Walker v. Anderson

• Decision Date: 29 August 2007
• Docket Number: No. 05-06-00025-CV.,05-06-00025-CV.
• Citation: 232 S.W.3d 899
• Parties: Richard B. WALKER, Appellant v. Thomas P. ANDERSON and Lynn C. Anderson, Appellees.
• Court: Texas Court of Appeals

232 S.W.3d 899

Richard B. WALKER, Appellant v. Thomas P. ANDERSON and Lynn C. Anderson, Appellees.

No. 05-06-00025-CV.

Court of Appeals of Texas, Dallas.

August 29, 2007.

Dan E. Martens, Law Office of Dan E. Martens, Plano, TX, for Appellant.

Steven E. Clark, Clark, Ashworth & Milby, Dallas, for Appellee.

Before Justices WRIGHT, RICHTER, and LANG.

OPINION

Opinion by Justice LANG.

Richard B. Walker appeals the trial court's judgment awarding Thomas P. Anderson and Lynn C. Anderson actual damages in the amount of $90,493 on their claims of fraudulent transfer pursuant to section 24.005(a)(1) of the Texas Uniform Fraudulent Transfer Act (TUFTA) and article 2.21, section A of the Texas Business Corporations Act.¹

Walker raises twenty-one issues on appeal that generally argue the trial court erred when it: (1) found and concluded he did not prove his affirmative defense of the statute of repose; (2) concluded he did not prove his affirmative defense of res judicata; (3) found and concluded he fraudulently transferred funds from Mitchell & Walker Enterprises, Inc. d/b/a Dick Walker Custom Homes (M & W); (4) concluded article 2.21, section A did not require the Andersons to pierce the corporate veil to hold him individually liable; and (5) concluded the Andersons should be awarded attorney's fees and costs.

We conclude the trial court did not err when it found and concluded Walker did not prove his affirmative defense of the statute of repose and concluded he did not prove his affirmative defense of res judicata. Also, we conclude the trial court did not err when it found and concluded Walker fraudulently transferred funds from M & W and concluded the Andersons need not pierce the corporate veil to hold Walker individually liable. Finally, we conclude the trial court did not err when it concluded the Andersons should be awarded attorney's fees and costs. The trial court's judgment is affirmed.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1988, Walker and Charles R. Mitchell formed M & W to construct homes. However, in 1989, Walker bought Mitchell's interest in M & W and became the sole shareholder and sole director for M & W.

During M & W's operation, Walker made shareholder loans to M & W because M & W had insufficient cash flow. These loans were not evidenced by promissory notes and there is nothing indicating the repayment terms. In 1988, Walker lent M & W $44,000 and in 1989, he lent M & W $181,339. In 1990, M & W made loan repayments to Walker totaling $33,207 and in 1991, M & W made loan repayments to Walker in the amount of $49,972. In 1992, Walker made another shareholder loan to M & W in the amount of $44,033.

In December of 1992, the Andersons entered into a contract with M & W to build a custom home on property located at 5412 Grassmere Drive, Plano, Texas. When the Andersons closed on their home in August of 1993, there were incomplete items and punchlist items, which M & W agreed to complete. M & W repaired some of the warranty items and completed some of the punchlist items, but not all.

In 1993, M & W made loan repayments to Walker in the amount of $57,336. Then, in 1994, M & W made additional loan repayments to Walker in the amount of $6,800 and again in 1995, in the amount of $22,500.

On April 3, 1995, the Andersons filed a small claims lawsuit against M & W alleging damages of $5,000 as a result of M & W's failure to complete the construction contract. See Anderson v. Dick Walker Custom Homes, No. CV-95-324 (Sm. Claims Ct., Precinct 3, Pl. 1, Collin County, Tex. Apr. 3, 1995). On October 31, 1995, the Andersons sued M & W for breach of contract, breach of warranty, and deceptive trade practices in county court. See Anderson v. Mitchell & Walker Enter., Inc., No. 1-577-95 (Co. Ct. at Law No. 4, Collin County, Tex. Oct. 31, 1995). Walker was not a party in either the small claims court or county court lawsuits. The small claims lawsuit was dismissed on December 11, 1995.

In 1996, Walker made an additional shareholder loan to M & W in the amount of $6,846. In 1997, M & W made repayment of the loans in the amount of $55,420. Then, in 1998, M & W made repayment of the loans to Walker in the amount of $50,983, which reduced the shareholder loans to zero, and paid Walker a dividend in the amount of $8,000.

On March 9, 1999, after Walker was deposed, the Andersons amended their lawsuit against M & W to include a claim for fraud based on misrepresentations and failure to disclose changes in material construction items, including an engineering variance. In 1998 and 1999, M & W paid Walker "unrecorded advances" totaling $31,500 against the profits or loans from M & W's revenues. In February of 1999, Walker incorporated Double Diamond Design. Walker was the sole shareholder and sole director. Although Double Diamond Design was originally established to develop condominium properties in Vail, Colorado, Walker used Double Diamond Design to construct residential homes and townhomes in the Austin and Dallas areas. Also, in mid-1999, Walker ceased doing business through M & W, although he did not file articles of dissolution. At this time, the Andersons' claims as alleged in their lawsuit were the largest outstanding claims against M & W.

The Andersons' suit against M & W was called to trial on June 5, 2000. M & W and its counsel failed to appear for trial. On June 6, 2000, the Andersons presented evidence of their claims and on June 12, 2000, the trial court entered a judgment in favor of the Andersons, awarding them $100,000 in actual damages on their fraud and breach of contract claims, $50,000 in punitive damages, and attorney's fees and costs. M & W appealed and the El Paso Court of Appeals affirmed the trial court's judgment. See Mitchell & Walker Enter., Inc. v. Anderson, No. 08-00-00412-CV, 2001 WL 522446 (Tex.App.-El Paso May 17, 2001, no pet.) (not designated for publication).

On September 18, 2001, the Andersons served post-judgment discovery requests on M & W. M & W did not respond. A writ of execution issued on the judgment, but was returned nulla bona, i.e., there was no sizable property within the jurisdiction and the judgment was not fulfilled. On June 18, 2002, the Andersons filed an application for turnover against M & W seeking the information previously sought in their post-judgment discovery requests. M & W opposed the Andersons' application for turnover. After a hearing, the trial court ordered M & W to produce the documents to the Andersons by December 13, 2002. The documents turned over by M & W revealed the shareholder loans made by Walker to M & W and the loan repayments made by M & W to Walker. On April 3, 2003, within four months of receiving the documents revealing the loans and loan repayments, the Andersons filed a lawsuit against Walker for fraudulent transfer in County Court at Law No. 4. On October 12, 2005, after a trial before the court, the trial court found in favor of the Andersons on their claims of fraudulent transfer pursuant to section 24.005(a)(1) of TUFTA and article 2.21 of the Texas Business Corporation Act. However, the trial court ordered that the Andersons take nothing on their claims for fraudulent transfer pursuant to sections 24.005(a)(2) and 24.006. The trial court awarded the Andersons actual damages in the amount of $90,483, and attorney's fees and costs. On January 6, 2006, the trial court issued its findings of fact and conclusions of law.

II. STANDARDS OF REVIEW

A. Findings of Fact

Findings of fact in a case tried to the court have the same force and effect as jury findings. See Pulley v. Milberger, 198 S.W.3d 418, 426 (Tex.App.-Dallas 2006, pet. denied). Unchallenged findings of fact are binding on an appellate court, unless the contrary is established as a matter of law or there is no evidence to support the finding. See McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986); Mullins v. Mullins, 202 S.W.3d 869, 874, 876-77 (Tex.App.-Dallas 2006, pet. denied). However, when an appellant challenges a trial court's findings of fact, an appellate court reviews those fact findings by the same standards it uses to review the sufficiency of the evidence to support a jury's findings. See Pulley, 198 S.W.3d at 426.

1. Legal Sufficiency

When an appellant attacks the legal sufficiency of an adverse finding on an issue for which he did not have the burden of proof, he must demonstrate there is no evidence to support the adverse finding. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983); Pulley, 198 S.W.3d at 426; Case Corp. v. Hi-Class Bus. Sys. of Am., Inc., 184 S.W.3d 760, 769 (Tex.App.-Dallas 2005, pet. denied). A legal sufficiency review of a no-evidence point must credit the favorable evidence if a reasonable fact-finder could and disregard the contrary evidence unless a reasonable fact-finder could not. See Kroger Tex. Ltd. v. Suberu, 216 S.W.3d 788, 793 (Tex.2006); City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex.2005); Pulley, 198 S.W.3d at 426. An appellate court will sustain a no-evidence point when: (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital fact. Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex.2003); Pulley, 198 S.W.3d at 426; see Wilson, 168 S.W.3d at 807.

Anything more than a scintilla of evidence is legally sufficient to support a trial court's finding. See Marathon, 106 S.W.3d at 727; Pulley, 198 S.W.3d at 426. However, a challenge to the legal sufficiency of the evidence will be sustained when the evidence offered to establish a vital fact does not exceed a scintilla. See Kroger, 216 S.W.3d at 793; Wilson, 168 S.W.3d at 810. Evidence does not exceed a scintilla if it is so weak as to do no more than create a mere...