Tryco Enters., Inc. v. Robinson

• Decision Date: 13 September 2012
• Docket Number: No. 01–10–00710–CV.,01–10–00710–CV.
• Citation: 390 S.W.3d 497
• Parties: TRYCO ENTERPRISES, INC., Sharon C. Dixon, James Dixon, Crown Staffing, Inc., and Troy Keith Dixon, Appellants v. James A. ROBINSON, Appellee.
• Court: Texas Court of Appeals

390 S.W.3d 497

TRYCO ENTERPRISES, INC., Sharon C. Dixon, James Dixon, Crown Staffing, Inc., and Troy Keith Dixon, Appellants

v.James A. ROBINSON, Appellee.

No. 01–10–00710–CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Sept. 13, 2012.

Maryellen Shea, James Thomas McBride, David Garrett Tatem, Jackson Walker LLP, Houston, TX, for Appellants.

Reginald E. McKamie Sr., Law Office of Reginald E. McKamie Sr., PC, Houston, TX, for Appellee.

Panel consists of Justices KEYES, HIGLEY, and MASSENGALE.

OPINION

EVELYN V. KEYES, Justice.

This is an action brought by appellee, James A. Robinson, to enforce the judgment entered in his favor in Robinson v. Texas Workforce Commission and Tryco Enterprises, Inc., No. 2000–32376, in the 113th District Court of Harris County, Texas (“the FLSA suit”). Appellants, Tryco Enterprises, Inc. (“Tryco”), Sharon C. Dixon, James Dixon, Crown Staffing, Inc. (“Crown Staffing”), and Troy Keith Dixon, appeal the judgment of the trial court holding them jointly and severally liable for the amounts owed to Robinson by Tryco in the FLSA suit and permitting enforcement of that judgment against the assets of all appellants.

In three issues, appellants argue that the trial court erred: (1) in piercing the corporate veil when it held them jointly and severally liable for using the corporate form to avoid paying the judgment in the FLSA suit; (2) in admitting the prior testimony of a witness given in the trial of the FLSA suit without a showing that the witness was unavailable to testify; and (3) in holding Sharon and James Dixon personally liable for the previous judgment against Tryco in the FLSA suit under Texas Tax Code section 171.255.

We reverse the judgment of the trial court as to Troy Keith Dixon and render judgment that Robinson take nothing by his claims against him. We affirm the judgment as to Tryco, Sharon Dixon, James Dixon, and Crown Staffing.

Background

The Dixons owned and operated Tryco, a temporary staffing company, as their family business. Sharon and James Dixon served as vice president and president, respectively, of the company, and their son Troy worked there as an employee. From 1996 to 2000, Tryco employed Robinson as a van driver. In 2000, after leaving Tryco, Robinson sued Tryco in the FLSA suit. He alleged that Tryco and the Dixons had violated the Fair Labor Standards Act (“FLSA”) by failing to pay him substantial amounts of money for time worked in excess of forty hours per week and that the Dixons had fired him for refusing to return copies of travel logs that he had made to substantiate his claims. The regulatory scheme under which Robinson sued provides, in relevant part, that an employer who violates the provisions of the FLSA may be held accountable for such violations by an action for damages, attorney's fees, and costs in any federal or state court. See29 U.S.C.S. §§ 201–19 (LexisNexis 2010).

On August 13, 2003, after a trial on the merits of his FLSA claim, a jury returned a verdict in favor of Robinson.

Nine days later, on August 22, 2003, Tryco forfeited its corporate privileges for failure to pay its franchise tax.

On September 11, 2003, the trial court signed a judgment against Tryco on the verdict in the FLSA suit for statutory damages, including $58,349 for unpaid overtime wages, $58,349 for willful violation of the FLSA, $16,558.75 in attorney's fees, $457 in court costs, and $603 in expenses, for a total of $134,316.75, plus prejudgment interest of $30,853.06.

One year later, on September 10, 2004, Robinson sued appellants in this action to enforce the judgment in the FLSA suit, alleging that Tryco forfeited its corporate charter and fraudulently transferred its assets to avoid paying the judgment awarded to him. Robinson alleged that, prior to August 22, 2003—the date on which Tryco forfeited its corporate charter—Sharon and James Dixon transferred the employees and assets of Tryco to Crown Staffing, which they had also formed and for which they also served as vice president and president, “effectively leaving Tryco Enterprises Inc. as an empty shell and defrauding its creditors.” He contended that the Dixons' transfer of employees and assets from Tryco to Crown Staffing “was a fraud against the rights of James Robinson, Defendant Judgment Debtors creditor, because the transfer was made with the intent to hinder, delay, or defraud Plaintiff and similarly situated creditors.”

On March 23, 2006, the instant action was called to trial. During the ensuing bench trial, Robinson began to present evidence regarding piercing of Tryco's corporate veil. Appellants objected on grounds of lack of notice and surprise. The court ordered a sixty-day recess to allow Robinson to amend his pleadings to allege alter ego and piercing of the corporate veil.

In his second amended pleading, filed on March 27, 2006, Robinson asserted an alter ego theory of liability for the judgment in the FLSA suit, alleging that Tryco and its officers, the Dixons, organized and operated Crown Staffing, through their son Troy, as a mere tool or business conduit and that “James Dixon was the true owner/manager of both Tryco Enterprises, Inc. and Crown Staffing, Inc.” Robinson argued, alternatively, that Sharon and James Dixon organized and operated both Tryco and Crown Staffing as part of a single business enterprise and that James Dixon was the true owner/manager of both Tryco and Crown Staffing. Robinson asked that the trial court find James and Sharon Dixon individually liable “because they were officers of Defendant Tryco Enterprises, Inc. who forfeited corporate privileges on August 22, 2003 prior to the Judgment of September 11, 2003.” He stated that “[f]orfeiture of corporate privileges results in liability for corporate officers” under Tax Code section 171.255(a).

On September 27, 2006, trial of this action to enforce the judgment in the FLSA suit resumed. Prior to the taking of testimony, Robinson presented to the court the following exhibits: (1) the September 11, 2003 judgment in the FLSA suit and an abstract of that judgment dated January 4, 2004; (2) a Tryco business card for Birt Edison, which showed that Tryco was a “temporary help service” and that Edison was its Industrial Office Manager and which provided contact information for Tryco; (3) the tax forfeiture of Tryco's corporate privileges dated August 22, 2003, certifying that Tryco's managerial officers were James Dixon, VP, and Sharon C. Dixon, P/S/T; and (4) a determination of forfeiture of Tryco's corporate charter by the office of the Texas Secretary of State, dated August 22, 2003, stating that Tryco had forfeited its corporate privileges and had not revived them within 120 days, that the Comptroller of Public Accounts had determined that Tryco “does not have assets from which a judgment for any tax, penalty, or court costs imposed under Chapter 171 of the [Texas Tax] Code may be satisfied,” and that “[i]t is therefore ordered that [the] charter or certificate of authority of the referenced entity be forfeited without judicial ascertainment and that the proper entry be made upon the permanent files and records of such entity to show such forfeiture as of the date hereof.”

The judgment in the FLSA suit, the abstract of that judgment, and Edison's Tryco business card were offered and admitted into evidence without objection. Before the close of evidence, the trial court took judicial notice of Tryco's tax forfeiture and James and Sharon Dixon's status as managerial officers of Tryco.¹

As his first witness, Robinson called former Tryco and Crown Staffing manager Birthol Edison by reading into the record the testimony given by Edison in the FLSA suit. Appellants' counsel objected to the admission of this testimony as hearsay. Robinson's counsel replied that Edison was Tryco's corporate representative, that the same counsel had represented each of the parties in the FLSA suit, and that Edison had been subject to cross-examination in that proceeding; therefore, his testimony was admissible as an admission of a party opponent. Robinson's counsel also pointed out that Edison's testimony in the FLSA suit had been given in open court, and appellants' counsel agreed that Edison was Tryco's corporate representative in that proceeding. The trial court conditionally admitted the testimony subject to appellants' submitting briefing showing why Edison's testimony from the FLSA suit was not admissible. The court permitted Robinson to read the testimony into the record over appellants' general objection that it was hearsay, and it offered appellants' counsel the opportunity to make specific objections during the reading. Counsel made no further objections to the testimony and permitted the testimony to be read. Appellants' counsel did, however, object to Robinson's subsequent testimony on the same matters on the ground that Edison's testimony on that subject was already in evidence.

Edison testified that, prior to December 2001, he worked as a manager at Tryco, where his immediate supervisor was Stacy Wilson, one of Tryco's vice presidents. Wilson reported to Tryco's president, James Dixon. At the time of his testimony in the FLSA suit, Edison worked for Crown Staffing as its industrial manager. His immediate supervisor was still Wilson, then one of Crown Staffing's vice presidents. Wilson reported to Crown Staffing's president, James Dixon, who had also been Tryco's president. Edison also testified that Crown Staffing used the same telephone numbers and the same business location as Tryco and that, at Crown Staffing, he provided staffing for several of the same companies as he had at Tryco. At the close of Edison's testimony, Robinson's counsel pointed out that, at the time of the FLSA suit, Edison worked for Crown Staffing and that he testified as a representative of Crown Staffing as well as Tryco. Appellants' counsel did not object to the characterization of Edison as a representative of either Tryco or Crown...