Pike v. Texas EMC Management, LLC

• Decision Date: 07 June 2017
• Docket Number: No. 10-14-00274-CV,10-14-00274-CV
• Citation: 579 S.W.3d 390
• Parties: Clinton W. (Buddy) PIKE, Sr., Daniel L. Walker, W. Tobin Wilson, VHSC Cement, LLC and Few Ready Mix Concrete Co., Appellants v. TEXAS EMC MANAGEMENT, LLC, Texas EMC Products, LP and EMC Cement, BV, Appellees
• Court: Texas Court of Appeals

579 S.W.3d 390

Clinton W. (Buddy) PIKE, Sr., Daniel L. Walker, W. Tobin Wilson, VHSC Cement, LLC and Few Ready Mix Concrete Co., Appellants

v.TEXAS EMC MANAGEMENT, LLC, Texas EMC Products, LP and EMC Cement, BV, Appellees

No. 10-14-00274-CV

Court of Appeals of Texas, Waco.

Opinion delivered and filed June 7, 2017

MEMORANDUM OPINION

AL SCOGGINS, Justice In numerous issues, appellants, Clinton W. Pike Sr., Daniel L. Walker, W. Tobin Wilson, VHSC Cement, LLC, and Few Ready Mix Concrete, challenge a judgment in favor of appellees, Texas EMC Management, LLC, Texas EMC Products, LP, and EMC Cement, BV, stemming from the breakup of a partnership and the subsequent purchase of the partnership's assets at a foreclosure sale. In a cross-appeal, EMC Management, EMC Products, and EMC Cement complain about the trial court's denial of their request for a permanent injunction in favor of cross-appellees, Pike, Walker, Wilson, VHSC, and Few Ready Mix.¹ After review, we modify the Amended Final Judgment to delete Pike's liability for breach of his Management Agreement with EMC Products and affirm the judgment in all other respects. We also reverse the trial court's denial of the permanent injunction and remand for proceedings consistent with this opinion.²

I. SUFFICIENCY OF THE EVIDENCE

Here, appellants raise sufficiency challenges with regard to aspects of the Amended Final Judgment. In a legal-sufficiency review, we consider the evidence in the light most favorable to the verdict, indulging every reasonable inference in favor of the verdict. Autozone, Inc. v. Reyes , 272 S.W.3d 588, 592 (Tex. 2008) (per curiam); Associated Indem. Corp. v. CAT Contracting, Inc. , 964 S.W.2d 276, 286 (Tex. 1998). To determine whether legally-sufficient evidence supports a challenged finding of fact, we credit evidence that supports the finding if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. See Kroger Tex. Ltd. P'ship v. Suberu , 216 S.W.3d 788, 793 (Tex. 2006) ; see also City of Keller v. Wilson , 168 S.W.3d 802, 822 (Tex. 2005). The factfinder is the sole judge of the credibility of the witnesses and the weight to be assigned to their testimony. See City of Keller , 168 S.W.3d at 819. The factfinder is free to believe one witness and disbelieve another, and reviewing courts may not impose their own opinions to the contrary. Id. As such, reviewing courts must assume that the factfinder decided all credibility questions in the favor of the findings and chose what testimony to disregard in a way that was in favor of the findings, if a reasonable person could do so. Id. at 819-20.

Additionally, it is within the factfinder's province to resolve conflicts in the evidence. Id. at 820. Consequently, we must assume that, where reasonable, the factfinder resolved all conflicts in the evidence in a manner consistent with the findings. Id. Where conflicting inferences can be drawn from the evidence, it is within the province of the factfinder to choose which inference to draw, so long as more than one inference can reasonably be drawn. Id. at 821. Thus, we must assume that the factfinder made all inferences in favor of the findings if a reasonable person could do so. Id. As stated in City of Keller , the final test for legal sufficiency must always be "whether the evidence at trial would entitle reasonable and fair-minded people to reach the verdict under review." Id. at 827. Anything more than a scintilla of evidence is legally sufficient to support the finding. See Cont'l Coffee Prods. Co. v. Cazarez , 937 S.W.2d 444, 450 (Tex. 1996).

In a factual-sufficiency challenge, an appellate court must consider and weigh all of the evidence. Cain v. Bain , 709 S.W.2d 175, 176 (Tex. 1986) (per curiam). The verdict should be set aside only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id. We may not pass upon the witnesses' credibility or substitute our judgment for that of the factfinder, even if the evidence would support a different result. 2900 Smith, Ltd. v. Constellation NewEnergy, Inc. , 301 S.W.3d 741, 746 (Tex. App.—Houston [14th Dist.] 2009, no pet.). If we determine the evidence is factually insufficient, we must detail the evidence relevant to the issue and state in what regard the contrary evidence greatly outweighs the evidence supporting the trial court's judgment; we need not do so when affirming the judgment. Id.

II. BREACH-OF-CONTRACT CLAIMS AGAINST WALKER AND WILSON

In their second issue, Walker, Wilson, and Few Ready Mix argue that appellees' breach-of-contract claim against Walker and Wilson is invalid as a matter of law, arguing, among other things, that: (1) the failure to provide an infinite amount of money was not a breach of the Partnership Agreement; and (2) appellees breached the Partnership Agreement first. Walker, Wilson, and Few Ready Mix also contend that EMC Cement lacks standing to recover for diminished value of the partnership; that the attorney's fees award is improper; and that the amount awarded to Walker and Wilson for appellees' breach of the Partnership Agreement was incorrect.

A. Standing

Because it is a threshold matter, we will first consider the standing argument. "Standing is a constitutional prerequisite to maintaining suit in either federal or state court." Williams v. Lara , 52 S.W.3d 171, 178 (Tex. 2001) (citing Tex. Ass'n of Bus. v. Tex. Air Control Bd. , 852 S.W.2d 440, 444 (Tex. 1993) ). Standing "focuses on whether a party has a sufficient relationship with the lawsuit so as to have a ‘justiciable interest’ in its outcome." Austin Nursing Ctr., Inc. v. Lovato , 171 S.W.3d 845, 848 (Tex. 2005). Essentially, parties have standing when they are personally aggrieved, regardless of whether they are acting with legal authority. See Nootsie, Ltd. v. Williamson County Appraisal Dist. , 925 S.W.2d 659, 661 (Tex. 1996).

On appeal, Walker, Wilson, and Few Ready Mix assert that EMC Cement lacks standing to bring a claim against Walker and Wilson for breach of the Partnership Agreement because the cause of action belongs to the partnership, not the individual partners. Appellees counter that this argument involves capacity and, as such, has been waived by a failure to file a verified denial under Texas Rule of Civil Procedure 93. See TEX. R. CIV. P. 93.

Capacity is a procedural issue dealing with the personal qualifications of a party to litigate. See Lovato , 171 S.W.3d at 848 ; see also Hubbard v. Rosenthal , No. 10-10-00267-CV, 2012 WL 1992124, at *4, 2012 Tex. App. LEXIS 4391 at *9 (Tex. App.—Waco May 30, 2012, pet. denied) (mem. op.). "[A] party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy." Lovato , 171 S.W.3d at 848-49 ; see El T. Mexican Rests. v. Bacon , 921 S.W.2d 247, 250 (Tex. App.—Houston [1st Dist.] 1995, no writ) (stating that capacity is a party's legal authority to go to court to prosecute or defend a suit). While standing may be raised for the first time on appeal, capacity must be raised by verified plea in the trial court or else it is deemed waived. See Lovato , 171 S.W.3d at 849 ; see also Sixth RMA Partners, L.P. v. Sibley , 111 S.W.3d 46, 56 (Tex. 2003).

We characterize the standing argument as a challenge to EMC Cement's right to recover in the capacity in which it filed suit.³ In other words, we conclude that Walker, Wilson, and Few Ready Mix's argument that EMC Cement did not have authority to prosecute this lawsuit because that authority belonged to the partnership involves capacity, not standing. See Pledger v. Schoellkopf , 762 S.W.2d 145, 145-46 (Tex. 1988) (per curiam) (holding that the question whether claims brought by shareholders belonged to the corporation involved capacity); see also Baker v. City of Robinson , 305 S.W.3d 783, 788 (Tex. App.—Waco 2009, pet. denied) (concluding that an individual's alleged lack of standing to recover lost profits suffered by a partnership was really an issue of capacity); WHM Props. v. Dallas County , 119 S.W.3d 325, 330-31 (Tex. App.—Waco 2003, no pet.) (holding that an issue presented as a "standing" challenge pertaining to corporate status actually involved "capacity"). And because the record does not contain a verified plea filed in the trial court under Texas Rule of Civil Procedure 93, we conclude that this argument has been waived. See TEX. R. CIV. P. 93 ; see also Lovato , 171 S.W.3d at 849 ; Sixth RMA Partners, L.P. , 111 S.W.3d at 56.

B. The Partnership Agreement

Next, we will address Walker, Wilson, and Few Ready Mix's arguments regarding the Partnership Agreement.

The partners in EMC Products, a Texas limited partnership, are EMC Management, EMC Cement, Walker and certain members of his family, and Wilson. EMC Management is a general partner with a 1% share in the partnership. EMC Cement is a Class A limited partner with a 49.5% ownership stake. Walker and his family and Wilson are Class B limited partners with a collective 49.5% ownership share in the partnership. Under the Partnership Agreement, the following was required of Class B limited partners Walker and Wilson:

Section 2.5. Financing Assistance by Class B Limited Partners. The Class B Limited Partners shall loan funds to and/or obtain financing for the Partnership to meet the Primary Objective until such time as the Partnership has the financial ability to obtain such financing on its own resources. The General Partner and the Class A Limited Partner shall have no obligation to make loans to and/or obtain financing for the Partnership.

Section 1.5 of the Partnership Agreement outlines the primary objective of the Partnership as follows: "The Partners agree that the primary objective of the partnership will be to maximize the degree and speed of market penetration for the Products in the State of Texas, in accordance with market demand and potential, respecting sound business principals."

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