Rutherford v. 6353 Joint Venture

• Decision Date: 25 July 2017
• Docket Number: NO. 14-16-00053-CV,14-16-00053-CV
• Parties: JAMES RUTHERFORD, Appellant v. 6353 JOINT VENTURE, Appellee
• Court: Texas Court of Appeals

JAMES RUTHERFORD, Appellant
v.
6353 JOINT VENTURE, Appellee

NO. 14-16-00053-CV

State of Texas in the Fourteenth Court of Appeals

July 25, 2017

On Appeal from the 125th District Court Harris County, Texas
Trial Court Cause No. 2010-79144

MEMORANDUM OPINION

Appellant James Rutherford guaranteed payment of a promissory note payable to appellee 6353 Joint Venture. When the note went unpaid, 6353 sued Rutherford on the guaranty. 6353 moved for summary judgment on its claim, which the trial court granted. Although Rutherford raises three issues in this appeal, we need only address his first and second issues.

Rutherford initially complains that the trial court erred when it refused to

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dismiss 6353's lawsuit on the ground that 6353 did not have standing at the time the suit was filed because it had assigned the Promissory Note to a third party. We overrule this issue because the record establishes that 6353, even if it had assigned the Promissory Note, possessed standing at the time it filed suit as a result of its indorsement of the Promissory Note with recourse.

Rutherford argues in his second issue that the trial court erred when it granted 6353's motion for summary judgment because 6353 failed to prove as a matter of law (1) that it was the owner or holder of the Promissory Note, and (2) the amount owed under the Promissory Note. We sustain this issue because 6353 failed to prove the amount owed under the guaranty as a matter of law. We therefore reverse the trial court's summary judgment and remand the case to the trial court for further proceedings.

BACKGROUND

Rutherford is the owner of 6300 Interests, Ltd. He is also the majority shareholder in Quality Infusion Care, Inc. On June 11, 2009, 6353 loaned 6300 Interests and Quality Infusion Care $675,000 to finance the purchase of condominiums. Rutherford signed the Promissory Note as president of both entities. Simultaneously, Rutherford personally guaranteed payment of the Promissory Note executed by 6300 Interests and Quality Infusion Care. 6300 Interests and Quality Infusion Care allegedly defaulted on the Promissory Note and 6353 sued Rutherford on the guaranty.

6353 eventually moved for summary judgment on its claim against Rutherford. 6353 sought to recover the unpaid balance of the note and its attorney's fees. In addition to filing a summary judgment response, Rutherford filed a motion to dismiss the lawsuit arguing that 6353 lacked standing at the time it filed suit because the Promissory Note had been assigned to Texas Capital Bank. The trial

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court never directly ruled on Rutherford's motion to dismiss. It did grant 6353's motion for summary judgment, however, awarding 6353 the principal sum of $390,000, $39,000 attorney's fees through trial, as well as additional attorney's fees if Rutherford unsuccessfully appealed the judgment. This appeal followed.

ANALYSIS

I. 6353 had standing at the time suit was filed.

Rutherford asserts in his first issue that the trial court erred when it failed to dismiss 6353's lawsuit. Rutherford argues that 6353 did not have standing at the time the suit was originally filed because it had previously assigned the promissory note to Texas Capital Bank.

A. Standard of review and applicable law

Standing, a component of subject-matter jurisdiction, is a constitutional prerequisite to maintaining suit. Tex. Ass'n. of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444-45 (Tex. 1993); Concerned Cmty. Involved Dev., Inc. v. City of Houston, 209 S.W.3d 666, 670 (Tex. App.—Houston [14th Dist.] 2006, pet. denied). Standing requires that there exist a real controversy between the parties that will actually be determined by the judicial declaration sought. Sammons & Berry, P.C. v. Nat'l Indem. Co., No. 14-13-00070-CV, 2014 WL 3400713, at *3 (Tex. App.—Houston [14th Dist.] July 10, 2014, no pet.) (mem. op.) (citing Nootsie, Ltd. v. Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 662 (Tex. 1999)). The plaintiff must have a personal stake in the litigation, and his injury must be actual or imminent. DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304-05 (Tex. 2008).

Standing must exist at the time a plaintiff files suit. Martin v. Clinical Pathology Lab., Inc., 343 S.W.3d 885, 888 (Tex. App.—Dallas 2011, pet. denied); In re Vogel, 261 S.W.3d 917, 921 (Tex. App.—Houston [14th Dist.] 2008, orig.

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proceeding). If the plaintiff lacks standing at the time suit is filed, the case must be dismissed even if the plaintiff later acquires an interest sufficient to support standing. Martin, 343 S.W.3d at 888.

A party's standing to pursue and maintain a cause of action is a question of law that we review de novo. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). When reviewing the question of standing, we take the allegations in the plaintiff's petition as true and construe them in favor of the plaintiff. Tex. Ass'n. of Bus., 852 S.W.2d at 446. In addition to the pleadings, we may also consider relevant evidence and must do so when necessary to resolve the jurisdictional issue. Id.

B. As an indorser with recourse, 6353 had an obligation to pay the note when it sued Rutherford on his guaranty.

Rutherford argues that 6353 did not have standing at the time it filed suit because it had assigned the Promissory Note to Texas Capital Bank on June 11, 2009, and the note had not been returned to 6353 by the time it filed suit in December 2010. In support of his motion to dismiss, Rutherford filed with the trial court a copy of the Promissory Note. The copy reflects that on June 11, 2009, 6353 indorsed the note "pay to the order of Texas Capital Bank, National Association with recourse."¹ Rutherford also filed a copy of the "Collateral Transfer of Note (Security Agreement)" executed by 6353. The Collateral Transfer provides, in part, that 6353 "transfers, assigns and conveys unto Texas Capital Bank, National Association, hereinafter called 'Secured Party' . . . , the promissory note (herein called Collateral and in which [6353] grants to Secured Party a Security Interest) and all liens, rights, titles, equities and interest securing the same, including but not limited to any and

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all guarantees, assignments of rents and leases, security agreements, and any other security instruments, and including all proceeds therefrom, . . . ." 6353 argues in response that it had standing to file suit because the...