d at 548–49. Further, every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor. Id. A motion for summary judgment must expressly present the grounds upon which it is made and must stand or fall on those grounds alone. McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex.1993); Espalin v. Children's Med. Ctr. of Dallas, 27 S.W.3d 675, 688 (Tex.App.-Dallas 2000, no pet.).

We review a no-evidence summary judgment under the same legal sufficiency standard used to review a directed verdict. SeeTex.R. Civ. P. 166a(i); Gen. Mills Rests., Inc. v. Tex. Wings, Inc., 12 S.W.3d 827, 832–33 (Tex.App.-Dallas 2000, no pet.). Thus, we must determine whether the nonmovant produced more than a scintilla of probative evidence to raise a fact issue on the material questions presented. Gen. Mills, 12 S.W.3d at 833. When analyzing no-evidence summary judgments, we consider the evidence in the light most favorable to the nonmovant. Id.

In the present case, the trial court did not specify the grounds on which the Douglas Appellees' summary judgment motion was granted. If a summary judgment order issued by the trial court does not specify the ground or grounds relied upon for a ruling, the ruling will be upheld if any of the grounds in the summary judgment motion can be sustained. Bradley v. State ex rel. White, 990 S.W.2d 245, 247 (Tex.1999); Ortega v. City Nat. Bank, 97 S.W.3d 765, 772 (Tex.App.-Corpus Christi 2003, no pet.). When the motion for summary judgment presents both no-evidence and traditional grounds, appellate courts usually review the no-evidence grounds first. See Kalyanaram v. Univ. of Tex. Sys., 230 S.W.3d 921, 925 (Tex.App.-Dallas 2007, pet. denied).

2. The Trustee's Fraud Claim Against Graham

In their first issue, appellants contend the trial court erred in granting Graham's motion for partial summary judgment regarding the Trustee's fraud claim. Specifically, appellants argue the trial court erred in granting summary judgment because “there was evidence that Graham made false statements with the intent that [the Trustee] rely upon them, and there was evidence of [the Trustee's] actual, detrimental reliance on those statements by Graham.”

The elements of fraud are: (1) that a material misrepresentation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury. Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex.2009). Thus, in their brief, appellants argue they presented at least some evidence with regard to the fourth and fifth elements sufficient to preclude summary judgment.

With regard to the fourth element, appellants contend Graham defrauded the Trustee by representing “in the loan documents themselves” that the loans it was making to DHL were going to be used for the development of the Hall Tract....