NOS.: 04-14 -00824- CV 04 -15 -00006- CV

IN THE COURT OF APPEALS

FOR THE FOURTH DISTRICT OF TEXAS AT SAN ANTONIO

ROBERT TYSON, CARL AND KATHY TAYLOR, LINDA AND RON TETRICK, JIM AND NANCY WESCOTT, and PAUL AND RUTHE NILSON,

Appellants /Plaintiffs ,

- against

ROBERT N. FREEMAN II , DEMAR BOREN And LORENA Y E ATES, Husband and Wife, Appellees /Defendants

.

Appeal from the 19 8 th Judicial District Court Bandera County, Texas

BRIEF FOR APPELLANTS

CAROLE K. BOYD Attorney for Plaintiffs/Appellants 15751 Highway 16 North Medina, Texas 78055 (830) 589-7587 Fax: (830) 589-7598 E-mail: ckbesq@hctc.net SBN: 00786793 ORAL ARGUMENT REQUESTED ACCEPTED 04-14-00824-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 2/24/2015 12:40:54 AM KEITH HOTTLE CLERK2 IDENTITY OF PARTIES AND COUNSEL

Appellants/Plaintiffs Robert Tyson Carl and Kathy Taylor Linda and Ron Tetrick Jim and Nancy Wescott Pa ul and Ruthe Nilson Counsel for Appellants Carole K. Boyd 15751 Highway 16 North Medina, Texas 78055 Appellees/Defendants Robert N. Freeman, II Demar Boren Lorena Yeates Counsel for Appellees C. Dixon Mosty Mosty Law Firm 222 Sidn ey Baker South, Suite 400 Kerrville, Texas 78028 Counsel for Robert N. Freeman, II Stephen B. Schulte Stephen B. Schulte, P.C. Main Plaza One 820 Main Street, Suite 100 Kerrville, Texas 78028 Counsel for Demar Boren and Lorena Yeates3 TABLE OF CONTENTS

Page

IDENTITY OF PARTIES AND COUNSEL ........................................ 2

T A B L E O F C O N T E N T S

... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... . 3

I N D E X O F A U T H O R I T I E S

... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... . 4

STATEMENT OF THE CASE ......................................................... 5

S TATEMENT REGARDING ORAL ARGUMENT ................................. 6

ISSUES PRESENTED .................................................................. 6

STATEMENT OF FACTS ............................................................. 7

SUMMARY OF THE ARGUMENT ................................................... 8

ARGUMENT ............................................................................. 9

I. The District Court Erred in Rejecting All of Ap pellants Summary Judgment Evidence ......................................................... 9

II. The District Court Erred in Granting Summary Judgments to Appellees Prior to Completion of Integral Discovery .................. 1 1

III. The District Court Erred in Denying Appellants’ Motion for Op portunity to Remedy and Rehearing .................................. 1 3

IV. The District Court Erred in Granting Appellees’ Motions For Severance ............................................................... 1 4

CONCLUSION AND PRAYER ........................................................ 1 5

APPENDIX ( A l l d o c u m e n t s c o n t a i n e d i n C l e r k ’ s R e c o r d a n d R e p o r t e r s ’ R e c o r d s )4

INDEX OF AUTHORITIES

CASES: Dubois v. Harris County 866 S.W. 2d 787, 791 (Tex.App.

- Houston[14th Dist.], 1993

... ... ..... 9 McConathy v. McConathy 869 S.W.2d, 341 (1994)

... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 1 0 , 1 3 Deerfield Land Joint Venture v. Southern Union Realty Co. 758 S.W.2d 608 (Tex.

- App.

– Dallas 1968, writ denied)

... ... ... ... ... 1 0 Perry v. Houston Independent School District 902 S.W.2d 544 (Tex. App.

- Houston, 1995)

... ... ... ... ... ... ... ... ... .. 1 0 Kingston v. Helm 82 S.W.3d 755 (Tex. App.

- Corpus Christi 2002)

... ... ... ... ... ... ...... 1 1 Leyendecker & Associ ates v. Wechter 683 S.W.2d 369, 375 (Tex. 1984)

... ... ... ... ... ... ... ... ... ... ... ... ... .. 1 1 McInnis v. Mallia 261 S.W. 3d 197, 200 (Tex. App.

- Houston [14th Dist.] 2008

... ... .... 1 1 Madison v. Williamson 241 S.W. 3d 145, 155 (Tex.App.

- Houston [1s Dist.] 2007, pet. denied 1 2 Garcia v. Ma r tinez 988 S.W. 2d 219, 222 (Tex. 1999)

... ... ... ... ... ... ... ... ... ... ... ... ... ... 1 2

. OAIC Commercial Assets, L.L.C. v. St onegate Vil., L.P. 234 S.W.3d 726, 747 (Tex. App.

- Dallas 2007, pet. filed)

... ... ... ... ... 1 3 Lynette Miller v. Barry Keyser 90 S.W. 3d 712 ( Tex. 2002 )

... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ..... 1 3 Castleberry v. Branscum et al

. 721 S.W.2d 270 (Tex.1986 )

... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ..... 1 3 M o r ris v. Northrop Grumman Corp. 37 F.Supp.2d 556,580 (E.D.N.Y. 1999)

... ... ... ... ... ... ... ... ... ... ... ... 1 4 State Dep't of Highways & Pub. Transp. v. Cotner 845 S.W.2d 818, 819 (Tex. 1993)

... ... ... ... ... ... ... ... ... ... ... ... ... .... 1 4

RULES: Texas Rules of Civil Procedure, Rule 166(a)(i)

... ... ... ... ... ... ... ... ... ... ... .... 1 1 Texas Rules of Civil Procedure, Rule 166(a)(f)

... ... ... ... ... ... ... ... ... ... ... .... 1 35

TO THE HNORABLE FOURTH COURT OF APPEALS:

Statement of the Case Nature of the case Plaintiffs were life

- time lease holders in a senior citizen retirement

Community original ly called “Las Aves Retreat” a nd later, under new ownership, “El Viaje.” CR 38. The leases were issued to Plaintiffs by Demar Boren and Lorena Yeates, husband and wife managers at the premises, under the authority of Robert N. Freeman, II, attorney, manager and a p rior owner of Medina Livestock Sales Company, LTD. CR 38, 39. The new owners, through Bankruptcy Court, had the leases declared unenforceable and, under Texas law, deemed to be tenancies at will. CR 40, 293

- 316. The P laintiffs were issued letters of te rmination of their leases and had to vacate the premises or fac e eviction. CR 42, 318. Suit below is for violation of the DTPA, Common Law Fraud, Statutory Fraud, Fraudulent Inducement, Negligent Misrepresentation, Negligence and Gross Negligence against individuals and the entity Medina Livestock Sales Company, LTD. CR 36, Tab 10.

Trial Court 198 th Judicial District Court, Bandera County

Hon. Rex Emerson

Trial Court’s Disposition Plaintiffs’ summary judgment evidence was excluded (CR 328

-

331, Tab 26) , summary judgment granted to all individual

D efendants ( CR 448 (Tab 30; CR 449, Tab 31) and6 individuals Defendants’ /Appellees’ motions for severance were granted. CR 490, Tab 40; CR 494,495. Plaintiff s’/Appellants motion for Remedy and Rehearing was denied. CR 491, Tab 41.

Statement Regarding Oral Argument Because of the several rulings, individual defendants motions having been brought simultaneously but Orders being issued at different times, and the confusion that has surrounding the identification of Appellees in this matter, as well as other administrative issues which hopefully will be resolved shortly, it is felt for the Court to have these matters clarified and put into time sequence, an d to craft an opinion that is consistent with the issues and facts, oral argument would be appropriate and helpful. The issues here are important ones, worthy of the Court’s full consideration. The District Court’s Orders denying summary judgment evidenc e, denying re

- hearing and granting severance in a case where clearly the case law and Rules dictate otherwise is erroneous and should be corrected in the administration of justice.

Issues Presented

1. Did the District Court err in rejecting Plaintiffs’ S ummary Judgment evidence?

2. Did the District Court err in granting Summary Judgment to all individual Defendants before completion of discovery?

3. Did the District Court err in denying Plaintiffs’ Motion for Opportunity to Remedy and for Rehearing?

4. Did the District Court err in granting sev erance of individual Defendants?7 Statement of Facts Appellants’ First Amended Petition alleges that Appellants were life

- time leasees of premises which they leased in a senior citizen community located in Medina, T exas, then known as Las Aves Retreat, paying on average a lump sum of $25,000 per lot. On the lot the Appellants were able to place a park model home, sheds, decks, or simply park a motor home there. Each lot had utilities and became a permanent residenc e for Appellants who were elderly veterans on social security incomes. Maintenance fees were fixed at $500/year which enabled Appellants to know what their retirement expenses would be to a great extent, for the remainder of their lives. CR 38

- 40, Tab 10

. Demar Boren and Lorena Yeates (hereinafter “Boren and Yeates”) , husband and wife, were the initial management team for the premises , hired by and under the supervision and authority of Robert N. Freeman, II (hereinafter “Freeman”.) Boren and

Yeates ma rketed the lots and sold to the Appellants the lifetime leases on behalf of Freeman and his company and at his direction, assuring Appellants that they were legal and binding. CR 39, 42 (Tab 10). Freeman was represented to Appellants as a real estate

att orney from Laredo, and as owner of the premises. Appellants did not have legal representation when they signed the lease agreements, but felt assured of the legality of the documents since they knew Freeman to be a real estate attorney

. Freeman visited t he property from time to time and met with some of the Appellants. CR 43

- 48, Tab 10. Eventually, in or about 2008, Robert Freeman effected a sale of the premises to an entity known as El Viaje Retreat, LLC, owned and operated by Susan Venus and Anne

Blank enship, taking back a purchase money mortgage. CR 39

- 40, Tab 10. He then8

transferred title of the premises from Medina Livestock Sales, Company, LTD to Listo Corporation, another of his entities. In September 2012 the new owners filed for bankruptcy in order to try to avoid the leases of Appellants and others who held lifetime leases at El Viaje. In July 2013 Judge Craig A. Gargotta held that the lifetime leases of Appellants and other residents of the retreat were not legal in Texas, but were deemed to be tenancies at will and could be rejected and terminated . CR 292

- 317, Tab 23. Shortly thereafter, the Appellants were given written notice that their leases were terminated. CR 318, Tab 23. Appellants lost their life’s savings as they could not ge t their investments back on their homes that they had established over the years and found themselves forced to move from the retreat , losing their investments and sustaining substantial damages. CR 42

- 48, Tab 10. Appellants brought the instant litigatio n alleging violation of the Deceptive Trade Practices Act, and for Common Law Fraud, Statutory Fraud, Fraudulent Inducement, Negligent Misrepresentation, Negligence, and Gross Negligence. CR Tab 10

Summary of the Argument Attorneys for individual Appel lees both moved for summary judgment in District Court, and moved to have Appellants’ summary judgment evidence excluded. Argument was made by the attorney for Freeman, Dixon Mosty, that excerpts from deposition transcripts were not authenticated and thus could not be summary judgment evidence. He also objected to a Bankruptcy Court transcript and resultant Order, and an unauthenticated letter from the attorney for the Debtor in Bankruptcy (the subsequent owner of the premises then known as El Viaje Retre at, LLC) to residents at El Viaje Retreat, including Appellants.9 The Court, having heard argument from Mr. Mosty, having reviewed his submission which was handed to the court and counsel at the start of the hearing, and taking into account the case be ing cited by Mr. Mosty upon which his argument was based, rejected Appellants’ evidence and thus granted summary judgments to all individual plaintiffs. The case relied upon by Mr. Mosty was a 199 3 Court of Appeals case. In January

199 4 the Texas Supre me Court, taking up the same issue, found authentication unnecessary. Appellants then moved for an opportunity to cure (the unauthenticated letter, a form defect) and re

- hearing on having all evidence exclude. Appellants’ motion was wrongfully denied.

I ndividual defendants, at the same hearing, had moved for severance; their motions were wrongfully granted. Appellants underlying matter was thus eviscerated, as it was the individuals who have, pursuant to case law, the liability, and who also have the means to compensate Appellants for the resultant damages at the hands of these individuals.

Argument

1. The District Court Erred in Rejecting all of Appellants’ Summary Judgment Evidence. The District Court ruled that all of Appellants’ Summary Judgment Evidence should be rejected, presumably pursuant to Appellees’ argument. No explanation was offered by the Court. By doing so, Appellants had virtually no means of opposing the summary judgments. The argument of counsel for Freeman, C. Dixon Mosty, wa s based upon the

case of Dubois v. Harris County, 866 S.W. 2d 787, 791 (Tex .App.

- Houston[14 th Dist.], 1993.) which found unauthenticated excerpts from transcript to be inadmissible as10

evidence for summary judgment proofs. In January, only a month after that decision, the Supreme Court of Texas, in McConathy v. McConathy, 869 S.W.2d, 341 (1994) held otherwise, overturning the underlying case of Deerfield Land Joint Venture v. Southern Union Realty Co., 758 S.W.2d 608 (Tex.

- App.

– Dallas 1968, writ denied) relied upon by

Dubois. Thus, Appellees cited bad law and the District Court, without comment or explanation , ruled against Appellants and dismissed all of their evidence. RR (Paula Beaver) 10. Counsel for Appellees also argued that Appellants could no t use their own answers to discovery as summary judgment evidence. However, a non

- movant may use a movant’s own exhibit against the movant to establish the existence of a fact question. Perry v. Houston Independent School District, 902 S.W.2d 544 (Tex. A pp.

- Houston, 1995). Appellants had argued that they believed the corporate entity and Freeman to be

one and the same. Anything argued by counsel for Appellants after their Summary Judgment evidence was excluded, though, was not able to be considered (Ru le 166a[i]). There were issues raised by Appellees’ counsel contesting individual liability and statute of limitations. These issues were heard by the Judge, but no response by Plaintiffs/Appellants’ counsel could be considered, and there were valid and important responses to be considered. Although counsel attempted to address the issue of statute of limitations, because the Appellants’ evidence was not considered, it remained to be proven that Plaintiffs/Appellants only knew of the illegality of their leases when the Bankruptcy Judge opined that they were not enforceable leases in Texas, but rather tenancies at will and that they could be terminated and were unenforceable. This came about well within the statute for Plaintiffs’ time frame to bring suit . Likewise, there was case law stating that individuals had liability whether they knew or not that what they11

were promoting was illegal. I t i s w e l l e s t a b l i s h e d i n T e x a s c a s e l a w t h a t a c o rp o r a t e

a g e n t c a n b e p e r s o n a l l y l i a b l e f o r t o r t i o u s a c t s w h i c h h e d i r e c t s o r p a r t i c i p a t e s i n d u r i n g

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. This was not able to be introduced or considered as Plaintiffs/Appellants had no admissible evidence,

and without su ch, Summary Judgments had to be granted against them. Defendants/Appellees motions, also, were defective in that they were not specifically address or labeled as No

- Evidence Motions. Plaintiffs/Appellants therefore

had no notice of what their burden of proof was on going into the hearing, and assumed that they were traditional motions for Summary Judgment. The Court, though, treated

them as No

- Evidence Motions. This was an additional factor in the devastating effect of excluding Plaintiffs/Appellants’ evidence.

2. The District Court Erred in Granting Summary Judgments to Appelle e s prior to Completion of Integral Discovery. Appellants, both in their opposition papers and in open Court, stated that Summary Judgment was not ripe because the deposition of Freeman, a critical event to this matter, had not yet been taken. CR 289, 290; RR (Paula Beaver) 16

- 18. Appellants did not request a continuance because of reliance upon case law and Rules which denote when summary judgment is appropriate. Texas Rules o f Civil Procedure, Rule 166(a)(i) allows for a summary judgment motion to be made after “adequate time for discovery.” According to the comment to Rule 166(a)(i), “a discovery period set by pretrial order should be adequate opportunity for discovery unles s there is a showing to the contrary, and ordinarily a motion under paragraph (i) would be permitted after the period but not

before.” McInnis v. Mallia, 261 S.W. 3d 197, 200 (Tex. App.

- Houston [14 th Dist.] 2008,12

no pet. The trial court’s determination t hat there has been adequate time for discovery is reviewed above for abuse of discretion. In the instant matter, there was no statement whatsoever from the District Court as to whether summary judgment was ripe because of adequate time for discovery havin g been had. A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner ‘‘without reference to any guiding rules or principles.” Madison v. Williamson, 241 S.W. 3d 145, 155 (Tex.App.

- Houston [1s Dist.] 2007, pet. denied (quotin g Garcia v. Ma r tinez, 988 S.W. 2d 219, 222 (Tex. 1999). When Summary Judgment motions were made, Summary Judgment relief was not appropriate; the discovery period had not run, and the deposition of Freeman was of upmost importance to the determination of his liability and authority of his management. Until these issues were clarified, it was impossible to determine which individual defendants/Appellees might have liability, and to what extent. Additionally, when depositions of Boren and Yeates where soug ht by counsel for Appellants, a motion was made to quash. CR 81

- 90, Tag 19. Those depositions were sought prior to taking the deposition of Freeman for strategic purposes, and the refusal for compliance with agreed upon dates was based upon the statement by counsel that they would be a waste of time. All other written discovery had been taken. When Appellants finally set a date when no response came from Appellees as to a date, all individuals made a motion to quash. When the Court asked if Appellants had requested a continuance by motion , it was answered that, there was no formal request for a continuance in opposition papers, but it was stressed that discovery was not complete and Summary Judgment, therefore, was not ripe as there were facts in dispute t hat required the deposition of Freeman

. RR (Paula Beaver)

16

- 28. In any event, no continuance was granted, and there was no factual determination13

or further discussion by the Court as to why Summary Judgment would be granted notwithstanding incomplete di scovery. 3. The District Court Erred in Denying Appellants’ Motion for Opportunity to Remedy and Rehearing. By having rejected Appellants’ Summary Judgment evidence in its entirety, the District Court had no evidence before it in opposition to the Summary J udgment motions brought by the individual defendants. However, the Court had an opportunity upon the return date of Appellants’ motion for Remedy and Rehearing to correct their mistake of law, and allow Appellants a rehearing on the Appellees’ motions. O AIC Commercial Assets, L.L.C. v. Stonegate Vil., L.P., 234 S.W.3d 726, 747 (Tex. App.

- Dallas 2007, pet. filed) (“The sole purpose of a motion for rehearing is to provide the court an opportunity to correct any errors on issues already presented.”) At tha t time, Appellants made the court aware of case law evidencing the fact that Appellants’ Summary Judgment

evidence was admissible (RR 4

- 5: McConathy v. McConathy , 869 S.W.2d 341 [Tex. 1994]) , as well as case law whereby Appellants had viable claims again st individual defendants for liability (RR 12: Lynette Miller v. Barry Keyser, 90 S.W. 3d 712 [Tex. 2002]) See also Castleberry v. Branscum et al ., 721 S.W.2d 270 (Tex.1986.) . In other words, Appellants’ desire for a rehearing was not rhetorical in natu re, but a valid

assertion that the individual defendants must remain in the case in chief. T h e C o u r t a l s o

h a d t h e o p p o r t u n i t y t o a l l o w A p p e l l a n t s t o r e m e d y a n y d e f e c t s o f f o r m

. T R C P 1 6 6 ( a ) ( f

)

. The District Court Judge stated in Court on the motion that he had review ed the transcript of Lorena Yeats and that his holding still stood as previously Ordered. The Judge did not state that he reviewed any other of the evidence submitted by Appellants which was previously rejected, or give any rationale for his holding.14 The mistake of law upon which Appellants’ evidence was excluded not only

denied Appellants the ability to defen d the Summary Judgment motions, but highly prejudiced the outcome of their subsequent motion for rehearing and remedy. The District Court seemingly was not going to change its ruling no matter what evidence was

then set forth before i t by Appellants. This amounted to a continued abuse of discretion by the District Court in disregard of case law, Rules and procedure. Appellants should have been granted a rehearing as counsel for Freeman’s admission that there was subsequent case law w hich invalidated his own submission of case law was clearly the deciding element in the Court’s holdings on Summary Judgment and on that basis alone a rehearing should have been granted.

4. The District Court Erred in Granting Appellees’ Motions for Severan ce. Severance should only be granted if it will further the administration of justice

. “Relevant considerations in determining whether to sever a party or claim may include 1) whether the claims arise out of the same transaction or occurrence; 2)

whether the claims present common questions of law or fact; 3) whether judicial economy would be served; 4) whether prejudice could be avoided through severance; and 5) whether the separate claims require different witnesses and documentary proof.” Morris v. Northrop Grumman Corp., 37 F.Supp.2d 556,580 (E.D.N.Y. 1999). A claim may be properly severed only if: (1) the controversy involves more than one cause of action, (2) the severed claim is one that would be proper if independently asserted, and (3) the se vered claim is not so interwoven with the remaining action that they involve the same facts and issues. State Dep't of Highways & Pub. Transp. v. Cotner, 845 S.W.2d 818, 819 (Tex. 1993). In this case the severance of the claims15

against the individual defe ndants were not only inextricably interwoven with the remaining action, but could not stand along, as all individuals were agents of the corporate entity. The severance was only to make the summary judgments in favor of

the individuals instantly appealabl e and to divide the litigation into three separate actions. In doing so, as was well known to opposing counsel and the Court, it placed

an insurmountable financial burden on Appellants. Appellees are fully aware that Appellants have lost their life’s sav ings over this situation and have a financial hardship which precludes such expenditures. Appellants are seeking justice on a

v irtual shoestring, and to have multiple c ases to be appealed at once would be financially impossible for them. Appellants have alleged serious damages at the hands these individual defendants which, by law, are compensable. However, if the Court makes it untenable for them to proceed, then justice would go out the window, and that is not the intention of the Rules, the law, or th is judicial system. There was no compelling reason for severance except to create a hardship for Appellants,

severance was an abuse of discretion, and should not have been granted. Conclusion and Prayer For these reasons, Appellants request that thi s Court reverse the District Court’s Orders granting Appellee’s motions for Summary Judgment and for Severance and specifically Deny Appellees Summary Judgment and Severance Motions. In the alternative, if the Court does not specifically Deny these motio n, Appellants request that this Court reverse the District Court’s Order Denying Appellants’ Motion for Remedy and Rehearing, and allow Appellants an opportunity to amend their evidence16

and for a rehearing on the Summary Judgment motions. Appellants also request all other relief to which they may show themselves justly entitled. February 24, 2015 Respectfully Submitted,

/ S / Carole K. Boyd S tate Bar Number: 00786793 15751 Highway 16 North Medina, Texas 78055 (830) 589

- 7587 Fax: (830) 589

- 7598 ATTORNEY FOR APPELLANTS

CERTIFICATE OF SERVICE I certify that on February 24, 2015 the within Brief for Appellants was served upon opposing counsel by e

- filing and email as follows: C. Dixon Mosty Mosty Law Firm Emai l: cdmosty@mostylaw.com Stephen B. Schulte Stephen B. Schulte PC Email: sschulte@schultepc.com

/ S / C a r o l e K

. B o y d