Prostok v. Browning

• Decision Date: 11 August 2003
• Docket Number: No. 05-99-00826-CV.,05-99-00826-CV.
• Citation: 112 S.W.3d 876
• Parties: Jeff P. PROSTOK, et al., Appellants, v. Peter C. BROWNING, et al., Appellees.
• Court: Texas Court of Appeals

112 S.W.3d 876

Jeff P. PROSTOK, et al., Appellants, v. Peter C. BROWNING, et al., Appellees.

No. 05-99-00826-CV.

Court of Appeals of Texas, Dallas.

August 11, 2003.

Joseph Donald Carona, Dies & Hile, L.L.P., Orange, Roger Townsend, Alexander

Dubose Jones & Townsend LLP, Houston, Boe W. Martin, Bell, Knunnally & Martin PLLC, Dallas, Thomas M. Fulkerson, Clements O'Neill Pierce & Nickens, L.L.P., Houston, for Appellants.

Kathy Dawn Patrick, Gibbs & Brun, Houston, Tyler A. Baker, Carrington, Coleman, Sloman & Blumenthal, L.L.P., Robert W. Jordan, Samara L. Kline, Baker & Botts, L.L.P., Thomas M. Melsheimer, Fish & Richardson L.L.P., Marie R. Yeates, Michael L. Raiff, Vinson & Elkins, L.L.P., Dallas, for Appellees.

Before Justices MOSELEY and O'NEILL.¹

OPINION ON MOTIONS FOR REHEARING

Opinion by Justice MOSELEY.

Several parties have filed motions for rehearing. We deny all such pending motions for rehearing. On the Court's own motion we withdraw our opinion of March 28, 2003 and vacate our judgment of that date. This is now the opinion of the Court.

This case stems from the bankruptcy proceedings of National Gypsum Company ("National Gypsum") and its parent company, Aancor Holdings, Inc. ("Aancor"). Appellants asserted various claims based on actions allegedly taken by appellees in connection with National Gypsum's valuation during the course of the bankruptcy proceedings. Pursuant to Tex.R. CIV. P. 166a(c), the trial court granted summary judgment against appellants on all their claims, which they challenge on appeal. In a cross-point, appellees contend the trial court erred in failing to grant summary judgment on the grounds of limitations, and in granting summary judgment for appellants on an attorneys' fee shifting provision of the bankruptcy plan. For the reasons set forth below, we reverse the trial court's judgment, render judgment in part, and remand this cause for further proceedings.

I. STANDARD OF REVIEW

The standards for reviewing a summary judgment granted pursuant to rule 166a(c) 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. See Tex.R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985); Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972). A defendant moving for summary judgment must either (1) conclusively disprove at least one element of the plaintiff's theory of recovery, or (2) plead and conclusively establish each essential element of an affirmative defense. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex.1979); Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 657 (Tex.App.-Dallas 1992, no writ).

As discussed in more detail below, the various appellees advanced several grounds in support of numerous motions for summary judgment against appellants. The trial court specifically rejected the motions based on the statute of limitations, but granted the motions for summary judgment in all other respects. However, the trial court's order does not specify which of the remaining grounds asserted in appellees' motions formed the basis, or bases, of its summary judgment. Thus we affirm the summary judgment if any of the theories advanced, and not specifically rejected by the trial court, are meritorious. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001) (per curiam); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989). Accordingly, appellants must show that none of appellees' remaining grounds were a proper basis for summary judgment. See Holloway v. Starnes, 840 S.W.2d 14, 18 (Tex.App.-Dallas 1992, writ denied).

Additionally, we consider all summary judgment grounds on which the trial court actually ruled, whether granted or denied, that are preserved for appeal and are dispositive of the appeal. See Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1, 5 (Tex.1999); Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex.1996). Further, we may also consider summary judgment grounds expressly presented to but not ruled on by the trial court, if the summary judgment movant presents the alternative grounds on appeal. Baker Hughes, Inc., 12 S.W.3d at 5. Lastly, if an appellant does not properly challenge each independent ground for summary judgment asserted against a claim, we affirm the summary judgment as to that claim. Smith v. Tilton, 3 S.W.3d 77, 83 (Tex.App.-Dallas 1999, no pet.).

In deciding whether a disputed issue of material fact exists, that would preclude summary judgment, evidence favorable to the nonmovant will be taken as true. Nixon, 690 S.W.2d at 548-49. Further, every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. Id. It is from this perspective that we review the summary judgment record.²

II. BACKGROUND AND PROCEDURAL HISTORY

A. Introduction

This is a complex case, involving issues of state and federal law litigated in a variety of courts over several years. The record is over 31,700 pages in length. The parties' briefs before this court refer to approximately 450 cases and other authorities. The appellants in this case include a group of junior bondholders of the old National Gypsum Company, represented by Prostok, Field and Earnest,³ and several groups that had asserted asbestos related claims against the old National Gypsum Company. The appellees include some of the former officers and directors of National Gypsum and its parent company ("Officers and Directors"); their financial advisor, Donaldson, Lufkin & Jenrette Securities Corp. ("DLJ"); some of National Gypsum's senior bondholders; and the senior bondholders' financial advisor, Houlihan Lokey Howard & Zukin Capital ("Houlihan Lokey"). The new National Gypsum Company ("New NGC"), formed pursuant to a plan of reorganization approved by a federal bankruptcy court, intervened in the district court and brings a separate cross-appeal.⁴

The parties are described in more detail in the following sections. However, the essence of the case is a dispute between the junior bondholders and asbestos claimants on the one side (as appellants herein), and the senior bondholders, management of National Gypsum, and their respective financial advisors on the other (as appellees herein), with cross-appellant New NGC generally siding with the latter group regarding the merits of that dispute.

During this appeal some of the parties have settled some or all of the claims asserted by and/or against them. Those claims and parties will be identified herein as well. However, the issues before this court are framed in part by the nature of the litigation below and before other courts, and by the various parties' participation in portions of that litigation. Thus, for purposes of clarity we describe the entirety of the disputes between the parties.

B. National Gypsum Bankruptcy

In 1986, National Gypsum, a manufacturer of building materials, was the subject of a leveraged buyout, becoming a wholly owned subsidiary of Aancor. To finance this buyout, National Gypsum and Aancor issued approximately $1 billion in bonds.

On October 28, 1990, faced with mounting debt and a multitude of asbestos lawsuits, National Gypsum and Aancor each filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code. The cases were consolidated and jointly administered in the United States Bankruptcy Court for the Northern District of Texas in Dallas; for convenience the two proceedings are referred to herein as one proceeding—the National Gypsum bankruptcy. At the time, the National Gypsum bankruptcy was one of the largest bankruptcy cases in American history. The bankruptcy case was highly contentious; National Gypsum's valuation was hotly contested by the various interested parties, and the parties advocated multiple competing plans of reorganization.

National Gypsum had three classes of publicly traded debt: (1) senior notes worth about $295 million; (2) senior debentures worth about $188 million; and (3) junior bonds worth about $537 million.⁵ The senior notes and debentures were held by several entities referred to as the Senior Bondholders, who are some of the appellees in this case.⁶

The junior bonds were held by persons and entities referred to as the Junior Bondholders, including appellant Prostok and the class members he represents. Others interested in the National Gypsum bankruptcy included parties holding actual or potential claims against National Gypsum arising from the manufacture, distribution, or use of asbestos products; these parties are generally referred to herein as the Asbestos Claimants.⁷

1. Allegations of Undervaluation

The Junior Bondholders' interests were represented in the bankruptcy by the official committee of bond and trade unsecured creditors ("BT Committee"). In January 1992, the BT Committee attempted to replace National Gypsum's management, which was acting as a debtor-in-possession under the Bankruptcy Code, with a bankruptcy trustee. Among other allegations, the BT Committee claimed National Gypsum's management and its financial advisor, DLJ, were manipulating the economic projections of the company in order to diminish its value. However in March 1992, after a two-day evidentiary hearing, the bankruptcy court rejected the BT Committee's motion, stating that insufficient evidence was presented to justify removing National Gypsum as debtor-in-possession and replacing it with a trustee.

2. Reorganization Plans

National Gypsum submitted a reorganization plan to the bankruptcy court based on a valuation of its business of between $300 and $375 million. The plan proposed to divide National Gypsum's assets between two entities. National Gypsum would change its name and keep certain insurance policies and the Austin Company, a National Gypsum subsidiary. The plan further created and funded the NGC Asbestos Disease and Property Damage Trust,⁸ which...