### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-14-00116- CV

Steve K ey; P at Curr y; P JC P ropert ies, L.L.C.; and P JC Centr al Texas F reight Lines, L.L.C., App ellants

v. Daniel R. Richards, as Rece iver for Ce ntex F reight Lines, L.L.C. an d

P rudence Adam s, Appellees

F ROM TH E CO UNTY COURT AT LAW NO . 1 O F TRAVIS CO UNTY, NO. C-1 -CV- 12- 0001 59, H ONO RAB LE J. DAVID P HI LLIP S, JUDGE P RESIDING

M E M O R A N D U M O P I N I O N

St e v e K e y , Pat Curry , PJ C Properties, L .L .C. (PJ C Properties), a n d PJC Ce n tr a l T e xa s Fr eig ht L ines, L .L .C. (PJ C Centex ), appe al the trial c ourt’s final judg ment awa rding damag es and equitable relief on appellee s’ fra udulent-transf

er and veil-pierc ing claims. Appellants arg ue that the trial court improperly applied the veil-pierc ing doctrine to impose individual liability on Key and Curry , that the evidenc e wa s insufficient to support the jury ’s fra udulent-transf

er f inding, a nd that appellee s’ claims wer e barr ed by the applicable statute of limit ations. We will aff irm the judgme nt. After unsucce ssful attempts to collect on a judgme nt that she o b t ai ned ag ainst
Centex Fr eig ht L ines, L .L .C. (Centex) in a lawsuit allegin g s ex ual hara ssment and reta liatory discharg e, Prudence Adams and court-a ppointed rec eiver for Centex, Daniel R. Richards, filed this lawsuit alleg ing appellants’ fra udulent transfe r of Centex’s assets to its owner s’ alter- eg o company ,PJ C Properties, fo r the unlawful purpose of evading pay ment of the judgme nt. The challeng ed 1

t ra n s action was a foreclosure and sale of C entex’s assets t o PJ C Properties after default on a lo an purportedly secur ed by all of Centex’s assets. The jury found that the asset transfe r was fra udulent under the Uniform Fr audulent Transf er Act (UF TA) beca

use PJ C Prop erties did not have an enfor cea ble s ec urity interest in the assets and that, there fore , Centex did not rec eive “re asonably equivalent value” in exchang e for the assets. See Tex. Bus. & Com. Code § 24.006(a)

. The jury also found that Key , Curry , and PJ C Properties we re “responsible” for the unfair conduct of Centex,
PJ C Properties, and PJ C Centex and that holding only Centex responsible for liability on the Adams judgme nt would result in injusti ce. Acc ording ly , the trial court awa rded Adams damag es in the full
amount of her prior judgme nt jointly and seve rally ag ainst Key , Curry , and PJ C Properties as well

as attorney ’s fee s and awa rded the rec eiver possession and title of all assets owned or held by Centex as of the date of

the Adams judg ment.

Fraudu lent-trans

fer f indin g Appellants contend that there was leg ally and fac tually insufficie nt evidenc e to support th e j u ry ’s findi ng in Question 1 that the t ransf er of Centex’s assets t o PJ C Properties was
fr audulent as t o Adams. Specifica lly , they complain t hat t he evidence was i nsufficie nt to support the nece ssary finding that PJ C Properties did not have a n enfor cea

ble sec urity

interest in Ce ntex’s
assets. See id. Appellants arg ue that appellee s’ claim about the secur ity interest was based mere ly
Curry owns 99% of P J C Properties, and Key owns the rema ining 1%. PJ C Properties 1 wholly owns PJ C Centex. Acc ording to its company ag ree ment and I RS rec ords, Centex (no longe r an active entity ) was wholly owned by Walkabout Transpor tation, L L C, which, in turn, was wholly owned by Curry (althoug h Key testified in his deposition that Walkabout w as owned 41% by Key , 49% by PJ C Properties, and 10% by an individual not party

to this sui t). 2on suspicion rathe r than evidenc e, based on attempts at trial to char acte rize the “primar y evidenc e” (in the form of a signe d promissory note, dated befor e the Adams judgme nt, in which Centex g ave PJ C Properties a se curity

interest in its assets) as a sham document that ha d been ba ckdate d. After revie wing the rec ord, we conclude that there was sufficie nt evidenc e to support the jury ’s finding

. Evidence at trial included the following : response s to post-judgme nt discovery afte r the fir st trial in which Key stated that there was no prope rty of Centex that had been pledg ed

as secur ity for a debt and no documents ref err in g t o an y liabiliti es of Centex or assets secur ing

an y d ebts ; two UCC financ ing statements noting a purported secur ity interest in cer tain t ru ck s and in all of Centex’s proper ty that wer e filed, respe ctively , just b ef o re the initial lawsuit and the day afte r the jury rea ched its verdic t in the first lawsuit; Key ’s testimony in his May , 2011 deposition that the only documents of which he was awa re o r h ad ever seen identify ing PJ C Properties as a

secur ed lender wer e the two financ ing statements; the inabili ty of L y nn Maxwell and Curry , the 2

t wo i n d i v iduals who maintain business rec ords of PJ C Properties, to produce a promissory not e

o r s ecurity ag ree ment or to identify their exis tence or location during their depositions; and inconsistency betwee n the terms of the promissory note that appellants eventua lly produce d (date d 2007) re quiring annual pa y ments and Key ’s deposition te stimony indicating that the loan re quired monthly pay

ments. The jury was fre e to believe evidenc e such as this, disbeliev e t ri al testimony and documentary evidenc e to the contrary , and conc lude that the purpor ted s ecur ity interest was a sham. See City of Keller v. W ilson , 168 S.W .3d 802, 807, 827-28 (Tex. 2005) (in leg al-suff iciency

The fi n ancing statements could not have cre ated a secur ity interest beca use they are not 2 signe d by the debtor a s require d by the UCC. See Tex. Bus. & Com. Code § 9.203(b)(3)( A).

3revie w, we must view evidenc e in light most favor able to verdic t, cre diting favor able ev i d en ce i f

rea sonable jurors could, and disreg arding contra ry ev i d en ce unless rea sonable jurors could not);
Cain v. Bain , 709 S.W .2d 175, 176 (Tex

. 1 9 8 6 ) (i n fac tual-suffic iency revie w, we may set aside verdic t only if evidenc e that supports jury finding is so wea k as to be clea rly wrong and manifestly unjust). We overrule a

ppellants’ third issue.
Piercing the corporate ve il

Appellants also arg ue that the trial court improperly pierc ed the cor p o rate veil to impose individual liability ag ainst Key and Curry

. We beg in our discussion of this issue by noting the longsta

nding common law in Texas rec og nizi ng that courts may disreg ard the corpor ate structure and hold a corpor ate ag ent responsible for corpor ate l i ab i lities “whe n the corpor ate form has b ee n u s ed as part of a basica lly unfair device to achie ve an inequitable result.” SSP Partners v. Gladstrong Inve

stments ( USA) Corp. , 275 S.W .3d 444, 454 (Tex. 2008) (noting that Texas law has long permitted corp o rate structure to be disreg arde d on showing of constructive fra ud, citing Castleberry v. Branscum , 721 S.W .2d 270, 271-72 (Tex. 1986), and that leg islature’s amendments
to former Business Corporations Act bega n requiring actua l fra ud to disreg ard structure for

co rporation’s contra ctual obliga tions); see also Shook v. W alden , 368 S.W .3d 604, 614 (Tex. App.—Austin 2012, pet. denied) (noting that “Te x as courts

. . . have uniformly held (or at least assumed) that an L L C’s veil could be pier ce d u n d er extra-statutory equitable principles, althoug h the Texas Supreme Court has y et to definitively addre ss that question”); McCarthy v. W ani Venture, A.S. , 251 S.W .3d 573, 590 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (noting that, despite
L L C statute providing that members are not individually liable for obliga tions of L L C, “Te x as courts

4and other jurisdictions

. . . have applied to L L Cs the same state law principles for pi er ci n g the

corpor ate ve il that they

have a pplied to corporations.”). Secondly , we note the well-e stablished rule i n T ex as that—independe ntly of the equitable doctrine of veil-pierc ing—a n entity ’s ag ent is pe rsonally liable for his ow n fra udulent or tortious acts. See M

iller v. K eyse r , 90 S.W .3d 712, 717 (Tex. 2002); Leyende cke r & Assocs., Inc

. v. W echte r , 683 S.W .2d 369, 375 (Tex. 1984); JJJ J W alker, L LC v. Y

ollick , 447 S.W .3d 453, 470 (Tex. App.—Houston [14t h Dist.] 2014, pet

. filed); Sanchez v. Mulvane y , 274 S.W .3d 708, 712 (Tex. App.—San Antonio 2008, no pet.). Thus, the corpor ate veil “is not require d to be pierc ed” in

an action seeking to hold a corpor ate ag ent individually liable for his tortious or fra udulent acts. Sanchez , 274 S.W .3d at 712 (dra wing distinction betwee n contra ct claims, for which plaintiff may pierc e L L C’s veil upo n showing of actua l fra ud, and tort claims, for which L L C member is individually liable for own tortious acts); see als o Shook , 368 S.W .3d at 621 (noting that case law and leg islature have long rec og nized distinction “b et we en the perc eived rela tive equities of veil-pierc ing claimants who are asser ting tort theories of rec overy versus those suing in contra ct”)

. Her e, the rele vant jury quest i o n s an d instructions (Que stions 2 and 3) inquiring whether appellants wer e “re sponsibl e” for the conduct of PJ C Properties and Centex define d
“re sponsible” as, among other illust rations, “tra nsfer r[ing] the assets

. . . to avoid a judgme nt or debt” or “us[ing] the entity as a means of evading an exis ting leg al obliga tion.” We conclude that 3

Questions 2 and 3, respe ctively , inquired whether eac h Curry and Key wer e “re sponsible 3 for [C entex L L C, PJ C Properties, or PJ C Centex’s] conduct” and provided a separ ate “y es” or “no” answe r line with respe ct to eac h entity

. The instructions provided the following definitions of being “re sponsible” for a

n entity ’s conduc t:

5the jury ’s aff irmative finding in Question 1 that a fra udulent transfe r o cc urre d, combined with an

a f f ir ma ti v e f in d in g to Q u e s ti o n s 2 a

n d 3 f in d in g K e y a

n d Cu r r y r e s p o n s ib le f

o r s u c h to r

ti o u s c o n d

u c t, support imposing individual liability on Key and Curry

. See W alker v. Anderson , 232 S.W .3d 899,
918 (Tex. App.— Da l l as 2007, no pet.) (fr audulent transfe r of assets is tort); In re Texas Am. Express, Inc. , 190 S.W .3d 720, 725 (Tex. App.—Dallas 2005, orig

. proce eding ) (same)

. Whil e the instructions in Questions 2 and 3 trac ked lang uag e in veil-pierc ing case law, see , e.g. , SSP Partners , 275 S.W .3d at 451, it was not nece ssary for the trial court to employ the equitable doctrine to impose individual liability on Key and Curry in light of the jury ’s finding s and on this rec ord; Ke y and
C u rr y ar e i ndividually liable for their own tortious conduct in participa ting in and direc ting the
wrong doing. See W

alker , 232 S.W .3d at 918. 4
[Defenda nt] used the entity as a sham to perpe trate a fra ud, and holding only the entity responsible would re sult in i njustice, or [Defenda nt] used the entity as a means of e vading an existi ng leg al obliga tion, and holding only

the entity responsible would re sult in i njustice, or [Defenda nt] used the entity as a means of circ umventing a statute, and holding only the entity responsible would re sult in i njustice, or [Defenda nt] used the entity to protec t a crime or to justify a wrong , and holding only the entity responsible would re sult in i njustice, or [Defenda nt] transfe rre d the assets of Centex Fr eig ht L ines, L L C to PJ C Ce n tr a l Texas Fr eig ht L ines, L L C to avoid a judgme nt o r d eb t and holding only Centex Fr eig ht L ines, L L C, PJ C Properties, L L C o r P J C Central Texas Fr eig ht L ines, L L C responsible would re sult in i njustice. We acknow ledg e that the leg islature has broadly insulated L L C members from liability for 4 an L L C’s obliga tions, see Tex. Bus. Org s. Code § 101.114 (“Except as and to the extent the company ag ree ment specific ally provides otherwise, a member or manag er is not liable for a debt, obliga tion, or liability of a limit ed liability company , including a debt, obliga tion, or liability under a judgme nt, decr ee, or order of a court.” ); howeve r, without clea r direc tion from the Supreme Court holding that 6I n this same iss u e , a p p e ll a n ts c o mp la in a

b o u t th e ju r y c h a rg e’s “insuffic ient g uidance ”

on the issue of veil-pierc ing in Questions 2 and 3, arg uing that eac h question (a) err oneously listed all three of the entities involved in this lawsuit (Cent ex , PJ C Properties, and PJ C Centex) when asking whether Key and Curry wer e “re sponsible” for the entities’ conduct and (b) improperly define d what “re sponsible for the conduct” means by taking a “kitchen s i n k” approa ch in listi ng

sever al i mproper theories of veil-piercing

. Wit h respe ct t o eac h challeng ed question’s containing multipl e entities in asking whethe r d ef en d ants wer e responsible for their respe ctive conduct, appellants did not specific ally object to the instructions o n t his basis and have, there fore , waived
any alleg ed er

ror. See Tex. R. App. P . 33.1; Tex. R . Civ. P . 274. Wit h respe ct to the instructions’ alleg edly impr o p er “k itchen sink” definition of
“re sponsible conduct,” we conclude that the trial court did not abuse its discretion, both beca use of

our conclusion that application of the veil-pierc ing doctrine was not nece ssary to impose individual liability on appellants and beca use, i n any case , the definiti ons wer e supported b y ap p l icable case law. See Texas Dep’ t of

Human Servs. v. E.B. , 802 S.W .2d 647, 649 (Tex. 1990) (op. on reh’ g ) (jury char g e is revie wed for abuse of discretion, which occur s only if trial court acts without ref ere nce to
any g uiding principles); Connell Chevrolet Co., Inc. v. Leak , 967 S.W .2d 88 8 , 894 (Tex. App.—Austin 1998, no pet.) (“I f the char g e resolves the controlling issues raised by the pleading s and any evidenc e in a fea sible manner that does not confuse the jury , no err or occur s.”). The court’s instructions wer e derive d from applicable case law an d ar e ac cura te statements of the law. See

the l eg islature has there by abrog ated longstanding common law re cog nizi ng that corpor ate ag ents are liable for their own t ortious conduct and may even be l iable for an entity ’s l iabilities based on the equitable principles of veil p i er ci n g, we ref use to hold that section 101.114 shields Key and Curry from their tortious fr audulent tra nsfer under the circ umstances in this case

. 7SSP Partners , 2 7 5 S

. W .3d at 451 (citing Castleberry for first four examples court provided in

instructions of circ umstances under which veil-pierc ing may be justified); Noorani Gas &
Convenienc e, Inc. v. State , No. 03-06-00463- CV, 2008 WL 1827605, *18-19 (Tex. A pp.—Austin Apr. 24, 2008, no pet.) (mem. op.) (supporting fifth example in instructions by noting that “[c]ourts have consistently pierc ed the corpor ate veil when an indebted corpor ation transfe rs assets to another
corpor ation to avoid a judgme nt or debt”) ; see also Klein v. Sporting Goods, Inc. , 772 S.W .2d 173,
176 (Tex

. App.—Houston [14t h Dist.] 1989, writ denied) (holding evidenc e leg ally and fac tually sufficie nt to pierc e veil and support jury finding of constructive fra ud wher e evidenc e showed that defe ndant formed new entity that was “mer ely a continuation” of previous entity and fore closed on

secur ed debt to avoid unse cure d cre ditors).

L astly in this same issue, appellants contend that the ev i d en ce was leg ally and fact u al l y i nsufficie nt to support imposing individual liability on them for the fra udulent transfe r. See W ilson , 168 S.W .3d at 827 (outlining leg al-suff iciency standard of revie w); Cain , 709 S.W .2d at 176 (outlining f

actua l-sufficie ncy

standard of revie w). Our review of the entire rec ord lea ds us
to conclude t h at t h e ev idence is leg ally and fac tually sufficie nt to support the jury ’s finding s and the court’s judgme nt imposing individual liability on Key and Curry

. E vidence demonstrating appellants’ ownership and control of the va rious entities (e.g ., Key was the president of Centex at the rele vant times and oversa w its day -to-day opera tions, while Curry wholly owned Ce n te x a n d 9 9 % of PJ C Properties and was responsible for its manag ement, which alleg edly included making a loan
to Centex); the rela tionship betwee n the timing of occur renc es such as: the prior Adams lawsuit, the
UCC filings, the purported fore closure by PJ C Properties, the formation of PJ C Centex (which included the car

ry over of the same employ ees, office s, and business opera tions of Centex without
8interruption), and the eventua l production of documents purportedly cre ating a secur ed loan; Curry

and Key ’s use of the same attorney to repr esent both cre ditor (PJ C Properties) and debtor (Centex) in the purported fore closure and UCC filings; and the admitted purpose of the purported fore closure
to preve nt Adams from collecting on her judg ment all support the j ury ’s findi ng s and trial court’s conclusions, which are not contra ry to the overw helming weig ht of the evidenc e. Acc ording ly , we

overr ule appe llants’ first issue.

Dam ages I n their second issue, appellants contend that the judgme nt is “irre concilably flawe d” beca u s e i t p rovi des for a “double rec overy ” by awa rding Adams damag es in the amount of $157,280.93 ag ains t t h em j o intly and severally while also g ranting the receive r equitable relief in the form of possession and title to all of Centex’s assets as of the date of the Adams judgme nt. Cf. 5
Tex. Bus. & Com. Code § 24.008 (listing reme dies under UFT A to include avoidanc e of fra udulent transfe r, attachme nt of assets, injunction ag ainst further dispositi o n o f assets, appointment of

rec eiver , and “any other relief the circ umstances may require ”). Howeve r, appellants have waived the complaint by not making it to the trial court. See Tex. R. App. P. 33.1; Major Help Ctr., Inc. v. Ivy , Crews & Elliott

, P.C. , No. 03-99-00285- CV, 2000 WL 298282, at *5 (Tex. App.—Austin 2000,

no pet.) (mem. op.) (def

endant waives issue of double rec overy if not raised befor e trial court); see also Eagle Fabricators, Inc. v

. Rakowitz , 344 S.W .3d 414, 423 (Tex. App.—Houston [14t h Dist.] 2011, no pet.) (de fenda

nt who fails to raise issue of improper mea sure of

damag es wa ives err or).

We note that the judgme nt does not awa rd Adams any

assets or other

proper ty of Centex 5 but awar ds such prope rty only to the rec eiver

. 9I n the same issue, appel l an t s also contend that there was leg ally and fac tually

insufficient evidenc e of the amount of damag es awa rded to Adams and that she did not reque st and obtain nece ssary jury

finding s to support the awa rd. See Tex. Bus. & Com. Code § 24.009 (whe n fra udulent transfe r is voidable by cre ditor under section 24.00 8 , cr ed itor may rec over judgme nt for value of as s et transfe rre d or amount nece ssary to satisfy cre ditor’s claim, whicheve r is less).
Howeve r, appellants have failed to prese rve this issue as well. See Cecil v. Smith , 804 S.W .2d 509,
510-11 (Tex. 1991) (cha lleng es to leg al suffic iency of evide nce must be prese rved by : motion for instructed verdic t, motion for judgme nt notwithstanding verdic t, objection to submissi on of issue
to jury , motion to disreg ard jury ’s answe r to vital fac t issue, or motion for new trial specific ally raising complaint); Tex. R. Civ. P. 324(b)( 2) (cha lleng es to fac tual sufficie ncy of evidenc e must be raised in motion for ne w trial). Ac cording ly , we ove rrule a ppellants’ sec ond issue.

Statu te of lim itation s

I n their last issue, appellants contend that appellee s’ UFT A claims wer e barr ed by a
one-y ear statute of limit ations instead of the four- y ear period that appellee s claim applies. See Tex.
Bus. & Com. Code § 24.010(a) (2), (3) (ca use of action for fra

udulent transfe r is exti ng uished unless broug ht wi t h i n fo u r y ear s if broug ht under section 24.006(a) or within one y ear if broug ht under section 24.006(b))

. We ag ree with appellee s, who broug ht their claim under section 24.006(a) as a “re asonably equivalent value” claim, not as an “insider” claim under section 24.006(b). The mere 6

The re spective se ctions defining actionable fra udulent transfe rs provide: 6 (a) A transf

er ma de or oblig ation incurre d by a debtor is f raudule nt a s to a cre ditor whose claim arose befor e the transfe r was made or the obliga tion was incurre d if the debtor made the transfer or incurred the obligation without rece iving a reasonably 10fac t that Key and Curry may have been insiders does not transfor m appellee s’ clai m from one alleg ing that the transfe r or obliga tion at issue wa s m ade without the debtor (Centex) rec eiving equivalent value in exchang e, see id. § 24.006(a) , into one alleg ing that the transfe r was made to an insider for an antec edent debt, see id. § 24.006(b). The jury was asked, in Question 1, whether the transfe r of Centex’s assets to PJ C Properties was fra udulent as t o Ad am s , and the definition of a fra udulent transfe r contained there in trac ked the lang uag e of subsection (a)

. Acc ording ly , appellee s’ claims wer e not bar

red by limit ations, and we overr ule appe llants’ fourth issue. Having overr

uled all of a

ppellants’ issues, we aff

irm the judg ment.

__________________________________________ David Pury ear , J ustice
Be fore J ustices Pury ear , Pemberton, and B ourland Concurring Opinion by J ustice Pemberton Affir med Filed: January

13, 2016

equivalent value in exc hange for the transfe r or obliga tion an d the debtor was ins o l v en t at that time or the debtor beca me insolvent as a result of the transfe r or obliga tion. (b) A transfe r made by a debtor is fra udulent as to a cre ditor whose claim ar o se befor e the transfe r was made if the transfer was made to an insider for an antece dent debt , t h e d ebtor was insol vent at that time, and the insider had rea sonable cause to believe tha t the debtor wa s insolvent.
Tex. Bus. & Com. Code § 24.006 (emphases a dded). 11